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Home My WebLink About; ; 1973-74 Audit Report of Examination; 1974-09-16CARLSBAD MUNICIPAL WATER DISTRICT FINANCIAL STATEMENTS WITH REPORT ON EXAMINATION BY CERTIFIED PUBLIC ACCOUNTANTS JUNE 30, 1974 JAMES M. GAISER MERGED WITH DIEHL, EVANS AND COMPANY CERTIFIED PUBLIC ACCOUNTANTS 2965 ROOSEVELT STREET CARLSBAD. CALIFORNIA ELLIS C.DIEHL, C. P. A. (1925-19561 JAMES M.GAISER.C.P.A. BRYN B. EVANS, C. P. A. PHILIP H.HOLTKAMP, C. P. A. WIN G.PETERS, C. P. A. DONALD H.PETERSON, C. P. A. DONALD E.CALLAHAN,C.P. A. L.PETER SCHERER.C.P.A. JOHN A.RAABERG, C.P. A. JAMES M. GAISER MERCED WITH DiEHL, EVANS. AND COMPANY CERTIFIED PUBLIC ACCOUNTANTS 2965 ROOSEVELT STREET CARLSBAD, CALIFORNIA 92OOS (7IA) 729-3343 OTHER OFFICES AT: SANTA ANA,CALIFORNIA SANTA MARIA,CALIFORNIA CARLSBAD MUNICIPAL WATER DISTRICT CARLSBAD, CALIFORNIA BOARD OF DIRECTORS JUNE 30, 1974 MEMBER FRED W. MAERKLE DONALD A. MAC LEOD W. D. CARMICHAEL ALLAN 0. KELLY HAROLD M. ENGELMANN OFFICE PRESIDENT VICE-PRESIDENT SECRETARY TREASURER ASSISTANT SECRETARY AND ASSISTANT TREASURER TERM EXPIRES 1-1977 1-1977 1-1975 1-1975 1-1975 GENERAL MANAGER - WINDER F. PRIDAY CARLSBAD MUNICIPAL WATER DISTRICT JUNE 30, 1974 CONTENTS Page Number Accountants' report 1 Combined Balance Sheet-All Funds 2 Combined Statement of Revenue and Expense-All Funds 3 Statement of Changes in Financial Position-All Funds 4 Statement of Changes in Fund Balances- All Funds 5 Notes to Financial Statements 6-8 Balance Sheet-Improvement District No. 1 (Schedule 1) 9 Balance Sheet-Improvement District No. 2 (Schedule 2) 10 Balance Sheet-Improvement District No. 3 (Schedule 3) 11 Balance Sheet-Improvement District No. 4 (Schedule 4) 12 Schedule of Operating Expenses-General Fund (Schedule 5) 13 Analysis of Changes in Reserve for Construction- Bond Construction Fund (Schedule 6) 14 Schedule of Actual Versus Estimated Revenues and Expenses - All Funds 15 Comments 16-24 ELLIS C.DIEHL, C. P. A. (1925-I9S6I JAMES M.GAISER, C. P. A. BRYN B. EVANS, C. P. A. PHILIP H. HOLTKAMP, C. P. A. WIN O.PETERS, C. P. A. DONALD H. PETERSON, C. P. A. DONALD E.CALLAHAN,C.P.A. L.PETER SCHERER.C.P. A. JOHN A.RAABERG.C.P.A. JAMES M. GAISER MERGED WITH DIEHL, EVANS AND COMPANY CERTIFIED PUBLIC ACCOUNTANTS £965 ROOSEVELT STREET CARLSBAD, CALIFORNIA 92OO8 1714) 729-3343 September 16, 1974 OTHER OFFICES AT: SANTA ANA,CALIFORNIA SANTA MARIA,CALIFORNIA ACCOUNTANTS' REPORT THE BOARD OF DIRECTORS CARLSBAD MUNICIPAL WATER DISTRICT CARLSBAD, CALIFORNIA We have examined the combined balance sheet - all funds of CARLSBAD MUNICIPAL WATER DISTRICT as of June 30, 1974 and the related statements of combined revenues and expenses - all funds, changes in fund balances - all funds, and changes in financial position - all funds for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, such financial statements present fairly the financial position of the various funds of CARLSBAD MUNICIPAL WATER DISTRICT at June 30, 1974 and the results of their operations and changes in financial position for the year then ended, in conformity with generally accepted accounting principles applied on a basis con- sistent with that of the preceding year. The accompanying supplemental information and schedules and the columns on the accompanying financial statements captioned "Memorandum Only" are not necessary for a fair presentation of the financial state- ments, but are presented as additional analytical data. This infor- mation has been subjected to the tests and other auditing procedures applied in the examination of the financial statements mentioned above and, in our opinion, is fairly stated in all material respects in re- lation to the financial statements taken as a whole. — 1— CARLSBAD MUNICIPAL WATER DISTRICT COMBINED BALANCE SHEET - ALL FUNDS JUNE 30, 1974 with comparative figures for 1973 GENERAL DISTRICT IMPROVEMENT DISTRICTS ASSETS rr ASSETS: Cash Tirn-? Certificates of Deposit Accrued interest receivable Accounts receivable, water cu5tOT,ers (Note 1) Accc-jnts receivable; other /Agricultural rebates receivable Inventories - water, pipe, etc. 0:otc i) Prersic". expenses Totol Current Assets PROPERTY AND EQUIPMENT (Note 1) OTHER ASSrTS AND OTHER DEBITS: Lena-term contract and notes re- ceivable (Note 2)' 1,661 Unarr.ortized bond discount _ - Total Other Assets and Other Debits _ 1,661 TOTALS j 976.192 LIABILITIES, RESERVES AND FUND BALANCES CURRS>n LIABILITIES: Accounts payable $ 83,629 Current installment due on notes 53,703 Current installment duo on bonds Unre-3ct?r.cd bond coupons - Accrued payroll taxes and benefits 6,283 Accrued interest 1,776 Consu.