CITY ESCONDIDO OFCertificate of Achievement for Excellence in Financial Reporting 12 Certificate of Award for Outstanding Financial Reporting 13 FINANCIAL SECTION: Independent Auditor’s

ECITY ESCONDIDOOF

Comprehensive

Annual

Financial Report

Fiscal Year Ended June 30, 2003

Prepared by the

Finance

Department

MAYOR

CITY COUNCIL

Lori Holt Pfeiler

Marie Waldron

CITY MANAGER Clay Phillips

ASSISTANT CITY MANAGER Jack Anderson

, Mayor Pro TemTom D’AgostaEd GalloRon Newman

PUBLIC WORKS DIRECTOR Pat Thomas

INFORMATION SYSTEMS DIRECTOR Mark Becker

COMMUNITY DEVELOPMENT DIRECTOR Charles Grimm

COMMUNITY SERVICES DIRECTOR Don Anderson

HOUSING & NEIGHBORHOOD SERVICES DIRECTOR Jerry Van Leeuwen

HUMAN RESOURCES DIRECTOR Gail Sullivan

CHIEF OF POLICE Duane White

FIRE CHIEF Vic Reed

CITY ATTORNEY Jeffrey Epp

CITY CLERK Marsha Whalen

CITY TREASURER Kenneth Hugins

FINANCE DIRECTOR Gilbert Rojas

CALIFORNIA

CITY OF ESCONDIDO Comprehensive Annual Financial Report

Table of Contents

June 30, 2003

Page INTRODUCTORY SECTION: Principal Officers 1 Table of Contents 3 Organization Chart 7 Letter of Transmittal 8 Certificate of Achievement for Excellence in Financial Reporting 12 Certificate of Award for Outstanding Financial Reporting 13 FINANCIAL SECTION: Independent Auditor’s Report 17 Management’s Discussion and Analysis (Unaudited) 19 Basic Financial Statements: Government-wide Financial Statements:

Statement of Net Assets 31 Statement of Activities 32

Fund Financial Statements: Governmental Funds: Balance Sheet 34 Reconciliation of the Balance Sheet to the Statement of Net Assets 35 Statement of Revenues, Expenditures, and Changes in Fund Balances 36 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 38

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Table of Contents

June 30, 2003

Page FINANCIAL SECTION (Continued): Proprietary Funds:

Statement of Net Assets 39 Statement of Revenues, Expenses, and Changes in Fund Net Assets 41 Combining Statement of Cash Flows 42 Fiduciary Funds:

Statement of Fiduciary Net Assets 46 Statement of Changes in Fiduciary Net Assets 47 Notes to the Financial Statements 48

Required Supplementary Information (Unaudited): Schedule of Funding Progress – Public Safety and Miscellaneous Employees Retirement System 85

Budgetary Comparison Schedule General Fund 86 Low and Moderate Income Housing Special Revenue Fund 90 Notes to Required Supplementary Information 91 Supplementary Information: Budgetary Comparison Schedule Community Development Commission Debt Service Fund 93 Nonmajor Governmental Funds: Combining Balance Sheet 102 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 108

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Table of Contents

June 30, 2003

Page FINANCIAL SECTION (Continued): Budgetary Comparison Schedules: Certain Special Revenue Funds:

Street Fund 112 Parks and Recreation Fund 113 Community Development Block Grant Fund 114 Landscape and Assessment District Fund 115 Storm Water Management Fund 116 Miscellaneous Fund 117 Debt Service Funds:

General Obligation Fund 118 Vineyard Golf Course Fund 119 Internal Service Funds:

Statement of Net Assets 122 Statement of Revenues, Expenses and Changes in Fund Net Assets 124 Combining Statement of Cash Flows 126

Agency Funds:

Combining Statement 131

Statements of Changes 132

STATISTICAL SECTION (Unaudited): Government-wide Information: Government-wide Expenses by Function – Last Two Fiscal Years 136 Government-wide Revenues – Last Two Fiscal Years 137

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Table of Contents

June 30, 2003

Page STATISTICAL SECTION (Continued): Fund Information: General Governmental Revenues by Source – Last Ten Fiscal Years 138 General Governmental Expenditures by Function – Last Ten Fiscal Years 140 Secured Property Tax Levies and Collections – Last Ten Fiscal Years 142 Schedule of Assessed Valuation – Last Ten Fiscal Years 144 Property Tax Rates - Direct and Overlapping Governments – Last Ten Fiscal Years 146 Special Assessment Collections – Last Ten Fiscal Years 147 Computation of Legal Debt Margin 148 Ratio of General Bonded Debt to Assessed Valuation and Net Bonded Debt Per Capita – Last Ten Fiscal Years 149 Ratio of Annual Debt Service for General Bonded Debt to Total Governmental Expenditures – Last Ten Fiscal Years 150 Direct and Overlapping Bond Debt 151

Revenue Bond Coverage, Water and Wastewater Enterprise Funds – Last Ten Fiscal Years 152

Demographic Statistics – Last Ten Fiscal Years 153 Bank Deposits and Construction and Business Activity – Last Ten Fiscal Years 154 Largest Employers 156 Principal Taxpayers 157 Miscellaneous Statistics 158

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CITY OF ESCONDIDO ORGANIZATION CHART

Electorate

Council Community Development

Commission Mobile Home Rent Review

Board

City Manager Assistant City Manager

Finance Fire Department

Information Systems Police Department

Human Resources Public Works

City Clerk Housing & Neighborhood Services

Community Development Community Services

City Attorney

City Treasurer

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Gilbert Rojas Director of Finance 201 North Broadway, Escondido, CA 92025 Phone: 760-839-4322 Fax: 760-746-0612

Lori Holt Pfeiler, Mayor Marie Waldron, Mayor Pro Tem Tom D'Agosta Ed Gallo Ron Newman

October 17, 2003 Honorable Mayor, City Council, and Citizens of the City of Escondido: It is our pleasure to present the Comprehensive Annual Financial Report of the City of Escondido for the fiscal year ended June 30, 2003. This report consists of management's representations concerning the finances of the City of Escondido. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Escondido has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of Escondido's financial statements in conformity with Generally Accepted Accounting Principles (GAAP). Because the cost of internal controls should not outweigh their benefits, the City of Escondido's comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

The City of Escondido's financial statements have been audited by Moreland & Associates, Inc., a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Escondido for the fiscal year ended June 30, 2003, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of Escondido's financial statements for the fiscal year ended June 30, 2003, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the City of Escondido was part of a broader, federally mandated "Single Audit" designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the City’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City of Escondido's Finance Department separately issued Single Audit Report.

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Comprehensive Annual Financial Report October 17, 2003

GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City of Escondido's MD&A can be found immediately following the report of the independent auditors. Profile of the Government The City of Escondido is located in north San Diego County, approximately 30 miles north of the City of San Diego, California. Escondido is an established community incorporated on October 8, 1888 under the general laws of the State of California. The City has grown to a current population of 138,015. Within the 35 square miles that comprise the city, there are many residential communities; the largest enclosed regional mall in San Diego County; a regional hospital; 22 hotels; an auto center; many office, industrial, and commercial centers; and civic, cultural, and recreational facilities. The City operates under a Council-Manager structure. The City Council is comprised of five Council members, elected at large on a staggered basis for a term of four years. The Mayor is directly elected for a four-year term. The City Treasurer is also elected to a four-year term. The City Council appoints the City Manager, and the City Attorney. The operating departments include Finance, Human Resources, Planning and Building, Community Development, Community Services, Police, Fire, Information Systems, City Clerk, and Public Works. The City provides the following services to its residents: police and fire protection, water and sewer services, building safety regulation and inspection, circulation and public facility capital improvement construction, street and park maintenance, refuse collection, planning and zoning, a full range of recreational programs for citizen participation, a senior center and a library. Financial administration of the City is the responsibility of the Director of Finance and the Finance Department whose management staff includes a Finance Manager which supervises the City's day-to-day accounting and budget operations and a Revenue Manager which oversees the day-to-day treasury and utility billing operations. The City Treasurer is an elected position serving a term of four years and is responsible for investing the City's portfolio and bond administration. Factors Affecting Financial Condition Local Economy. The local economy has been stable despite a statewide soft economy and a record state budget deficit. The City has benefited from increases in retail and auto sales, as well as the strong real estate and housing market. Long-term Financial Planning. A 16-screen theater complex located downtown will open in January 2004. The 3,200-seat theater will be part of a complex that includes a two-story office building, plus several other structures for restaurant and retailing activity. The theater is expected to attract 20 to 30 thousand people a week to downtown Escondido.

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The City of Escondido and Sempra Energy Resources have reached agreement on a proposal to build a 550-megawatt power plant as part of an industrial development. Sempra has agreed to provide $1.2 million for immediate road improvements and will guarantee the purchase of reclaimed water from the new City reclamation plant. The purchase of reclaimed water will be for a minimum of $950,000 up to a maximum of $2 million. In addition to the increase in property taxes, the City will benefit from a franchise tax on natural gas used at the plant of about $1.5 million per year. The industrial park development is expected to generate 4,000 to 5,000 new jobs. Cash Management. Cash management within the City is facilitated through a central investment pool to maximize earnings. Each fund possesses an interest in the total portfolio based on the cash book balance. All investment earnings are distributed to each fund based on the funds interest in the total pool. The City’s portfolio of $128.3 million is invested primarily in U.S. Government Securities. $42.4 million of the portfolio has maturity dates of less than one year. The balance of the portfolio matures from 1-10 years. The average yield on investments at June 30, 2003, was 4.06 percent, which was a decrease from 4.798 percent at June 30, 2002. The amount of interest earned in 2002-03 was $7.1 million. This represented a decrease compared to the 2000-02 amount. The City Council has adopted a comprehensive investment policy (as required by state law) specifying the type and term of City investments. This policy has allowed the City Treasurer flexibility without endangering the safety, liquidity or yield of the total portfolio. Risk Management. The City of Escondido is a member of the San Diego Pooled Insurance Program Authority (SANDPIPA) which provides general liability insurance. SANDPIPA is a joint venture of twelve cities located within San Diego County. As a member, the City carries a self-insured retention of $500,000 and is insured through SANDPIPA from $500,000 to $2,000,000. In addition, SANDPIPA has purchased excess insurance coverage from $2,000,000 to $37,000,000 for all of its members. Escondido participates in the property, boiler and machinery, faithful performance bond, and excess workers’ compensation programs on an insured or self-insured retention basis with deductibles of $10,000 or under per occurrence; except for the Workers’ Compensation Program which carries a retention of $500,000/occurrence. The Workers’ Compensation Program is self-insured and administered by Hazelrigg Risk Management. Reserves are funded for both incurred and incurred but not reported (IBNR) losses. The City’s Risk Management and Benefits offices oversee the management of these programs so as to assure that the cost of risk is kept at a minimum. Awards and Acknowledgments. The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Escondido for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2002. In order to be awarded a Certificate of Achievement, the

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government published an easily readable and efficiently organized CAFR. This report satisfied both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period on one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The City also participates in the California Society of Municipal Finance Officers' Certificate of Award Program for outstanding Financial Reporting. This award is designed to recognize and encourage excellence in financial reporting by state and local governments. The City received this award for its 2001-02 Comprehensive Annual Financial Report (CAFR). The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance Department. We would like to express our appreciation to all members of the department who assisted and contributed to the preparation of this report. We would like to extend our appreciation to the Mayor, City Council, City Manager, and each City department for their cooperation and support in conducting the fiscal operations of the City. Respectfully submitted, Gilbert Rojas Director of Finance

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13

14

EFinancial

Section

16

17

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MANAGEMENT’S DISCUSSION AND ANALYSIS

As management of the City of Escondido, we offer readers of the City of Escondido’s financial statements this narrative overview and analysis of the financial activities of the City of Escondido for the fiscal year ended June 30, 2003. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 8-11 of this report. Financial Highlights • The assets of the City of Escondido exceeded its liabilities at the close of the most recent fiscal year

by $332,772,488 (net assets). Of this amount, $79,241,565 (unrestricted net assets) may be used to meet the government’s ongoing obligations to citizens and creditors.

• The government’s total net assets decreased by $8,317,576. 6.1 percent of the decrease is from governmental activities, while business type activities actually increased by 3.9 percent.

• As of the close of the current fiscal year, the City of Escondido’s governmental funds reported combined ending fund balances of $131,940,127, a decrease of $1,832,249 in comparison with the prior year. Approximately 24 percent of this total amount, $32,087,261, is available for spending at the government’s discretion (unreserved fund balance).

• At the end of the current fiscal year, unreserved fund balance for the general fund was $29,918,674, or 48 percent of total general fund expenditures.

Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the City of Escondido’s basic financial statements. The City of Escondido’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City of Escondido’s finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the City of Escondido’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of Escondido is improving or deteriorating. The statement of activities presents information showing how the government’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

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Both of the government-wide financial statements distinguish functions of the City of Escondido that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Escondido include general government, public safety, cultural and recreation, public works and community development. The business-type activities of the City of Escondido include a Water and Wastewater Fund, as well as Golf Course Operations Fund. The government-wide financial statements include not only the City of Escondido itself (known as the primary government), but also the legally separate Community Development Commission (the redevelopment authority) that functions as an integral part of the primary government and has been included in these financial statements. The government-wide financial statements can be found on pages 30-33 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Escondido, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City of Escondido can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Escondido maintains twenty-six individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Low and Moderate Income Housing Special Revenue Fund and the Community Development Commission Debt Service Fund, which are considered to be major funds. Data from the other twenty-three governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City of Escondido adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 34-38 of this report.

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Proprietary funds. The City of Escondido maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City of Escondido uses enterprise funds to account for its Water, Wastewater and Golf Course. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City of Escondido’s various functions. The City of Escondido uses internal service funds to account for its Vehicle and Equipment Maintenance, General Liability Self-Insurance, Workers' Compensation, Insurance, Central Services, and Building Maintenance Funds. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Water and Wastewater Fund, both of which are considered to be major funds of the City of Escondido, and the remaining Golf Course Fund. Conversely, all internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements can be found on pages 39-45 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City of Escondido’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on pages 46-47 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 48-83 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City of Escondido’s progress in funding its obligation to provide pension benefits to its employees, Budgetary Comparison Schedules for General Fund and Low and Moderate Income Housing Special Revenue Fund, as well as notes to required supplemental information. Required supplementary information can be found on pages 85-91 of this report. The combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the notes to required supplementary information. Combining and individual fund statements and schedules can be found on pages 86-132 of this report. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City of Escondido, assets exceeded liabilities by $332,772,488 at the close of the most recent fiscal year.

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By far the largest portion of the City of Escondido’s net assets (55 percent) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment), less any related debt used to acquire those assets that is still outstanding. The City of Escondido uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Escondido’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

Governmental Business-type

2003 2002 2003 2002 2003 2002Current and other assets $162,387 $160,089 $39,584 $34,904 $201,971 $194,993 Capital assets 200,294 193,856 200,379 189,605 400,673 383,461

Total assets 362,681 353,945 239,963 224,509 602,644 578,454Long-term liabilities outstanding 119,193 102,289 118,213 88,591 237,406 190,880Other liabilities 23,376 22,071 9,089 26,480 32,465 48,551

Total liabilities 142,569 124,360 127,302 115,071 269,871 239,431Net assets:Invested in capital assets, net of related debt 93,468 103,514 91,396 87,345 184,864 190,859 Restricted 68,667 22,145 5,627 68,667 27,772 Unrestricted 57,977 103,926 21,264 16,466 79,241 120,392

Total net assets $220,112 $229,585 $112,660 $109,438 $332,772 $339,023

Totalactivities activities

City of Escondido’s Changes in Net Assets(Amounts expressed in thousands)

An additional portion of the City of Escondido’s net assets ($68,667) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets $79,241,565 may be used to meet the government’s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Escondido is able to report positive balances in all three categories of net assets, both for the government as a whole as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. Governmental activities. Governmental activities increased the City of Escondido’s net assets by $5,095,775, thereby accounting for 61 percent of the total growth in the net assets of the City of Escondido. Key elements of this increase are as follows:

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2003 2002 2003 2002 2003 2002Revenues:Program revenues:

Charges for services $13,787 $12,933 $44,701 $42,399 $58,488 $55,332 Operating grants and contributions 14,698 25,498 14,698 25,498 Capital grants and contributions 5,279 4,928 5,145 12,941 10,424 17,869

General revenues: Sales tax 31,218 26,338 31,218 26,338

Property taxes 21,514 17,238 21,514 17,238 Other taxes 15,169 13,602 15,169 13,602 Other 2,020 6,561 2,757 3,300 4,777 9,861

Total revenues 103,685 107,098 52,603 58,640 156,288 165,738

Expenses:General government 7,278 9,294 7,278 9,294 Public safety 46,935 40,705 46,935 40,705 Cultural and recreation 12,670 11,527 12,670 11,527 Public Works 18,711 13,280 18,711 13,280 Community development 10,646 3,662 10,646 3,662 Capital projects 1,676 1,676 Interest and fiscal charges 7,149 7,017 3,880 7,149 10,897 Loss from retirement of assets 423 423 Water 29,884 26,531 29,884 26,531 Wastewater 15,598 13,435 15,598 13,435 Golf 1,136 1,136

Total expenses 103,389 87,584 46,618 43,846 150,007 131,430

Increase in net assets before transfers 296 19,514 5,985 14,794 6,281 34,308 & special item

Transfers 2,763 352 (2,763) (352)Special item 2,037 2,037 Increase in net assets 5,096 19,866 3,222 14,442 8,318 34,308 Net assets – July 1, as restated 215,016 209,719 109,438 94,496 324,454 304,715 Net assets – June 30 $220,112 $229,585 $112,660 $109,438 $332,772 $339,023

Governmental activities

Business-type activities Total

(Amounts expressed in thousands)City of Escondido’s Changes in Net Assets

• Property taxes increased significantly during the year. Most of this increase is the product of

soaring prices on the housing market. • Sales tax receipts were up considerably, reflecting a strong regional economy. • Motor vehicle in lieu fees increased by 7.9 percent, reflecting dealer incentives to consumers. • Paramedic service revenue was up 11.5 percent over last year. This reflects an increase in rates in

the spring of 2003.

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Expenses and Program Revenues – Governmental Activities

$0$5,000,000

$10,000,000$15,000,000$20,000,000$25,000,000$30,000,000$35,000,000$40,000,000$45,000,000$50,000,000

GeneralGovernment

Public Safety Cultural &Recreation

Public Works CommunityDevelopment

Interest & FiscalCharges

Other

Expenses Program Revenues

Revenues by Source – Governmental Activities

14%

5%

20%

30%

13%

14%4%

Charges for Service Grants and Contributions Capital Grants and ContributionsSales Tax Property Taxes Other TaxesOther

Business-type activities. Business-type activities increased the City of Escondido’s net assets by $3,221,801, accounting for 39 percent of the total growth in the government’s net assets. Key elements of this increase are as follows. • Charges for services for business-type activities increased by 5 percent. The Water and Wastewater

Fund accounts for a majority of this increase. • The Municipal Golf Course finished its initial year and is not yet profitable. This is due to the

number of golf rounds played to be significantly below the original estimates.

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_ Expenses and Program Revenues – Business-type Activities

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

Water Wastewater Golf Interest & FiscalCharges

Contributions

Expenses Program Revenues

Revenues by Source-Business-type Activities

10%

85%

1%4%

Capital Grants & Contributions Charges for Service Use of Money and Property Miscellaneous

_ Financial Analysis of the Government’s Funds As noted earlier, the City of Escondido uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City of Escondido’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Escondido’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.

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As of the end of the current fiscal year, the City of Escondido’s governmental funds reported combined ending fund balances of $131,940,127, a decrease of $1,832,249 in comparison with the prior year. Approximately 24 percent of this total amount, or $32,087,261, constitutes unreserved fund balance, which is available for spending at the government’s discretion. The remainder of fund balance is reserved to indicate that it is not available for new spending because it has already been committed 1) to pay debt service ($5,105,018) or 2) for a variety of other restricted purposes ($94,747,848). The general fund is the chief operating fund of the City of Escondido. At the end of the current fiscal year, unreserved fund balance of the general fund was $29,918,674, while total fund balance reached $43,588,239. As a measure of the general fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 48 percent of total general fund expenditures, while total fund balance represents 69 percent of that same amount. The fund balance of the City of Escondido’s general fund increased by $1,295,462 during the current fiscal year. Key factors in this growth are as follows: • An increase in the paramedic service revenue by $1,172,664. • Department expenses were significantly under the budget due to a hiring freeze initiated by City

management. Proprietary funds. The City of Escondido’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net assets of the Water Fund and Wastewater Fund at the end of the year amounted to $4,801,167, and $19,006,001 respectively. The total growth in net assets was the result of a decrease of $632,097 in the Water Fund and an increase of $4,432,895 in the Wastewater Fund. Other factors concerning the finances of these two funds have already been addressed in the discussion of the City of Escondido’s business-type activities. General Fund Budgetary Highlights Differences between the original budget and the final amended budget were relatively minor ($1,613,883 increase in appropriations) and can be briefly summarized as follows: • $761,775 in miscellaneous decreases in general government activities • $387,290 in increases allocated to the police department • $935,240 in increases allocated to the fire department • $336,260 in increases allocated for public works • $435,893 in increases in cultural and recreation activities • $262,975 in increases in community development

During the year, revenues exceeded budgetary estimates by $2.3 million dollars and provided funding for all amendments to the 2002-03 budget.

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Capital Asset and Debt Administration Capital assets. The City of Escondido’s investment in capital assets for its governmental and business type activities as of June 30, 2003, amounts to $400,673,202 (net of accumulated depreciation). This investment in capital assets includes land, buildings and system, improvements, machinery and equipment, park facilities, roads, highway, and bridges. The total increase in the City of Escondido’s investment in capital assets for the current fiscal year was 4 percent.

