AC 11-25-2024 Agenda PacketCITY OF CUPERTINO
AUDIT COMMITTEE
AGENDA
10185 North Stelling Road, Quinlan Conference Room
Monday, November 25, 2024
4:00 PM
Special Meeting
Members of the public wishing to observe the meeting may do so in one of the following
ways:
1) Attend in person at Quinlan Community Center, 10185 North Stelling Road
2) The meeting will also be streamed live on and online at
https://youtube.com/@cupertinocitycommission
Members of the public wishing to comment on an item on the agenda may do so in the
following ways:
1) Appear in person at Quinlan Community Center.
2) E-mail comments by 4:00 p.m. on Monday, November 25 to the legislative body at
auditcommittee@cupertino.gov. These e-mail comments will also be posted to the City’s
website after the meeting.
Oral public comments may be made during the public comment period for each agenda
item.
NOTICE AND CALL FOR A SPECIAL MEETING OF THE CUPERTINO AUDIT
COMMITTEE
NOTICE IS HEREBY GIVEN that a special meeting of Cupertino Audit Committee is
hereby called for Monday November 25, 2024, commencing at 4:00 p.m. at the Quinlan
Community Center Conference Room, 10185 North Stelling Road, Cupertino, California
95014. Said special meeting shall be for the purpose of conducting business on the subject
matters listed below under the heading, "Special Meeting."
SPECIAL MEETING
ROLL CALL
ORDERS OF THE DAY
APPROVAL OF MINUTES
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Audit Committee Agenda November 25, 2024
1.Subject: Approve Minutes of Special Meeting on October 31, 2024
Recommended Action: Approve Minutes of Special Meeting on October 31, 2024
A - Draft Minutes
POSTPONEMENTS
ORAL COMMUNICATIONS
This portion of the meeting is reserved for persons wishing to address the Committee on any matter
within the jurisdiction of the Committee and not on the agenda. Speakers are limited to three (3)
minutes. In most cases, State law will prohibit the Commission from making any decisions with respect
to a matter not on the agenda.
Effective January 1, 2023, Government Code Section 65103.5 (SB 1214) limits the distribution of
copyrighted material associated with the review of development projects. Members of the public wishing
to view plans that cannot otherwise be distributed under SB 1214 may make an appointment with the
Planning Division to view them at City Hall by sending an email to planning@cupertino .org. Plans
will also be made available digitally during the hearing to consider the proposal.
OLD BUSINESS
NEW BUSINESS
2.Subject: INFORMATIONAL ITEM Receive the FY 2023-24 Annual Comprehensive
Financial Report (ACFR)
Recommended Action: Receive the FY 2023-24 Annual Comprehensive Financial
Report (ACFR)
Presenter: Jonathan Orozco, Finance Manager and The Pun Group
4:15(20)
A - FY 23-24 ACFR
3.Subject: ACTION ITEM Review and accept the City-Wide Policy Inventory and Gap
Analysis Report
Recommended Action: Review and accept the City-Wide Policy Inventory and Gap
Analysis Report
Presenter: Moss Adams
4:35(20)
Staff Report
A – Revised Citywide Administrative Policy Inventory and Gap Analysis Final Report
4.Subject: INFORMATIONAL ITEM Budget Format Review Update
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Audit Committee Agenda November 25, 2024
Recommended Action: Budget Format Review Update
Presenter: Kristina Alfaro, Director of Administrative Services
4:55(10)
5.Subject: INFORMATIONAL ITEM Receive the Agreed Upon Procedures (AUP) Review
- GANN Limit, Investment Policy, Storm Drain
Recommended Action: Receive the Agreed Upon Procedures (AUP) Review - GANN
Limit, Investment Policy, Storm Drain
Presenter: Jonathan Orozco, Finance Manager and The Pun Group
5:05(15)
A - Cupertino GANN AUP 2023
B - Cupertino Investment AUP 2023
C - Cupertino Single Audit 2023
D - Cupertino Storm Drain AUP 2023
E - Cupertino Storm Drain AUP 2022
6.Subject: INFORMATIONAL ITEM Receive the proposed Audit Committee 2025
Schedule and Workplan
Recommended Action: Receive the proposed Audit Committee 2025 Schedule and
Workplan
Presenter: Jonathan Orozco, Finance Manager
5:20(10)
A - Proposed Audit Committee 2024 Schedule and Work Plan
B - Proposed Audit Committee 2025 Schedule and Work Plan
STAFF AND COMMITTEE REPORTS
FUTURE AGENDA SETTING
ADJOURNMENT
In compliance with the Americans with Disabilities Act (ADA), anyone who is planning to attend this
meeting who is visually or hearing impaired or has any disability that needs special assistance should
call the City Clerk's Office at 408-777-3223, at least 48 hours in advance of the meeting to arrange for
assistance. In addition, upon request in advance by a person with a disability, meeting agendas and
writings distributed for the meeting that are public records will be made available in the appropriate
alternative format.
Any writings or documents provided to a majority of the members after publication of the agenda will
be made available for public inspection. Please contact the City Clerk’s Office in City Hall located at
10300 Torre Avenue, Cupertino, California 95014, during normal business hours.
IMPORTANT NOTICE: Please be advised that pursuant to Cupertino Municipal Code section
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Audit Committee Agenda November 25, 2024
2.08.100 written communications sent to the City Council, Commissioners or staff concerning a matter
on the agenda are included as supplemental material to the agendized item. These written
communications are accessible to the public through the City website and kept in packet archives. Do
not include any personal or private information in written communications to the City that you do not
wish to make public, as written communications are considered public records and will be made
publicly available on the City website.
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CITY OF CUPERTINO
Agenda Item
24-13526 Agenda Date:
11/25/2024 Agenda #: 1.
Subject: Approve Minutes of Special Meeting on October 31, 2024
Approve Minutes of Special Meeting on October 31, 2024
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City of Cupertino
Audit Committee Special Meeting
DRAFT Minutes
October 31, 2024
CALL TO ORDER
At 4:10 p.m., Chair Schmidt called the special meeting to order in the City of Cupertino Quinlan
Conference Room, 10185 North Stelling Road.
ROLL CALL
Committee Members Present: Chair Eno Schmidt, Mayor Sheila Mohan, Committee member
Hanyan Wu
City Staff Present: Kristina Alfaro, Janet Liang, Jonathan Orozco, Pamela Wu
Absent: Committee member Angela Chen, Councilmember Hung Wei
Guests: Ken Pun (The Pun Group), Sophia Kuo (The Pun Group), Chelsea Ritchie (Moss Adams),
Maria Stroth (Moss Adams), Colleen Rozillis (Moss Adams), Jennifer Meza (PARS), Dennis
Mullins (US Bank)
ORDERS OF THE DAY
1. APPROVE MINUTES OF REGULAR MEETING ON JUNE 24, 2024
Mayor Mohan motioned, Committee member Wu seconded. The motion passes with Committee
member Wu and Councilmember Wei absent.
POSTPONEMENTS
ORAL COMMUNICATIONS
OLD BUSINESS
NEW BUSINESS
2. Receive OPEB & Pension Section 115 Trust Performance Report for Quarter Ending
September 30, 2024
Mullins provided an overview. Chair Schmidt noted that we have been in that high yield category
sleeve for a number of years and asked if they are watching the market carefully and is it common
to see. Mullins noted it is a permanent asset class and the standard position is to hold an allocation
to high yield bonds. Chair Schmidt asked if the MSCI table could be added to the Common Stock
Holdings page as we are not comparing to the S&P. Mullins noted that they would check to see
if it could be possible to add it to the index and yes the MSCI can be used as the benchmark. Chair
Schmidt suggested that one meeting out of the year to look more in depth to the market detail as
the index is the most important part and wants to understand why the performance varies from
the index.
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Mayor Mohan inquired about the benchmark. Orozco noted that this benchmark was established
when the Section 115 trust was created, it may have evolved over the years and staff noted that
there can be more in-depth discussions. Mullins noted that they will run numbers on the
benchmarks to see how close they are, to make sure that the benchmarks are relevant and that
they are subscribing too. Chair Schmidt suggested that there could be an analysis on the
performances vs. the index. Mullins noted that they can add a separate chart that will include
that information and see if we can identify if its from timing or selection.
Committee member Wu asked why the equity part of the portfolio is added as an ETF. Mullins
noted that it is more cost-effective, more diversification for less money.
No public comment.
3. Receive the Internal Audit and Fraud, Waste, and Abuse programs update
Orozco provided an overview. Chair Schmidt noted that there is a fraud item that was closed out
on the report and asked for Moss Adams to expand further on it next time. they received the
report. Chair Schmidt noted Audit Committee receiving the report.
No Public Comment.
4. Fiscal Year 2023-24 ACFR Update
Kuo provided an overview. Mayor Mohan asked if the timelines to submit the final draft was in
November. Orozco confirmed that the timeline and asked if Audit Committee is available the
week of Thanksgiving to review the ACFR as it is a tight deadline as staff is looking to get the
ACFR to City Council as well before the end of the year.
No public comment.
5. Review and accept the City-Wide Policy Inventory and Gap Analysis Report
Orozco provided an overview. Mohan inquried about the high-risk item – CIP, do we have a
policy and what is being done with the policy. Orozco noted that staff is aware of the concerns
and is addressing it with a comment included when the report is sent to City Council. Mohan
asked what they mean when they define it as high risk. Wu noted that the analysis is part of the
City Work Program to look at all the policies the City has and realized that the policys were a
hodgepodge of Administrative and Council approved policies. The City created a separation
between the two categories and asked Moss Adams to review the admin policies against industry
standards to see if there are any risk to the operation. Wu noted that in terms of CIP, our policies
are not as robust in comparison to other cities and CIP is an area that can be improved to be
streamlined and is not a risk to anyone but to the operation.
Chair Schmidt inquired about the Law Enforcement Gap as it is outsourced. Wu noted that the
regarding Law Enforcement it is hard to say as the policies are more internal operations and
because it is contracted, those policies may not be shared with the City.
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No public comment.
6. Review and accept the OPEB and Pension Trust Investment Policies
Orozco provided an overview. Chair Schmidt noted that there is limitation to not go over 20% for
foreign investments and the portfolio is getting close to 20%. Mullins noted to remove the
limitation. Orozco confirmed that staff will remove that language.
No public comment.
7. Receive the Treasurer's Investment Report for the Quarter Ending September 30, 2024
Orozco provided an overview. Oblites provided an overview.
No public comment.
8. Receive the proposed Audit Committee 2024 Schedule and Workplan
Orozco provided an overview.
No public comment.
STAFF AND COMMITTEE REPORTS
COMMITTEEMEMBER ATTENDANCE AT UPCOMING MEETINGS AND EVENTS
FUTURE AGENDA SETTING
ADJOURNMENT
The meeting adjourned at 6:01 p.m.
Recording Secretary:
Janet Liang, Management Analyst
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CITY OF CUPERTINO
Agenda Item
24-13527 Agenda Date:
11/25/2024 Agenda #: 2.
Subject:INFORMATIONAL ITEM Receive the FY 2023-24 Annual Comprehensive Financial Report
(ACFR)
Receive the FY 2023-24 Annual Comprehensive Financial Report (ACFR)
Presenter: Jonathan Orozco, Finance Manager and The Pun Group
4:15(20)
CITY OF CUPERTINO Printed on 11/22/2024Page 1 of 1
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City of Cupertino • 10300 Torre Avenue •Cupertino, CA 95014 •cupertino.gov
FISCAL YEAR 2023-2024
$QQXDO&RPSUHKHQVLYH
)LQDQFLDO5HSRUW
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CITY OF CUPERTINO, CALIFORNIA
ANNUAL COMPREHENSIVE
FINANCIAL REPORT
WITH REPORTS ON AUDIT
BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
FOR THE YEAR ENDED
JUNE 30, 2024
Prepared by:
The City of Cupertino Administrative Services Department
Finance Division
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City of Cupertino
Annual Comprehensive Financial Report
For the Year Ended June 30, 2024
Table of Contents
Page
INTRODUCTORY SECTION (Unaudited)
Letter of Transmittal ...................................................................................................................................................... i
City Council and Directory of City Officials .............................................................................................................. vii
Organizational Chart .................................................................................................................................................. viii
Commissions and Committees ..................................................................................................................................... ix
GFOA Certificate of Achievement for Excellence in Financial Reporting .................................................................. x
FINANCIAL SECTION
Independent Auditors’ Report on Financial Statements ......................................................................................... 1
Management’s Discussion and Analysis (Required Supplementary Information) (Unaudited) ......................... 5
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position .............................................................................................................................. 22
Statement of Activities ................................................................................................................................... 24
Fund Financial Statements:
Governmental Fund Financial Statements:
Balance Sheet .......................................................................................................................................... 28
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position ......................................................................... 31
Statement of Revenues, Expenditures, and
Changes in Fund Balances ................................................................................................................ 32
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures, and Changes in Fund Balances to the Government-Wide
Statement of Activities ...................................................................................................................... 34
Proprietary Fund Financial Statements:
Statement of Net Position ........................................................................................................................ 36
Statement of Revenues, Expenses, and Changes in Net Position ............................................................ 40
Statement of Cash Flows ......................................................................................................................... 42
Notes to the Basic Financial Statements ........................................................................................................... 51
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City of Cupertino
Annual Comprehensive Financial Report
For the Year Ended June 30, 2024
Table of Contents (Continued)
Page
FINANCIAL SECTION (Continued)
Required Supplementary Information (Unaudited)
Budgetary Comparison Schedule:
General Fund .................................................................................................................................................. 97
Transportation Special Revenue Fund ........................................................................................................... 98
Housing Development Special Revenue Fund ............................................................................................... 99
Notes to the Budgetary Comparison Schedules ................................................................................................ 101
Schedule of Changes in the Net Pension Liability and Related Ratios
Agent Multiple Employer Defined Benefit Retirement Plan - Miscellaneous Plan ..................................... 102
Schedule of Contributions - Pensions
Agent Multiple Employer Defined Benefit Retirement Plan - Miscellaneous Plan ..................................... 104
Schedule of Changes in the Net OPEB Liability and Related Ratios .............................................................. 106
Schedule of Contributions - Other postemployment Benefits ......................................................................... 108
Supplementary Information:
Other than the General Fund and Special Revenue Funds ................................................................................. 113
Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual:
Public Facilities Corporation Debt Service Fund ......................................................................................... 115
Capital Improvement Projects Capital Projects Fund .................................................................................. 116
Nonmajor Governmental Funds:
Description of Nonmajor Governmental Funds ........................................................................................... 117
Combining Balance Sheet ............................................................................................................................ 118
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .................................... 120
Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual:
Storm Drain Improvement Special Revenue Fund ................................................................................ 122
Park Dedication Special Revenue Fund ................................................................................................ 123
Environmental Management/Clean Creeks Special Revenue Fund ...................................................... 124
Traffic Impact Special Revenue Fund ................................................................................................... 125
Stevens Creek Corridor Park Capital Projects Fund .............................................................................. 126
Nonmajor Enterprise Funds:
Combining Statement of Net Position.......................................................................................................... 129
Combining Statement of Revenues, Expenses and Changes in Net Position .............................................. 130
Combining Statement of Cash Flows ........................................................................................................... 131
Internal Service Funds:
Combining Statement of Net Position.......................................................................................................... 134
Combining Statement of Revenues, Expenses, and Changes in Net Position ............................................. 136
Combining Statement of Cash Flows ........................................................................................................... 138
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City of Cupertino
Annual Comprehensive Financial Report
For the Year Ended June 30, 2024
Table of Contents (Continued)
Page
STATISTICAL SECTION (Unaudited)
Description of Statistical Section Contents ............................................................................................................... 145
Financial Trends:
Net Position By Component - Last Ten Fiscal Years ............................................................................................ 146
Changes in Net Position - Expenses and Program Revenues - Last Ten Fiscal Years .......................................... 148
Fund Balances of Governmental Funds - Last Ten Fiscal Years ........................................................................... 152
Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years ........................................................ 154
Revenue Capacity:
Assessed and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years ............................................ 157
Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years .................................................................... 158
Principal Property Taxpayers – Current Year and Nine Years Ago ...................................................................... 160
Property Tax Levies and Collections - Last Ten Fiscal Years ............................................................................... 161
Debt Capacity:
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years ............................................................................... 162
Direct and Overlapping Bonded Debt .................................................................................................................... 163
Legal Debt Margin Information - Last Ten Fiscal Years ....................................................................................... 164
Ratio of General Bonded Debt - Last Ten Fiscal Years ........................................................................................ 165
Demographic and Economic Information:
Demographic and Economic Statistics – Last Ten Fiscal Years ........................................................................... 166
Top 25 Sales Tax Producers .................................................................................................................................. 167
Operating Information:
Full-Time Equivalent City Employees By Function/Program – Last Ten Fiscal Years ........................................ 169
Operating Indicators by Function/Program – Last Ten Fiscal Years ..................................................................... 170
Capital Assets By Function/Program – Last Ten Fiscal Years .............................................................................. 172
Community Economic Profile ................................................................................................................................ 175
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i
November 25, 2024
To the Citizens of Cupertino, Honorable Mayor,
Members of the City Council, and City Manager:
It is our pleasure to submit the Annual Comprehensive Financial Report (ACFR) for the City of Cupertino
(the City), California for the fiscal year ended June 30, 2024. The report is prepared in accordance with
accounting principles generally accepted in the United States of America (GAAP) set by the Governmental
Accounting Standards Board (GASB). The report presents City information on an entity-wide basis and a
more detailed fund-level basis. The fund-level reports emphasize the City’s major funds. A Management
Discussion and Analysis (MD&A) presents a comparative analysis of current and prior year results, changes
in financial position, a comparison of actual versus budget, financial highlights, trends, and disclosure of
any known significant events or decisions that affect the financial condition of the City. This transmittal
letter is designed to complement the MD&A and should, therefore, be read in conjunction with it. The
MD&A is required supplementary information and is found in the Financial Section of the ACFR.
The accuracy of the data presented and the completeness and fairness of the presentations, including all
disclosures, are the responsibility of the management of the City. To provide a reasonable basis for making
these representations, management has established a comprehensive internal control framework that is
designed to protect the City’s assets and provide sufficient, reliable information for the proper preparation
of these financial statements. We believe the data is accurate in all material respects and is presented in a
manner that fairly sets forth the City’s financial position. Furthermore, we believe that all disclosures
necessary to enable the reader to gain an understanding of the City’s financial activity have been included.
REPORTING ENTITY
This ACFR includes all component units and funds of the City. It reports all activities for which the City is
considered to be financially accountable. The general governmental funds support a full range of services,
including law enforcement, community development, recreation, public works, public and environmental
affairs, and general administration. Enterprise funds account for recreation and solid waste operations
supported by user fees. This financial report incorporates data for the City of Cupertino and its component
unit, the Cupertino Public Facilities Corporation.
The City operates under a Council-City Manager form of government. There are five council members,
including the Mayor, who serve staggered four-year terms. The City Council appoints the City Manager
who is responsible for the daily administration of City affairs. The City Council also appoints the City
Attorney. The Director of Administrative Services shall also be appointed Treasurer per the Cupertino
Municipal Code 2.48.020. All other employees are appointed by the City Manager.
CITY OF CUPERTINO
CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014-3202
(408) 777-CITY • WWW.CUPERTINO.ORG
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ECONOMIC CONDITIONS
The City of Cupertino is located in Santa Clara County at the southern end of the San Francisco Bay
Peninsula. The City is comprised of 13-square miles and is bordered by the cities of San Jose, Saratoga,
Sunnyvale, Santa Clara, and Los Altos. It has a residential population of 59,471 (California Department of
Finance, January 2024).
Situated at the west end of Silicon Valley, Cupertino has earned the reputation of a balanced community
with a healthy climate for business and well-maintained residential neighborhoods, community parks and
public facilities. The excellent reputation of Cupertino’s schools is a major attraction for families wishing
to settle in close proximity to high-wage jobs in Silicon Valley. The City recognizes the importance of
quality school facilities and programs to all Cupertino residents and works in partnership with the schools
in many programs affecting education and youth. National surveys rank the city high in education levels,
average household incomes, and registered patent numbers, as well as one of the best cities in which to live
and raise a family.
Because Cupertino is a mostly built-out city, the City of Cupertino focuses on business retention and
revitalization. Cupertino is world renowned as the home of high-tech giants, such as Apple, Inc., and
Amazon, and as a community with stellar public schools. De Anza College, one of the largest single-campus
community colleges in the country, is another major employer and a magnet for attracting local and
international students. The City’s proactive economic development efforts have resulted in an innovative
environment for start-ups and growing companies to thrive. The City strives to retain and attract local
companies through active outreach and a responsive and customer-oriented entitlement process.
The City is excited to have a number of new mixed-use development projects offering more retail and
dining options, as well as providing additional housing opportunities to meet the needs of the growing
community.
The Main Street and Nineteen800 mixed-use developments continue to offer a vibrant downtown area for
Cupertino, with a large selection of restaurants and retailers, including Alexander’s Steakhouse, Eureka!,
Oren’s Hummus, Lazy Dog, Ippudo, HaiDiLao Hotpot Restaurant, Pressed Juicery, Orangetheory Fitness,
85 Degree Bakery, Somi Somi, Sul & Beans, Kura Sushi, Vitality Bowls, Holder's Country Inn, Koja
Kitchen, Bishops Cuts/Color, Capezio, Howard’s Shoes, Tan Cha, Meet Fresh, Pineapple Thai, Koi Palace
Contempo, Myungrang Hotdog, Pacific Catch, Philz Coffee, Pelicana Chicken, Golden Vision Optical,
Meri West Bank, AT&T Store, The Original Facial Bar, Pizza My Heart, Charles Schwab (formerly TD
Ameritrade), and Bon Mot Restaurant. Housing, office, and a Residence Inn by Marriott and Main Street
Cupertino Lofts are available to support the thriving area. Benihana, Bowlmor, and Cupertino Ice Center
also serve as long-time anchors.
The limited construction of new retail and commercial development results in strengthening
existing popular venues in Cupertino, including The Marketplace. The Marketplace has a variety of stores
and restaurants popular with students, families, and working professionals. They include Sanrio (Hello
Kitty), Kiddleton, Galpao Gaucho (Brazilian Steakhouse), Daiso, Marukai Groceries, Harumi Sushi, La
Patisserie Bakery, Beard Papa’s, Legend’s Pizza, Icicles, Kong’s Tofu & BBQ, and One Pot Shabu Shabu.
Shopping center improvements to Cupertino Village reflect building upgrades and renovations, newly
constructed buildings, parking, and open space. The shopping center is home to 99 Ranch Market, Duke of
Edinburgh Pub & Restaurant, Ume Tea, Tofu Plus, Kira Kira Beauty, Ten Ren Tea, Fantasia Coffee & Tea,
Happy Lemon, Shanghai Family Restaurant, and many other Asian restaurants, bakeries, and shops.
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Cupertino features many other retail opportunities, including TJ Maxx and Home Goods, Whole Foods,
Target, Party City, and over 180 restaurants to serve residents and the local workforce. There are seven
hotels providing over 1,000 rooms, to serve the area: The Aloft Cupertino, Cupertino Hotel, Hilton Garden
Inn, Juniper Hotel operated by Curio, Marriott Courtyard, the Residence Inn by Marriott, and Hyatt House.
The Homestead Square Shopping Center, located at Homestead Road and De Anza Boulevard, includes a
Safeway, PGA Tour Superstore, Starbucks, Ulta Beauty, Ross, Pet Club, Michaels, FedEx, and numerous
restaurants, such as Fish’s Wild, Pho Hoa Noodle Soup, Yayoi Teishoku Japanese Restaurant, and Chipotle.
Apple completed construction of its new corporate campus, Apple Park, which includes approximately 2.8
million square feet of office and R&D space north of Highway 280 between Wolfe Road and Tantau
Avenue. A state-of-the-art Visitors Center, Observation Deck, flagship retail store and café offer the public
a place to learn, explore, and shop.
Property Tax
According to the 2023-2024 Assessor’s Annual Report for Santa Clara County, Cupertino’s net assessment
roll growth increased by nearly $1,411 million, or 4.6%, from the prior year. Residential use values
increased 6.8% a total of $1,281 million and represented 90.8% of net positive growth experienced in the
City. Commercial properties posted a decrease of $91.5 million, or -1%, due to the movement of assets
from the secured to the unsecured roll. The industrial properties reported growth of $99.1 million, or 7.0%,
on the strength of parcels adding improvement values between tax years or tenants at these sites adding
fixtures and business assets. Unsecured assets in Cupertino increased by $75.7 million, or 7.1% due to the
movement of assets from the secured to the unsecured roll, which contributed to the large growth in
unsecured seen in the commercial use category.
Sales Tax
The City has experienced significant fluctuations in sales tax revenues over the past several fiscal years.
Sales tax revenue peaked at $42.6 million in FY 2020-21, driven by pandemic-related growth in two major
industry groups: Business and Industry, and State & County Pools. These sectors saw substantial gains due
to increased demand for technology and online purchases. However, as in-person purchases resumed,
revenues decreased to $34.8 million in FY 2022-23, and further declined to $31.0 million in FY 2023-24,
returning to pre-pandemic levels.
The increase in sales tax revenue during FY 2020-21 and FY 2021-22 can be attributed to strong growth in
two major industry groups: Business and Industry, and State & County Pools. These groups experienced
the greatest growth during the pandemic. However, during FY 2022-23, these groups have returned to FY
2019-20 levels, with other industry groups have shown modest but constant growth over the years,
contributing to the City's diversified economic base. In FY 2023-24, the Business and Industry group
experienced the largest decrease, which in turn negatively affected the State and County Pools.
Sales taxes are comprised of eight major industry groups: Business and Industry and State & County Pools
(86.1%), Restaurants and Hotels (6.8%), General Consumer Goods (3.3%), Fuel and Service Stations
(1.8%), Food and Drugs (1.1%), Building and Construction (0.7%), and Autos and Transportation (0.2%)
in FY 2023-24. Due to confidentiality requirements, the percentage for State & County Pools has been
included within the Business and Industry category. These figures underscore the City’s reliance on
technology-driven sectors while highlighting emerging contributions from hospitality and retail industries.
Pension and Other Post-Employment Benefits (OPEB)
The City remains committed to responsibly managing its long-term pension and retiree medical obligations.
As of June 30, 2024, Cupertino’s CalPERS actuarial valuation (measured as of June 30, 2023) reported an
unfunded accrued liability of approximately $58.0 million, with a funded status of 68.2%. Adjustments to
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the CalPERS discount rate from 7.0% to 6.9% in FY 2022-23 increased liabilities for all agencies, including
Cupertino. Despite these challenges, the City continues to address its obligations proactively through long-
term planning and prudent fiscal management.
To mitigate rising costs, the City implemented measures such as reducing pension benefits for new hires
under state law and increasing employee contributions. Additionally, the City continues to leverage its
Section 115 Pension Trust, established as part of a pension rate stabilization program. Since its inception
in 2017-18, the City has contributed $16 million, and the trust remains a critical tool for managing pension
cost volatility.
As of June 30, 2024, the City’s Net OPEB Liability stands at approximately $2.4 million. While the City
has traditionally contributed annually to its retiree health plan trust, the City paused its contributions in FY
2022-23 and FY 2023-24 to help balance potential General Fund deficits resulting from the CDTFA audit.
This decision underscores Cupertino’s flexibility in addressing short-term fiscal challenges while remaining
committed to the long-term sustainability of its OPEB obligations.
The City benefits from its contracted approach to public safety services, outsourcing police operations to
the County Sheriff and fire protection to a special district. This structure avoids the significant pension and
capital costs associated with operating its own public safety departments. Additionally, prudent financial
practices, including maintaining robust reserves and implementing cost-saving measures, position
Cupertino to navigate economic uncertainties effectively.
California Department of Tax and Fee Administration (CDTFA)
The City of Cupertino continues to navigate a dynamic economic environment shaped by its strong property
tax base, diversified sales tax revenue sources, and ongoing fiscal challenges. Recently, the City achieved
a favorable resolution to a California Department of Tax and Fee Administration (CDTFA) audit involving
a major sales taxpayer.
To prepare for a potential adverse outcome, the City established a Sales Tax Repayment Reserve totaling
$74.5 million to cover disputed revenues. However, following the settlement reached in October 2024, the
reserve was deemed unnecessary, and the funds were transferred back to the General Fund’s unassigned
balance. This resolution underscores the City’s proactive financial management and strengthens its ability
to address future economic uncertainties.
ECONOMIC INITIATIVES
The City of Cupertino remains committed to fostering economic diversity and maintaining long-term fiscal
sustainability. While Cupertino benefits from a thriving high-tech economy, led by major employers like
Apple Inc., the City is focused on broadening its revenue base to enhance stability and growth.
This includes supporting the development of emerging industries, promoting local entrepreneurship, and
investing in innovative infrastructure that attracts diverse businesses. By fostering a vibrant mix of industry
sectors, from technology to retail and services, the City aims to create a resilient economy that can adapt to
changing market conditions, ensuring sustained prosperity for the community and future generations.
ACCOUNTING AND BUDGETARY CONTROL
In developing and evaluating the City’s accounting system, consideration is given to the adequacy of
internal accounting controls. The City’s controls are designed to provide reasonable, but not absolute,
assurance regarding the safeguarding of assets against losses from unauthorized use or disposition and the
reliability of financial records for preparing financial statements and maintaining accountability of assets.
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v
The concept of reasonable assurance recognizes that the costs of a control should not exceed the benefits
likely to be derived and that the evaluation of costs and benefits requires estimates and judgments by
management.
The City’s budget is a detailed operating plan that identifies estimated costs and results in relation to
estimated revenues. The budget includes 1) the programs, projects, services and activities to be provided
during the fiscal year; 2) estimated revenue and fund balance available to finance the operating plan; and
3) the estimated spending requirements of the operating plan. The budget represents a process through
which policy decisions are made, implemented and controlled.
INDEPENDENT AUDIT
City ordinance requires an annual audit of the financial records by an independent certified public
accounting firm selected by the City Council and its audit committee. The Pun Group LLP audited the
City’s Basic Financial Statements, and their opinion thereon is included in the Financial Section of this
report.
FRAUD INVESTIGATION UPDATE
The City of Cupertino remains committed to financial integrity and accountability. Following the 2018
discovery of embezzlement by a former employee, Jennifer “Yuen-Cheng” Chang, the City has pursued
both criminal and civil remedies to recover the stolen funds. In December 2021, Ms. Chang pleaded no
contest to three felony charges and paid the City $612,000 in restitution as a condition of her criminal
judgment. The City also pursued a civil case, which concluded on May 5, 2024, when the court found Ms.
Chang liable for conversion and awarded the City over $800,000 in damages, including the remaining
principal and accrued interest. Through a subsequent settlement agreement, Ms. Chang agreed to pay the
full damages awarded by the court. Between the criminal judgment and the civil settlement, the City has
successfully recovered the entire loss resulting from the embezzlement.
To safeguard against future incidents, the City has strengthened internal controls, hired additional
accounting staff to enhance segregation of duties, and established an internal audit function in FY 2019-
20. The City also engaged Moss Adams, LLP as its internal auditor, reinforcing the City’s commitment to
robust financial oversight and operational transparency.
CERTIFICATE OF ACHIEVEMENT
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City of Cupertino for its ACFR for
the year ended June 30, 2022. In order to be awarded a Certificate of Achievement, a government unit must
publish an easily readable and efficiently organized ACFR. This report must satisfy both GAAP and
applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. Due to the timing of the completion of
last year’s ACFR and the earlier completion date of this report, the City has not yet received notification
regarding the award for the fiscal year ended June 30, 2023. However, we believe that the current report
continues to meet the Certificate of Achievement Program’s requirements.
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ACKNOWLEDGMENTS
I would like to express my appreciation to City employees, department heads, the City Manager, members
of the Audit Committee, and members of City Council for their interest in conducting the financial
operations of the City in a responsible manner. Special thanks go to, Jonathan Orozco, Zeng Wang, Min
Zhao, Jumaini Judoprasetijo, Vi Tran, and Amber Chang of the Finance staff for their continued support
and dedication. Special recognition to Beth Viajar, Richard Wong, Giang Dinh, and Janet Liang for their
efforts in the preparation and production of this report.
Reviewed by,
Kristina Alfaro
Director of Administrative Services
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26
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Cupertino
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2022
Executive Director/CEO
x
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INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and the Members of the City Council
of the City of Cupertino
Cupertino, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities,
each major fund, and the aggregate remaining fund information of City of Cupertino, California (the “City”) as of and
for the year ended June 30, 2024, and the related notes to the basic financial statements, which collectively comprise
the City’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, the business-type activities, each major fund, and the aggregate
remaining fund information of the City, as of June 30, 2024, and the respective changes in financial position, and,
where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States. Our responsibilities under those standards are further described in the Auditors’
Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of
the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to
our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with
accounting principles generally accepted in the United States of America, and for the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events,
considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for
twelve months beyond the financial statement date, including any currently known information that may raise
substantial doubt shortly thereafter.
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To the Honorable Mayor and the Members of the City Council
of the City of Cupertino
Cupertino, California
Page 2
2
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinions.
Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an
audit conducted in accordance with auditing standards generally accepted in the United States of America and
Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered
material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment
made by a reasonable user based on the financial statements.
In performing an audit in accordance with auditing standards generally accepted in the United States of America and
Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, and design and perform audit procedures responsive to those risks. Such procedures include examining,
on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
City’s internal control. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise
substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified
during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that Management’s Discussion and
Analysis, the Budgetary Comparison Schedules – General Fund and Major Special Revenue Funds, the Schedule of
Changes in Net Pension Liability and Related Ratios, the Schedule of Contributions – Pensions, the Schedules of
Changes in Net Other Postemployment Benefits Liability and Related Ratios, and the Schedule of Contributions –
Other Postemployment Benefits as listed in the table of contents be presented to supplement the basic financial
statements. Such information is the responsibility of management and, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of
financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical
context. We have applied certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency with management’s
responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the
basic financial statements. We do not express an opinion or provide any assurance on the information because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
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To the Honorable Mayor and the Members of the City Council
of the City of Cupertino
Cupertino, California
Page 3
3
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise
the City’s basic financial statements. The accompanying combining and individual nonmajor fund financial
statements are presented for purposes of additional analysis and are not a required part of the basic financial
statements. Such information is the responsibility of management and was derived from and relates directly to the
underlying accounting and other records used to prepare the basic financial statements. The information has been
subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the basic financial statements or to the basic financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of America. In
our opinion, the combining and individual nonmajor fund financial statements are fairly stated, in all material
respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the annual report. The other information comprises
the Introductory Section and the Statistical Section are presented for purposes of additional analysis and are not a
required part of the basic financial statements. Our opinions on the basic financial statements do not cover the other
information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other information and
consider whether a material inconsistency exists between the other information and the basic financial statements, or
the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that
an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated November XX, 2024, on
our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely
to describe the scope of our testing of internal control over financial reporting and compliance and the results of that
testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards
in considering the City’s internal control over financial reporting and compliance.
Santa Ana, California
November XX, 2024
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CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2024
5
As management of the City of Cupertino (City), we offer readers of the City's financial statements this narrative
overview and analysis of the financial activities for the fiscal year ended June 30, 2024 (FY 2023-24). Readers
are encouraged to consider the following information in conjunction with the accompanying Transmittal Letter
and Basic Financial Statements.
