2018 SDWD Annual Financial ReportSan Dieguito Water District
Annual Financial Report
For the Year Ended June 30, 2018
San Dieguito Water District
A Component Unit of the City of Encinitas
San Dieguito Water District
Table of Contents
Page
FINANCIAL SECTION
Independent Auditors’ Report on Financial Statements ......................................................................... 1
Independent Auditors’ Report on Internal Control over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards ................................................... 6
Management’s Discussion and Analysis (Required Supplementary Information – Unaudited) .......... 7
Basic Financial Statements:
Statements of Net Position ....................................................................................................................... 15
Statements of Revenues, Expenses, and Changes in Net Position ......................................................... 16
Statements of Cash Flows ......................................................................................................................... 17
Notes to the Financial Statements ............................................................................................................ 19
Required Supplementary Information (Unaudited):
Schedule of Funding Progress ............................................................................................................ 53
Schedule of Proportionate Share of the Net Pension Liability and Related Ratios.............................. 54
Schedule of Contributions .................................................................................................................... 55
Schedule of Proportionate Share of the Net OPEB Liability and Related Ratios ................................. 56
Schedule of Contributions - OPEB....................................................................................................... 57
SELECTED STATISTICAL INFORMATION SECTION (UNAUDITED)
Schedule of Water Rates ..................................................................................................................... 62
Bi-Monthly Meter Service Availability Charges .................................................................................... 62
Historic Potable Water System Revenues ........................................................................................... 63
Historic Recycled Water System Revenues ........................................................................................ 63
Summary of Water Production by Source ............................................................................................ 64
Summary of Water Deliveries by Source ............................................................................................. 64
Sales by Customer Class..................................................................................................................... 65
Total Service Connections by Category ............................................................................................... 65
Historical Debt Service Coverage ........................................................................................................ 66
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San Dieguito Water District, 505 S Vulcan Ave., Encinitas, CA. 92024 www.encinitasca.gov
FINANCIAL
SECTION
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INDEPENDENT AUDITORS’ REPORT
To the Board of Directors
of the San Dieguito Water District
Encinitas, California
Report on Financial Statements
We have audited the accompanying financial statements of the San Dieguito Water District (the “District”),
a component unit of the City of Encinitas, California (the “City”), which comprise the statement of net
position as of June 30, 2018 and June 30, 2017 and the related statements of revenues, expenses, and
changes in net position, and cash flows for the years then ended, and the related notes to financial
statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audits.
Investment in R.E. Badger Filtration Plant
We did not audit the financial statements of the R.E. Badger Filtration Plant which represents the following
percentages of the assets, net position, and expenses of the District as of June 30, 2018 and
June 30, 2017:
% of Total June 30, 2018 June 30, 2017
Assets 33% 35%
Net Position 43% 48%
Expenses 11% 11%
Those statements were audited by other auditors whose report has been furnished to us, and our opinion,
in so far as it relates to the amounts included for the Investments in R.E. Filtration Plant, is based solely on
the report of the other auditors.
4365 Executive Drive, Suite 710, San Diego, California 92121
Tel: 858-242-5100 • Fax: 858-242-5150
www.pungroup.com
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To the Board of Directors
of the San Dieguito Water District
Encinitas, California
Page 2
2
Investment in R.E. Badger Water Facilities Financing Authority
We did not audit the financial statements of the R.E. Badger Water Facilities Financing Authority which
represents the following percentages of the assets, net position, and expenses of the District as of June
30, 2018 and June 30, 2017:
% of Total June 30, 2018 June 30, 2017
Assets 1% 1%
Net Position 2% 2%
Expenses 5% 5%
Those statements were audited by other auditors whose report has been furnished to us, and our opinion,
in so far as it relates to the amounts included for the Investments in R.E. Filtration Plant, is based solely on
the report of the other auditors.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the 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 opinion.
Opinion
In our opinion, based on our audit and the report of others auditors, the financial statements referred to
above present fairly, in all material respects, the financial position of the District as of June 30, 2018 and
June 30, 2017, and the changes in financial position and cash flows for the years then ended in
accordance with accounting principles generally accepted in the United States of America.
To the Board of Directors
of the San Dieguito Water District
Encinitas, California
Page 3
3
Emphasis of Matter
Change in Accounting Principle
As discussed in Note 11 to the financial statements, in 2018, the District adopted new accounting
guidance, GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits
Other Than Pensions. The adoption of this statement requires retrospective application of previously
reported net position at July 1, 2017 as described in Note 13 to the basic financial statements. In addition,
Total OPEB Liability is reported in the Statement of Net Position in the amount of $315,665 as of June 30,
2017, the measurement date. This Net OPEB Liability is calculated by actuaries using estimates and
actuarial techniques from an actuarial valuation as of June 30, 2017. Our opinion is not modified with
respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis and the schedule of funding progress, schedule of changes in net pension liability
and related ratios, schedule of contributions, and schedule of changes in net OPEB liability and related
ratios, schedule of contributions - OPEB, on pages 7-11 and 52-56, respectively, 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. The statistical
section is presented for purposes of additional analysis and is not a required part of the basic financial
statements. The statistical section has not been subjected to the auditing procedures applied in the audit
of the financial statements and, accordingly, we do not express an opinion or provide any assurance on
them.
To the Board of Directors
of the San Dieguito Water District
Encinitas, California
Page 4
4
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 27, 2018, on our consideration of the 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 District’s internal control over financial
reporting and compliance.
San Diego, California
December 27, 2018
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Independent Auditors’ Report
To the Board of Directors
of the San Dieguito Water District
Encinitas, California
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of the San Dieguito Water
District (the “District”), a component unit of the City of Encinitas, California (the “City”), as of and for the
year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise
the District’s basic financial statements, and have issued our report thereon dated December 27, 2018.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal
control over financial reporting (“internal control”) to determine the audit procedures that are appropriate in
the circumstances for the purpose of expressing our opinions on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do
not express an opinion on the effectiveness of the District’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination
of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement
of the District’s financial statements will not be prevented, or detected and corrected on a timely basis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe
than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
4365 Executive Drive, Suite 710, San Diego, California 92121
Tel: 858-242-5100 • Fax: 858-242-5150
www.pungroup.com
3939352 Pun & McGeady_L_final.pdf 2 1/14/14 3:48 PM
To the Board of Directors
of the San Dieguito Water District
Encinitas, California
Page 2
6
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District’s financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the District’s internal control and compliance. Accordingly,
this communication is not suitable for any other purpose.
San Diego, California
December 27, 2018
San Dieguito Water District
Management’s Discussion & Analysis
(Unaudited)
7
This section of the San Dieguito Water District (the “District”) Annual Financial Report presents
Management’s Discussion and Analysis of the District’s financial position and performance for Fiscal
Year 2017-18. Please read it in conjunction with the District’s Basic Financial Statements, which include
explanatory footnotes and required supplementary information.
FINANCIAL HIGHLIGHTS
Table 1
Summarized Statement of Net Position
(Millions of Dollars)
The District’s net position increased by $2.9 million, or 6.3 percent, from 2017 to 2018. A majority of the
increase is the result of a net investment increase in capital assets. The District had positive cash flows
from operations in 2018, after factoring in debt service payments of $1.4 million. Rates had minor impact
on the net position as the last rate increase went into effect January 1, 2017 after approval by the Board
on January 20, 2016. There was no rate increase in 2018.
San Dieguito Water District
Management’s Discussion & Analysis (Continued)
(Unaudited)
8
Changes in Net Position are affected by revenues and operating expenses as summarized in Table 2.
Table 2
Summarized Statement of Revenues, Expenses and Changes in Net Position
(Millions of Dollars)
Revenues – Operating revenues increased $2.1 million from 2017 to 2018 due to higher potable water and
recycled water sales. Non-operating revenues remained flat from 2017 to 2018.
Expenses – Operating expenses increased $0.1 million from 2017 to 2018 mainly due to increased
maintenance of facilities and general operations.
Capital contributions decreased from 2017 to 2018 due to lower levels of development activity within the
District.
San Dieguito Water District
Management’s Discussion & Analysis (Continued)
(Unaudited)
9
Net Position – The net position was restated in 2018 to reflect Board action taken in October 2017
approving a revised Reserve Policy. The previous Reserve Policy had the Operating Reserve set at 60
days’ worth of the following year annual operating expenses for the District and the Capital Replacement
Reserve set at 2 to 3 times of the average future 5-year capital appropriation. The Board approved the
Operating Reserve to be increased to 90 days’ worth of the following year annual operating expenses and
the Capital Replacement Reserve to be reduced to 1 to 2 times of the average future 5-year capital
appropriation, in conformance with industry standards and similar to neighboring agencies.
CAPITAL ASSETS AND CAPITAL IMPROVEMENT PROGRAMS
The District has an ongoing capital improvement program and publishes a capital budget every year. The
capital budget includes funding for both infrastructure and various large consulting projects, such as
capital master plans and water rate studies. The District generally capitalizes infrastructure and expenses
consulting studies in the accompanying Basic Financial Statements.
Capital expenditures for infrastructure are accounted for in the accompanying financial statements either
as: (1) additions to Capital Assets, or (2) additions to Investments in Joint Ventures.
Additions to Capital Assets totaled approximately $0.4 million, which is primarily the replacement or
improvements to the water distribution system and purchases of vehicles and equipment. The District also
capitalized approximately $0.4 million of capital improvement costs paid for the R.E. Badger Joint
Facilities.
The overall budget of the District for capital improvements averages about $3.1 million per year over the
next seven years.
Table 3
Capital Assets, Net of Accumulated Depreciation
(Millions of Dollars)
San Dieguito Water District
Management’s Discussion & Analysis (Continued)
(Unaudited)
10
DEBT ADMINISTRATION
Table 4
Long-Term Debt
The District’s total long-term debt outstanding at June 30 consisted of:
On September 18, 2014, the District issued $5,870,000 of Water Revenue Refunding Bonds, Series 2014.
The Series 2014 bonds redeemed all of the District’s outstanding 2004 Water Revenue Refunding Bonds
remaining of $8,110,000, which were themselves a refunding of the District’s original 1993 Water Revenue
Bonds. The 2014 refunding resulted in saving the District approximately $250,000 annually in debt service
costs, due to lower market interest rates and the elimination of a reserve previously required on the 2004
bonds. Interest is due and payable semi-annually at rates ranging from 3.0 percent to 4.0 percent.
On November 20, 2007, the Authority issued $20,685,000 of 2007 Water Refunding Bonds while
concurrently redeeming all of its outstanding 1999 Water Revenue Bonds, on behalf of its member
agencies, the Santa Fe Irrigation District and the San Dieguito Water District. The transaction was a
current refunding intended to save the member agencies future interest costs due to lower market interest
rates. No new funds were raised by either agency. New Installation Purchase Agreements were executed,
which saves the District approximately $60,000 per year on debt service.
The debt service payments on these two obligations will total approximately $1.4 million annually, going
forward. The District has covenanted to maintain debt service coverage of at least 115 percent of net
revenues available for debt service each fiscal year. The District was in compliance with its debt service
coverage requirement for the FY 2017-18.
The District does not currently have plans to issue additional debt.
San Dieguito Water District
Management’s Discussion & Analysis (Continued)
(Unaudited)
11
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
On June 28, 2017, the District Board of Directors (Board) approved the two-year operating and capital
budget for FY 2017-18 and FY 2018-19. During the two-year budget cycle, funds are appropriated in the
first fiscal year only and then the District returns to the Board one year later to present its “second-year
revise” budget, which is revised based on changed assumptions to the originally published figures for the
second year.
On June 20, 2018, the Board approved the FY 2018-19 operating and capital “second-year revise” budget.
The operating budget anticipates total revenues of $18.6 million, which is an overall increase of $0.4
million over the prior year. On January 20, 2016, the Board approved an updated two-year water rate
study, modifying the District’s water rates and meter service charges. This action approved an overall
revenue increase from rates and charges of 6.5 percent on February 1, 2016 and another 6.5 percent
overall rate and charge increase on January 1, 2017. Another update to the District’s water rate schedule
is scheduled to occur in Spring 2019, which may result in new water rate and charge increases. Operating
expenses for FY 2018-19 are budgeted at $14.9 Million or approximately $2.5 million more than prior year.
The increase is largely due to the increased cost of water. The Board also approved a modest 2.0 percent
increase in salaries and benefits in Fiscal Year 2018-19.