2003 2002 2003 2002 2003 2002Land $27,868 $27,348 $2,891 $959 $30,759 $28,307 Buildings and systems 83,359 88,651 10,940 11,248 94,299 99,899Improvements other than buildings 2,180 1,037 448 13 2,628 1,050Machinery and equipment 5,700 4,793 1,458 946 7,158 5,739Infrastructure 56,283 58,155 96,423 80,031 152,706 138,186Construction in progress 24,905 13,872 88,219 96,408 113,124 110,280Total $200,295 $193,856 $200,379 $189,605 $400,674 $383,461

Total

City of Escondido’s Capital Assets(net of depreciation / in thousands)

Governmentalactivities

Business typeactivities

Additional information on the City of Escondido’s capital assets can be found in the notes on pages 62-64 of this report. Long-term debt. At the end of the current fiscal year, the City of Escondido had total bonded debt outstanding of $179,083,809. The City of Escondido’s debt represents bonds secured solely by specified revenue sources (i.e., revenue bonds or lease obligations).

2003 2002 2003 2002 2003 2002Certificates of Participation $5,165 $5,415 $62,315 $53,435 $67,480 $58,850 Special assessment debt with governmental commitment 105 120 105 120Lease revenue bonds 122,370 95,374 6,466 6,393 128,836 101,767Tax allocation bonds 16,945 16,945Capital lease 792 404 792 404Total $145,272 $101,193 $68,886 $59,948 $214,158 $161,141

Governmentalactivities

Business typeactivities Total

27

Economic Factors and Next Year’s Budgets and Rates • The unemployment rate for the area is a modest 4.1 percent, which compares favorably to the State

and National rates. • All economic indicators show the San Diego county area has avoided a downturn experienced by

other areas in the state. All of these factors were considered in preparing the City of Escondido’s budget for the 2003-2004 fiscal year. Requests for Information This financial report is designed to provide a general overview of the City of Escondido’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Escondido, Finance Department, 201 North Broadway, Escondido, CA 92025.

28

Basic Financial

Statements

29

30

CITY OF ESCONDIDOStatement of Net Assets

June 30, 2003

Governmental Business-type Assets Activities Activities Total

Cash and investments $ 108,387,340 $ 25,514,086 $ 133,901,426Restricted cash and investments 12,680,783 7,052,962 19,733,745Receivables, net of allowances 31,724,289 5,936,645 37,660,934Internal balances (655,784) 655,784Due from other governments 5,690,218 199,596 5,889,814Inventory, at cost 154,742 155,586 310,328Deposits 246,036 69,221 315,257Deferred bond issue costs 304,771 304,771Land held for resale 3,854,004 3,854,004Capital assets:

Not being depreciated 52,772,150 91,110,009 143,882,159 Being depreciated, net 147,522,274 109,268,769 256,791,043

Total Assets 362,680,823 239,962,658 602,643,481

Liabilities

Payables:Accounts 4,560,570 4,850,772 9,411,342Interest 1,126,398 1,246,387 2,372,785Deposits 6,545,236 6,545,236

Accrued expenses 1,574,698 242,907 1,817,605Deferred revenue 1,382,449 1,382,449Long-term obligations:

Payables due within one year: Employee leave benefits 478,941 145,846 624,787 Capital lease 204,397 43,847 248,244 Loans 67,523 1,804,779 1,872,302 Bonds 7,165,000 120,000 7,285,000 Certificates of participation 270,000 635,000 905,000Payables due in more than one year: Connection rights 15,443,448 15,443,448 Employee leave benefits 5,650,967 646,080 6,297,047 Claims 6,695,339 1,302,997 7,998,336 Capital lease 587,491 121,765 709,256 Deposits 603,931 603,931 Loans 1,372,246 34,088,170 35,460,416 Bonds, net 99,992,345 6,069,387 106,061,732 Certificates of participation, net 4,895,000 59,937,077 64,832,077

Total Liabilities 142,568,600 127,302,393 269,870,993

Net Assets

Invested in capital assets, net of related debt 93,467,500 91,395,716 184,863,216Restricted for:

Debt service 1,099,200 1,099,200Low and moderate income housing 23,818,625 23,818,625Capital projects 1,330,450 1,330,450Other purposes 42,419,432 42,419,432

Unrestricted 57,977,016 21,264,549 79,241,565

Total Net Assets $ 220,112,223 $ 112,660,265 $ 332,772,488

See Accompanying Notes to Financial Statements.

31

Operating CapitalCharges for Grants and Grants and

Functions/Programs Expenses Services Contributions Contributions

Governmental activitiesGeneral government $ 7,278,160 $ 203,360 $ 1,346,493 $ 166,504Public safety 46,934,431 7,605,245 1,548,056 778,032Cultural and recreation 12,670,230 1,796,813 1,430,266 321,995Public works 18,711,369 2,278,004 7,589,486 4,012,027Community development 10,646,006 1,903,199 2,783,966Interest and fiscal charges 7,149,247

Total governmental activities 103,389,443 13,786,621 14,698,267 5,278,558

Business-type activitiesWater 29,884,159 28,482,317 1,742,595Wastewater 15,598,418 15,565,385 3,402,365Golf 1,135,468 653,337

Total business-type activities 46,618,045 44,701,039 5,144,960

Total 150,007,488 58,487,660 14,698,267 10,423,518

General Revenue Taxes: Sales taxes Property taxes Other taxes Use of money and property MiscellaneousTransfersSpecial item: Economic development incentive

Total General Revenue, transfers and special item

Change in Net Assets

Net Assets - Beginning of Year, as restated

Net Assets - End of Year

Program Revenues

CITY OF ESCONDIDOStatement of Activities

For the Year Ended June 30, 2003


32

Net (Expense) Revenue andChanges in Net Assets

Governmental Business-typeActivities Activities Total

$ (5,561,803) $ $ (5,561,803)(37,003,098) (37,003,098)(9,121,156) (9,121,156)(4,831,852) (4,831,852)(5,958,841) (5,958,841)(7,149,247) (7,149,247)

(69,625,997) (69,625,997)

340,753 340,7533,369,332 3,369,332(482,131) (482,131)

3,227,954 3,227,954

(69,625,997) 3,227,954 (66,398,043)

31,217,876 31,217,87621,513,677 21,513,67715,169,418 15,169,4185,814,185 2,212,617 8,026,802

280,478 543,880 824,3582,762,650 (2,762,650)

(2,036,512) (2,036,512)

74,721,772 (6,153) 74,715,619

5,095,775 3,221,801 8,317,576

215,016,448 109,438,464 324,454,912

$ 220,112,223 $ 112,660,265 $ 332,772,488


33

CITY OF ESCONDIDOBalance Sheet

Governmental FundsJune 30, 2003

Special DebtRevenue Service

Low and Community Total Moderate Development Governmental Governmental

Assets General Income Housing Commission Funds FundsAssets:

Cash and investments $ 25,410,485 $ 5,204,153 $ 5,788,154 $ 55,815,808 $ 92,218,600Restricted cash and investments 10,672,794 2,007,989 12,680,783Receivables (net): Accounts 2,821,951 1,791,363 4,613,314 Interest 385,078 84,779 49,652 737,629 1,257,138 Taxes 322,430 62,883 208,185 7,207 600,705 Notes 323,132 6,277 4,972,861 5,302,270 Loans 19,357,272 346,839 19,704,111Due from: Other funds 1,157,515 1,157,515 Other governments 4,405,463 1,284,755 5,690,218Inventory, at cost 3,192 3,192Land held for resale, at cost 3,854,004 3,854,004Advances to other funds 11,827,549 869,988 12,697,537

Total Assets $ 46,656,795 $ 28,569,368 $ 16,718,785 $ 67,834,439 $ 159,779,387

Liabilities and Fund BalanceLiabilities:

Accounts payable $ 922,554 $ 44,782 $ $ 3,088,073 $ 4,055,409Accrued expenditures 1,428,409 9,535 59,697 1,497,641Due to other funds 1,660,988 1,660,988Deposits payable 9,448 1,212 6,534,576 6,545,236Deferred revenue 708,145 674,304 1,382,449Advances from other funds 11,868,299 829,238 12,697,537

Total Liabilities 3,068,556 55,529 11,868,299 12,846,876 27,839,260

Fund Balance:Reserved for: Inventory 3,192 3,192 Advances to other funds 11,827,549 869,988 12,697,537 Land held for resale 3,854,004 3,854,004 Low and moderate income housing 5,296,286 5,296,286 Non-current loans and notes receivable 323,132 19,363,549 4,903,370 24,590,051 Specific purpose 1,515,692 7,672,956 9,188,648 Debt service 4,850,486 254,532 5,105,018Reserved for Current Projects:

Special revenue 8,626,639 8,626,639Capital projects 30,491,491 30,491,491

Unreserved; designated Economic uncertainty 11,231,318 11,231,318 Underground waivers 489,017 489,017 Library trust 365,432 365,432 Bond contingency 4,938,854 4,938,854 Carryovers 508,115 508,115 Building replacement 9,616,800 9,616,800

Future projects: Special revenue 1,116,914 1,116,914 Capital projects 1,051,673 1,051,673

Unreserved 2,769,138 2,769,138

Total Fund Balance 43,588,239 28,513,839 4,850,486 54,987,563 131,940,127

Total Liabilities and Fund Balance $ 46,656,795 $ 28,569,368 $ 16,718,785 $ 67,834,439 $ 159,779,387

Other Nonmajor


34

CITY OF ESCONDIDOReconciliation of the Balance Sheet to the Statement of Net Assets

Governmental FundsJune 30, 2003

Fund balances for governmental funds $ 131,940,127

Amounts reported for governmental activities in the statement of net assets are difference because:

Capital assets $ 378,621,261Ending accumulated depreciation (181,855,076) 196,766,185

12,012,811

Long-term liabilities (117,052,300)Deferred bond costs 304,771 (116,747,529)

Interest payable (1,126,398)Accretion (2,732,973) (3,859,371)

Net assets of governmental activities $ 220,112,223

Capital assets used in governmental activities are not financial resources and,therefore, are not reported in the funds. Capital assets allocated from internalservice funds are included in the internal service fund adjustment below.

Internal service funds are used by management to charge the costs ofactivities involved in rendering services to departments within the City. Theassets and liabilities of the internal service funds are included in the statementof net assets.

Interest on long-term liabilities is not accrued in governmental funds, butrather is recognized as an expenditure when due.

Long-term liabilities, including bonds payable, are not due and payable in thecurrent period and therefore are not reported in the funds. Long-termliabilities allocated from internal service funds are included in the internalservice fund adjustment above.


35

CITY OF ESCONDIDOStatement of Revenues, Expenditures,

and Changes in Fund BalancesGovernmental Funds


Special DebtRevenue Service Other


General Income Housing Commission Funds FundsRevenues: Sales tax $ 27,558,293 $ $ $ 3,659,583 $ 31,217,876 Other taxes 13,187,551 2,965,175 11,860,699 635,227 28,648,652 Licenses and permits 1,273,972 43,877 1,317,849 Fines and forfeits 1,928,933 1,928,933 Intergovernmental 10,112,124 112,400 9,664,086 19,888,610 Charges for services 6,230,276 5,355,640 11,585,916 Special assessments 361,982 361,982 Lease income 141,108 141,108 Investment income 1,985,190 562,749 482,961 3,006,734 6,037,634 Miscellaneous 2,619,880 202,468 109,959 2,932,307

Total Revenues 64,896,219 3,983,900 12,343,660 22,837,088 104,060,867

Expenditures: Current: General government 5,093,785 751,133 5,844,918 Public safety 37,711,728 2,351,010 40,062,738 Public works 9,088,575 5,659,521 14,748,096 Cultural and recreation 7,462,239 4,106,455 11,568,694 Community development 3,500,102 1,462,572 26,865 2,773,061 7,762,600 Agency tax sharing agreement 2,097,708 2,097,708 Capital projects 16,430,287 16,430,287 Debt Service: Principal retirements 5,141,385 250,000 5,391,385 Interest and fiscal charges 6,318,356 442,876 6,761,232

Total Expenditures 62,856,429 1,462,572 13,584,314 32,764,343 110,667,658

Excess (Deficiency) of Revenues Over Expenditures 2,039,790 2,521,328 (1,240,654) (9,927,255) (6,606,791)

Nonmajor


36

CITY OF ESCONDIDOStatement of Revenues, Expenditures,

and Changes in Fund BalancesGovernmental Funds (Continued)For the Year Ended June 30, 2003

Special DebtRevenue Service


General Income Housing Commission Funds FundsOther Financing Sources (Uses): Sale of property 9,397 1,273,332 1,282,729 Capital appreciation bonds 2,732,973 2,732,973 Transfers in 4,470,510 205,593 1,555,178 12,787,769 19,019,050 Transfers out (5,224,235) (1,555,178) (128,848) (9,308,390) (16,216,651)

Total Other Financing Sources (Uses) (744,328) (1,349,585) 4,159,303 4,752,711 6,818,101

Special Item: Economic development incentive (2,043,559) (2,043,559)

Net Change in Fund Balance 1,295,462 1,171,743 2,918,649 (7,218,103) (1,832,249)

Fund Balances at Beginning of Year 42,292,777 27,342,096 1,931,837 62,205,666 133,772,376

Fund Balances at End of Year $ 43,588,239 $ 28,513,839 $ 4,850,486 $ 54,987,563 $ 131,940,127

Other Nonmajor


37

CITY OF ESCONDIDOReconciliation of the Statement of Revenues,

Expenditures, and Changes in Fund Balances ofGovernmental Funds to the Statement of Activities


Amounts reported for governmental activities in the statement of activities are different because:

Net change in fund balances - total governmental funds: $ (1,832,249)

Capital outlay $ 16,430,287Contributed capital assets 1,427,861Capital asset expenditures within the functions 1,784,674Depreciation (10,268,070)Retirement and sale of capital assets (3,346,347) 6,028,405

(833,118)

Principal retirements 5,391,385Accreted value (2,732,973)Other adjustments (925,675) 1,732,737

Change in net assets of governmental activities $ 5,095,775

Governmental funds report capital outlays as expenditures. However, in the statementof activities the cost of these assets is allocated over their estimated useful lives andreported as depreciation expense. This is the amount by which capital outlays,contributed capital assets, retirements and capital related expenditures exceededdepreciation in the current period.

Internal service funds are used by management to charge the costs of activitiesinvolved in rendering services to departments within the City. The assets andliabilities of the internal service funds are included in the statement of net assets.

The issuance of long-term debt provides current financial resources to governmentalfunds, while the repayment of the principal of long-term debt consumes the currentfinancial resources of governmental funds. Neither transaction, however, has anyeffect on net assets.


38


Proprietary FundsJune 30, 2003

Golf Course Internal ServiceWater Wastewater (Nonmajor) Totals Funds

Assets

Cash and investments $ 5,946,743 $ 16,070,699 $ 49,249 $ 22,066,691 $ 19,616,135Cash with fiscal agent 3,554,455 2,715,736 782,771 7,052,962Receivables, net: Accounts 4,775,792 456,041 590 5,232,423 53,925 Interest 110,832 269,340 10,747 390,919 251,896 Notes 5,473 7,450 12,923 Assessments 105,000 105,000Inventory 34,097 34,097 273,039Deposits 22,357 22,357 292,900Other assets 136,310 136,310Due from: Other funds 781,300 781,300 Other governments 199,596 199,596Advances from other funds 5,500,000 5,500,000Capital assets: Land 1,494,199 320,360 1,076,000 2,890,559 Land improvements 231,681 17,633 244,531 493,845 Buildings 14,255,637 12,024,347 344,468 26,624,452 1,121,796 Golf course 4,314,066 4,314,066 Water system 50,405,614 50,405,614 Electric system 3,433,127 3,433,127 Sewer system 65,116,567 65,116,567 Recycled water system 10,699,207 10,699,207 Equipment 1,589,168 1,172,397 484,151 3,245,716 17,251,732 Construction in progress 11,738,202 76,481,248 88,219,450 Less: Accumulated Depreciation (26,508,366) (29,167,773) (193,766) (55,869,905) (14,039,209)

Total Assets 76,532,557 157,269,148 7,305,571 241,107,276 24,822,214

(Continued)


39


Proprietary Funds (Continued)June 30, 2003

Golf Course Internal ServiceWater Wastewater (Nonmajor) Totals Funds

Liabilities and Net Assets

Liabilities: Payables: Accounts 4,101,358 619,340 15,070 4,735,768 620,164 Interest 629,465 516,132 100,790 1,246,387 Accrued expenses 98,986 89,538 38,305 226,829 93,135 Due to other funds 150,000 150,000 127,827 Long-term obligations: Payables due within one year: Employee leave benefits 73,638 72,208 145,846 Leases 230,776 Loans 1,804,779 1,804,779 Bonds 15,000 105,000 120,000 Certificates of participation 385,000 250,000 635,000 Payables due in more than one year: Advances to other funds 5,500,000 5,500,000 Connection rights 10,737,812 4,705,636 15,443,448 Estimated claims 7,998,336 Employee leave benefits 306,115 300,167 606,282 232,403 Deposits 602,155 1,776 603,931 Leases 640,868 Loans 612,332 33,475,838 34,088,170 Bonds 90,000 5,979,387 6,069,387 Certificates of participation 33,175,762 26,761,315 59,937,077

Total Liabilities 50,722,623 74,201,729 6,388,552 131,312,904 9,943,509

Net Assets:Invested in capital assets, net of related debt 21,008,767 64,061,418 185,063 85,255,248 3,462,675Unrestricted 4,801,167 19,006,001 731,956 24,539,124 11,416,030

Total Net Assets $ 25,809,934 $ 83,067,419 $ 917,019 109,794,372 $ 14,878,705

Adjustment to reflect the consolidation of internalservice fund activities to related enterprise funds 2,865,893

Net assets of business-type activities $ 112,660,265


40

CITY OF ESCONDIDOStatement of Revenues, Expenses, and Changes in Fund Net Assets

Proprietary FundsFor the Year Ended June 30, 2003

Golf Course Internal ServiceWater Wastewater (Nonmajor) Total Funds

Operating Revenues: Charges for services $ 28,482,318 $ 15,565,384 $ 653,337 $ 44,701,039 $ 18,504,150

Operating Expenses: Personnel services 4,517,508 3,995,168 8,512,676 3,305,321 Purchased water 12,736,067 12,736,067 Contractual services 534,283 534,283 Administrative expenses 3,713,826 1,918,681 5,632,507 1,449,480 Benefit claims 3,726,580 Supplies 1,420,489 1,310,528 2,731,017 279,008 Repairs and maintenance 794,677 892,984 1,687,661 717,108 Depreciation 1,872,163 2,157,749 193,766 4,223,678 1,490,236 Utilities 1,180,838 1,420,382 2,601,220 718,576 Fuel 480,080 Professional services 919,906 1,052,656 44,900 2,017,462 3,325,107 Insurance premiums 195,767 194,158 15,000 404,925 5,102,417 Rent 187,923 190,290 378,213 18,720 Other 235,990 157,089 34,078 427,157 390,672

Total Operating Expenses 27,775,154 13,289,685 822,027 41,886,866 21,003,305

Operating Income (Loss) 707,164 2,275,699 (168,690) 2,814,173 (2,499,155)

Non-Operating Revenues (Expenses): Investment income 501,244 1,145,664 44,634 1,691,542 1,127,895 Rents and concessions 318,732 5,887 324,619 Interest and fiscal charges (1,895,881) (1,581,824) (313,441) (3,791,146) (24,569) Interest on connection rights (511,973) (511,973) Intergovernmental 1,283,629 299,422 1,583,051 Miscellaneous 477,675 11,785 15,337 504,797 250,637

Total Non-Operating Revenues (Expenses) 685,399 (636,926) (247,583) (199,110) 1,353,963

Income (Loss) Before Transfers and Capital Contributions 1,392,563 1,638,773 (416,273) 2,615,063 (1,145,192)

Transfers in 15,000 15,000 30,000Transfers out (2,494,515) (290,564) (2,785,079) (47,320) Total Transfers (2,479,515) (275,564) (2,755,079) (47,320) Income (Loss) Before Capital Contributions (1,086,952) 1,363,209 (416,273) (140,016) (1,192,512)

Capital contributions 454,855 3,069,686 3,524,541 196,668

Changes in Net Assets (632,097) 4,432,895 (416,273) 3,384,525 (995,844)Net Assets at Beginning of Year 26,442,031 78,634,524 1,333,292 106,409,847 15,874,549

Net Assets at End of Year $ 25,809,934 $ 83,067,419 $ 917,019 $ 109,794,372 $ 14,878,705

Change in Net Assets $ 3,384,525Adjustment to reflect the consolidation of internal service fund activities to related enterprise funds (162,724)

Change in net assets of business-type activities $ 3,221,801


41

Water WastewaterCash Flows from Operating Activities Cash received from customers $ 28,505,768 $ 16,674,205 Cash paid to employees for services (4,467,576) (3,947,865) Cash paid to other suppliers of goods or services (20,864,653) (7,614,491) Cash from rents and concessions 318,732 Cash from other sources 547,132 11,785

Net Cash Provided by (Used for) Operating Activities 4,039,403 5,123,634

Cash Flows from Noncapital Financing Activities Intergovernmental revenue 1,283,629 299,422 Cash paid for startup costs Cash received from other funds 15,000 15,000 Cash paid to other funds (2,494,515) (240,564)

Net Cash Provided by (Used for) Noncapital Financing Activities (1,195,886) 73,858

Cash Flows from Capital and Related Financing Activities Purchase and construction of fixed assets (7,563,217) (5,819,391) Sale of fixed assets 30,093 Refunds (payments) on connection right (1,060,054) 400,595 Cash received from special assessments 15,000 Interest payments on bonds (1,693,355) (1,556,764) Interest payments on connection right (511,973) Principal payments on bonds (90,000) (215,000) Interest payments on leases Principal payments on leases Capital grants received 2,407,765 Proceeds from long term debt 8,842,725 Proceeds from loans payable 612,332 4,912,366

Net Cash Provided by (Used for) Capital and Related Financing Activities (921,476) (367,402)

Cash Flows from Investing Activities Investment income received 557,583 953,543

Net Increase (Decrease) in Cash and Cash Equivalents 2,479,624 5,783,633Cash and Cash Equivalents at Beginning of Year 7,021,574 13,002,802

Cash and Cash Equivalents at End of Year $ 9,501,198 $ 18,786,435

Reconciliation of Cash Equivalents to the statement of net assets Total cash and investments per the statement of net assets $ 5,946,743 $ 16,070,699 Total restricted assets per the statement of net assets 3,554,455 2,715,736

Cash and Cash Equivalents at the End of Year $ 9,501,198 $ 18,786,435

CITY OF ESCONDIDOCombining Statement of Cash Flows

Proprietary FundsFor the Year Ended June 30, 2003


42

Golf Course Internal (Nonmajor) Totals Service Funds

$ 618,650 $ 45,798,623 $ 18,459,805(8,415,441) (3,302,985)

(683,055) (29,162,199) (13,698,251)5,887 324,619

15,337 574,254 293,082

(43,181) 9,119,856 1,751,651

1,583,051(170,388) (170,388)

30,000(2,735,079) (182,212)

(170,388) (1,292,416) (182,212)

(721,498) (14,104,106) (1,070,473)30,093 30,269

(659,459)15,000

(305,455) (3,555,574)(511,973)(305,000)

(24,569)(246,414)

2,407,7658,842,7255,524,698

(1,026,953) (2,315,831) (1,311,187)

47,810 1,558,936 1,131,528

(1,192,712) 7,070,545 1,389,7802,024,732 22,049,108 18,226,355

$ 832,020 $ 29,119,653 $ 19,616,135

$ 49,249 $ 22,066,691 $ 19,616,135782,771 7,052,962

$ 832,020 $ 29,119,653 $ 19,616,135

(Continued)See Accompanying Notes to Financial Statements.