FINANCIAL HIGHLIGHTS
The comparisons provided in this discussion and analysis are between FY 2022-23 and FY 2023-24. All increases
and decreases are expressed relative to FY 2022-2023 amounts. Financial highlights for FY 2023-24 are
summarized below. Details related to these highlights are found in the remaining sections of this analysis.
Citywide
The City's total net position, the amount by which total assets and deferred outflows of resources exceed total
liabilities and deferred inflows of resources, equaled $398.5 million in FY 2022-23 and equals $424.4 million
in FY 2023-24.
Of this amount, $147.5 million is unrestricted and may be used to meet the City's ongoing obligations to
residents and creditors. The remaining net position is classified as net investment in capital assets of $205.0
million and restricted of $71.9 million.
The City's total net position increased by $25.8 million over FY 2023-24, and is largely attributed to revenues
exceeding expenditures as reported in the statement of activities. The remainder of this report will provide a
more detailed analysis of the City's net position and operating activities that contributed to this increase.
In December 2021, the California Department of Tax and Fee Administration (CDTFA) initiated an audit of
one of the City’s major sales taxpayers, creating uncertainty about the potential fiscal impact. In March 2023,
the CDTFA preliminarily determined that sales tax revenues had been misallocated to Cupertino, and the City
received the formal audit results in October 2023 and subsequently appealed the results. This prompted the
City to take proactive steps to mitigate potential impacts, including adjustments in its FY 2023-24 and
FY 2024-25 Adopted Budgets.
During the fiscal year, the Federal Reserve continued its efforts to combat inflation by implementing further
interest rate increases. The City's investment portfolio reached 98.1% of its book value as of June 30, 2024,
an increase to last year’s 95%, resulting in a positive $4.4 million adjustment compared to the prior fiscal
year.
Fund Level
As of June 30, 2024, governmental funds report a combined fund balance of $246.1 million, an increase of
$25.7 million from the prior year. Of this amount, $26.0 million is available for spending at the City's
discretion (unassigned fund balance).
As of June 30, 2024, the General Fund reports an ending fund balance of $166.1 million. Of this amount,
$26.0 million is available for spending at the City's discretion (unassigned fund balance). Cash and
investments of the General Fund total $149.0 million, which represents 89.7% of the General Fund's total
$166.1 million fund balance.
To address the anticipated CDTFA audit outcome, City Council established a committed Sales Tax
Repayment Reserve in October 2023, initially funded at $56.5 million and later increased to $74.5 million to
account for disputed revenues and accrued interest. As of June 30, 2024, this $74.5 million is reflected as
committed fund balance in the financial statements.
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CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2024
6
OVERVIEW OF THE FINANCIAL STATEMENTS
The discussion and analysis are intended to serve as an introduction to the City’s Basic Financial Statements. The
Basic Financial Statements are comprised of the City-wide Financial Statements, the Fund Financial Statements,
and the notes to the Basic Financial Statements. These two sets of financial statements provide two different views
of the City’s financial activities and positions.
The City-Wide Financial Statements provide a long-term view of the City’s activities as a whole and comprise
the Statement of Net Position and the Statement of Activities. These statements are prepared on an accrual basis,
which means they measure the flow of all economic resources of the City as a whole. The accrual basis of
accounting is similar to the accounting used by most private sector companies. The Statement of Net Position
provides information about the financial position of the City as a whole, including all its capital assets and long-
term liabilities. The Statement of Activities provides information about all the City’s revenues and expenses, with
the emphasis on measuring net revenues and expenses for each of the City’s programs. The Statement of Activities
explains in detail the change in net position for the year. Over time, increases or decreases in net position can be
indicators of whether the financial condition of the City is improving or deteriorating.
All of the City’s activities are grouped into Governmental activities and Business-type activities, as explained
below. The Statement of Net Position and the Statement of Activities provide a summary of these two types of
activities for the City as a whole.
Governmental activities—Most of the City’s basic services are considered to be governmental activities,
including public works, law enforcement, community development, recreation, public & environmental
affairs, and general administration. These services are supported by general City revenues such as property,
sales and other taxes, and by specific program revenues such as developer fees and grants.
The City’s governmental activities include the activities of a separate legal entity, the Cupertino Public
Facilities Corporation (the “Corporation”), because the City is considered to be financially accountable for
the Corporation. The City leases its major facilities from the Corporation, which then uses the lease payments
to pay principal and interest on the Corporation’s long-term debt.
Business-type activities—All of the City’s enterprises are reported here, including solid waste management
and most of the City’s recreational operations. Unlike governmental services, these services are supported by
charges paid by users based on the amount of services used.
The Fund Financial Statements report the City’s operations in more detail than the City-wide Financial
Statements and focus primarily on the short-term activities of the City’s General Fund and other major funds. The
Fund Financial Statements measure only current revenues, expenditures, assets, liabilities, and deferred inflows
and outflows of resources; they exclude long-term assets and liabilities. Because these statements focus on the
near-term inflows and outflows of spendable resources, such information may be useful in evaluating near-term
financing requirements.
The Fund Financial Statements provide detailed information about each of the City’s most significant funds, called
major funds. Cupertino’s Fund Financial Statements include governmental, enterprise and internal service funds
as discussed below. Each major fund is presented individually, with all non-major funds summarized and
presented only in a single column. Subordinate schedules, which follow the Notes to Basic Financial Statements,
present the details of these non-major funds. Major funds present the significant activities of the City for the year
and may change from year to year as a result of changes in the pattern of the City’s activities and public interest.
For example, the Capital Improvement Projects Fund may or may not appear as a major fund depending on the
volume of construction activity in a certain year.
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CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2024
7
Governmental Fund financial statements are prepared on a modified accrual basis, which means they measure
only current financial resources and uses. They present essentially the same functions reported as governmental
activities in the city-wide financial statements. However, capital assets and other long-lived assets, along with
long-term liabilities, are not presented in the Governmental Fund financial statements. Reconciliations are
provided to facilitate a comparison between governmental funds and governmental activity statements to allow a
better understanding of the long-term impact of the government’s near-term financial decisions.
Comparisons of budget and actual financial information are included in the Basic Financial Statements for the
General Fund and other major Special Revenue Funds. For other nonmajor funds, budgetary comparison schedules
for these funds are included in this document as supplemental information only.
Enterprise and Internal Service Fund financial statements are prepared on a full accrual basis and include current
and long-term assets and liabilities and deferred outflows and inflows of resources. Enterprise funds are used to
report the same functions presented as business-type activities in the City-wide Financial Statements, and in more
detail in the Fund Financial Statements.
Since the City’s Internal Service funds provide goods and services only to the City’s governmental and business-
type activities, their activities are reported only in total at the fund level. Internal Service funds may not be major
funds because their revenues are derived from other City funds. These revenues are eliminated in the City-wide
financial statements and any related profits or losses are returned to the activities which created them, along with
any residual net position of the Internal Service funds. For this City, internal service activities predominantly
benefit governmental rather than business-type functions, and are therefore included within governmental
activities in the City-wide Financial Statements.
The Notes to Basic Financial Statements provide important additional detail that is essential to a full
understanding of the data reported in the City-wide and Fund Financial Statements.
CITY-WIDE FINANCIAL ACTIVITIES
This analysis focuses on the net position and changes in net position of the City’s Governmental Activities (Tables
1 and 2) and Business-Type Activities (Tables 3 and 4) as presented in the City-wide Statement of Net Position
and the Statement of Activities.
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CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2024
8
2024 2023
Assets:
Cash and investments 241,393$ 205,572$
Restricted cash and investments 21,664 19,089
Other assets 25,113 25,222
Capital assets 220,484 219,168
Total assets 508,654 469,051
Deferred Outflows of Resources:
Loss on refunding 120 159
Related to Pension 16,410 17,294
Related to OPEB 5,693 5,859
Total deferred outflows of resources 22,223 23,312
Liabilities:
Long term debt 16,417 18,850
Other liabilities 95,682 80,725
Total liabilities 112,099 99,575
Deferred Inflows of Resources:
Leases Receivable 2,321 2,379
Related to Pension 82 131
Related to OPEB 1,857 2,169
Total deferred inflows of resources 4,260 4,679
Net Position:
Net Investment in capital assets 202,961 198,451
Restricted 71,760 69,129
Unrestricted 139,797 120,529
Total net position 414,518$ 388,109$
Table 1
Condensed Statement of Net Position at June 30
(in thousands)
Governmental Activities
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CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2024
9
Governmental Activities
The City’s change in net position from governmental activities was $26.4 million. The following significant
changes within assets, liability, and net position categories occurred:
As part of the City’s budget-balancing efforts, the City did not make an additional contribution to its Section
115 Pension Trust during the fiscal year. In accordance with guidance under GASB 67/68, the assets in the
Section 115 Trust are reported as restricted cash and investments in the City’s General Fund. While the Section
115 Trust qualifies as a “trust,” the assets in the Section 115 Trust are not used to directly pay benefits to
beneficiaries; rather, they are used to pay CalPERS via the CERBT Trust, and as a result, the activities are not
required to be reported in a fiduciary fund.
The City utilized the Section 115 OPEB Trust to pay for the direct benefit costs instead of relying on the
General Fund to subsidize the expense. Additionally, the change in demographic assumptions and investment
performance, the Net OPEB Liability grew to $2.4 million, an increase of $1.8 million from the previous
year’s Net OPEB Liability of $.6 million.
Capital assets increased approximately $1.3 million. This consisted of continued significant capital investment
into capital projects dedicated to street and transportation improvements, storm drain improvements, and
maintenance of and improvements to City facilities that were offset with current year depreciation expense.
Long-term debt decreased by $2.4 million or 12.9% over the previous year and resulted from the regular debt
service payments made and the annual amortization on the issuance premium during the year.
Other liabilities increased by approximately $15.0 million or 18.5%, primarily due to an increase in the City’s
Net Pension and OPEB Liabilities.
Deferred Outflows Related to Pension and OPEB decreased $1.1 million, while Deferred Inflows of Resources
Related to Pension and OPEB increased approximately $.4 million primarily due to actuarial changes of
assumptions.
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CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2024
10
The Statement of Activities presents program revenues, expenses, general revenues, and the resulting change in
net position as summarized in the next table.
Expenses 2024 2023
Administration 9,069$ 8,830$
Law enforcement 16,682 15,716
Innovation and technology 3,127 1,951
Administrative services 8,166 6,363
Parks and recreation 7,195 6,021
Community development 13,696 12,463
Public works 36,547 38,696
Interest on long-term debt 305 370
Total expenses 94,787 90,410
Revenues
Program revenues:
Charges for services 18,622 18,405
Operating grants and contributions 4,685 10,881
Capital grants and contributions 3,666 1,594
Total program revenues 26,973 30,881
General revenues:
Taxes:
Property tax 22,494 21,808
Property tax in-lieu of motor vehicle fee 10,543 10,082
Sales tax 30,961 34,819
Transient occupancy tax 6,907 7,062
Utility user tax 3,936 4,104
Franchise tax 4,314 3,995
Other taxes 1,971 2,873
Intergovernmental, unrestricted:
Motor vehicle license fee 75 62.072
Investment earnings 11,563 2,802
Gain on sale of capital assets - -
Miscellaneous 1,442 444
Total general revenues 94,204 88,051
Total revenues 121,177 118,932
Excess of revenues over expenses,
before transfers 26,390 28,521
Transfers 20 (296)
Change in net position 26,410 28,225
Beginning net position 388,109 359,884
Ending net position 414,518$ 388,109$
Table 2
Condensed Statement of Activities for the Year Ended June 30
(in thousands)
Governmental Activities
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CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2024
11
City-wide Governmental Activities Revenues
Table 2 shows that revenues from governmental activities increased $2.2 million or 1.9% from last year, finishing
at $121.2 million. The modest increase is largely due to increases in the temporary market adjustment to
investment earnings and settlement agreement (included in Miscellaneous Revenue) offset by decreases in
Operating Grants and sales taxes.
Property taxes increased general revenues by $.7 million over the prior year. According to the 2023/24 City of
Cupertino Property Tax Review from HDL (Assessor’s Annual Report for Santa Clara County) the net assessment
roll growth increased $1.4 billion, or 4.6%, from the prior year.
The City experienced a sales tax decrease of $3.9million in the fiscal year, decreasing by 11.1% over the previous
fiscal year. As consumers continue to transition back to in store shopping from online, sales tax revenue continue
to decrease with the business and industry and the City’s county pool allocation experienced the greatest decline.
Transient occupancy tax revenue decreased by $0.2 million, or 2.2%, compared to the prior year. While the City
continues to see gradual recovery in this revenue source, the pace is slower than other areas due to the lasting
impact of employers’ long-term and permanent telework policies, which significantly affect travel and lodging
demand.
Investment earnings increased by $8.7 million over the prior year. This is primarily due to an unrealized
investment gain of $4.4 million compared to the previous year. Albeit, the City’s investment portfolio continues
to have a market value below cost.
Program revenues experienced a decrease of $3.9 million or 13%, and is primarily attributable to the revenue
recognition of the remaining SLFRF funds in the previous year.
City-wide Governmental Activities Expenses
City-wide governmental activities expenses increased by $4.4 million, or 4.8%. This was primarily driven by
increases across all programs with the exception of Public Works.
Change in Net Position
The City-wide governmental activities net position increased by $26.4 million, closely aligning with the prior
year’s $28.2 million increase. This growth is attributed to budget reduction strategies, including decreased utility
expenses, reduced capital outlay, renegotiated contract services, and savings from staff vacancies.
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Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2024
12
Business Type Activities
Business-type activities in the City-wide Financial Statements include the City’s four enterprise funds. Enterprise
funds are used to account for recreational and solid waste management operations that are financed and operated
in a manner similar to private business enterprises where the intent is that costs of providing services and facilities
to the general public on a continuing basis be financed or recovered primarily through user fees. The major
proprietary funds section of this report provides more information on business-type results.
Administration 9.6%
Law Enforcement
17.7%
Public Works 38.7%
Innovation and
Technology 3.3%
Administrative
Services 8.6%
Parks and
Recreations 7.6%
Community
Development
14.5%
EXPENSES - GOVERNMENTAL ACTIVITIES
FISCAL YEAR 2023-24
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Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2024
13
As provided in Table 3 and Table 4, the business-type net position totaled $9.9 million at June 30, 2024, decreasing
by $.6 million or 5.4%, largely due to operating costs exceeding revenues. Business-type activities revenues
increased by $.5 million, or 6.2%, to $7.9 million, investment earnings increased by $.4 million and operating
expenses increased by $.5 million to $8.4 million. The operating losses were attributed to Cupertino Sports Center,
Recreation Programs, and Blackberry Farm.
2024 2023
Assets:
Cash and investments 10,410$ 11,373$
Other assets 956 307
Capital assets 2,009 2,109
Total assets 13,375 13,789
Deferred Outflows of Resources:
Related to pension 872 832
Related to OPEB 378 311
Total deferred outflows of resources 1,250 1,143
Other Liabilities:4,639 4,386
Total liabilities 4,639 4,386
Deferred Inflows of Resources:
Related to pension 4 6
Related to OPEB 123 115
Total deferred inflows of resources 127 121
Net Position:
Net Investment in capital assets 2,010 2,110
Restricted 107 167
Unrestricted 7,742 8,148
Total net position 9,859$ 10,425$
Business Type Activities
Table 3
Condensed Statement of Net Position at June 30
(in thousands)
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CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2024
14
Expenses 2024 2023
Resource recovery 2,228$ 2,038$
Cupertino sports center 3,113 3,457
Recreation programs 2,394 1,662
Blackberry Farm 674 799
Total expenses 8,409 7,956
Revenues
Program revenues:
Charges for services 7,429 7,249
General revenues:
Investment earnings 434 156
Total revenues 7,863 7,405
Excess of revenues over expenses,
before transfers (546) (551)
Transfers (20) 296
Change in net position (566) (255)
Beginning net position 10,425 10,679
Ending net position 9,859$ 10,425$
Table 4
Condensed Statement of Activities for the Year Ended June 30
(in thousands)
Business Type Activities
MAJOR GOVERNMENTAL FUNDS
General Fund
General Fund Revenues
The General Fund's fund balance increased by $27.5 million in FY 2023-24. This increase resulted from revenues
and transfers-in totaling $110.2 and $.1 million, respectively, exceeding expenditures totaling $76.2 million and
transfers out totaling $6.6 million.
General Fund revenue decreased by $.8 million compared to FY 2022-23. This net decrease is mainly explained
by an increase of $1.1 million in property taxes and $6.1 million use of money and property, which includes
realized and unrealized investment income, offset by a decrease of $3.9 million in sales tax and $6.4 million in
intergovernmental revenue, which included ARPA revenue recognition in the previous year.
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CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2024
15
Fiscal 2023-24 overall expenditures, at $76.2 million, were $3.6 million, or 5.0%, higher than last year. This result
came in $10 million, or 11.6%, under the final budget. Year-over-year and budget-versus-actual results for General
Fund programs are described below
Transportation
The Transportation Special Revenue Fund carried a June 30, 2024, ending fund balance of $13.6 million,
increasing by 28.8%, or $3.0 million from the beginning of the fiscal year. In recent years this fund has
accumulated fund balance year over year. The current year’s increase is primarily attributed to additional transfers
in to support scheduled projects that remain in progress.
Housing Development
The Housing Development Special Revenue Fund carried a June 30, 2024, ending fund balance of $11.1 million,
down 3.4%, or $0.4 million, from the beginning of the fiscal year.
Public Facilities Corporation
On September 29th, 2020, the City of Cupertino 2020A Certificates of Participation (2020 COPs) were
successfully sold at very attractive interest rates in order to refund the City’s 2012 Certificates of Participation for
debt service savings. The 2020 COPs were very well received by investors due in large part to the well-regarded
Cupertino name, the top-notch AA+ rating, the sizable annual principal amounts and short maturity, and favorable
supply and demand dynamics in the California municipal market.
At the end of the order period, there were nearly eight times as many orders as there were bonds for sale. This
strong investor demand enabled the underwriter to further lower yields. The refunding ultimately generated net
present value savings of approximately $3.14 million, or 11.61% of refunded par (compared to $2.26 million, or
8.36% of refunded par, when presented to Council on September 1st) and a True Interest Cost of 0.72%. Savings
to the City’s General Fund amounts to approximately $494,000 per year for the next 10 years, or almost $5 million
in total savings. Fund balance as of June 30, 2024, was $250, which was $1,500 lower than the previous year,
which will remain at this approximate fund balance in future fiscal years.
Capital Improvement Projects
The Capital Improvement Projects Capital Projects Fund had an ending fund balance of $32.0 million as of
June 30, 2024, reflecting a decrease of $2.8 million from the prior fiscal year. This decrease is primarily attributed
to an increase in expenditures for ongoing capital projects.
MAJOR PROPRIETARY FUNDS
Resource Recovery
The City has a solid waste franchise agreement with Recology that shares collection, landfill disposal, and
recycling revenues and costs. This fund receives revenues from Recology with the funds going toward landfill
costs, regulatory fees, and staffing costs that the City incurs to manage its solid waste, recycling, and household
hazardous waste programs. Total operating revenue and expenses is at $2.4 million and $2.2 million, respectively.
Considering net non-operating revenues of $0.2 million, net position increased by $0.3 to an ending fund balance
of $5.1 million.
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CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2024
16
Recreation Programs
This enterprise operates the Quinlan Community Center, Monta Vista Recreation Center, McClellan Ranch,
Creekside Park building, eight school sites, and various parks. These programs generated approximately
$2 million in revenues and program expenses of approximately $2.4 million. Considering net non-operating
revenues of $0.1 million, the program experienced a net operating loss of $0.2 million. The fund ended the year
with a net position of $2.8 million.
Cupertino Sports Center
The Sport Center generated operating revenue decreased by $0.4 million or 15.4%, while the expenses also
decreased by $0.3 million, resulting in a net operating loss of $0.8 million. Considering net non-operating revenues
of $0.1 million, this fund’s net position was $1.2 million as of June 30, 2024.
NONMAJOR PROPRIETARY FUNDS
Blackberry Farm
City employees, with a teaching professional contractor, staff the City-owned Blackberry Farm golf course and
pro shop. This fund generated a positive net position increase of $22.8 thousand to $757.2 thousand as a result of
$663.3 thousand in operating revenues, $673.4 thousand in operation expenses, and a positive nonoperating
revenue of $32.9 thousand.
GENERAL FUND BUDGETARY HIGHLIGHTS
For the fiscal year ended June 30, 2024, the General Fund’s original expenditure budget of $79.6 million increased
by $6.5 million, resulting in a final amended budget of $86.1 million. Actual expenditures for the fiscal year
totaled $76.2 million, coming in $10.0 million under budget. The majority of the budget increase occurred in
Public Works, driven by an additional $2.9 million for contract services, primarily for a community shuttle
program, and $1.5 million for special projects carried over from the prior fiscal year.
CAPITAL ASSETS
At June 30, 2024, the City had $222.5 million, net of depreciation and amortization, invested in a broad range of
capital assets used in governmental and business-type activities, as shown in Note 6 to the Basic Financial
Statements. This reflects the City’s continued investment into capital projects dedicated to street and
transportation improvements, storm drain improvements, and maintenance of and improvements to City
facilities, resulting in an increase in net capital assets of $1.2 million, after depreciation and amortization.
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CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2024
17
2024 2023
Governmental Activities:
Land 64,787$ 64,787$
Easements 19,615 19,615
Construction in progress 27,161 28,594
Buildings 11,967 12,504
Improvements other than buildings 15,431 13,373
Machinery and equipment 3,567 3,640
Roads, curbs, gutters, sidewalks, medians and bridges 69,403 69,369
Streetlights 1,361 1,241
Storm drain structures and mains 5,551 3,541
Traffic signals 355 420
Right-to-use assets 1,287 2,083
Total Governmental Activities 220,484 219,167
Business-Type Activities
Construction in progress 3 358
Buildings 1,540 1,419
Improvements other than buildings 419 262
Machinery and equipment 47 70
Total Business-Type Activities 2,009 2,109
Total City 222,494$ 221,276$
Table 5
Capital Assets, Net of Depreciation and Amortization, at June 30
(in thousands)
DEBT ADMINISTRATION
On September 29, 2020, the City of Cupertino’s 2020A Certificates of Participation (2020 COPs) were
successfully sold in order to refund the City’s 2012 Certificates of Participation for debt service savings. The 2020
COPs were very well received by investors due in large part to the well-regarded Cupertino name, the top-notch
AA+ rating, the sizable annual principal amounts and short maturity, and favorable supply and demand dynamics
in the California municipal market. The refunding generated net present value savings of approximately $3.14
million, 11.61% of refunded par and a True Interest Cost of 0.72%. Savings to the City’s General Fund amounts
to approximately $494,000 per year for the next 10 years, or almost $5 million in total savings.
The June 30, 2024, outstanding principal of $14,030,000 is due to be paid off by June 1, 2030. More information
can be found in Note 7 to the Basic Financial Statements and in the Public Facilities Corporation discussion earlier
in this analysis.
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CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited) (Continued)
For the Year Ended June 30, 2024
18
CURRENTLY KNOWN FACTS AND CONDITIONS
The City of Cupertino is in a strong financial position, supported by a solid property tax base and sales tax
revenues. Following the resolution of a significant California Department of Tax and Fee Administration
(CDTFA) audit, previously committed funds were transferred back to the General Fund’s unassigned balance.
The City is now focusing on strategies to allocate these uncommitted funds toward community priorities,
infrastructure investments, and long-term fiscal sustainability. At this time, the City is not aware of any other
facts, conditions, or decisions expected to significantly affect its net position or results of operations.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This Comprehensive Annual Financial Report is intended to provide a general overview of the City’s finances.
Further information can be provided by the City of Cupertino Finance Department, 10300 Torre Avenue,
Cupertino CA 95014, phone (408) 777-3280, or by the City website at www.cupertino.gov.
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BASIC FINANCIAL STATEMENTS
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GOVERNMENT-WIDE
FINANCIAL STATEMENTS
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Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:
Cash and investments (Note 2) 241,393,169$ 10,409,609$ 251,802,778$
Receivables:
Accounts 14,414,306 891,221 15,305,527
Interest 3,565,996 64,656 3,630,652
Leases, due within one year (Note 4) 245,873 - 245,873
Inventories 21,383 - 21,383
Prepaid items 4,680 - 4,680
Other assets 3,884 - 3,884
Total current assets 259,649,291 11,365,486 271,014,777
Noncurrent assets:
Restricted cash and investments (Note 2) 21,663,664 - 21,663,664
Lease receivable, due in more than one year (Note 4) 2,239,890 - 2,239,890
Loans receivable, net (Note 3) 4,617,269 - 4,617,269
Capital assets: (Note 6)
Capital assets, not being depreciated 111,562,428 3,337 111,565,765
Capital assets, being depreciated and amortized 108,921,607 2,006,083 110,927,690
Total noncurrent assets 249,004,858 2,009,420 251,014,278
Total assets 508,654,149 13,374,906 522,029,055
DEFERRED OUTFLOWS OF RESOURCES
Deferred charges on refunding 119,609 - 119,609
Related to pensions 16,409,725 872,310 17,282,035
Related to other postemployment benefit 5,693,398 377,739 6,071,137
Total deferred outflows of resources 22,222,732 1,250,049 23,472,781
City of Cupertino
Statement of Net Position
June 30, 2024
See accompanying Notes to the Basic Financial Statements.
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Governmental Business-Type
Activities Activities Total
LIABILITIES
Current liabilities:
Accounts payable and accruals 16,864,439 430,327 17,294,766
Accrued payroll and benefits 627,895 289 628,184
Deposits payable 7,623,932 - 7,623,932
Interest payable 46,767 - 46,767
Unearned revenues 5,224,783 896,268 6,121,051
Compensated absences, due within one year (Note 7) 453,951 19,979 473,930
Claims payable, due within one year (Note 10) 322,000 - 322,000
Lease liabilities, due within one year (Note 7) 6,808 - 6,808
Subscription liabilities, due within one year (Note 7) 597,895 - 597,895
Long-term debt, due within one year (Note 7) 2,115,000 - 2,115,000
Total current liabilities 33,883,470 1,346,863 35,230,333
Noncurrent liabilities:
Compensated absences, due in more than one year (Note 7) 4,606,986 214,720 4,821,706
Claims payable, due in more than one year (Note 10) 1,349,587 - 1,349,587
Lease liabilities, due in more than one year (Note 7) 8,561 - 8,561
Subscription liabilities, due more than one year (Note 7) 612,379 - 612,379
Long-term debt, due in more than one year (Note 7) 14,301,895 - 14,301,895
Aggregate net pension liabilities (Note 8) 55,107,440 2,929,405 58,036,845
Net other postemployment benefit liabilities (Note 9) 2,228,086 147,825 2,375,911
Total noncurrent liabilities 78,214,934 3,291,950 81,506,884
Total liabilities 112,098,404 4,638,813 116,737,217
DEFERRED INFLOWS OF RESOURCES
Leases (Note 4) 2,321,090 - 2,321,090
Related to pensions (Note 8) 82,126 4,367 86,493
Related to other postemployment benefit (Note 9) 1,856,867 123,196 1,980,063
Total deferred inflows of resources 4,260,083 127,563 4,387,646
NET POSITION
Net investment in capital assets (Note 11)202,961,106 2,009,420 204,970,526
Restricted for:
Public works 37,384,845 - 37,384,845
Affordable housing 11,103,256 - 11,103,256
Pension trust 21,663,664 - 21,663,664
Other postemployment benefit 1,608,445 106,718 1,715,163
Debt service 250 - 250
Total restricted 71,760,460 106,718 71,867,178
Unrestricted 139,796,828 7,742,441 147,539,269
Total net position 414,518,394$ 9,858,579$ 424,376,973$
June 30, 2024
Statement of Net Position (Continued)
City of Cupertino
See accompanying Notes to the Basic Financial Statements.
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Capital Grants
Charges for Operating Grants and
Expenses Services and Contributions Contributions
Functions/Programs
Governmental Activities:
Administration 9,069,311$ 1,370,548$ -$ -$
Law enforcement 16,682,075 739,408 567,591 -
Innovation and technology 3,127,436 - - -
Administrative services 8,165,843 6,642,671 - -
Recreation services 7,194,533 811,979 - -
Community development 13,696,180 5,549,943 250,129 -
Public works 36,547,118 3,507,250 3,867,433 3,665,581
Interest and fiscal charges 304,972 - - -
Total Governmental Activities 94,787,468 18,621,799 4,685,153 3,665,581
Business-Type Activities:
Resource recovery 2,227,782 2,363,496 - -
Cupertino sports center 3,113,577 2,362,677 - -
Recreation programs 2,393,886 2,039,338 - -
Blackberry farm 673,788 663,274 - -
Total Business-Type Activities 8,409,033 7,428,785 - -
Total Primary Government 103,196,501$ 26,050,584$ 4,685,153$ 3,665,581$
City of Cupertino
Statement of Activities
For the Year Ended June 30, 2024
Program Revenues
See accompanying Notes to the Basic Financial Statements.
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Governmental Business-Type
Activities Activities Total
Functions/Programs
Governmental Activities:
Administration (7,698,763)$ -$ (7,698,763)$
Law enforcement (15,375,076) - (15,375,076)
Innovation and technology (3,127,436) - (3,127,436)
Administrative services (1,523,172) - (1,523,172)
Recreation services (6,382,554) - (6,382,554)
Community development (7,896,108) - (7,896,108)
Public works (25,506,854) - (25,506,854)
Interest and fiscal charges (304,972) - (304,972)
Total Governmental Activities (67,814,935) - (67,814,935)
Business-Type Activities:
Resource recovery - 135,714 135,714
Cupertino sports center - (750,900) (750,900)
Recreation programs - (354,548) (354,548)
Blackberry farm - (10,514) (10,514)
Total Business-Type Activities - (980,248) (980,248)
Total Primary Government (67,814,935) (980,248) (68,795,183)
General Revenues:
Taxes:
Property taxes 22,494,293 - 22,494,293
Property tax in lieu of motor vehicle fee 10,542,559 - 10,542,559
Sales taxes 30,961,166 - 30,961,166
Transient occupancy tax (TOT) 6,906,722 - 6,906,722
Utility user tax (UUT) 3,935,917 - 3,935,917
Franchise tax 4,313,669 - 4,313,669
Other taxes 1,970,611 - 1,970,611
Motor vehicle license fee 74,801 - 74,801
Investment earnings 11,562,914 434,290 11,997,204
Miscellaneous 1,441,717 - 1,441,717
Total General Revenues 94,204,369 434,290 94,638,659
Transfers 20,000 (20,000) -
Changes in Net Position 26,409,434 (565,958) 25,843,476
Net Position - Beginning 388,108,960 10,424,537 398,533,497
Net Position - Ending 414,518,394$ 9,858,579$ 424,376,973$
Net (Expense) Revenue and Changes in Net Position
City of Cupertino
Statement of Activities (Continued)
For the Year Ended June 30, 2024
See accompanying Notes to the Basic Financial Statements.
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Capital Improvement Projects Capital Projects Fund -This fund accounts for activities related to the acquisition or
construction of major capital facilities.
GOVERNMENTAL FUND
FINANCIAL STATEMENTS
General Fund - This fund is the general operating fund of the City and is used to pay for core services such as public safety, parks
and recreation, community development, public works, and a host of other vital services. The revenue used to pay for these services
comes primarily from local taxes such as sales tax, property tax, franchise fees, charges for services, and a variety of other
discretionary sources. It also accounts for activities related to the City’s investment portfolio. It is used to account for all financial
resources except those that are required to be accounted for in another fund.
Transportation Special Revenue Fund - This fund accounts for the City's gas tax, vehicle registration fees, and grant revenues and
expenditures related to the maintenance and construction of City streets. All revenue in this fund is restricted exclusively for street
and road purposes, including related engineering and administrative expenditures.
Housing Development Special Revenue Fund - This fund accounts for the Federal Housing and Community development
Grant Program activities administered through the County, including rehabilitation loans. Monies collected from developers
that mitigate the impact of housing needs are also included. Monies in this fund are governed by the program's rules.
Public Facilities Corporation Debt Service Fund -This fund accounts for the payments of principal and interest on certificates of
participation issued to provide for the financing of the Civic Center, Library, Wilson Park, Memorial Park, and other City facilities.
In the Fund Financial Statements only individual major funds are presented, while nonmajor funds are combined in a single column.
Major funds are defined generally as having significant activities or balances in the current year.
The funds described below were determined to be Major Funds by the City. Individual nonmajor funds can be found in the
Supplementary Section.
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Housing
General Transportation Development
ASSETS
Cash and investments (Note 2) 148,965,885$ 14,239,100$ 5,390,909$
Restricted cash and investments (Note 2) 21,663,664 - -
Receivables:
Accounts 11,816,460 1,067,114 124,524
Interest 1,749,186 88,918 1,528,490
Loans, net (Note 3) 428,431 - 4,188,838
Leases (Note 4) 2,485,763 - -
Due from other funds (Note 5) 1,401,947 - -
Advances to other funds (Note 5) 3,000,000 - -
Inventories 21,383 - -
Other assets 3,884 - -
Total assets 191,536,603 15,395,132 11,232,761
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
Liabilities:
Accounts payable and accruals 14,048,092 1,107,833 129,505
Accrued payroll and benefits 627,823 - -
Advances from other funds (Note 5) - - -
Deposits 7,623,932 - -
Unearned revenue 224,783 - -
Total liabilities 22,524,630 1,107,833 129,505
Deferred inflows of resources:
Lease related (Note 4) 2,321,090 - -
Unavailable revenue 595,564 651,941 -
Total deferred inflows of resources 2,916,654 651,941 -
Fund balances: (Note 11)
Nonspendable 3,449,814 - -
Restricted 23,241,194 13,635,358 11,103,256
Committed 108,627,891 - -
Assigned 4,741,474 - -
Unassigned 26,034,946 - -
Total fund balances 166,095,319 13,635,358 11,103,256
Total liabilities, deferred inflows
of resources, and fund balances 191,536,603$ 15,395,132$ 11,232,761$
(Continued)
Special Revenue Funds
City of Cupertino
Balance Sheet
June 30, 2024
Governmental Funds
See accompanying Notes to the Basic Financial Statements.
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Public Capital
Facilities Improvement
Corporation Projects Nonmajor Total
Debt Capital Governmental Governmental
Service Fund Projects Fund Funds Funds
ASSETS
Cash and investments (Note 2)250$ 41,255,897$ 23,211,490$ 233,063,531$
Restricted cash and investments (Note 2)- - - 21,663,664
Receivables:
Accounts - - 18,249 13,026,347
Interest - - 143,492 3,510,086
Loans, net (Note 3)- - - 4,617,269
Leases (Note 4)- - - 2,485,763
Due from other funds (Note 5)- - - 1,401,947
Advances to other funds (Note 5)- - - 3,000,000
Inventories - - - 21,383
Other assets - - - 3,884
Total assets 250 41,255,897 23,373,231 282,793,874
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
Liabilities:
Accounts payable and accruals - 1,284,794 121,137 16,691,361
Accrued payroll and benefits - - - 627,823
Advances from other funds (Note 5)- 3,000,000 - 3,000,000
Deposits - - - 7,623,932
Unearned revenue - 5,000,000 - 5,224,783
Total liabilities - 9,284,794 121,137 33,167,899
Deferred inflows of resources:
Lease related (Note 4)- - - 2,321,090
Unavailable revenue - - - 1,247,505
Total deferred inflows of resources - - - 3,568,595
Fund balances: (Note 11)
Nonspendable - - - 3,449,814
Restricted 250 - 23,097,546 71,077,604
Committed - - - 108,627,891
Assigned - 31,971,103 154,548 36,867,125
Unassigned - - - 26,034,946
Total fund balances 250 31,971,103 23,252,094 246,057,380
Total liabilities, deferred inflows
of resources, and fund balances 250$ 41,255,897$ 23,373,231$ 282,793,874$
(Concluded)
City of Cupertino
Balance Sheet (Continued)
Governmental Funds
June 30, 2024
See accompanying Notes to the Basic Financial Statements.