-ers1 deposits _ 48.603 Total Current Liabilities 193.994 LONG-TERM DEBT, EXCLUDING CURRENT PORTION: Notes payable, (Note 3) 53,704 Bonds payable _ - Total Long-Term Debt, Excluding Current Portion _ 53,704 RESERVES FOR: Construction (Schedule 6) Unar-ortized bond discount Long-term receivables 1,661 Investment in property and equipment (Note 4) _ 568,119 Total Reserves 569,780 FUND BALANCES 158.714 TOTALS S 976,192 GENERAL FUND $ 16,244 86,000 5,157 68,698 32,069 15,794 74,603 440 299,005 675,526 REVOLVING FUND $ 1,865 12,000 — -' 13,865_ NO. 1 (SCHEDULE 1) $ 11,799 55,000 — - 66,799 799,154 NO. 2 (SCHEDULE 2) $ 82,868 42,000 315 879 126,062 1,479,525 NO. 3 (SCHEDULE 3) S 14,897 177,000 - - 191,897 634,153 NO. 4 (SCHEDULE 4) S 13,967 53,000 - - 66,967 614,056 MEMORANDUM ONLY 13.365 13.865 13.865 119,560 119.560 985.513 45,000 978 9,698 55.676 705,000 705.000 1.19,560 49.154 168.714 56,123 3,158 3,158 S 1.608.745 826.050 615,000 615.000 60,025 3,158 834,525 897,708 54.622 See accompanying accountants report and notes to financial statements. 985.513 S 1.608.745 -2- 633.000 633.000 (3.847) (3.847) 180.143 826.050 681.023 30,000 2,715 8,700 41,415 5,000 1,189 10,565 16,754 20,000 3,475 1,710 25,185 490,000 490,000 104.056 104.056 61.7B2 681.023 TOTAL 1974 $ 141.640 425.000 5,157 68,698 32.384 15,794 75,482 440 764,595 4,202,414 121,221 3.U8 124,375 ? 5 r 091. 383, $ 83.629 53,703 100,000 8,357 6.283 32.449 48,603 333,024 53,704 2,443,000 2,496,704 60,025 3,158 121,221 1,552^007 1,736,411 525,249 S 5.091.388 TOTAL 1973 5 207,988 250,000 2,191 67,760 11,939 18,072 53,857 300 612,107 3.<)31,5?2 126,554 •3,509 130,063 J 4r673.762 S 67 , 037 53,703 95.000 6.606 3,350 34,453 47,232 307,9.11 107,407 2,543,000 2,650,407 63,771 3,509 126,554 1,132,482 1,326,316 389,108 S 4.673.762 CARLSBAD MUNICIPAL WATER DISTRICT COMBINED STATEMENT OF REVENUES AND EXPENSES - ALL FUNDS For the year ended June 30, 1974 with comparative figures for 1973 GENERAL DISTRICT IMPROVEMENT DISTRICTS MEMORANDUM OKLY REVZN-UCS : Water sales LPSS cost of water sold Vet water sales District property taxes Interest income Miscellaneous Total Revenues OPERATING EXPENSES: Operating Expenses (Schedule 5) Depreciation Total Operating Expenses ISCCKE BEFORE OTHER EXPENSES OTHER EXPENSES: Interest expense Other Total Other Expenses NET INCOME GENERAL FUND $ 496,575 304,474 192,101 145,032 19,278 5,176 361,587 208,941 17,854 226,795 134,792' 9,684 9,684 S 125.108 REVOLVING FUND $ 7,199 4,413 2,786 2,786 - - 2,786 - - S 2.78S NO. 1 $ 14,397 8,825 5,572 83,203 3,427 92,202 20,616 20,616 71,586 30,292 30,292 S 41.294 BOND AND INTEREST FUNDS . NO. 2 NO. 3 $ 69,267 3,371 72,638 27,761 27,761 44,877 31,739 31,739 S -13.138 $ 79,205 48,539 30,666 . 33,305 6,352 1,775 72.098 14,229 14,229 57,869 31,858 31,858 S 26.011 NO. 4 S 21.577 13.2398,33851,284 59,622 10.070 10.070 49,552 21,250 21,250 S 28.302 CONSTRUCTION FUND (SCHEDULE 6) $ 100,780 $ 61,778 39,062 39,002 - - 3S..002 - - $ 3,9,002, $ TOTAL 1974 719,733 441, W5 278,465 382,091 25,630 13,749 699,935 208, 9<U 90,530 299,471 400.464 124,823 124,823 275.641 TOTAL 1973 $ 594,254 366,100 227,45-1 335,841 9,275 14,792 587,352 191, GS7 81,152 272,839 314,523 , 132,986 360 133,346 $ 181,177 See accompanying accountants' report and notes to financial statements. -3- CARLSBAD MUNICIPAL WATER DISTRICT STATEMENT OF CHANGES IN FINANCIAL POSITION - ALL FUNDS For the year ended June 30, 1974 with comparative figures for 1973 GENERAL DISTRICT IMPROVEMENT DISTRICTS MEMORANDUM ONLY FUNDS PROVIDED: Frc~ operations: >7<?~ i r.cor,?. Add charges not requiring use of working capital: Depreciation Pjr.ortization of bond discount Total Prom Operations Decrease in long-term contracts and notes receivable Total Funds Provided FUXDS UST.'D: Purchase of property and equipment, net Decreare in long-term notes payable Decrease in long-term bonds payable Increase in working capital Total Funds Used CHANGES IN' WOKKING CAPITAL: Increase (Decrease) In Current Assets: Cash Time Certificates of Deposit Accrued interest receivable Accounts receivable, water customers Accounts receivable, other Agricultural rebates receivable Inventories - water, pipe, etc. prepaid expenses Net Increase (Decrease) In Current Assets Increase (Decrease) In Current Liabilities: Accounts payable Current installment due on bonds Unredeemed bond coupons Accrued payroll taxes and benefits Accrued interest Consumers' deposits Net Increase (Decrease) In Current Liabilities NET INCREASE IN WORKING CAPITAL GENERAL REVOLVING FUND FUND $ 125,108 $ 2,786 17.854 142,962 2,766 1,905 S 144.367 S 2.786 $ 44,582 "$ 53,703 46,582 2,786 ,$..144.867 S 2.786 $ (63,809) $ (214) 86,000 3,000 2,966 - 938 20,445 (2,278) 21,701- 140 66,043 2.786 16,542 2,433 (885) 1,371 19,461 