43


Water Wastewater

Reconciliation of Operating Income to Net Cash Provided by Operating Activities

Operating Income $ 707,164 $ 2,275,699

Adjustments to Reconcile Operating Income to Ne Cash Provided by (Used for) Operating Activities Depreciation expense 1,872,163 2,157,749 Amortization expense Cash from rents and concessions 318,732 Cash from other sources 546,297 11,785 Change in Assets and Liabilities (Increase) decrease in accounts receivable 17,962 1,108,823 (Increase) decrease in inventories (Increase) decrease in deposits (Increase) decrease in notes receivable 835 Increase (decrease) in accounts payable 520,830 (477,724) Increase (decrease) in accrued expenses 6,991 3,725 Increase (decrease) in employee leave benefits payables 42,941 43,578 Increase (decrease) in customer deposits 5,488 (1) Increase (decrease) in estimated leave claims payable

Total Adjustments 3,332,239 2,847,935

Net Cash Provided by (Used for) Operating Activities $ 4,039,403 $ 5,123,634

Noncash Investing, Capital and Financing Activities Contributed property, plant and equipment $ 386,233 $ 462,325 Bond amortization 57,283 28,487 Purchase of equipment with capital lease

CITY OF ESCONDIDOCombining Statement of Cash Flows

Proprietary Funds (Continued)


44

Golf Course Internal (Nonmajor) Totals Service Funds

$ (168,690) $ 2,814,173 $ (2,499,155)

193,766 4,223,678 1,490,23634,078 34,0785,887 324,619

15,337 573,419 227,902

(590) 1,126,195 17,925(34,097) (34,097) 84,366(22,357) (22,357)

835(104,820) (61,714) 63,387

38,305 49,021 (6,327)

86,519 (3,346)5,487 2,910

2,373,753

125,509 6,305,683 4,250,806

$ (43,181) $ 9,119,856 $ 1,751,651

$ $ 848,558 $ 196,6687,986 93,756

630,019


45

Trust AgencyFund Funds

Assets

Cash and investments $ 105,436 $ 492,270Restricted assets - cash with fiscal agent 287,433 759,813Receivables: Interest 1,866 5,049 Taxes 821 2,397

Total Assets $ 395,556 $ 1,259,529

Liabilities

Accounts payable $ 1,189 $Due to bondholders 328,712 1,259,529

Total Liabilities 329,901 $ 1,259,529

Net Assets

Held in trust $ 65,655

CITY OF ESCONDIDOStatement of Fiduciary Net Assets

Fiduciary FundsJune 30, 2003

See Accompanying Notes to Financial Statements. 46

TrustFund

Additions

Special assessments $ 270,766 Investment income 6,921

Total additions 277,687

Deductions

Administrative expenses 20,000 Professional services 9,434 Interest and fiscal charges 184,380

Total deductions 213,814

Change in net assets 63,873 Net Assets - beginning 1,782

Net Assets - ending $ 65,655

CITY OF ESCONDIDOStatement of Changes in Fiduciary Net Assets

Fiduciary FundsFor the Year Ended June 30, 2003


47

CITY OF ESCONDIDO Notes to Financial Statements

June 30, 2003

I. Summary of Significant Accounting Policies

A. Reporting Entity

The City of Escondido (City) was incorporated in 1888 and operates under a Council/Manager form of government. The Council is composed of five members. As required by generally accepted accounting principles, the financial statements present the government and its component units for which the government is considered financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government’s operations and so data from these units are combined with the data of the primary government. Each blended component unit as described below has a June 30 year end. Blended Component Units Escondido Community Development Commission The Community Development Commission (Commission) was established in 1984 for the purpose of preparing and carrying out plans for improvement, rehabilitation and redevelopment of blighted areas within the territorial limits of the City. The City Council acts as the Commission’s governing board and exerts significant influence over its operations. The funds of the Commission have been included in the governmental activities of the financial statements. Separate financial statements of the City of Escondido Community Development Commission can be obtained from the Finance Department at:

City of Escondido 201 North Broadway Escondido, California 92025

The Escondido Vehicle Parking District (District) was established in 1962 for the purpose of acquiring and improving parking lots in Escondido. The City Council acts as the District’s governing board and exerts significant influence over its operations. The funds of the District have been included in the governmental activities of the financial statements. Separate financial statements are not prepared for this blended component unit. The City and Commission formed the Escondido Joint Powers Financing Authority (Authority). The Authority was established in 1991 for the purpose to provide for the financing of public capital improvements for the Members through the issuance of bonds by the Authority and the leasing of the public capital improvements to the

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CITY OF ESCONDIDO Notes to Financial Statements (Continued)

June 30, 2003

Members and/or the acquisition of obligations pursuant to which public capital improvements are financed by or for the benefit of the Members. The City Council acts as the Authority’s governing board and exerts significant influence over its operations. The funds of the Authority have been included in the governmental activities of the financial statements. Separate financial statements are not prepared for this blended component unit. B. Government-wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfiduciary activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements and eliminations have been made to minimize the double counting of internal activities. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contribution that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The government-wide, proprietary and fiduciary fund 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 the liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

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Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, claims and judgments are not recognized until paid.

Property taxes, charges for services, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government.

The City reports the following major governmental funds:

The General Fund is the general operating fund of the City. All general tax revenues and other receipts that are not allocated by law or contractual agreement to some other fund are accounted for in this fund. From this fund are paid the general operating expenses not paid through other funds.

The Low and Moderate Income Housing Special Revenue Fund was established to account for the 20 percent tax increment housing set-aside required by the State when a redevelopment project area is created. The funds will be used to assist low and moderate income families within the city.

The Community Development Commission Debt Service Fund was established to account for the receipt of tax increment funds received through the creation of a redevelopment project area. The funds will be used to service debt related to the project area which includes advances from other funds and 1989 Tax Allocation Bonds that have been refunded by Lease Revenue Bonds. The debt was issued to provide financing for the construction of a new City Hall and Civic Center complex. This fund also accounts for the debt related to the purchase of two mobilehome parks purchased by the Housing Division of the Community Development Commission. The 1999 Lease Revenue Bonds were issued for the advance refunding of 1991 certificates of participation issued for the purchase of the mobilehome parks, and funding is provided

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for debt service by the rental of the mobilehome park lots to residents supplemented by the tax increment.

The City reports the following major proprietary funds:

The Water Fund is used to account for the financial activity of the City’s water utility. The costs of providing these services to the general public are financed or recovered primarily through user charges.

The Wastewater Fund is used to account for the financial activity of the City’s sewer utility. The costs of providing these services to the general public are financed or recovered primarily through user charges. Additionally, the City reports the following fund types: Governmental Funds: The Special Revenue Funds are used to account for proceeds of specific revenue sources that are legally restricted or otherwise designated for specific purposes. The Debt Service Funds are used to account for the accumulation of resources for and the payment of principal and interest on general long-term debt. The Capital Projects Funds are used to account for financial resources used for the acquisition or construction of major capital facilities. The Permanent Funds are used to account for resources that are legally restricted, to the extent that only earnings and not principal, may be used for purposes that support the City’s programs. Proprietary Funds: The Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises. Costs are financed or recovered primarily through user charges. The Internal Service Funds are utilized to finance and account for activities involved in rendering services to departments within the City. Costs of services are accumulated in these funds and charged to user departments as such costs are incurred. Services provided by these funds include insurance, building maintenance, equipment maintenance and central services.

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Fiduciary Funds: Fiduciary Fund financial statements include a Statement of Net Assets. The City fiduciary funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The City has a private purpose trust fund and agency funds. The Agency funds are accounted for on an accrual basis of accounting as are the proprietary funds explained above. The City reports the following fiduciary funds which are excluded from the government-wide financial statements:

The Private-Purpose Trust Fund is used to account for resources legally held in trust for the Hidden Trails Community Facilities District. The Agency Funds are used to account for money and property held by the City as trustee or custodian.

Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance.

As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the government’s water and sewer function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to members, customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Water Enterprise Fund, the

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Sewer Enterprise Fund, and of the government’s internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then use unrestricted resources as needed.

D. Assets, Liabilities, and Net Assets or Equity

1. Cash and Investments

Investments are reported in the accompanying statement of net assets at fair value, except for certain certificates of deposit and investment contracts that are reported at cost because they are not transferable and they have terms that are not affected by changes in market interest rates.

Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation, maturity, or sale of investments.

The City pools cash and investments of all funds, except for assets held by fiscal agents. Each fund’s share in this pool is displayed in the accompanying financial statements as cash and investments. Investment income, earned by the pooled investments, is allocated to the various funds based on each fund’s average cash and investment balance. For purposes of the statement of cash flows, the City considers all highly liquid investments (including restricted assets) with maturity of three months or less when purchased to be cash equivalents. Cash invested in the City’s cash management pool is also considered to be cash equivalents. 2. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding

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balances between funds are reported as “due to/from other funds.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. The amounts recorded as a receivable due from other governments include amounts collected or provided by Federal, State and County governments and not remitted to the City as of June 30, 2003. The County of San Diego assesses bills and collects taxes for the City. 3. Inventories

Inventories within the various fund types consist of materials and supplies valued at cost, which approximates market, on the first-in, first-out basis. The costs of governmental fund type inventories are recorded as expenditures when consumed rather than when purchased.

4. Land Held for Resale

The Low and Moderate Income Housing Fund land held for resale is valued at lower of cost or market. Reported land held for resale is equally offset by a fund balance reserve, which indicates that it does not constitute available spendable resources. The land held for resale consists of lots in two mobilehome parks that the City owns and is holding until sold. It is anticipated that these lots could take several years to sell.

5. Cash and Investments with Fiscal Agents The City has monies held by trustees or fiscal agents pledged to the payment or security of certain bonds. The California Government Code provides that these monies, in the absence of specific statutory provisions governing the issuance of bonds, may be invested in accordance with the ordinance, resolutions or indentures specifying the types of investments its trustees or fiscal agents may make. These ordinances, resolutions and indentures are generally more restrictive than the City’s investment policy.

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6. Capital Assets

Capital assets, which include property, plant, equipment and infrastructure assets, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated assets are valued at the fair value of the assets on the date on which they were contributed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. The City utilizes a capitalization threshold of $5,000 - $10,000 depending on asset type.

Depreciation is charged to operations using the straight-line method over the estimated useful lives of the assets as follows: Structures and improvements 20-40 years Machinery and equipment 3-15 years Infrastructure 20-50 years 7. Accounting for Capital Leases

The City has entered into several leases that provide for the transfer of title to the City upon the exercise of a bargain purchase option or upon the payment of all required lease payments. These leases are classified as capital leases. In the accompanying financial statements, the assets acquired by means of capital leases are reported in the amount of the present value of the total lease payments. The related liability is presented in the amount of the present value of the future lease payments.

8. Employee Leave Benefits

Depending upon length of employment, City employees earn 12 to 27 vacation days a year. Sick leave is accrued at the rate of 12 days per year except for Fire Safety which earns six twenty-four hour shifts. Employees can carry forward to subsequent years two to three years worth of earned but unused vacation leave benefits depending on employee group. Upon termination, the City is obligated to compensate employees for all earned but unused vacation days. The earned but unused sick leave benefits are not payable in the event of employee termination. These benefits are considered to be contingent liabilities subject to the continuation of the employee relationship. Such sick leave benefits are therefore not recorded as liabilities in the accompanying financial statements.

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In the government-wide financial statements, a liability is accrued for all earned but unused vacation leave benefits relating to the operations of the funds. This liability will be liquidated as either additional cash payments in the event of employee termination or as part of budgeted salary expenditures if used by employees as compensated leave time while still employed by the City. In the fund financial statement governmental funds accrue current liabilities for material vacation leave benefits due on demand to governmental fund employees that have terminated prior to year-end. Non-current amounts will be recorded, as fund expenditures in the year in which they are paid or become due on demand to terminated employees. 9. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

10. Claims and Judgments

The City records a liability for litigation, judgments and claims when it is probable that an asset has been impaired or a liability has been incurred prior to year-end and the probable amount of loss (net of any insurance coverage) can be reasonably estimated. This liability is recorded in the internal service funds, which account for the City’s self-insurance activities.

11. Post Employment Medical and Other Benefits

The City does not offer City-paid benefits to retirees.

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12. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change.

II. Stewardship, Compliance and Accountability

A. Budgetary Data The City adopts an annual operating budget prepared on the modified accrual basis for its general, certain special revenue and certain debt service funds. Under Section 2-59 of the Escondido City Code, the City Manager is required to prepare and submit to the City Council the annual budget of the City and administer it after adoption. Each year, the City Manager submits a proposed budget to the City Council during early May. The City Council holds budget hearings during May and early June. The final budget is adopted by the City Council before June 30. The legal level of budgetary control is at the department level. The City Manager is authorized to transfer budgeted amounts between the accounts of any department; however, any revisions that alter the total appropriations of any department must be approved by City Council.

No budgetary comparisons are presented for certain special revenue, certain debt service, capital projects or proprietary funds as the City is not legally required to adopt an annual budget for those funds.

In addition to the annual operating budget the City adopts a Five-Year Capital Improvement Program. Funds are appropriated for the first year of the plan with years two through five included for planning purposes. Funds are appropriated on a project basis and are carried over until expended or the project is closed. The legal level of budgetary control is at the project level. The City Manager is authorized to transfer budgeted amounts between projects when transfers are less than $5,000 or 10% of the project. Transfers in excess of the budget policy amount must be approved by the City Council.

The City holds a midyear budget review meeting at which time revenue and expenditure projections are reviewed. Any necessary changes are approved by the City Council. Prior period appropriations lapse unless they are reappropriated through the formal budget process. The City controls its expenditures using encumbrance accounting.

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B. Excess of Expenditures Over Appropriations The following individual fund exceeded its expenditures budget:

Fund Type of Fund Amount over Budget

Community Development Commission Debt Service $4,158,907

The above unbudgeted expenditures were the result of two major amounts. The first amount was two bond calls totaling $1,275,000 which was the result of unanticipated Mobilehome lot sales. The second amount was accreted value of $2,583,935 on the 1995 Lease Revenue Bonds. Both expenditures were funded either by the revenues in excess of the estimated revenues or by the available fund balance.

C. Deficit Fund Equity

The following funds had a deficit at June 30, 2003: Community Development Block Grant – Special Revenue Fund $(93,860) Workers’ Compensation Internal Service Fund (1,852,936)

These deficits are expected to be eliminated with future revenues from reimbursements and transfers.

III. Detailed Notes on All Funds

A. Cash and Investments

At June 30, 2003, cash and investments are reported in the accompanying financial statements as follows:

Govermental activities $ 121,068,123Business-type activities 32,567,048Fiduciary funds 1,644,952

$ 155,280,123 Cash and investments were comprised of the following as of June 30, 2003:

Deposits with financal institutions $ 1,213,228Investments 133,280,404Investments with fiscal agents 20,780,991Petty cash and cash drawer 5,500

$ 155,280,123

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The City follows the practice of pooling cash and investments of all funds except for funds required to be held by outside fiscal agents under the provisions of bond indentures (see Note III F).

Interest income earned on pooled cash and investments is allocated monthly to the various funds based on the month-end cash and investment balances. Interest income from cash and investments with fiscal agent is credited directly to the related fund. The City is generally authorized under the City of Escondido Investment Policy to invest in demand deposits with financial institutions; obligations of the U.S. Government (at least 80% of portfolio is the target; the percentage may fluctuate depending on market conditions, but will never be lower than 70%); certificates of deposit with banks and savings and loans doing business in the State of California; Prime Banker’s Acceptances (no more than 20% of portfolio); Prime Commercial Paper (no more than 15% of portfolio); Repurchase agreements and Money Market Funds whose underlying collateral consists of the foregoing (Repurchase agreements are limited to 10% of the portfolio and Money Market funds are limited to 20% of the portfolio); Local Agency Investment Fund of the State of California and San Diego County’s Investment Pool which includes the purchase of Reverse Repurchase agreements, and pools and other investment structures incorporating the aforementioned investments. Short-term investments of the City are required to be not less than 50 percent of the total annual general fund operating budget of the City.

The California Government Code requires California banks and savings and loan associations to secure a City’s deposits by pledging government securities as collateral. The market value of pledged securities must equal at least 110% of a City’s deposits. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total deposits. The City may waive collateral requirements for deposits, which are fully insured up to $100,000 by federal depository insurance. Deposits of cities and other state or local governments are classified in three categories to give an indication of the level of credit risk assumed by the City. Category 1 includes deposits that are insured or collateralized with securities held by the City or its agent in the City’s name. Category 2 includes deposits collateralized with securities held by the pledging financial institution’s trust department or agent in the City’s name. Category 2 also includes deposits collateralized by an interest in an undivided collateral pool held by an authorized Agent or Depository in the City’s name and is subject to certain regulatory requirements under State law. Category 3 includes deposits collateralized with securities held by the pledging financial institution or by its trust

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department or agent but not in the City’s name. Category 3 also includes any uncollateralized deposits.

Investments of cities and other state or local governments are classified in three categories to give an indication of the level of risk assumed by the entity at year-end. Category 1 includes investments that are insured or registered or for which the securities are held by the City or its agent (other than the institution through which the City purchased the securities) in the City’s name. Investments held “in the City’s name” include securities held in a separate custodial or fiduciary account and identified as owned by the City in the custodian’s internal accounting records. Category 2 includes uninsured and unregistered investments for which the dealer’s agent holds the securities in the City’s name (or by the trust department of the dealer if the dealer was a financial institution and another department of the institution purchased the securities for the City). Category 3 includes uninsured and unregistered investments for which the securities are held by the dealer’s trust department or agent, but not in the City’s name. Category 3 also includes all securities held by the broker-dealer agent of the City (the party that purchased the securities for the City) regardless of whether or not the securities are being held in the City’s name. Deposits and Investments held by the City at June 30, 2003 are summarized by category below:

Category1 2 3 Amount

Demand Deposits:

Demand Accounts (bank balance) $ 100,000 $ 2,168,104 $ $ 2,268,104Add: deposits in transit 613,129Less: outstanding warrants (1,668,005)

Total Deposits $ 100,000 $ 2,168,104 $ - $ 1,213,228

Pooled Investments:

LAIF * $ $ $ $ 22,339,934Money market mutual funds * 2,623,687Tennessee Valley Authority 1,094,020 1,094,020Federal Home Loan Bank 56,972,976 56,972,976Limited Partnership (AIM) * 1,062,500Federal Home Loan Mortgage Corp. 18,219,480 18,219,480FNMA 22,499,421 22,499,421FFCB 8,468,386 8,468,386

Total Investments $ 107,254,283 $ - $ - $ 133,280,404

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Category Fair1 2 3 Value

Investment with Fiscal Agents:United States Treasury Notes $ $ $ 13,140,311 $ 13,140,311Mutual Funds * 7,640,680

Total Investments with Fiscal Agents $ - $ - $ 13,140,311 $ 20,780,991

* Not subject to categorization.

The amount of all investments reflected in the above table is at fair value.

Required Disclosures Regarding Investments

The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section §16429 under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Included in LAIF’s investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, and corporations. The City of Escondido has also invested in certain variable rate government securities, including securities with interest rates that vary inversely to certain prescribed indices.

Included in City investments is an investment in a limited partnership holding various mortgage-backed securities. This investment was authorized by City Council after extensive legal research as to the legality of the investment. Although this type of investment is not specifically listed in the state Government Code as an allowable investment for cities, the City concluded at that time that the state Government Code does not prohibit such an indirect holding of mortgage-backed securities in the form of a limited partnership interest.

B. Allowance for Uncollectible receivables

The Community Development Commission has entered into agreements with various parties to establish low and moderate housing loans. At June 30, 2003, the outstanding loan receivable total $19,357,272.

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All receivables are shown net of an allowance for uncollectibles which is at June 30 as follows:

Fund Amount

General Fund $ 262,825Water Enterprise Fund 70,400

$ 333,225

The General Fund allowance is mainly for paramedic and DUI cost recovery activities.