The capital budget anticipates capital costs at $3.0 million, which is on par with the average for the next
seven years. This includes $1.1 million for District capital improvements and $1.9 million for capital
contributions to the R.E. Badger Joint Facilities.
Overall, the District expects to end FY 2018-19 with an available fund balance of $11.0 million, based on
its internal projections
CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT
If you have questions about this report or need additional information, please contact the City of Encinitas
Finance Department or the San Dieguito Water District General Manager’s office.
12
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San Dieguito Water District, 505 S Vulcan Ave., Encinitas, CA. 92024 www.encinitasca.gov
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BASIC FINANCIAL
STATEMENTS
14
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2018 2017
ASSETS
Current assets:
Cash and investments 16,103,120$ 13,671,646$
Restricted cash and investments with fiscal agent 156 65
Accounts receivables, net 2,308,598 2,243,159
Inventories 237,791 221,388
Total current assets 18,649,665 16,136,258
Noncurrent assets:
Investments in joint ventures 21,810,960 22,547,246
Capital assets, net 23,687,954 23,222,557
Total noncurrent assets 45,498,914 45,769,803
Total assets 64,148,579 61,906,061
DEFERRED OUTFLOWS OF RESOURCES
OPEB related items 53,291 -
Pension related items 2,148,106 1,540,047
Total deferred outflows of resources 2,201,397 1,540,047
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 851,121 1,189,620
Accrued interest payable 86,465 97,259
Deposits 402,300 298,195
Compensated absences - due within one year 73,807 162,845
Long-term debt - due within one year 1,100,000 1,060,000
Total current liabilities 2,513,693 2,807,919
Noncurrent liabilities:
Compensated absences - due more than one year 54,236 -
Long-term debt - due in more than one year 7,276,231 8,450,602
Net OPEB liability 315,665 -
Aggregate net pension liability 7,141,232 6,288,631
Total noncurrent liabilities 14,787,364 14,739,233
Total liabilities 17,301,057 17,547,152
DEFERRED INFLOWS OF RESOURCES
OPEB related items 7,074 -
Pension related items 447,916 168,372
Total deferred inflows of resources 454,990 168,372
NET POSITION
Net investment in capital assets 15,311,723 13,711,955
Restricted 156 65
Unrestricted 33,282,050 32,018,564
Total net position 48,593,929$ 45,730,584$
June 30, 2018 and 2017
Statements of Net Position
San Dieguito Water District
See accompanying Notes to the Financial Statements
15
2018 2017
OPERATING REVENUES
Charges for services 16,791,403$ 14,788,114$
Rental income 109,229 91,247
Interfund revenues 61,329 63,863
Other revenue 63,493 37,620
Total operating revenues 17,025,454 14,980,844
OPERATING EXPENSES
Source of supply 5,029,043 5,888,028
General operations and maintenance 5,208,840 4,982,370
Facility operations and maintenance 2,266,216 1,570,463
General and administrative 527,197 453,276
Depreciation of capital assets 703,955 694,595
Amortization of other assets - 98,155
Insurance and claims 65,037 -
Total operating expenses 13,800,288 13,686,887
NET OPERATING INCOME (LOSS)3,225,166 1,293,957
NONOPERATING REVENUES (EXPENSES)
Property taxes 1,030,168 959,873
Investment earnings 53,880 81,966
Gain on sale of capital assets 8,285 6,925
Amortization of investment in joint ventures (1,144,958) (284,032)
Accretion of bond premium 74,372 74,372
Interest expense (328,051) (366,740)
Total nonoperating revenues (expenses)(306,304) 472,364
INCOME BEFORE CAPITAL CONTRIBUTIONS 2,918,862 1,766,321
CAPITAL CONTRIBUTIONS
Contribution of capital assets:
Donation - 258,940
Easements 38,253 43,477
Connection fees 194,040 161,600
Total capital contributions 232,293 464,017
CHANGES IN NET POSITION 3,151,155 2,230,338
NET POSITION:
Beginning of year, as restated (Note 13)45,442,774 43,500,246
End of year 48,593,929$ 45,730,584$
San Dieguito Water District
Statements of Revenues, Expenses, and Changes in Net Position
For the Years Ended June 30, 2018 and 2017
See accompanying Notes to the Financial Statements
16
2018 2017
Cash flows from operating activities:
Receipts from users 16,835,193$ 15,118,189$
Receipts from interfund charges 61,329 63,863
Payments to employees and suppliers for goods and services (12,876,209) (12,667,002)
Other operating revenues 63,493 37,620
Net cash provided by operating activities 4,083,806 2,552,670
Cash flows from noncapital financing activities:
Receipts from property taxes 1,030,168 959,873
Net cash provided by noncapital and related financing activities 1,030,168 959,873
Cash flows from capital and related financing activities:
Acquisition of capital assets (1,169,352) (1,433,511)
Capital contributions - connection fees 232,293 464,017
Principal payments on bonds and note payable (1,060,000) (1,025,000)
Interest payments on bonds and note payable (338,843) (374,783)
Capital related payments to R.E. Badger Filtration Plant (408,672) (3,051,139)
Proceeds from sale of capital assets 8,285 6,925
Net cash (used in) capital and related financing activities (2,736,289) (5,413,491)
Cash flows from investing activities:
Investment income received 53,880 81,966
Net cash provided by investing activities 53,880 81,966
Net increase (decrease) in cash and cash equivalents 2,431,565 (1,818,982)
Cash and cash equivalents, beginning of year 13,671,711 15,490,693
Cash and cash equivalents, end of year 16,103,276$ 13,671,711$
Reconciliation of cash and cash equivalents to the
Statements of Net Position:
Current assets:
Cash and investments 16,103,120$ 13,671,646$
Restricted cash and investments with fiscal agent 156 65
Total cash and cash equivalents 16,103,276$ 13,671,711$
San Dieguito Water District
Statements of Cash Flows
For the Years Ended June 30, 2018 and 2017
See accompanying Notes to the Financial Statements
17
2018 2017
Reconciliation of operating income to net cash provided
by operating activities:
Operating income 3,225,166$ 1,009,925$
Adjustments to reconcile operating income
to net cash provided by operating activities:
Depreciation and amortization 703,955 1,076,782
Changes in operating assets, deferred outflows of resources,
liabilities, and deferred inflows of resources:
Accounts receivable (65,439) 238,828
Inventory and prepaid items (16,403) (39,995)
OPEB related deferred outflows of resources 10,037 -
Pension related deferred outflows of resources (608,060) (699,416)
Accounts payable and accrued liabilities (338,499) (127,094)
Deposits 104,105 (56,433)
Compensated absences (34,802) -
Net OPEB liability (35,473)
Net pension liability 852,601 1,269,138
OPEB-related deferred inflows 7,074 -
Pension-related deferred inflows 279,544 (119,065)
Net cash provided by operating activities 4,083,806$ 2,552,670$
Noncash capital and related financing activities:
Amortization of original issue premium 74,372$ 74,372$
Contribution of capital assets 38,253 302,417
112,625$ 376,789$
For the Years Ended June 30, 2018 and 2017
Statements of Cash Flows (Continued)
San Dieguito Water District
See accompanying Notes to the Financial Statements
18
San Dieguito Water District
Notes to the Financial Statements
For the Years Ended June 30, 2018 and 2017
19
Note 1 – Reporting Entity
San Dieguito Water District (the “District”) was formed in 1922 under the laws of the State of California to
supply irrigation and potable water services to the central western portion of San Diego County. The
District became a subsidiary district of the City of Encinitas, California (the “City”) on October 1, 1986,
pursuant to an election approving the San Dieguito Reorganization and the incorporation of the City. The
District is considered a component unit of the City, based on the provisions of Governmental Accounting
Standards Board (“GASB”) Statement No. 61, The Financial Reporting Entity: Omnibus - An Amendment
of GASB Statement No. 14 and No. 34.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
Financial statement presentation follows the recommendations promulgated by the Governmental
Accounting Standards Board (“GASB”) commonly referred to as accounting principles generally accepted
in the United States of America (“U.S. GAAP”). GASB is the accepted standard-setting body for
establishing governmental accounting and financial reporting standards.
Measurement Focus, Basis of Accounting and Financial Statements Presentation
The Financial Statements (i.e., the statement of net position, the statement of revenues, expenses and
changes in net position, and statement of cash flows) report information on all of the activities of the
District.
The Financial Statements are reported using the “economic resources” measurement focus and the
accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a
liability is incurred, regardless of the timing of related cash flows. Interest associated with the current
fiscal period is considered to be susceptible to accrual and so has been recognized as revenue of the
current fiscal period.
The Statement of Net Position reports separate sections for Deferred Outflows of Resources, and
Deferred Inflows of Resources, when applicable.
Deferred Outflows of Resources represent outflows of resources (consumption of net position) that
apply to future periods and that, therefore, will not be recognized as an expense until that time.
Deferred Inflows of Resources represent inflows of resources (acquisition of net position) that apply to
future periods and that, therefore, are not recognized as revenue until that time.
Operating revenues are those revenues that are generated from the primary operations of the District. The
District reports a measure of operations by presenting the change in net position from operations as
"operating income" in the statement of revenues, expenses, and changes in net position. Operating
activities are defined by the District as all activities other than financing and investing activities (interest
expense and investment income), and other infrequently occurring transaction of a non-operating nature.
Operating expenses are those expenses that are essential to the primary operations of the District. All
other expenses are reported as non-operating expenses.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
20
Note 2 – Summary of Significant Accounting Policies (Continued)
Cash and Investments
Cash and cash equivalents include all highly liquid investments with original maturities of 90 days or less
and are carried at cost, which approximates fair value. The majority of the District’s cash and investments
is invested in the City’s pooled investment fund (the “City Pool”). The District does not own any specifically
identifiable securities or investments in the City Pool. As a participant in the City Pool, the District has
rights to its ratable share of the pooled cash and investments in the City Pool, on a dollar-for-dollar basis.
The District’s ratable share of investment income from the City Pool is calculated and distributed on a
monthly basis. Investment income is reported as non-operating revenue in the Statement of Revenues,
Expenses, and Changes in Net Position. Since all amounts invested in the City Pool are available upon
demand, the District considers all amounts invested in the City Pool to be cash equivalents.
Certain disclosure requirements, if applicable for deposit and investment risk, are specified for the
following areas:
Interest Rate Risk
Credit Risk
Overall
Custodial Credit Risk
Concentration of Credit Risk
Foreign Currency Risk
Restricted Cash and Investments
Cash and investments with fiscal agents are restricted due to limitations on their use by bond covenants or
donor limitations. Fiscal agents acting on behalf of the District hold investment funds arising from the
proceeds of long-term debt issuances. The funds may be used for specific capital outlays or for the
payment of certain bonds, and have been invested only as permitted by specific State statutes or
applicable District ordinance, resolution or bond indenture.
Fair Value Measurement
U.S. GAAP defines fair value, establishes a framework for measuring fair value and establishes
disclosures about fair value measurement. Investments, unless otherwise specified, recorded at fair
value in the Statements of Net Position, are categorized based upon the level of judgment associated
with the inputs used to measure their fair value. Levels of inputs are as follows:
Level 1 – Inputs are unadjusted, quoted prices for identical assets and liabilities in active markets at the
measurement date.
Level 2 – Inputs, other than quoted prices included in Level 1, which are observable for the asset or
liability through corroboration with market data at the measurement date.
Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would
use in pricing the asset or liability at the measurement date.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
21
Note 2 – Summary of Significant Accounting Policies (Continued)
Receivables and Unbilled Revenues
Customer accounts receivable consist of amounts owed by private individuals and organizations for
services rendered in the regular course of business operations. Receivables are shown net of allowances
for doubtful accounts, if any. The District also accrues an estimated amount for services that have been
provided, but not yet billed. Federal and State grants accrued as revenue when all eligibility requirements
have been met. Amount earned but outstanding at year end are reported as accounts receivable.
Inventory of Materials
Inventories consist primarily of materials used in the construction and repair of the District’s plant and
equipment and on-site supplies such as water meters. Inventory is stated at cost using average-cost
basis.