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Total Fund Balances - Total Governmental Funds 246,057,380$
Nondepreciable, net of $192,925 reported in the Internal Service Fund 111,369,503$
Depreciable and amortizable,
net of $2,567,288 reported in the Internal Service Fund 106,354,319 217,723,822
Bonds payable (14,030,000)
Premium on bonds payable (2,386,895)
Deferred charges on refunding 119,609
(1,113,053)
Interest payable (46,767)
(4,635,947)
Claims liability, net of $1,273,000 reported in the Internal Service Funds (398,587) (22,491,640)
15,253,892$
(51,225,899)
(76,341) (36,048,348)
5,312,347$
(2,078,964)
(1,732,590) 1,500,793
1,247,505
6,528,882
Net Position of Governmental Activities 414,518,394$
City of Cupertino
Reconciliation of the Governmental Funds Balance Sheet to the
June 30, 2024
Government-Wide Statement of Net Position
Amounts reported for governmental activities in the Statement of Net Position were reported differently because:
Long-term liabilities are not due and payable in the current period and accordingly are not reported as fund liabilities. All
liabilities, both current and long-term, are reported in the Statement of Net Position:
Capital assets used in governmental activities were not current financial resources. Therefore, they were not reported in
the Governmental Funds Balance Sheet.
Internal Service Funds were used by management to charge the costs of certain activities, such as insurance and equipment
replacement to individual funds. The assets and liabilities of the Internal Service Funds were included in the
governmental activities in the Government-Wide Statement of Net Position.
Revenue reported as unavailable revenue in the governmental funds when it is not received soon enough after year-end to
be considered available. The availability criteria does not apply to the Government-Wide Financial Statements and,
therefore, the revenue is recognized when eligibility requirements are met and earned.
Net pension liabilities and the related deferred outflows of resources and deferred inflows of resources are not due and
payable in the current period or not available for current expenditures and are not reported in the governmental fund
financial statements:
Net other postemployment benefit liability and the related deferred outflows of resources and deferred inflows of
resources are not due and payable in the current period or not available for current expenditures and are not reported in the
governmental fund financial statements:
Pension related deferred outflows of resources, net of $1,155,833 reported in the Internal
Service Funds
Pension related deferred inflows of resources, net of $5,785 reported in the Internal Service
Funds
Aggregate net pension liability, net of $3,881,541 reported in the Internal Service Funds
Subscription liabilities, net of $97,221 reported in the Internal Service Funds
Compensated absences, net of $424,990 reported in the Internal Service Funds
Other postemployment benefits related deferred outflows of resources, net of $381,051 reported
in the Internal Service Funds
Other postemployment benefits related deferred inflows of resources, net of $124,277 reported
in the Internal Service Funds
Net Other postemployment benefits liability, , net of $149,122 reported in the Internal Service
Funds
See accompanying Notes to the Basic Financial Statements.
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Housing
General Transportation Development
Revenues:
Taxes 80,355,732$ -$ -$
Use of money and property 9,098,441 438,177 524,394
Intergovernmental 1,404,322 4,840,805 243,777
Licenses and permits 4,412,057 - -
Charges for services 12,308,496 2,223 -
Fines and forfeitures 416,402 - -
Other revenue 2,199,861 4,798 50,000
Total revenues 110,195,311 5,286,003 818,171
Expenditures:
Current:
Administration 7,381,733 - -
Law enforcement 16,204,350 - -
Innovation and technology 2,284,198 - -
Administrative services 6,716,341 - -
Recreation services 5,517,003 - -
Community development 10,659,154 - 839,571
Public works 25,060,745 3,250,708 -
Capital outlay 1,773,434 2,435,630 -
Debt service:
Principal 552,091 - -
Interest and fiscal charges 22,997 - -
Total expenditures 76,172,046 5,686,338 839,571
Excess (deficiency) of revenues over
expenditures 34,023,265 (400,335) (21,400)
Other financing sources (uses):
Transfers in (Note 5) 111,000 3,449,019 -
Transfers out (Note 5) (6,595,284) - (367,951)
Total other financing sources (uses)(6,484,284) 3,449,019 (367,951)
Net Change in Fund Balances 27,538,981 3,048,684 (389,351)
Fund balances:
Beginning of year 138,556,338 10,586,674 11,492,607
End of year 166,095,319$ 13,635,358$ 11,103,256$
(Continued)
Special Revenue Funds
City of Cupertino
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
For the Year Ended June 30, 2024
See accompanying Notes to the Basic Financial Statements.
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Public Capital
Facilities Improvement
Corporation Projects Nonmajor Total
Debt Capital Governmental Governmental
Service Fund Projects Fund Funds Funds
Revenues:
Taxes -$ -$ 349,283$ 80,705,015$
Use of money and property - 790,983 950,318 11,802,313
Intergovernmental - 352,570 - 6,841,474
Licenses and permits - - - 4,412,057
Charges for services - - 1,522,315 13,833,034
Fines and forfeitures - - 2,746 419,148
Other revenue - 161,337 2,784 2,418,780
Total revenues - 1,304,890 2,827,446 120,431,821
Expenditures:
Current:
Administration 1,500 - - 7,383,233
Law enforcement - - - 16,204,350
Innovation and technology - - - 2,284,198
Administrative services - - - 6,716,341
Recreation services - - - 5,517,003
Community development - - - 11,498,725
Public works - 49,785 1,670,649 30,031,887
Capital outlay - 4,270,128 1,994,691 10,473,883
Debt service:
Principal 2,035,000 - - 2,587,091
Interest and fiscal charges 642,600 - - 665,597
Total expenditures 2,679,100 4,319,913 3,665,340 93,362,308
Excess (deficiency) of revenues over
expenditures (2,679,100) (3,015,023) (837,894) 27,069,513
Other financing sources (uses):
Transfers in (Note 5)2,677,600 4,552,250 - 10,789,869
Transfers out (Note 5)- (4,333,318) (815,000) (12,111,553)
Total other financing sources (uses)2,677,600 218,932 (815,000) (1,321,684)
Net Change in Fund Balances (1,500) (2,796,091) (1,652,894) 25,747,829
Fund balances:
Beginning of year 1,750 34,767,194 24,904,988 220,309,551
End of year 250$ 31,971,103$ 23,252,094$ 246,057,380$
(Concluded)
City of Cupertino
Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued)
Governmental Funds
For the Year Ended June 30, 2024
See accompanying Notes to the Basic Financial Statements.
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Net Change in Fund Balances - Total Governmental Funds 25,747,829$
Capital outlay, net of $432,767 reported in Internal Service Fund 10,357,167$
Depreciation and amortization, net of $650,668 reported in Internal Service Funds (8,726,719)
Net effect on disposal of capital assets (165,206) 1,465,242
374,513
Bonds payable 2,035,000$
Subscription liabilities, net of $135,606 reported in the Internal Service Funds 552,091 2,587,091
6,783
357,947
-
163,652
56,723
170,199
(2,465,861)
(1,416,621)
(638,063)
Change in Net Position of Governmental Activities 26,409,434$
Internal Service Funds are used by management to charge the costs of certain activities, such as insurance and equipment
replacement, to individual funds. The net revenue of the Internal Service Funds is reported in governmental activities.
Certain pension expenses reported in the Statement of Activities do not require the use of current financial resources and,
therefore, are not reported as expenditures in governmental funds, net of $199,180 reported in Internal Service Funds.
Certain OPEB expenses reported in the Statement of Activities do not require the use of current financial resources and,
therefore, are not reported as expenditures in governmental funds net of $112,245 reported in Internal Service Funds.
Compensated absences were reported in the Government-Wide Statement of Activities, but they did not require the use of
current financial resources. Therefore, compensated absences were not reported as expenditures in the governmental funds.
Compensated absences is net of $36,100 reported in the Internal Service Funds.
Net change in revenues that was considered unavailable in the governmental funds. These items have been reported as
revenue in the Statement of Activities.
Amortization of bond premium and deferred charges were recognized in interest expense on the Government-Wide
Statement of Activities, but did not require the use of current financial resources. Therefore amortization of bond discount
was not reported as an expenditure in the governmental funds.
Principal repayment on long-term debt is not an expense in the Statement of Activities, but is considered an expenditure in
governmental funds.
Interest accrued on long-term debt is reported in the Statement of Activities, but does not require the use of current financial
resources. Therefore, accrued interest is not reported as an expenditure in governmental funds. This amount represents the
change in accrued interest from the prior year.
Certain claims expenses reported in the Statement of Activities do not require the use of current financial resources and,
therefore, are not reported as expenditures in governmental funds net of $381,000 reported in Internal Service Funds.
Inception of subscription liability, net of $51,199 reported in the Internal Service Funds.
Termination of subscription liability, net of $16,866 reported in the Internal Service Funds.
Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental
funds.
Governmental activities in the Statement of Activities were reported differently because:
City of Cupertino
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes
For the Year Ended June 30, 2024
in Fund Balances to the Government-Wide Statement of Activities
See accompanying Notes to the Basic Financial Statements.
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PROPRIETARY FUND
FINANCIAL STATEMENTS
Resources Recovery Fund -This fund accounts for activity related to the collection, disposal, and recycling of solid waste.A
private company has been issued an exclusive franchise to perform these services.
Recreation Programs Fund - This fund accounts for activities of the City's community centers and park facilities.
Cupertino Sports Center Fund -This fund accounts for the operation and maintenance of the Cupertino Sports Center.
Proprietary funds account for City operations financed and operated a in manner similar to a private business enterprise. The intent
of the City is that the cost of providing goods and services be financed primarily through user charges.
The City has identified the funds below as major proprietary funds for fiscal year 2023-2024.
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Cupertino
Resources Recreation Sports
Recovery Programs Center
ASSETS
Current assets:
Cash and investments (Note 2) 5,210,390$ 3,417,275$ 847,694$
Accounts receivable 783,446 63,941 41,300
Interest receivable 32,331 21,516 4,999
Prepaid expense - - -
Total current assets 6,026,167 3,502,732 893,993
Noncurrent assets:
Capital assets: (Note 6)
Nondepreciable - 3,337 -
Depreciable and amortizable, net - 649,276 1,217,153
Total noncurrent assets - 652,613 1,217,153
Total assets 6,026,167 4,155,345 2,111,146
DEFERRED OUTFLOWS OF RESOURCES
Related to pensions (Note 8) 311,740 272,823 215,079
Related to other postemployment benefit (Note 9) 105,874 139,198 106,490
Total deferred outflows of resources 417,614 412,021 321,569
Business-Type Activities - Enterprise Funds
City of Cupertino
Statement of Net Position
Proprietary Funds
June 30, 2024
See accompanying Notes to the Basic Financial Statements.
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Governmental
Activities
Nonmajor Internal
Enterprise Service
Fund Total Funds
ASSETS
Current assets:
Cash and investments (Note 2)934,250$ 10,409,609$ 8,329,638$
Accounts receivable 2,534 891,221 1,387,959
Interest receivable 5,810 64,656 55,910
Prepaid expense - - 4,680
Total current assets 942,594 11,365,486 9,778,187
Noncurrent assets:
Capital assets: (Note 6)
Nondepreciable - 3,337 192,925
Depreciable and amortizable, net 139,654 2,006,083 2,567,288
Total noncurrent assets 139,654 2,009,420 2,760,213
Total assets 1,082,248 13,374,906 12,538,400
DEFERRED OUTFLOWS OF RESOURCES
Related to pensions (Note 8)72,668 872,310 1,155,833
Related to other postemployment benefit (Note 9)26,177 377,739 381,051
Total deferred outflows of resources 98,845 1,250,049 1,536,884
Business-Type Activities
Enterprise Funds
City of Cupertino
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2024
See accompanying Notes to the Basic Financial Statements.
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Cupertino
Resources Recreation Sports
Recovery Programs Center
LIABILITIES
Current liabilities:
Accounts payable and accruals 80,585 277,919 32,501
Accrued payroll and benefits 289 - -
Due to other funds - - -
Compensated absences, due within one year (Note 7) 9,865 4,554 4,760
Claims payable, due within one year (Note 10) - - -
Unearned revenue - 465,161 319,070
Lease liabilities, due within one year (Note 7) - - -
Subscription liabilities, due within one year (Note 7) - - -
Total current liabilities 90,739 747,634 356,331
Noncurrent liabilities:
Compensated absences, due more than one year (Note 7) 106,022 48,942 51,156
Claims payable, due more than one year (Note 10) - - -
Lease liabilities, due more than one year (Note 7) - - -
Subscription liabilities, due more than one year (Note 7) - - -
Net pension liabilities (Note 8) 1,046,892 916,197 722,282
Net other postemployment benefit liabilities (Note 7) 41,433 54,474 41,674
Total noncurrent liabilities 1,194,347 1,019,613 815,112
Total liabilities 1,285,086 1,767,247 1,171,443
DEFERRED INFLOWS OF RESOURCES
Related to pensions (Note 8) 1,560 1,366 1,077
Related to other postemployment benefit (Note 9) 34,530 45,398 34,731
Total deferred inflows of resources 36,090 46,764 35,808
NET POSITION
Net investment in capital assets (Note 11) - 652,613 1,217,153
Restricted 29,911 39,326 30,085
Unrestricted (deficit)5,092,694 2,061,416 (21,774)
Total net position 5,122,605$ 2,753,355$ 1,225,464$
(Continued)
Business-Type Activities - Enterprise Funds
City of Cupertino
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2024
See accompanying Notes to the Basic Financial Statements.
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Governmental
Activities
Nonmajor Internal
Enterprise Service
Fund Total Funds
LIABILITIES
Current liabilities:
Accounts payable and accruals 39,322 430,327 173,078
Accrued payroll and benefits - 289 72
Due to other funds - - 1,401,947
Compensated absences, due within one year (Note 7)800 19,979 38,121
Claims payable, due within one year (Note 10)- - 232,000
Unearned revenue 112,037 896,268 -
Lease liabilities, due within one year (Note 7)- - 6,808
Subscription liabilities, due within one year (Note 7)- - 68,110
Total current liabilities 152,159 1,346,863 1,920,136
Noncurrent liabilities:
Compensated absences, due more than one year (Note 7)8,600 214,720 386,869
Claims payable, due more than one year (Note 10)- - 1,041,000
Lease liabilities, due more than one year (Note 7)- - 8,561
Subscription liabilities, due more than one year (Note 7)- - 29,111
Net pension liabilities (Note 8)244,034 2,929,405 3,881,541
Net other postemployment benefit liabilities (Note 7)10,244 147,825 149,122
Total noncurrent liabilities 262,878 3,291,950 5,496,204
Total liabilities 415,037 4,638,813 7,416,340
DEFERRED INFLOWS OF RESOURCES
Related to pensions (Note 8)364 4,367 5,785
Related to other postemployment benefit (Note 9)8,537 123,196 124,277
Total deferred inflows of resources 8,901 127,563 130,062
NET POSITION
Net investment in capital assets (Note 11)139,654 2,009,420 2,647,623
Restricted 7,396 106,718 381,051
Unrestricted (deficit)610,105 7,742,441 3,500,208
Total net position 757,155$ 9,858,579$ 6,528,882$
(Concluded)
Business-Type Activities
Enterprise Funds
City of Cupertino
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2024
See accompanying Notes to the Basic Financial Statements.
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Cupertino
Resources Recreation Sports
Recovery Programs Center
OPERATING REVENUES:
Charges for services 1,563,696$ 1,907,013$ 1,998,806$
Other 799,800 132,325 363,871
TOTAL OPERATING REVENUES 2,363,496 2,039,338 2,362,677
OPERATING EXPENSES:
Salaries and benefits 826,953 928,461 847,882
Materials and supplies 273,638 338,361 465,848
Contractual services 1,127,191 1,066,640 1,689,674
Insurance and claims and premium - - -
Depreciation - 60,424 110,173
TOTAL OPERATING EXPENSES 2,227,782 2,393,886 3,113,577
OPERATING INCOME (LOSS)135,714 (354,548) (750,900)
NONOPERATING REVENUES (EXPENSES):
Investment income 203,021 132,200 65,800
Gain (loss) on sale of capital assets - - -
Interest expense - - -
Total Nonoperating Income (Expenses)203,021 132,200 65,800
NET INCOME (LOSS) BEFORE TRANSFERS 338,735 (222,348) (685,100)
TRANSFERS:
Transfers in (Note 5)- - -
Transfers out (Note 5)(20,000) - -
TOTAL TRANSFERS (20,000) - -
CHANGES IN NET POSITION 318,735 (222,348) (685,100)
NET POSITION:
Beginning of year 4,803,870 2,975,703 1,910,564
End of year 5,122,605$ 2,753,355$ 1,225,464$
(Continued)
Business-Type Activities - Enterprise Funds
City of Cupertino
Statement of Revenues, Expenses, and Changes in Net Position
Proprietary Funds
For the Year Ended June 30, 2024
See accompanying Notes to the Basic Financial Statements.
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Activities
Nonmajor Internal
Enterprise Service
Fund Total Funds
OPERATING REVENUES:
Charges for services 611,331$ 6,080,846$ 4,171,856$
Other 51,943 1,347,939 1,431,954
TOTAL OPERATING REVENUES 663,274 7,428,785 5,603,810
OPERATING EXPENSES:
Salaries and benefits 159,565 2,762,861 4,399,972
Materials and supplies 225,497 1,303,344 1,631,687
Contractual services 272,995 4,156,500 504,673
Insurance and claims and premium - - 764,574
Depreciation 15,390 185,987 650,668
TOTAL OPERATING EXPENSES 673,447 8,408,692 7,951,574
OPERATING INCOME (LOSS)(10,173) (979,907) (2,347,764)
NONOPERATING REVENUES (EXPENSES):
Investment income 33,269 434,290 341,083
Gain on sale of capital assets (341) (341) 31,039
Interest expense - - (4,105)
Total Nonoperating Income (Expenses)32,928 433,949 368,017
NET INCOME (LOSS) BEFORE TRANSFERS 22,755 (545,958) (1,979,747)
TRANSFERS:
Transfers in (Note 5)- - 1,417,684
Transfers out (Note 5)- (20,000) (76,000)
TOTAL TRANSFERS - (20,000) 1,341,684
CHANGES IN NET POSITION 22,755 (565,958) (638,063)
NET POSITION:
Beginning of year 734,400 10,424,537 7,166,945
End of year 757,155$ 9,858,579$ 6,528,882$
(Concluded)
Enterprise Funds
City of Cupertino
Statement of Revenues, Expenses, and Changes in Net Position (Continued)
Proprietary Funds
For the Year Ended June 30, 2024
See accompanying Notes to the Basic Financial Statements.
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Resources Recreation Sports
Recovery Programs Center
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers and users 1,802,376$ 1,994,364$ 2,123,966$
Cash paid to suppliers for goods and services (1,419,006) (1,371,793) (2,236,005)
Cash paid to employees for services (693,741) (812,792) (660,331)
Cash paid to insurance claims - - -
Net Cash Provided by (Used in) Operating
Activities (310,371) (190,221) (772,370)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:
Cash received from (paid to) other funds (20,000) - -
Net Cash Provided by (Used in)
Noncapital Financing Activities (20,000) - -
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Acquisition of capital assets - - (86,156)
Principal paid - - -
Interest paid - - -
Proceed from sale of capital assets - - -
Net Cash Provided by (Used in) Capital and
Related Financing Activities - - (86,156)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Investment income 189,445 122,894 66,533
Net Cash Provided by Investing Activities 189,445 122,894 66,533
Net Change In Cash and Cash
Equivalents (140,926) (67,327) (791,993)
CASH AND CASH EQUIVALENTS:
Beginning of year 5,351,316 3,484,602 1,639,687
End of year 5,210,390$ 3,417,275$ 847,694$
CASH AND CASH EQUIVALENTS:
Cash and investments 5,210,390$ 3,417,275$ 847,694$
Total cash and cash equivalents 5,210,390$ 3,417,275$ 847,694$
(Continued)
Business-Type Activities - Enterprise Funds
City of Cupertino
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2024
See accompanying Notes to the Basic Financial Statements.
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Governmental
Activities
Nonmajor Internal
Enterprise Service
Fund Total Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers and users 682,383$ 6,603,089$ 5,601,610$
Cash paid to suppliers for goods and services (478,146) (5,504,950) (2,883,013)
Cash paid to employees for services (197,523) (2,364,387) (4,052,447)
Cash paid to insurance claims - - (381,000)
Net Cash Provided by (Used in) Operating
Activities 6,714 (1,266,248) (1,714,850)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:
Cash received from (paid to) other funds - (20,000) 1,347,974
Net Cash Provided by (Used in)
Noncapital Financing Activities - (20,000) 1,347,974
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Acquisition of capital assets - (86,156) (432,767)
Principal paid - - (154,345)
Interest paid - - (4,105)
Proceed from sale of capital assets - - 30,750
Net Cash Provided by (Used in) Capital and
Related Financing Activities - (86,156) (560,467)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Investment income 30,595 409,467 317,967
Net Cash Provided by Investing Activities 30,595 409,467 317,967
Net Change In Cash and Cash
Equivalents 37,309 (962,937) (609,376)
CASH AND CASH EQUIVALENTS:
Beginning of year 896,941 11,372,546 8,939,014
End of year 934,250$ 10,409,609$ 8,329,638$
CASH AND CASH EQUIVALENTS:
Cash and investments 934,250$ 10,409,609$ 8,329,638$
Total cash and cash equivalents 934,250$ 10,409,609$ 8,329,638$
(Concluded)
Enterprise Funds
Business-Type Activities
City of Cupertino
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2024
See accompanying Notes to the Basic Financial Statements.
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Resources Recreation Sports
Recovery Programs Center
Reconciliation of Operating Income (Loss) to
Net Cash Provided by (Used in) Operating Activities:
Operating income (loss) 135,714$ (354,548)$ (750,900)$
Adjustments to reconcile to net cash provided by
Operating activities:
Depreciation and amortization - 60,424 110,173
Changes in assets and liabilities:
(Increase)/decrease in accounts receivables (561,120) (21,960) (40,300)
(Increase)/decrease in prepaid expense - - -
(Increase)/decrease in deferred outflows of resources
related to pensions 14,529 (31,746) (51,945)
(Increase)/decrease in deferred outflows of resources
related to other postemployment benefit (1,035) (32,321) (25,403)
Increase/(decrease) in accounts payable (18,177) 33,208 (80,483)
Increase/(decrease) in unearned revenue - (23,014) (198,411)
Increase/(decrease) in compensated absences 51,610 (43,543) 6,605
Increase/(decrease) in claims payable - - -
Increase/(decrease) in net pension liabilities 41,756 173,513 219,714
Increase/(decrease) in other postemployment benefit liabilities 31,544 44,393 34,025
Increase/(decrease) in deferred inflows of resources
related to pensions (913) (461) (159)
Increase/(decrease) in deferred inflows of resources
related to other postemployment benefit (4,279) 5,834 4,714
Net Cash Provided by (Used in) Operating Activities (310,371)$ (190,221)$ (772,370)$
NONCASH ITEMS:
Acquisition of right to use intangible assets -$ -$ -$
Issuance of lease and subscription liabilities -$ -$ -$
Termination of subscription liabilities -$ -$ -$
Gain (loss) of sale of capital assets -$ -$
(Continued)
City of Cupertino
For the Year Ended June 30, 2024
Business-Type Activities - Enterprise Funds
Statement of Cash Flows (Continued)
Proprietary Funds
See accompanying Notes to the Basic Financial Statements.
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Governmental
Activities
Nonmajor Internal
Enterprise Service
Fund Total Funds
Reconciliation of Operating Income (Loss) to
Net Cash Provided by (Used in) Operating Activities:
Operating income (loss)(10,173)$ (979,907)$ (2,347,764)$
Adjustments to reconcile to net cash provided by
Operating activities:
Depreciation and amortization 15,390 185,987 650,668
Changes in assets and liabilities:-
(Increase)/decrease in accounts receivables (705) (624,085) (2,200)
(Increase)/decrease in prepaid expense - - (4,680)
(Increase)/decrease in deferred outflows of resources
related to pensions 28,838 (40,324) 56,800
(Increase)/decrease in deferred outflows of resources
related to other postemployment benefit (7,698) (66,457) 29,593
Increase/(decrease) in accounts payable 20,346 (45,106) 22,601
Increase/(decrease) in unearned revenue 19,814 (201,611)
Increase/(decrease) in compensated absences (215) 14,457 36,100
Increase/(decrease) in claims payable - - (381,000)
Increase/(decrease) in net pension liabilities (68,675) 366,308 145,785
Increase/(decrease) in other postemployment benefit liabilities 8,501 118,463 110,387
Increase/(decrease) in deferred inflows of resources
related to pensions (405) (1,938) (3,405)
Increase/(decrease) in deferred inflows of resources -
related to other postemployment benefit 1,696 7,965 (27,735)
Net Cash Provided by (Used in) Operating Activities 6,714$ (1,266,248)$ (1,714,850)$
NONCASH ITEMS:
Acquisition of right to use intangible assets -$ -$ 85,307$
Issuance of lease and subscription liabilities -$ -$ 85,307$
Termination of subscription liabilities -$ -$ 16,866$
Gain (loss) of sale of capital assets (341)$ (341)$ -$
(Concluded)
City of Cupertino
For the Year Ended June 30, 2024
Business-Type Activities
Enterprise Funds
Statement of Cash Flows (Continued)
Proprietary Funds
See accompanying Notes to the Basic Financial Statements.
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City of Cupertino
Index to the Notes to the Basic Financial Statements
For the Year Ended June 30, 2024
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Note 1 – Summary of Significant Accounting Policies ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 51
A. Financial Reporting Entity ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 51
B. Basis of Presentation ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 52
C. Measurement Focus, Basis of Accounting and Financial Statements Presentation ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 52
D. Cash, Cash Equivalents, and Investments ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 55
E. Fair Value Measurements ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 56
F. Receivables ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 56
G. Lease Receivable ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 57
H. Inventories ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 57
I. Prepaid Items ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 57
J. Interfund Transactions ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 57
K. Capital Assets ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 58
L. Deferred Outflows of Resources and Deferred Inflows of Resourcesꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 59
M. Interest Payable ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 59
N. Unearned Revenue ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 59
O. Compensated Absences ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 59
P. Claims and Judgement Payable ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 59
Q. Lease Liabilities ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 59
R. Subscription Liabilities ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 60
S. Long-Term Debt ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 61
T. Pensions ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 61
U. Other Postemployment Benefits (“OPEB”) Plan ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 62
V. Net Position ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 62
W. Fund Balancesꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 62
X. Property Taxes ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 63
Y. Use of Estimates ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 63
Z. Implementation of New GASB Pronouncements ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 64
AA. Upcoming New GANB Pronouncements ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 64
Note 2 – Cash and Investments ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 64
A. Deposits ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 65
B. Investments Authorized by the California Government Code and the City’s Investment Policy ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 66
C. Investments Authorized by Debt Agreements ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 67
D. Risk Disclosures ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 67
E. Fair Value Measurement Disclosure ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 70
F. Investment in Local Agency Investment Fund (LAIF) ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 70
Note 3 – Loans Receivable ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 71
Note 4 – Leases Receivable and Lease-Related Deferred Inflows of Resources ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 71
Note 5 – Interfund Transactions ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 72
A. Advances ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 72
B. Due from and To other Funds ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 73
C. Transfers In and Out ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 73
FINAL
DRAF
T
11.22.
2
0
2
4
76
City of Cupertino
Index to the Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
50
Page
Note 6 – Capital Assets ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 74
A. Governmental Activities ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 74
B. Business-Type Activities ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 75
Note 7 – Long-Term Liabilities ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 76
A. Governmental Activities ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 76
B. Business-Type Activities ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 78
Note 8 – Defined Benefit Pension Plan ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 78
A. General Information about the Pension Plan ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 78
B. Net Pension Liability ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 80
C. Changes in the Net Pension Liability ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 82
Note 9 – Other Post Employment Benefits (OPEB) ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 84
A. General Information about the OPEB Plan ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 84
B. Net OPEB Liability ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 85
C. Change in Net OPEB Liability ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 88
D. OPEB Expense and Deferred Inflows of Resources Related to OPEB ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 89
Note 10 – Liabilities Under Self-Insurance and Risk Management ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 89
Note 11 – Net Position and Fund Balances ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 90
A. Net Investment in Capital Assets ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 90
B. Fund Balance Classifications ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 91
Note 12 – Commitments and Contingencies ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 91
A. Federal and State Grant ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 91
B. Encumbrances ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 92
C. Consulting Agreement for Sales Taxes ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 92
D. Santa Clara County Vehicle Registration Fee (VRF) ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 92
Note 13 – Concentration Risk ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 93
Note 14 – Stewardship, Compliance and Accountability ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 93
A. Deficit Fund Balance/Net Position ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 93
B. Excess of Expenditures over Appropriations ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 93
Note 15 – Subsequent Event ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 93
FINAL
DRAF
T
11.22.
2
0
2
4
77
City of Cupertino
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024
51
Note 1 – Summary of Significant Accounting Policies
A. Financial Reporting Entity
The City of Cupertino, California (the “City”) was incorporated on October 3, 1955, under the laws of the State of
California. The City operates under a Council - City Manager form of government and provides services through
the following departments: Administrative Services, Community Development, City Manager, Parks and
Recreation, Public and Environmental Affairs, and Public Works. Fire services are provided by the Santa Clara
County Fire District, and the City contracts with the Santa Clara County Sheriff’s Department for police services,
and with Recology for garbage and recycling services.
The accompanying basic financial statements include all funds and boards and commissions that are controlled by
the City Council. The basic financial statements include the City's blended component unit entity for which the City
is considered to be financially accountable. A blended component unit, although a legally separate entity, is in
substance, part of the City's operations and so data from this unit is combined with the City.
Blended Component Unit
In evaluating how to define the City for financial reporting purposes, management has considered all potential
component units. The primary criteria for including a potential component unit within the reporting entity are the
governing body’s financial accountability and a financial benefit or burden relationship and whether it is misleading
to exclude. A primary government is financially accountable and shares a financial benefit or burden relationship,
if it appoints a voting majority of an organization’s governing body and it is able to impose its will on the
organization, or if there is a potential for the organization to provide specific financial benefits to, or impose specific
financial burdens on the primary government. A primary government may also be financially accountable if an
organization is fiscally dependent on the primary government regardless of whether the organization has a
separately elected governing board, a governing board appointed by a higher level of government, or a jointly
appointed board, and there is a potential for the organization to provide specific financial benefits to, or impose
specific financial burdens on the primary government.
Management determined that the following component unit should be blended based on the criteria above:
Although the following is legally separate from the City, it has been “blended” as though it is part of the City
because the component unit’s governing body is substantially the same as the City’s and there is a financial benefit
or burden relationship between the City and the component unit; management of the City has operational
responsibilities for the component unit; and/or the component unit provides services entirely, or almost entirely, to
the City or otherwise exclusively, or almost exclusively, benefits the City, even though it does not provide services
directly to it.
The Cupertino Public Facilities Corporation (the “Corporation”) – The Corporation was incorporated in May
1986, under the Nonprofit Public Benefit Corporation Law of the State of California. The Corporation was
organized as a nonprofit corporation solely for the purpose of assisting the City in the acquisition, construction, and
financing of public improvements which are of public benefit to the City. The Corporation, after acquiring certain
properties from the City, leases these back to the City. The lease money provides the funds for the debt service for
the Certificates of Participation issued by the Corporation to acquire the properties. The Corporation does not issue
separate financial statements, since it is reported separately in the City's basic financial statements.
The City had no discretely presented component units.
FINAL
DRAF
T
11.22.
2
0
2
4
78
City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
52
Note 1 – Summary of Significant Accounting Policies (Continued)
B. Basis of Presentation
Financial statement presentation follows the recommendations promulgated by the Governmental Accounting
Standards Board (“GASB”) commonly referred to as accounting principles generally accepted in the United States
of America (“U.S. GAAP”). GASB is the accepted standard-setting body for establishing governmental accounting
and financial reporting standards.
C. Measurement Focus, Basis of Accounting and Financial Statements Presentation
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting
entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts that
comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Fund accounting
segregates funds according to their intended purpose and is used to aid management in demonstrating compliance
with finance-related legal and contractual provisions. The minimum number of funds is maintained in accordance
with legal and managerial requirements.
Government-Wide Statements
The City’s Government-Wide Financial Statements include a Statement of Net Position and a Statement of
Activities. These statements present summaries of governmental and business-type activities for the City
accompanied by a total column. Fiduciary activities of the City are not included in these statements.
These financial statements are presented on an “economic resources” measurement focus and the accrual basis of
accounting. Accordingly, all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of
resources, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the
accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the
accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are
recognized in the period in which the liability is incurred.
Certain types of transactions are reported as program revenues for the City in three categories:
Charges for services
Operating grants and contributions
Capital grants and contributions
Certain eliminations have been made in regards to interfund activities, payables and receivables. All internal
balances in the Statement of Net Position have been eliminated except those representing balances between the
governmental activities and the business-type activities, which are presented as internal balances and eliminated in
the total primary government column. In the Statement of Activities and Changes in Net Position, internal service
fund transactions have been eliminated; however, those transactions between governmental and business-type
activities have not been eliminated. The following interfund activities have been eliminated:
Due to/from other funds
Transfers in/out
FINAL
DRAF
T
11.22.
2
0
2
4
79
City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
53
Note 1 – Summary of Significant Accounting Policies (Continued)
C. Measurement Focus, Basis of Accounting and Financial Statements Presentation (Continued)
Governmental Fund Financial Statements
Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures and
Changes in Fund Balances for all major governmental funds and nonmajor funds aggregated. An accompanying
schedule is presented to reconcile and explain the differences in net position as presented in these statements to the
net position presented in the Government-Wide Financial Statements. The City has presented all major funds that
met the applicable criteria.
All governmental funds are accounted for on a spending or "current financial resources" measurement focus and
the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the
Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund Balances presents increases
(revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets.
Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they
become both “measurable” and “available” to finance expenditures of the current period.
Revenues are recognized as soon as they are both “measurable” and “available”. Revenues are considered to be
available when they are collectible within the current period as soon enough thereafter to pay liabilities of the
current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of
the end of the current fiscal period. The primary revenue sources, which have been treated as susceptible to accrual
by the City, are property taxes, sales tax, intergovernmental revenues and other taxes. Expenditures are recorded in
the accounting period in which the related fund liability is incurred.
The Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided to
explain the differences.