C. Capital Assets A summary of changes in capital asset activity for the City’s governmental activities for the year ended June 30, 2003 is as follows:

Balance at Balance at July 1, 2002 Increases Decreases June 30, 2003

Governmental activities:

Capital assets, not being depreciated:Land $ 27,347,624 $ 838,265 $ (318,059) $ 27,867,830Construction in progress 13,872,872 16,777,662 (5,746,214) 24,904,320

Total capital assets, not being depreciated 41,220,496 17,615,927 (6,064,273) 52,772,150

Capital assets, being depreciated:Land Improvements 9,433,569 1,468,434 (79,616) 10,822,387Buildings 125,985,369 173,927 (1,439,597) 124,719,699Machinery and equipment 25,978,792 1,423,142 (778,488) 26,623,446Motorized vehicles 880,676 1,461,141 2,341,817Infrastructure 173,023,324 3,210,176 176,233,500

Total capital assets, being depreciated 335,301,730 7,736,820 (2,297,701) 340,740,849

Less accumulated depreciation for:Land Improvements (8,396,831) (325,449) 79,616 (8,642,664)Buildings (37,334,791) (4,117,874) 92,111 (41,360,554)Machinery and equipment (22,066,942) (1,951,131) 752,752 (23,265,321)Infrastructure (114,867,729) (5,082,307) (119,950,036)

Total accumulated depreciation (182,666,293) (11,476,761) 924,479 (193,218,575)

Total capital assets, being depreciated, net 152,635,437 (3,739,941) (1,373,222) 147,522,274

Governmental activities capital assets, net $ 193,855,933 $ 13,875,986 $ (7,437,495) $ 200,294,424

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Balance at Balance at July 1, 2002 Increases Decreases June 30, 2003

Business-type activities:

Capital assets, not being depreciated:Land $ 958,960 $ 1,961,692 $ (30,093) $ 2,890,559 Construction in progress 96,407,777 14,560,905 (22,749,232) 88,219,450

Total capital assets, not being depreciated 97,366,737 16,522,597 (22,779,325) 91,110,009

Capital assets, being depreciated:Land Improvements 48,814 445,031 493,845 Buildings 26,488,052 345,079 26,833,131 Machinery and equipment 5,678,379 1,110,406 (269,958) 6,518,827 Golf course 4,314,066 4,314,066 Water system 46,601,080 4,690,225 (885,691) 50,405,614 Electrical system 3,433,127 3,433,127 Sewer system 64,204,086 912,481 65,116,567 Recycled water system 10,699,207 10,699,207

Total capital assets, being depreciated 146,453,538 22,516,495 (1,155,649) 167,814,384

Less accumulated depreciation for:Land Improvements (35,712) (10,333) (46,045) Buildings (15,240,174) (652,929) (15,893,103) Machinery and equipment (4,732,823) (503,486) 175,595 (5,060,714) Golf course (95,868) (95,868) Water system (12,693,712) (1,319,482) (14,013,194) Electrical system (2,035,010) (129,140) (2,164,150) Sewer system (19,478,122) (1,606,500) (21,084,622) Recycled water system (187,919) (187,919)

Total accumulated depreciation (54,215,553) (4,505,657) 175,595 (58,545,615)

Total capital assets, being depreciated, net 92,237,985 18,010,838 (980,054) 109,268,769

Business-type activities capital assets, net $ 189,604,722 $ 34,533,435 $ (23,759,379) $ 200,378,778

Construction in progress in the governmental activities consists primarily of additions to infrastructure, park upgrades, police department building improvements, finance and public art projects.

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Business-type construction in progress consists primarily of expansion of the wastewater treatment plant, construction of a reclamation distribution system and water and sewer line installation projects.

Depreciation expense of $15,982,418 was charged to the following functions:

Governmental Activities

Business-type Activities

General government $ 1,180,197 $Public safety 5,850,361 Cultural and recreation 1,394,300 Public works 2,435,683 Community development 616,220 Water 2,036,245 Wastewater 2,275,646 Golf 193,766

Total $ 11,476,761 $ 4,505,657 D. Interfund Receivable, Payable and Transfers Due to/from other funds:

Due from other funds

Wastewater Due to other funds General Fund Fund Total

Nonmajor Governmental Funds $ 879,688 $ 781,300 $ 1,660,988Nonmajor Business Type Funds 150,000 150,000Internal Service Funds 127,827 127,827

Total $ 1,157,515 $ 781,300 $ 1,938,815 These balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. The General Fund loaned the General Capital Projects Fund $200,000 for a mobile home development and $807,515 to funds which had negative cash balances.

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Advance to/from other funds:

Advance From:Nonmajor

Water GovernmentalAdvance To: General Fund Fund Fund Total

CDC Debt Service $ 11,668,299 $ $ 200,000 $ 11,868,299Wastewater Fund 5,500,000 5,500,000Nonmajor Governmental Funds 159,250 669,988 829,238

Total $ 11,827,549 $ 5,500,000 $ 869,988 $ 18,197,537 The advances were primarily used for the following: 1. The Community Development Commission Capital Projects Fund has received

monies from the General Fund and the Street Special Revenue Fund for use in its operations. Interest is accrued at the average annual 20-year municipal bond rate plus one percent, which equated to 7.04% for the year ended June 30, 2003. Accrued interest on the advances amounting to $17,224,725 is not reflected in the accompanying financial statements. Interest is recorded when it becomes payable from available spendable resources. The amount of the long-term advances to other funds has been offset by a fund balance reserve amount. At June 30, 2003, the outstanding balance is $11,868,299.

2. In March 2001, the City issued $25,730,000 Revenue Certificates of Participation

Water Bonds. See note III E. Of which, $5,500,000 was advanced to the Wastewater Fund. The repayment of the advance has been calculated based on the Wastewater Funds prorata share over the life of the bond. The principal payments range from $82,323 to $376,129. At June 30, 2003 the amount of $5,500,000 remains outstanding.

3. The City entered into agreements for the purchase of the downtown parking lots and

Vineyard golf course improvements. These advances totaled $829,238 at June 30, 2003.

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Interfund transfers:

Transfer inLow and OtherModerate Community Nonmajor

General Income Development Governmental EnterpriseTransfer out Fund Housing Commission Funds Water Wastewater Total

General Fund $ $ $ $ 5,224,235 $ $ $ 5,224,235Low and Moderate

Income Housing 1,555,178 1,555,178Community

DevelopmentCommission 128,848 128,848

Enterprise: Water 2,494,515 2,494,515 Wastewater 290,564 290,564Internal Service 47,320 47,320Other Nonmajor

Governmental Funds 4,470,510 76,745 4,731,135 15,000 15,000 9,308,390

Total $ 4,470,510 $ 205,593 $ 1,555,178 $ 12,787,769 $ 15,000 $ 15,000 $ 19,049,050

Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, (2) move receipts restricted to the debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, and (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. E. Long-Term Liabilities

Governmental Activities: Employee Leave Benefits Payable The City’s policies relating to employee leave benefits are described in Note I D. This liability will be paid in future years from future resources primarily from the general fund. $6,129,908 Claims Payable (Note I D) $6,695,339

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Obligation Under Capital Lease

In 2002, the City entered into an Equipment Lease for computer equipment for the amount of $85,856. Title transfers to the City at the termination of lease, the annual principal and interest installment is $18,983 and interest on the lease is 4.32%. $ 85,856

In 1998, the City entered into an Equipment Lease for a fire truck in the amount of $465,317; title transfers to the City at termination of the lease; the annual principal and interest installment is $60,750 and interest on the lease is 5.48%. In 1999, the City entered into an Equipment Lease for two fire trucks in the amount of $315,000; title transfers to City at termination of lease; the annual principal and interest installment is $73,123 and interest on the lease is 5.61%. In 2002, the City entered into an Equipment Lease for two fire trucks in the amount of $630,019; title transfers to City at termination of lease; the annual principal and interest installment is $137,210 and interest on the lease is 4.53%. 706,032

$791,888 Loan Payable

In 2002, the Community Development Commission of the City of Escondido received a loan from the California Housing Finance Agency. The proceeds of the loan are to be used to finance the acquisition of Washington Plaza Apartments. The term of the loan is ten years with an annual interest rate of 3%. Payment is deferred for the term of the loan. $ 800,000

The Escondido Community Development Commission (Commission), a component unit of the City of Escondido, entered into a Disposition and Development Agreement on July 22, 1992 with Arroyo Energy Limited Partnership, a California limited partnership (Developer). The Agreement was entered into for the purpose of developing an ice arena and health club facility within the redevelopment area. Under the terms of the Agreement, the Commission would pay $1,000,000 to the Developer, attributable to the site of the development (net of the site’s pro rata share of any existing pass-through agreements and the required low and moderate income housing deposits). The interest rate on the loan is 10%, and the annual payment of interest and principal is $131,500 commencing 1995 and ending 2009. 639,769

$1,439,769

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Certificates of Participation

In December 1993, the City of Escondido issued $6,775,000 of taxable Certificates of Participation to provide financing for the acquisition of an 18-hole golf course. The principal is due annually in amounts ranging from $160,000 to $645,000 on September 1 of each year commencing with 1995 through the year 2014. Interest is payable semiannually on March 1 and September 1 of each year commencing September 1, 1994, at rates ranging from 5.5% to 8.4%. The reserves are fully funded. $5,165,000 Tax Allocation Bonds

In January 1992, the Escondido Joint Powers Financing Authority issued $35,986,152 Revenue Bonds Series 1992 for the purpose of making a loan to the Escondido Community Development Commission. In December 2001, the Commission issued $22,420,000 Revenue Bonds to advance refund $23,585,000 of the bonds. The remaining bonds consist of capital appreciation bonds in the initial amounts of $612,259 and $568,893 due on September 1, 2012 and September 1, 2013, respectively, in the accreted amounts of $2,240,000 each. The outstanding balance at June 30, 2003, includes $1,251,157 of accreted value of the capital appreciation bonds. 2,432,309 In March 1993, the Escondido Joint Powers Financing Authority issued $24,790,000 Revenue Bonds Series 1993A for the purpose of making a loan (advance) to the Escondido Community Development Commission. Principal is due annually in amounts ranging from $1,050,000 to $2,055,000 on September 1 of each year through the year 2009. Interest is payable semiannually on March 1 and September 1 of each year commencing September 1, 1993 at rates ranging from 3.00% to 5.20%. The reserves are fully funded. 12,465,000

$20,062,309 Lease Revenue Bonds

In May 1995, the Commission issued $51,385,757 of Certificates of Participation (COP) Lease Revenue Bonds to advance refund $41,000,000 of the 1992 COP to provide financing for the Civic Center Construction project. The 1995 refunding COP bear interest rates between 5.50% and 6.65% and were issued under a

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trust agreement dated May 1, 1995 with the First Interstate Bank of California as trustee. The refunding COP mature between September 1, 2003 through September 2018 in amounts ranging from $2,140,730 to $5,136,800. Bonds maturing on or after September 1, 2005, are subject to optional redemption in any amount at the discretion of the Commission, on any date on or after September 1, 2003 at redemption prices ranging from 100% to 102% of principal. Additionally, $12,195,000 Term Bonds are due September 1, 2018 and are subject to mandatory redemption from a sinking fund account in amounts ranging from $850,000 to $1,845,000. Interest is payable semiannually on March 1 and September 1 of each year commencing on March 1, 1996, at rates ranging from 5.6% to 6.0%. Capital appreciation bonds in the initial amount of $26,970,757 are due annually in accreted maturity amounts ranging from $2,605,000 to $7,010,000 on September 1 of each year through the year 2018 commencing in 2003. The outstanding balance at June 30, 2003, includes $16,457,397 of accreted value of the capital appreciations bonds. The reserve was fully funded. $67,837,154

In March 1999, the Community Development Commission of the City of Escondido issued $6,625,000 in Lease Revenue Bonds which bear interest rates between 3.63% and 4.7% to advance refund $6,160,000 of outstanding 1991 Mobile Home Parks Project Certificates of Participation (COPS). The $6,625,000 1999 Lease Revenue Bonds are due in annual installments through 2021 of $155,000 to $215,000. In addition term bonds of $1,885,000 at 5.0% mature on March 1, 2021. The Bonds maturing on or after March 1, 2015 will be subject to redemption at the option of the Commission from any available funds as a whole or in part on any date on or after March 1, 2009, at redemption prices ranging from 100% to 102%. The Term Bonds maturing March 1, 2021 are subject to mandatory redemption from a sinking fund account in amounts ranging from $235,000 to $310,000. The reserve was fully funded. 3,855,000

In December 2001, the Commission issued $22,420,000 of Lease Revenue Bonds to refund $22,005,000 of the 1992 Certificates of Participation which were issued to refund certain certificates of participation originally issued by the City of Escondido in 1986 to finance a portion of the construction of the City Hall. The Bonds

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are due in annual installments from 2002 through 2011, with interest rates ranging from 3.00% to 4.25% and annual installments of $1,970,000 to $2,580,000. 20,305,000

Total Lease Revenue Bonds $91,997,154

Debt Service Requirements to Maturity – Governmental Activities

The annual requirements to amortize outstanding long-term debt including accreted values of the City’s Governmental Activities as of June 30, 2003, excluding amounts for employee leave benefits payable, claims payable and loans payable are as follows (expressed in thousands of dollars):

Capital Lease Certificates of Tax Allocation Lease RevenueYear Ending Payable Participation Bonds Bonds

June 30 Principal Interest Principal Interest Principal Interest Principal Interest

2004 $ 204 $ 34 $ 270 $ 427 $ 1,535 $ 590 $ 5,630 $ 1,9762005 182 27 290 406 1,605 514 6,480 2,2302006 161 19 315 383 1,685 433 6,650 2,1492007 168 11 340 358 1,770 346 6,835 2,0082008 65 3 365 331 1,860 255 7,115 1,817

2009-2013 12 2,345 1,144 6,250 210 44,920 5,7162014-2018 1,240 158 2,240 36,140 2,1662019-2021 8,600 145

Total Debt Service Payments $ 792 $ 94 $ 5,165 $ 3,207 $ 16,945 $ 2,348 $ 122,370 $ 18,207

Summary of Changes in Long-term Liabilities for Governmental Activities

*See restatement footnote IV G.

Excludes a bond premium of $262,882.

RestatedBalance at Balance at Due within

July 1, 2002* Additions Reductions June 30, 2003 one year

Employee leave benefits payable $ 5,566,299 $ 574,780 $ (11,171) $ 6,129,908 $ 478,941 Claims payable 4,704,543 1,990,796 6,695,339Capital lease payable 403,827 596,171 (208,110) 791,888 204,397 Loan payable * 1,501,154 (61,385) 1,439,769 67,523 1993 Taxable Certificates of

Participaton 5,415,000 (250,000) 5,165,000 270,000 1992 Tax Allocation Revenue Bonds 2,283,271 149,038 2,432,3091993 Tax Allocation Revenue Bonds 13,930,000 (1,465,000) 12,465,000 1,535,0001995 Lease Revenue Bonds* 65,253,219 2,583,935 67,837,154 3,505,0001999 Lease Revenue Bonds 5,355,000 (1,500,000) 3,855,000 155,000 2001 Lease Revenue Bonds 22,420,000 (2,115,000) 20,305,000 1,970,000

Totals $ 126,832,313 $ 5,894,720 $ (5,610,666) $ 127,116,367 $ 8,185,861

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Business-type Activities:

Connection Rights Payable

In 1982, the City raised funds for water and sewer improvements by selling in advance rights to connect to the utility system. The holders of those rights could sell or transfer those rights to others. The value of the rights resulted from the ability of the holder to redeem the rights to the City in order to connect to the system. The amounts collected represent connection fees collected in advance of the connection. The amounts collected are recorded as a liability until earned at the time of connection. The purchase price for sewer connection rights sold was $1,500 per right. Per the contract, the rights increase in value at 10% per year till May 31, 2007. As of that date, a sewer right will be valued at $21,872. The purchase price for water connection rights sold was $900 per right. Per the contract, the rights increase in value at 10% per year till July 1, 1993. At that time, each right was valued at $3,230. There was no limit to the number of rights purchased under a contract or the number of contracts an individual might purchase. Both contracts allowed several options to the purchaser. These options were: 1) The rights could be used by the purchaser at the time of pulling building permits, thus waiving the current fee being charged by the Building Department; 2) if the owner of the rights sold the property for which the rights were originally purchased, the rights could be transferred to the new owner; 3) the last option was to turn in the right to the City of Escondido for the purpose of resale on a “first come, first served” basis. Resales are determined monthly and paid based on receipts from current connection fees on building permits. Interest on connection rights represents the increase in the obligation of the City to the holders of the rights as a result of rates of increase stipulated in the City’s agreement with the holders of the rights. $15,443,448

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Employee Leave Benefits Payable

The City’s policies relating to employee leave benefits are described in Note I D.8. of the Notes to Financial Statements. This liability will be paid in future years from future resources. $ 791,926

Claims Payable (Note I D) $1,302,997 Obligation Under Capital Lease

In 1998, the City entered into an Equipment Lease for a fire truck; the present value of total lease payments is $465,317; title transfers to City at termination of lease; the annual principal and interest installment is $60,750 and interest on the lease is 5.48%. In 1999, the City entered into an Equipment Lease for a fire truck; the present value of total lease payments is $315,000; title transfers to City at termination of lease; the annual principal and interest installment is $73,123 and interest on the lease is 5.61%. In 2002, the City entered into an Equipment Lease for a fire truck; the present value of total lease payments is $630,019; title transfers to City at termination of lease; the annual principal and interest installment is $137,163 and interest on the lease is 4.53%. $165,512 Deposits Payable

The City collects deposits from water customers when water service is initiated and when credit issues arise. These deposits are refunded when service is canceled or after a period specified by the Water Department in the case of additional credit-related deposits. $603,931 Special Assessment Debt with Government Commitment In February 1994, the City issued bonds for the Assessment District No. 93-1 (Bernardo Avenue/Hamilton Lane Sewer). Proceeds from the bonds are to be used by the City to provide sewer service to specific residences. The bonds were issued in the amount of $242,461 and bear an interest rate of 3.75% to 6.10%, depending on the date of maturity. Bonds are payable annually beginning September 2, 1995 through September 2, 2008. The property owners benefiting from the 1915 Act Assessment District improvements are directly liable for repayment of the Special Assessment Bonds pursuant to the Improvement Bond Act of 1915

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and the Municipal Improvement Act of 1913. The City is not directly liable for repayment of the bonds. The City may, at its sole option and in its sole discretion, elect to advance available surplus funds of the City to pay for any delinquent installments pending sale, reinstatement, or redemption of the delinquent property. However, Bond owners should not rely upon the City to advance monies to the Redemption Fund if the Reserve Fund were ever depleted. The liability for the bonds along with a corresponding assessments receivable have been included in the Wastewater Fund. $105,000

Revenue Certificates of Participation On March 2001, the City issued $25,730,000 in Revenue Certificates of Participation with an average interest rate of 5.4% to (i) finance certain improvements to the City’s Hale Avenue Resource Recovery Facility (the “HARRF Project”) (ii) finance various capital improvements to the Water System (the “Water Project”) and (iii) advance refund $6,860,000 of outstanding 1996 Water Revenue Bonds with an average interest rate of 5%, which were originally executed and delivered to provide funds for the refunding of certain water revenue bonds of the City issued in 1974 and 1989 which in turn financed the acquisition, construction and improvement of certain elements of the Water System.

The $25,730,000 Revenue Certificates of Participation are due in annual installments beginning March 1, 2001 through 2032 of $85,000 to $7,050,000 with varying interest rates from 5% to 6% per annum. At June 30, 2003, the reserve was fully funded.

The Certificates with stated maturities on or after September 1, 2011, will further be subject to prepayment prior to their respective stated maturities, as a whole or in part on any date in the order of maturity as directed by the City in a Written Request provided to the Trustee at least 60 days prior to the prepayment date and by lot within each maturity in integral multiples of $5,000, on or after September 1, 2010 from amounts prepaid by the City pursuant to the Installment Purchase Agreement at a Prepayment Price (expressed as a percentage of the principal amount of such Certificates to be prepaid) ranging from 100% to 101% plus interest accrued. In addition the term bonds maturing

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on September 1, 2018 through 2031, in the amounts ranging from $1,925,000 to $6,000,000 and with interest ranging from 5.625% to 6%, are subject to mandatory sinking fund prepayment. Unamortized bond discounts and deferred charges are $742,872 at June 30, 2003. $25,450,000

On August 2002, the City issued $9,170,000 in Revenue Certificates of Participation, Series 2002 A, to finance the cost of construction of certain replacements to water lines and other capital improvements to the water system. The $9,170,000 Revenue Certificates of Participation are due in annual installments beginning September 1, 2004 through 2023 of $70,000 to $145,000 with varying interest rates from 1.7% to 5% per annum. In addition, there is $7,275,000 of term bonds with an interest rate of 5% due September 2024 through 2033 in amounts ranging from $145,000 to $2,275,000, which are subject to mandatory sinking fund prepayment. At June 30, 2003, the reserve was fully funded.

The Certificates with stated maturities on or after September 1, 2011, will further be subject to prepayment prior to their respective stated maturities, as a whole or in part on any date in the order of maturity as directed by the City in integral multiples of $5,000, on or after September 1, 2011 from amounts prepaid by the City pursuant to the Installment Purchase Agreement at a Prepayment Price (expressed as a percentage of the principal amount of such Certificates to be prepaid) ranging from 100% to 101% plus interest accrued. Unamortized bond discounts and deferred charges are $316,366 at June 30, 2003. $9,170,000 Certificates of Participation In November 1996, the City of Escondido issued $33,440,000 Certificates of Participation to provide funds for a refunding of City of Escondido 1972 Sewer revenue Bonds, Series A. The Certificates of Participation were used for the acquisition of Daley Ranch and related water and sewer connection rights. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City’s financial statements.