Other Assets
The District’s defined-benefit pension plan, which has less than 100 active members, was required to
enroll in a CalPERS risk-sharing pool in 2003. As part of that enrollment process, CalPERS calculated the
funded status of the plan and compared that amount to the funded status of the risk pool at inception, and
a “side fund liability” was created. The difference was financed by CalPERS over a 17 year period at the
assumed rate of return of the CalPERS pooled investment fund (7.75 percent). The District elected to
prepay the full amount of $981,523 in Fiscal Year 2006-07 and has capitalized this amount in the
Statement of Net Position. This amount is being amortized over ten (10) years on a straight-line basis. At
June 30, 2018 and 2017, this amount is fully amortized.
Investment in R.E. Badger Filtration Plant (the “Joint Facilities”)
The District’s investment in the Joint Facilities is accounted for using the equity method of accounting.
The District makes periodic contributions to cover its share of capital and operating costs. Contributions
for capital are accounted for as an increase in the District’s investment account. Contributions for
operations are accounted for as operating expenses under the classification: facility operations and
maintenance. Depreciation expense on plant operations that is charged to the District is accounted for as
an operating expense.
Investment in R.E. Badger Water Facilities Financing Authority (the “Financing Authority”)
The District’s investment in the Financing Authority is accounted for using the equity method of
accounting. The equity interest is comprised primarily of bond reserve funds held by a fiscal agent and
unamortized bond discounts and issuance costs. Changes in the investment account result primarily from
interest revenues on reserve funds and amortization expense on the bond discounts and issuance costs.
These items are classified as non-operating revenues and expenses in the accompanying Statement of
Revenues, Expenses, and Changes in Net Position.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
22
Note 2 – Summary of Significant Accounting Policies (Continued)
Capital Assets
Capital assets consist of land easements, the perpetual right-of-use of the City’s Public Works facility,
structure and improvements, machinery and equipment, distribution system, and capacity rights. Capital
assets are valued at historical cost, or estimated historical cost, if actual historical cost was not available.
Donated capital assets are valued at their estimated fair market value on the date donated. The District
policy has set the capitalization threshold for reporting capital assets at $5,000 for non-infrastructure
assets and $100,000 for infrastructure assets, all of which must have an estimated useful life in excess of
one year. Depreciation is recorded on a straight-line basis over estimated useful lives of the assets as
follows:
Structures and improvements 20-45 years
Equipment, machinery and vehicles 5-20 years
Collection and distribution system 50 years
Capacity rights 50 years
Major outlays for capital assets are capitalized as projects, once constructed, and repairs and
maintenance costs are expensed. Interest accrued during capital assets construction, if any, is capitalized
as part of the asset cost, net of interest income, on construction bond proceeds.
Deposits
Deposits consist of cash amounts that the District has collected from customers related to on-going
construction work being performed by the applicant. It can either be a “job deposit,” which is an amount
collected to cover the expected costs to the District related to the project, or a “security deposit” which is
meant to help guarantee that the work required of the applicant will be completed to the satisfaction of the
District.
Compensated Absences
The District’s policy permits its employees to accumulate not more than one and one half of their current
annual vacation. The District participates in the City's short term disability income protection plan (IPP)
Program which provides employees with protection against loss of income due to illness or disability.
Employees do not earn any number of hours of sick leave and thus, no provision has been made for sick
leave liability under the account for compensated absences. The unused vacation pay will be paid to
employee or his/her beneficiary upon leaving the District’s employment. The amount due will be
determined using salary/wage rate in effect at the time of separation.
Long-Term Debt
Debt premiums and discounts are deferred and amortized over the life of the debt using the straight-line
method. Long-term debt is reported net of the applicable bond premium or discount. Debt issuance costs
are expensed when incurred.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
23
Note 2 – Summary of Significant Accounting Policies (Continued)
Pensions
For purposes of measuring the net pension liability at June 30, 2018, deferred outflows of resources and
deferred inflows of resources related to pensions, and pension expense, information about the fiduciary
net position of the plans and additions to/deductions from the plans’ fiduciary net position have been
determined on the same basis as they are reported by the plans (Note 9). For this purpose, benefit
payments (including refunds of employee contributions) are recognized when due and payable in
accordance with benefit terms. Investments are reported at fair value.
The following timeframes are used for pension reporting:
For the Year Ended June 30, 2018
Valuation Date June 30, 2016
Measurement Date June 30, 2017
Measurement Period July 1, 2016 to June 30, 2017
Other Postemployment Benefits (“OPEB”)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of
resources related to OPEB, and OPEB expense, information about the fiduciary net position of the District
Retiree Benefits Plan (“OPEB Plan”) and additions to/deductions from OPEB Plan's fiduciary net position
have been determined on the same basis as they are reported by the OPEB Plan. For this purpose, the
OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms.
Investments are reported at fair value, except for money market investments, which are reported at
amortized cost.
The following timeframes are used for OPEB reporting:
For the Year Ended June 30, 2018
Valuation Date June 30, 2017
Measurement Date June 30, 2017
Measurement Period July 1, 2016 to June 30, 2017
Arbitrage Rebate Requirement
The District is subject to the Internal Revenue Code (“IRC”) Section 148(f), related to its tax exempt
revenue bonds. The IRC requires that investment earnings on gross proceeds of any revenue bonds that
are in excess of the amount prescribed will be surrendered to the Internal Revenue Service. The District
had no rebate liability for arbitrage as of June 30, 2018 and 2017.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
24
Note 2 – Summary of Significant Accounting Policies (Continued)
Net Position
Net position represents the difference between all other elements in the statement of net position and
should be displayed in the following three components:
Net Investment in Capital Assets – This component of net position consists of capital assets, net of
accumulated depreciation, reduced by the outstanding balances of debt that are attributable to the
acquisition, construction, or improvement of those assets.
Restricted – This component of net position consists of restricted assets reduced by liabilities and
deferred inflows of resources related to those assets.
Unrestricted – This component of net position is the amount of the assets, deferred outflows of
resources, liabilities, and deferred inflows of resources that are not included in the determination of
net investment in capital assets or the restricted component of net position.
Property Taxes
Property taxes are levied on March 1 and are payable in two installments: November 1 and February 1 of
each year. Property taxes become delinquent on December 10 and April 10, for the first and second
installments, respectively. The lien date is March 1. The County of San Diego, California (“County”) bills
and collects property taxes and remits them to the District according to a payment schedule established by
the County.
The County is permitted by State law to levy on properties at one percent of full market value (at time of
purchase) and can increase the property tax rate at no more than two percent per year. The District
receives a share of this basic tax levy proportionate to what it received during the years 1976-1978.
Property taxes are recognized in the fiscal year for which the taxes have been levied.
No allowance for doubtful accounts was considered necessary.
Use of Restricted/Unrestricted Assets
When both restricted and unrestricted resources are available for use, it is the District’s policy to use
restricted resources first, then unrestricted resources as they are needed.
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 disclosure of the contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
25
Note 3 – Cash and Investments
At June 30, cash and investments are reported in the accompanying statement of net position as follows:
2018 2017
Cash and investments 16,103,120$ 13,671,646$
Cash and investments with fiscal agent 156 65
Total cash and investments 16,103,276$ 13,671,711$
At June 30, cash and investments are reported at fair value based on quoted market prices. The following
table presents the fair value measurements of investments recognized in the accompanying statement of
net position measured at fair value on a recurring basis and the level within the fair value hierarchy in
which the fair value measurements fall at June 30:
Fair Measurement Fair Measurement
Value Input Value Input
Cash on hand 300$ Uncategorized 300$ Uncategorized
City of Encinitas pooled investments fund 16,102,976 Uncategorized 13,671,411 Uncategorized
Total cash and investments 16,103,276$ 13,671,711$
2018 2017
Authorized Investments
The District’s investments are managed by the City. All of the District’s cash, except investments held by
fiscal agents, are invested in the City Pool. The District has an equity interest in the City Pool equal to its
proportionate share of invested cash. The District does not have a separate investment policy; its cash
are invested according to the City of Encinitas’ adopted investment policy.
The table below identifies the allowable investment types authorized by the California Government Code
(the “Gov’t Code”) and the City’s adopted Investment Policy (the “Investment Policy”). The table also
identifies certain restrictions related to interest rate risk and concentration of credit risk. The Investment
Policy restricts the City Treasurer to investing in only the types of investments listed herein, which is more
restrictive than the Gov’t Code, as the City’s policy does not allow certain investments to be purchased
which are permitted under the Gov’t Code.
Authorized Maximum Maximum
by Investment Maximum Percentage of Investment in
Authorized Investment Type Policy Maturity Portfolio One Issuer
Repurchased Agreements-Overnight "Sweep" Yes 1 day 20% No Limit
Local Agency Investment Fund (LAIF) Yes N/A 30% No Limit
Other Governmental Managed Investment Pools Yes N/A 30% No Limit
Money Market Mutual Funds Yes N/A 20% 10%
Certificates of Deposit Yes 1 year 10% $1M
Negotiable Certificates of Deposit Yes 5 years 10% $1M
Bankers' Acceptances Yes 180 days 10% $1M
U.S. Treasury Bills, Notes and Bonds Yes 5 years 50% 15%
U.S. Government Sponsored Enterprises Yes 5 years 60% 15%
Commercial Paper Yes 270 days 25% $5M
Commercial Medium-Term Notes Yes 5 years 15% $1M
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
26
Note 3 – Cash and Investments (Continued)
Investments Authorized and Utilized under Debt Agreements
The investment of the proceeds of debt issues is governed by the provisions of the 2004 Bond Indenture.
Although there are several authorized investment instruments, the District’s reserve fund is currently
invested 100 percent in a Money Market Mutual Fund.
Disclosures Related to Interest Rate Risk
The District invests all of its excess cash in the City Pool. As a participant, the District has immediate
access to its funds on a dollar-for-dollar basis. The allocation of investment income is made to the District
based on the book value of its investment (which approximates fair market value). As a result, the District
is not exposed to interest rate risk, as it would be if it owned direct securities for its own account.
The District’s investment with fiscal agents consists of an institutional money market mutual fund. This
Fund has a stable net asset value of $1.00 and the funds can be withdrawn at any time without prior
notice. Any changes to the fair value of this money market mutual fund are allocated on a monthly basis
to each participant, as a part of their monthly distribution.
Disclosures Relating to Credit Risk
Credit risk is defined as the risk that an issuer of an investment will not fulfill its obligation to the holder of
the investment. This is measured by the assignment of a rating by a nationally recognized statistical
organization. Presented below is the minimum rating required by (where applicable) the Gov’t Code, the
Investment Policy, or the debt agreements, and the actual rating as of year end for each investment type.
Credit ratings as of June, 30, 2018 were as follows:
Minimum
Legal AAA/
Investment Type Totals Rating Aaa Not Rated
Investment in City Pool 16,102,976$ N/A -$ 16,102,976$
Total investments 16,102,976$ -$ 16,102,976$
Rating as of Year End
Credit ratings as of June, 30, 2017 were as follows:
Minimum
Legal AAA/
Investment Type Totals Rating Aaa Not Rated
Investment in City Pool 13,671,411$ N/A -$ 13,671,411$
Total investments 13,671,411$ -$ 13,671,411$
Rating as of Year End
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
27
Note 3 – Cash and Investments (Continued)
Disclosures Relating to Credit Risk (Continued)
The investment policy contains limitations on the amount that can be invested in any one issuer beyond
those stipulated in the Gov’t Code. GASB Statement No. 40 requires disclosure by amount and issuer, of
investments in any one issuer that represent five percent or more of total investments.
As of June 30, 2018, both the Investment in City Pool exceeded five percent of the District’s total cash and
investments. As of June 30, 2017 the Investment in City Pool exceeded five percent of the District’s total
cash and investments.
Disclosures Relating to Custodial Credit Risk
The District is exposed to custodial credit risk indirectly via its investment in the City Pool. Custodial credit
risk is the risk that, in the event of the failure of a depository financial institution, an entity may not be able
to recover its deposits or will not be able to recover collateral securities that are in the possession of an
outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the
counterparty (e.g. broker-dealer) to a transaction, an entity may not be able to recover the value of its
investment or collateral securities that are in the possession of another party. The Government Code and
the Investment Policy do not contain legal or policy requirements that would limit the exposure to custodial
credit risk for deposits or investments, other than the following provisions for deposits: The Government
Code requires that a financial institution secure deposits made by state or local governmental units by
pledging qualifying securities in an undivided collateral pool held by a depository regulated under State
Law. The market value of the qualifying pledged securities must equal at least 110 percent of the total
amount deposited by the public agencies. California law also allows financial institutions to secure
deposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public
deposits.