The City reports the following major Governmental Funds:
General Fund - The General Fund is the general operating fund of the City. It is used to account for all financial
resources except those that are required to be accounted for in another fund.
Transportation Special Revenue Fund – The Transportation Special Revenue Fund accounts for the City's gas
tax, vehicle registration fees and grant revenues and expenditures related to the maintenance and construction
of City streets. All revenue in this fund is restricted exclusively for street and road purposes including related
engineering and administrative expenses. Management considers this fund qualitatively major and has elected
to present this fund as such, even if mathematically it does not qualify per applicable GASB requirements.
Housing Development Special Revenue Fund - The Housing Development Special Revenue Fund accounts for
the Federal Housing and Community Development Grant Program activities administered through the County.
Monies collected from developers that mitigate the impact of housing needs are also included. Monies in this
fund are governed by the program's rules. Management considers this fund qualitatively major and has elected
to present this fund as such, even if mathematically it does not qualify per applicable GASB requirements.
Public Facilities Corporation Debt Service Fund - The Public Facilities Corporation Debt Service Fund
accounts for the payments of principal and interest on certificates of participation issued to provide for the
financing of City Hall, Library, Wilson Park, Memorial Park, and other City facilities. Management considers
this fund qualitatively major and has elected to present this fund as such, even if mathematically it does not
qualify per applicable GASB requirements.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
54
Note 1 – Summary of Significant Accounting Policies (Continued)
C. Measurement Focus, Basis of Accounting and Financial Statements Presentation (Continued)
Governmental Fund Financial Statements (Continued)
Capital Improvement Projects Capital Projects Fund – The Capital Improvement Projects Capital Projects
Fund Accounts for activities related to the acquisition or construction of major capital facilities.
Proprietary Fund Financial Statements
Proprietary Fund Financial Statements include a Statement of Net Position, a Statement of Revenues, Expenses and
Changes in Fund Net Position, and a Statement of Cash Flows for each major Proprietary Fund.
A separate column representing internal service funds is also presented in these statements. However, internal
service balances and activities have been combined with the governmental activities in the Government-Wide
Financial Statements. The City’s internal service funds include two individual funds which provide services directly
to other City funds. These areas of service include Central Garage and Print Shop.
Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of
accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of
Net Position. The Statement of Revenues, Expenses and Changes in Fund Net Position presents increases (revenues)
and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in
the period in which they are earned while expenses are recognized in the period in which the liability is incurred.
In these funds, receivables have been recorded as revenue and provisions have been made for uncollectible amounts.
Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of
the fund. All other revenues are reported as nonoperating revenues. Operating expenses are those expenses that are
essential to the primary operations of the fund. All other expenses are reported as nonoperating expenses.
The City reports the following major proprietary funds:
Resources Recovery Enterprise Fund - The Resources Recovery Enterprise Fund accounts for activity related
to the collection, disposal, and recycling of solid waste. A private company has been issued an exclusive
franchise to perform these services.
Recreation Programs Enterprise Fund - The Recreation Programs Enterprise Fund accounts for activities of
the City's community centers and park facilities.
Cupertino Sports Center Enterprise Fund - The Cupertino Sports Center Enterprise Fund accounts for activities
of the City’s sports center facility.
The City also reports the following fund as proprietary fund type:
Internal Service Funds - These funds account for management information systems maintenance and
replacement, workers' compensation, equipment maintenance and replacement, accrued leave payouts, and
long-term disability, retiree health costs, coverage which are provided to other departments on a cost-
reimbursement basis.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
55
Note 1 – Summary of Significant Accounting Policies (Continued)
C. Measurement Focus, Basis of Accounting and Financial Statements Presentation (Continued)
Basis of Accounting
The government-wide and proprietary financial statements are reported using the economic resources measurement
focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the
time liabilities are incurred, regardless of when the related cash flows take place.
Governmental funds 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. The City considers
all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after
year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on
long-term debt which are recognized as expenditures to the extent the City has provided financial resources to a
debt service fund for payment of these liabilities that mature early in the following year. General capital asset
acquisitions are reported as expenditures in governmental funds. Proceeds from long-term debt and acquisitions
under capital leases are reported as other financing sources.
Unearned revenues are considered on both the full accrual basis and the modified accrual basis, while unavailable
revenues are based on the modified accrual measure.
Property taxes, transient occupancy taxes, utility taxes, franchise taxes, interest and special assessments are
susceptible to accrual. Other receipts and taxes are recognized as revenue when the cash is received. Sales taxes
collected and held by the state at year end on behalf of the City are also recognized as revenue. Sales tax consultant
payments which are contingent on revenues collected are netted against the related revenues.
Under the terms of grant agreements, the City may fund certain programs with a combination of cost reimbursement
grants, categorical block grants, and general revenue. The City's policy is to first apply restricted grant resources to
such programs, followed by general revenues if necessary. Grant revenues are recognized after eligibility and billing
occurs, but may be a deferred inflow if not received within sixty days of year-end. Because of the cost-
reimbursement and recognition nature of some grants, certain capital project funds may carry deficit fund balances
until billing and receipt of grants. The City may also front the capital outlays with cash advances from other funds.
Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal
value in exchange, include property taxes, grants, entitlements, and donations. On the accrual basis, revenue from
property taxes is recognized in the fiscal year for which the taxes are levied or assessed. Revenue from grants is
recognized as described above. Entitlement and donation revenues are recognized when cash is received.
D. Cash, Cash Equivalents, and Investments
The City pools its cash resources, consisting of cash and investments, of all funds for investment except for
restricted funds generally held by an outside fiscal agent. Cash amounts are reported net of outstanding warrants.
Investments are stated at fair value, except for money market mutual funds which are reported at amortized cost.
Adjustments to fair value, as well as dividend and interest income received is recorded by the City in its
governmental funds in the Use of money and property caption while proprietary funds report these items as
Investment income.
The statement of cash flows requires presentation of “cash and cash equivalents”. For the purposes of the statement
of cash flows, the City considers all proprietary fund pooled cash and investments as “cash and cash equivalents”,
as such funds are available to the various funds as needed.
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City of Cupertino
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Note 1 – Summary of Significant Accounting Policies (Continued)
D. Cash, Cash Equivalents, and Investments (Continued)
Certain disclosure requirements, if applicable, for Deposits and Investment Risks in the following areas:
Interest Rate Risk
Credit Risk
- Overall
- Custodial Credit Risk
- Concentration of Credit Risk
Foreign Currency Risk
In addition, other disclosures are specified including use of certain methods to present deposits and investments,
highly sensitive investments, credit quality at year-end and other disclosures.
E. Fair Value Measurements
U.S. GAAP defines fair value, establishes a framework for measuring fair value and establishes disclosures about
fair value measurement. Investments, unless otherwise specified, recorded at fair value in the financial statements,
are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Levels
of inputs are as follows:
The three levels of the fair value measurement hierarchy are described below:
Level 1 – Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the
measurement date.
Level 2 – Inputs, other than quoted prices included in Level 1, that are observable for the assets or liabilities
through corroboration with market data at the measurement date.
Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would use
in pricing the assets or liabilities at the measurement date.
If the fair value of an asset or liability is measured using inputs from more than one level of the fair value hierarchy,
the measurement is considered to be based on the lowest priority level input that is significant to the entire
measurement.
F. Receivables
Receivables include such items as taxes, intergovernmental revenues, charges for services, miscellaneous accounts
receivable, and interest receivable. No allowance for doubtful accounts has been established, as the City believes
all amounts are considered to be collectible in the normal course of business.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
57
Note 1 – Summary of Significant Accounting Policies (Continued)
G. Lease Receivable
The City is a lessor for leases of buildings and land and recognizes leases receivable and deferred inflows of
resources in the financial statements. Variable payments based on future performance or usage of the underlying
asset are not included in the measurement of the lease receivable.
At the commencement of a lease, the lease receivable is measured at the present value of payments expected to be
received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease
payments received. The deferred inflows of resources are initially measured as the initial amount of the lease
receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the
deferred inflows of resources are recognized as revenue over the life of the lease term in a systematic and rational
method.
Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected
lease receipts to present value, (2) lease term, and (3) lease receipts.
The City uses the incremental borrowing rate (IBR) provided by the City’s financial institution for existing
leases or the current rate at the time a new lease is executed.
The lease term includes the noncancelable period of the lease plus any option periods that are likely to be
exercised.
Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the
lessee.
The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the
lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect
the amount of the lease receivable.
H. Inventories
Inventories consist of fuel.
I. Prepaid Items
Prepaid items are reported under the consumption method, which recognizes the expenditures/expense in the period
associated with the service rendered or goods consumed.
J. Interfund Transactions
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” or “advances to/from other funds” (i.e., the current
portion of interfund loans). Any residual balances outstanding between the governmental activities and business-
type activities are reported in the Government-Wide Financial Statements as “internal balances”.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
58
Note 1 – Summary of Significant Accounting Policies (Continued)
K. Capital Assets
Capital assets are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets
are recorded at their estimated acquisition value on the date donated. Public domain (infrastructure) capital assets
consisting of roads, bridges, curbs, gutters, medians, sidewalks, drainage and lighting systems have been capitalized
and depreciated. Capital assets are defined as assets with an initial individual cost of more than $5,000 for general
capital assets and $100,000 for intangible assets.
Depreciation is recorded using the straight-line method over the following useful lives:
Buildings 15 – 25 years
Improvements 10 – 15 years
Vehicles 4 – 10 years
Street equipment 3 – 20 years
Water equipment 3 – 50 years
Office equipment 3 – 5 years
Road, curbs, gutters, sidewalks, medians and bridges 30 – 40 years
Streetlights 20 years
Storm drain structure and mains 40 years
Traffic signals 20 years
Major outlays for capital assets and improvements are capitalized as projects are constructed. For enterprise funds,
interest incurred during the construction phase is reflected in the capitalized value of the asset constructed, net of
interest earned on the invested proceeds over the same period. Some capital assets may be acquired using federal
and state grant funds, or they may be contributed by developers or other governments. These contributions are
accounted for as revenues at the time the capital assets are contributed.
Right-of-Use Lease Assets
Lease assets are recorded at the amount of the initial measurement of the lease liabilities and adjusted by any lease
payments made to the lessor at or before the commencement of the lease term, less any lease incentives received
from the lessor at or before the commencement of the lease term along with any initial direct costs that are ancillary
charges necessary to place the lease assets into service. Lease assets are amortized using the straight-line method
over the shorter of the lease term or the useful life of the underlying asset, unless the lease contains a purchase
option that the City has determined is reasonably certain of being exercised. In this case, the lease asset is amortized
over the useful life of the underlying asset.
Right-of-Use Subscription Assets
Subscription assets are recorded at the amount of the initial measurement of the SBITA liabilities (“subscription
liabilities”) and adjusted by any subscription payments to the SBITA vendor at or before the commencement of the
subscription term, less any incentives received from the SBITA vendor at or before the commencement of the
subscription term along with subscription implementation costs. Subscription assets are amortized over the shorter
of the subscription term or the useful life of the underlying information technology assets.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
59
Note 1 – Summary of Significant Accounting Policies (Continued)
L. Deferred Outflows of Resources and Deferred Inflows of Resources
The Statement and Net Position and the Balance Sheet report separate sections for deferred outflows of resources,
and deferred inflows of resources, when applicable.
Deferred Outflows of Resources represent a consumption of net assets that applies to future periods.
Deferred Inflows of Resources represent an acquisition of net assets that applies to future periods.
M. Interest Payable
In the government-wide financial statements, interest payable on long-term debt is recognized as the liability is
incurred for governmental activities and business-type activities.
N. Unearned Revenue
Unearned revenue is reported for transactions for which revenue has not yet been earned. Typical transactions
recorded as unearned revenues are prepaid charges for services.
O. Compensated Absences
Compensated absences comprise vested accumulated vacation and sick leave. The City's liability for compensated
absences is recorded in governmental or business-type activities as appropriate. The liability for compensated
absences is determined annually. For all governmental funds, amounts expected to be "permanently liquidated,"
such as what is due to be paid because of a realized employment action, are recorded as fund liabilities; the long-
term portion is recorded in the Statement of Net Position.
Compensated absences are liquidated by the fund that has recorded the liability. The long-term portion of
governmental activities compensated absences are liquidated primarily by the General Fund, using the
Compensated Absences and Long-Term Disability internal service fund to account for termination payouts.
P. Claims and Judgement Payable
Claims and judgments payable are accrued when the liability is incurred and the amount can be reasonably
estimated. Claims and judgments payable are recorded in an internal service fund for workers' compensation and
long-term disability, and other claims and judgments are recorded in the General Fund or enterprise funds, as
appropriate.
Q. Lease Liabilities
The City has a policy to recognize a lease liability and a right-to-use asset (lease asset) in the financial statements
with an initial, individual value of $5,000 or more with a lease term greater than one year. Variable payments based
on future performance or usage of the underlying assets are not included in the measurement of the lease liability.
At the commencement of a lease, the lease liability is measured at the present value of payments expected to be
made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments
made.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
60
Note 1 – Summary of Significant Accounting Policies (Continued)
Q. Lease Liabilities (Continued)
Lease assets are recorded at the amount of the initial measurement of the lease liabilities and modified by any lease
payments made to the lessor at or before the commencement of the lease term, less any lease incentives received
from the lessor at or before the commencement of the lease term along with any initial direct costs that are ancillary
charges necessary to place the lease assets into service. Lease assets are amortized using the straight–line method
over the shorter of the lease term or the useful life of the underlying asset, unless the lease e State has determined
is reasonably certain of being exercised. In this case, the lease asset is amortized over the useful life of the
underlying asset.
Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to
discount the expected lease payments to present value, (2) lease term, and (3) lease payments.
The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by
the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount
rate for leases.
The lease term includes the noncancelable period of the lease, plus any option periods that are reasonably
certain to be exercised.
Lease payments included in the measurement of the lease liability are composed of fixed payments and
purchase option price that the City is reasonably certain to exercise. The City monitors changes in
circumstances that would require a remeasurement of a lease and will remeasure any lease asset and liability
if certain changes occur that are expected to significantly affect the amount of the lease liability.
Lease assets are reported as right-to-use along with other capital assets and lease liabilities are reported as long term
liabilities on the statement of net position.
The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure
any lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease
liability.
R. Subscription Liabilities
The City recognizes subscription liabilities with an initial, individual value of $5,000 or more with a subscription
term greater than one year in the government-wide and proprietary fund financial statements. Variable payments
based on future performance of the City, usage of the underlying information technology assets, or number of user
seats are not included in the measurement of the subscription liability.
At the commencement of a subscription, the City initially measures the subscription liability at the present value of
payments expected to be made during the subscription term. Subsequently, the subscription liability is reduced by
the principal portion of subscription payments made.
Key estimates and judgments related to subscription liabilities include how the City determines (1) the discount
rate it uses to discount the expected subscription payments to present value, (2) subscription term, and (3)
subscription payments.
The City uses incremental borrowing rate provided by the financial institution at July 1, 2022 for existing
subscription or the current rate at the time a new subscription is executed.
The subscription term includes the noncancellable period of the SBITA. Subscription payments included
in the measurement of the subscription liability are composed of fixed payments.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
61
Note 1 – Summary of Significant Accounting Policies (Continued)
R. Subscription Liabilities (Continued)
The City monitors changes in circumstances that would require a remeasurement of its SBITA and will remeasure
any subscription asset and liability if certain changes occur that are expected to significantly affect the amount of
the subscription liability.
S. Long-Term Debt
Government-Wide Financial Statements
Long-term debt and other financial obligations are reported as liabilities in the statement of net position.
Bond premiums and discounts, as well as gains and losses on refunding, are deferred and amortized over the life of
the bonds using the effective interest method. Bonds payable are reported net of the applicable premium or discount.
Issuance costs are expensed in the year of issuance.
Fund Financial Statements
The fund financial statements do not present long-term debt but are shown in the Reconciliation of the
Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position.
T. Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources
related to pensions, and pension expense, information about the fiduciary net position of the plans and additions
to/deductions from the plans’ fiduciary net position have been determined on the same basis as they are reported
by the plans. For this purpose, benefit payments (including refunds of employee contributions) are recognized when
due and payable in accordance with benefit terms. Investments are reported at fair value.
The following timeframes are used for pension reporting:
Valuation Date June 30, 2022
Measurement Date June 30, 2023
Measurement Period July 1, 2022 to June 30, 2023
Gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension
expense systematically over time. The first amortized amounts are recognized in pension expense for the year the
gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources
related to pensions and are to be recognized in future pension expense. The amortization period differs depending
on the source of the gain or loss. The difference between projected and actual earnings is amortized straight-line
over 5 years. All other amounts are amortized straight-line over the average expected remaining service lives of all
members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement
period.
General Fund is typically used to liquidate pension liabilities to governmental funds.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
62
Note 1 – Summary of Significant Accounting Policies (Continued)
U. Other Postemployment Benefits (“OPEB”) Plan
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources
related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s OPEB Plan and
additions to/deductions from the OPEB Plans’ fiduciary net position have been determined on the same basis as
they are reported by the plans. For this purpose, benefit payments (including refunds of employee contributions)
are recognized when due and payable in accordance with benefit terms. Investments are reported at fair value.
The following timeframes are used for OPEB reporting:
Valuation Date July 1, 2023
Measurement Date June 30, 2024
Measurement Period July 1, 2023 to June 30, 2024
Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB
expense systematically over time. The first amortized amounts are recognized in OPEB expense for the year the
gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources
related to OPEB and are to be recognized in future OPEB expense. The amortization period differs depending on
the source of the gain or loss. The difference between projected and actual earnings is amortized straight-line over
5 years. All other amounts are amortized straight-line over the average expected remaining service lives of all
members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement
period.
General Fund is typically used to liquidate OPEB liabilities to governmental funds.
V. Net Position
In governmental-wide and proprietary fund financial statements, net positions are categorized as follows:
Net Investment in Capital Assets – This category consists of capital assets, net of accumulated
depreciation/amortization, reduced by the outstanding balances of debt that are attributable to the acquisition,
construction, or improvement of those assets and retention payable.
Restricted – This category represents net position that has external restrictions imposed by creditors, grantors,
contributors or laws or regulations of other governments and restrictions imposed by law through constitutional
provisions or enabling legislation.
Unrestricted – This category represents net position of the City that do not meet the definition of "net investment
in capital assets" or "restricted."
When expenses are incurred for purposes for which both restricted and unrestricted net position are available, the
City’s policy is to apply restricted net position first, then unrestricted net position as they are needed.
W. Fund Balances
As prescribed by GASB Statement No. 54, governmental funds report fund balance in classifications based
primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts
in the funds can be spent. Fund balances for governmental funds are made up of the followings:
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City of Cupertino
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63
Note 1 – Summary of Significant Accounting Policies (Continued)
W. Fund Balances (Continued)
Nonspendable Fund Balance - includes amounts that are (a) not in spendable form, or (b) legally or contractually
required to be maintained intact. The "not in spendable form" criterion includes items that are not expected to be
converted to cash, for example: prepaid items, property held for resale and long term notes receivable.
Restricted Fund Balance - includes amounts that can be spent only for the specific purposes stipulated by external
resource providers, constitutionally or through enabling legislation. Restrictions may effectively be changed or
lifted only with the consent of resource providers.
Committed Fund Balance - includes amounts that can only be used for the specific purposes determined by a
formal action of the City's highest level of decision-making authority, the City Council. Commitments may be
changed or lifted only by the City taking the same formal action (resolution) that imposed the constraint originally.
Assigned Fund Balance - comprises amounts intended to be used by the City for specific purposes that are neither
restricted nor committed. Intent is expressed by the City Council or official to which the City Council has delegated
the authority to assign amounts to be used for specific purposes. Through the adopted budget, the City Council
establishes assigned fund balance policy levels and also sets the means and priority for the City Manager to fund
these levels.
Unassigned Fund Balance - is the residual classification for the General Fund and includes all amounts not
contained in the other classifications. Unassigned amounts are technically available for any purpose. Only the
General Fund reports unassigned positive fund balance. A governmental fund other than the General Fund may
report a negative unassigned fund balance if expenditures incurred for a specific purpose exceed the amounts that
are restricted, committed or assigned to those purposes.
In circumstances when an expenditure may be made for which amounts are available in multiple fund balance
classifications, the fund balance in General Fund will generally be used in the order of restricted, unassigned, and
then assigned reserves. In other governmental funds, the order will generally be restricted and then assigned.
X. Property Taxes
Property Tax Calendar - All property taxes are levied and collected by the County of Santa Clara. Secured taxes
are levied on July 1, are due in two installments on November 1 and February 1 and become delinquent after
December 10 and April 10. Unsecured taxes are levied on July 1 and become delinquent on August 31. The lien
date for secured and unsecured property taxes is January 1.
The City, in fiscal year 1993-94, adopted an alternative method of property tax distribution (the "Teeter Plan").
Under this method, the City receives 100 percent of its secured property tax levied in exchange for foregoing any
interest and penalties collected on delinquent taxes. The City receives remittances as a series of advances made by
the County during the year.
Y. Use of Estimates
The preparation of the basic financial statements in accordance with U.S. GAAP requires management to make
estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
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Note 1 – Summary of Significant Accounting Policies (Continued)
Z.Implementation of New GASB Pronouncements
GASB Statement No. 100 – In June 2022, GASB issued Statement No. 100, Accounting Changes and Error
Corrections – an Amendment of GASB Statement No. 62. The primary objective of this Statement is to enhance
accounting and financial reporting requirements for accounting changes and error corrections to provide more
understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing
accountability. Implementation of this Statement did not have a significant effect on the City’s financial statements
for the fiscal year ended June 30, 2024.
AA. Upcoming New GANB Pronouncements
The City is currently evaluating its accounting practices to determine the potential impact on the financial
statements for the following GASB Statements:
GASB Statement No. 101 – In June 2022, GASB issued Statement No. 101, Compensated Absences. The objective
of this Statement is to better meet the information needs of financial statement users by updating the recognition
and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and
measurement guidance under a unified model and by amending certain previously required disclosures. Application
of this statement is effective for the City’s fiscal year ending June 30, 2025.
GASB Statement No. 102 – In December 2023, GASB issued Statement No. 102, Certain Risk Disclosures. This
Statement requires a government to assess whether a concentration or constraint makes the primary government
reporting unit or other reporting units that report a liability for revenue debt vulnerable to the risk of a substantial
impact. Additionally, this Statement requires a government to assess whether an event or events associated with a
concentration or constraint that could cause the substantial impact have occurred, have begun to occur, or are more
likely than not to begin to occur within 12 months of the date the financial statements are issued. Application of
this statement is effective for the City’s fiscal year ending June 30, 2025.
GASB Statement No. 103 – In April 2024, GASB issued Statement No. 103, Financial Reporting Model
Improvements. The objective of this Statement is to improve key components of the financial reporting model to
enhance its effectiveness in providing information that is essential for decision making and assessing a
government’s accountability. Application of this statement is effective for the City’s fiscal year ending
June 30, 2026.
Note 2 – Cash and Investments
The City had the following cash and investments at June 30, 2024:
Governmental Business-Type
Activities Activities Total
Cash and investments 241,393,169$ 10,409,609$ 251,802,778$
Restricted cash and investments:
Held by fiscal agent for pension 21,663,664 - 21,663,664
Total cash and investments 263,056,833$ 10,409,609$ 273,466,442$
Government-Wide
Statement of Net Position
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
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Note 2 – Cash and Investments (Continued)
The City’s cash and investments at June 30, 2024, in more detail:
Cash on hand 1,850$
Deposits with financial institutions 22,862,770
Total cash 22,864,620
Investments 228,938,158
Investments with PARS 21,663,664
Total investments 250,601,822
Total cash and investments 273,466,442$
A. Deposits
The carrying amounts of the City’s demand deposits were $22,862,770 at June 30, 2024. Bank balances at that date
were $23,586,439 the total amount of which was collateralized or insured with accounts held by the pledging
financial institutions in the City’s name as discussed below.
Cash and Investments with PARS were related to the City’s Pension Trust.
The California Government Code requires California banks and savings and loan associations to secure the City’s
cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have
the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral
for cash deposits is considered to be held in the City's name.
The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also
allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of
the City’s total cash deposits. The City may waive collateral requirements for cash deposits, deposits, which are
fully insured up to $250,000 by the Federal Deposit Insurance Corporation (“FDIC”). The City did not waive the
collateral requirement for deposits insured by FDIC.
The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by
fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is
allocated on an accounting period basis to the various funds based on the period-end cash and investment balances.
Interest income from cash and investments with fiscal agents is credited directly to the related fund.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
66
Note 2 – Cash and Investments (Continued)
B. Investments Authorized by the California Government Code and the City’s Investment Policy
The following table identifies the investment types that are authorized for the City by the California Government
Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the
California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk,
credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond
trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the
California Government Code or the City’s investment policy: This does not include the City's investments of debt
proceeds held by fiscal agents that are governed by the provisions of debt agreements of the City.
Authorized Investment Type
Maximum
Maturity
Minimum Credit
Quality
Maximum
Percentage of
Portfolio
Maximum Investment in
One Issuer
U.S. Treasury Obligations 5 years N/A None None
U.S. Agency Securities* 5 years N/A None None
California Local Agency Investment Fund (LAIF)N/A N/A Up to $65 million None
Non-negotiable Certificates of Deposits (time deposits)5 years N/A 30%***
10% of portfolio;
5% of issuer's net worth **
State of California registered state
warrants, treasury notes, or bonds 5 years N/A None None
California local agency bonds, notes,
warrants, or other obligations 5 years N/A None None
Bond issued by the local agency 5 years N/A None None
Bankers' Acceptances 180 days N/A 40%None
Commercial Paper
270 days A-1+P-1 25% 10% of portfolio; 5% of issuer's
net worth; 10% of outstanding
paper of Issuer. **
Negotiable Certificates of Deposit 5 years N/A 30%
10% of portfolio; 5% of issuer's
net worth. **
Repurchase Agreements 1 year N/A None
10% of portfolio; 5% of issuer's
net worth. **
Medium Term Corperate Notes 5 years A or better 25%
10% of portfolio; 5% of issuer's
net worth. **
Money market mutual funds investing
in U.S. Treasury, Government Agency
securities or repurchase agreements
collateralized by U.S. Treasury or
Government Agency securities 5 years Aaa/AAA 20%None
Supernationals 5 years AA or better 30%10% of portfolio
*** 30% maximum percent of portfolio if using a private sector entity to assist in the placement of the time deposits. No maximum
*Securities issued by agencies of the federal government such as the Government National Mortgage Association (GNMA),
** Represents restriction in which the City's investment policy is more restrictive than the California Government Code.
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Notes to the Basic Financial Statements (Continued)
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Note 2 – Cash and Investments (Continued)
C. Investments Authorized by Debt Agreements
The City must maintain required amounts of cash and investments with trustees or fiscal agents under the terms of
certain debt issues. These funds are unexpended bond proceeds or are pledged reserves to be used if the City fails
to meet its obligations under these debt issues. The California Government Code requires these funds to be invested
in accordance with City ordinances, bond indentures or State statutes. The City's Investment Policy allows
investments of bond proceeds to be governed by provisions of the related bond indentures. The following identifies
the investment types that are authorized for investments held by fiscal agents under the terms of the bond indentures
of the related debt issue:
Authorized Investment Type
Maximum
Maturity
Minimum Credit
Quality
Maximum
Percentage of
Portfolio
Cash or obligations of the U.S. including U.S. Treasury obligations N/A N/A None
Federal agencies obligations which represent
full faith and credit of the U.S. N/A N/A None
Direct federal agencies obligations which are not
fully guaranteed by the full faith and credit of the U.S. N/A N/A None
U.S. dollar denominated deposit accounts, federal funds and
bankers' acceptances with domestic commercial banks 360 days P-1, A-1+, A-1 None
Commercial Paper 270 days P-1, A-1 None
Money market funds N/A Aaam or AAAm-G None
Pre-refunded municipal obligations that are not callable prior
to maturity or as to which irrevocable instructions have been Highest
given to call on the date specified in the notice N/A Rating Category None
Municipal obligations or General obligations of states N/A Aaa, AAA, A2, A None
California Local Agency Investment Fund (LAIF) N/A N/A Up to $65 million
Shares in a California common law trust established pursuant
to Title 1, Division 7, Chapter 5 of the California Government
Code which invests exclusively in investments permitted by
Section 53635 of Title 5, Division 2, Chapter of the California
Government Code, as it may be amended. N/A N/A None
D. Risk Disclosures
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment.
Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market
interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination
of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the
portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and
liquidity needed for operations.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
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Note 2 – Cash and Investments (Continued)
D. Risk Disclosures (Continued)
Disclosures Relating to Interest Rate Risk (Continued)
Information about the sensitivity of the fair values of the City's investments (including investments held by bond
trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the
City's investments by maturity:
Investment Type
12 Months of
less 13 to 24 Months
More than 24
Months Total
U.S. Treasury Securities 8,951,031$ 12,755,976$ 34,158,951$ 55,865,958$
Corporate Notes 9,920,496 11,372,012 21,688,001 42,980,509
U.S. Agency Notes:
Federal Home Loan Mortgage Corporation 2,310,585 3,553,731 - 5,864,316
Federal National Mortgage Association 7,410,588 4,725,871 - 12,136,459
Federal Home loan Banks - - 1,880,320 1,880,320
FarmCredit System - - 5,209,380 5,209,380
Municipal Bonds 748,923 - - 748,923
Asset-Backed Securities 2,859,880 1,483,330 13,578,990 17,922,200
Supranationals - 6,933,063 - 6,933,063
Collateralized Mortgage Obligations 1,220,868 2,884,099 1,571,735 5,676,702
Local Agency Investment Fund 64,760,594 - - 64,760,594
Money Market Mutual Funds 8,959,734 - - 8,959,734
Restricted investment with PARS 21,663,664 - - 21,663,664
Total investments 128,806,363$ 43,708,082$ 78,087,377$ 250,601,822
Cash in banks and on hand 22,864,620
Total Cash and Investments 273,466,442$
Remaining Maturity (In Months)
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the
investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization.
Presented below is the minimum rating required by (where applicable) the California Government Code, the City's
investment policy, or debt agreements, and the actual rating, by Standard and Poor’s or Moody’s’, as of
June 30, 2024 for each investment type:
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
69
Note 2 – Cash and Investments (Continued)
D. Risk Disclosures (Continued)
Disclosures Relating to Credit Risk (Continued)
Investment Type Total AAA AA A Not Required
U.S. Treasury Securities 55,865,958$ 55,865,958$ -$ -$ -$
Corporate Notes 42,980,509 - 15,864,172 27,116,337 -
U.S. Agency Notes
Federal Home Loan Mortgage Corporation 5,864,316 5,864,316 - - -
Federal National Mortgage Association 12,136,459 12,136,459 - - -
Federal Home Loan Banks 1,880,320 1,880,320 - - -
FarmCredit System 5,209,380 5,209,380
Municipal Bonds 748,923 - 748,923 - -
Asset-Backed Securities 17,922,200 17,922,200 - - -
Supranationals 6,933,063 6,933,063 - - -
Collateralized Mortgage Obligations 5,676,702 5,676,702 - - -
Local Agency Investment Fund 64,760,594 - - - 64,760,594
Money Market Mutual Funds 8,959,734 8,959,734 - - -
Restricted investment with PARS 21,663,664 - - - 21,663,664
Total Investments 250,601,822$ 120,448,132$ 16,613,095$ 27,116,337$ 86,424,258$
Disclosures Relating to Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer
beyond that stipulated by the California Government Code. At June 30, 2024, the following investment represent
5% or more of total City investments:
Issuer Investment Type Amount Percentage
Federal National Mortgage Association (FNMA) U.S. Agency Notes 12,136,459$ 5%
Disclosures Relating to Custodial Credit Risk
Custodial credit risk is the risk that, in the event of the failure of the counter party, the City will not be able to
recover the value of its investments or collateral securities that are in the possession of an outside party. All
securities, with the exception of LAIF and other pooled investments, are held by a third-party custodian.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
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Note 2 – Cash and Investments (Continued)
E. Fair Value Measurement Disclosure
The investments are reported at fair value. The following table presents the fair value measurement of investments
on a recurring basis and the levels within GASB 72 fair value hierarchy in which the fair value measurements fall
at June 30, 2024:
Investments by Fair Value Level
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2) Total
U.S. Treasury Securities 55,865,958$ -$ 55,865,958$
Corporate Notes - 42,980,509 42,980,509
U.S. Agency Notes
Federal Home Loan Mortgage Corporation - 5,864,316 5,864,316
Federal National Mortgage Association - 12,136,459 12,136,459
Federal Home Loan Banks - 1,880,320 1,880,320
FarmCredit System - 5,209,380 5,209,380
Asset-Backed Securities - 17,922,200 17,922,200
Collateralized Mortgage Obligations - 5,676,702 5,676,702
Supranationals - 6,933,063 6,933,063
Municipal Bonds - 748,923 748,923
Total Investments 55,865,958$ 99,351,872$ 155,217,830
Investments Measured at Amortized Cost:
Money Markel Mutual Funds - Restricted for Pension (PARS)21,663,664
Money Markel Mutual Funds 8,959,734
Investments Exempt from Fair Value Hierarchy:
Local Agency Investment Fund 64,760,594
Cash in banks and on hand 22,864,620
Total Cash and Investments 273,466,442$
F. Investment in Local Agency Investment Fund (LAIF)
The City is a participant in LAIF which is regulated by California Government Code Section 16429 under the
oversight of the Treasurer of the State of California. The City’s investments in LAIF at June 30, 2024 included a
portion of pool funds invested in Structure Notes and Asset-Backed Securities:
Structured Notes are debt securities (other than asset-backed securities) whose cash-flow characteristics
(coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have
embedded forwards or options.
Asset-Backed Securities, the bulk of which are mortgage-backed securities, entitle their purchasers to receive a
share of the cash flows from pool of assets such as principal and interest repayments from a pool of mortgages
(such as Collateralized Mortgage Obligations) or credit card receivables.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
71
Note 2 – Cash and Investments (Continued)
F. Investment in Local Agency Investment Fund (LAIF) (Continued)
As of June 30, 2024, the City had $64,760,594 invested in LAIF, which had invested 3.00% of the pool investment
funds in Structured Notes and Asset-Back Securities. LAIF determines fair value on its investment portfolio based
on market quotations for those securities where market quotations are readily available and based on amortized cost
or best estimate for those securities where market value is not readily available. LAIF is reported at amortized cost,
which approximates fair value.
Note 3 – Loans Receivable
Housing Program Loans
On June 30, 1995, the City loaned $821,000 to Community Housing Developers, a California nonprofit public benefit
corporation. The note bears interest at three percent per annum, compounded annually, payable to the extent of surplus
cash, and all unpaid principal and interest due June 30, 2035. As of June 30, 2024, the balance remaining on the loan
was $1,934,740 including principal and interest in the amounts of $821,000 and $1,113,740, respectively. The loan was
issued using resources in the amount of $417,000 and $404,000 in the General Fund and the Housing Development
Special Revenue Fund, respectively and is considered governmental activities.
On June 6, 1996, the City loaned $320,000 to Cupertino Community Services, a California nonprofit public benefit
corporation. The note bears interest at three percent per annum and due on July 14, 2026. As of June 30, 2024, the
balance on the loan was $124,269. The loan was issued using resources in the Housing Development Special Revenue
Fund and is considered governmental activities.