The 1996 refunding COP bear interest rates between 4.50% and 5.40% and were issued under a trust agreement dated December 1,

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1996 with Wells Fargo Bank as trustee. Subsequently, Wells Fargo Bank merged with Bank of New York. The refunding COP mature between September 1, 1999 through September 1, 2016 in the amounts ranging from $25,000 to $3,825,000. In addition, $18,865,000 of Term Certificates are due on September 1, 2026. At June 30, 2003, the reserve was fully funded. Unamortized bond discounts and deferred charges are $683,685 at June 30, 2003. $27,695,000 2001 Lease Revenue Bonds In April 2001, the City of Escondido issued $6,300,000 in Lease Revenue Bonds to provide financing for the acquisition and construction of an 18-hole golf course. The principal is due annually on September 1 in amounts ranging from $70,000 to $240,000, commencing 2003 and ending 2020. In addition, $3,770,000 of Term Bonds are due September 1, 2030. Interest is payable semiannually on March 1 and September 1 of each year commencing September 1, 2001, at rates ranging from 3.5% to 5.12%. The reserves are fully funded. Unamortized bond discount and deferred charges are $215,613 at June 30, 2003. $6,300,000 Loan Payable

In 1999, the City of Escondido entered into an agreement with the State Water Resources Control Board (State Board) for a revolving fund loan program. The fund was established with a combination of Federal Clean Water Act funds and State matching funds. The proceeds were used to construct a Tertiary Treatment Facility for local wastewater and a delivery system for recycled water to a specified number of local users. There are two phases in the Tertiary Treatment Facility project, and the loan was set up with sub-loan amounts for each phase. The City is obligated to repay the State Board on the Federal Disbursement Amount as principal and the Local Match Amount as interest on the loan. The Federal Disbursement portion is 83.33% and the Local Match portion is 16.67% of the total loan balance. The first phase of the Tertiary Treatment Facility project was completed on May 25, 2001. During fiscal year 2002-03 the City increased the outstanding loan balance on the second phase of the

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projects by $4,912,366. The project was competed on April 1, 2003. The principal and interest on the first phase loan is due annually on May 25 in the amount of $488,990 commencing 2002 and ending 2021. The principal and interest on the second phase loan is due annually on April 1 in the amount of $1,676,754 commencing 2004 and ending 2023. $ 35,280,617

In 2002, the City of Escondido entered into an agreement with the Department of Water Resources for a loan program. The fund was provided in part from a Federal Capitalization Grant for Drinking Water State Revolving Funds. The proceeds are used to construct the Gravity Float Line Capital Project. Repayment is scheduled to begin on January 1, 2005, with semi-annual payments of $65,459 with varying interest rates from 1.94% to 3.16%. The repayment schedule may change depending on the actual completion date, and the amount of repayments may change based on recalculation with actual disbursement amounts at the completion of the project. At June 30, 2003 the project was not completed. 612,332

$ 35,892,949

Debt Service Requirements to Maturity – Business-type Activities

The annual requirements to amortize outstanding long-term debt of the City’s Business-type Activities as of June 30, 2003, excluding amounts for connection rights payable, employee leave benefits payable, claims payable, deposits payable and loans payable are as follows (expressed in thousands of dollars):

Special AssessmentYear Ending Lease Payable Water Revenue COP Wastewater COP Lease Revenue Bonds Bonds

June 30 Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest2004 $ 44 $ 8 $ 385 $ 1,878 $ 250 $ 1,533 $ 105 $ 301 $ 15 $ 62005 39 6 475 1,857 305 1,521 115 297 15 52006 34 4 495 1,834 360 1,505 130 292 15 42007 35 2 520 1,810 425 1,487 140 287 20 32008 11 545 1,784 490 1,464 150 282 20 2

2009-2013 3 3,190 8,471 3,175 6,871 455 1,352 20 12014-2018 4,145 7,508 3,825 6,115 775 1,2222019-2023 5,515 6,142 5,379 660 1,0162024-2028 7,335 4,322 18,865 3,765 9662029-2033 9,740 1,916 3,770 4832034-2038 2,275 57

Total Debt Service $ 166 $ 20 $ 34,620 $ 37,579 $ 27,695 $ 29,640 $ 6,300 $ 6,498 $ 105 $ 21

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Summary of Changes in Long-term Liabilities for Business-type Activities:

Balance at Balance at Due withinJuly 1, 2002 Additions Reductions June 30, 2003 one year

Connection Rights Payable $ 16,102,907 $ $ (659,459) $ 15,443,448 $Employee Leave Benefits Payable 706,284 88,189 (2,547) 791,926 145,846 Claims Payable 920,040 382,957 1,302,997Capital Lease Payable 92,728 119,703 (46,819) 165,612 43,847 Deposit Payable 598,445 5,486 603,931Loan payable 30,368,251 5,932,188 (407,490) 35,892,949 1,804,779 Special Assessment Debt 93-1 120,000 (15,000) 105,000 15,000 2000 Water Revenue COP 25,540,000 (90,000) 25,450,000 385,000 2002 Water Revenue COP 9,170,000 9,170,0001996 Wastewater COP 27,895,000 (200,000) 27,695,000 250,000 2001 Reidy Creek Lease Revenue Bond 6,300,000 6,300,000 105,000

Totals $ 108,643,655 $ 15,698,523 $ (1,421,315) $ 122,920,863 $ 2,749,472

Includes bond and COP discounts of $1,958,536.

F. Rate Covenants

Under various debt issues, the City has agreed to set charges for water and wastewater services each year at rates sufficient to produce net revenues (after paying operating and maintenance expenses, excluding depreciation and interest) of at least 1.20 and 1.00 times the debt service on the bonds for that year for the Water and Wastewater Fund, respectively. For the year ended June 30, 2003, the City met this requirement, as follows:

Water Wastewater

Gross revenues, excluding intergovernmental revenue $ 29,779,969 $ 16,722,833

Operating and maintenance expenses,excluding depreciation and interest 25,902,991 11,131,936

Net revenues 3,876,978 5,590,897

Amount required:Debt service payments 2,273,003 1,790,452 Coverage required 1.20 1

Amount required 2,727,604 1,790,452

Excess of net revenues $ 1,149,374 $ 3,800,445

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G. Special Item

During the fiscal year 2002-03, the City entered into a Disposition and Development Agreement with Signature Management, LLC. The agreement specifically addresses the purchase of a parcel of land integral to the theater project from a third party and the sale of that parcel to Signature Management, LLC. This transaction resulted in a net loss of $2,043,559 to the City. This has been reported as a special item classified as an economic development incentive.

IV. Other Information A. Self-Insurance and Contingent Liabilities

The City is a member of the San Diego Pooled Insurance Program Authority (SANDPIPA) which provides liability coverage to its members. As a member, the City carries a self-insured retention of $500,000 and is insured through SANDPIPA from $500,000 to $2,000,000. In addition, SANDPIPA has purchased excess insurance coverage above $2,000,000 to $35,000,000 for all of its members, including the City.

The Board of Directors elects three members (including a President and Vice President) to the Executive Committee, which has the responsibility for overseeing all operations of SANDPIPA, including preparation and submission of the annual operating budget to the Board of Directors for its approval and modification, if deemed necessary.

Annual premiums and assessments are approved by the Board of Directors and are adjusted each year based on the following criteria:

Each city’s incurred losses;

Each city’s share of such losses and other expenses as a proportion of all cities’ such

losses;

Each city’s contribution to reserves, including reserves for incurred-but-not reported losses;

Each city’s share of costs to purchase excess insurance; and

Each city’s share of costs to purchase any additional coverage.

If and when SANDPIPA is dissolved, the remaining assets, after all premiums and assessments have been paid and final disposition of all claims has been determined, will

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be distributed to members proportionate to each city’s cash contributions made during the life of SANDPIPA. Until dissolution, however, no city has identifiable equity in SANDPIPA. As of June 30, 2003, the City has recorded general self-insurance and workers’ compensation liabilities of $7,998,336. The City is self-insured for workers’ compensation, but has purchased outside insurance coverage for individual claims in excess of $250,000 up to a maximum of $5,000,000 per claim. Only the probable amounts of loss as estimated by legal counsel and the City, including an estimate for incurred but not reported losses, have been recorded as liabilities in the accompanying financial statements. Increases and decreases in claim liabilities for changes in estimates are charged to expense in the period in which the estimates are adjusted. For the past three years, no settlements or claims payments have exceeded the amount of the applicable insurance coverage. For the past two fiscal years, the changes in the City’s liability for claims payable are summarized as follows:

ClaimsIncurred

Beginning and Changes Less Claim EndingBalance in Estimates Payments Balance

2001-02 $ 3,900,916 $ 3,585,980 $ (1,862,313) $ 5,624,5832002-03 5,624,583 5,272,321 (2,898,568) 7,998,336 B. Mortgage Revenue Bonds Without Government Commitment

The City has issued mortgage revenue bonds for low-income multifamily dwellings. These bonds are not included in the accompanying financial statements, as these bonds are payable solely from the related mortgage loans in which the bond proceeds were invested. They are as follows:

Original Balances at

Issue Amount June 30, 2003 Due Date

Morning View Terrace $ 11,000,000 $ 10,700,000 January 1, 2007Terrace Garden 8,100,000 7,490,000 July 1, 2007Redwood Terrace, Series 91 15,200,000 10,500,000 November 1, 2007

Total Mortgage Revenue Bonds $ 34,300,000 $ 28,690,000

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C. Special Assessment Debt Without Government Commitment

In January 1998 the City issued $4,435,000 in Limited Obligation Improvement Refunding Bonds for the Auto Parkway project. Interest payments commenced March 2, 1999 and are paid semiannually thereafter on September 2 and March 2 of each year. Principal payments commenced September 2, 1999 and are paid annually in amounts ranging from $10,000 to $190,000, commencing 1999 and ending 2008. In addition, $2,575,000 of Term Bonds are due September 2, 2018. These bonds were issued to refund the Limited Obligation Bonds issued in July 1988 for Assessment District No. 86-1-R. On June 30, 2003 the 86-1-R Limited Obligation Improvement Refunding Bonds outstanding were $3,490,000. In August 1998 the City issued $5,105,000 in Limited Obligation Refunding Bonds for Assessment District No. 98-1 (Rancho San Pasqual). Interest payments commenced March 2, 1999 are paid semiannually thereafter on March 2 and September 2 and annual principal payments are made on September 2 in amounts ranging from $80,000 to $165,000 commencing 1999 and ending 2013. In addition, $3,215,000 of Term Bonds are due September 2, 2026. These bonds were issued to refund the Limited Obligation Improvements Bonds issued in September 1995 for Rancho San Pasqual Assessment District No. 95-1. On June 30, 2003 the 98-1 Limited Obligation Refunding Bonds outstanding were $4,620,000.

In October 2001, the City issued $3,085,000 is Special Tax Bonds for Community Facility District No. 2000-01 (Hidden Trails). Interest payments commenced September 1, 2002 and are paid semiannually thereafter on September 1 and March 1 of each year. Principal payments commence September 1, 2003 and are paid annually in amounts ranging from $45,000 to $110,000, commencing 2003 and ending 2020. In addition, $1,785,000 of Term Bonds are due September 1, 2031. The bonds were issued to finance various public improvements needed to develop property located within Community Facilities District No. 2000-01 (Hidden Trails). The principal outstanding balance as of June 30, 2003 was $3,085,000. The bonds are secured by and payable from the proceeds of annual special assessment taxes levied and collected on the property within the Districts. The bonds are not general or special obligations of the City of Escondido. The City is not obligated in any manner for the payment of debt service in the event of default by the property owners but is only acting as an agent for the property owners in collecting the assessments, forwarding the collections to bondholders, and initiating foreclosure proceedings, if appropriate. Neither the faith and credit nor taxing power of the City is pledged to the payment of these bonds. Accordingly, no liability for these bond issuances has been recorded and all debt service transactions have been recorded as an agency fund.

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June 30, 2003

D. Prior Year Defeasance of Debt

In prior years the City defeased certain general obligations and other bonds by placing the proceeds of new bonds in irrevocable trusts to provide for all future debt service payments on the old bonds. Accordingly the trust account assets and liability for the defeased bonds are not included in the City’s financial statements. On June 30, 2003 $34,275,000 of bonds outstanding are considered defeased.

E. Other Guarantees and Commitments

The City has executed a commercial guarantee agreement which establishes a commercial line of credit in the amount of $1,250,000 for the California Center for the Arts, Escondido. F. City Employees Retirement Plans –

1. Defined Benefit Pension Plan

Plan Description

The City of Escondido contributes to the California Public Employees Retirement System (PERS), an agent multiple-employer public employee defined benefit pension plan. PERS provides retirement, disability benefits, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Copies of PERS’ annual financial report may be obtained from their executive office: 400 P Street, Sacramento, California 95814.

Funding Policy Participants are required to contribute 7% (9% for safety employees) of their annual covered salary. The City makes the contributions required of City employees on their behalf and for their account. For the year ended June 30, 2003, the amount contributed by the City on behalf of the employees was $3,777,993. The City is required to contribute at an actuarially determined rate calculated as a percentage of covered payroll. The employer contribution rate for the year ended June 30, 2003 was 0% for miscellaneous employees and 7.253% for police and fire employees. Separately funded plans have been established for each employee group. Benefit provisions and all other requirements are established by state statute and City contract with employee bargaining groups.

81


June 30, 2003

Annual Pension Cost For the year ended June 30, 2003, the City’s annual pension cost (employer contribution) of $1,250,812 for safety and $0 for miscellaneous employees was equal to the City’s required and actual contributions. The required contribution was determined as part of the June 30, 2002, actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included (a) 8.25% investment rate of return (net of administrative expenses), (b) projected annual salary increases that vary by duration of service, (c) 3.50% inflation, (d) 3.75% payroll growth, and (e) individual salary growth using a merit scale varying by duration of employment coupled with an assumed annual inflation component of 3.50% and an annual production growth of 0.25%. The actuarial value of PERS assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a four-year period (smoothed market value). PERS’ unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis. PERS has combined the prior service unfunded liability and the current service unfunded liability into a single initial unfunded liability. The single funding horizon for this initial unfunded liability is June 30, 2016.

THREE-YEAR TREND INFORMATION FOR SAFETY EMPLOYEES

Annual Pension Percentage of Net Pension Fiscal Year Cost (APC) APC Contributed Obligation

6/30/01 $-0- 100% - 0 - 6/30/02 917,491 100% - 0 - 6/30/03 1,250,812 100% - 0 -

THREE-YEAR TREND INFORMATION FOR MISCELLANEOUS

EMPLOYEES Annual Pension Percentage of Net Pension Fiscal Year Cost (APC) APC Contributed Obligation

6/30/01 $-0- 100% - 0 - 6/30/02 -0- 100% - 0 - 6/30/03 -0- 100% - 0 -

82


June 30, 2003

2. Defined Contribution Plan

In accordance with the Federal Omnibus Budget Reconciliation Act of 1990, the City established pension benefits for all of its part-time employees through Public Agency Retirement System (PARS) which is a defined contribution plan, qualifying under sections 401 and 501 of the Internal Revenue Code. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings.

For the year ended June 30, 2003, the City’s total and covered payroll was $2,362,493. The City made employer contributions of $88,595 (3.75 percent of covered payroll), and employees contributed $88,595 (3.75 percent of covered payroll). All eligible employees are covered by the plan and are fully vested. Employer liabilities are limited to the amount of current contributions. The plan covers part-time, seasonal, or temporary employees, and all employees not covered by another retirement system, subject to the requirements of Section 3121 of the Internal Revenue Code.

G. Restatement

GovernmentalActivities

Beginning net assets, July 1, 2002 $ 229,585,064Restatement for accretion of the capital depreciation bonds (13,867,462)Restatement to loan payable (701,154)

Beginning net assets, July 1, 2002, restated $ 215,016,448 The beginning net assets for the Governmental Activities have been restated to properly account for the capital appreciation of the 1995 COP and the Arroyo Energy Limited Partnership loan payable.

83

Required Supplementary Information

84

UAAL asActuarial a % ofValuation Funded Covered

Date Ratio Payroll

6/30/00 $ 106,823,944 $ 120,585,742 $ (13,761,798) 112.9% $ 14,951,427 (92.0) %

6/30/01 115,599,093 124,642,560 (9,043,467) 107.8% 15,371,852 (58.8) %

6/30/02 125,970,515 118,407,022 7,563,493 94.0% 16,202,656 46.7 %

UAAL asActuarial a % ofValuation Funded Covered

Date Ratio Payroll

6/30/00 $ 86,532,936 $ 117,149,997 $ (30,617,061) 135.4% $ 26,086,030 (117.4) %

6/30/01 96,282,989 122,161,430 (25,878,441) 126.9% 27,811,913 (93.0) %

6/30/02 106,808,760 115,844,515 (9,035,755) 108.5% 29,722,913 (30.4) %

Safety Employees

Miscellaneous Employees

AccruedLiability (AAL)

Entry Age

ActuarialValue of

Assets

CITY OF ESCONDIDO

Schedule of Funding ProgressJune 30, 2003

Public Safety Employees Retirement System

UnfundedAAL

(UAAL)CoveredPayroll

AccruedLiability Actuarial Unfunded(AAL) Value of AAL Covered

Entry Age Assets (UAAL) Payroll

See Note to Required Supplementary Information.

85

Variance Over

Amounts Actual (Under)Revenues:

Sales tax $ 28,000,000 $ 28,000,000 $ 27,558,293 $ (441,707)

Other Taxes:Property taxes 6,335,000 6,335,000 6,687,803 352,803 Property transfer tax 410,000 410,000 611,610 201,610 Franchise tax 3,150,000 3,150,000 3,444,005 294,005 Transient occupancy tax 1,100,000 1,100,000 1,090,329 (9,671) Business license tax 1,450,000 1,450,000 1,353,804 (96,196)

Total Other Taxes 12,445,000 12,445,000 13,187,551 742,551

Licenses and Permits:Bicycle licenses 1,000 1,000 265 (735) Building permits 966,000 966,000 1,251,776 285,776 Mobilehome setup 25,000 25,000 21,931 (3,069)

Total Licenses and Permits 992,000 992,000 1,273,972 281,972

Fines and Forfeits:Vehicle code fines 744,125 744,125 638,239 (105,886) Parking ticket fines 130,000 130,000 205,008 75,008 Library fines 104,000 104,000 110,905 6,905 Booking fees 536,000 536,000 530,704 (5,296) Other fines 488,000 488,000 444,077 (43,923)

Total Fines and Forfeits 2,002,125 2,002,125 1,928,933 (73,192)

Intergovernmental:State motor vehicle in lieu 7,686,000 7,686,000 8,034,442 348,442 Grants 231,000 463,945 333,650 (130,295) Rincon fire operation fees 1,282,700 1,282,700 1,329,792 47,092 Miscellaneous agencies 575,700 590,420 414,240 (176,180)

Total Intergovernmental 9,775,400 10,023,065 10,112,124 89,059

(Continued)

Original Final

CITY OF ESCONDIDOGeneral Fund

Budgetary Comparison Schedule

BudgetAmounts


Budget


86

Variance Over

Amounts Actual (Under)Charges for Services:

Zoning and subdivision fees 135,000 135,000 100,391 (34,609) Annexation fees 30,000 30,000 (2,607) (32,607) Sale of maps and publications 10,000 10,000 3,161 (6,839) Plan check fees 325,000 325,000 281,088 (43,912) Environmental impact report 10,000 10,000 11,308 1,308 Engineering and inspection fee 790,000 790,000 807,956 17,956 Special police services 547,645 547,645 537,447 (10,198) Fire and paramedic services 2,294,300 2,635,960 3,808,624 1,172,664Processing fees 122,000 122,000 95,748 (26,252) Other 179,000 179,000 253,515 74,515 Older adult/oasis 203,000 203,000 178,693 (24,307) Senior meal payments 50,000 50,000 27,619 (22,381) Audio visual rentals 125,000 125,000 127,333 2,333

Total Charges for Services 4,820,945 5,162,605 6,230,276 1,067,671

Investment income 1,410,000 1,410,000 1,985,190 575,190

Miscellaneous:Rent 2,205,000 2,205,000 2,455,516 250,516 Contributions 13,970 32,945 18,975 Mobile home fees 30,000 30,000 63,947 33,947 Other 243,000 243,000 67,472 (175,528)

Total Miscellaneous 2,478,000 2,491,970 2,619,880 127,910

Total Revenues 61,923,470 62,526,765 64,896,219 2,369,454

(Continued)

Budget Budget


Budgetary Comparison Schedule (Continued)For the Year Ended June 30, 2003

Original Final

Amounts


87

Variance Over

Amounts Actual (Under)Expenditures: General government:

City council 194,370 204,370 183,331 (21,039) City manager 683,140 945,785 894,781 (51,004) City attorney 178,400 271,860 303,986 32,126 City clerk 385,115 412,275 363,548 (48,727) City treasurer 197,560 208,990 207,487 (1,503) Finance 958,220 1,152,630 1,066,199 (86,431) Human resources 602,495 664,000 358,619 (305,381) Information systems 1,664,170 1,777,020 1,525,583 (251,437) Other 2,249,435 714,200 190,251 (523,949)

Total General Government 7,112,905 6,351,130 5,093,785 (1,257,345)

Public Safety: Police 25,627,720 26,015,010 25,670,189 (344,821) Fire 11,130,635 12,083,875 12,041,539 (42,336)

Total Public Safety 36,758,355 38,098,885 37,711,728 (387,157)

Public Works: Highways and streets 9,141,975 9,478,235 9,088,575 (389,660)

Cultural and Recreational: Library 4,185,032 4,375,560 4,082,522 (293,038) Community services 1,043,875 1,088,770 998,179 (90,591) Community relations 2,052,500 2,077,500 2,069,864 (7,636) Grants and contracts 222,185 397,655 311,674 (85,981)