At June 30, 2018 and 2017 the District had no deposits with financial institutions or any other parties that
would subject the District to custodial credit risk.
Note 4 – Investment in Joint Ventures
At June 30, investment in joint ventures consisted of the following:
2018 2017
R.E. Badger Filtration Plant 21,045,875$ 21,786,604$
R.E. Badger Water Facilities Financing Authority 765,085 760,642
Total investment in other agencies 21,810,960$ 22,547,246$
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
28
Note 4 – Investment Other Agencies (Continued)
R.E. Badger Filtration Plant
In 1967, the District entered into an agreement with the Santa Fe Irrigation District (Santa Fe) for the joint
ownership, maintenance, operation, and use of a water treatment plant and various facilities for the
storage and delivery of potable water. During the ensuing years, the parties have added various facilities
and improvements, which are owned in different percentages depending on the type of facility and the
agreements in place. The ownership percentages of the Joint Facilities are described below:
San Dieguito Santa Fe
Facilities Water District Irrigation District
Filtration Plant 45% 55%
Filtered Water Reservior (13 million gallons) 31% 69%
Joint Pipeline 39% 61%
San Dieguito Reservoir 42% 58%
Santa Fe is responsible for the operations, maintenance, and construction of capital improvements of the
Joint Facilities, as well as the related administration. For the years ended June 30, 2018 and 2017, the
District made capital contributions of $413,387 and $3,051,139, respectively and recorded its share of
depreciation and other allocated charges, as well as a true-up charge affecting the prior fiscal year. The
investment balance at June 30, 2018 and 2017 was $21,045,875 and $21,786,604, respectively.
Operations and maintenance costs are allocated monthly on the basis of the water used by each district,
and administrative costs are allocated based on an agreed-upon cost allocation plan. For the years ended
June 30, 2018 and 2017, the District’s share of operations and maintenance costs for the Joint Facilities
was $2,266,216 and $1,570,463, respectively.
R.E Badger Water Facilities Financing Authority
In 1999, the District and Santa Fe entered into a joint exercise of powers agreement and formed the
Financing Authority, to provide financing for the acquisition and construction of capital improvements
related to the Joint Facilities. The Financing Authority subsequently issued revenue bonds for the purpose
of funding those capital improvements. Each district is obligated under an Installment Purchase
Agreement to repay their proportionate share of the costs of the long-term financing. The investment in
the Financing Authority consists primarily of a share of the debt reserve funds held by a fiscal agent and
unamortized bond discounts and issuance costs. The investment balance at June 30, 2018 and 2017 was
$765,085 and $760,642, respectively.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
29
Note 5 – Capital Assets
Summary of changes in capital assets for the year ended June 30, 2018 is as follows:
Balance Balance
July 1, 2017 Additions Deletions Transfers June 30, 2018
Capital assets, not depreciated
Land easements 3,262,678$ 38,253$ -$ -$ 3,300,931$
Public works facilities right of use 3,378,700 - - - 3,378,700
Construction in progress 1,914,408 708,560 (57,419) (1,774,864) 790,685
Total capital assets, not depreciated 8,555,786 746,813 (57,419) (1,774,864) 7,470,316
Capital assets, being depreciated
Structures and improvements 11,007 - - - 11,007
Machinery, equipment, and vehicles 2,312,153 59,999 (27,389) 131,323 2,476,086
Distribution system 39,567,447 419,959 - 1,643,541 41,630,947
Capacity rights 323,190 - - - 323,190
Total capital assets, being depreciated 42,213,797 479,958 (27,389) 1,774,864 44,441,230
Less accumulated depreciation
Structures and improvements (5,595) (1,101) - - (6,696)
Machinery and equipment (1,679,160) (169,843) 27,389 - (1,821,614)
Distribution system (25,723,837) (526,548) - - (26,250,385)
Capacity rights (138,434) (6,463) - - (144,897)
Total accumulated depreciation (27,547,026) (703,955) 27,389 - (28,223,592)
Total capital assets, being depreciated, net 14,666,771 (223,997) - 1,774,864 16,217,638
Total capital assets, net 23,222,557$ 522,816$ (57,419)$ -$ 23,687,954$
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
30
Note 5 – Capital Assets (Continued)
Summary of changes in capital assets for the year ended June 30, 2017 is as follows:
Balance Balance
July 1, 2016 Additions Deletions Transfers June 30, 2017
Capital assets, not depreciated
Land easements 3,219,301$ 43,377$ -$ -$ 3,262,678$
Public works facilities right of use 3,378,700 - - - 3,378,700
Construction in progress 937,748 1,056,849 - (80,189) 1,914,408
Total capital assets, not depreciated 7,535,749 1,100,226 - (80,189) 8,555,786
Capital assets, being depreciated
Structures and improvements 11,007 - - - 11,007
Machinery and equipment 2,355,844 74,345 (98,737) (19,299) 2,312,153
Distribution system 39,228,318 258,940 - 80,189 39,567,447
Capacity rights 323,190 - - - 323,190
Total capital assets, being depreciated 41,918,359 333,285 (98,737) 60,890 42,213,797
Less accumulated depreciation
Structures and improvements (4,495) (1,100) - - (5,595)
Machinery and equipment (1,624,431) (172,765) 98,737 19,299 (1,679,160)
Distribution system (25,209,571) (514,266) - - (25,723,837)
Capacity rights (131,970) (6,464) - - (138,434)
Total accumulated depreciation (26,970,467) (694,595) 98,737 19,299 (27,547,026)
Total capital assets, being depreciated, net 14,947,892 (361,310) - 80,189 14,666,771
Total capital assets, net 22,483,641$ 738,916$ -$ -$ 23,222,557$
Note 6 – Compensated Absences
Summary of changes in compensated absences for the years ended June 30, 2018 and 2017 is as
follows:
Beginning Ending Due within Due in More
Fiscal Year Balance Additions Deletions Balance One Year Than One Year
2017-2018 162,845$ 134,859$ (169,661)$ 128,043$ 73,807$ 54,236$
2016-2017 161,310 131,111 (129,576) 162,845 162,845 -
Compensated absences represent the dollar value of employee vacation leave earned (up to the specified
maximum amount of hours) but unused as of June 30, 2018 and 2017. The balance outstanding of
$73,807 and $162,845 at June 30, 2018 and 2017, respectively, are classified as a current liability
because there are no restrictions on when employees may make use of their accrued vacation.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
31
Note 7 – Long-Term Debt
A summary of changes in long-term debt for the year ended June 30, 2018, is as follows:
Balance Balance Due within Due In More
July 1, 2017 Additions Deletion June 30, 2018 One Year Than One Year
2007 Note Payable to R.E. Badger
Water Facilities Financing Authority 4,275,000$ -$ (455,000)$ 3,820,000$ 475,000$ 3,345,000$
2014 Water Revenue Bonds 4,715,000 - (605,000) 4,110,000 625,000 3,485,000
add: original issue premium 520,602 - (74,371) 446,231 - 446,231
Total long-term obligation 9,510,602$ -$ (1,134,371)$ 8,376,231$ 1,100,000$ 7,276,231$
A summary of changes in long-term debt for the year ended June 30, 2017, is as follows:
Balance Balance Due within Due In More
July 1, 2016 Additions Deletion June 30, 2017 One Year Than One Year
2007 Note Payable to R.E. Badger
Water Facilities Financing Authority 4,715,000$ -$ (440,000)$ 4,275,000$ 455,000$ 3,820,000$
2014 Water Revenue Bonds 5,300,000 - (585,000) 4,715,000 605,000 4,110,000
add: original issue premium 594,973 - (74,371) 520,602 - 520,602
Total long-term obligation 10,609,973$ -$ (1,099,371)$ 9,510,602$ 1,060,000$ 8,450,602$
2007 Note Payable to the R.E. Badger Water Facilities Financing Authority
On November 20, 2007, the R.E. Badger Water Facilities Financing Authority issued $20,685,000 of 2007
Water Revenue Refunding Bonds while concurrently redeeming all of its outstanding 1999 Water Revenue
bonds, on behalf of its member agencies, the Santa Fe Irrigation District and the San Dieguito Water
District. The transaction was a current refunding intended to save the member agencies future interest
costs due to lower market interest rates. New Installment Purchase Agreements were executed. The
overall bond issue consists of $20,685,000 of serial bonds maturing from 2008 through 2024. The
District’s portion of the refinancing totaled $7,705,000. Principal is due and payable annually in amounts
ranging from $335,000 to $620,000. Interest is due and payable semi-annually at rates ranging from 3.5
percent to 4.5 percent. The District accounts for its share of the bonds as a note payable to the Financing
Authority.
Annual debt service requirements for the 2007 Note Payable to the R.E. Badger Water Facilities Financing
Authority outstanding at June 30, 2018 are as follows:
Year Ending
June 30 Principal Interest Total
2019 475,000$ 152,919$ 627,919$
2020 490,000 133,619 623,619
2021 525,000 111,465 636,465
2022 545,000 89,396 634,396
2023 570,000 66,043 636,043
2024-2025 1,215,000 54,865 1,269,865
Total 3,820,000$ 608,307$ 4,428,307$
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
32
Note 7 – Long-Term Debt (Continued)
2014 Water Revenue Refunding Bonds
On September 18, 2014, the District issued $5,870,000 of Water Revenue Refunding Bonds, Series 2014,
to defease and refund on a current basis, all of the outstanding 2004 Water Revenue Refunding Bonds.
The bonds consist of serial bonds maturing from 2016 through 2024 in annual installments of $570,000 to
$755,000. Interest is due and payable semi-annually at rates ranging from 3.0 percent to 4.0 percent.
Annual debt service is approximately $780,000 through 2024. The bonds are subject to federal arbitrage
requirements. The aggregate debt service payments of the new debt are $2,012,280 less than the old
debt. The issuance of the new debt and refunding of the old debt resulted in an economic gain (the
difference between the net present value of the old debt and new debt service payments) of approximately
$780,873.
The annual debt service requirements for the 2014 Water Revenue Refunding Bonds outstanding at
June 30, 2018 are as follows:
Year Ending
June 30 Principal Interest Total
2019 625,000$ 148,775$ 773,775$
2020 645,000 126,500 771,500
2021 665,000 100,300 765,300
2022 695,000 73,100 768,100
2023 725,000 44,700 769,700
2024 755,000 15,100 770,100
Total 4,110,000$ 508,475$ 4,618,475$
Pledged Revenues
The District has pledged its net revenues (as defined) to pay the annual debt service on the bonds and
note described above. The District has covenanted to set rates and charges in order to produce net
revenues of at least 115 percent of annual debt service. During the years ended June 30, 2018 and June,
30, 2017, principal and interest paid were $1,398,844 and $1,401,319, respectively, net revenues
available for debt service were $5,289,865 and $3,273,387, respectively, resulting in debt service
coverage ratios of 378 percent and 235 percent, respectively.
Note 8 – Risk Management
Risk management programs and support for the District are provided by the City risk management
department. The District is a member of the Association of California Water Agencies - Joint Powers
Insurance Authority (JPIA), which provides coverage for general liability, property and casualty, and
workers’ compensation. Self-insured retention level $10,000. As of June 30, 2018 and 2017, in the
opinion of the District’s management and general counsel, there were no material claims which would
require accrual in the accompanying financial statements. Management has determined, based on modest
self-insurance retention levels and favorable claims experience, that no self-insurance reserve is required.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
33
Note 9 – Public Employees Retirement System – CalPERS
Summary
Net Pension Liability
Net pension liability is reported in the Statement of Net Position as follows at June 30:
2018 2017
Net pension liability 7,141,232$ 6,288,631$
Total 7,141,232$ 6,288,631$
Deferred Outflows of Resources
Deferred outflows of resources are reported in the accompanying Statement of Net Position as follows at
June 30:
2018 2017
Pension contributions after the measurement date 504,492$ 472,819$
Changes of assumptions 891,674 -
Difference between projected and actual
earnings on pension plan investments 218,306 740,965$
Change in plan proportion 533,634 301,343
Total 2,148,106$ 1,540,047$
Deferred Inflows of Resources
Deferred inflows of resources are reported in the accompanying Statement of Net Position as follows at
June 30:
2018 2017
Difference between projected and actual
experience 103,679$ -$
Employer contributions in excess of proportionate
share of contributions 319,454 26,007
Changes in assumptions 24,783 142,365
Total 447,916$ 168,372$
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
34
Note 9 – Public Employees Retirement System – CalPERS (Continued)
Summary (Continued)
Pension Expense
Pension expense is included in the accompanying Statement of Revenues, Expenses, and Changes in
Net Position as follows for the year ended June 30:
2018 2017
Pension Expense 591,501$ 923,486$
Total 591,501$ 923,486$
Plan Description
The SDWD Plan (the Plan) is a cost-sharing multiple employer defined benefit plan that provides
retirement and disability benefits, annual cost-of-living adjustments, and death benefits to members and
beneficiaries, in which the District participates with other public agencies that each have fewer than 100
active members and share the same benefit formula. The Plan is administered by the California Public
Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent
for its participating member employers. Benefit provisions under the Plan are established by State statutes
within the Public Employee’s Retirement Law. CalPERS issues publicly available reports that include a
full description of the pension plans regarding benefit provisions, assumptions and membership
information that can be found on the CalPERS website. Copies of the CalPERS annual financial report
may be obtained from the CalPERS Executive Office – 400 P Street, Sacramento, California 95814.