On September 11, 2017 the City loaned $3,672,000 to Stevens Creek, L.P., a California limited partnership. The note
bears interest at three percent per annum for 55 years. After the completion of construction of the development, no later
than April 30th of each calendar year, the Developer shall make repayments of the loan in an amount equal to the City
loan percentage of the lenders’ share of residual receipts. The payments shall be credited first against accrued interest
and then against outstanding principal of the loan, and shall be accompanied by the developer’s report of residual
receipts. As of June 30, 2024, the balance remaining on the loan was $4,489,789 including principal and interest in the
amounts of $3,672,000 and $817,789, respectively in the Housing Development Special Revenue Fund and is
considered as governmental activities.
Note 4 – Leases Receivable and Lease-Related Deferred Inflows of Resources
The City leases various City assets to other entities via contractual arrangements under the provisions of GASB
Statement No. 87, Leases. The leases include land leases utilized for cell phone towers as well as property leases of the
McClellan Ranch House and the Cupertino Public Library. The City receives fixed payments from the lessees, with a
total of $263,427 recognized as rental revenue and $29,203 recognized as interest revenue on the lease for the year
ended June 30, 2024 and a receivable for the remaining payments under the leases of $2,485,763.
A summary of changes in lease receivable for the year ended June 30, 2024 is as follows:
Balance
July 1, 2023 Additions Retirements
Balance
June 30, 2024 Current Portion
Long-term
Portion
2,493,039$ 221,447$ (228,723)$ 2,485,763$ 245,873$ 2,239,890$
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
72
Note 4 – Leases Receivable and Lease-Related Deferred Inflows of Resources (Continued)
At June 30, 2024, the required payments for these leases, including interest, are:
Year Ending
June 30,
NPV Leases
Receivable Interest
Total Lease
Payment
2025 245,873$ 31,656$ 277,529$
2026 265,353 28,432 293,785
2027 277,565 24,914 302,479
2028 289,843 21,252 311,095
2029 240,456 17,489 257,945
2030 - 2034 856,588 48,459 905,047
2035 - 2039 254,353 13,496 267,849
2040 - 2041 55,732 484 56,216
Total 2,485,763$ 186,182$ 2,671,945$
At June 30, 2024, the amounts reported as deferred inflows of resources related to leases will be recognized as lease
revenue as follows:
Year Ending
June 30, Amount
2025 292,705$
2026 280,343
2027 280,343
2028 280,343
2029 227,941
2030 - 2034 722,216
2035 - 2039 195,140
2040 - 2041 42,059
Total 2,321,090$
Note 5 – Interfund Transactions
A. Advances
Interfund advances are balances between funds that are not expected to be repaid within the current fiscal year. As
of June 30, 2024, the General Fund advanced $3,000,000 to the Capital Improvement Projects Capital Projects Fund
for advance funding of planned projects that will be repaid in subsequent years.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
73
Note 5 – Interfund Transactions (Continued)
B. Due from and to other Funds
At June 30, 2024, the City has the following due from and to other funds:
Internal Service
Funds Total
Due From Other Funds
Governmental Funds:
General Fund 1,401,947$ 1,401,947$
1,401,947$ 1,401,947$
Due to Other Funds
These interfund balances represent routine short-term cash flow assistance.
C. Transfers In and Out
Transfers between funds during the fiscal year ended June 30, 2024 were as follows:
Capital
Public Facilities Improvement
Transportation Corporation Projects Internal
Special Revenue Debt Capital Project Service
Transfers Out General Fund Fund Service Fund Fund Funds Total
Governmental Funds:
General Fund -$ 2,500,000$ 2,677,600$ -$ 1,417,684$ 6,595,284$
Housing Developemnt
Special Revenue Fund - - - 367,951 - 367,951
Capital Improvement Projects
Capital Projects Fund - 949,019 - 3,384,299 - 4,333,318
Nonmajor Governmental Funds 15,000 - - 800,000 - 815,000
Proprietary Funds:
Resource Recovery Enterprise Fund 20,000 - - - - 20,000
Internal Service Funds 76,000 - - - - 76,000
111,000$ 3,449,019$ 2,677,600$ 4,552,250$ 1,417,684$ 12,207,553$
Proprietary Funds
Transfers In
Governmental Funds
Transfers provided funding for operating subsidies, capital projects, capital acquisitions, internal service funds
personnel costs associated with staff special project, compensated absences and retiree health, and debt service.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
74
Note 6 – Capital Assets
A. Governmental Activities
A summary of changes in capital assets of the governmental activities for the year ended June 30, 2024 is as follows:
Balance Balance
Governmental Activities:July 1, 2023 Additions Deletions Transfers June 30, 2024
General Government Capital Asset:
Capital assets not being depreciated:
Land 64,786,669$ -$ -$ -$ 64,786,669$
Easements 19,615,039 - - - 19,615,039
Construction in progress 28,475,393 10,357,167 (2,136) (11,862,629) 26,967,795
Total general government capital assets not being depreciated 112,877,101 10,357,167 (2,136) (11,862,629) 111,369,503
Capital assets being depreciated:
Buildings 47,763,913 - - 1,122,392 48,886,305
Improvements other than buildings 61,623,361 - - 4,545,738 66,169,099
Machinery and equipment 4,575,626 - - 311,918 4,887,544
Roads, curbs, gutters, sidewalks, medians and bridges 187,809,815 - - 3,009,061 190,818,876
Streetlights 9,704,680 - - 282,038 9,986,718
Storm drain structure and mains 37,373,158 - - 2,546,177 39,919,335
Traffic signals 6,440,061 - - 45,305 6,485,366
Total capital assets being depreciated 355,290,614 - - 11,862,629 367,153,243
Less accumulated depreciation for:
Buildings (35,258,927) (1,660,807) - - (36,919,734)
Improvements other than buildings (48,249,869) (2,488,375) - - (50,738,244)
Machinery and equipment (3,524,357) (196,590) - - (3,720,947)
Roads, curbs, gutters, sidewalks, medians and bridges (118,441,355) (2,974,308) - - (121,415,663)
Streetlights (8,463,672) (162,016) - - (8,625,688)
Storm drain structure and mains (33,832,000) (536,305) - - (34,368,305)
Traffic signals (6,019,643) (111,072) - - (6,130,715)
Total accumulated depreciation (253,789,823) (8,129,473) - - (261,919,296)
Total capital assets being depreciated, net 101,500,791 (8,129,473) - 11,862,629 105,233,947
Intangible assets, being amortized
Right-to-use subscription assets 2,454,977 - (219,832) - 2,235,145
Total intangible assets, being amortized 2,454,977 - (219,832) - 2,235,145
Less accumulated amortization for:
Right-to-use subscription assets (574,289) (597,246) 56,762 - (1,114,773)
Total accumulated amortization (574,289) (597,246) 56,762 - (1,114,773)
Total intangible assets, being amortized, net 1,880,688 (597,246) (163,070) - 1,120,372
Total general government capital asset, net 216,258,580 1,630,448 (165,206) - 217,723,822
Internal Service Fund Capital Assets:
Capital assets not being depreciated:
Construction in progress 119,408 432,767 - (359,250) 192,925
Total internal fund capital
assets not being depreciated 119,408 432,767 - (359,250) 192,925
Capital assets being depreciated:
Machinery and equipment 13,067,171 - (126,904) 359,250 13,299,517
Less accumulated depreciation (10,479,018) (546,697) 126,904 - (10,898,811)
Total internal fund capital assets being depreciated, net 2,588,153 (546,697) - 359,250 2,400,706
Intangible assets, being amortized
Right-to-use lease assets - 34,108 - - 34,108
Right-to-use subscription assets 307,834 51,199 (24,866) - 334,167
Total intangible assets, being amortized 307,834 85,307 (24,866) - 368,275
Less accumulated amortization for:
Right-to-use lease assets - (18,844) - - (18,844)
Right-to-use subscription assets (106,011) (85,127) 8,289 - (182,849)
Total accumulated amortization (106,011) (103,971) 8,289 - (201,693)
Total intangible assets, being amortized, net 201,823 (18,664) (16,577) - 166,582
Total internal service fund capital assets, net 2,909,384 (132,594) (16,577) - 2,760,213
Governmental activities capital assets, net 219,167,964$ 1,497,854$ (181,783)$ -$ 220,484,035$
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
75
Note 6 – Capital Assets (Continued)
A. Governmental Activities (Continued)
Depreciation and amortization expenses were charged to functions and programs based on their usage of the related
assets. Depreciation and amortization expenses were charged to governmental activities as follows:
Governmental Activities Depreciation Amortization
Administration 1,016,184$ 46,585$
Innovation and technology 618,653
Administrative Services 795,062 37,626
Parks and Recreation 1,148,695 27,533
Community development 1,016,184 160,540
Public Works 3,534,695 324,962
Subtotal 8,129,473 597,246
Internal Service Allocation
Administration 1,235 8,110
Innovation and technology 101,415 -
Administrative Services 967 6,550
Parks and Recreation 4,726 4,793
Community development 1,235 27,947
Public Works 437,119 56,571
Subtotal 546,697 103,971
Total - Governmental Activities 8,676,170$ 701,217$
B. Business-Type Activities
A summary of changes in capital assets of the business-type activities for the year ended June 30, 2024 is as follows:
Balance Balance
July 1, 2023 Additions Deletions Transfers June 30, 2024
Business-type activities:
Capital assets not being depreciated:
Construction in progress 358,231$ 86,156$ (341)$ (440,709)$ 3,337$
Total capital assets not being depreciated 358,231 86,156 (341) (440,709) 3,337
Capital assets being depreciated:
Buildings 2,073,689 - - 217,551 2,291,240
Improvements other than buildings 2,175,914 - - 223,158 2,399,072
Machinery and equipment 751,752 - - 751,752
Total capital assets being depreciated 5,001,355 - - 440,709 5,442,064
Less accumulated depreciation for:
Buildings (655,019) (95,786) - - (750,805)
Improvements other than buildings (1,912,652) (67,240) - - (1,979,892)
Machinery and equipment (682,323) (22,961) - - (705,284)
Total accumulated depreciation (3,249,994) (185,987) - - (3,435,981)
Total capital assets being depreciated, net 1,751,361 (185,987) - 440,709 2,006,083
Business-type activity capital assets, net 2,109,592$ (99,831)$ (341)$ -$ 2,009,420$
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
76
Note 6 – Capital Assets (Continued)
B. Business-Type Activities (Continued)
Depreciation expense was charged to the business-type activities as follows:
Business-Type Activities Depreciation
Cupertino Sports Center 110,173$
Recreation Program 60,424
Blackberry Farm 15,390
Total 185,987$
Note 7 – Long-Term Liabilities
A. Governmental Activities
A summary of changes in long-term liabilities for governmental activities for the year ended June 30, 2024 is as
follows:
Balance
July 1, 2023
Additions/
Adjustment Retirements
Balance
June 30, 2024 Current Portion
Long-term
Portion
2020A Certificates of Participation 16,065,000$ -$ (2,035,000)$ 14,030,000$ 2,115,000$ 11,915,000$
Issuance Premium 2,784,711 - (397,816) 2,386,895 - 2,386,895
Lease liabilities - 34,108 (18,739) 15,369 6,808 8,561
Subscription liabilities 2,027,290 51,199 (868,215) 1,210,274 597,895 612,379
Claims payable 2,222,786 (268,925) (282,274) 1,671,587 322,000 1,349,587
Compensated absences 5,081,560 376,814 (397,437) 5,060,937 453,951 4,606,986
Total long-term liabilities 28,181,347$ 193,196$ (3,999,481)$ 24,375,062$ 3,495,654$ 20,879,408$
2020 A Certificates of Participation
The Cupertino Public Facilities Corporation issued Certificates of Participation to provide financing for the
construction of the Community Center, improvements of the City Hall and the Library in July 1986; purchase of
Wilson Park in 1989; finance the Memorial Park Expansion in 1990; and purchase the Blackberry Farm and
Fremont Older site in 1991. The Cupertino Public Facilities Corporation, as lessor, leased real property to the City
(under the Lease Agreement with the lessee) and assigned the base rental payments to the trustee for the benefit of
the owners of the certificates of participation. The rental payments which represent the pledged revenues are
scheduled to be sufficient in both time and amount, when the principal and interest of the certificates are due, which
was the case for the year ended June 30, 2024.
On May 9, 2012, $43,940,000 principal amount of 2012 Refinancing Certificates of Participation (2012 COPs)
were issued to refund the 2002 COPs, to fund a reserve fund for the 2012 COPs, and pay costs incurred in connection
with issuance.
On September 29, 2020, $22,040,000 principal amount of 2020A Certificates of Participation (2020 COPs) were
issued to refund the 2012 COPs and pay costs incurred in connection with issuance. The proceeds were placed into
an escrow account, along with funds from the City’s 2012 COPs Reserve and on October 30, 2020, the 2012 COPS
were prepaid, resulting no amounts outstanding as of June 30, 2024 for the 2012 COPs. The result of the transaction
was an economic gain of $3,133,819.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
77
Note 7 – Long-Term Liabilities (Continued)
A. Governmental Activities (Continued)
2020 A Certificates of Participation (Continued)
The 2020A COPs are payable by a pledge of revenues from the lease payments payable by the City pursuant to the
Lease Agreement between the Cupertino Public Facilities Corporation and the City for the use and possession of
the Site and Facility as described in the Lease Agreement. The City also covenanted in the Lease Agreement to
include all lease payments in its annual budget. Total debt service payments remaining on the 2020 COPs is
$16,058,600 payable through June 1, 2030. During the year ended June 30, 2024, the bonds had $2,035,000 of
principal and $642,600 interest due and paid. The annual debt service requirements on these certificates are as
follows:
Year Ending
June 30, Principal Interest Total
2025 2,115,000$ 561,200$ 2,676,200$
2026 2,200,000 476,600 2,676,600
2027 2,285,000 388,600 2,673,600
2028 2,380,000 297,200 2,677,200
2029 2,475,000 202,000 2,677,000
2030 2,575,000 103,000 2,678,000
Total 14,030,000$ 2,028,600$ 16,058,600$
Lease Liabilities
The City has entered into a lease for vehicle uses. The terms of the agreements are 36 months with an implicit rate
0.5273%. Principal and interest to maturity are as follows:
Year Ending
June 30, Principal Interest Total
2025 6,808$ 65$ 6,873$
2026 6,844 29 6,873
2027 1,717 2 1,719
Total 15,369$ 96$ 15,465$
Subscription Liabilities
The City has entered into subscriptions for information technology arrangements. The terms of the arrangements
range from 12 to 48 months with implicit rates used between 1.710% to of 3.331%. Principal and interest to
maturity are as follows:
Year Ending
June 30, Principal Interest Total
2025 597,895$ 24,988$ 622,883$
2026 382,583 12,130 394,713
2027 224,956 4,342 229,298
2028 4,840 160 5,000
Total 1,210,274$ 41,620$ 1,251,894$
Claims Payable
Refer to Note 10 for more details.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
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Note 7 – Long-Term Liabilities (Continued)
A. Governmental Activities (Continued)
Compensated Absences
The long-term portion of compensated absences payable has been accrued for the Governmental Activities on the
Government-Wide Financial Statements. In prior years, the General Fund has typically been used to liquidate the
liability. The balance outstanding at June 30, 2024 was $5,060,937.
B. Business-Type Activities
The following is a summary of changes in long-term liabilities for business-type activities for the year ended
June 30, 2024:
Balance
July 1, 2023 Additions Retirements
Balance
June 30, 2024 Current Portion
Long-term
Portion
Compensated absences 220,241$ 23,731$ (9,273)$ 234,699$ 19,979$ 214,720$
Total long-term liabilities 220,241$ 23,731$ (9,273)$ 234,699$ 19,979$ 214,720$
Compensated Absences
All vested vacation and compensatory leave time is recognized as an expense and as a liability in the business-type
funds at the time the liability vests. All of the enterprise funds of the City have been used to liquidate the liability.
The balance outstanding at June 30, 2024 was $234,699.
Note 8 – Defined Benefit Pension Plan
A. General Information about the Pension Plan
Plan Description
The City contributes to the California Public Employees’ Retirement System (“CalPERS”), an agent multiple-
employer public employee defined benefit pension plan. CalPERS acts as a common investment and administrative
agent for participating public entities within the State of California. Benefit provisions and all other requirements
are established by state statute and City ordinance. A full description of the pension plan regarding number of
employees covered, benefit provisions, assumptions (for funding, but not accounting purposes), and membership
information are listed in the Annual Actuarial Valuation Report. This report and CalPERS’ audited financial
statements are publicly available reports that can be obtained at CalPERS’ website at www.calpers.ca.gov under
Forms and Publications.
Benefit Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits
to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service,
equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50
with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service.
The cost of living adjustments for each plan are applied as specified by the Public Employees' Retirement Law.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
79
Note 8 – Defined Benefit Pension Plan (Continued)
A. General Information about the Pension Plan (Continued)
Benefit Provided (Continued)
The Pension Reform Act of 2013 (PEPRA), Assembly Bill 340, is applicable to employees new to CalPERS and
hired after December 31, 2012. The Plans' provisions and benefits in effect at June 30, 2024, are summarized as
follows:.
Prior to January 1 ,
2013
On or after January 1,
2013
Benefit formula 2.7%@55 2.0%@62
Benefit vesting schedule 5 years service 5 years service
Benefit payments monthly for life monthly for life
Minimum retirement age 50 52
Monthly benefits, as a% of eligible compensation 2% to 2.7% 1% to 2%
Required employee contribution rates 8.00% 7.00%
Required employer contribution rates 10.71% 10.71%
Hire date
Participant is eligible for non-industrial disability retirement if becomes disabled and has at least 5 years of credited
service. There is no special age requirement. The standard non-industrial disability retirement benefit is a monthly
allowance equal to 1.8 percent of final compensation, multiplied by service. Industrial disability benefits are not
offered.
An employee's beneficiary may receive the basic death benefit if the employee dies while actively employed. The
employee must be actively employed with the City to be eligible for this benefit. An employee's survivor who is
eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this basic
death benefit. The basic death benefit is a lump sum in the amount of the employee's accumulated contributions,
where interest is currently credited at 6 percent per year, plus a lump sum in the amount of one-month salary for
each completed year of current service, up to a maximum of six-months salary. For purposes of this benefit, one
month's salary is defined as the member's average monthly full-time rate of compensation during the 12 months
preceding death.
Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree's designated
survivor(s), or to the retiree's estate.
Benefit terms provide for annual cost-of-living adjustments to each employee’s retirement allowance. Beginning
the second calendar year after the year of retirement, retirement and survivor allowances will be annually adjusted
on a compound basis by 2 percent.
Employees Covered by Benefit Terms
As of the June 30, 2022, the valuation date, the following employees were covered by the benefit terms of the Plan:
Active employees 205
Transferred and terminated employees 169
Retired Employees and Beneficiaries 273
Total 647
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
80
Note 8 – Defined Benefit Pension Plan (Continued)
A. General Information about the Pension Plan (Continued)
Contributions
Section 20814(c) of the California Public Employees' Retirement Law requires that the employer contribution rates
for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1
following notice of a change in the rate. Funding contributions for both Plans are determined annually on an
actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to
finance the costs of benefits earned by employees during the year, with an additional amount to finance any
unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate
and the contribution rate of employees.
B. Net Pension Liability
Actuarial Methods and Assumptions Used to Determine Total Pension Liability
The June 30, 2022 valuation was rolled forward to determine the June 30, 2023 total pension liability, based on the
following actuarial methods and assumptions:
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate 6.90%
Inflation 2.30%
Salary Increases
Mortality Rate Table1
Post Retirement Benefit Increase
1The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS
Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using80%
of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experience study report
from November 2021 that can be found on the CalPERS website.
Entry Age Normal in accordance with the requirement of GASB Statement
No. 68
Varies by Entry Age and Service
Derived using CalPERS’ Membership Data for all Funds.
The lesser of contract COLA or 2.30% until Purchasing Power Protection
Allowance floor on purchasing power applies, 2.30% thereafter
Change of Assumptions
There were no changes of assumptions in 2023.
Long-term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using a building-block method
in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation)
are developed for each major asset class.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
81
Note 8 – Defined Benefit Pension Plan (Continued)
B. Net Pension Liability (Continued)
Long-term Expected Rate of Return (Continued)
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term
market return expectations. Using historical returns of all of the funds’ asset classes, expected compound
(geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of
return was then adjusted to account for assumed administrative expenses of 10 Basis points. The expected real rates
of return by asset class are as follows:
Asset Class1
Assumed
Asset
Allocation Real Return
1,2
Global Equity - Cap-weighted 30.00%4.54%
Global Equity - Non-Cap-weighted 12.00%3.84%
Private Equity 13.00%7.28%
Treasury 5.00%0.27%
Mortgage-backed Securities 5.00%0.50%
Investment Grade Corporates 10.00%1.56%
High Yield 5.00%2.27%
Emerging Market Debt 5.00%2.48%
Private Debt 5.00%3.57%
Real Assets 15.00%3.21%
Leverage -5.00%-0.59%
100.00%
1An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021 Asset Liability Management study.
Discount Rate
The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to
determine the discount rate assumed that contributions from plan members will be made at the current member
contribution rates and that contributions from employers will be made at statutorily required rates, actuarially
determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all
projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan
investments was applied to all periods of projected benefit payments to determine the total pension liability.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
82
Note 8 – Defined Benefit Pension Plan (Continued)
C. Changes in the Net Pension Liability
The following table shows the changes in net pension liability for the City’s Miscellaneous Plan recognized over
the measurement period.
Total Pension
Liability (a)
Plan Fiduciary Net
Position (b)
Net Pension Liability
(c) = (a) - (b)
Balance at June 30, 2022 (Valuation Date) 172,848,302$ 117,007,404$ 55,840,898$
Changes in the year:
Service cost 4,097,215 - 4,097,215
Interest on the total pension liability 11,919,333 - 11,919,333
Change of Benefit Terms 201,460 - 201,460
Change of Assumptions - - -
Differences between actual and expected experience 2,085,468 - 2,085,468
Contribution - employer - 7,183,364 (7,183,364)
Contribution - employee - 1,825,602 (1,825,602)
Net investment income - 7,184,605 (7,184,605)
Administrative expenses - (86,042) 86,042
Other miscellaneous income/(expenses) - - -
Benefit payments, including refunds of employee
contributions (8,879,755) (8,879,755) -
Net Changes during July 1, 2022 to June 30, 2023 9,423,721 7,227,774 2,195,947
Balance at June 30, 2023 (Measurement Date) 182,272,023$ 124,235,178$ 58,036,845$
Miscellaneous Plan
Increase (Decrease)
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability of the plans as of the measurement date, calculated using the
discount rate of 6.90%, as well as what the net pension liability would be if it were calculated using a discount rate
that is 1 percentage-point lower (5.90%) or 1 percentage-point higher (7.90%) than the current rate:
Discount Rate Current Discount Discount Rate
- 1% (5.90%) Rate (6.90%) + 1% (7.90%)
Miscellaneous Plan 82,467,218$ 58,036,845$ 37,947,324$
Plan's Net Pension Liability/(Asset)
Pension Plan Fiduciary Net Position
Detailed information about the plan’s fiduciary net position is available in the separately issued CalPERS financial
report.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
83
Note 8 – Defined Benefit Pension Plan (Continued)
C. Changes in the Net Pension Liability (Continued)
Pension Expense (Credit) and Deferred Outflows and Deferred Inflows of Resources Related to Pensions
For the year ended June 30, 2024, the City recognized pension expense of $10,219,721. As of June 30, 2024, the
City reported deferred outflows of resources and deferred inflows of resources related to pensions from the
following sources:
Deferred outflows Deferred inflows
of Resources of Resources
Pension contribution made after measurement date 7,230,634$ -$
Changes of assumptions 2,472,297 -
Difference between expected and actual experience 1,890,633 (86,493)
Net difference between projected and actual earning on
pension plan investments 5,688,471 -
Total 17,282,035$ (86,493)$
Miscellaneous Plan
The amounts above are net of outflows and inflows recognized in the 2022-23 measurement period expense.
The expected average remaining service lifetime (“EARSL”) is calculated by dividing the total future service years
by the total number of plan participants (active, inactive, and retired). The EARSL for the Plan for the measurement
period ending June 30, 2023 is 3.7 years, which was obtained by dividing the total service years of 2,413 (the sum
of remaining service lifetimes of the active employees) by 647 (the total number of participants: active, inactive,
and retired). Inactive employees and retirees have remaining service lifetimes equal to 0. Total future service is
based on the members’ probability of decrementing due to an event other than receiving a cash refund.
The $7,230,634 of contributions for the fiscal year ended June 30, 2024 reported as deferred outflows of resources
related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension
liability in the year ending June 30, 2025.
Other amounts reported as deferred inflows of resources related to pensions will be recognized as pension expense
as follows:
Measurement
Period
Ending June 30
2024 3,377,930$
2025 2,166,910
2026 4,243,185
2027 176,883
2028 -
Thereafter -
Total 9,964,908$
Deferred
Outflows/(Inflows)
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
84
Note 9 – Other Post Employment Benefits (OPEB)
A. General Information about the OPEB Plan
Plan Description
Permanent employees who retire under the City's CalPERS retirement plan are, pursuant to their respective
collective bargaining agreements, eligible to have their medical insurance premiums paid by the City. Retirees
receive the amount necessary to pay the cost of his/her enrollment, including the enrollment of his/her family
members, in a health benefit plan provided by CalPERS up to the maximum received by active employees in their
respective bargaining unit.
The City contracts with CalPERS for this insured-benefit plan established under the state Public Employees'
Medical and Hospital Care Act (PEMHCA). The plan offers employees and retirees three CalPERS' self-funded
options, setup as insurance risk pools, or offers various third-party insured health plans. The plan's medical benefits
and premium rates are established by CalPERS and the insurance providers. The City contribution is established by
City resolution. Retirees and active employees pay the difference between the premium rate and the City's
contribution. Premiums and City contributions are based on the plan and coverage selected by actives and retirees,
with the City's potential contribution ranging from zero to $1,605 per month per employee or retiree. The
responsibility for benefit payments has transferred to the insurers and the City does not guarantee the benefits in
the event of default by the insurers. A comprehensive annual financial report of CalPERS, inclusive of their benefit
plans, is available at www.calpers.ca.gov.
The City participates in the Public Agency Retirement System (PARS) Public Agencies Post Retirement Health
Care Plan Trust Program (PARS Trust), an agent-multiple employer irrevocable trust established to fund other
postemployment benefits. The City Council adopted the PARS Public Agencies Post-Retirement Health Care Plan
Trust, including the PARS Public Agencies Post-Retirement Health Care Plan, to fund medical insurance costs for
its retired employees, effective February 17, 2010. The City Council appointed the City Treasurer, or his/her
successor or his/her designee as the City’s plan administrator. The plan administrator is authorized to execute the
PARS legal documents on behalf of the City and to take whatever additional actions necessary to maintain the
City’s participation in the Program and to maintain compliance of any relevant regulation issued or as may be
issued; therefore, authorizing him/her to take whatever additional actions are required to administer the City’s
PARS Plan. The PARS Trust is approved by the Internal Revenue Code Section 115 and invests funds in equity,
bond, and money market mutual funds. Copies of PARS Trust annual financial report is available at the City's
Finance Department.
An employee is eligible for lifetime medical benefits under the OPEB Plan, along with his/her spouse or declared
domestic partner at the time of retirement, if all criteria listed below are met:
The employee was hired or the City Council member was elected prior to August 1, 2004, and the employee
has five or more full-time years of service and the City Council member has five or more years of elected
service with the City of Cupertino; or
The employee was hired or the City Council member was elected on or after August 1, 2004, and the employee
has ten or more full-time and/or elected years of CalPERS service, five years of which must be from the City
of Cupertino; and
The employee is eligible for retirement as defined under the CalPERS retirement system; and the employee
retires from the City of Cupertino.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
85
Note 9 – Other Post Employment Benefits (OPEB) (Continued)
A. General Information about the OPEB Plan (Continued)
Plan Description (Continued)
In addition, the eligible employee's dependent children at the time of retirement who are under 23 years old are
eligible for medical benefits. In addition to extending the eligibility of dependents from age 23 to age 26 in
accordance with the recent healthcare reform act, effective July 1, 2010, employees that retire or resign from service
with the City of Cupertino and who are not eligible for retiree medical benefits can continue on the City's medical
and dental plans provided that they pay the premiums in full.
Plan Members Covered by Benefit Terms
At July 1, 2023, the valuation date, the Plan membership consisted of the following:
Inactive plan members or beneficiaries currently receiving benefit payments 156
Inactive plan members entitled to but not yet receiving benefit payments 0
Active plan members 171
327
Contributions
OPEB Plan contributions are set by the adopted budget. The cost of the benefits provided by the OPEB Plan is
currently being paid by the City on a fully pre-funded basis. Based on the actuarial valuation date of July 1, 2023,
the annual required contribution rate is 7.3 percent of annual covered payroll. For the year ended June 30, 2024, the
City paid $722,863 in healthcare premium payments including implied subsidy. Plan members are not required to
contribute to the plan.
B. Net OPEB Liability
The City’s net OPEB liability was measured as of June 30, 2024 and the total OPEB liability used to calculate the
net OPEB liability was determined by an actuarial valuation as of July 1, 2023. Standard actuarial update procedures
were used to project/discount from valuation to measurement dates.
Investment Rate of Return
The long-term expected rate of return on OPEB plan investments was determined using a building-block method
in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense
and inflation) are developed for each major asset class. These ranges are combined to produce the long-term
expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage
and by adding expected inflation. Best estimates of geometric real rates of return for each major asset class included
in the target asset allocation as of June 30, 2024 (see the discussion of the Plan’s investment policy) are summarized
in the following table:
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
86
Note 9 – Other Post Employment Benefits (OPEB) (Continued)
B. Net OPEB Liability (Continued)
Investment Rate of Return (Continued)
Asset Class
Long-Term Expected
Real Rate of Return
Fixed income - core 6.20%
Fixed income - high yield 6.80%
Equities - domestic 7.50%
Equities - developed foreign 7.10%
Equities - emerging foreign 7.40%
Real estate 7.00%
Cash 2.70%
Investment Policy
The Plan’s policy in regard to the allocation of invested assets is established and may be amended by the Plan’s
Board by a majority vote of its members. It is the policy of the Plan Board to pursue an investment strategy that
reduces risk through the prudent diversification of the portfolio across a broad selection of distinct asset classes.
The Plan’s investment policy discourages the use of cash equivalents, except for liquidity purposes, and aims to
refrain from dramatically shifting asset class allocations over short time spans. The following was the Board’s
adopted asset allocation policy as of June 30, 2024:
Asset Class Target Allocation
Fixed income 29.00%
Equities 62.00%
Real estate 6.00%
Commodities 2.00%
Cash 1.00%
Total 100.00%
Concentrations
The Plan did not have investments outside of mutual funds that comprise five percent or more of the Plan’s total
fiduciary net position.
Rate of Return
For the year ended June 30, 2024, the annual money-weighted rate of return on investments, net of investment
expense, was 13.65 percent. The money-weighted rate of return expresses investment performance, net of
investment expense, adjusted for the changing amounts actually invested.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
87
Note 9 – Other Post Employment Benefits (OPEB) (Continued)
B. Net OPEB Liability (Continued)
Actuarial Assumptions
The total OPEB liability was determined by an actuarial valuation as of July 1, 2023, using the previously listed
actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified. Mortality
rates were based on the CalPERS mortality assumptions.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by
the employer and the plan members) and include the types of benefits provided at the time of each valuation and
the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial
methods and assumptions used include techniques that are designed to reduce effects of short-term volatility in
actuarial accrued liabilities and the actuarial value of assets, consistent with long-term perspective of the
calculations.
The other significant actuarial assumptions used to prepare the City's July 1, 2023 actuarial valuation include the
following:
Valuation date:July 1, 2023
Measurement date:June 30, 2024
Actuarial Cost Method:Entry Age Normal
Amortization Method:Level percent of pay closed, 7.5 years as of July 1, 2023
Amortization Period:10 year
Asset Valuation Method:Market value of Assets
Actuarial Assumptions:
Discount Rate 6.50%
Amortization growth rate 2.75%
Ultimate Rate of Medical Inflation 4.25%
Salary increases 2.75% plus merit component based on years of service
Mortality CalPERS mortality assumptions
Discount Rate
The discount rate used to measure the total OPEB liability was 6.5 percent. The projection of cash flows used to
determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined
contribution rates. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available
to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of
return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total
OPEB liability.
Change of Assumptions
Demographic changes refer to the changes in status, as well as changes in member and beneficiary data and
coverage elections from January 1, 2021 to July 1, 2023. In aggregate, the changes in demographics over the two-
and-a-half-year period were close to those expected, though there were some gains. Health cost gain/loss refers to
the changes in healthcare claims, trends, and expense costs. Overall health care claims were higher than expected
since the prior valuation. Other assumptions include updating the following actuarial assumptions to reflect those
adopted by the CalPERS Board in November 2021 including rates of mortality, rates of retirement, rates of
termination, rates of disability, and salary increases.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
88
Note 9 – Other Post Employment Benefits (OPEB) (Continued)
C. Change in Net OPEB Liability
Changes in the Net OPEB Liability: The changes in the City’s net OPEB liability are:
Total OPEB
Liability (a)
Plan Fiduciary Net
Position (b)
Net OPEB Liability
(c) = (a) - (b)
Balance at June 30, 2023 35,290,000$ 34,708,000$ 582,000$
Changes in the year
Service cost 1,312,300 - 1,312,300
Interest on the total OPEB liability 2,311,698 - 2,311,698
Change of assumptions 3,583,364 - 3,583,364
Contribution - employer - 722,863 (722,863)
Contribution - employee - - -
Net investment income - 4,814,071 (4,814,071)
Administrative expenses - (123,483) 123,483
Benefit payments, including refunds of
Employee contributions (2,108,622) (2,108,622) -
Net Changes during July 1, 2023 to June 30, 2024 5,098,740 3,304,829 1,793,911
Balance at June 30, 2024 (Measurement Date)40,388,740$ 38,012,829$ 2,375,911$
Net Increase (Decrease)
Sensitivity of the net OPEB Liability (Asset) to Changes in the Discount Rate
The following presents the net OPEB asset of the City, as well as what the City’s net OPEB liability would be if it
were calculated using a discount rate that is one-percentage-point lower (5.5 percent) or one-percentage-point
higher (7.5 percent) than the current discount rate:
1% Decrease 5.50%
Current Discount
Rate 6.50% 1% Increase 7.50%
7,303,748$ 2,375,911$ (1,728,579)$
Plan's Net OPEB Liability/(Asset)
Sensitivity of the Net OPEB Liability (Asset) to Changes in the Health Care Cost Trend Rates
The following presents the net OPEB asset of the City, as well as what the City’s net OPEB liability would be if it
were calculated using healthcare cost trend rates that are one-percentage-point lower (decreasing to 3.5 percent) or
one-percentage-point higher (increasing to 5.5 percent) than the current healthcare cost trend rates:
1% Decrease
Current Healthcare
Cost Trend Rate 1% Increase
(1,648,459)$ 2,375,911$ 7,559,037$
Plan's Net OPEB Liability/(Asset)
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
89
Note 9 – Other Post Employment Benefits (OPEB) (Continued)
D. OPEB Expense and Deferred Inflows of Resources Related to OPEB
For the year ended June 30, 2024, the City recognized OPEB expense of $2,311,700. As of June 30, 2024, the City
reported deferred inflows of resources related to OPEB from the following sources:
Deferred Outflows
of Resources
Deferred Inflows of
Resources
Net difference between projected and actual
earnings on investments -$ (716,063)$
Differences between expected and actual experience 2,957,000 (936,000)
Changes in assumption 3,114,137 (328,000)
6,071,137$ (1,980,063)$
OPEB Plan
The difference between projected OPEB plan investment earnings and actual earnings is amortized over a five-year
period. The remaining gains and losses are amortized over the expected average remaining service life. The
expected average remaining service life is 5 years, which was determined as of June 30, 2023, the beginning of the
measurement period, for employees covered by the OPEB plan benefit terms.