NO. 1 $ 41,294 20,616 SOTS S 61.910 $ 45,000 16,910 $ 61.91Q $ (1,282) 17,500 16.218 (92) (600) (692) NO. 2 $ 52,140 27,761 352 80,253 S 80,253 $ 42.748 30.000 7,505 S 80.253 $ 467 12,000 (76) 12,391 5,000 248 (362) 4,886 NO. 3 $ 26,011 14,229 40,240 S 40.240 $ 5,000 35.240 $ 40.240 $ (1,602) 36,500 34,898 (261) (81) (342) NO. 4 $ 28,302 10,070 .36,312 S 36.372 $ 20,000 18,372 $ 38,372 $ 152 20,000 20,152 1,856 (76) 1,780 TOTAL 1974 $ 275,641 90,530 352366,521 1,905 2 368., 428. $ 87,330 53,703 100,000 127,395 $ (66,348) 175,000 2,966 938 20,445 (2,278) 21,625 140 152,483 16,542 5,000 1.751 2,433 (2,004) 1,371 25.093 TOTAL 1973 $ 181,177 81,152 351 262,685 2,136 S 254,816 $ 54,332 53,703 134,000 22,281 $ (95,161) 77.600 2.191 16,686 (65,613) (3,066) 8,957 (53,406) (50.184) (50,000) 656 (963) (1,706) '21,510 (80,687) $ 46.582 S 2.786 S 16.910 7.505 S 35.240 S 18.372 S 127.395 S 22.2&1 See accompanying accountants' report and notes to financial statements. r4- CARLSBAD MUNICIPAL WATER DISTRICT STATEMENT OF CHANGES IN FOND BALANCES - ALL FUNDS For the year ended June 30, 1974 Fund balances, July 1, 1973: Additions or (Deductions.) : Net income for the year Amortization of bond discount Depreciation Retirement of long-term debt, bonds Settlement on lawsuit Capital expenditures for investment in property and equipment, net Payment on notes payable Fund balances, June 30, 1974 GENERAL DISTRICT GENERAL . REVOLVING FUND FUND IMPROVEMENT DISTRICTS $ 112,132 BOND AND INTEREST FUNDS NO. 1 NO. 2 . NO. 3 $ 11,079 $ 39,213 $ 38,371 $ 144,903 NO. 4 $ 43,410 MEMORANDUM ONT.Y TOTAL ALL FITN"DS $ 389,108 125..108 2,786 17,854 1,905 (44,582) (53,703) S 158.714 S 13.865 41,294 20,616 (45,000) - S 56.123 13,138 352 27,761 (25,000) - S 54.622 26,011 14,229 (5,000) - S 18,0,143 28.302 10,070 (20,000) - S 61.782 236,639 352 90,530 (95,000) 1,905 (44,582) (53,703) S 525.249 See accompanying accountants' report and notes to financial statements. -5- CARLSBAD MUNICIPAL WATER DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 1974 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: a) The District uses a fund system of accounting and maintains its accounts on the accrual basis. The District chart of accounts conforms to the Uniform System of Accounts for Water Utility Districts as prescribed by the Controller of the State of California. b) The District maintains one general bank account for all of its funds. As a result, when investments are made, they are not set up in separate investment accounts un- less it can be determined that the cash for an investment came from a specific fund. At June 30, 1974, the invest- ment in Time Certificates of Deposit was allocated to the various funds on the basis of available cash in excess of normal requirements in each fund. The balance in the sinking fund in Improvement District No. 3 was $ 102,400 at June 30, 1974. c) The District does not provide for an allowance for doubt- ful accounts since all accounts are considered collectible and prior experience has not indicated a necessity for such a valuation account. d) The inventories consist of water and materials. The inventory of water is valued at the lower of cost (last- in, first-out) or market. The materials, inventory is valued at the lower of cost (first-in, first-out) or market. e) The property and equipment owned by the District at June 30, 1974 is valued at cost and is summarized as follows: Work-in-progress $ 270,205 Cost of participation - San Diego County Water Authority 33,174 Land and easements 120,848 Reservoirs and dam 1,419,362 Pipelines and pump stations 2,802,256 Chlorination stations 65,148 Meters and accessories 162,008 Buildings 122,281 Machinery and equipment 65,835 Office fixtures and equipment 18,947 Total 5,080,064 Less accumulated depreciation ( 877,650) Net Property and Equipment $4,202,414 See accompanying accountants' report. -6- CARLSBAD MUNICIPAL WATER DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 1974 (Continued) e) (Continued) Depreciation of the property and equipment is provided by the straight-line method and is based on the estimated useful lives of the related assets as follows: ESTIMATED ASSETS USEFUL LIVES Reservoirs and dams 75 years Pipelines and pump stations 50 years Chlorination stations 25 to 40 years Meters and accessories 25 to 40 years Buildings 40 years Machinery and equipment 5 to 20 years Office fixtures and equipment 10 years The District has consistently taken a full year's deprec- iation during the year of disposition of an asset and no depreciation is taken during the year of acquisition. The cost of participation - San Diego County Water Authority and the land and easements are not being depreciated. f) Water sales are allocated to the various improvement districts by the Board of Directors and do not reflect actual sales in those districts. Operating expenses are absorbed fully by the General Fund and not allocated to the respective improvement districts. 