Benefits Provided
The SDWD Plan provides employees hired before October 13, 2012 with a Tier 1 benefit equal to 2.7
percent at 55 years of age, calculated based on the single highest year of qualifying compensation. As of
October 13, 2012, the Board of Directors imposed new terms and conditions which created a new benefit
formula for employees hired after the effective date of the change (the "Tier 2 Plan"). Employees hired
under the Tier 2 Plan receive a lower benefit formula, referred to as the 2 percent at 60 years of age
formula. In addition, PEPRA created yet another benefit formula for new hires with no experience or prior
service credit with CalPERS. In the case of the District, this will constitute a "Tier 3 Plan" which provides a
retirement benefit, referred to as the 2 percent at 62 years of age formula. The actual retirement benefit for
Tier 2 and Tier 3 employees will be calculated using the average of the highest 36 consecutive months of
qualifying compensation.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
35
Note 9 – Public Employees Retirement System – CalPERS (Continued)
Employees Covered by Benefit Terms
At June 30, the following employees were covered by the benefit terms for the Plan:
2018 2017
Active employees 23 25
Inactive employees or beneficiaries currently
receiving benefits 33 32
Inactive employees entitled to, but not yet
receiving benefits 6 7
Total 62 64
Contributions
Section 20841(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer
contribution rates for all public employers be determined on an annual basis by the actuary and shall be
effective on July 1 following notice of a change of the rate. The total plan contributions are determined
through CalPERS’ annual actuarial valuation process. The public agency cost-sharing plans covered by
the miscellaneous risk pools, the Plan’s actuarially determined rate is based on the estimated amount
necessary to pay the Plan’s allocated share of the risk pool’s costs of benefits earned by employees
during the year, and any unfunded accrued liability. The employer is required to contribute the difference
between the actuarially determined rate and the contribution rate of employees.
Active members in the Tier 1 Plan are required to contribute eight percent of their annual covered salary
(the "employee contribution"). Effective October 13, 2012, all Tier 1 members contribute the full eight
percent, which is credited to their individual accounts. Members receiving the Tier 2 or Tier 3 benefits are
required to contribute seven percent, and 6.25 percent of their annual covered salary, respectively. The
employee contribution requirements are established by State statute.
SDWD is required to contribute the actuarially determined remaining amounts necessary to fund the
benefits for its members (the "employer contributions"). The employer contribution rates for the year ended
June 30, 2017 for Tier 1, Tier 2, and PEPRA employees were 11.634 percent, 7.159 percent, and 6.555
percent, respectively. The employer contribution rates for the year ended June 30, 2016 for Tier 1, Tier 2,
and PEPRA employees were 10.958 percent, 6.709 percent, and 6.237 percent, respectively. The
employer contribution rates are calculated and established annually by CalPERS, based on the actuarial
methods and assumptions as adopted by the CalPERS Board of Administration.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
36
Note 9 – Public Employees Retirement System – CalPERS (Continued)
Contributions (Continued)
For the measurement period ended June 30, the Plan’s proportionate share of aggregate employer
contributions made was as follows:
2018 2017
Contributions recognized as part of pension expense 472,819$ 356,509$
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to
Pensions
As of June 30, the District reported net pension liabilities for its proportionate share of the net pension
liability of the SDWD Plan as follows:
Plan Total Plan Plan Net
Pension Fiduciary Pension
Liability Net Position Liability/(Asset)
Balance at: June 30, 2016 (Valuation date) 21,875,339$ 15,586,708$ 6,288,631$
Balance at: June 30, 2017 (Measurement date) 23,132,699 15,991,467 7,141,232
Net changes during 2016-2017 1,257,360$ 404,759$ 852,601$
Plan Total Plan Plan Net
Pension Fiduciary Pension
Liability Net Position Liability/(Asset)
Balance at: June 30, 2015 (Valuation date) 21,378,148$ 16,358,655$ 5,019,493$
Balance at: June 30, 2016 (Measurement date) 21,875,339 15,586,708 6,288,631
Net changes during 2015-2016 497,191$ (771,947)$ 1,269,138$
The District’s net pension liability for the SDWD Plan is measured as the proportionate share of the net
pension liability. The net pension liability of the Plan is measured as of June 30, 2017, and the total
pension liability for the Plan used to calculate the net pension liability was determined by an actuarial
valuation as of June 30, 2016 rolled forward to June 30, 2017 using standard update procedures. The
District’s proportion of the net pension liability was based on a projection of the District’s long-term share
of contributions to the pension plans relative to the projected contributions of all participating employers,
actuarially determined.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
37
Note 9 – Public Employees Retirement System – CalPERS (Continued)
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to
Pensions (Continued)
The following is the approach established by the plan actuary to allocate the net pension liability and
pension expense to the individual employers within the risk pool.
(1) In determining a cost-sharing plan’s proportionate share, total amounts of liabilities and assets are
first calculated for the risk pool as a whole on the valuation date (June 30, 2014). The risk pool’s
fiduciary net position (“FNP”) subtracted from its total pension liability (“TPL”) determines the net
pension liability (“NPL”) at the valuation date.
(2) Using standard actuarial roll forward methods, the risk pool TPL is then computed at the
measurement date (June 30, 2016). Risk pool FNP at the measurement date is then subtracted
from this number to compute the NPL for the risk pool at the measurement date. For purposes of
FNP in this step and any later reference thereto, the risk pool’s FNP at the measurement date
denotes the aggregate risk pool’s FNP at June 30, 2017 less the sum of all additional side fund (or
unfunded liability) contributions made by all employers during the measurement period (2016-17).
(3) The individual plan’s TPL, FNP and NPL are also calculated at the valuation date.
(4) Two ratios are created by dividing the plan’s individual TPL and FNP as of the valuation date from
(3) by the amounts in step (1), the risk pool’s total TPL and FNP, respectively.
(5) The plan’s TPL as of the Measurement Date is equal to the risk pool TPL generated in (2)
multiplied by the TPL ratio generated in (4). The plan’s FNP as of the Measurement Date is equal
to the FNP generated in (2) multiplied by the FNP ratio generated in (4) plus any additional side
fund (or unfunded liability) contributions made by the employer on behalf of the plan during the
measurement period.
(6) The plan’s NPL at the Measurement Date is the difference between the TPL and FNP calculated in
(5).
The District’s proportionate share of the net pension liability for each SDWD Plan as of the measurement
date June 30 was as follows:
Proportion June 30, 2017 0.1810300%
Proportion June 30, 2018 0.1811600%
Change - Increase (Decrease) 0.0001300%
Proportion June 30, 2016 0.1829617%
Proportion June 30, 2017 0.1810300%
Change - Increase (Decrease) -0.0019317%
For the years ended June 30, 2018 and 2017, the District recognized pension expense of $591,501 and of
$923,486, respectively, for the SDWD Plan.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
38
Note 9 – Public Employees Retirement System – CalPERS (Continued)
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to
Pensions (Continued)
At June 30 the District reported deferred outflows of resources and deferred inflows of resources related to
pensions from the following sources:
Deferred outflows Deferred inflows Deferred outflows Deferred inflows
of Resources of Resources of Resources of Resources
Contribution made after the measurement date 504,492$ -$ 472,819$ -$
Difference between expected and actual
experience - (103,679) 11,600 -
Changes of assumptions 891,674 - - (142,365)
Net difference between projected and actual
earnings on pension plan investments 218,306 - 740,965 -
Difference between employer's actual contributions
and proportionate share of contributions - (319,454) 13,320 (26,007)
Adjustments due to difference in proportions 533,634 (24,783) 301,343 -
Total 2,148,106$ (447,916)$ 1,540,047$ (168,372)$
June 30, 2018 June 30, 2017
The $504,492 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the year ended June 30,
2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related
to pensions will be recognized as pension expense as follows:
Measurement Period
Ended June 30
2019 $231,031
2020 687,707
2021 406,573
2022 (129,613)
Thereafter -
1,195,698$
Measurement Period
Ended June 30
2018 176,947$
2019 148,909
2020 381,091
2021 191,909
Thereafter -
898,856$
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
39
Note 9 – Public Employees Retirement System – CalPERS (Continued)
Actuarial Methods and Assumptions Used to Determine Total Pension Liability
For the measurement period ended June 30, 2017 and 2016 (the measurement dates), the total pension
liability was determined by rolling forward the June 30, 2016 and 2015 total pension liability determined in
the June 30, 2016 and June 30, 2015 actuarial accounting valuations, respectively. The June 30, 2017
and June 30, 2016 total pension liabilities were based on the following actuarial methods and
assumptions:
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate 7.15%
Inflation
Salary Increases
Investment Rate of Return
Mortality Rate Table 1
Post Retirement Benefit Increase
Entry Age Normal
2.75%
Varies by Entry Age and Service
7.65% Net of Pension Plan Investment and Administrative
Expenses; includes inflation
Derived using CalPERS’ Membership Data for all Funds. The
mortality table used was developed based on CalPERS’ specific
data. The table includes 20 years of mortality improvements
using Society of Actuaries Scale BB.
Contract cost of living adjustment (COLA) up to 2.75% until
Purchasing Power Protection Allowance Floor on Purchasing
Power applies, 2.75% thereafter.
1 The mortality table used was developed based on CalPERS’ specific data. The table includes 20 years of
mortality improvements using Society of Actuaries Scale BB. For more details on this table, please refer to
CalPERS’ 2015 Experience Study report.
All other actuarial assumptions used in the June 30, 2016 and June 30, 2015 valuations were based on
the results of an actuarial experience study for the period from 1997 to 2011, including updates to salary
increase, mortality and retirement rates. The Experience Study report can be obtained at CalPERS’
website under “Forms and Publications.”
Change of Assumption
In accordance with GASB No. 68, the long-term expected rate of return should be determined net of
pension plan investment expense but without reduction for pension plan administrative expense. The
discount rate was changed from 7.65 percent to 7.15 percent as of the June 30, 2016 measurement date
to correct the adjustment which previously reduced the discount rate for administrative expenses.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
40
Note 9 – Public Employees Retirement System – CalPERS (Continued)
Discount Rate
The discount rate used to measure the total pension liability as of the June 30, 2017 and June 30, 2016
measurement dates was 7.15 and 7.65 (net of administrative expenses) percent, respectively. To
determine whether the municipal bond rate should be used in the calculation of a discount rate for each
plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different
from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of
assets. Therefore, the current 7.50 percent discount rate is adequate and the use of the municipal bond
rate calculation is not necessary. The long term expected discount rate of 7.15 percent is applied to all
plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report
called “GASB Crossover Testing Report” that can be obtained at CalPERS’ website under the GASB No.
68 section.
The long-term expected rate of return on pension plan investments was determined using a building-block
method in which best-estimate ranges of expected future real rates of return (expected returns, net of
pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, staff took into account both short-term and long-term
market return expectations as well as the expected pension fund cash flows. Such cash flows were
developed assuming that both members and employers will make their required contributions on time and
as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected
compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11-
60 years) using a building-block approach. Using the expected nominal returns for both short-term and
long-term, the present value of benefits was calculated for each fund. The expected rate of return was set
by calculating the single equivalent expected return that arrived at the same present value of benefits for
cash flows as the one calculated using both short-term and long-term returns. The expected rate of return
was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest
one quarter of one percent.
The table below reflects long-term expected real rate of return by asset class. The rate of return was
calculated using the capital market assumptions applied to determine the discount rate and asset
allocation. These geometric rates of return are net of administrative expenses.