Amounts reported as deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows
Measurement
Period
Ending June 30
2025 67,961$
2026 2,251,961
2027 442,961
2028 730,962
2029 597,229
Thereafter -
Total 4,091,074$
Deferred
Outflows/(Inflows)
Note 10 – Liabilities Under Self-Insurance and Risk Management
General and Property Liability: The City is self-insured for the first $250,000 of general and property liability for each
occurrence, and the excess (up to $10,000,000 for each occurrence and annual aggregate) is covered through the City's
participation in the Pooled Liability Assurance Network Joint Powers Authority (PLAN JPA – formerly the Association
of Bay Area Governments Pooled Liability Assurance Network or ABAG PLAN). The risk pool consists of 28 agencies
within the San Francisco Bay Area. The stated purpose of the PLAN JPA is to provide certain levels of liability
insurance coverage, claims management, risk management services, and legal defense to its participating members.
PLAN JPA is governed by a Board of Directors, which comprises officials appointed by each participating member.
Premiums paid to PLAN JPA are subject to possible refund based on the results of actuarial studies and approval by the
Board of Directors. Complete financial statements for PLAN JPA may be obtained from their offices at the following
address: PLAN JPA, c/o Sedgwick, 1750 Creekside Oaks Drive Suite 200, Sacramento, CA, 95833. Premiums are
revised each year based on the City's claims experience and risk exposure. For the year ended June 30, 2024, the City
paid the PLAN JPA premiums of $1,626,671.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
90
Note 10 – Liabilities Under Self-Insurance and Risk Management (Continued)
Workers' Compensation Liability: The City belongs to the CSAC Excess Insurance Authority (EIA), a joint power
authority which provides excess workers' compensation liability claims coverage above the City's self-insured retention
of $500,000 per occurrence. Losses above the self-insured retention are pooled with excess reinsurance purchased to a
$50,000,000 statutory limit. EIA was established in 1979 for the purpose of creating a risk management pool for all
California public entities. EIA is governed by a Board of Directors consisting of representatives of its member public
entities. Complete financial statements for ETA may be obtained from their offices at the following address: CSAC
Excess Insurance Authority, Finance Department, EIA 75 Iron Point Circle, Suite 200, Folsom, CA 95630. For the year
ended June 30, 2024, the City paid premiums of $151,564.
It is the City's practice to obtain biennial actuarial studies for the self-insured workers' compensation liability. The
claims liabilities included in the workers' compensation internal service fund is based on the results of actuarial studies
and include amounts for claims incurred but not reported and loss adjustment expenses. Claim liabilities are calculated
considering the effects of inflation, recent claim settlement trends, including frequency and amount of payouts, and
other economic and social factors. Inflation of 2.5 percent, annual rate of return of two percent, claim severity increase
at 2.5 percent were assumed. In the current year, management used actuarial estimates based on a 90 percent confidence
level.
Settlements have not exceeded insurance coverage in the past three years.
Changes in the balances of workers' compensation and general claims liabilities during the years ended June 30 are as
follows:
2024 2023
Claims liability, beginning of year 2,222,786$ 1,569,000$
Incurred claims and changes in estimate (268,925) 1,122,626
Claim payments and credits (282,274) (468,840)
Total claims liability, end of year 1,671,587 2,222,786
Less current portion (322,000) (382,000)
Non-current portion 1,349,587$ 1,840,786$
Note 11 – Net Position and Fund Balances
A. Net Investment in Capital Assets
The following is the calculation of net investment in capital assets at June 30, 2024:
Governmental Business-Type
Activities Activities
Capital assets, net of accumulated depreciation and amortization 220,484,035$ 2,009,420$
Add: deferred charges on refunding 119,609 -
Less: outstanding principal on capital related debts (14,030,000) -
Less: bond premium (2,386,895) -
Less: lease liabilities (15,369) -
Less: subscription liabilities (1,210,274) -
Net investment in capital assets 202,961,106$ 2,009,420$
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
91
Note 11 – Net Position and Fund Balances (Continued)
B. Fund Balance Classifications
At June 30, 2024, fund balances are classified in the governmental funds as follows:
General Transportation
Housing
Development
Public Facilities
Corporation
Debt Service
Fund
Capital
Investments
Projects
Capital Projects
Fund
Nonmajor
Governmental
Funds Total
Nonspendable:
Loans receivable 428,431$ -$ -$ -$ -$ -$ 428,431$
Advances to other funds 3,000,000 - - - - - 3,000,000
Inventories 21,383 - - - - - 21,383
Subtotal 3,449,814 - - - - - 3,449,814
Restricted for:
Public access television 1,565,153 - - - - - 1,565,153
CASP Certificate & Training 12,377 - - - - - 12,377
PARS Section 115 Trust 21,663,664 - - - - - 21,663,664
Debt services - - - 250 - - 250
Storm drain system - - - - - 2,193,180 2,193,180
Parks and open space - - - - - 19,122,923 19,122,923
Environmental management - - - - - 968,556 968,556
St reets and road projects - 13,635,358 - - - 812,887 14,448,245
Housing programs - - 11,103,256 - - - 11,103,256
Subtotal 23,241,194 13,635,358 11,103,256 250 - 23,097,546 71,077,604
Committed for:
Economic uncertainty 24,000,000 - - - - - 24,000,000
Sustainability reserve 127,891 - - - - - 127,891
Sales tax repayment reserve* 74,500,000 - - - - - 74,500,000
Capital project reserve 10,000,000 - - - - - 10,000,000
Subtotal 108,627,891 - - - - - 108,627,891
Assigned to:
Encumbrances 4,741,474 - - - - - 4,741,474
Capital projects - - - - 31,971,103 154,548 32,125,651
Subtotal 4,741,474 - - - 31,971,103 154,548 36,867,125
Unassigned 26,034,946 - - - - - 26,034,946
T otal 166,095,319$ 13,635,358$ 11,103,256$ 250$ 31,971,103$ 23,252,094$ 246,057,380$
* Uncommitted on October 15, 2024. See Note 15 - Subsequent Event for more detials.
Note 12 – Commitments and Contingencies
A. Federal and State Grants
The City participates in a number of federal and state grant programs subject to financial and compliance audits by
the grantors or their representatives. Audits of certain grant programs, including those for the year ended
June 30, 2024, have yet to be conducted. The amount, if any, of expenditures that may be disallowed by the granting
agencies cannot be determined at this time. Management believes that such disallowances, if any, would not have
a material effect on the financial statements.
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
92
Note 12 – Commitments and Contingencies (Continued)
B. Encumbrances
The City uses encumbrances to control expenditure commitments for the year. Encumbrances represent
commitments related to executor contracts not yet performed and purchase orders not yet filled. Commitments for
such expenditure of monies are encumbered to reserve a portion of applicable appropriations. Encumbrances still
open at year end are not accounted for as expenditures and liabilities, but as restricted, or assigned fund balance.
As of June 30, 2024, the City had the following encumbrances outstanding:
Governmental Funds:
General Fund 4,741,474$
Transportation Special Revenue Fund 778,864
Housing Development Special Revenue Fund 3,005
Capital Improvements Projects Capital Projects Fund 2,447,952
Nonmajor Governmental Funds 105,085
Proprietary Funds:
Resource Recovery Enterprise Fund 44,640
Cupertino Sports Center Enterprise Fund 10,756
Internal Service Funds 837,022
Total Encumbrances 8,968,798$
C. Consulting Agreement for Sales Taxes
The City entered into agreements (commitments) with two companies to provide services consisting of the
assessment and creation of new sales and use tax revenue sources for the City. The City agreed to pay the companies
based on a sliding scale payment schedule dependent on the level of new sales tax revenue realized by the City as
defined in the consulting agreements. These agreements qualify as tax abatements under the provisions of GASB
Statement 77. For the year ended June 30, 2024, the City abated taxes totaling $9,193,716.
D. Santa Clara County Vehicle Registration Fee (VRF)
The City is required to report VRF revenues, expenditures and fund balances for the year ended June 30, 2024:
VRF Balance as of July 1, 2023 -$
VRF Revenue 438,330
VRF Interest 7,446
VRF Expended (445,776)
VRF Balance as of June 30, 2024 -$
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City of Cupertino
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
93
Note 13 – Concentration Risk
The City has an economic dependency on revenues generated directly or indirectly from one company. For the year
ended June 30, 2024, more than 10 percent of the City General Fund's total revenues are derived from the company.
The City's operations would be adversely impacted if there are any significant declines in taxes received from the
company.
Note 14 – Stewardship, Compliance and Accountability
A. Deficit Fund Balance/Net Position
At June 30, 2024, the following fund had a unrestricted net position (deficit):
Fund Fund Type Deficit
Retiree Medical Internal Service Fund (13,988)$
City management believes the present cash position of the Internal Service Funds are adequate to meet current
needs.
B. Excess of Expenditures over Appropriations
Total expenditures exceeded budgeted appropriations in the following funds:
Funds Appropriations Expenditures Excess
General Fund:
Debt service:
Principal -$ 552,091$ (552,091)$
Interest and fiscal charges - 22,997 (22,997)
Public Facilities Corporation Debt Service Fund 2,677,600 2,679,100 (1,500)
Nonmajor Governmental Funds
Storm Drain Improvement Special Revenue Fund 1,761,800 1,765,950 (4,150)
Note 15 – Subsequent Event
California Department of Tax and Fee Administration (“CDTFA”)Local Tax Reallocation
On October 2, 2024, CDTFA and the City entered into a settlement agreement that allowed the City to retain the full
amount of the $74.5 million held in reserve. Subsequently, the City unassigned funds from the committed sales tax
repayment reserve through the Council approval on October 15, 2024.
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REQUIRED SUPPLEMENTARY
INFORMATION (UNAUDITED)
95
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Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:
Taxes 59,055,566$ 79,233,156$ 80,355,732$ 1,122,576$
Use of money and property 2,328,336 2,328,336 9,098,441 6,770,105
Intergovernmental 807,624 1,571,820 1,404,322 (167,498)
Licenses and permits 4,265,081 34,012,361 4,412,057 (29,600,304)
Charges for services 12,261,786 14,978,786 12,308,496 (2,670,290)
Fines and forfeitures 405,000 405,000 416,402 11,402
Other revenue 1,142,836 1,200,904 2,199,861 998,957
Total revenues 80,266,229 133,730,363 110,195,311 (23,535,052)
EXPENDITURES:
Current:
Administration 9,030,461 8,505,119 7,381,733 1,123,386
Law enforcement 17,812,608 18,062,608 16,204,350 1,858,258
Innovation and Technology 3,632,785 3,161,298 2,284,198 877,100
Administrative services 7,083,011 7,255,528 6,716,341 539,187
Recreation services 6,082,736 6,132,685 5,517,003 615,682
Community development 11,647,125 13,111,301 10,659,154 2,452,147
Public works 24,071,672 28,118,930 25,060,745 3,058,185
Capital outlay 245,000 1,774,415 1,773,434 981
Debt service:
Principal - - 552,091 (552,091)
Interest and fiscal charges - - 22,997 (22,997)
Total expenditures 79,605,398 86,121,884 76,172,046 9,949,838
Excess (deficiency) of revenues over
expenditures 660,831 47,608,479 34,023,265 (13,585,214)
OTHER FINANCING SOURCES (USES):
Transfers in 15,000 111,000 111,000 -
Transfers out (6,457,600) (6,595,284) (6,595,284) -
Total other financing sources (uses)(6,442,600) (6,484,284) (6,484,284) -
NET CHANGE IN FUND BALANCE (5,781,769)$ 41,124,195$ 27,538,981 (13,585,214)$
FUND BALANCE:
Beginning of year 138,556,338
End of year 166,095,319$
City of Cupertino
Required Supplementary Information
Budgetary Comparison Schedule - General Fund
For the Year Ended June 30, 2024
97
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Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:
Use of money and property 159,000$ 159,000$ 438,177$ 279,177$
Intergovernmental 3,164,952 4,164,952 4,840,805 675,853
Charges for services - - 2,223 2,223
Other revenue - - 4,798 4,798
Total revenues 3,323,952 4,323,952 5,286,003 962,051
EXPENDITURES:
Current:
Public works 3,695,902 3,297,821 3,250,708 47,113
Capital outlay 2,823,892 3,093,464 2,435,630 657,834
Total expenditures 6,519,794 6,391,285 5,686,338 704,947
Excess (deficiency) of revenues over
expenditures (3,195,842) (2,067,333) (400,335) 1,666,998
OTHER FINANCING SOURCES (USES):
Transfers in 2,500,000 3,449,019 3,449,019 -
Total other financing sources (uses)2,500,000 3,449,019 3,449,019 -
NET CHANGE IN FUND BALANCE (695,842)$ 1,381,686$ 3,048,684 1,666,998$
FUND BALANCE:
Beginning of year 10,586,674
End of year 13,635,358$
City of Cupertino
Required Supplementary Information
Budgetary Comparison Schedule - Transportation Special Revenue Fund
For the Year Ended June 30, 2024
98
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Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:
Taxes 4,532,926$ 4,532,926$ -$ (4,532,926)$
Use of money and property 86,300 86,300 524,394 438,094
Intergovernmental 588,886 588,886 243,777 (345,109)
Other revenue - - 50,000 50,000
Total revenues 5,208,112 5,208,112 818,171 (4,389,941)
EXPENDITURES:
Current:
Community development 1,632,788 1,639,512 839,571 799,941
Total expenditures 1,632,788 1,639,512 839,571 799,941
Excess (deficiency) of revenues over
expenditures 3,575,324 3,568,600 (21,400) (3,590,000)
OTHER FINANCING SOURCES (USES):
Transfers out - (367,951) (367,951) -
Total other financing sources (uses)- (367,951) (367,951) -
NET CHANGE IN FUND BALANCE 3,575,324$ 3,200,649$ (389,351) (3,590,000)$
FUND BALANCE:
Beginning of year 11,492,607
End of year 11,103,256$
City of Cupertino
Required Supplementary Information
Budgetary Comparison Schedule - Housing Development Special Revenue Fund
For the Year Ended June 30, 2024
99
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The budget of the City is a detailed operating plan which identifies estimated costs and results in relation to estimated revenues.
The budget includes (1) the programs, projects, services and activities to be provided during the fiscal year; (2) estimated
revenue available to finance the operating plan; and (3) the estimated spending requirements of the operating plan. The budget
represents a process through which policy decisions are made, implemented and controlled. The City prohibits expending funds
for which there is no legal appropriation. Operating appropriations lapse at fiscal year end.
In May of each year, the City Manager submits to the City Council a proposed budget for the fiscal year beginning July 1. Public
hearings on the proposed budget are held during the month of June and the budgets for all fund types are legally adopted by
Resolution prior to June 30. Original budget amounts are presented on the accompanying budgetary statements include these
legally adopted amounts.
Budgets for governmental funds are adopted on a basis consistent with accounting principles generally accepted in the United
States of America. The City's legal level of budgetary control is at the functional level for the general fund and at the fund level
for other funds. The City Manager is responsible for controlling the City's expenditures in accordance with the adopted budget.
The City Manager is authorized to administer and transfer appropriations between budget accounts within the operating budget
when in his opinion such transfers become necessary for administrative purposes. Any revision which increases total
appropriations must be approved by the City Council. Requests for additional personnel or capital outlay also require the
approval of the City Council.
City of Cupertino
Required Supplementary Information
Notes to the Budgetary Comparison Schedules
For the Year Ended June 30, 2024
Budget and Budgetary Accounting
101
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Measurement period 2022-23 2021-22 2020-21 2019-20 2018-19
Total pension liability
Service cost 4,097,215$ 3,614,486$ 3,392,942$ 3,241,719$ 3,324,361$
Interest 11,919,333 11,312,835 10,907,002 10,302,395 9,800,245
Changes of benefit terms 201,460 - - - -
Changes of assumptions - 5,380,881 - - -
Differences between expected and actual experience 2,085,468 (188,249) 2,212,836 444,188 4,144,384
Benefit payments, including refunds of employee contributions (8,879,755) (8,451,800) (7,937,592) (6,815,494) (6,193,271)
Net change in total pension liability 9,423,721 11,668,153 8,575,188 7,172,808 11,075,719
Total pension liability - beginning 172,848,302 161,180,149 152,604,961 145,432,153 134,356,434
Total pension liability - ending (a)182,272,023$ 172,848,302$ 161,180,149$ 152,604,961$ 145,432,153$
Pension fiduciary net position
Contributions - employer 7,183,364$ 6,396,030$ 5,957,595$ 5,308,579$ 4,654,841$
Contributions - employee 1,825,602 1,632,861 1,560,532 1,429,446 1,364,731
Net investment income 7,184,605 (9,612,070) 23,553,078 4,975,822 6,096,968
Benefit payments, including refunds of employee contributions (8,879,755) (8,451,800) (7,937,592) (6,815,494) (6,193,271)
Net Plan to Plan Resource Movement - - - - -
Administrative expense (86,042) (79,189) (103,981) (140,036) (66,707)
Other Miscellaneous Income/(Expense)1 - - - - 216
Net change in plan fiduciary net position 7,227,774 (10,114,168) 23,029,632 4,758,317 5,856,778
Plan fiduciary net position - beginning 2 117,007,404 127,121,572 104,091,940 99,333,623 93,476,845
Plan fiduciary net position - ending (b)124,235,178$ 117,007,404$ 127,121,572$ 104,091,940$ 99,333,623$
Plan net pension liability - ending (a) - (b)58,036,845$ 55,840,898$ 34,058,577$ 48,513,021$ 46,098,530$
Plan fiduciary net position as a percentage 68.16%67.69%78.87%68.21%68.30%
of the total pension liability
Covered payroll3 23,043,952$ 20,455,494$ 20,427,103$ 18,662,748$ 18,461,490$
Plan net pension liability as a percentage of covered
payroll 251.85% 272.99% 166.73% 259.95% 249.70%
Notes to Schedule:
Changes of Assumptions: There were no assumption changes in 2023. Effective with the June 30, 2021 valuation date (June 30, 2022 measurement date), the
accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market
return expectations as well as the expected pension fund cash flows. In addition, demographic assumptions and the price inflation assumption were changed in
accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement dates June
30, 2017 through June 30, 2021, 7.65% for measurement dates June 30, 2015 through June 30, 2016, and 7.50% for measurement date June 30, 2014.
Agent Multiple Employer Defined Benefit Retirement Plan - Miscellaneous Plan
1 During Fiscal Year 2017-18, as a result of Governmental Accounting Standards Board Statement (GASB) No. 75, Accounting and Financial Reporting for
Postemployment Benefit Plans Other than Pensions (GASB 75), CalPERS reported its proportionate share of activity related to postemployment benefits for
participation in the State of California’s agent OPEB plan. Accordingly, CalPERS recorded a one-time expense as a result of the adoption of GASB 75. Additionally,
CalPERS employees participate in various State of California agent pension plans and during Fiscal Year 2017 -18, CalPERS recorded a correction to previously
reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and
Financial Reporting for Pensions (GASB 68).
2 Includes any beginning of year adjustment.
Changes of Benefit Terms: The figures above generally include any liability impact that may have resulted from voluntary benefit changes that occurred on or before
the Measurement Date. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the Valuation Date are not included
in the figures above, unless the liability impact is deemed to be material by the plan actuary. In 2022, SB 1168 increased the standard retiree lump sum death benefit
from $500 to $2,000 for any death occurring on or after July 1, 2023. The impact, if any, is included in the changes of benefit terms.
3 Includes one year’s payroll growth using 2.80% payroll growth assumption for fiscal years ended in 2022 and 2023; 2.75% payroll growth assumption for fiscal
years ended in 2018 through 2021; 3.00% payroll growth assumption for fiscal years ended in 2014 through 2017.
City of Cupertino
Required Supplementary Information (Unaudited)
Schedule of Changes in the Net Pension Liability and Related Ratios
For the Year Ended June 30, 2024
Last Ten Fiscal Years
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Measurement period 2017-18 2016-17 2015-16 2014-15 2013-14
Total pension liability
Service cost 3,058,629$ 2,895,549$ 2,525,314$ 2,444,939$ 2,504,228$
Interest 9,065,322 8,619,588 8,253,983 7,789,134 7,349,943
Changes of benefit terms - - - - -
Changes of assumptions (847,606) 7,125,558 - (1,883,633) -
Differences between expected and actual experience 1,184,340 (182,397) 696,347 372,917 -
Benefit payments, including refunds of employee contributions (6,051,845) (5,346,890) (5,151,298) (4,637,005) (4,351,614)
Net change in total pension liability 6,408,840 13,111,408 6,324,346 4,086,352 5,502,557
Total pension liability - beginning 127,947,594 114,836,186 108,511,840 104,425,488 98,922,931
Total pension liability - ending (a)134,356,434$ 127,947,594$ 114,836,186$ 108,511,840$ 104,425,488$
Pension fiduciary net position
Contributions - employer 4,263,020$ 4,183,822$ 3,659,170$ 3,301,642$ 2,891,986$
Contributions - employee 1,506,888 1,236,052 1,169,921 1,149,894 1,061,884
Net investment income 7,347,936 8,749,288 466,704 1,724,204 11,379,985
Benefit payments, including refunds of employee contributions (6,051,845) (5,346,890) (5,151,298) (4,637,005) (4,351,614)
Net Plan to Plan Resource Movement (216) - - - -
Administrative expense2 (135,263) (115,304) (47,536) (87,780) -
Other Miscellaneous Income/(Expense)2 (256,867) - - - -
Net change in plan fiduciary net position 6,673,653 8,706,968 96,961 1,450,955 10,982,241
Plan fiduciary net position - beginning 3 86,803,192 78,096,224 77,999,263 76,548,308 65,566,067
Plan fiduciary net position - ending (b)93,476,845$ 86,803,192$ 78,096,224$ 77,999,263$ 76,548,308$
Plan net pension liability - ending (a) - (b)40,879,589$ 41,144,402$ 36,739,962$ 30,512,577$ 27,877,180$
Plan fiduciary net position as a percentage 69.57%67.84%68.01%71.88%73.30%
of the total pension liability
Covered payroll4 16,809,349$ 15,595,136$ 14,336,969$ 13,504,966$ 13,080,327$
Plan net pension liability as a percentage of covered
payroll 243.20% 263.83% 256.26% 225.94% 213.12%
City of Cupertino
Required Supplementary Information (Unaudited)
Schedule of Changes in the Net Pension Liability and Related Ratios (Continued)
For the Year Ended June 30, 2024
Last Ten Fiscal Years
Agent Multiple Employer Defined Benefit Retirement Plan - Miscellaneous Plan
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Fiscal Year End1 2023-24 2022-23 2021-22 2020-21 2019-20
Actuarially determined contribution2 7,230,634$ 7,183,364$ 6,396,030$ 5,957,595$ 5,308,579$
Contributions in relation to the actuarially
determined contribution2 (7,230,634) (7,183,364) (6,396,030) (5,957,595) (5,308,579)
Contribution deficiency (excess)-$ -$ -$ -$ -$
Covered payroll3 23,689,183$ 23,043,952$ 20,455,494$ 20,427,103$ 18,662,748$
Contributions as a percentage of covered
payroll3 30.52% 31.17% 31.27% 29.17% 28.44%
Notes to Schedule:
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Actuarial Cost Method
Amortization method Level percentage of payroll, closed
Asset valuation method Fair Value of Assets
Inflation 2.50%
Salary increases Varies by entry age and service
Payroll Growth 2.75%
Investment rate of return
Retirement age
Mortality
City of Cupertino
Required Supplementary Information (Unaudited)
Schedule of Contributions - Pension
For the Year Ended June 30, 2024
Last Ten Fiscal Years
Agent Multiple Employer Defined Benefit Retirement Plan - Miscellaneous Plan
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2022-23 were derived from the June 30,
2020 funding valuation report.
1As prescribed in GASB 68, paragraph 46, the information presented in the Schedule of Plan Contributions should also be presented as of the
employer’s most recent fiscal year-end.
2 Employers are assumed to make contributions equal to the actuarially determined contributions. However, some employers may choose to make
additional contributions towards their unfunded liability. Employer contributions for such plans exceed the actuarially determined contributions.
7.00% net of pension plan investment and administrative expenses; includes inflation.
The probabilities of retirement are based on the 2017 CalPERS Experience study for the
period from 1997 to 2015.
The probabilities of mortality are based on the 2017 CalPERS Experience Study for the
period from 1997 to 2015. Pre-retirement and post-retirement mortality rates include 15 years
of projected mortality improvement using 90% of Scale MP-2016 published by the Society of
Actuaries.
3 Includes one year’s payroll growth using 2.80% payroll growth assumption for fiscal years ended June 30, 2022 and 2023; 2.75% payroll growth
assumption for fiscal years ended June 30, 2018- 21; 3.00% payroll growth assumption for fiscal years ended June 30, 2014-17.
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Fiscal Year End 2018-19 2017-18 2016-17 2015-16 2014-15
Actuarially determined contribution 4,654,841$ 4,263,020$ 4,183,822$ 3,659,170$ 3,301,642$
Contributions in relation to the actuarially
determined contribution (4,654,841) (4,263,020) (4,183,822) (3,659,170) (3,301,642)
Contribution deficiency (excess)-$ -$ -$ -$ -$
Covered payroll 18,461,490$ 16,809,349$ 15,595,136$ 14,336,969$ 13,504,966$
Contributions as a percentage of covered payroll 25.21% 25.36% 26.83% 25.52% 24.45%
City of Cupertino
Required Supplementary Information (Unaudited)
Schedule of Contributions - Pension (Continued)
For the Year Ended June 30, 2024
Last Ten Fiscal Years
Agent Multiple Employer Defined Benefit Retirement Plan - Miscellaneous Plan
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Measurement period 2023-24 2022-23 2021-22 2020-21
Total OPEB liability
Service cost 1,312,300$ 1,260,000$ 1,015,000$ 844,000$
Interest 2,311,698 1,967,000 1,921,000 2,042,000
Changes of benefit terms - - - -
Difference between expected vs actual experience - 4,437,000 - (4,688,000)
Changes of assumptions 3,583,364 (492,000) - 640,000
Benefit payments, including refunds of employee contributions (2,108,622) (1,753,000) (1,691,000) (1,550,068)
Net change in total OPEB liability 5,098,740 5,419,000 1,245,000 (2,712,068)
Total OPEB liability - beginning 35,290,000 29,871,586 28,626,586 31,338,654
Total OPEB liability - ending (a)40,388,740$ 35,290,586$ 29,871,586$ 28,626,586$
Contributions - employer 722,863 1,753,000 1,691,000 1,550,068
Net investment income 4,814,071 3,484,000 (6,568,000) 8,775,796
Benefit payments (2,108,622) (1,753,000) (1,691,000) (1,550,068)
Administrative expense (123,483) (116,000) (117,000) (121,000)
Net change in fiduciary net position 3,304,829 3,368,000 (6,685,000) 8,654,796
Plan fiduciary net position - beginning 34,708,000 31,340,044 38,025,044 29,370,248
Plan fiduciary net position - ending (b)38,012,829$ 34,708,044$ 31,340,044$ 38,025,044$
Net OPEB liability (asset) - ending (a-b) 2,375,911$ 582,542$ (1,468,458)$ (9,398,458)$
Plan fiduciary net position as a percentage 94.12% 98.35% 104.92% 132.83%
of the total OPEB liability
Covered-employee payroll 26,587,600$ 27,343,833$ 24,015,350$ 23,081,960$
Plan OPEB liability as a percentage of covered payroll 8.94%2.13% -6.11% -40.72%
Notes to Schedule:
* Fiscal year 2017 was the 1st year of implementation, therefore only eight (8) years are shown.
For the Year Ended June 30, 2024
Schedule of Changes in the Net Other postemployment Benefits Liability and Related Ratios
Required Supplementary Information (Unaudited)
City of Cupertino
Single Employer Defined Benefit Other Post Employment Benefit Plan
Last Ten Fiscal Years*
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Measurement period 2019-20 2018-19 2017-18 2016-17
Total OPEB liability
Service cost 1,009,000$ 865,260$ 1,007,863$ 907,986$
Interest 1,985,000 2,004,581 1,876,280 1,780,898
Changes of benefit terms - - - -
Difference between expected vs actual experience - (1,808,295) - -
Changes of assumptions 1,761,000 (36,407) - -
Benefit payments, including refunds of employee contributions (1,489,506) (1,423,109) (1,419,221) (1,332,975)
Net change in total OPEB liability 3,265,494 (397,970) 1,464,922 1,355,909
Total OPEB liability - beginning 28,073,160 28,471,130 27,006,208 25,650,299
Total OPEB liability - ending (a)31,338,654$ 28,073,160$ 28,471,130$ 27,006,208$
Contributions - employer 1,489,506 1,423,109 1,419,221 1,332,975
Net investment income 272,722 1,259,390 2,364,652 2,959,614
Benefit payments (1,489,506) (1,423,109) (1,419,221) (1,332,975)
Administrative expense (120,708) (97,301) (53,582) (48,629)
Net change in fiduciary net position 152,014 1,162,089 2,311,070 2,910,985
Plan fiduciary net position - beginning 29,218,234 28,056,145 25,745,075 22,834,090
Plan fiduciary net position - ending (b)29,370,248$ 29,218,234$ 28,056,145$ 25,745,075$
Net OPEB liability (asset) - ending (a-b) 1,968,406$ (1,145,074)$ 414,985$ 1,261,133$
Plan fiduciary net position as a percentage 93.72% 104.08% 98.54% 95.33%
of the total OPEB liability
Covered-employee payroll 21,643,061$ 20,085,777$ 19,153,396$ 17,255,340$
Plan OPEB liability as a percentage of covered payroll 9.09% -5.70%2.17%7.31%
Notes to Schedule:
* Fiscal year 2017 was the 1st year of implementation, therefore only eight (8) years are shown.
Single Employer Defined Benefit Other Post Employment Benefit Plan
City of Cupertino
Required Supplementary Information (Unaudited)
Schedule of Changes in the Net Other postemployment Benefits Liability and Related Ratios (Continued)
For the Year Ended June 30, 2024
Last Ten Fiscal Years*
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2023-24 2022-23 2021-22 2020-21
Actuarially determined contribution 1,675,019$ 1,592,398$ 128,715$ 123,712$
722,863 1,753,000 1,691,000 1,550,068
Contribution deficiency (excess)952,156$ (160,602)$ (1,562,285)$ (1,426,356)$
Covered-employee payroll 26,587,600$ 27,343,833$ 24,015,350$ 23,081,960$
Contributions as a percentage of covered-
employee payroll -2.72% -6.41% -7.04% -6.72%
Notes to Schedule:
Valuation Date July 1, 2023
Timing
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age
Amortization method Level Percent of Pay, Closed, 7.5 years as of 7/1/2023
Asset valuation method Market value of assets
Discount rate 6.50%
Amortization growth rate 2.75%
Ultimate rate of medical inflation 4.250%
Salary increases 2.75% plus merit component based on years of service
Mortality CalPERS mortality assumptions
Contributions in relation to the actuarially determined contribution
City of Cupertino
Required Supplementary Information (Unaudited)
Schedule of Contributions - Other postemployment Benefits
For the Year Ended June 30, 2024
Last Ten Fiscal Years*
Single Employer Defined Benefit OPEB Plan
Actuarially determined contributions are calculated based on the most recently performed
actuarial valuation
* Fiscal year 2017 was the 1st year of implementation, therefore only eight (8) years are shown.
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2019-20 2018-19 2017-18 2016-17
Actuarially determined contribution 1,401,176$ 1,300,357$ 1,361,806$ 1,116,764$
Contributions in relation to the actuarially determined contribution 1,489,506 1,423,109 1,419,221 1,332,975
Contribution deficiency (excess) (88,330)$ (122,752)$ (57,415)$ (216,211)$
Covered-employee payroll 21,643,061$ 20,085,777$ 19,153,396$ 17,255,340$
Contributions as a percentage of covered-
employee payroll -6.88% -7.09% -7.41% -7.72%
Notes to Schedule:
Valuation Date July 1, 2023
Timing
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age
Amortization method Level Percent of Pay, Closed, 7.5 years as of 7/1/2023
Asset valuation method Market value of assets
Discount rate 6.50%
Amortization growth rate 2.75%
Ultimate rate of medical inflation 4.250%
Salary increases 2.75% plus merit component based on years of service
Mortality CalPERS mortality assumptions
City of Cupertino
Required Supplementary Information (Unaudited)
Schedule of Contributions - Other postemployment Benefits (Continued)
For the Year Ended June 30, 2024
Last Ten Fiscal Years*
Single Employer Defined Benefit OPEB Plan
Actuarially determined contributions are calculated based on the most recently performed
actuarial valuation
* Fiscal year 2017 was the 1st year of implementation, therefore only eight (8) years are shown.
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SUPPLEMENTARY
INFORMATION
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City of Cupertino
Major Governmental Funds
Other than the General Fund and Special Revenue Funds
This section is provided for the presentation of budget-to-actual schedules for the Public Facilities Corporation Debt Service Fund
and the Capital Improvement Projects Capital Projects Fund. Although the funds are considered to be major government funds, budget- to-
actual information in the required supplementary information is limited to the General Fund and major Special Revenue Funds. All other
major governmental fund schedules with such information are therefore included as Supplemental Information.
Public Facilities Corporation Debt Service Fund -This fund accounts for the payments of principal and interest on certificates of
participation issued to provide for the financing of the Civic Center, Library, Wilson Park, Memorial Park, and other City facilities.
Capital Improvement Projects Capital Projects Fund - This fund accounts for activities related to the acquisition or construction of
major capital facilities.