2. LONG-TERM RECEIVABLES: The District received $ 1,905 during the year on its long- term notes receivable in settlement of two price -fixing anti -trust suits. American Pipe and Construction Company paid $ 1,839 leaving a balance of $ 1,661 to be paid. United Concrete Pipe Corporation and U. S. Industries paid $ 67 fulfilling the terms of their settlement. The District received $ 3,427 during the year on its long- term contract receivable with the San Marcos County Water District, leaving a balance of $ 119,560 to be paid. Pay- ments are due annually within 90 days after June 30 of each year until paid in full. The annual payments are the equiv- alent of $ 1.00 per acre foot of water purchased by the San Marcos County Water District, within the fiscal year preceding the date of payment. No interest is provided in the contract. See accompanying accountants' report -7- CARLSBAD MUNICIPAL WATER DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 1974 (Continued) 3. NOTES PAYABLE: Included in notes payable is a note payable in the amount of $ 40,000 to Security Pacific National Bank bearing interest at 1% payable quarterly beginning November 5, 1970. Principal is to be paid in annual installments of $ 20,000 or more on the fifth day of August each year, beginning August 5, 1971. The District may prepay any unpaid principal balance of the note at any time, without any penalty. Also included in notes payable is an 8% note payable to Mrs. Ida Dawson in the amount of $ 67,407 secured by a first deed of trust on the land purchased for the Squires Dam Expansion Program presently included in work-in-progress. The note is payable in semi-annual principal installments of $ 16,852 until paid. Interest is also payable semi-annually. 4. RECLASSIFICATIONS: To conform to 1974 presentation, Work-in-Progress of $224,675 at June 30, 1973 has been combined with Property and Equipment; Future Revenue Required to Retire Loan and Bonded Debt of $ 2,799,110 and the Reserve for Work-in-Progress of $ 224,675 have been combined with the Reserve for Investment in Property and Equipment at June 30, 1973. Depreciation expense has been included in operating expenses. Bonds authorized, unissued of $ 300,000 at June 30, 1974 and the related reserve have been eliminated. See accompanying accountants' report, -8- SCHEDULE 1 CARLSBAD MUNICIPAL WATER DISTRICT IMPROVEMENT DISTRICT NO. 1 BALANCE SHEET June 30, 1974 ASSETS Cash Time Certificates of Deposit Long-term contract receivable Property and equipment TOTALS TOTAL FUNDS BOND AND INTEREST FUND $ 11,799 $ 11,799 55,000 55,000 119,560 119,560 799,154 - PROPERTY AND EQUIPMENT 799,154 $ 985.513 $ 186.359 $ 799.154 LIABILITIES, RESERVES, AND FUND BALANCE Unredeemed bond coupons Accrued interest on bonds Bonds payable Reserves for: Long-term receivable Investment in property and equipment Fund balance TOTALS $ 9, 750, 119, 49, 56, 978 698 000 560 154 123 $ 9, 119, 56, 978 698 560 123 $ 750,000 - 49,154 $ 985.513 $ 186.359 $ 799.154 See accompanying accountants' report and notes to financial statements, -9- SCHEDULE 2 CARLSBAD MUNICIPAL WATER DISTRICT IMPROVEMENT DISTRICT NO. 2 BALANCE SHEET June 30, 1974 ASSETS Cash Time Certificates of Deposit Inventory Accounts receivable, other Property and equipment Unamortized bond discount TOTALS TOTAL FUNDS 42,000 879 315 1,479,525 3,158 $ 1.608.745 BOND AND BOND PROPERTY INTEREST CONSTRUCTION AND FUND FUND EQUIPMENT 82,868 $ 24,037 $ 58,831 42,000 3,158 879 315 1,479,525 $ 1.479.525 LIABILITIES, RESERVES, AND FUND BALANCE Unredeemed bond coupons $ Accrued interest on bonds Bonds payable Reserves for: Construction (Schedule 6) Unamortized bond dis- count Investment in property and equipment Fund balance $ & J 2,715 8,700 645,000 60,025 3,158 834,525 54,622 $ 2,715 $ 8,700 60,025 3,158 54,622 645,000 834,525 TOTALS $ 1.608.745 $ 69.195 $ 60.025 $ 1.479.525 See accompanying accountants' report and notes to financial statements -10- SCHEDULE 3 CARLSBAD MUNICIPAL WATER DISTRICT IMPROVEMENT DISTRICT NO. 3 BALANCE SHEET June 30, 1974 ASSETS Cash Time Certificates of Deposit (see note below) Property and equipment TOTALS TOTAL FUNDS BOND AND INTEREST FUND $ 14,897 $ 14,897 177,000 177,000 634,153 - PROPERTY AND EQUIPMENT 634,153 $ 826.050 $ 191.897 LIABILITIES, RESERVES, AND FUND BALANCE Unredeemed bond coupons $ Accrued interest on bonds 10,565 Bonds payable 638,000 Reserves for: Investment in property and equipment (3,847) Fund