The long-term expected real rate of return by asset class for the measurement period ended
June 30, 2017 was as follows:
Asset Class
New Strategic
Allocation
Real Return
Years 1 - 10 1
Real Return Years
11 + 2
Global equity 47.00% 4.90% 5.38%
Global fixed income 19.00% 0.80% 2.27%
Inflation sensitive 6.00% 0.60% 1.39%
Private equity 12.00% 6.60% 6.63%
Real estate 11.00% 2.80% 5.21%
Infrastructure and forestland 3.00% 3.90% 5.36%
Liquidity 2.00% (0.40%) (0.90%)
1 An expected inflation of 2.5 percent was used for this period.
2 An expected inflation of 3.0 percent was used for this period.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
41
Note 9 – Public Employees Retirement System – CalPERS (Continued)
Discount Rate (Continued)
The long-term expected real rate of return by asset class for the measurement period ended June 30,
2016 was as follows:
Asset Class
New Strategic
Allocation
Real Return
Years 1 - 10 1
Real Return Years
11 + 2
Global equity 51.00% 5.25% 5.71%
Global fixed income 20.00% 0.99% 2.43%
Inflation sensitive 6.00% 0.45% 3.36%
Private equity 10.00% 6.83% 6.95%
Real estate 10.00% 4.50% 5.13%
Infrastructure and forestland 2.00% 4.50% 5.09%
Liquidity 1.00% (0.55%) (1.05%)
1 An expected inflation of 2.5 percent was used for this period.
2 An expected inflation of 3.0 percent was used for this period.
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate
The following presents the District’s proportionate share of the net pension liability for each SDWD Plan,
calculated using the discount rate for each SDWD Plan, as well as what the District’s proportionate share
of the net pension liability would be if it were calculated using a discount rate that is one percentage point
lower or one percentage point higher than the current rate:
Measurement Discount Rate - 1% Current Discount Discount Rate + 1%
Date (6.15%) Rate (7.15%) (8.15%)
June 30, 2017 $10,323,063 7,141,232$ 4,505,982$
Plan's Net Pension Liability/(Asset)
Measurement Discount Rate - 1% Current Discount Discount Rate + 1%
Date (6.65%) Rate (7.65%) (8.65%)
June 30, 2016 9,233,733$ 6,288,631$ 3,854,650$
Plan's Net Pension Liability/(Asset)
Pension Plan Fiduciary Net Position
Detailed information about the plan’s fiduciary net position is available in the separately issued CalPERS
financial report and can be obtained from CalPERS website under Forms and Publications.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
42
Note 10 – Other Postemployment Benefits - GASB 45
Plan Description
The District provides OPEB benefits (postretirement health care) through the CalPERS healthcare
program (PEMHCA), to eligible employees who retire directly from the District. Retirees receive the
PEMHCA minimum benefit as determined by CalPERS. The District does not provide any retiree benefits
for dental, vision, or life insurance. The District’s OPEB plan does not issue a separate stand-alone
report.
The District has elected to join the California Employers’ Retiree Benefit Trust (the “Trust”), which provides
a means to fully fund the annual OPEB cost, referred to as the Annual Required Contribution (ARC). The
District makes its annual contribution to the Trust, pays benefits either directly to retirees or through
PEMHCA during the year, and then seeks reimbursement for these “pay-as-you-go expenses” from the
Trust.
Funding Policy and Actuarial Methods and Assumption
It is the District’s Policy to fully fund the annual required contribution (ARC) each fiscal year.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined
regarding the funded status of the plan and the annual required contributions of the employer are subject
to continual revision as actual results are compared with past expectations and new estimates are made
about the future.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood between the employer and the plan members) and include the types of benefits provided at
the time of each valuation and the historical pattern of sharing benefit costs between the employer and the
plan members at that point. The actuarial methods and assumptions used include techniques designed to
reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of plan
assets, consistent with the long–term perspective of the calculations.
The following key assumptions were utilized in developing the June 30, 2017 actuarial valuation:
1) The actuarial cost method used to determine the benefit obligations is the Entry Age Normal cost
method.
2) The ARC is comprised of the present value of benefits in the current fiscal year (normal cost with
interest) plus a 26-year amortization (on a level-percentage of basis) of the unfunded actuarial
accrued liability.
3) The valuation reflects updated census and premium information, as well as changes to the
demographic tables, reflecting the recent experience study published by CalPERS.
4) The investment return assumption by the Trust is 7.28 percent.
5) The expected future medical price inflation trend ranges from 5.0 to 6.5 percent.
6) Core inflation rate of 2.75 percent.
7) Payroll increases of 3.0 percent per annum, in aggregate.
8) Projected salary increase is based on merit increase data from the most recent CalPERS Pension
Plan Study.
9) Levels of Participation – participation levels for safety personnel eligible of lifetime medical benefits
is assumed to be 100 percent, while participation levels for miscellaneous employees who receive
the CalPERS minimum required contribution is 50 percent, based on experience.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
43
Note 10 – Other Postemployment Benefits - GASB 45 (Continued)
Annual Required Contribution (ARC) and OPEB Cost Summary
The ARC for fiscal years June 30, 2018 and 2017 of $26,924 and $52,780, respectively, represents a level
of funding that, if paid on an on-going basis, is projected to cover normal costs each year and to amortize
any unfunded actuarial liability over a maximum of 30 years.
The annual OPEB costs, the percentage of annual OPEB cost contributed, and the resulting net OPEB
obligation for the preceding three years were as follows:
Percentage of
Annual Annual OPEB Cost Net OPEB
Fiscal Year OPEB Cost APC Contributed Obligation
June 30, 2015 29,000$ 100% -$
June 30, 2016 28,794 100% -
June 30, 2017 52,780 100% -
Funding Status and Funding Progress
As of June 30, 2017, the most recent actuarial valuation date, the actuarial accrued liability for benefits
was $493,240, and the actuarial value of assets was $177,575, resulting in an unfunded actuarial liability
(“UAAL”) of $315,665 and a funded ratio (actuarial value of assets as a percentage of the actuarial liability)
of 36 percent.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about the future employment, mortality, and the healthcare cost trend. Amounts determined
regarding the funded status of the plan and the annual required contributions of the employer are subject
to continual revision as actual results are compared with past expectations and new estimates are made
about the future.
Unfunded
Actuarial
Entry Age Unfunded Liability as
Actuarial Actuarial Actuarial Actuarial Estimated Percentage of
Valuation Assets Accrued Accrued Funded Covered Covered
Date Value Liability Liability Ratio Payroll Payroll
June 30, 2017 177,575$ 493,240$ 315,665$ 36.00% 1,802,043$ 17.52%
The schedule of funding progress for the Plan is presented as Required Supplementary Information
following the Notes to the Financial Statements. These schedules show multiyear trend information about
whether the actuarial value of the plan assets is increasing or decreasing over time relative to the actuarial
accrued liability for benefits.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
44
Note 11 – Other Postemployment Benefits (GASB 75)
The San Dieguito Water District maintain separate plans to provide for post-retirement health care
benefits. An actuarial report is prepared every two years to update plan information and assumptions
(when required). The latest actuarial valuation was prepared for June 30, 2017, and applies to Fiscal
Years 2016-17 and 2017-18.
A. Summary
Aggregate Net OPEB Liability
Aggregate net OPEB liability is reported in the accompanying Statement of Net Position as follows:
Net OPEB liabilities:
Net OPEB liabilities 315,665$
Total net OPEB liabilities 315,665$
Deferred Outflows of Resources
Deferred outflows of resources related to OPEB are reported in the accompanying Statement of Net
Position as follows:
Deferred outflows of resources:
OPEB contribution after measurement date 53,291$
Total deferred outflows of resources 53,291$
Deferred Inflows of Resources
Deferred inflows of resources related to OPEB are reported in the accompanying Statement of Net
Position as follows:
Deferred inflows of resources:
Differences between projected and actual earnings on
OPEB plan investments 7,074$
Total deferred inflows of resources 7,074$
OPEB Expense
OPEB expenses are included in the accompanying Statement of Revenues, Expenses, and Changes
in Net Position as follows:
OPEB expenses:
OPEB expenses 34,933$
Total OPEB expenses 34,933$
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
45
Note 11 – Other Postemployment Benefits (GASB 75) (Continued)
B. San Dieguito Water District – Retiree Health Plan
The San Dieguito Water District maintains a separate plan to provide for post-retirement health care
benefits. An actuarial report is prepared every two years to update plan information and assumptions
(when required). The latest actuarial valuation was prepared for June 30, 2017, and applies to Fiscal
Years 2016-17 and 2017-18.
Plan Description
SDWD provides postretirement health care benefits through the Public Employees Medical and
Hospital Care Act (PEMHCA), which is a health benefit plan administered by CalPERS, to eligible
employees who retire directly from SDWD. Retirees receive the PEMHCA minimum benefit, as
determined by CalPERS. SDWD does not provide a retiree contribution for dental, vision, or life
insurance benefits. SDWD's OPEB plan does not issue a separate stand-alone report.
SDWD has elected to join the California Employers' Retiree Benefit Trust (the "Trust") in accordance
with GASB Statement No. 75, which provides a means to fund the annual OPEB costs, referred to as
the Actuarially Determined Contribution (ADC). The ADC includes the normal cost (current accrual for
benefits being earned) plus an amortization of the unfunded accrued liability or net OPEB liability over
15 years on a level-percentage of pay basis. SDWD’s funding policy is to pre-fund the ADC through
the trust.
Eligibility
Employees of SDWD are eligible for retiree health benefits if they retire from SDWD and commence
pension benefits under PERS (typically on or after age 50 with at least five years of PERS eligible
service). Membership in the plan consisted of the following at June 30, 2017, the date of the latest
actuarial valuation:
Active employees 22
Retired employees and beneficiaries 13
35
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
46
Note 11 – Other Postemployment Benefits (GASB 75) (Continued)
B. San Dieguito Water District – Retiree Health Plan (Continued)
Net OPEB Liability
SDWD’s net OPEB liability was measured as of June 30, 2017. The total OPEB liability used to
calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2017. The net
OPEB liability at June 30, 2018 was:
Total OPEB Liability 493,240$
Plan Fiduciary Net Position (177,575)
Net OPEB Liability 315,665$
Actuarial Assumptions
The net OPEB liability in the June 30, 2017 actuarial valuation was determined using the following
actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate 7.00%
Inflation 2.75%
Wage Inflation 3.00%
Expected Rate of Return
Merit Increases:
Pre-retirement Turnover
Pre-retirement Mortality
Post-retirement Mortality
Healthcare Trend Rate
Merit increases from the most recent CalPERS pension plan experiences
study. The benefits are not payroll related, but each individual's projected
cost is allocated over their lifetime as a level-percentage of pay.
7.00% per annum. This discount rate assumes the SDWD continues to fully
fund for its retiree benefits throught the California Employers' Retiree Benefit
Trust (CERBT) under its investment strategy 1 of 7.28% with an additional
margin for adverse deviation.
An annual healthcare cost trend rate of 6.5% initially reduced by decrements
to an ultimate of 5.0% therefore.
According to the post-retirement mortality rates under the CalPERS pension
plan updated to reflect the most recent experience study.
According to the pre-retirement mortality rates under the CalPERS pension
plan updated to reflect the most recent experience study.
According to the termination rates under the CalPERS pension plan.
Entry Age Normal
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an
actuarial experience study for the period July 1, 2016 to June 30, 2017.
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
47
Note 11 – Other Postemployment Benefits (GASB 75) (Continued)
B. San Dieguito Water District – Retiree Health Plan (Continued)
Discount Rate
The discount rate used to measure the net OPEB liability was seven percent. This discount rate
assumes the City continues to fully fund for its retiree health benefits through the California Employers’
Retiree Benefit Trust (CERBT) under its investment allocation Strategy 1. The rate reflects the CERBT
published median interest rate for strategy 1 of 7.28 percent with an additional margin for adverse
deviation.
The table below reflects long-term expected real rate of return by asset class. The rate of return was
calculated using the capital market assumptions applied to determine the discount rate and asset
allocation. These geometric rates of return are net of administrative expenses.