Total Cultural and Recreational 7,503,592 7,939,485 7,462,239 (477,246)

Community DevelopmentPlanning 1,440,990 1,586,970 1,488,124 (98,846) Building 680,275 714,390 665,600 (48,790) Code enforcement 953,615 997,160 925,050 (72,110) Economic development 414,770 454,105 421,328 (32,777)

Total Community Development 3,489,650 3,752,625 3,500,102 (252,523)

(Continued)

General FundBudgetary Comparison Schedule (Continued)


Amounts

Original FinalBudget

CITY OF ESCONDIDO

Budget


88

Over

Amounts (Under)

Total Expenditures 64,006,477 65,620,360 62,856,429 (2,763,931)

Excess (Deficiency) of Revenues Over Expenditures (2,083,007) (3,093,595) 2,039,790 5,133,385

Other Financing Sources (Uses):Sale of property 9,397 9,397 Transfers in 1,245,785 3,990,285 4,470,510 480,225 Transfers out (1,050,870) (4,920,870) (5,224,235) (303,365)

Total Other Financing Sources (Uses) 194,915 (930,585) (744,328) 186,257

Net Change in Fund Balance (1,888,092) (4,024,180) 1,295,462 5,319,642

Fund Balance at Beginning of Year 42,292,777 42,292,777 42,292,777

Fund Balance at End of Year $ 40,404,685 $ 38,268,597 $ 43,588,239 $ 5,319,642

Amounts

Variance


Actual

Budgetary Comparison Schedule (Continued)For the Year Ended June 30, 2003

Original FinalBudget Budget


89

CITY OF ESCONDIDOLow and Moderate Income Housing Special Revenue Fund

Budgetary Comparison ScheduleFor the Year Ended June 30, 2003

Original Final VarianceBudget Budget Over

Amounts Amounts Actual (Under)Revenues:

Other taxes 2,674,695$ 2,674,695$ 2,965,175$ 290,480$ Intergovernmental 744,000 744,000 112,400 (631,600)Lease income 225,475 225,475 141,108 (84,367)Investment income 195,000 225,000 562,749 337,749Miscellaneous 202,468 202,468

Total Revenues 3,839,170 3,869,170 3,983,900 114,730

Expenditures:Community development 1,647,232 1,657,232 1,462,572 (194,660)

Excess (Deficiency) of Revenues Over Expenditures 2,191,938 2,211,938 2,521,328 309,390

Other Financing Sources (Uses):Transfers in 205,593 205,593Transfers out (449,215) (449,215) (1,555,178) (1,105,963)

Total Other Financing Sources (Uses) (449,215) (449,215) (1,349,585) (900,370)

Net Change in Fund Balance 1,742,723 1,762,723 1,171,743 (590,980)

Fund Balance at Beginning of Year 27,342,096 27,342,096 27,342,096

Fund Balance at End of Year 29,084,819$ 29,104,819$ 28,513,839$ (590,980)$


90

CITY OF ESCONDIDO Note to Required Supplementary Information

June 30, 2003

Budgetary Data The City adopts an annual operating budget prepared on the modified accrual basis for its general, certain special revenue and certain debt service funds. Under Section 2-59 of the Escondido City Code, the City Manager is required to prepare and submit to the City Council the annual budget of the City and administer it after adoption. Each year, the City Manager submits a proposed budget to the City Council during early May. The City Council holds budget hearings during May and early June. The final budget is adopted by the City Council before June 30. The legal level of budgetary control is at the department level. The City Manager is authorized to transfer budgeted amounts between the accounts of any department; however, any revisions that alter the total appropriations of any department must be approved by City Council. No budgetary comparisons are presented for certain special revenue, certain debt service, capital projects or proprietary funds as the City is not legally required to adopt an annual budget for those funds.

The City holds a midyear budget review meeting at which time revenue and expenditure projections are reviewed. Any necessary changes are approved by the City Council. Prior period appropriations lapse unless they are reappropriated through the formal budget process. The City controls its expenditures using encumbrance accounting.

91

Supplementary Information

92

Final VarianceBudget Over


Taxes $ 10,698,770 $ 11,860,699 $ 1,161,929Investment income 368,000 482,961 114,961

Total Revenues 11,066,770 12,343,660 1,276,890

Expenditures:Community development 32,730 26,865 (5,865)Agency tax sharing agreement 2,020,910 2,097,708 76,798Principal retirements 3,795,000 5,141,385 1,346,385Interest and fiscal charges 3,576,767 6,318,356 2,741,589

Total Expenditures 9,425,407 13,584,314 4,158,907

Excess (Deficiency) of Revenues Over Expenditures 1,641,363 (1,240,654) (2,882,017)

Other Financing Sources (Uses): Capital appreciation on bonds 2,732,973 2,732,973

Transfers in 496,580 1,555,178 1,058,598Transfers out (128,848) (128,848)

Total Other Financing Sources 496,580 4,159,303 3,662,723

Net Change in Fund Balance 2,137,943 2,918,649 780,706

Fund Balance at Beginning of Year 1,931,837 1,931,837

Fund Balance at End of Year $ 4,069,780 $ 4,850,486 $ 780,706

Community Development Commission Debt Service Fund


CITY OF ESCONDIDO


93

SPECIAL REVENUE FUNDS

STREET FUND

This fund was established to account for transactions related to:

• Gasoline taxes received under Sections 2106, 2107, and 2107.5 of the Streets and Highways Code. These funds are utilized solely for street-related purposes such as new construction, rehabilitation or maintenance.

• Traffic impact fees which are collected from developers. These fees are used exclusively for street improvements that are required as the result of growth and development.

• Traffic Congestion Relief grants from California Dept. of Transportation. These funds provide monies to cities based on population levels for the rehabilitation and improvement of streets and other transportation purposes.

PARK DEVELOPMENT AND RECREATION FUND


• The purchase and development of parks with funding received from park development fees collected from developers.

• Improvements in Kit Carson Park. Funding is received through a lease agreement with Ernest Hahn Development Company for the North County Fair Mall.

• All Parks and Recreation transactions. This fund also includes operation activities for the Community Center and activity for the Municipal Golf Course.

• The revenue received from the sale of mitigation credits. The funds will be used to provide maintenance services at Daley Ranch.

COMMUNITY DEVELOPMENT BLOCK GRANT FUND

This fund was created to account for transactions related to the Community Development Block Grant provided by the Federal Government. The resources are expended for community development and housing assistance.

94


Continued

LANDSCAPE AND ASSESSMENT DISTRICT FUND

This fund was created to account for transactions related to:

• The maintenance of landscaping in the Rancho Verde subdivision area and other portions of the landscape maintenance district. Funding is provided through special assessments on property owners who receive direct benefit.

• The maintenance of landscaping in the Parkwood subdivision area. Funding is provided through special assessments on property owners who receive direct benefit.

• The maintenance of landscaping in the Country Club Lane Assessment District. Funding is provided through special assessments on property owners who receive direct benefit.

• Improvements in the Reidy Creek Assessment District. Funding is provided through special assessments on property owners who receive direct benefit.

• The Rancho San Pasqual Special Assessment District. Funding is provided through special assessments on property owners who receive direct benefits.

STORM WATER MANAGEMENT FUND

This fund was established to account for revenues received from utility billings. These funds are used for storm drain improvements.

LAW ENFORCEMENT FUND


• Revenue received by the Police Department through the asset forfeiture program. The funds must be used to supplement and enhance existing law enforcement budgets.

• Transactions related to the law enforcement grants received from the Federal and State Government. These funds are used to provide front line law enforcement services and must supplement existing services.

95


Continued

CABLE TECHNOLOGY FUND

This fund was created to account for a Technology Grant from Cox Communications for the purchase and installation of telecommunications equipment and services.

MISCELLANEOUS FUND


• The maintenance and operation of the City-owned public parking lots. Funding is provided by parking permit revenues.

• Revenue received from the sale of recycled materials. The funds are used to further the effort of recycling within the city.

• The Community Service Center. Primary funding is from private grants with additional funding from the County and the City.

• A portion of sales tax revenue received for fire safety in accordance with the passage of SB8.

• Public art fees, which are assessed when development occurs. The funds will be used to provide public art throughout the city.

96

DEBT SERVICE FUNDS

GENERAL OBLIGATION DEBT SERVICE FUND

This fund was established to account for transactions related to all general obligation debt issued by the City, including the accumulation of resources for, and the payment of interest and principal on general long-term bonds. Funding is provided through property taxes designated for general obligation bonds. General obligation debt consists of 1958 Series 1 and 2 Sewer and Storm Drain Bonds; 1967 Storm Drain, Park, and Fire Protection Bonds; and 1967 Series B Storm Drainage Bonds.

REIDY CREEK DEBT SERVICE FUND

This fund was established to account for transactions related to debt issued for capital improvements in the Reidy Creek Assessment District. Funding is provided through special assessments on the property owners who receive direct benefit.

VINEYARD GOLF COURSE DEBT SERVICE FUND

This fund was created to account for transactions related to debt issued for the development of the Municipal Golf Course. Funding is provided by repayment of a loan to Escondido Consulting, Inc.

97

CAPITAL PROJECT FUNDS

STREET IMPROVEMENT FUND

This fund was created to account for projects related to street improvements. Funding is provided from a variety of sources which include transfers from Gas Tax and Traffic Impact Funds.

STORM DRAINS FUND

This fund was created to account for funds collected from developers when projects create a need for improvements to the City’s storm drain basin system. Funds are held until collections for a specific basin make an improvement possible.

QUAIL HILLS ASSESSMENT DISTRICT FUND

This fund was created to account for transactions related to the improvement projects in the Quail Hills Assessment District. Funding is provided through special assessments on the property tax rolls.

GENERAL CAPITAL PROJECTS FUND

This fund was created to account for transactions related to general capital projects. These projects are typically funded through transfers from General, Public Facilities, and Water and Sewer funds.

COUNTY TRANSPORTATION STREET AND BICYCLE PROJECTS FUND

This fund was established to account for funds received:

• Through the adoption of San Diego County Special Proposition A, which provides a transportation sales tax override to fund local street improvements.

• From SANDAG relative to the Transportation Development Act. Expenditures in this fund pertain to the development of bike paths.

98

CAPITAL PROJECT FUNDS

Continued

PUBLIC FACILITIES FUND

This fund was created to account for developer fees collected for public facility needs that are created as the result of growth and development in the city.

COMMUNITY DEVELOPMENT COMMISSION FUND

This fund was established to account for transactions related to projects in the Community Development Commission. Projects were primarily related to the Civic Center project and improvements in the downtown area. Funding was primarily provided through bond issues and advances from the City’s General Fund. Advances will be repaid through tax increment funds received from the redevelopment project area.

STATE PARK BOND ACT FUND

This fund was established to account for funds received from the State Bond Act of 2000 that are to provide for the acquisition, development, or improvement of safe, open and accessible local park and recreational facilities.

99

PERMANENT FUNDS

DALEY RANCH FUND

This fund was created to fund the City's long-term management and maintenance efforts, of Daley Ranch, as stated in the agreement with the Wildlife Agencies.

RYAN TRUST FUND

This fund was created to account for the monies received from the Frances B. Ryan Trust. The Trust was established to create the Pioneer Room, a historical perspective of Escondido, and to provide financing for its ongoing operation.

HEGYI TRUST FUND

This fund was established to account for funds received from the Hegyi Family Trust. Expenditure of these funds are related to the Library's Volunteer Recognition Program.

DEPOSIT TRUST FUND

This fund was created to account for deposits received and held by the City as an agent for individuals, developers, private organizations, and other governmental agencies.

100

101

Special Revenue FundsLandscape

Community andand Development Assessment

Street Recreation Block Grant DistrictAssets:

Cash and investments $ 5,834,259 $ 3,903,762 $ $ 332,476Restricted cash and investmentsReceivables:

Accounts 93,643 290,976Interest 73,528 56,251 4,594Taxes 2,514Notes 4,903,370 69,491Loans

Due from other governments 255,982 225,857Advances to other funds 200,000

Total Assets $ 6,457,412 $ 9,154,359 $ 295,348 $ 339,584

Liabilities and Fund Balances:

Liabilities:Payables: Accounts $ 213,226 $ 277,705 $ 89,485 $ 12,882 Deposits 63,218Accrued expenditures 46,820 6,770Due to other funds 223,462Deferred revenue 69,491Advances from other funds 200,000

Total Liabilities 213,226 587,743 389,208 12,882

Fund Balances (Deficits):Reserved for: Non-current receivables 4,903,370 Advances to other funds 200,000 Specific purpose 699,281 680,102 (93,860) 326,702 Debt service Current projects 5,344,905 2,817,999Unreserved: Designated for future projects 165,145

Total Fund Balances 6,244,186 8,566,616 (93,860) 326,702

Total Liabilities and Fund Balances $ 6,457,412 $ 9,154,359 $ 295,348 $ 339,584

CITY OF ESCONDIDOCombining Balance Sheet

Nonmajor Governmental FundsJune 30, 2003

Parks

102

Special Revenue Funds Debt Service Funds

VineyardStorm Water Law Cable General Reidy GolfManagement Enforcement Technology Miscellaneous Obligation Creek Course

$ 298,172 $ 195,425 $ 938,846 $ 1,400,005 $ $ $710,758

13,622 166,9853,622 17,152 12,923 19,368

4,691

802,916

$ 301,794 $ 1,029,115 $ 951,769 $ 1,591,049 $ 0 $ 0 $ 710,758

$ 412 $ 111,701 $ $ 29,873 $ $ $

1,741 750 1,870456,226

378,327629,238

2,153 490,778 660,981 456,226

299,641 538,337 466,333254,532

463,735

951,769

299,641 538,337 951,769 930,068 254,532

$ 301,794 $ 1,029,115 $ 951,769 $ 1,591,049 $ 0 $ 0 $ 710,758

(Continued)

103


Nonmajor Governmental Funds (Continued)June 30, 2003

Capital Projects Funds

Quail Hills GeneralStreet Storm Assessment Capital

Improvement Drains District ProjectsAssets:

Cash and investments $ 3,939,008 $ 3,734,678 $ 25,258 $ 5,480,942Restricted cash and investments 1,297,231Receivables:

Accounts 105,360Interest 58,947 49,738 118,137TaxesNotesLoans 346,839

Due from other governmentsAdvances to other funds 200,000

Total Assets $ 4,303,315 $ 3,784,416 $ 25,258 $ 7,243,149


Liabilities:Payables: Accounts $ 657,973 $ $ $ 118,444 Deposits 50,000 215Accrued expenditures 1,746Due to other funds 200,000Deferred revenueAdvances from other funds

Total Liabilities 707,973 320,405

Fund Balances (Deficits):Reserved for: Non-current receivables Advances to other funds 200,000 Specific purpose 2,637,047 25,258 Debt service Current projects 3,301,215 1,147,369 5,989,117Unreserved: Designated for future projects 94,127 933,627

Total Fund Balances 3,595,342 3,784,416 25,258 6,922,744

Total Liabilities and Fund Balances $ 4,303,315 $ 3,784,416 $ 25,258 $ 7,243,149

104

Permanent FundsCounty

Transportation StateStreet and Public Park Bond Daley Ryan Hegyi

Bicycle Projects Facilities Act Ranch Trust Trust

$ 16,154,129 $ 6,020,993 $ 285,100 $ 504,722 $ 60,105 $ 364,265 $ 20,952

1,120,777227,506 83,542 3,939 897 788 5,029 290

469,988

$ 17,502,412 $ 6,104,535 $ 759,027 $ 505,619 $ 60,893 $ 369,294 $ 21,242

$ 837,016 $ 105,447 $ 1,584 $ 277,948 $ $ $60,893 369,294 21,242

781,300226,486

837,016 886,747 1,584 504,434 60,893 369,294 21,242

469,9882,092,930 1,185

16,665,396 3,124,858 263,536

23,919

16,665,396 5,217,788 757,443 1,185

$ 17,502,412 $ 6,104,535 $ 759,027 $ 505,619 $ 60,893 $ 369,294 $ 21,242

(Continued)

Commission


CommunityDevelopment

105


Nonmajor Governmental Funds (Continued)June 30, 2003

PermanentFunds

TotalNonmajor

Deposit GovernmentalTrust Funds

Assets:Cash and investments $ 6,322,711 $ 55,815,808Restricted cash and investments 2,007,989 Receivables:

Accounts 1,791,363 Interest 1,378 737,629 Taxes 2 7,207 Notes 4,972,861 Loans 346,839

Due from other governments 1,284,755 Advances to other funds 869,988

Total Assets $ 6,324,091 $ 67,834,439


Liabilities:Payables: Accounts $ 354,377 $ 3,088,073 Deposits 5,969,714 6,534,576 Accrued expenditures 59,697 Due to other funds 1,660,988 Deferred revenue 674,304 Advances from other funds 829,238

Total Liabilities 6,324,091 12,846,876

Fund Balances (Deficits):Reserved for: Advances to other funds 869,988 Non-current receivables 4,903,370 Specific purpose 7,672,956 Debt service 254,532 Current projects 39,118,130Unreserved: Designated for future projects 2,168,587

Total Fund Balances 54,987,563

Total Liabilities and Fund Balances $ 6,324,091 $ 67,834,439

106

107

CITY OF ESCONDIDOCombining Statement of Revenues, Expenditures,

and Changes in Fund BalanceNonmajor Governmental Funds


Special Revenue FundsLandscape

Parks Community andAnd Development Assessment

Street Recreation Block Grant DistrictRevenues:

Sales tax $ $ $ $Other taxes 635,227Licenses and permitsIntergovernmental 3,164,983 1,878,661Charges for services 904,904 2,003,034Special assessments 361,982Investment income 282,573 753,000 12,361Miscellaneous 66,572 7,500

Total Revenues 4,352,460 3,457,833 1,886,161 374,343Expenditures: Current:

General government Public safety Public works 468,419 379,924 321,374 Cultural and recreation 2,826,161 Community development 776,172

Capital projects 655,699 1,648,249 1,280,992 Debt Service: Principal retirements Interest and fiscal charges

Total Expenditures 1,124,118 4,854,334 2,057,164 321,374

Excess (Deficiency) of Revenues Over Expenditures 3,228,342 (1,396,501) (171,003) 52,969

Other Financing Sources (Uses):Sale of property 441,904Transfers in 1,060,452 1,020,000 8,531Transfers out (1,812,278) (967,254)

Total Other Financing Sources (Uses) (751,826) 494,650 8,531

Special item: Economic development incentive

Net Change in Fund Balance 2,476,516 (901,851) (162,472) 52,969

Fund Balance at Beginning of Year 3,767,670 9,468,467 68,612 273,733

Fund Balance at End of Year $ 6,244,186 $ 8,566,616 $ (93,860) $ 326,702

108

Special Revenue Funds Debt Service Funds

VineyardStorm Water Law Cable General Reidy GolfManagement Enforcement Technology Miscellaneous Obligation Creek Course

$ $ $ $ 59,583 $ $ $

43,8771,411,305 36,349

835,449 515,816

9,875 48,027 44,326 61,401 16,3572,722

848,046 1,459,332 44,326 717,026 16,357

1,674,639696,684 382,335

93,336

298,245

250,000717 1,686 440,473

696,684 1,674,639 773,916 717 1,686 690,473

151,362 (215,307) 44,326 (56,890) (717) (1,686) (674,116)

303,365 4,990 57,508 693,750(390,802) (300,085) (67,900) (47,248) (111,159)

(87,437) (295,095) (10,392) (47,248) (111,159) 693,750

151,362 (302,744) (250,769) (67,282) (47,965) (112,845) 19,634

148,279 841,081 1,202,538 997,350 47,965 112,845 234,898

$ 299,641 $ 538,337 $ 951,769 $ 930,068 $ 0 $ 0 $ 254,532

(Continued)

109

CITY OF ESCONDIDOCombining Statement of Revenues, Expenditures,

and Changes in Fund BalanceNonmajor Governmental Funds (Continued)



Quail HillsStreet Assessment

Improvement Storm Drains DistrictRevenues:

Sales tax $ $ $Other taxesLicenses and permitsIntergovernmental 164,600 Charges for services 1,840 272,464Special assessmentsInvestment income 105,959 204,805Miscellaneous 29,150

Total Revenues 301,549 477,269Expenditures: Current:

General government Public safety Public works 1,653,647 Cultural and recreation Community development

Capital projects 1,730,001 91,821 Debt Service: Principal retirements Interest and fiscal charges

Total Expenditures 3,383,648 91,821

Excess (Deficiency) of Revenues Over Expenditures (3,082,099) 385,448

Other Financing Sources (Uses):Sale of propertyTransfers in 1,197,918Transfers out (1,310,207) (832,188)

Total Other Financing Sources (Uses) (112,289) (832,188)

Special item:Economic development incentive

Net Change in Fund Balance (3,194,388) (446,740)

Fund Balance at Beginning of Year 6,789,730 4,231,156 25,258

Fund Balance at End of Year $ 3,595,342 $ 3,784,416 $ 25,258

110

TotalGeneral County State NonmajorCapital Transportation Public Park Bond GovernmentalProjects Street Projects Facilities Act Funds

$ $ 3,600,000 $ $ $ $ 3,659,583635,22743,877

997,345 1,310,129 700,714 9,664,086822,133 5,355,640

361,982163,635 1,047,275 245,413 10,542 1,185 3,006,734

555 2,500 960 109,959

1,161,535 5,959,904 1,068,506 10,542 701,899 22,837,088

751,133 751,133147,607 528,764 2,351,010274,856 1,437,871 44,076 335 5,659,521

1,085,201 101,757 4,106,4551,992,943 3,946 2,773,0611,845,063 8,122,578 82,890 674,749 16,430,287

250,000442,876

6,096,803 9,560,449 757,487 3,946 675,084 32,764,343

(4,935,268) (3,600,545) 311,019 6,596 26,815 (9,927,255)