balance (see note below) 180,143 1,189 $ 1,189 10,565 180,143 TOTALS $ 826.050 $ 191.897 638,000 (3,847) $ 634.153 NOTE: The fund balance includes a sinking fund in the amount of $ 102,400 represented by Time Certificates of Deposit. See accompanying accountants' report and notes to financial statements, -11- SCHEDULE 4 CARLSBAD MUNICIPAL WATER DISTRICT IMPROVEMENT DISTRICT NO. 4 BALANCE SHEET June 30, 1974 ASSETS Cash Time Certificates of Deposit Property and equipment TOTALS TOTAL FUNDS BOND AND INTEREST FUND $ 13,967 $ 13,967 53,000 53,000 614,056 - PROPERTY AND EQUIPMENT $ 681.023 $ 66.967 614,056 $ 614.056 LIABILITIES, RESERVES AND FUND BALANCE Unredeemed bond coupons Accrued interest on bonds Bonds payable Reserves for: Investment in pro- perty and equipment Fund balance TOTALS $ $ 3, 1, 510, 104, 61, 681. 475 710 000 056 782 023 $ 3 1 61 $ 66 ,475 ,710 ,782 .967 $ 510, 104, $ 614. 000 056 056 See accompanying accountants' report and notes to financial statements. -12- SCHEDULE 5 CARLSBAD MUNICIPAL WATER DISTRICT SCHEDULE OF OPERATING EXPENSES - GENERAL FUND For the year ended June 30, 1974 with comparative figures for 1973 1974 1973 PUMPING: Fuel and power Supervision, labor, and expense Maintenance Totals WATER TREATMENT: Chlorine Supervision, labor, and expense Power usage Chlorine equipment, repairs and maintenance Laboratory services, testing Totals TRANSMISSION - DISTRIBUTION: Supervision, labor, and expense Repairs and maintenance, pipelines Meter repairs Telemetering Utilities Repairs and maintenance, plant Miscellaneous supplies Totals CUSTOMER ACCOUNTS: v Meter reading and supervision Uncollectible accounts Totals ADMINISTRATIVE AND GENERAL: Salaries Engineering Payroll taxes and employee benefits Legal, auditing, and accounting Advertising and promotion Directors' fees Utilities and telephone Auto and truck expense Insurance Meetings, conventions, and dues Office Maintenance, general plant Printing and reproduction Bond service Small tools and equipment maintenance Miscellaneous Totals Total Operating Expenses $ 1,055 874 63 1,992 5,951 1,995 1,186 538 254 9,924 35,343 21,102 6,593 1,636 448 - - 65,122 2,124 73 2,197 43,584 17,536 13,456 12,999 6,264 6,050 5,898 5,460 4,357 3,826 3,345 2,993 844 821 707 1,566 129,706 $ 816 915 — 1,731 3,582 2,179 818 426 192 7,197 20,617 32,976 9,529 1,532 369 1,760 87 66,870 2,074 117 2,191 45,999 12,240 11,016 9,600 3,732 5,850 5,139 4,985 4,494 2,726 2,882 2,462 969 619 611 374 113,698 $ 208.941 $ 191.687 See accompanying accountants' report and notes to financial statements, -13- SCHEDULE 6 CARLSBAD MUNICIPAL WATER DISTRICT ANALYSIS OF CHANGES IN RESERVE FOR CONSTRUCTION BOND CONSTRUCTION FUND For the year ended June 30, 1974 IMPROVEMENT DISTRICT NO. 2 BALANCE, JULY 1, 1973 $ 63,771 REVENUE: Water sales 100,780 Less cost of water sold 61,778 Net water sales 39,002 Total Funds Available 102,773 EXPENDITURES: Transmission line, Arenal Road Project 22,546 Transmission line, Hughes' facility 20,202 Total Expenditures 42,748 BALANCE, JUNE 30, 1974 $ 60.025 See accompanying accountants' report and notes to financial statements, -14- SCHEDULE 7 CARLSBAD MUNICIPAL WATER DISTRICT SCHEDULE OF ACTUAL VERSUS ESTIMATED REVENUES AND EXPENSES - ALL FUNDS For the year ended June 30, 1974 BUDGET REVENUES: Water sales, net District property taxes Other Total Revenues $ 206,750 380,713 19,500 OPERATING EXPENSES: PUMPING: Fuel and power Supervision, labor, and expense Maintenance, structures WATER TREATMENT: Chlorine Supervision, labor and expense Power usage Chlorine equipment and station, maintenance Laboratory services, testing TRANSMISSION - DISTRIBUTION: Supervision, labor and expense Repairs and maintenance: Pipelines Plant Meter repairs Telemetering Utilities Miscellaneous supplies CUSTOMER ACCOUNTS: Meter reading and supervision Uncollectible accounts ADMINISTRATIVE AND GENERAL: Salaries Engineering Payroll taxes and employee benefits Legal, auditing, and accounting Advertising and promotion Directors' fees Utilities and telephone Auto and truck expense Insurance Meetings, conventions, and dues Office Maintenance, general plant Printing and reproduction Bond service Small tools and equipment maintenance Miscellaneous Total Operating Expenses EXCESS OF REVENUES OVER OPERATING EXPENSES NON-OPERATING EXPENSES: Debt service, principal and interest Capital expenditures and work-in-progress Total Non-Operating Expenses TOTALS 606,963 950 (OVER) UNDER BUDGET $ (71,715) (1,378) (19,879) (92,972) (105) ACTUAL $ 278,465 382,091 39,379 699,935 1,055 1,030 100 4,200 2,460 1,200 1,600 300 36,454 17,000 1,000 6,000 1,500 550 100 i 2,280 200 41,928 12,000 14,500 10,850 6,100 8,500 5,700 .5,000 5,500 