Santa Paula: Comprehensive Audited Financial Report (CAFR) FY 16-17

By Sheryl Hamlin

Brett Van Lant of Van Lant & Fankhanel, LLP (CPA firm) presented an eight page Powerpoint consisting primarily of text describing the auditing requirements and methodology. Shown below is the one page from the presentation with financial information from the CAFR, which presumably the auditors considered as the most important from the audit for the fiscal year ending June 30, 2017.

Source: Brett Van Lant, auditor

GASB 68 – Collective Pension Debt

The GASB (Government Accounting Standards Board) is the source of Generally Accepted Accounting Practices (GAAP) for the accounting of governments. It is a non-governmental, private organization according to Wikipedia. From time to time, new standards are issued. GASB 68 was issued in 2014 and took effect for statements after that date.

Historically governments reported pension debt simply as those obligations they had committed to contractually plus the amortized balance of any unfunded payments in years when the agency (city or county) did not meet its full requirement payment. However, realizing that the California pension systems (CalPERS and CalSTRS) did not carry enough assets on their books to fund all pensions when they come due, the GASB created a new standard for reporting the agency’s pro rata share of the pension system’s unfunded liability, which is why it is called the “Collective Pension Debt”. A simplified discussion can be read here.

The chart below shows the Santa Paula pension debt pre-GASB 68 and after implementation. It is noteworthy that in the recession years, the debt decreased, as the headcount decreased. After GASB 68, the total debt increased (and will increase ad infinitum) because the system can no longer fund all of its obligation, which is represented now as a “collective liability”. Large Image Click Here

Santa Paula Pension Liability Pre-GASB 68 and Post



Mr. Van Lant noted the city’s pension liability of $22,609,596, but in the CAFR it is $20,197,497. He said that this number changes as CalPERS changes its actuarial values in the model. Presumably the larger number is the most recent value.

General Fund Balance Decrease

Decreasing by almost three-quarters of a million dollars, this is the fund where most of the city’s $1,967,182 contribution to CalPERS is taken. There is some pension expense in the Enterprise funds, which were not identified in the CAFR.

Operating Reserves Below Recommended Two Months

This was a very challenging budget where the pensions and health care costs were noted as serious. Click here.


Council asked no questions about the CAFR.

Sheryl Hamlin noted in Public Comments: 1) the $1.9 million payment to CalPERS is about 11% of the General Fund, as a way of visualizing the number, or almost 100% of the Measure T monies; 2) CalPERS is lowering the amortization period from 30 to 20 years, which will increase future payments and 3) CalPERS is lowering its investment portfolio return to 7.0% from 7.75%, which will also increase payments to the system.

This is the first of multiple reports on the council meeting. To watch the video, click here

For more information on author click sherylhamlin dot com

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