Percentage of
Asset Class Portfolio Real Return1
Global equity 57.00% 5.50%
Fixed income 27.00% 2.35%
Inflation sensitive 5.00% 1.50%
Commodities 3.00% 1.75%
Real estate investment trusts 8.00% 3.650%
100.00%
1 Long-term expected rate of return is 7.00 percent
Change in the Net OPEB Liability
Total OPEB Plan Fiduciary Net Net OPEB
Liability Position Liability/(Asset)
(a) (b) (c) = (a) - (b)
Balance at June 30, 2016 (Valuation Date) 475,974$ 124,836$ 351,138$
Changes Recognized for the Measurement Period:
Service cost 13,309 - 13,309
Interest on the total OPEB liability 33,225 - 33,225
Contributions from the employer - 63,332 (63,332)
Contributions from employees - - -
Net investment income, net of administrative expense - 18,770 (18,770)
Benefit payments, including refunds of employee
contributions (29,268) (29,268) -
Administrative expense - (95) 95
Net Changes during July 1, 2016 to June 30, 2017 17,266 52,739 (35,473)
Balance at June 30, 2017 (Measurement Date) 493,240$ 177,575$ 315,665$
Increase (Decrease)
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
48
Note 11 – Other Postemployment Benefits (GASB 75) (Continued)
B. San Dieguito Water District – Retiree Health Plan (Continued)
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the net OPEB liability of SDWD, as well as what SDWD’s net OPEB liability
would be if it were calculated using a discount rate 1-percentage point lower (6.0 percent) or 1-
percentage point higher (8.0 percent) than the current discount rate:
Discount Rate - 1% Current Discount Discount Rate + 1%
(6.00%) Rate (7.00%) (8.00%)
June 30, 2017 Measurement Date 375,313$ 315,665$ 265,912$
Plan's OPEB Liability/(Asset)
Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rates
The following presents the net OPEB liability of SDWD, as well as what SDWD’s net OPEB liability
would be if it were calculated using healthcare cost trend rates 1-percentage point lower
(5.0%HMO/5.5%PPO decreasing to 4.0%HMO/4.5%PPO) or 1-percentage point higher
(7.0%HMO/6.5%PPO decreasing to 6.0%HMO/6.5%PPO than the current healthcare cost trend rates:
(5.00% HMO/5.50%PPO (6.00% HMO/6.50%PPO (7.00% HMO/7.50%PPO
decreasing to decreasing to decreasing to
4.00% HMO/4.00% PPO) 5.00% HMO/5.00% PPO) 6.00% HMO/6.00% PPO)
June 30, 2017 Measurement Date 261,886$ 315,665$ 380,731$
Plan's Net OPEB Liability/(Asset)
Contributions, OPEB Liabilities, OPEB Expense and Deferred Outflows/Inflows of Resources to
OPEB
SDWD’s policy is to fund the ADC, which includes the normal cost (current accrual for benefits being
earned) plus an amortization of the net (unfunded accrued) OPEB liability. For the year ended
June 30, 2018, SDWD recognized OPEB expense of $34,933 for the SDWD Plan. At June 30, 2018
SDWD reported deferred outflows of resources and deferred inflows of resources related to OPEB
from the following sources:
Deferred outflows Deferred inflows
of Resources of Resources
OPEB contribution made after the measurement period 53,291$ -$
Net difference between projected and actual earning on
OPEB plan investments - 7,074
Total 53,291$ 7,074$
San Dieguito Water District
Notes to the Financial Statements (Continued)
For the Years Ended June 30, 2018 and 2017
49
Note 11 – Other Postemployment Benefits (GASB 75) (Continued)
C. San Dieguito Water District – Retiree Health Plan (Continued)
The $52,391 reported as deferred outflows of resources related to contributions subsequent to the
measurement date will be recognized as a reduction of the net OPEB liability in the year ended
June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of
resources related to OPEB will be recognized as OPEB expense as follows:
Measurement Period
Ended June 30
2018 (1,769)$
2019 (1,769)
2020 (1,769)
2021 (1,767)
2022 -
Thereafter -
(7,074)$
Note 12 – Commitments and Contingencies
Risk management programs and support for the District are provided by the City of Encinitas Risk
Management Department, for which the District pays the City an annual fee (charge for those services.)
Management has determined, based on modest self-insurance retention levels and favorable claims
experience, that no liability accruals were necessary. The District has no outstanding claims as of
June 30, 2018, and did not pay any claims during the fiscal year.
Note 13 – Prior Period Adjustment
The City recorded the following prior period adjustment to the beginning net position of the Business-type
Activities and the San Dieguito Water District (“SDWD”) major enterprise fund for the years ended June
30, 2018 and 2017:
Net position at July 1, 2017, as previously reported 45,730,584$
To implement GASB 75 for net OPEB liability (287,810)
Net position at July 1, 2017, as restated 45,442,774$
Net position at July 1, 2016, as previously reported 43,500,246$
To adjust restricted cash (1,377,006)
to adjust amount due to R.E. Badger 1,377,006
Net position at July 1, 2016, as restated 43,500,246$
50
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San Dieguito Water District, 505 So. Vulcan Ave., Encinitas, CA. 92024 www.encinitasca.gov
51
REQUIRED
SUPPLEMENTARY
INFORMATION
(UNAUDITED)
52
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San Dieguito Water District
Required Supplementary Information (Unaudited)
For the Years Ended June 30, 2018 and 2017
53
Note 1 – Schedule of Funding Progress
A. Other Postemployment Employee Benefits Schedule of Funding Progress
Unfunded
Actuarial
Entry Age Unfunded Liability as
Actuarial Actuarial Actuarial Actuarial Estimated Percentage of
Valuation Assets Accrued Accrued Funded Covered Covered
Date Value Liability Liability Ratio Payroll Payroll
June 30, 2011 65,000$ 343,000$ 278,000$ 18.95% 1,230,000$ 22.60%
June 30, 2013 68,176 332,472 264,296 20.51% 1,886,000 14.01%
June 30, 2015 177,575 493,240 315,665 36.00% 1,802,043 17.52%
San Dieguito Water District
Required Supplementary Information (Unaudited) (Continued)
For the Years Ended June 30, 2018 and 2017
54
Note 2 – Schedule of Proportionate Share of the Net Pension Liability and Related Ratios
6/30/2017 1 6/30/2016 1 6/30/2015 1 6/30/2014 1
Plan's proportion of the net pension liabliity 0.1811600% 0.1810300% 0.1829600% 0.0006074%
Plan's proportionate share of the net pension liability 7,141,232$ 6,288,631$ 5,019,493$ 3,779,285$
Plan's covered-employee payroll 2 $1,812,312 1,808,714$ 1,756,033$ 1,712,639$
Plan's proportionate share of the net pension liability as a
percentage of covered-employee payroll 394.04% 347.69% 285.84% 220.67%
Plan's fiduciary net position 15,991,467$ 15,586,708$ 16,358,655$ 18,489,458$
Plan's fiduciary net position as a percentage of the total
pension liability 69.13% 71.25% 76.52% 83.03%
Plan's proportionate share of aggregate employer contributions 3, 4 493,586$ 356,509$ 565,860$ 499,985$
Notes to Schedule:
* Fiscal Year 2014-15 was the first year of implementation, therefore only three years are shown.
3 The plan’s proportionate share of aggregate contributions may not match the actual contributions made by the employer during the
measurement period. The plan’s proportionate share of aggregate contributions is based on the plan’s proportion of fiduciary net position shown
on line five of the table above as well as any additional side fund (or unfunded liability) contributions made by the employer during the
measurement period.
4 This data is not required to be displayed by GASB No. 68 for employers participating in cost-sharing plans, but it is being shown here because it
is used in the calculation of the Plan’s pension expense.
1 Historical information is presented only for measurement periods for which GASB No. 68 is applicable.
2 Covered-Employee Payroll represented above is based on pensionable earnings provided by the employer. However, GASB No. 68 defines
covered-employee payroll as the total payroll of employees that are provided pensions through the pension plan. Accordingly, if pensionable
earnings are different than total earnings for covered-employees, the employer should display in the disclosure footnotes the payroll based on
total earnings for the covered group and recalculate the required payroll-related ratios.
Benefit changes. In 2015, benefit terms were modified to base miscellaneous employee pensions on a final three-year average salary instead of
a final five-year average salary.
Changes in assumptions. In 2015, amounts reported as changes in assumptions resulted primarily from adjustments to expected retirement
ages of miscellaneous employees.
San Dieguito Water District
Required Supplementary Information (Unaudited) (Continued)
For the Years Ended June 30, 2018 and 2017
55
Note 3 – Schedule of Contributions
2016-17 1 2016-17 1 2015-16 1 2014-15 1 2013-14 1
Contractually determined contribution (actuarially determined) 504,492$ 472,819$ 356,509$ 271,845$ 241,133$
Contributions in relation to the actuarially determined contributions 2 (504,492) (472,819) (598,690) (271,845) (241,133)
Contribution deficiency (excess)-$ -$ (242,181)$ -$ -$
Covered-employee payroll 3, 4 1,812,312$ 1,862,975$ 1,808,714$ 1,756,033$ 1,712,639$
Contributions as a percentage of covered-
employee payroll 3 27.84% 25.38% 33.10% 15.48% 14.08%
Notes to Schedule
Valuation date:6/30/2016 6/30/2015 6/30/2014 6/30/2013
Methods and assumptions used to determine contribution rates:
Actuarial cost method
Amortization method/period
Asset valuation method
Inflation
Salary increases
Payroll growth
Investment rate of return
Retirement age
Mortality
* Fiscal Year 2014-15 was the first year of implementation, therefore, only two years are shown.
7.50%, net of pension plan investment and administrative expenses, including inflation
The probabilities of retirement are based on the 2010 CalPERS Experience study for
the period from 1997 to 2007.
The probabilities of mortality are based on the 2010 CalPERS Experience Study for
the period from 1997 to 2007. Pre-retirement and Post-retirement mortality rates
include 5 years of projected mortality improvement using Scale AA published by the
Society of Actuaries.
3 Covered-employee payroll represented above is based on pensionable earnings provided by the employer. However, GASB No. 68 defines covered-
employee payroll as the total payroll of employees that are provided pensions through the pension plan. Accordingly, if pensionable earnings are
different than total earnings for covered-employees, the employer should display in the disclosure footnotes the payroll based on total earnings for the
covered group and recalculate the required payroll-related ratios.
4 Payroll from prior year was assumed to increase by the three percent payroll growth assumption.
1 Historical information is presented only for measurement periods for which GASB No. 68 is applicable.
2 Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers may choose to make
additional contributions towards their unfunded liability. Employer contributions for such plans exceed the actuarially determined contributions.
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2013-14 were from the June 30, 2011
public agency valuations.
3.00%
Varies by entry age and service
2.15%
Actuarial Value of Assets. For details, see June 30, 2011 Funding Valuation Report.
For details, see June 30, 2011 Funding Valuation Report
Entry Age Normal
San Dieguito Water District
Required Supplementary Information (Unaudited) (Continued)
For the Years Ended June 30, 2018 and 2017
56
Note 4 – Schedule of Proportionate Share of the Net OPEB Liability and Related Ratios
Measurement period 2016-171
Total OPEB liability
Service cost 13,309$
Interest 33,225
Benefit payments, including refunds of employee contributions (29,268)
Net change in total OPEB liability 17,266
Total OPEB liability - beginning 475,974
Total OPEB liability - ending (a)493,240$
OPEB fiduciary net position
Contributions - employer 63,332$
Net investment income2 18,770
Benefit payments, including refunds of employee contributions (29,268)
Other (95)
Net change in plan fiduciary net position 52,739
Plan fiduciary net position - beginning 124,836
Plan fiduciary net position - ending (b)177,575$
District's net OPEB liability - ending (a) - (b)315,665$
Plan fiduciary net position as a percentage 36.00%
of the total OPEB liability
Covered payroll 1,802,043$
District's net OPEB liability as a percentage of covered payroll 17.52%
1 Ten year historical information is not available.
San Dieguito Water District
Required Supplementary Information (Unaudited) (Continued)
For the Years Ended June 30, 2018 and 2017
57
Note 5 – Schedule of Contributions – OPEB
2017 1
Contractually determined contribution (actuarially determined) 52,780$
Contributions in relation to the actuarially determined contributions 2 (63,332)
Contribution deficiency (excess)(10,552)$
Covered payroll 3, 4 1,802,043$
Contributions as a percentage of covered
payroll 3 3.51%
Notes to Schedule
Valuation date:6/30/2017
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period Level percentage of pay
Asset valuation method
Inflation 2.75%
Salary increases 3.00%
Payroll growth 3.00%
Investment rate of return 7.00%
Retirement age
Mortality
* Fiscal Year 2017-18 was the first year of implementation, therefore, only one year is shown.