3,600 4,000 3,000 1,000 1,800 1,000 10,300 211,702 395,261 239,065 206,300 445,365 156 37 (1,751) 465 14 1,062 46 1,111 (4,102) 1,000 (593) (136) 102 100 156 127 (1,656) (5,536) 1,044 (2,149) (164) 2,450 (198) (460) 1,143 (226) 655 7 156 979 293 8,734 2,761 (95,733) (34,461) 118,970 84,509 874 63 5,951 1,995 1,186 538 254 35,343 21,102 - 6,593 1,636 448 - 2,124 73 43,584 17,536 13,456 12,999 6,264 6,050 5,898 5,460 4,357 3,826 3,345 2,993 844 821 707 1,566 208,941 490,994 273,526 87,330 360,856 (50.104) $ 180.242 $ 130.138 See accompanying accountants' report and notes to financial statements -15- CARLSBAD MUNICIPAL WATER DISTRICT COMMENTS HISTORY AND ORGANIZATION Carlsbad Municipal Water District was formed on March 22, 1954, under the provisions of the Municipal Water District Act of 1911 to provide water for the City of Carlsbad and the adjacent, surrounding areas. On May 20, 1954, the District became a member of the San Diego County Water Authority and thus a member of the Metropolitan Water District of Southern California. The District retails its water to consumers in rural areas and portions of the City of Carlsbad, and also functions as a wholesaler to the City of Carlsbad, which maintains its own facilities for distribution to the remaining portions of the City. One dam, seven reservoirs, and num- erous transmission lines are owned and operated by the District, which constitutes the major portion of its waterworks system. ACCOUNTS AND RECORDS The District uses a fund system of accounting and maintains its accounts on the accrual basis. The District's chart of accounts conforms to the Uniform System of Accounts for Water Utility Districts as prescribed by the Controller of the State of California. The accounting records maintained were suitable and well kept, reflecting reasonably adequate internal control. Monthly financial statements and information are prepared and presented to the Board of Directors by the Accounting Officer. We found the minutes of the Board of Directors in excellent condition. CASH The fund cash balances at June 30, 1974 are as follows: On deposit: General fund $ 16,144 General revolving fund 1,865 Improvement District No. 1 fund 11,799 Improvement District No. 2 fund 82,868 Improvement District No. 3 fund 14,897 Improvement District No. 4 fund 13,967 On hand: Petty cash fund 1QQ Total $ 141.640 The cash on deposit was verified by direct correspondence with the depositary banks and by reconciliation of the amounts confirmed to the amounts as shown by the records of the District. Cash on hand was verified by count. See accompanying accountants' report. -16- INSURANCE COVERAGE The District had the following insurance coverage at June 30, 1974: Primary comprehensive liability- all business, including $ 5,000 medical payments, owned automobiles, uninsured motorists and non-owned automobiles Bodily injury $ 500,000/$ 500,000 Property damage 500,000 Liability - non auto, including general liability, products and completed operations and employees' non-ownership 500,000 Excess comprehensive liability 1,000,000 Fire insurance coverage on buildings and caretaker's trailer, including extended coverage, vandalism, and malicious mischief 139,500 Employee dishonesty 50,000 Equipment and records - all risks • 25,000 Depositors' forgery coverage 10,000 Comprehensive - glass panes and doors Actual cash value The District also has the statutory amount of Workmen's Compensation Insurance and carries group medical insurance for its employees. See accompanying accountants' report. -17- TIME CERTIFICATES OF DEPOSIT Time Certificates of Deposit in the amount of $ 425,000 '""" were held by West Coast National, Bank, Carlsbad Branch, at **" June 30, 1974. Details of these deposits were confirmed by the depositary bank and are presented below: PURCHASE SETTLEMENT INTEREST INTEREST FACE DATE TERM RATE PAYABLE AMOUNT 5-13-74 90 days 10.500% At Maturity $ 300,000 5-31-74 60 days 9.875% At Maturity 125,000 Total $ 425,000 We confirmed directly with the agents of all depositary banks that they held securities in a pool having a market value of at least 10% in excess of all deposits reported by the banks. At June 30, 1974, the investment in Time Certificates of deposit was allocated to the various funds on the basis of available cash in excess of normal requirements in each fund. ACCOUNTS RECEIVABLE - WATER CUSTOMERS Requests for confirmation of accounts receivable were mailed to 120 water customers, consisting of 19 positive con- firmations and 101 negative confirmations, and totaled approxi- mately 83% of the dollar amount of accounts receivable. Fifteen positive confirmations, in the amount of $. 