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Original Final Variance with
Budget Budget Actual Final Budget
EXPENDITURES:
Current:
Administration -$ -$ 1,500$ (1,500)$
Debt service:
Principal 2,035,000 2,035,000 2,035,000 -
Interest and fiscal charges 642,600 642,600 642,600 -
Total expenditures 2,677,600 2,677,600 2,679,100 (1,500)
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES (2,677,600) (2,677,600) (2,679,100) (1,500)
OTHER FINANCIN SOURCES:
Transfers in 2,677,600 2,677,600 2,677,600 -
Total other financing sources 2,677,600 2,677,600 2,677,600 -
NET CHANGE IN FUND BALANCE -$ -$ (1,500) (1,500)$
FUND BALANCE:
Beginning of Year 1,750
End of Year 250$
City of Cupertino
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual
Public Facilities Corporation Debt Service Fund
For the Year Ended June 30, 2024
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Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:
Use of money and property -$ -$ 790,983$ 790,983$
Intergovernmental - 2,359,233 352,570 (2,006,663)
Charges for services - 15,000 - (15,000)
Other revenue - - 161,337 161,337
Total revenues - 2,374,233 1,304,890 (1,069,343)
EXPENDITURES:
Public works - - 49,785 (49,785)
Capital outlay 2,202,000 4,902,061 4,270,128 631,933
Total expenditures 2,202,000 4,902,061 4,319,913 582,148
EXCESS OF REVENUES OVER
EXPENDITURES (2,202,000) (2,527,828) (3,015,023) (487,195)
OTHER FINANCING SOURCES (USES):
Transfers in 2,027,000 4,552,250 4,552,250 -
Transfers out (2,027,000) (4,333,318) (4,333,318) -
Total other financing sources (uses)- 218,932 218,932 -
NET CHANGE IN FUND BALANCE (2,202,000)$ (2,308,896)$ (2,796,091) (487,195)$
FUND BALANCE:
Beginning of Year 34,767,194
End of Year 31,971,103$
City of Cupertino
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual
Capital Improvement Projects Capital Projects Fund
For the Year Ended June 30, 2024
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Environmental Management I Clean Creeks - This fund accounts for all activities related to operating the non-point source
pollution program. A parcel tax provides revenues.
NONMAJOR GOVERNMENTAL FUNDS
All funds not considered as major funds on the Fund Financial Statements are consolidated in one column entitled "Other
Governmental Funds." These non-major funds are identified and included in this supplementary section and includes the
City's Special Revenue Funds and Capital Project Funds.
Storm Drain Improvement - This fund accounts for the construction and maintenance of storm drain facilities including drainage
and sanitary sewer facilities. Revenues were collected from developers as a result of connections to the storm drainage sewer
Park Dedication - This fund accounts for the activity granted by the business and professions code of the State of California in
accordance with the open space and conservation element of the City's General Plan. Revenues of this fund are restricted for
the acquisition, improvement, expansion and implementation of the City's parks and recreation facilities.
SPECIAL REVENUE FUNDS
The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to
expenditures for specified purposes.
Traffic Impact - This fund accounts for development impact fees and related that ensure that new development and
redevelopment projects pay their "fair share" to mitigate traffic impacts.
CAPITAL PROJECTS FUNDS
Capital Projects Funds account for the financial resources committed to the construction or improvement of major facilities.
Stevens Creek Corridor Park Capital Projects Fund -This fund accounts for the design and construction of the Stevens Creek
Corridor Park projects.
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Storm Environmental
Drain Park Management/ Traffic
Improvement Dedication Clean Creeks Impact
ASSETS
Cash and investments 2,179,709$ 19,004,522$ 1,064,837$ 807,874$
Accounts receivable - - 18,249 -
Interest receivable 13,471 118,401 6,607 5,013
Total assets 2,193,180 19,122,923 1,089,693 812,887
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable and accruals - - 121,137 -
Total liabilities - - 121,137 -
Fund balances:
Restricted 2,193,180 19,122,923 968,556 812,887
Assigned - - - -
Total fund balances 2,193,180 19,122,923 968,556 812,887
Total liabilities and fund balances 2,193,180$ 19,122,923$ 1,089,693$ 812,887$
Special Revenue Funds
City of Cupertino
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2024
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Capital Projects
Fund
Total Nonmajor
Stevens Creek Governmental
Corridor Park Funds
ASSETS
Cash and investments 154,548$ 23,211,490$
Accounts receivable - 18,249
Interest receivable - 143,492
Total assets 154,548 23,373,231
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable and accruals - 121,137
Total liabilities - 121,137
Fund balances:
Restricted - 23,097,546
Assigned 154,548 154,548
Total fund balances 154,548 23,252,094
Total liabilities and fund balances 154,548$ 23,373,231$
City of Cupertino
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2024
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Storm Environmental
Drain Park Management/ Traffic
Improvement Dedication Clean Creeks Impact
Revenues:
Taxes 109,283$ 240,000$ -$ -$
Use of money and property 156,175 717,404 44,463 29,122
Charges for services - 7,900 1,500,757 13,658
Fines and forfeitures - - 2,746 -
Other revenue - 2,784 - -
Total revenues 265,458 968,088 1,547,966 42,780
Expenditures:
Current:
Public works - - 1,670,649 -
Capital outlay 1,765,950 93,897 128,895 -
Total expenditures 1,765,950 93,897 1,799,544 -
Excess (deficiency) of revenues over
expenditures (1,500,492) 874,191 (251,578) 42,780
Other financing sources (uses):
Transfers out (300,000) (515,000) - -
Total other financing sources (uses)(300,000) (515,000) - -
Net Change in Fund Balance (1,800,492) 359,191 (251,578) 42,780
Fund balances:
Beginning of year 3,993,672 18,763,732 1,220,134 770,107
End of year 2,193,180$ 19,122,923$ 968,556$ 812,887$
Special Revenue Funds
City of Cupertino
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended June 30, 2024
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Capital Projects
Fund
Total Nonmajor
Stevens Creek Governmental
Corridor Park Funds
Revenues:
Taxes -$ 349,283$
Use of money and property 3,154 950,318
Charges for services - 1,522,315
Fines and forfeitures - 2,746
Other revenue - 2,784
Total revenues 3,154 2,827,446
Expenditures:
Current:
Public works - 1,670,649
Capital outlay 5,949 1,994,691
Total expenditures 5,949 3,665,340
Excess (deficiency) of revenues over
expenditures (2,795) (837,894)
Other financing sources (uses):
Transfers out - (815,000)
Total other financing sources (uses)- (815,000)
Net Change in Fund Balance (2,795) (1,652,894)
Fund balances:
Beginning of year 157,343 24,904,988
End of year 154,548$ 23,252,094$
City of Cupertino
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued)
Nonmajor Governmental Funds
For the Year Ended June 30, 2024
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Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:
Taxes 131,135$ 131,135$ 109,283$ (21,852)$
Use of money and property 51,000 51,000 156,175 105,175
Total revenues 182,135 182,135 265,458 83,323
Expenditures:
Capital outlay - 1,761,800 1,765,950 (4,150)
Total expenditures - 1,761,800 1,765,950 (4,150)
Excess (deficiency) of revenues over
expenditures 182,135 (1,579,665) (1,500,492) 79,173
OTHER FINANCING SOURCES (USES):
Transfers out - (300,000) (300,000) -
Total other financing sources (uses)- (300,000) (300,000) -
NET CHANGE IN FUND BALANCE 182,135$ (1,879,665)$ (1,800,492) 79,173$
Fund balance:
Beginning of year 3,993,672
End of year 2,193,180$
Budgeted Amounts
City of Cupertino
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual
Storm Drain Improvement Special Revenue Fund
For the Year Ended June 30, 2024
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Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:
Taxes -$ -$ 240,000$ 240,000$
Use of money and property 257,000 257,000 717,404 460,404
Charges for services - - 7,900 7,900
Other revenue - - 2,784 2,784
Total Revenues 257,000 257,000 968,088 708,304
Expenditures:
Capital outlay - 1,329,727 93,897 1,235,830
Total Expenditures - 1,329,727 93,897 1,235,830
Excess (deficiency) of revenues over
expenditures 257,000 (1,072,727) 874,191 1,944,134
Other Financing Sources (Uses):
Transfers out (15,000) (515,000) (515,000) -
Total Other Financing Sources (Uses)(15,000) (515,000) (515,000) -
NET CHANGE IN FUND BALANCE 242,000$ (1,587,727)$ 359,191 1,946,918$
FUND BALANCE:
Beginning of year 18,763,732
End of year 19,122,923$
City of Cupertino
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual
For the Year Ended June 30, 2024
Budgeted Amounts
Park Dedication Special Revenue Fund
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Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:
Use of money and property 9,000$ 9,000$ 44,463$ 35,463$
Charges for services 1,498,201 1,498,201 1,500,757 2,556
Fines and forfeitures 3,563 3,563 2,746 (817)
Total Revenues 1,510,764 1,510,764 1,547,966 37,202
Expenditures:
Current:
Public works 2,102,590 1,872,969 1,670,649 202,320
Capital outlay 131,000 131,000 128,895 2,105
Total Expenditures 2,233,590 2,003,969 1,799,544 204,425
NET CHANGE IN FUND BALANCE (722,826)$ (493,205)$ (251,578) 241,627$
FUND BALANCE:
Beginning of year 1,220,134
End of year 968,556$
Budgeted Amounts
City of Cupertino
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual
Environmental Management/Clean Creeks Special Revenue Fund
For the Year Ended June 30, 2024
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Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:
Use of money and property 10,000$ 10,000$ 29,122$ 19,122$
Charges for services - - 13,658 13,658
Total Revenues 10,000 10,000 42,780 32,780
NET CHANGE IN FUND BALANCE 10,000$ 10,000$ 42,780 32,780$
FUND BALANCE:
Beginning of year 770,107
End of year 812,887$
Budgeted Amounts
City of Cupertino
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual
Traffic Impact Special Revenue Fund
For the Year Ended June 30, 2024
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Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues:
Use of money and property -$ -$ 3,154$ 3,154$
Total Revenues - - 3,154 3,154
Expenditures:
Capital outlay - 5,949 5,949 -
Total Expenditures - 5,949 5,949 -
NET CHANGE IN FUND BALANCE -$ (5,949)$ (2,795) 3,154$
FUND BALANCE:
Beginning of year 157,343
End of year 154,548$
Budgeted Amounts
City of Cupertino
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual
Stevens Creek Corridor Park Capital Projects Fund
For the Year Ended June 30, 2024
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NONMAJOR ENTERPRISE FUND
Proprietary funds account for City operations financed and operated in a manner similar to a private business enterprise.
The intent of the City is that the cost of providing goods and services be financed primarily through user charges.
The City has identified the fund below as a nonmajor proprietary fund.
Blackberry Farm Fund - This fund accounts for activities related to operating the City-owned golf course.
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Blackberry
Farm
ASSETS
Current assets:
Cash and investments 934,250$
Accounts receivable 2,534
Interest receivable 5,810
Total current assets 942,594
Noncurrent assets:
Capital assets:
Depreciable, net 139,654
Total capital assets 139,654
Total noncurrent assets 139,654
Total assets 1,082,248
DEFERRED OUTFLOWS OF RESOURCES
Related to pensions 72,668
Related to other postemployment benefit 26,177
Total deferred outflows of resources 98,845
LIABILITIES
Current Liabilities:
Accounts payable and accruals 39,322
Compensated absences, current portion 800
Unearned revenue 112,037
Total current liabilities 152,159
Noncurrent liabilities:
Compensated absences 8,600
Net pension liability 244,034
Net other postemployment benefit liability 10,244
Total noncurrent liabilities 262,878
Total liabilities 415,037
DEFERRED INFLOW OF RESOURCES
Related to pensions 364
Related to other postemployment benefit 8,537
Total deferred inflows of resources 8,901
NET POSITION:
Net investment in capital assets 139,654
Unrestricted 617,501
Total net position 757,155$
City of Cupertino
Combining Statement of Net Position
Nonmajor Enterprise Fund
June 30, 2024
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Blackberry
Farm
OPERATING REVENUES:
Charges for services 611,331$
Others 51,943
Total operating revenues 663,274
OPERATING EXPENSES:
Salaries and benefits 159,565
Materials and supplies 225,497
Contractual services 272,995
Depreciation 15,390
Total operating expenses 673,447
OPERATING INCOME (LOSS)(10,173)
NONOPERATING REVENUES:
Investment income 33,269
Loss on sale of capital asset (341)
Total nonoperating revenues 32,928
CHANGES IN NET POSITION 22,755
NET POSITION:
Beginning of year 734,400
End of year 757,155$
City of Cupertino
Combining Statement of Revenues, Expenses, and Changes in Net Position
Nonmajor Enterprise Fund
For the Year Ended June 30, 2024
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Farm
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers 682,383$
Cash paid to suppliers for goods and services (478,146)
Cash paid to employees for services (197,523)
Net cash provided by operating activities 6,714
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Acquisition of capital assets -
Net cash provided capital and related
financing activities -
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received 30,595
Net cash provided by investing activities 30,595
Net change in cash and cash equivalents 37,309
RECONCILIATION OF CASH AND CASH EQUIVALENTS
TO STATEMENTOF NET POSITION:
Beginning of year 896,941
End of year 934,250$
CASH AND CASH EQUIVALENTS:
Cash and investments 934,250$
Total cash and cash equivalents 934,250$
Reconciliation of Operating Income (Loss) to
to Net Cash Provided by Operating Activities:
Operating income (loss)(10,173)$
Adjustments to reconcile operating income (loss)
to net cash provided by (used in) operating activities:
Depreciation 15,390
Changes in assets and liabilities:
(Increase)/decrease in accounts receivables (705)
(Increase)/decrease in deferred outflows of resources pension related 28,838
(Increase)/decrease in deferred outflows of resources other postemployment benefit liabilities related (7,698)
Increase/(decrease) in accounts payable 20,346
Increase/(decrease) in unearned revenue 19,814
Increase/(decrease) in compensated absences (215)
Increase/(decrease) in net pension liability (68,675)
Increase/(decrease) in net other postemployment benefit liabilities 8,501
Increase/(decrease) in deferred inflows of resources pension related (405)
Increase/(decrease) in deferred inflows of resources other postemployment benefit liabilities related 1,696
Net cash provided by operating activities 6,714$
NONCASH ITEMS:
Loss on sale of capital assets (341)
For the Year Ended June 30, 2024
City of Cupertino
Combining Statement of Cash Flows
Nonmajor Enterprise Fund
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Compensated Absences and Long-Term Disability -Accounts for accrued leave payouts and the City's long term disability
insurance program.
Retiree Medical - Accounts for funds set-aside for other post-employment retirement benefits.
Equipment Revolving -Accounts for the activities related to the maintenance and replacement of the City's vehicle fleet and other
equipment.
INTERNAL SERVICE FUNDS
These funds account for goods or services provided to other departments of the City where the intent of the City is that the costs of
these goods or services are to be recovered through interdepartmental charges at the time that the goods are delivered or the services
rendered to those departments.
The concept of major funds does not extend to internal service funds because they do not do business with outside parties. For the
Statement of Activities, the net revenues or expenses of each internal service fund are eliminated by netting them against the
operations of the City departments that generated them. The remaining balance sheet items are consolidated with these same funds
in the Statement of Net Position. However, internal service funds are still presented separately in the Fund financial statements.
Information Technology -Accounts for the activities related to the maintenance and replacement of the City's technology
infrastructure.
Workers’ Compensation - This fund is used to account for all expenses relating to workers’ compensation (i.e., injury claims,
insurance premiums, etc.). The costs are recovered through an annual “user fee” which is charged to all departments/funds that have
employees.
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Information Workers' Equipment
Technology Compensation Revolving
ASSETS
Current assets:
Cash and investments 3,168,807$ 3,564,772$ 1,144,531$
Account receivable - - -
Interest receivable 19,663 22,082 10,265
Prepaid expense 4,680 - -
Total current assets 3,193,150 3,586,854 1,154,796
Noncurrent assets:
Capital assets:
Nondepreciable 5,031 - 187,894
Depreciable and amortizable, net 598,925 - 1,968,363
Total capital assets 603,956 - 2,156,257
Total noncurrent assets 603,956 - 2,156,257
Total assets 3,797,106 3,586,854 3,311,053
DEFERRED INFLOW OF RESOURCES
Related to pensions 919,238 20,665 215,930
Related to other postemployment benefit liability 282,941 3,209 94,901
Total deferred outflows of resources 1,202,179 23,874 310,831
Current Liabilities:
Accounts payable and accruals 153,652 - 19,426
Accrued payroll and benefits - - 72
Due to other funds - - -
Compensated absences, due within one year 32,220 1,353 4,548
Claims payable, due within one year - 232,000 -
Subscription liabilities, due within one year 68,110 - -
Lease liabilities, due within one year - - 6,808
Total current liabilities 253,982 233,353 30,854
Noncurrent liabilities:
Compensated absences, due more than one year 326,987 13,728 46,154
Claims payable, due more than one year - 1,041,000 -
Subscription liabilities, due more than one year 29,111 - -
Lease liabilities, due more than one year - - 8,561
Net pension liability 3,087,004 69,396 725,141
Net other postemployment benefit liability 110,727 1,256 37,139
Total noncurrent liabilities 3,553,829 1,125,380 816,995
Total liabilities 3,807,811 1,358,733 847,849
DEFERRED INFLOW OF RESOURCES
Related to pensions 4,601 103 1,081
Related to other postemployment benefit liability 92,279 1,047 30,951
Total deferred inflows of resources 96,880 1,150 32,032
NET POSITION:
Net investment in capital assets 506,735 - 2,140,888
Restricted for other postemployment benefit 79,935 906 26,811
Unrestricted (deficit) 507,924 2,249,939 574,304
Total net position 1,094,594$ 2,250,845$ 2,742,003$
City of Cupertino
Combining Statement of Net Position
Internal Service Funds
June 30, 2024
LIABILITIES
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Absences and
Long-Term Retiree
Disability Medical Total
ASSETS
Current assets:
Cash and investments 451,528$ -$ 8,329,638$
Account receivable - 1,387,959 1,387,959
Interest receivable 3,900 - 55,910
Prepaid expense - - 4,680
Total current assets 455,428 1,387,959 9,778,187
Noncurrent assets:
Capital assets:
Nondepreciable - - 192,925
Depreciable and amortizable, net - - 2,567,288
Total capital assets - - 2,760,213
Total noncurrent assets - - 2,760,213
Total assets 455,428 1,387,959 12,538,400
DEFERRED INFLOW OF RESOURCES
Related to pensions - - 1,155,833
Related to other postemployment benefit liability - - 381,051
Total deferred outflows of resources - - 1,536,884
Current Liabilities:
Accounts payable and accruals - - 173,078
Accrued payroll and benefits - - 72
Due to other funds - 1,401,947 1,401,947
Compensated absences, due within one year - - 38,121
Claims payable, due within one year - - 232,000
Subscription liabilities, due within one year - - 68,110
Lease liabilities, due within one year - - 6,808
Total current liabilities - 1,401,947 1,920,136
Noncurrent liabilities:
Compensated absences, due more than one year - - 386,869
Claims payable, due more than one year - - 1,041,000
Subscription liabilities, due more than one year - - 29,111
Lease liabilities, due more than one year - - 8,561
Net pension liability - - 3,881,541
Net other postemployment benefit liability - - 149,122
Total noncurrent liabilities - - 5,496,204
Total liabilities - 1,401,947 7,416,340
DEFERRED INFLOW OF RESOURCES
Related to pensions - - 5,785
Related to other postemployment benefit liability - - 124,277
Total deferred inflows of resources - - 130,062
NET POSITION:
Net investment in capital assets - - 2,647,623
Restricted for other postemployment benefit - - 107,652
Unrestricted (deficit) 455,428 (13,988) 3,773,607
Total net position 455,428$ (13,988)$ 6,528,882$
LIABILITIES
City of Cupertino
Combining Statement of Net Position (Continued)
Internal Service Funds
June 30, 2024
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Information Workers' Equipment
Technology Compensation Revolving
OPERATING REVENUES:
Charges for services 2,546,858$ -$ 1,523,066$
Other 5,377 38,356 262
Total operating revenues 2,552,235 38,356 1,523,328
OPERATING EXPENSES:
Salaries and benefits 2,477,519 45,676 488,818
Materials and supplies 1,303,771 29,295 278,162
Contractual services 400,552 - 104,121
Insurance and claims and premium - - -
Depreciation and amortization 200,553 - 450,115
Total operating expenses 4,382,395 74,971 1,321,216
OPERATING INCOME (LOSS)(1,830,160) (36,615) 202,112
NONOPERATING REVENUES (EXPENSES):
Investment income 134,857 147,234 26,776
Gain on sale of capital assets 289 - 30,750
Interest expense (4,105) - -
Total nonoperating revenues 131,041 147,234 57,526
(1,699,119) 110,619 259,638
TRANSFERS:
Transfers in 1,037,684 - -
Transfers out (76,000) - -
Total transfers 961,684 - -
CHANGES IN NET POSITION (737,435) 110,619 259,638
NET POSITION (DEFICIT):
Beginning of year 1,832,029 2,140,226 2,482,365
End of year 1,094,594$ 2,250,845$ 2,742,003$
INCOME (LOSS) BEFORE TRANSFERS
City of Cupertino
Combining Statement of Revenues, Expenses, and Changes in Net Position
Internal Service Funds
For the Year Ended June 30, 2024
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Compensated
Absences and
Long-Term Retiree
Disability Medical Total
OPERATING REVENUES:
Charges for services 101,932$ -$ 4,171,856$
Other - 1,387,959 1,431,954
Total operating revenues 101,932 1,387,959 5,603,810
OPERATING EXPENSES:
Salaries and benefits - 1,387,959 4,399,972
Materials and supplies 6,471 13,988 1,631,687
Contractual services - - 504,673
Insurance and claims and premium 764,574 - 764,574
Depreciation and amortization - - 650,668
Total operating expenses 771,045 1,401,947 7,951,574
OPERATING INCOME (LOSS)(669,113) (13,988) (2,347,764)
NONOPERATING REVENUES (EXPENSES):
Investment income 32,216 - 341,083
Gain on sale of capital assets - - 31,039
Interest expense - - (4,105)
Total nonoperating revenues 32,216 - 368,017
(636,897) (13,988) (1,979,747)
TRANSFERS:
Transfers in 380,000 - 1,417,684
Transfers out - - (76,000)
Total transfers 380,000 - 1,341,684
CHANGES IN NET POSITION (256,897) (13,988) (638,063)
NET POSITION:
Beginning of year 712,325 - 7,166,945
End of year 455,428$ (13,988)$ 6,528,882$
INCOME (LOSS) BEFORE TRANSFERS
City of Cupertino
Combining Statement of Revenues, Expenses, and Changes in Net Position (Continued)
Internal Service Funds
For the Year Ended June 30, 2024
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Information Workers' Equipment
Technology Compensation Revolving
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers and users 2,552,235$ 38,356$ 1,523,328$
Cash paid to suppliers for goods and services (1,627,301) (29,295) (441,384)
Cash paid to employees for services (2,137,110) (43,120) (484,258)
Cash paid for insurance claims - (381,000) -
Net cash provided by (used in) operating activities (1,212,176) (415,059) 597,686
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:
Cash received (paid) from other funds 961,684 - -
Net cash provided by (used in) noncapital financing activities 961,684 - -
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Acquisition of capital assets (5,031) - (427,736)
Principal paid (135,606) - (18,739)
Interest paid (4,105) - -
Proceeds from sale of capital assets - - 30,750
Net cash (used in) capital and related
financing activities (144,742) - (415,725)
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest earnings 126,928 138,581 21,381
Net cash provided by (used in) investing activities 126,928 138,581 21,381
Net change in cash and cash equivalents (268,306) (276,478) 203,342
CASH AND CASH EQUIVALENTS:
Beginning of year 3,437,113 3,841,250 941,189
End of year 3,168,807$ 3,564,772$ 1,144,531$
(Continued)
City of Cupertino
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2024
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Compensated
Absences and
Long-Term Retiree
Disability Medical Total
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers and users 101,932$ 1,385,759$ 5,601,610$
Cash paid to suppliers for goods and services (771,045) (13,988) (2,883,013)
Cash paid to employees for services - (1,387,959) (4,052,447)
Cash paid for insurance claims - - (381,000)
Net cash provided by (used in) operating activities - (669,113) (16,188) (1,714,850)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:
Cash received (paid) from other funds 380,000 6,290 1,347,974
Net cash provided by (used in) noncapital financing activities 380,000 6,290 1,347,974
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:
Acquisition of capital assets - - (432,767)
Principal paid - - (154,345)
Interest paid - - (4,105)
Proceeds from sale of capital assets - - 30,750
Net cash (used in) capital and related
financing activities - - (560,467)
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest earnings 31,077 - 317,967
Net cash provided by (used in) investing activities 31,077 - 317,967
Net change in cash and cash equivalents (258,036) (9,898) (609,376)
CASH AND CASH EQUIVALENTS:
Beginning of year 709,564 9,898 8,939,014
End of year 451,528$ -$ 8,329,638$
(Continued)
City of Cupertino
Combining Statement of Cash Flows (Continued)
Internal Service Funds
For the Year Ended June 30, 2024
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Information Workers' Equipment
Technology Compensation Revolving
Reconciliation of Operating Income (Loss) to
to Net Cash Provided by (used in) Operating Activities:
Operating income (loss)(1,830,160)$ (36,615)$ 202,112$
Adjustments to reconcile operating income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization 200,553 - 450,115
Changes in assets and liabilities:
(Increase)/decrease in account receivable - - -
(Increase)/decrease in prepaid expense (4,680) - -
(Increase)/decrease in deferred outflows of resources related to pensions 16,066 2,899 37,835
(Increase)/decrease in deferred outflows of resources related
to other postemployment benefit 28,805 119 669
Increase/(decrease) in accounts payable 81,702 - (59,101)
Increase/(decrease) in compensated absences 34,213 2,054 (167)
Increase/(decrease) in claims payable - (381,000) -
Increase/(decrease) in net pension liabilities 205,614 (3,197) (56,632)
Increase/(decrease) in other postemployment benefit liabilities 81,321 942 28,124
Increase/(decrease) in deferred inflows of resources related to pensions (2,487) (76) (842)
Increase/(decrease) in deferred inflows of resources related
to other postemployment benefit (23,123) (185) (4,427)
Net cash provided by (used in) operating activities (1,212,176)$ (415,059)$ 597,686$
NONCASH ITEMS:
Acquisition of right to use intangible assets 51,199$ -$ 34,108$
Issuance of lease and subscription liabilities 51,199$ -$ 34,108$
Termination of subscription liabilities 16,866$ -$ -$
For the Year Ended June 30, 2024
City of Cupertino
Combining Statement of Cash Flows (Continued)
Internal Service Funds
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Compensated
Absences and
Long-Term Retiree
Reconciliation of Operating Income (Loss) to Disability Medical Total
to Net Cash Provided by (used in) Operating Activities:
Operating income (loss)(669,113)$ (13,988)$ (2,347,764)$
Adjustments to reconcile operating income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization - - 650,668
Changes in assets and liabilities:
(Increase)/decrease in account receivable - (2,200) (2,200)
(Increase)/decrease in prepaid expense - - (4,680)
(Increase)/decrease in deferred outflows of resources related to pensions - - 56,800
(Increase)/decrease in deferred outflows of resources related
to other postemployment benefit - - 29,593
Increase/(decrease) in accounts payable - - 22,601
Increase/(decrease) in compensated absences - - 36,100
Increase/(decrease) in claims payable - - (381,000)
Increase/(decrease) in net pension liabilities - - 145,785
Increase/(decrease) in other postemployment benefit liabilities - - 110,387
(Increase)/decrease in deferred inflows of resources related to pensions - - (3,405)
Increase/(decrease) in deferred inflows of resources related
to other postemployment benefit - - (27,735)
Net cash provided by (used in) operating activities (669,113)$ (16,188)$ (1,714,850)$
NONCASH ITEMS:
Acquisition of right to use intangible assets -$ -$ 85,307$
Issuance of lease and subscription liabilities -$ -$ 85,307$
Termination of subscription liabilities -$ -$ 16,866$
For the Year Ended June 30, 2024
City of Cupertino
Combining Statement of Cash Flows (Continued)
Internal Service Funds
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STATISTICAL SECTION
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Contents:Pages
146-155
157-161
162-165
166-167
169-173
Financial Trends - These schedules contain trend information to help the reader understand how
the City's financial performance and well-being have changed over time.
Revenue Capacity - These schedules contain information to help the reader assess the City's most
significant local revenue source, the property tax.
Debt Capacity - These schedules present information to help the reader assess the affordability of
the City's current level of outstanding debt and the City's ability to issue additional debt in the
future.
Demographic and Economic Information - These schedules offer demographics and economic
indicators to help the reader understand the environment within which the City's financial activities
take place.
Operating Information - These schedules contain service and infrastructure data to help the
reader understand how the information in the City's financial report related to the services the City
provides and activities it performs.
This part of the City of Cupertino's annual comprehensive financial report presents detailed information as a
context for understanding what the information in the financial statements, note disclosures, and required
supplementary information say about the government's overall financial health.
City of Cupertino
Description of Statistical Section Contents
June 30, 2024
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2015 2016 2017 2018 2019
Government activities:
Net investment in capital assets 131,425,677$ 148,168,074$ 153,239,534$ 167,606,366$ 170,973,897$
Restricted 38,327,705 34,861,807 34,991,692 32,073,195 45,405,508
Unrestricted 51,003,950 51,164,063 59,385,309 50,457,871 51,190,017
Total governmental activities net position 220,757,332$ 234,193,944$ 247,616,535$ 250,137,432$ 267,569,422$
Business-type activities:
Net investment in capital assets 2,079,561$ 1,708,183$ 1,972,169$ 1,597,700$ 1,318,744$
Restricted - - - - -
Unrestricted 6,604,578 7,375,444 9,092,584 8,051,015 6,737,758
Total business-type activities net position 8,684,139$ 9,083,627$ 11,064,753$ 9,648,715$ 8,056,502$
Primary government:
Net investment in capital assets 133,505,238$ 149,876,257$ 155,211,703$ 169,204,066$ 172,292,641$
Restricted 38,327,705 34,861,807 34,991,692 32,073,195 45,405,508
Unrestricted 57,608,528 58,539,507 68,477,893 58,508,886 57,927,775
Total primary government net position 229,441,471$ 243,277,571$ 258,681,288$ 259,786,147$ 275,625,924$
City of Cupertino
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
Source: Department of Administrative Services, City of Cupertino.
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2020 2021 2022*2023 2024
Government activities:
Net investment in capital assets 177,128,134$ 186,503,116$ 196,915,823$ 198,450,441$ 202,961,106$
Restricted 48,005,800 53,711,040 69,354,217 69,129,277 71,760,460
Unrestricted 66,493,336 83,458,299 93,613,909 120,529,242 139,796,828
Total governmental activities net position 291,627,270$ 323,672,455$ 359,883,949$ 388,108,960$ 414,518,394$
Business-type activities:
Net investment in capital assets 1,118,882$ 2,090,530$ 2,089,569$ 2,109,592$ 2,009,420$
Restricted - - 166,607 166,689 106,718
Unrestricted 8,134,944 9,374,129 8,422,930 8,148,256 7,742,441
Total business-type activities net position 9,253,826$ 11,464,659$ 10,679,106$ 10,424,537$ 9,858,579$
Primary government:
Net investment in capital assets 178,247,016$ 188,593,646$ 199,005,392$ 200,560,033$ 204,970,526$
Restricted 48,005,800 53,711,040 69,520,824 69,295,966 71,867,178
Unrestricted 74,628,280 92,832,428 102,036,839 128,677,498 147,539,269
Total primary government net position 300,881,096$ 335,137,114$ 370,563,055$ 398,533,497$ 424,376,973$
* 2022 restricted and unrestricted net positions are restated as result of a prior period adjustment
City of Cupertino
Net Position by Component (Continued)
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
Source: Department of Administrative Services, City of Cupertino.
147
FINAL
DRAF
T
11.22.
2
0
2
4
174
2015 2016 2017 2018 2019
Expenses:
Governmental Activities:
Administration 3,286,919$ 3,710,388$ 2,873,744$ 5,612,733$ 6,849,046$
Law enforcement 10,705,328 11,316,271 12,528,328 12,674,042 13,381,113
Innovation and technology 649,442 575,260 1,884,165 3,244,846 3,210,343
Administrative services 4,300,336 2,994,611 5,898,479 4,415,647 4,290,818
Recreation services 5,365,282 5,758,194 10,651,557 9,352,551 7,389,915
Community development 5,976,797 6,259,734 13,775,591 16,789,351 10,470,973
Public works 27,893,361 31,313,396 32,491,244 28,995,382 31,870,165
Interest on long-term debt 1,120,138 1,077,538 1,035,738 993,038 949,438
Total governmental activities expenses 59,297,603 63,005,392 81,138,846 82,077,590 78,411,811
Business-type activities:
Resources recovery 2,548,461$ 2,997,200$ 2,991,177$ 2,594,511$ 1,735,885$
Blackberry farm 547,185 576,177 597,406 656,112 645,469
Cupertino sports center 2,269,420 2,299,210 2,159,243 2,633,748 3,036,037
Recreation programs 2,342,457 3,136,011 2,351,501 3,232,593 2,923,336
Total business-type activities expenses 7,707,523 9,008,598 8,099,327 9,116,964 8,340,727
Total primary government expenses 67,005,126$ 72,013,990$ 89,238,173$ 91,194,554$ 86,752,538$
Program revenues:
Governmental activities:
Charges for services:
Administration 322,534$ 369,069$ 3,992,716$ 5,062,988$ 1,319,395$
Law enforcement 590,378 664,483 603,194 732,544 889,923
Innovation and technology 41,352 41,352 - - -
Administrative services 481,616 359,148 3,565,627 2,635,885 3,113,731
Recreation services 1,798,134 1,421,185 2,016,159 1,589,134 1,563,262
Community development 8,511,745 10,534,457 10,902,822 8,598,935 7,470,690
Public works 2,869,357 6,358,870 6,873,487 4,720,646 4,504,104
Operating grants and contributions 6,002,617 1,851,282 2,313,632 4,819,696 2,557,470
Capital grants and contributions 4,022,190 362,491 245,288 271,587 1,082,243
Total governmental activities program revenues 24,639,923 21,962,337 30,512,925 28,431,415 22,500,818
Business-type activities:
Charges for services:
Resources recovery 2,591,276$ 2,664,888$ 2,792,190$ 2,559,862$ 1,750,279$
Blackberry farm 388,091 334,529 325,224 345,667 316,615
Cupertino sports center 2,152,498 2,224,146 2,238,023 2,403,665 2,349,468
Recreation programs 2,532,800 2,466,336 2,778,588 2,516,678 1,986,781
Total business-type activities program revenues 7,664,665 7,689,899 8,134,025 7,825,872 6,403,143
Total primary government program revenues 32,304,588$ 29,652,236$ 38,646,950$ 36,257,287$ 28,903,961$
Fiscal Year
City of Cupertino
Changes in Net Position - Expenses and Program Revenues
Last Ten Fiscal Years
(accrual basis of accounting)
Source: Department of Administrative Services, City of Cupertino.
148
FINAL
DRAF
T
11.22.