7,046 360,382 464,000 1,273,3324,912,924 3,419,807 108,524 12,787,769

(3,181,729) (140,000) (80,340) (67,200) (9,308,390)

1,738,241 3,640,189 492,184 (67,200) 4,752,711

(2,043,559) (2,043,559)

(5,240,586) 39,644 803,203 (60,604) 26,815 (7,218,103)

12,163,330 16,625,752 4,414,585 818,047 (25,630) 62,205,666

$ 6,922,744 $ 16,665,396 $ 5,217,788 $ 757,443 $ 1,185 $ 54,987,563

CommunityDevelopmentCommission


111



Intergovernmental $ 3,000,000 $ 3,164,983 $ 164,983Charges for services 580,000 904,904 324,904Investment income 160,000 282,573 122,573

Total Revenues 3,740,000 4,352,460 612,460

Expenditures:Public works 5,357,424 468,419 (4,889,005)Capital projects 2,140,959 655,699 (1,485,260)

Total Expenditures 7,498,383 1,124,118 (6,374,265)

Excess (Deficiency) of Revenues Over Expenditures (3,758,383) 3,228,342 6,986,725

Other Financing Sources (Uses):Transfers in 1,060,452 1,060,452Transfers out (1,812,278) (1,812,278)

Total Other Financing Sources (Uses) (751,826) (751,826)

Net Change in Fund Balance (4,510,209) 2,476,516 6,986,725


Fund Balance at End of Year $ (742,539) $ 6,244,186 $ 6,986,725


CITY OF ESCONDIDOStreet Special Revenue Fund


112



Other taxes $ 583,200 $ 635,227 $ 52,027Charges for services 2,245,850 2,003,034 (242,816)Investment income 690,000 753,000 63,000Miscellaneous 66,572 66,572

Total Revenues 3,519,050 3,457,833 (61,217)

Expenditures:Public works 2,597,193 379,924 (2,217,269)Cultural and recreation 3,020,990 2,826,161 (194,829)Capital projects 2,257,136 1,648,249 (608,887)

Total Expenditures 7,875,319 4,854,334 (3,020,985)

Excess (Deficiency) of Revenues Over Expenditures (4,356,269) (1,396,501) 2,959,768

Other Financing Sources (Uses):Sale of property 440,000 441,904 1,904Transfers in 1,020,000 1,020,000Transfers out (832,750) (967,254) (134,504)

Total Other Financing Sources (Uses) 627,250 494,650 (132,600)

Net Change in Fund Balance (3,729,019) (901,851) 2,827,168


Fund Balance at End of Year $ 5,739,448 $ 8,566,616 $ 2,827,168


CITY OF ESCONDIDOParks and Recreation Special Revenue Fund


113

CITY OF ESCONDIDOCommunity Development Block Grant Special Revenue Fund

Budgetary Comparsion ScheduleFor the Year Ended June 30, 2003



Intergovernmental $ 1,714,000 $ 1,878,661 $ 164,661Miscellaneous 7,500 7,500

Total Revenues 1,714,000 1,886,161 172,161

Expenditures:Community development 1,189,189 776,172 (413,017)Capital projects 1,366,586 1,280,992 (85,594)

Total Expenditures 2,555,775 2,057,164 (498,611)

Excess (Deficiency) of Revenues Over Expenditures (841,775) (171,003) 670,772

Other Financing Sources:Transfers in 8,531 8,531

Net Change in Fund Balance (841,775) (162,472) 679,303

Fund Balance at Beginning of Year 68,612 68,612

Fund Balance at End of Year $ (773,163) $ (93,860) $ 679,303

114



Special assessments $ 369,270 $ 361,982 $ (7,288)Investment income 12,361 12,361

Total Revenues 369,270 374,343 5,073

Expenditures:Public works 439,905 321,374 (118,531)

Net Change in Fund Balance (70,635) 52,969 123,604


Fund Balance at End of Year $ 203,098 $ 326,702 $ 123,604


CITY OF ESCONDIDOLandscape and Assessment District Special Revenue Fund


115



Charges for services $ 785,145 $ 835,449 $ 50,304Investment income 5,000 9,875 4,875Miscellaneous 2,722 2,722

Total Revenues 790,145 848,046 57,901

Expenditures:Public works 882,475 696,684 (185,791)

Net Change in Fund Balance (92,330) 151,362 243,692




CITY OF ESCONDIDOStorm Water Management Special Revenue Fund


116



Sales tax $ 65,000 $ 59,583 $ (5,417)Licenses and permits 35,000 43,877 8,877Intergovernmental 36,349 36,349Charges for services 537,742 515,816 (21,926)Investment income 70,500 61,401 (9,099)

Total Revenues 708,242 717,026 8,784

Expenditures:Public works 497,155 382,335 (114,820)Cultural and recreation 191,887 93,336 (98,551)Capital projects 761,980 298,245 (463,735)

Total Expenditures 1,451,022 773,916 (677,106)


Other Financing Sources (Uses):Transfers in 50,870 57,508 6,638Transfers out (67,900) (67,900)

Total Other Financing Sources (Uses) 50,870 (10,392) (61,262)

Net Change in Fund Balance (691,910) (67,282) 624,628




CITY OF ESCONDIDOMiscellaneous Special Revenue Fund


117


Amounts Actual (Under)Expenditures:

Interest and fiscal charges $ $ 717 $ 717

Other Financing (Uses):Transfers out (47,248) (47,248)

Net Change in Fund Balance (47,965) (47,965)


Fund Balance at End of Year $ 47,965 $ 0 $ (47,965)


CITY OF ESCONDIDOGeneral Obligation Debt Service Fund


118



Investment income $ $ 16,357 $ 16,357

Expenditures:Principal retirements 250,000 250,000Interest and fiscal charges 443,750 440,473 (3,277)

Total Expenditures 693,750 690,473 (3,277)


Other Financing Sources:Transfers in 693,750 693,750

Net Change in Fund Balance 19,634 19,634


Fund Balance at End of Year $ 234,898 254,532 $ 19,634


CITY OF ESCONDIDOVineyard Golf Course Debt Service Fund


119

INTERNAL SERVICE FUNDS

BUILDING MAINTENANCE FUND

This fund was created to account for financial activity related to the maintenance and repair of all City-owned buildings. Funding is provided through charges to other departments, based on square footage, common area allocation, and specific maintenance projects. A reserve for replacement will be accumulated to replace carpeting, air conditioning, roofing and other maintenance items.

VEHICLE AND EQUIPMENT MAINTENANCE FUND

This fund was created to account for transactions related to the maintenance, operation, and replacement of the City’s vehicles, whereby the City can more accurately determine the full cost of services. Such costs to other departments are billed through charges to used departments in the form of a rental payment for each piece of equipment.

CENTRAL SERVICES FUND


• The provision of postage, telephone, and copying services. Funding is provided through charges to other departments based on actual usage.

• The provision of a central stores warehouse. Funding is provided through charges to user departments.

WORKERS' COMPENSATION FUND

This fund was created to account for transactions related to the City’s self-insurance provision of general liability insurance. Funding is provided through charges to other departments based on future risk evaluation, prior claims experience, and other factors.

GENERAL LIABILITY SELF-INSURANCE FUND

This fund was created to account for transactions related to the City’s self-insurance provision of Workers’ Compensation insurance. Funding is provided through charges to other departments based on payroll expense.

120

INTERNAL SERVICE FUNDS

Continued

INSURANCE FUND


• The provision of health and life insurance for City employees. Funding is provided through charges to other departments based on employee participation.

• The provision of vision insurance to City employees. Funding is provided through charges to other departments based on employee participation.

• Property insurance obtained for the City. Funding is provided through charges to other departments based on replacement cost of the property and square footage allocations.

• The provision of dental insurance to City employees. Funding is provided through charges to other departments based on employee participation.

• The provision of unemployment insurance. Funding is provided through charges to other departments based on payroll expense.

121

CITY OF ESCONDIDO

Vehicle andBuilding Equipment

Maintenance Maintenance Assets

Cash and investments $ 3,696,554 $ 5,506,388Receivables:

Accounts 17,171Interest 51,317 66,563

Inventory 24,426DepositsCapital Assets:

Buildings 718,726 342,000Equipment 320,047 16,914,245Less: Accumulated Depreciation (307,789) (13,668,941)

Total Assets 4,478,855 9,201,852

Liabilities and Net Assets

Liabilities:Accounts payable 88,063 81,243Accrued expenses 37,822 18,419Due to other fundsLong-term obligations: Due within one year: Leases payable 230,776 Payables due in more than one year: Estimated claims Employee leave benefits 129,141 54,092 Leases 640,868

Total Liabilities 255,026 1,025,398

Net Assets:Invested in capital assets, net of related debt 730,984 2,715,660Unrestricted 3,492,845 5,460,794

Total Net Assets (Deficit) $ 4,223,829 $ 8,176,454

Statement of Net AssetsInternal Service Funds

June 30, 2003

122

Insurance Totals

$ $ 3,744,355 $ 5,756,972 $ 911,866 $ 19,616,135

36,754 53,925635 44,032 78,643 10,706 251,896

248,613 273,039250,000 42,900 292,900

61,070 1,121,79617,440 17,251,732

(62,479) (14,039,209)

265,279 4,038,387 5,835,615 1,002,226 24,822,214

84,100 212,070 57,732 96,956 620,1644,427 2,736 29,731 93,135

127,827 127,827

230,776

5,672,000 2,326,336 7,998,3368,648 4,517 36,005 232,403

640,868

225,002 5,891,323 2,384,068 162,692 9,943,509

16,031 3,462,67524,246 (1,852,936) 3,451,547 839,534 11,416,030

$ 40,277 $ (1,852,936) $ 3,451,547 $ 839,534 $ 14,878,705

LiabilitySelf-Insurance

CentralServices

Workers'Compensation

General

123


Maintenance MaintenanceOperating Revenues:

Charges for services $ 3,270,641 $ 3,384,635

Operating Expenses:Personnel services 1,899,452 779,387Administrative expenses 25,668 30,684Benefit claimsSupplies 92,752 28,492Repairs and maintenance 223,502 428,916Depreciation 67,616 1,421,093Utilities 260,887 7,050Fuel 480,080Professional services 506,851 29,810Insurance premiums 21,468 15,672Rent 18,720Other 165,252 53,545

Total Operating Expenses 3,282,168 3,274,729

Operating Income (Loss) (11,527) 109,906

Non-Operating Revenues (Expenses):Investment income 153,717 318,833Interest and fiscal charges (24,569)Miscellaneous 20,952 2,593

Total Non-Operating Revenues (Expenses) 174,669 296,857

Income Before Transfers and Capital Contributions 163,142 406,763

Transfers out (47,320)

Income Before Capital Contributions 115,822 406,763

Capital contributions 196,668

Net Assets (Deficit) at Beginning of Year 4,108,007 7,573,023

Net Assets (Deficit) at End of Year $ 4,223,829 $ 8,176,454

CITY OF ESCONDIDOStatement of Revenues, Expenses, and Changes in Fund Net Assets

Internal Service FundsFor the Year Ended June 30, 2003

124

Compensation Insurance Totals

$ 1,288,942 $ 3,211,452 $ 1,695,017 $ 5,653,463 $ 18,504,150

219,434 120,722 286,326 3,305,3216,684 324,628 992,016 69,800 1,449,480

2,776,410 395,683 554,487 3,726,580136,861 989 18,423 1,491 279,008

64,070 161 459 717,1081,527 1,490,236

443,470 3,065 24 4,080 718,576480,080

343,040 1,659,059 652,008 134,339 3,325,1076,108 143,586 280,608 4,634,975 5,102,417

18,72012,322 7,911 90,010 61,632 390,672

1,233,516 5,036,531 2,428,772 5,747,589 21,003,305

55,426 (1,825,079) (733,755) (94,126) (2,499,155)

1,499 282,328 341,573 29,945 1,127,895(24,569)

(3,586) 229,269 1,409 250,637

(2,087) 511,597 342,982 29,945 1,353,963

53,339 (1,313,482) (390,773) (64,181) (1,145,192)

(47,320)

53,339 (1,313,482) (390,773) (64,181) (1,192,512)

196,668

(13,062) (539,454) 3,842,320 903,715 15,874,549

$ 40,277 $ (1,852,936) $ 3,451,547 $ 839,534 $ 14,878,705

CentralServices

Workers'GeneralLiability

Self-Insurance

125


Maintenance MaintenanceCash flows from Operating Activities:

Cash received from customers $ 3,270,641 $ 3,405,102Cash paid to employees for services (1,893,373) (791,493)

Cash paid to other suppliers ofgoods or services (1,267,695) (1,240,241)

Cash from other sources 20,952 (20,143)

Net Cash Provided by (Used for) Operating Activities 130,525 1,353,225

Cash Flows from Noncapital Financing Activities:

Cash paid to other funds (47,320)

Cash Flows from Capital and RelatedFinancing Activities:

Purchase of fixed assets (83,355) (987,118)Sale of fixed assets 30,269Interest payments on leases (24,569)Principal payments on leases (246,414)

Net Cash Provided by (Used for) Capital and Related Financing Activities (83,355) (1,227,832)

Cash Flows from Investing Activities:Investment income received 152,448 322,333

Net Increase in Cash and Cash Equivalents 152,298 447,726

Cash and Cash Equivalents at Beginning of Year 3,544,256 5,058,662

Cash and Cash Equivalents at End of Year $ 3,696,554 $ 5,506,388

CITY OF ESCONDIDOInternal Service Funds

Combining Statement of Cash FlowsFor the Year Ended June 30, 2003

126

GeneralLiability

Self-Insurance Insurance Totals

$ 1,288,942 $ 3,211,452 $ 1,695,017 $ 5,588,651 $ 18,459,805(218,038) (119,232) (280,849) (3,302,985)

(934,090) (2,687,516) (2,081,378) (5,487,331) (13,698,251)(3,586) 232,179 1,409 62,271 293,082

133,228 636,883 (384,952) (117,258) 1,751,651

(134,892) (182,212)

(1,070,473)30,269

(24,569)(246,414)

(1,311,187)

1,664 275,842 347,658 31,583 1,131,528

912,725 (37,294) (85,675) 1,389,780

2,831,630 5,794,266 997,541 18,226,355

$ 0 $ 3,744,355 $ 5,756,972 $ 911,866 $ 19,616,135

(Continued)

ServicesCentral Workers'

Compensation

127

Vehicle andReconciliation of Operating Income to Net Cash Building Equipment Provided by Operating Activities Maintenance Maintenance

Operating Income (Loss) $ (11,527) $ 109,906

Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by(Used for) Operating Activities:

Depreciation expense 67,616 1,421,093Cash from other sources 20,952 (20,142)Change in assets and liabilities:

(Increase) decrease in accounts receivable 20,467(Increase) decrease in inventories (3,893) Increase (decrease) in accounts payable 47,405 (162,100) Increase (decrease) in accrued expenses 2,825 1,299 Increase (decrease) in employee leave benefits payable 3,254 (13,405) Increase (decrease) in customer deposits Increase (decrease) in estimated claims payable

Total Adjustments 142,052 1,243,319

Net Cash Provided by (Used for) Operating Activities $ 130,525 $ 1,353,225

Noncash Investing, Capital and Financing Activities:Contributed property, plant and equipment $ 196,668Purchase of equipment with capital lease 630,019

CITY OF ESCONDIDOInternal Service Funds

Combining Statement of Cash Flows (Continued)For the Year Ended June 30, 2003

128

GeneralLiability

Self-Insurance Insurance Totals

$ 55,426 $ (1,825,079) $ (733,755) $ (94,126) $ (2,499,155)

1,527 1,490,236(3,586) 229,269 1,409 227,902

(2,542) 17,92588,259 84,366(9,794) 170,247 31,687 (14,058) 63,387

46 439 (10,936) (6,327)1,350 1,051 4,404 (3,346)

2,910 2,9102,058,046 315,707 2,373,753

77,802 2,461,962 348,803 (23,132) 4,250,806

$ 133,228 $ 636,883 $ (384,952) $ (117,258) $ 1,751,651

$ 196,668630,019

CentralServices

Workers'Compensation

129

AGENCY FUNDS

AUTO PARKWAY ASSESSMENT DISTRICT FUND

This fund was created to account for debt service payments on 1915 Act Assessment bonds paid from special assessments collected and remitted to a fiscal agent-trustee. The bonds were issued to finance capital improvements in the Auto Parkway District, including drainage and road improvements, sewer, lighting, and other improvements.

RANCHO SAN PASQUAL FUND

This fund was created to account for the debt service payments collected directly from property owners and remitted to bondholders for payment on Rancho San Pasqual bonds, issued to finance certain public improvements within the City's Assessment District No. 95-1.

130

AutoParkway

Assessment RanchoDistrict San Pasqual Total

Assets

Cash and investments $ 262,808 $ 229,462 $ 492,270Restricted assets - cash with fiscal agent 382,855 376,958 759,813Receivables: Interest 2,772 2,277 5,049 Taxes 39 2,358 2,397

Total Assets $ 648,474 $ 611,055 $ 1,259,529

Liabilities

Due to bondholders $ 648,474 $ 611,055 $ 1,259,529

Total Liabilities $ 648,474 $ 611,055 $ 1,259,529

CITY OF ESCONDIDOCombining Statement of Agency Funds

June 30, 2003

131

Balance atDeductions

Auto Parkway Assessment District

Assets Cash and investments $ 342,371 $ 341,008 $ (420,571) $ 262,808 Restricted assets - cash with fiscal agent 400,945 26,859 (44,949) 382,855 Receivables: Interest 3,987 2,772 (3,987) 2,772 Taxes 59 39 (59) 39

Total Assets $ 747,362 $ 370,678 $ (469,566) $ 648,474

LiabilitiesAccounts payable $ 1,738 $ 4,803 $ (6,541) $Due to bondholders 745,624 615,618 (712,768) 648,474

Total Liabilities $ 747,362 $ 620,421 $ (719,309) $ 648,474

Rancho San Pasqual

Assets Cash and investments $ 234,871 $ 355,071 $ (360,480) $ 229,462 Restricted assets - cash with fiscal agent 386,579 27,089 (36,710) 376,958 Receivables: Interest 2,636 2,277 (2,636) 2,277 Taxes 4,355 2,358 (4,355) 2,358

Total Assets $ 628,441 $ 386,795 $ (404,181) $ 611,055

LiabilitiesAccounts payable $ 2,150 $ 10,353 $ (12,503) $Due to bondholders 626,291 495,736 (510,972) 611,055

Total Liabilities $ 628,441 $ 506,089 $ (523,475) $ 611,055

CITY OF ESCONDIDOStatement of Changes in Agency Funds


June 30, 2003AdditionsBalance at

June 30, 2002

132

EStatistical

Section

134

135

Category 2001-02 2002-03

General government $9,294,091 $7,278,160

Public safety 40,704,987 46,934,431

Cultural and recreation 11,526,832 12,670,230

Public works 14,956,310 18,711,369

Community development (1) 3,662,190 10,646,006

Interest and fiscal charges 7,016,487 7,149,247

Loss from retirement of assets 423,000

TOTALS $87,583,897 $103,389,443

(1) Agency tax sharing agreements, building, planning, code enforcement and economic development expenses are classified within Community Development whereas in theprevious fiscal year these expenses were classified as General Government or Interestand Fiscal Charges.

Source: City of Escondido Finance Department.

CITY OF ESCONDIDOGovernment-wide Expenses by Function

Last Two Fiscal Years

136

Category 2001-02 2002-03

Program Revenues:

Charges for services $12,933,374 $13,786,621

Operating grants and contribution 25,497,517 14,698,267

Capital grants and contributions 4,928,368 5,278,558

General Revenues:

Taxes 57,178,552 67,900,971

Use of money and property 5,699,904 5,814,185

Miscellaneous 432,052 280,478

Transfers 351,837 2,762,650

Contributions 428,684

Special Item - Economic development incentive (2,036,512)

TOTALS $107,450,288 $108,485,218


CITY OF ESCONDIDOGovernment-wide Revenues

Last Two Fiscal Years

137

Category 1993-94 1994-95 1995-96 1996-97

Sales tax $19,581,323 $16,785,186 $20,405,715 $20,495,323

Property tax 11,882,691 11,649,557 12,110,269 11,128,282

Property transfer tax 244,369 182,741 119,537 243,363

Franchise tax 1,960,264 2,096,833 2,022,395 1,944,148

Transient occupancy tax 480,031 488,933 503,747 536,841

Business license tax 886,593 910,388 999,339 1,034,766

Licenses and permits 630,960 582,703 663,080 918,788

Fines and forfeitures 299,034 561,518 311,824 468,593

Intergovernmental 11,593,357 10,322,030 11,109,599 11,286,303

Charges for services 6,004,025 5,386,470 5,571,871 5,348,553

Special assessments 966,957 1,534,821 385,285 375,637

Community services 214,598 247,427 182,288 190,642

Use of money and property 13,092,440 5,709,422 6,117,358 6,118,503

Park and recreation fees 506,343 535,815 667,604 670,042

Contributions 1,255 102,224 7,976 81,365

Miscellaneous 1,359,899 4,142,012 3,291,309 4,091,638

TOTALS (1) $69,704,139 $61,238,080 $64,469,196 $64,932,787

(1) Includes General, Special Revenue, Debt Service, and Capital Projects Funds.