51,640 were received and no differences were reported. No replies were received on four positive confirmations, in the amount of $ 2,766; however alternate procedures were used to satisfy ourselves. Of the 101 negative confirmations sent, in the total amount of $ 2,385, no exceptions were received. The District does not provide for an allowance for doubtful accounts on the books since all accounts are considered collect- ible and prior experience has not indicated a necessity for such a valuation account. ACCOUNTS RECEIVABLE - OTHER The accounts receivable - other consists of meter and service installations and repairs for various consumers in the District in the amount of $ 12,516, and $ 19,868 consisting of construction and- subdivision charges in excess of deposits which have been received. AGRICULTURAL REBATES RECEIVABLE The agricultural rebates receivable represent the amount due the District from the San Diego County Water Authority for water consumed for agricultural purposes during the period April 1, 1974 through June 30, 1974. See accompanying accountants' report. -18- LONG-TERM CONTRACT AND NOTE RECEIVABLE The long-term receivable balances at June 30, 1974 are as follows: Contract receivable, San Marcos County Water District Improvement District No. 1 Note receivable, American Pipe and Construction Co. - General Fund Total $ 119,560 1,661 $ 121,221 We confirmed the contract receivable directly with the San Marcos County Water District and verified the note receivble by alternate procedures. The $ 119,560 represents the balance due on the sale of a pipe- line to the San Marcos County Water District; the sale was consummated on November 6, 1963. Payments are due annually within 90 days after June 30 of each year until paid in full. The annual payments are the equivalent of $ 1.00 per acre foot of water purchased by the San Marcos County Water District within the fiscal year preceding the date of payment. No interest is provided in the contract. The note receivable in the amount of $ 1,661 is a six year, 5% note which constitutes the District's interest in a note issued by American Pipe and Construction Co. in settlement of an anti-trust suit. PROPERTY AND EQUIPMENT Changes, during the year under review, to property and equipment accounts for all funds are summarized as follows: ACCOUNTS BALANCE 7-1-73 ADDITIONS RETIREMENTS $ 224,675 $ 45,530Work-in-progress Cost of partici- pation - San Diego County Water Authority 33,174 Land and easements 120,848 Reservoirs and dam 1,419,253 109 Pipelines and pump stations 2,547,742 254,514 Chlorination stations 56,730 8,418 Meters and accessories 117,710 44,298 Buildings 119,821 2,460 Machinery and equipment 61,599 4,236 Office fixtures and equipment 17,454 2,078 Totals $4.719.006 $ 361,643 Less accumulated depreciation Net Property and Equipment See accompanying accountants' report. -19- (585) (585) BALANCE 6-30-74 $ 270,205 33,174 120,848 1,419,362 2,802,256 . 65,148 162,008 122,281 65,835 18,947 $5,080,064 (877,650) $4.202.414 PROPERTY AND EQUIPMENT (CONTINUED) The work-in-progress at June 30, 1974 for all funds consists of the following: Squires Dam Expansion $ 202,511 Oceanside - Carlsbad Inter Tie 20,133 Water System Planning Study 1,829 Tri-Agency Pipeline Project 7,942 Headquarters Addition 10,605 La Costa Reservoir 80 South Aqueduct Connection 251 Corrosion Control Study 232 Reservoir Painting 2,491 Realignments 45 La Costa Golf Course Water Main 184 Poinsetta Plan 1,356 Arenal Road Pipeline 22,456 Total $ 270.205 The Squires Dam Expansion includes the cost of approximately 56 acres of land purchased from Mrs. Ida Dawson in April, 1972. The property and equipment are being depreciated on the basis of the estimated useful life of each individual item on the straight-line method. The District has consistently taken a full year's depreciation during the year of disposition of an asset and no depreciation is taken during the year of acquisition. The estimated useful lives of the property and equipment groups that are being depreciated are shown below: ESTIMATED ASSETS USEFUL LIVES Reservoirs and dam 75 years Pipelines and pump stations 50 years Chlorination stations 25 to 40 years Meters and accessories 25 to 40 years Buildings 40 years Machinery and equipment 5 to 20 years Office fixtures and equipment 10 years The cost of participation - San Diego County Water Authority and the land and easements are not being depreciated. See accompanying accountants' report, -20- INVENTORIES Inventories of water and materials at June 30, 1974 are shown below: Water - General Fund $ 20,771 Materials - General Fund $ 53,832 Improvement District No. 2 879 54,711 Total $ 75.482 The water inventory is valued at the lower of cost (last-in, first-out) or market and the materials inventory is valued at the lower of cost (first-in, first-out) or market. We were present to observe the taking of the water and materials inventories by the District personnel at the end of the fiscal year. We tested the count valuations and the arithmetical accuracy of the inventory amounts. ACCOUNTS PAYABLE The accounts payable at June 30, 1974 represent amounts due to trade creditors in the ordinary course of business. CONSUMERS' DEPOSITS At June 30, 1974, consumers' deposits consist of the following items: Performance deposits and inspection deposits $ 23,465 Refunds due and deposits on meter installations 25,138 Total $ 48.603 The performance deposits and inspection deposits represent the unused portion of deposits received by the District, generally for construction. The refunds due and deposits on meter installations include amounts owing to consumers for the excess of their deposits over the actual cost of installation and deposits for meters not yet installed. NOTES PAYABLE At June 30, 1974, notes payable consist of the following: CURRENT LONG-TERM Security Pacific National Bank $ 20,000 $ 20,000 Mrs. Ida Dawson 33,703 33,704 Totals $ 53.703 $ 53.704 See accompanying accountants' report. -21- NOTES PAYABLE (CONTINUED) The note payable to Security Pacific National Bank bears interest at 7% payable quarterly. Principal is to be paid in annual installments of $ 20,000*or more on the fifth day of August each year,, The District may prepay any unpaid principal balance of the note at any time without any penalty. The note payable to Mrs. Ida Dawson bears interest at 8% and is secured by a first deed of trust on approximately 56 acres of land purchased during 1972 as part of the Squires Dam Expansion Program. Principal is payable in semi-annual installments of $ 16,852 and interest is also payable semi-annually commencing October 1, 1972. BONDS PAYABLE - CONSTRUCTION Bonds in the principal amount of $ 95,000 matured during the year under review, all of which were redeemed by the District. The remaining bonds are due and payable as follows: YEARS OF MATURITY Improvement District No. 1 :1975- 1976- 1978- 1981- 1983- 1984- 1987- Improvement District No. 2: Series 1: Series 2: Series 3: Totals (Forward) only 1977 1980 •1982 only •1986 only RATE OF INTEREST 4.00% 4.00% 3 3 3 3 85% 85% 85% 85% 3.85% 1975-1976 1977-1983 1984-1987 1988-only 1975-only 1976-1982 1983-1987 1988-1991 1974-only 1975-1983 5.00% 5.00% 5.00% 5.00% 4.50% 4.50% 4.50% 4.50% 5.00% 5.00% AMOUNT DUE EACH YEAR 45,000 50,000 55,000 60,000 65,000 70,000 45,000 10,000 15,000 20,000 25,000 10,000 15,000 20,000 25,000 10,000 10,000 CURRENT PORTION LONG-TERM PORTION $ 45,000 $ 10,000 10,000 10,000 100,000 165,000 120,000 65,000 210,000 45,000 10,000 105,000 80,000 25,000 105,000 100,000 100,000 90,000 $ 75,000 $ 1,320,000 See accompanying accountants' report, -22- BONDS PAYABLE - CONSTRUCTION (CONTINUED) YEARS OF MATURITY RATE OF INTEREST AMOUNT DUE EACH YEAR CURRENT PORTION LONG-TERM PORTION Totals (Forward) Improvement District No. 3: Improvement District No. 4: $ 75,000 $ 1,320,000 1975-only 1976-1990 1991-only 1974-only 1975-1977 1978-only 1979-1982 1983-1986 1987-1989 1990-1991 4.75% 4.75% 5.00% 4.50% 4.50% 4.50% .00% ,00% ,00% 4, 4, 4. 3.50% 5,000 5,000 558,000 20,000 20,000 25,000 25,000 30,000 35,000 40,000 5,000 20,000 75,000 558,000 60,000 25,000 100,000 120,000 105,000 80,000 Total bonds outstanding at June 30, 1974 $ 2.443.000 At June 30, 1974, $ 300,000 in construction bonds, which were authorized by the voters of the various Improvement Districts, remain unissued. OPERATIONS A summary of the combined results of operations for the year ended June 30, 1974 is shown below: Operating revenues, net Operating expenses Loss from operations Other revenue (primarily District property taxes) Income before other expense Other Expense: Interest Net Income $ 278,465 299,471 (21,006) 421,470 400,464 124,823 $ 275.641 The tax rates for the fiscal year ending June 30, 1974 were: DISTRICT General District Improvement District No. 1 Improvement District No. 2 Improvement District No. 3 Improvement District No. 4 SECURED TAX RATE .140 .080 .290 .450 .050 UNSECURED TAX RATE .140 .080 .290 .450 .050 See accompanying accountants' report. -23- BUDGETARY PROCEDURES AND COMPARISON The operating budget for the year under review, which was approved by the Board of Directors, was based on the operations of the preceding year. A comparison of the budgeted revenues and expenses and the actual revenues and expenses, not including depreciation, resulting from the year's operations are shown in Schedule 7. See accompanying accountants' report, -24-