1 Historical information is available only for measurement periods for which GASB No. 75 is applicable.
2 Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers
may choose to make additional contributions towards their unfunded liability. Employer contributions for such plans exceed the
actuarially determined contributions.
3 Covered-Employee Payroll represented above is based on pensionable earnings provided by the employer. However, GASB
No. 75 defines covered payroll as the total payroll of employees that are provided pensions through the pension plan.
Accordingly, if pensionable earnings are different than total earnings for covered-employees, the employer should display in the
disclosure footnotes the payroll based on total earnings for the covered group and recalculate the required payroll-related ratios.
4 Payroll from prior year was assumed to increase by the three percent payroll growth assumption.
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2016-17 were from
the June 30, 2015 public agency valuations.
According to the mortality rates under the CalPERS pension plan updated to reflect the
most recent experience study.
According to the retirement rates under the most recent CalPERS pension plan
experience study.
58
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San Dieguito Water District, 505 So. Vulcan Ave., Encinitas, CA. 92024 www.encinitasca.gov
59
STATISTICAL
SECTION
60
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Summary of Operational Data
The following tables are being presented as supplementary information based on
requirements for bonds issued by SDWD for continuing bond disclosure certificate.
61
Customer Class Residential Rate Tier Potable Recycled
Single-family residential 0-12 units 2.81$ -$
13-20 units 4.46 -
21-40 units 5.51 -
41+ units 6.28 -
Multi-family residential (per dwelling) 0-8 units 2.81 -
9-12 units 4.46 -
13-16 units 5.51 -
17+ units 6.28 -
Agriculture Uniform 4.78 4.06
Commercial Uniform 4.78 4.06
Government Uniform 5.23 4.44
Public Uniform 5.23 4.44
Landscaping Uniform 5.51 4.68
Construction Uniform 5.61 4.76
(1) Per Unit (one hundred cubic feet or 748 gallons)
Source: San Dieguito Water District
Bi-Monthly Meter Service Availability Charges (2)
As of June 30, 2018
Water Meter Service Infrastructure Fire Meter Service
Availability Access Availability
Meter Size Charge Charge Charge
5/8" & 3/4" 39.82$ 6.02$ 8.47$
1" 58.63 9.66 8.47
1-1/2" 105.24 18.06 9.55
2" 161.40 31.32 16.65
3" 292.52 57.82 42.12
4" 479.81 98.74 86.04
6" 947.59 180.60 243.69
8" 1,509.16 313.04 515.61
Source: San Dieguito Water District
(2) San Dieguito Water District charges a bi-monthly service availability charge, which covers the costs for
the maintenance of meters, water lines, and storage facilities, to ensure that water is available upon demand.
This charge also covers customer service costs for meter reading and billing. The Intrastructure Access
Charge is levied by the San Diego County Water Authority and is collected from the customer by the District.
Table 1
Rate (1)
Table 2
San Dieguito Water District
San Dieguito Water District
Schedule of Water Rates
As of June 30, 2018
62
Meter
Fiscal Potable Percentage Availability Percent
Year Water Sales Change (3)Charge Change (3)
2009 7,525,927$ (2.5%) 2,453,075$ 2.0%
2010 7,146,854 (5.0%) 2,501,264 2.0%
2011 8,205,876 14.8% 3,007,127 20.2%
2012 8,528,418 3.9% 3,196,605 6.3%
2013 9,236,462 8.3% 3,087,794 (3.4%)
2014 10,649,157 15.3% 3,227,823 4.5%
2015 9,728,434 (8.6%) 3,415,227 5.8%
2016 9,503,108 (2.3%) 3,503,933 2.6%
2017 9,467,085 (0.4%) 3,544,758 1.2%
2018 11,222,736 18.5% 3,772,759 6.4%
(3) Due to the varying number of billing cycles in a fiscal year, changes year-over-year may not be exactly
comparable.
Source: San Dieguito Water District
Meter
Fiscal Recycle Percent Availability Percent
Year Water Sales Change Charges (4)Change
2009 663,036$ 10.4% -$ N/A
2010 537,654 (18.9%) - N/A
2011 523,397 (2.7%) - N/A
2012 422,925 (19.2%) - N/A
2013 400,244 (5.4%) - N/A
2014 460,383 15.0% 60,048 N/A
2015 648,398 40.8% 80,585 34.2%
2016 702,301 8.3% 85,149 5.7%
2017 716,826 2.1% 78,732 (7.5%)
2018 853,052 19.0% 86,098 9.4%
(4) The District first implemented a meter availability charge for recycled customers on September 1, 2013.
Source: San Dieguito Water District
Table 3
Last Ten Fiscal Years
Table 4
San Dieguito Water District
Last Ten Fiscal Years
San Dieguito Water District
Historic Potable Water System Revenues
Historic Recycled Water System Revenues
63
Fiscal Local Imported Total Recycled Total
Year Water Water Potable Water Production
2009 3,869 3,369 7,237 694 7,931
2010 4,399 2,156 6,555 498 7,053
2011 4,434 1,901 6,335 511 6,846
2012 3,719 2,663 6,382 578 (6)6,960
2013 4,200 2,395 6,595 678 (6)7,273
2014 1,136 5,598 6,734 692 7,426
2015 603 5,726 6,329 736 7,065
2016 1,400 3,839 5,239 628 5,867
2017 1,446 3,984 5,430 654 6,084
2018 3,450 2,660 6,110 714 6,824
(5) Potable water production is defined as water either produced locally or purchsed from imported sources.
Fiscal Percent Percent
Year Potable Change Recycled Change
2009 6,463 (4.3%) 694 2.7%
2010 5,649 (12.6%) 498 (28.2%)
2011 5,425 (4.0%) 511 2.6%
2012 5,957 9.8% 578
(6)13.1%
2013 6,284 5.5% 678
(6)17.3%
2014 6,449 2.6% 692 2.1%
2015 6,134 (4.9%) 736 6.4%
2016 5,112 (16.7%) 628 (14.7%)
2017 5,287 3.4% 654 4.1%
2018 5,838 10.4% 714 9.2%
distribution system and/or water pumped or used through the fire distribution system.
Source: San Dieguito Water District
Note: The differences between potable water production and deliveries represents water loss in the
San Dieguito Water District
(6) Since FY 2011-12, Recycled Water Production and Delivery figures are revised to include water provided
to the Encinitas Ranch Golf Authority (ERGA). Beginning in FY 2011-12, the San Elijo Joint Powers Authority
(SEJPA) began directly providing recycled water to ERGA. The recycled water provided to ERGA credits
towards the Districts production and delivery water to ERGA and the District ceased selling recycled figures
as ERGA falls within the District's sphere of influence.
Table 5
Last Ten Fiscal Years
Potable Production (in acre-feet)(5)
Table 6
Last Ten Fiscal Years
San Dieguito Water District
Summary of Water Production by Source
Summary of Water Deliveries by Source
64
Acre-Feet Percent of
Customer Description Sold Water Sold
Agriculture 204 3.5%
Commercial 544 9.3%
Construction 26 0.4%
Government 39 0.7%
Landscaping 441 7.5%
Multi-Family Residential 1177 20.2%
Public 135 2.3%
Single-Family Residential 3272 56.1%
Total Sales 5,838 100.0%
Source: San Dieguito Water District
Fiscal Percent Percent
Year Potable Increase Recycled Increase
2009 11,370 0.1% 68 15.3%
2010 11,388 0.2% 73 7.4%
2011 11,397 0.1% 72 (1.4%)
2012 11,476 0.7% 74 2.8%
2013 11,502 0.2% 77 4.1%
2014 11,610 0.9% 77 0.0%
2015 11,644 0.3% 81 5.2%
2016 11,721 0.7% 82 1.2%
2017 11,740 0.2% 87 6.1%
2018 11,790 0.4% 85 (2.3%)
Source: San Dieguito Water District
The decline of one connection during FY 2010-11 reflects the change in the contract arrangement with the
Encinitas Ranch Golf Course.
Table 7
As of June 30, 2018
Table 8
Last Ten Fiscal Years
San Dieguito Water District
Sales by Customer Class
San Dieguito Water District
Total Service Connections by Category
65
2009 2010 2011 2012 2013
Revenues:
Operating revenues - including connection fees 11,521,897$ 11,267,684$ 12,574,450$ 13,170,422$ 13,789,636$
Nonoperating revenues 1,129,594 879,477 817,872 813,610 869,568
Gross Revenues 12,651,491 12,147,161 13,392,322 13,984,032 14,659,204
Total Operating and Nonoperating Expenses 12,955,085 11,634,347 11,614,631 12,448,911 12,198,228
Net Income (303,594) 512,814 1,777,691 1,535,121 2,460,976
Add:
Interest expense 803,748 749,704 725,936 698,908 657,963
Depreciation and amortization expense 2,217,274 1,213,640 1,196,007 1,294,904 1,476,044
Net Revenues Available for Debt Service 2,717,428 2,476,158 3,699,634 3,528,933 4,594,983
Less: Debt Service Paid
1999 Badger Bonds-Interest Charges - - - - -
1999 Badger Bonds-Principal Payments - - - - -
2004 Water Revenue Refunding Bonds - Interest Charges 485,769 469,269 452,244 433,950 408,906
2004 Water Revenue Refunding Bonds - Principal Payments 540,000 560,000 575,000 595,000 615,000
2007 Note Payable to Financing Authority - Interest Charges 290,748 265,157 281,494 270,352 256,744
2007 Note Payable to Financing Authority - Principal Payments 360,000 335,000 350,000 365,000 375,000
2014 Water Revenue Refunding Bonds - Interest Charges - - - - -
2014 Water Revenue Refunding Bonds - Principal Payments - - - - -
Total Debt Service 1,676,517$ 1,629,426$ 1,658,738$ 1,664,302$ 1,655,650$
Coverage by Net Revenues Available for Debt Service 162% 152% 223%212% 278%
Debt service coverage requirement is minimum 115 percent including connection fees. The above schedules include connection fees in operating
revenues.
City of Encinitas
Historical Debt Service Coverage
Last Ten Fiscal Years
San Dieguito Water District
Source: City of Encinitas Finance Department 66
2014 2015 2016 2017 2018
Revenues:
Operating revenues - including connection fees 15,715,575$ 15,152,433$ 14,852,061$ 15,142,544$ 17,219,494$
Nonoperating revenues 827,676 927,526 1,013,297 1,048,764 1,092,337
Gross Revenues 16,543,251 16,079,959 15,865,358 16,191,308 18,311,831
Total Operating and Nonoperating Expenses 14,066,485 15,481,543 13,800,671 14,263,288 15,198,929
Net Income 2,476,766 598,416 2,064,687 1,928,020 3,112,902
Add:
Interest expense 622,075 475,775 412,108 366,740 328,050
Depreciation and amortization expense 1,490,806 2,271,907 1,514,716 978,627 1,848,913
Net Revenues Available for Debt Service 4,589,647 3,346,098 3,991,511 3,273,387 5,289,865
Less: Debt Service Paid
1999 Badger Bonds-Interest Charges - - - - -
1999 Badger Bonds-Principal Payments - - - - -
2004 Water Revenue Refunding Bonds - Interest Charges 380,731 144,720 - - -
2004 Water Revenue Refunding Bonds - Principal Payments 640,000 665,000 - - -
2007 Note Payable to Financing Authority - Interest Charges 241,344 224,994 211,144 191,244 171,619
2007 Note Payable to Financing Authority - Principal Payments 385,000 405,000 415,000 440,000 455,000
2014 Water Revenue Refunding Bonds - Interest Charges - 106,061 202,400 185,075 167,225
2014 Water Revenue Refunding Bonds - Principal Payments - - 570,000 585,000 605,000
Total Debt Service 1,647,075$ 1,545,775$ 1,398,544$ 1,401,319$ 1,398,844$
Coverage by Net Revenues Available for Debt Service 279% 216% 285%234%378%
Debt service coverage requirement is minimum 115 percent including connection fees. The above schedules include connection fees in operating
revenues.
City of Encinitas
Historical Debt Service Coverage
Last Ten Fiscal Years
(Continued)
San Dieguito Water District
Source: City of Encinitas Finance Department 67
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68