CITY OF ESCONDIDOGeneral Governmental Revenues by Source

Last Ten Fiscal Years

138

1997-98 1998-99 1999-00 2000-01 2001-02 2002-03

$22,093,228 $23,565,067 $27,226,164 $26,593,336 $31,734,157 $31,217,876

12,163,240 15,135,818 17,268,226 18,290,957 19,372,806 21,513,677

420,388 610,642 736,278 451,553 492,777 611,610

2,063,589 2,084,911 2,221,136 2,807,735 3,743,845 4,079,232

640,582 843,249 952,784 1,141,134 1,022,851 1,090,329

1,084,919 1,191,346 1,229,257 1,314,478 1,337,856 1,353,804

1,084,586 984,522 926,287 760,933 987,764 1,317,849

455,045 854,046 1,476,643 1,585,365 1,612,866 1,928,933

12,437,590 13,384,194 14,309,043 18,092,081 18,822,723 19,888,610

5,298,217 7,504,535 7,957,135 5,943,801 8,996,708 9,249,237

348,979 379,396 382,015 235,809 322,711 361,982

266,954 224,468 251,984 290,334 226,712 333,645

5,895,011 5,140,367 5,037,350 8,987,246 7,008,758 6,037,634

986,314 1,325,802 1,472,586 1,761,444 1,877,803 2,003,034

62,862 12,083 21,670 9,711 16,545 32,945

3,560,126 2,861,272 3,550,038 3,623,500 3,784,621 3,040,470

$68,861,630 $76,101,718 $85,018,596 $91,889,417 $101,361,503 $104,060,867

139

Category 1993-94 1994-95 1995-96 1996-97

General government $4,808,214 $4,642,826 $5,137,589 $4,823,747

Public safety 21,861,656 22,903,140 22,790,884 23,845,071

Public works 4,792,385 5,159,044 5,394,499 5,363,001

Culture and recreation 6,125,987 6,160,083 6,760,665 8,259,536

Community development 2,667,001 3,006,789 3,158,744 3,092,669

Capital projects 44,051,935 24,279,096 12,130,632 17,793,210

Bond issue costs - - - -

Debt service 17,258,492 11,872,555 9,991,250 8,925,096

TOTALS (1) $101,565,670 $78,023,533 $65,364,263 $72,102,330



CITY OF ESCONDIDOGeneral Governmental Expenditures by Function


140

1997-98 1998-99 1999-00 2000-01 2001-02 2002-03

$4,884,908 $5,411,647 $6,199,304 $7,229,520 $7,775,441 $5,844,918

26,033,139 27,994,445 29,333,777 31,444,785 35,177,607 40,062,738

6,450,939 8,482,884 9,408,632 9,151,894 11,259,226 14,748,096

10,401,523 7,111,223 7,629,797 9,548,422 9,945,286 11,568,694

4,355,522 5,139,190 4,732,519 2,864,746 3,482,827 9,860,308

7,778,391 10,098,943 15,289,775 14,459,312 13,931,466 16,430,287

- 267,516 - - 3,272,759 -

7,975,133 8,670,939 7,983,046 9,585,758 10,771,479 12,152,617

$67,879,555 $73,176,787 $80,576,850 $84,284,437 $95,616,091 $110,667,658

141

Category 1993-94 1994-95 1995-96 1996-97

Total tax levy $5,851,378 $4,284,998 $4,464,177 $4,431,144

Current tax collections (1) 5,620,877 4,135,635 4,333,578 4,315,639

Percent of current taxes collected 96.06 96.51 97.07 97.39

Delinquent tax collections (1) 300,163 239,024 182,746 168,159

Total tax collections (1) 5,921,040 4,374,659 4,516,324 4,483,798

Ratio of total tax collections to total tax levy 101.19 102.09 101.17 101.19

Outstanding delinquent taxes 1,246,185 414,601 376,810 337,346

Ratio of delinquent taxes to total tax levy 21.30 9.68 8.44 7.61

(1) Total tax collections does not include property taxes collected for the Community Development Commission in the following amounts: 1993/94 - $5,557,315, 1994/95 - $5,208,242, 1995/96 - $5,638,982, 1996/97 - $5,185,336, 1997/98 - $5,575,304, 1998/99 - $7,682,739, 1999-00 - $9,009,306, 2000/01 - $10,006,352, 2001/02 - $10,509,436, and 2002/03 - $11,860,699.

Source: County of San Diego, Auditor and Controller's Office.

CITY OF ESCONDIDOSecured Property Tax Levies and Collections


142

1997-98 1998-99 1999-00 2000-01 2001-02 2002-03

$4,356,516 $4,660,002 $5,104,037 $5,482,980 $5,881,201 $6,364,173

4,232,974 4,517,452 4,944,496 5,244,692 5,746,464 6,205,238

97.16 96.94 96.87 95.65 97.71 97.50

182,504 130,589 111,075 122,698 124,928 117,200

4,415,478 4,648,041 5,055,571 5,367,390 5,871,393 6,322,438

101.35 99.74 99.05 97.89 99.83 99.34

281,121 263,894 266,580 337,323 212,012 229,885

6.45 5.66 5.22 6.15 3.60 3.61

143

Estimated EstimatedFiscal Assessed Actual Assessed ActualYear Valuation (1) Value Valuation Value

1993-94 $5,254,552,035 $5,254,552,035 $162,780,023 $162,780,023

1994-95 5,225,637,734 5,225,637,734 157,621,805 157,621,805

1995-96 5,307,808,766 5,307,808,766 169,550,179 169,550,179

1996-97 5,396,580,486 5,396,580,486 170,854,982 170,854,982

1997-98 5,252,896,819 5,252,896,819 204,127,220 204,127,220

1998-99 5,549,575,582 5,549,575,582 208,411,413 208,411,413

1999-00 6,127,511,864 6,127,511,864 229,809,627 229,809,627

2000-01 6,582,230,159 6,582,230,159 236,648,980 236,648,980

2001-02 7,079,496,249 7,079,496,249 247,320,156 247,320,156

2002-03 7,656,792,012 7,656,792,012 242,746,635 242,746,635

(1) Includes City of Escondido and Community Development Commission assessed values.

Source: County of San Diego Auditor and Controller's Office.

CITY OF ESCONDIDOSchedule of Assessed Valuation


Real Property Personal Property

144

Less Less Net EstimatedProperty Homeowner's Assessed Actual

Exemptions Exemptions Valuation Value

$83,931,316 $114,172,079 $5,219,228,663 $5,417,332,058

92,682,840 115,679,777 5,174,896,922 5,383,259,539

99,224,853 118,744,339 5,259,389,753 5,477,358,945

108,285,023 118,691,783 5,340,458,662 5,567,435,468

123,238,458 119,580,024 5,214,205,557 5,457,024,039

111,817,056 120,793,091 5,525,376,848 5,757,986,995

141,349,387 126,621,290 6,089,350,814 6,357,321,491

150,401,892 128,341,771 6,540,135,476 6,818,879,139

156,943,063 132,805,073 7,037,068,269 7,326,816,405

178,100,826 133,818,795 7,587,619,026 7,899,538,647

Exemptions Total

145

Fiscal School OtherYear City County District District Total

1993-94 0.1378 0.2631 0.6044 0.0424 1.0477

1994-95 0.1061 0.1615 0.7365 0.0411 1.0452

1995-96 0.1050 0.1588 0.7436 0.0412 1.0486

1996-97 0.1042 0.1588 0.7544 0.0414 1.0588

1997-98 0.1028 0.1584 0.7635 0.0408 1.0655

1998-99 0.1028 0.1583 0.7579 0.0393 1.0583

1999-00 0.1028 0.1582 0.7542 0.0393 1.0545

2000-01 0.1028 0.1581 0.7502 0.0381 1.0492

2001-02 0.1028 0.1580 0.7753 0.0371 1.0731

2002-03 0.1028 0.1580 0.7753 0.0371 1.0731

Property tax rates are based on $1,000 of assessed valuation.

Source: County of San Diego Auditor and Controller's Office and Planning and Land Use Department.

CITY OF ESCONDIDOProperty Tax Rates

Direct and Overlapping GovernmentsLast Ten Fiscal Years

146

Current Total Ratio ofFiscal Assessment Assessment Collections toYear Billings Collected Amount Due

1993-94 $896,591 $966,957 107.85 %

1994-95 577,815 1,534,821 265.62

1995-96 496,410 493,413 99.40

1996-97 890,552 890,552 100.00

1997-98 898,115 877,671 97.72

1998-99 798,277 792,661 99.30

1999-00 718,872 715,810 99.57

2000-01 789,108 784,523 99.42

2001-02 730,594 723,916 99.09

2002-03 708,977 701,366 98.93

Source: County of San Diego, Auditor and Controller's Office.

CITY OF ESCONDIDOSpecial Assessment Collections


147

Total valuation (1) $6,325,018,363

Debt limit - 15 percent of total valuation $948,752,754

Amount of debt applicable to debt limit:

Bonded debt - general 0

Less amounts available:

Held by Debt Service Fund 0

Total amount of debt applicable to debt limit 0

Legal debt margin $948,752,754

(1) Valuation excludes the assessed valuation allocated to the Community Development Commission for Redevedlopment Tax Allocation increment.


CITY OF ESCONDIDOComputation of Legal Debt Margin

June 30, 2003

148

(1)Net Redevelopment General (2) Percentage Per

Fiscal Assessed Assessed Net Assessed Outstanding of Total Capita (3)Year Valuation Valuation Valuation Principal Valuation Debt Population

1993-94 $5,219,228,663 $805,962,989 $4,413,265,674 $585,000 0.0133 % 5 116,938

1994-95 5,174,896,922 767,128,685 4,407,768,237 490,000 0.0111 4 120,034

1995-96 5,378,134,092 808,489,379 4,569,644,713 390,000 0.0085 3 118,286

1996-97 5,288,295,473 765,306,919 4,522,988,554 285,000 0.0063 2 119,916

1997-98 5,214,205,557 776,312,465 4,437,893,092 175,000 0.0039 1 123,148

1998-99 5,525,376,848 858,646,394 4,666,730,454 60,000 0.0013 1 125,597

1999-00 6,089,350,814 1,040,278,458 5,049,072,356 0 0.0000 0 127,813

2000-01 6,540,135,476 1,171,730,988 5,368,404,488 0 0.0000 0 137,023

2001-02 7,037,068,269 1,266,059,206 5,771,009,063 0 0.0000 0 136,956

2002-03 7,587,619,026 1,396,419,458 6,191,199,568 0 0.0000 0 138,015

(1) Amounts represent the allocation of assessed valuation to the Community Development Commission forRedevelopment Tax Allocation increment. 1985-86 was the initial year that the Community DevelopmentCommission qualified for Redevelopment Tax Allocation increment.

(2) Source: City of Escondido Finance Department and County of San Diego Auditor and Controller's Office.

(3) All figures represent data as of January 1.Source: California State Department of Finance.

CITY OF ESCONDIDORatio of General Bonded Debt to Assessed Valuation

and Net Bonded Debt Per CapitaLast Ten Fiscal Years

149

(2)(1) Total

Fiscal Total Debt GovernmentalYear Principal Interest Service Expenditures

1993-94 $95,000 $29,125 $124,125 $101,565,670 0.1 %

1994-95 95,000 24,930 119,930 120,182,232 0.1

1995-96 100,000 20,620 120,620 65,364,263 0.2

1996-97 105,000 17,258 122,258 72,102,330 0.2

1997-98 110,000 12,612 122,612 67,879,555 0.2

1998-99 115,000 7,744 122,744 73,176,787 0.2

1999-00 60,000 2,655 62,655 80,576,850 0.1

2000-01 0 0 0 84,284,437 0.0

2001-02 0 0 0 95,616,091 0.0

2002-03 0 0 0 110,667,658 0.0

(1) Debt Service requirement on General Obligation Bonds comprised of 1958 Sewer Bond Series 1and 2, and 1967 Storm Drain, Park, and Fire Protection Bonds and 1967 Series B StormDrainage Bonds. General Obligation Bonds were defeased as of July 1, 2000.



Ratio ofService to

GovernmentalExpenditures %

CITY OF ESCONDIDORatio of Annual Debt Service for General Bonded Debt to

Total Governmental ExpendituresLast Ten Fiscal Years

150

2002-03 Assessed Valuation: $6,325,018,363 (Adjusted Assessed Valuation after deducting $1,396,419,458 redevelopment incremental valuation.)

Percentage DebtApplicable 6/30/2003

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:City of Escondido Hidden Trails Community Facilities District 100.000 % $3,085,000City of Escondido 1915 Act Bonds 100.000 8,215,000 Total Direct Tax and Assessment Debt 11,300,000

San Diego County Water Authority 3.092 50,863Metropolitan Water District 0.557 2,474,723San Marcos Unified School District School Facilities Improvement District No. 1 3.993 790,335San Marcos Unified School District Community Facilities District No. 1 100.000 3,450,000Escondido Union High School District 73.828 31,427,087Escondido Union School District 74.867 49,138,672San Pasqual Union School District 52.438 818,741Valley Center Unified School District 0.002 85 Total Overlapping Tax and Assessment Debt 88,150,506

TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $99,450,506

DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT:

City of Escondido Certificates of Participation 100.000 % $115,927,154

San Diego County General Fund Obligations 2.997 14,261,188San Diego County Pension Obligations 2.997 24,707,118San Diego County Superintendent of School Obligations 2.997 61,963Palomar Community College District Certificates of Participation 13.453 1,268,618Escondido Union School District Certificates of Participation 74.867 10,537,530 Total Overlapping General Fund Obligation Debt 50,836,417

TOTAL DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT $166,763,571

COMBINED TOTAL DEBT $266,214,077

Ratios to Assessed Valuation: Total Direct and Overlapping Tax and Assessment Debt 1.288%

Ratios to Adjusted Assessed Valuation: Combined Direct Debt ($89,342,847) 1.413% Combined Total Debt 4.209%

State School Building and Repayable as of 6/30/03 $0

Source: California Municipal Statistics

CITY OF ESCONDIDODirect and Overlapping Bond DebtFor the Year Ended June 30, 2003

151

(1) (2) Net RevenueFiscal Gross Operating Available forYear Revenue Expenses Debt Service Principal Interest Total

1993-94 $27,612,815 $21,761,070 $5,851,745 $545,000 $723,796 $1,268,796 461.20 %

1994-95 26,282,277 21,624,254 4,658,023 580,000 708,889 1,288,889 361.40

1995-96 29,345,252 24,495,666 4,849,586 627,461 657,149 1,284,610 377.51

1996-97 37,916,660 25,563,900 12,352,760 705,000 146,469 851,469 1,450.76

1997-98 31,611,550 23,994,917 7,616,633 620,000 1,206,689 1,826,689 416.96

1998-99 36,518,604 27,845,631 8,672,973 660,000 1,958,078 2,618,078 331.27

1999-00 38,361,414 30,575,751 7,785,663 620,000 1,756,095 2,376,095 327.67

2000-01 43,238,559 33,738,114 9,500,445 225,000 2,936,520 3,161,520 300.50

2001-02 49,446,742 37,311,887 12,134,855 265,000 3,014,581 3,279,581 370.01

2002-03 48,085,853 37,034,927 11,050,926 305,000 3,232,935 3,537,935 312.36

(1) Total revenue includes interest.

(2) Total operating expenses exclusive of depreciation.

(3) Includes principal and interest of Water and Sewer Revenue Bonds only. It does not include the GeneralObligation Bonds reported in the General Fund.


(3)Debt Service Requirements

Coverage

CITY OF ESCONDIDORevenue Bond Coverage

Water and Wastewater Enterprise FundsLast Ten Fiscal Years

152

(2) (3) (4)Fiscal (1) School Per Capita MedianYear Population Enrollment Income Age

1993-94 116,938 22,520 21,100 30.9 7.8

1994-95 120,034 23,286 20,617 32.0 7.0

1995-96 118,286 24,330 22,900 31.8 6.3

1996-97 119,916 24,765 23,969 32.7 4.9

1997-98 123,148 26,055 25,944 32.9 3.9

1998-99 125,597 27,730 27,500 33.2 3.4

1999-00 127,813 26,870 28,393 33.3 2.9

2000-01 137,023 25,467 33,025 33.2 3.2

2001-02 136,956 25,844 34,500 33.2 4.2

2002-03 138,015 26,233 35,979 31.5 4.1

(1) Source: California State Department of Finance.

(2) Source: Escondido Union Elementary School District and Escondido Union High SchoolDistrict.

(3) Based on County-wide averages.Source: San Diego Chamber of Commerce.

(4) Based on County-wide averages.Source: San Diego Association of Governments (SANDAG).

(5) Based on County-wide averages.Source: Employment Development Department, State of California.

(5)Unemployment

Rate

CITY OF ESCONDIDODemographic StatisticsLast Ten Fiscal Years

153

(3)Bank Number Number Number

Fiscal Deposits of of ofYear (in thousands) Permits Valuation Units Valuation Permits Valuation

1993-94 $1,289,895 16 $11,157,098 232 $40,468,291 1,130 $27,204,389

1994-95 1,346,019 24 17,316,841 179 31,974,518 1,139 14,491,493

1995-96 1,362,423 16 10,589,717 392 45,458,260 1,104 15,613,657

1996-97 1,386,567 33 13,055,114 382 77,022,071 1,127 15,515,416

1997-98 1,473,251 20 10,463,832 465 94,683,011 1,213 16,445,773

1998-99 1,503,534 30 17,470,828 278 71,973,849 1,433 21,663,525

1999-00 1,564,027 31 27,747,955 277 59,944,204 1,343 20,269,947

2000-01 1,645,037 29 28,561,675 234 43,764,535 1,180 21,178,434

2001-02 1,859,692 45 33,342,080 329 68,003,048 1,372 21,812,349

2002-03 (4) 37 25,746,527 384 98,541,170 1,586 25,769,522

(1) Source: City of Escondido Building Department.

(2) Source: City of Escondido Finance Department.

(3) Source: The Findley Reports on California Financial Institution.

(4) 2003 data for banks will not be available until 12/31/03.

(1) (1)

CITY OF ESCONDIDOBank Deposits and Construction and Business Activity


(1)Miscellaneous

Construction PermitsCommercial

Construction PermitsResidential

Construction Permits

154

(2)(2) Business

Total Permit LicenseValuation Revenue Revenue

$78,829,778 $586,234 5.19 % $886,593 0.20 %

63,782,852 542,895 (7.39) 910,388 2.68

71,661,634 624,813 15.09 999,339 9.77

105,592,601 871,268 39.44 1,034,766 3.55

121,592,616 1,029,731 18.19 1,084,919 4.85

111,108,202 915,935 (11.05) 1,191,346 9.81

107,962,106 861,197 (5.98) 1,229,257 3.18

93,504,644 718,508 (16.57) 1,314,478 6.93

123,157,477 945,309 31.57 1,337,856 1.78

150,057,219 1,147,086 21.35 1,353,803 1.19

PercentageChange

PercentageChange

155

Name of Company Employment

Manufacturing

Electronic Scientific Industries 300

Advanced Structures Inc 200

Habor Packaging Inc 120

R and M Industries, Inc. 113

Freeberg Industrial Fabrication 108

Special Products Division 83

Acushnet Company Titleist 80

Jeropa Swiss Precision, Inc. 76

Non-Manufacturing

Escondido Union School District 2,240

Palomar Medical Center 1,450

City of Escondido 1,156

Bergelectric 900

Escondido Union High School District 800

North County Transit District 585

Pacific Bell 504

Nordstrom, Inc. 413

Albertsons 409

SDG&E 407

County of San Diego 400

Superior Ready Mix 375


CITY OF ESCONDIDOLargest Employers

June 30, 2003

156

AssessedPrincipal Taxpayers Valuation

North County Fair $175,010,338 2.31 %

Goal Line 55,999,092 (1) 0.74

Prebys Conrad Trust 52,832,006 (1) 0.70

Cox Communications 37,454,226 (1) 0.49

PG&E Dispersed Generating Company 27,629,897 0.36

Frit Escondido Promenade 24,519,357 (1) 0.32

CT Operating Partnership 23,008,314 (1) 0.30

Albertsons Inc. 23,394,250 (1) 0.31

Dayton Hudson 17,757,172 (1) 0.23

Archstone Communities Trust 16,106,179 (1) 0.21

TOTAL $453,710,831 5.97 %

(1) Value represents multiple parcel totals.

(2) Net assessed valuation for 2002-03 is $7,587,619,026.


(2)

CITY OF ESCONDIDOPrincipal Taxpayers

June 30, 2003

Percentageof Total

Net AssessedValuation

157

Year of incorporation 1888

Form of government Council/Manager

Number of full time employees (excluding police and fire) 492

Facilities and services: Miles of streets 286 Number of street lights 4,402 Area in square miles 36.53 Culture and recreation: Community/cultural 3 Parks (developed) 13 Park acreage 431 Lake sites 2 Lake sites acreage 1,700 Sportsfields 34 Swimming pools 2 Tennis courts 17 Daley Ranch acreage 3,050 Fire protection: Number of stations 5 Number of fire personnel and officers 108 Number of calls answered 9,486 Number of inspections conducted 5,000 Police protection: Number of stations 1 Number of police personnel and officers 228 Number of patrol units 163 Number of law violations: Physical arrests 6,725 Traffic violations 13,461 Parking violations 7,143 Sewer system: Miles of sanitary sewers 352 Miles of storm drains 326 Number of treatment plants 1 Number of service connections 25,505 Daily average treatment in gallons 15,600,000 Maximum daily capacity of treatment in gallons 16,500,000 Water system: Miles of water mains 387 Number of service connections 24,591 Number of fire hydrants 3,630 Daily average consumption in gallons 27,076,000 Maximum daily capacity of plant in gallons 75,000,000

CITY OF ESCONDIDOMiscellaneous Statistics

June 30, 2003

158

CITY OF ESCONDIDOMiscellaneous Statistics

June 30, 2003

Facilities and services not included in the reporting entity: Education: Number of elementary schools 16 Number of elementary school instructors 777 Number of middle schools 4 Number of middle school instructors 284 Number of secondary schools 6 Number of secondary instructors 322 Hospitals: Number of hospitals 1 Number of patient beds 307

Compiled by City of Escondido Finance Department.

(continued)

159

160

Documents

CITY ESCONDIDO OFCertificate of Achievement for Excellence in Financial Reporting 12 Certificate of Award for Outstanding Financial Reporting 13 FINANCIAL SECTION: Independent Auditor’s