2
0
2
4
175
2020 2021 2022 2023 2024
Expenses:
Governmental Activities:
Administration 7,974,520$ 3,637,467$ 7,293,244$ 8,830,127$ 9,069,311$
Law enforcement 14,698,130 15,211,646 16,100,903 15,716,301 16,682,075
Innovation and technology 3,637,354 1,721,729 2,004,515 1,950,718 3,127,436
Administrative services 5,175,596 5,358,183 5,363,745 6,363,343 8,165,843
Recreation services 8,763,194 1,182,662 3,976,793 6,020,526 7,194,533
Community development 10,286,317 11,495,788 12,209,547 12,463,257 13,696,180
Public works 33,339,191 41,870,240 35,653,588 38,696,234 36,547,118
Interest on long-term debt 882,837 397,682 636,960 369,502 304,972
Total governmental activities expenses 84,757,139 80,875,397 83,239,295 90,410,008 94,787,468
Business-type activities:
Resources recovery 2,213,404$ 1,670,261$ 1,837,781$ 2,038,313 2,227,782
Blackberry farm 663,663 535,274 655,184 799,168 3,113,577
Cupertino sports center 2,883,903 2,182,900 3,396,146 3,456,539 2,393,886
Recreation programs 3,141,225 1,117,244 1,617,717 1,661,686 673,788
Total business-type activities expenses 8,902,195 5,505,679 7,506,828 7,955,706 8,409,033
Total primary government expenses 93,659,334$ 86,381,076$ 90,746,123$ 98,365,714$ 103,196,501$
Program revenues:
Governmental activities:
Charges for services:
Administration 2,091,811$ 2,387,412$ 2,551,205$ 3,098,916$ 1,370,548$
Law enforcement 1,102,888 550,051 940,797 612,993 739,408
Innovation and technology ---- -
Administrative services 3,889,180 5,232,679 7,457,032 5,419,347 6,642,671
Recreation services 1,309,906 264,426 653,994 621,587 811,979
Community development 5,859,847 5,736,587 5,768,850 5,361,837 5,549,943
Public works 5,657,315 3,966,206 4,015,183 3,290,506 3,507,250
Operating grants and contributions 5,794,443 5,998,209 7,601,210 10,881,438 4,685,153
Capital grants and contributions 1,046,756 1,792,376 1,282,617 1,593,910 3,665,581
Total governmental activities program revenues 26,752,146 25,927,946 30,270,888 30,880,534 26,972,533
Business-type activities:
Charges for services:
Resources recovery 1,821,677$ 1,819,861$ 1,545,683$ 1,772,252$ 2,363,496$
Blackberry farm 338,212 610,603 602,778 616,461 2,362,677
Cupertino sports center 2,365,667 1,810,194 2,796,329 3,117,580 2,039,338
Recreation programs 1,588,576 590,871 1,294,128 1,742,442 663,274
Total business-type activities program revenues 6,114,132 4,831,529 6,238,918 7,248,735 7,428,785
Total primary government program revenues 32,866,278$ 30,759,475$ 36,509,806$ 38,129,269$ 34,401,318$
City of Cupertino
Changes in Net Position - Expenses and Program Revenues (Continued)
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
Source: Department of Administrative Services, City of Cupertino.
149
FINAL
DRAF
T
11.22.
2
0
2
4
176
2015 2016 2017 2018 2019
Net revenues (expenses):
Governmental activities (34,657,680)$ (41,043,055)$ (50,625,921)$ (53,646,175)$ (55,910,993)$
Business-type activities (42,858) (1,318,699) 34,698 (1,291,092) (1,937,584)
Total net revenues (expenses)(34,700,538)$ (42,361,754)$ (50,591,223)$ (54,937,267)$ (57,848,577)$
General revenues and Transfers
Governmental activities:
Taxes:
Property taxes - 11,864,027$ 13,251,840$ 14,881,533$ 17,082,005$
Property taxes in lieu of motor vehicle fee - 6,330,436 6,967,237 7,552,272 8,219,090
Sales taxes - 21,350,056 26,932,012 26,164,531 24,901,779
Transient occupancy tax - 5,852,244 6,023,681 6,810,718 8,901,337
Utility user taxes - 3,370,830 3,082,407 3,146,398 3,089,922
Franchise taxes - 3,478,024 3,409,572 3,563,820 3,445,253
Other taxes - 2,818,019 3,258,118 1,943,652 3,299,587
Intergovernmental - 24,111 26,118 31,013 28,844
Investment earnings (loss)40,751 807,287 694,730 916,638 3,258,550
Miscellaneous (2) 219,053 2,004,906 1,834,492 1,187,741
Gain on sale of capital assets 23,715,897 580 - 740,570 3,875
Transfers - fund closing1 -- 272,011 --
Transfers 872,340 (1,635,000) (1,874,120) 107,030 (75,000)
Total governmental activities 24,628,986 54,479,667 64,048,512 67,692,667 73,342,983
Business-type activities:
Investment earnings 42,561 82,187 59,012 75,663 270,371
Transfers (872,340) 1,635,000 1,874,120 (107,030) 75,000
Total business-type activities (829,779) 1,717,187 1,933,132 (31,367) 345,371
Total primary government 23,799,207$ 56,196,854$ 65,981,644$ 67,661,300$ 73,688,354$
Changes in net position
Governmental activities (10,028,694)$ 13,436,612$ 13,422,591$ 14,046,492$ 17,431,990$
Business-type activities (872,637) 398,488 1,967,830 (1,322,459) (1,592,213)
Total primary government (10,901,331)$ 13,835,100$ 15,390,421$ 12,724,033$ 15,839,777$
1 Asset and liability transfer from the closed City Channel/Web Internal Service Fund in 2017.
City of Cupertino
Fiscal Year
(accrual basis of accounting)
Last Ten Fiscal Years
Changes in Net Position - Expenses and Program Revenues (Continued)
Source: Department of Administrative Services, City of Cupertino.
150
FINAL
DRAF
T
11.22.
2
0
2
4
177
2020 2021 2022 2023 2024
Net revenues (expenses):
Governmental activities (58,004,993)$ (54,947,451)$ (52,968,407)$ (59,529,474)$ (67,814,935)$
Business-type activities (2,788,063) (674,150) (1,267,910) (706,971) (980,248)
Total net revenues (expenses)(60,793,056)$ (55,621,601)$ (54,236,317)$ (60,236,445)$ (68,795,183)$
General revenues and Transfers
Governmental activities:
Taxes:
Property taxes 18,117,304$ 19,197,994$ 20,322,779$ 21,807,628$ 22,494,293$
Property taxes in lieu of motor vehicle fee 8,489,541 9,079,845 9,401,632 10,082,011 10,542,559
Sales taxes 35,657,214 42,581,070 43,646,813 34,819,341 30,961,166
Transient occupancy tax 7,286,083 2,141,058 4,404,958 7,062,150 6,906,722
Utility user taxes 3,182,086 3,074,358 3,356,389 4,103,906 3,935,917
Franchise taxes 3,418,908 3,368,286 3,479,554 3,995,018 4,313,669
Other taxes 1,774,235 3,022,333 11,117,528 2,872,571 1,970,611
Intergovernmental 47,391 43,675 67,762 62,072 74,801
Investment earnings (loss)5,690,723 4,147,907 (9,241,781) 2,801,930 11,562,914
Miscellaneous 1,922,356 3,185,110 1,948,332 444,339 1,441,717
Gain on sale of capital assets ---- -
Transfers - fund closing1 ---- -
Transfers (3,523,000) (2,849,000) (886,801) (296,481) 20,000
Total governmental activities 82,062,841 86,992,636 87,617,165 87,754,485 94,224,369
Business-type activities:
Investment earnings 462,387 35,983 (404,444) 155,921 434,290
Transfers 3,523,000 2,849,000 886,801 296,481 (20,000)
Total business-type activities 3,985,387 2,884,983 482,357 452,402 414,290
Total primary government 86,048,228$ 89,877,619$ 88,099,522$ 88,206,887$ 94,638,659$
Changes in net position
Governmental activities 24,057,848$ 32,045,185$ 34,648,758$ 28,225,011$ 26,409,434$
Business-type activities 1,197,324 2,210,833 (785,553) (254,569) (565,958)
Total primary government 25,255,172$ 34,256,018$ 33,863,205$ 27,970,442$ 25,843,476$
City of Cupertino
Changes in Net Position - Expenses and Program Revenues (Continued)
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
Source: Department of Administrative Services, City of Cupertino.
151
FINAL
DRAF
T
11.22.
2
0
2
4
178
2015 2016 2017 2018 2019(1)
General fund:
Nonspendable 938,245$ 937,381$ 876,939$ 464,893$ 454,188$
Restricted 761,653 888,374 1,016,771 1,254,578 9,469,670
Committed - - 19,000,000 19,122,754 19,123,397
Assigned 28,849,679 20,500,000 4,638,181 9,963,310 1,979,202
Unassigned 8,774,966 29,869,085 28,057,799 21,704,922 27,896,128
Total general fund 39,324,543$ 52,194,840$ 53,589,690$ 52,510,457$ 58,922,585$
All other governmental funds:
Nonspendable -----
Restricted 37,566,052 33,973,433 33,974,921 30,818,617 35,935,838
Committed 1,398,665 1,398,665 1,398,665 - -
Assigned 20,671,116 15,344,191 25,305,974 29,129,616 33,211,946
Unassigned - - - - -
Total all other governmental funds 59,635,833$ 50,716,289$ 60,679,560$ 59,948,233$ 69,147,784$
Total Governmental Funds 98,960,376$ 102,911,129$ 114,269,250$ 112,458,690$ 128,070,369$
1The City established a trust to fund Other Post-Employment Benefit contributions, which is classified as a restriction in fund balance.
City of Cupertino
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
Source: Department of Administrative Services, City of Cupertino.
152
FINAL
DRAF
T
11.22.
2
0
2
4
179
2020 2021 2022(1)2023 2024
General fund:
Nonspendable 3,449,341$ 3,444,346$ 4,055,956$ 4,000,588$ 3,449,814$
Restricted 14,324,757 20,140,419 18,756,482 19,088,859 23,241,194
Committed 19,127,891 19,127,891 34,127,891 34,127,891 108,627,891
Assigned 3,176,882 4,906,139 5,041,682 9,735,187 4,741,474
Unassigned 34,426,942 49,231,996 48,696,821 71,603,813 26,034,946
Total general fund 74,505,813$ 96,850,791$ 110,678,832$ 138,556,338$ 166,095,319$
All other governmental funds:
Nonspendable ----$ -$
Restricted 33,681,043 33,570,621 51,106,343 46,828,676 47,836,410
Committed ---- -
Assigned 40,551,131 37,038,174 35,088,889 34,924,537 32,125,651
Unassigned - - -- -
Total all other governmental funds 74,232,174$ 70,608,795$ 86,195,232$ 81,753,213$ 79,962,061$
Total Governmental Funds 148,737,987$ 167,459,586$ 196,874,064$ 220,309,551$ 246,057,380$
12022 balances were restated due to prior period adjustments.
City of Cupertino
Fund Balances of Governmental Funds (Continued)
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
Source: Department of Administrative Services, City of Cupertino.
153
FINAL
DRAF
T
11.22.
2
0
2
4
180
2015 2016 2017 2018 2019
Revenues:
Taxes 55,134,238$ 55,462,956$ 62,924,867$ 64,062,924$ 68,938,973$
Use of money and property 915,933 1,654,702 1,425,629 1,543,818 3,896,813
Intergovernmental 7,210,562 2,532,025 2,585,038 5,122,296 3,668,557
Licenses and permits 3,170,445 3,073,110 2,536,925 2,757,928 4,102,665
Charges for services 5,203,371 17,249,123 24,103,167 15,638,247 13,385,698
Fines and forfeitures 554,002 564,903 603,194 602,934 534,012
Other 542,429 1,289,013 2,004,904 1,834,492 1,187,741
Total revenues 72,730,980 81,825,832 96,183,724 91,562,639 95,714,459
Expenditures:
Current:
Administration 3,897,701 4,053,741 5,942,633 4,943,052 6,294,111
Law enforcement 10,283,772 10,988,735 11,939,095 12,362,621 13,108,732
Innovation and technology 624,295 544,718 1,864,746 2,835,768 2,843,540
Administrative services 3,226,164 2,811,117 5,054,539 4,430,300 4,197,582
Recreation services 5,047,548 5,441,200 9,361,934 8,686,076 8,996,118
Community development 5,180,659 6,102,820 7,431,292 12,907,086 9,359,835
Public works 14,625,038 15,078,174 18,623,585 18,191,714 19,955,579
Capital outlay:21,760,899 26,171,127 18,731,165 23,395,112 10,528,246
Debt service:
Principal repayment 2,055,000 2,090,000 2,135,000 2,180,000 2,220,000
Interest and fiscal charges 1,120,138 1,077,538 1,035,738 993,038 949,438
Total expenditures 67,821,214 74,359,170 82,119,727 90,924,767 78,453,181
Excess of revenues over (under) expenditures 4,909,766 7,466,662 14,063,997 637,872 17,261,278
Other financing sources (uses):
Proceeds from debt issuance -----
Proceeds from debt issuance premium -----
Payments to refunding agent -----
Proceeds from sale of capital assets 23,814,257 580 - 872,250 3,875
Inception of subscription liability - - - - -
Transfers in 39,408,990 11,905,724 26,446,090 31,028,218 19,407,613
Transfers in - fund closing -- 260,374 --
Transfers out (39,177,284) (15,422,213) (29,412,340) (34,348,900) (21,061,087)
Total other financing sources (uses)24,045,963 (3,515,909) (2,705,876) (2,448,432) (1,649,599)
Net change in fund balances 28,955,729$ 3,950,753$ 11,358,121$ (1,810,560)$ 15,611,679$
Debt service as a percentage of
noncapital expenditures 0.00%6.57%5.00%4.70%4.67%
Fiscal Year
City of Cupertino
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Source: Department of Administrative Services, City of Cupertino.
154
FINAL
DRAF
T
11.22.
2
0
2
4
181
2020 2021 2022 2023 2024
Revenues:
Taxes 77,925,371$ 82,464,944$ 95,729,653$ 84,233,345$ 80,705,015$
Use of money and property 6,259,342 4,447,970 (8,501,439) 3,422,106 11,802,313
Intergovernmental 6,888,590 7,834,260 8,951,589 11,869,664 6,841,474
Licenses and permits 4,692,847 4,068,238 4,141,902 4,093,631 4,412,057
Charges for services 13,937,950 13,601,302 16,373,903 12,741,952 13,833,034
Fines and forfeitures 344,008 134,459 373,722 326,944 419,148
Other 1,922,356 3,185,110 1,948,332 1,393,059 2,418,780
Total revenues 111,970,464 115,736,283 119,017,662 118,080,701 120,431,821
Expenditures:
Current:
Administration 6,951,541 7,549,386 7,492,277 7,603,732 7,383,233
Law enforcement 14,151,413 14,776,409 15,715,815 15,276,950 16,204,350
Innovation and technology 3,223,185 1,836,725 2,063,176 1,825,667 2,284,198
Administrative services 4,617,787 5,196,299 5,525,888 5,976,301 6,716,341
Recreation services 7,688,935 4,787,914 4,729,438 5,432,183 5,517,003
Community development 9,310,827 11,177,690 12,627,702 11,693,554 11,498,725
Public works 22,445,948 24,568,155 28,542,850 28,221,856 30,031,887
Capital outlay:12,644,373 19,483,945 12,777,121 12,533,316 10,473,883
Debt service:
Principal repayment 2,290,000 2,140,000 1,880,000 2,581,181 2,587,091
Interest and fiscal charges 882,837 798,747 796,000 739,340 665,597
Total expenditures 84,206,846 92,315,270 92,150,267 91,884,080 93,362,308
Excess of revenues over (under) expenditures 27,763,618 23,421,013 26,867,395 26,196,621 27,069,513
Other financing sources (uses):
Proceeds from debt issuance - 22,040,000 - - -
Proceeds from debt issuance premium - 3,878,704 - - -
Payments to refunding agent - (27,279,118) - - -
Proceeds from sale of capital assets --- - -
Inception of subscription liability - - - 964,745 -
Transfers in 35,208,276 12,876,969 23,089,059 11,350,697 10,789,869
Transfers in - fund closing --- - -
Transfers out (42,304,276) (16,215,969) (25,776,712) (15,076,576) (12,111,553)
Total other financing sources (uses)(7,096,000) (4,699,414) (2,687,653) (2,761,134) (1,321,684)
Net change in fund balances 20,667,618$ 18,721,599$ 24,179,742$ 23,435,487$ 25,747,829$
Debt service as a percentage of
noncapital expenditures 4.43%4.04%3.37%4.18%3.92%
Fiscal Year
City of Cupertino
Changes in Fund Balances of Governmental Funds (Continued)
Last Ten Fiscal Years
(modified accrual basis of accounting)
Source: Department of Administrative Services, City of Cupertino.
155
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T
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State Board of Total Assessed & Direct
Total Equalization Secured Est. Full Market Tax
Fiscal Year Secured (a) Unsecured (a) Non-Unitary Exemptions Valuation (a)Rate
2015 16,133,637,244$ 965,141,148$ -$ 119,476,276$ 17,098,778,392$ 5.61%
2016 18,308,720,226 1,086,786,901 - 114,223,063 19,395,507,127 5.59%
2017 20,196,258,418 1,150,311,942 - 118,257,368 21,346,570,360 5.98%
2018 22,024,906,420 1,114,123,426 - 122,805,695 23,139,029,846 6.19%
2019 23,402,123,229 1,779,936,377 - 125,245,819 25,182,059,606 6.38%
2020 24,370,718,536 1,641,863,322 - 138,025,761 26,012,581,858 6.50%
2021 25,397,331,860 2,423,984,683 - 145,644,653 27,821,316,543 6.48%
2022 27,083,468,890 1,724,247,088 - 149,658,614 28,807,715,978 3.55%
2023 29,822,398,085 1,069,629,678 - 154,098,046 30,892,027,763 7.24%
2024 31,157,956,858 1,145,368,676 - 146,726,345 32,303,325,534 4.57%
(a) Net of exemptions
Source: HdL, Coren & Cone
Data Source: Santa Clara County Assessor 2023-24 Combined Tax Rolls
This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone
City of Cupertino
(Unaudited)
Last Ten Fiscal Years
Assessed and Estimated Actual Value of Taxable Property
$0
$5
$10
$15
$20
$25
$30
$35
20
1
5
20
1
6
20
1
7
20
1
8
20
1
9
20
2
0
20
2
1
20
2
2
20
2
3
20
2
4
Bi
l
l
i
o
n
s
Secured Property Unsecured Property
157
FINAL
DRAF
T
11.22.
2
0
2
4
184
2014-15 2015-16 2016-17 2017-18 2018-19
Basic Levy¹1.00000 1.00000 1.00000 1.00000 1.00000
Co. Housing Bond 2016 0.00000 0.00000 0.00000 0.01266 0.01050
County Bond 2008 Hospital Facility 0.00910 0.00880 0.00860 0.00820 0.00720
County Library Retirement Levy 0.00240 0.00240 0.00240 0.00240 0.00240
County Retirement Levy 0.03880 0.03880 0.03880 0.03880 0.03880
Cupertino Elementary 0.05400 0.05190 0.05090 0.04960 0.03970
El Camino Hospital 2003 0.01290 0.01290 0.01290 0.01000 0.01000
Foothill De Anza College 0.02760 0.02400 0.02340 0.02200 0.02170
Fremont High 0.03960 0.05250 0.04030 0.04640 0.04300
Los Gatos-Saratoga High 1998 0.05160 0.04230 0.04690 0.04570 0.03040
MidPeninsula Open Space 2014 0.00000 0.00080 0.00060 0.00090 0.00180
Santa Clara Unified 0.07040 0.09420 0.08180 0.08280 0.07070
Santa Clara Valley Water District 0.00650 0.00570 0.00860 0.00620 0.00420
Saratoga Elementary 0.04580 0.04490 0.04560 0.04580 0.04580
West Valley College 0.01200 0.02320 0.01960 0.02000 0.01980
Total Direct & Overlapping² Tax Rates 1.37070 1.40240 1.38040 1.39146 1.34600
City's Share of 1% Levy Per Prop 13³0.05617 0.05571 0.05962 0.06148 0.06320
General Obiligation Debt Rate
Redevelopment Rate⁴
Total Direct Rate⁵0.05610 0.05588 0.05976 0.06187 0.06381
Notes:
Data Source: Santa Clara County Assessor 2014/15 - 2023/24 Tax Rate Table
This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone
City of Cupertino
Direct and Overlapping Property Tax Rates
(Rate per $100 of taxable value)
Last Ten Fiscal Years
Agency
⁵Total Direct Rate is the weighted average of all individual direct rates applied to by the government preparing the statistical section information
and excludes revenues derived from aircraft. Beginning in 2013/14 the Total Direct Rate no longer includes revenue generated from the former
redevelopment tax rate areas. Challenges to recognized enforceable obligations are assumed to have been resolved during 2012/13. For the
purposes of this report, residual revenue is assumed to be distributed to the City in the same proportions as general fund revenue.
¹In 1978, California voters passed Proposition 13 which set the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing
agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of
assessed property values for the payment of any voter approved bonds.
²Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all
city property owners.
³City's Share of 1% Levy is based on the City's share of the general fund tax rate area with the largest net taxable value within the city. ERAF
general fund tax shifts may not be included in tax ratio figues.
⁴Redevelopment Rate is based on the largest RDA tax rate area and only includes rate(s) from indebtedness adopted prior to 1989 per California
State statute. RDA direct and overlapping rates are applied only to the incremental property values. The approval of ABX1 26 eliminated
Redevelopment from the State of California for the fiscal year 2012/13 and years thereafter.
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Agency 2019-20 2020-21 2021-22 2022-23 2023-24
Basic Levy¹1.00000 1.00000 1.00000 1.00000 1.00000
Co. Housing Bond 2016 0.01000 0.00000 0.01266 0.01080 0.00950
County Bond 2008 Hospital Facility 0.00690 0.00690 0.00610 0.00630 0.00550
County Library Retirement Levy 0.00240 0.00240 0.00240 0.00240 0.00240
County Retirement Levy 0.03880 0.03880 0.03880 0.03880 0.03880
Cupertino Elementary 0.04150 0.04030 0.03800 0.03680 0.03570
El Camino Hospital 2003 0.01000 0.01000 0.01000 0.00900 0.00500
Foothill De Anza College 0.02080 0.03640 0.03310 0.02910 0.02780
Fremont High 0.04790 0.04780 0.04160 0.03710 0.04410
Los Gatos-Saratoga High 1998 0.01770 0.01930 0.01850 0.01790 0.01370
MidPeninsula Open Space 2014 0.00160 0.00150 0.00150 0.00130 0.00120
Santa Clara Unified 0.11760 0.10450 0.10140 0.08670 0.08890
Santa Clara Valley Water District 0.00410 0.00370 0.00510 0.00440 0.00410
Saratoga Elementary 0.04640 0.04850 0.04830 0.04850 0.05960
West Valley College 0.01860 0.03110 0.03040 0.02830 0.02580
Total Direct & Overlapping² Tax Rates 1.39530 1.39120 1.38786 1.35740 1.36210
City's Share of 1% Levy Per Prop 13³0.06531 0.06515 0.06528 0.06504 0.06513
General Obiligation Debt Rate
Redevelopment Rate⁴
Total Direct Rate⁵0.06499 0.06463 0.06477 0.06482 0.06515
Notes:
Data Source: Santa Clara County Assessor 2014/15 - 2023/24 Tax Rate Table
This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone
City of Cupertino
Direct and Overlapping Property Tax Rates (Continued)
(Rate per $100 of taxable value)
Last Ten Fiscal Years
¹In 1978, California voters passed Proposition 13 which set the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing
agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of
assessed property values for the payment of any voter approved bonds.
²Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all
city property owners.
³City's Share of 1% Levy is based on the City's share of the general fund tax rate area with the largest net taxable value within the city. ERAF
general fund tax shifts may not be included in tax ratio figues.
⁴Redevelopment Rate is based on the largest RDA tax rate area and only includes rate(s) from indebtedness adopted prior to 1989 per California
State statute. RDA direct and overlapping rates are applied only to the incremental property values. The approval of ABX1 26 eliminated
Redevelopment from the State of California for the fiscal year 2012/13 and years thereafter.
⁵Total Direct Rate is the weighted average of all individual direct rates applied to by the government preparing the statistical section information
and excludes revenues derived from aircraft. Beginning in 2013/14 the Total Direct Rate no longer includes revenue generated from the former
redevelopment tax rate areas. Challenges to recognized enforceable obligations are assumed to have been resolved during 2012/13. For the
purposes of this report, residual revenue is assumed to be distributed to the City in the same proportions as general fund revenue.
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2024 Percentage of 2015 Percentage of
Assessed Total Assessed Assessed Total Assessed
Valuation Valuation Valuation Valuation
Apple Inc.7,802,605,907$ 24.15% 1,596,975,041$ 9.34%
Main Street Cupertino 390,150,977 1.21%- 0.00%
Cupertino City Center 378,541,764 1.17%139,849,982 0.82%
Vallco Property Owner LLC 364,276,620 1.13%157,741,957 0.92%
Markham Apartments LP 256,729,104 0.79%- 0.00%
Cupertino Property Development 215,132,010 0.67%100,941,770 0.59%
PR Cupertino Gateway LLC 140,150,193 0.43%- 0.00%
Preg Emerson LLC 130,697,590 0.40%- 0.00%
Avery Glenbrook LP 116,016,640 0.36%- 0.00%
APPLE ENTERPRISES INC 112,000,000 0.35%- 0.00%
Total 9,906,300,805$ 30.67%1,995,508,750$ 11.67%
Source: HdL, Coren & Cone
Taxpayer
City of Cupertino
Principal Property Taxpayers
Current Year and Nine Years Ago
(Unaudited)
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Percent of
Percent Delinquent Total Total Tax
Fiscal Total Current Tax of Levy Tax Tax Collections
Year Tax Levy Collections Collected (1) Collections (1) Collections to Tax Levy
2015 10,178,734$ 10,178,734$ 100.00%- 10,178,734$ 100.00%
2016 11,864,026 11,864,026 100.00%- 11,864,026 100.00%
2017 13,308,884 13,308,884 100.00%- 13,308,884 100.00%
2018 13,172,425 13,172,425 100.00%- 13,172,425 100.00%
2019 16,049,112 16,049,112 100.00%- 16,049,112 100.00%
2020 18,117,304 18,117,304 100.00%- 18,117,304 100.00%
2021 19,197,994 19,197,994 100.00%- 19,197,994 100.00%
2022 20,322,779 20,322,779 100.00%- 20,322,779 100.00%
2023 21,807,628 21,807,628 100.00%- 21,807,628 100.00%
2024 22,494,293 22,494,293 100.00%- 22,494,293 100.00%
(1) Per the Teeter Plan, the City receives 100% of the tax levy, while the County receives delinquencies and penalties.
Source: City of Cupertino NWS
City of Cupertino
Property Tax Levies and Collections
Last Ten Fiscal Years
(Unaudited)
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% of
Fiscal Certificates Lease SBITA Total Pirmary Total Debt Personal
Year of Participation Payable Agreement Payable Government Per Capita Income
2015 37,925,000$ -$ -$ 37,925,000$ 634.44$ 0.14%
2016 35,835,000 - - 35,835,000 615.88 0.16%
2017 33,700,000 - - 33,700,000 571.99 0.18%
2018 31,520,000 - - 31,520,000 524.54 0.19%
2019 29,300,000 - - 29,300,000 489.32 0.22%
2020 22,040,000 - - 22,040,000 370.12 0.31%
2021 19,900,000 - - 19,900,000 328.08 0.37%
2022 18,020,000 - - 18,020,000 271.90 0.43%
2023 16,065,000 - 2,027,290 18,092,290 303.28 0.49%
2024 14,030,000 15,369 1,210,274 15,255,643 256.52 0.26%
* Bond was refinanced in 2020
Source: City of Cupertino Budget Book
City of Cupertino
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
(Unaudited)
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32,303,182,933$
Total Debt %City’s Share of
OVERLAPPING TAX AND ASSESSMENT DEBT:6/30/2024 Applicable (1) Debt 6/30/24
Santa Clara County 956,770,000$ 4.894% 46,824,324$
Foothill-DeAnza Community College District 640,179,446 12.279% 78,607,634
West Valley Community College District 663,040,000 1.871% 12,405,478
Santa Clara Unified School District 1,003,615,000 4.145% 41,599,842
Fremont Union High School District 737,130,088 27.348% 201,590,336
Cupertino Union School District 235,883,303 50.573% 119,293,263
El Camino Hospital District 102,186,937 0.861% 879,830
Midpeninsula Regional Open Space District 80,700,000 7.403% 5,974,221
Santa Clara Valley Water District Benefit Assessment District 29,235,000 4.894% 1,430,761
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 508,605,689$
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
Santa Clara County General Fund Obligations 1,057,709,440$ 4.894% 51,764,300$
Santa Clara County Pension Obligation Bonds 323,733,582 4.894% 15,843,522
Santa Clara County Board of Education Certificates of Participation 12,073,098 4.894%590,857
West Valley-Mission Community College District General Fund Obligations 2,520,000 1.871%47,149
Santa Clara Unified School District General Fund Obligations 11,202,000 4.145%464,323
Cupertino Union School District General Fund Obligations 40,233,350 50.573% 20,347,212
City of Cupertino Certificates of Participation 14,030,000 100.000% 14,030,000
Santa Clara County Central Fire Protection District General Fund Obligations 27,130,000 46.763% 12,686,802
Midpeninsula Regional Open Space Park District General Fund Obligations 79,795,600 7.403% 5,907,268
TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT 121,681,433$
Less: Santa Clara County Supported Obligations 130,180
TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT 121,551,253$
TOTAL DIRECT DEBT 14,030,000$
TOTAL GROSS OVERLAPPING DEBT 616,257,122$
TOTAL NET OVERLAPPING DEBT 616,126,942$
GROSS COMBINED TOTAL DEBT 630,287,122$ (2)
NET COMBINED TOTAL DEBT 630,156,942$
(1)
(2)Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
Ratios to 2023-24 Assessed Valuation:
Total Overlapping Tax and Assessment Debt 1.57%
Total Direct Debt ($14,030,000)0.04%
Gross Combined Total Debt 1.95%
Net Combined Total Debt 1.95%
Direct and Overlapping Bonded Debt
City of Cupertino
Sources: California Municipal Statistics, Inc.
2023-24 Assessed Valuation
The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages
were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by
the district's total taxable assessed value.
(Unaudited)
June 30, 2024
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Total net debt
Total Net Legal applicable to the
Fiscal Debt Debt Applicable Debt limit as a % of
Year Limit to Limit Margin debt limit
2015 605,011,397$ -$ 605,011,397$ -$
2016 686,577,008 - 686,577,008 -
2017 757,359,691 - 757,359,691 -
2018 825,933,991 - 825,933,991 -
2019 877,579,621 - 877,579,621 -
2020 913,901,945 - 913,901,945 -
2021 952,399,944 - 952,399,944 -
2022 1,015,630,083 -1,015,630,083 -
2023 1,118,339,928 -1,118,339,928 -
2024 1,168,423,382 1,168,423,382
Debt Limit:
Secured property assessed value, net of exempt real property 31,157,956,858$
Adjusted valuation - 25% of assessed valuation 7,789,489,215
Debt limit - 15% of adjusted valuation 1,168,423,382
Amount of Debt Subject to Limit:
Total Bonded Debt 18,020,000
Less: Certificates of Participation not subject to debt limit (18,020,000)
Amount of debt subject to limit -
Legal Debt Margin 1,168,423,382$
Source: City of Cupertino Budget Book
Note: The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision
was enacted when assessed valuation was based upon 25% of market value. Effective with the 1981-82 fiscal year, each parcel is now assessed at
100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed
valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the time that the legal debt margin
was enacted by the State of California for local governments located within the state.
City of Cupertino
Legal Debt Margin Information
(Unaudited)
Last Ten Fiscal Years
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Ratio of General
Fiscal Assessed General Bonded Debt Bonded Debt to
Year Population Value Bonded Debt Per Capita Assessed Value
2015 59,777 19,395,507,127$ -$ -$ -$
2016 58,185 19,395,507,127 - - -
2017 58,917 21,346,570,360 - - -
2018 60,091 23,139,029,846 - - -
2019 59,879 25,182,059,606 - - -
2020 59,549 27,821,316,543 - - -
2021 60,656 27,821,316,543 - - -
2022 66,274 28,807,715,978 - - -
2023 59,656 30,892,027,763 - - -
2024 59,471 32,303,325,534 - - -
Sources: HdL, Coren & Cone/Cupertino Budget Book
City of Cupertino
Ratio of General Bonded Debt
Last Ten Fiscal Years
(Unaudited)
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% of % of
City City County Population Population
City County Population City Per Capita **Public Unemployment Unemployment Median Over 25 with Over 25 with
Fiscal Population Population % of Personal Personal School Rate (%) Rate (%) Age High School Bachelor's
Year (1) (1) County Income (2) Income (2) Enrollment (3) (3) (4) Degree Degree
2014-15 59,777 1,889,638 3.16% 3,186,772,000 53,311 29,871 4.2% 3.8% 40.0 96.5% 74.6%
2015-16 58,185 1,927,888 3.02% 3,340,132,000 57,405 29,684 3.4% 4.2% 40.2 96.5% 75.6%
2016-17 58,917 1,938,180 3.04% 3,486,805,000 59,181 29,467 3.0% 3.8% 40.6 96.7% 76.0%
2017-18 60,091 1,938,153 3.10% 3,620,255,000 60,246 29,255 3.3% 3.8% 40.7 97.1% 76.6%
2018-19 59,879 1,937,570 3.09% 3,821,320,000 63,817 29,240 2.6% 2.3% 41.1 97.1% 77.2%
2019-20 59,549 1,927,852 3.09% 4,114,967,000 69,102 29,550 2.4% 10.7% 41.1 97.2% 78.1%
2020-21 60,656 1,936,259 3.13% 4,378,045,000 74,485 30,900 4.9% 5.2% 41.6 97.2% 78.8%
2021-22 66,274 1,934,171 3.43% 4,571,170,000 76,684 24,380 3.7% 2.2% 41.2 97.3% 79.6%
2022-23 59,656 1,902,799 3.14% 5,214,787,000 88,156 23,486 2.3% 3.7% 41.0 97.0% 80.9%
2023-24 59,471 1,903,198 3.12% 5,924,781,000 99,624 23,233 3.5% 4.1% 40.4 97.2% 82.8%
Notes and Data Sources:
Population: California State Department of Finance. Unemployment Data: California Employment Development Department
Income, Age, and Education Data: ESRI - Demographic Estimates are based on the last available Census. Projections are developed by incorporating all of the prior
census data released to date. Demographic Data is totaled from Census Block Groups that overlap the City's boundaries
201- and later - Income, Age and education Data - US Census Bureau, most recent American Community Survey
**Reported Public School Enrollment reflects the total number of students in the Fremont Union High School District and Cupertino Union School District.
Previously published reports included Fremont Union High School District only.
City of Cupertino
Last Ten Fiscal Years
Demographic and Economic Statistics
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Business Name Business Category
99 Ranch Market Grocery Stores
Alexander's Steak House Fine Dining
Apple Fulfillment Centers
Argonaut Window & Door Contractors
Benihana Fine Dining
BJ's Restaurant & Brewhouse Casual Dining
California Dental Arts Medical/Biotech
Chevron Service Stations
Cupertino Car Wash Service Stations
Galpao Gaucho Fine Dining
Great Gas Cupertino Service Stations
Haidilao Hot Pot Casual Dining
Insight Direct Office Equipment
Insight Public Sector Office Equipment
Kura Revolving Sushi Bar Casual Dining
Lazy Dog Cafe Casual Dining
Mirapath Electrical Equipment
Ross Family Apparel
Rotten Robbie Service Stations
Safeway Grocery Stores
Shane Company Jewelry Stores
Target Discount Dept Stores
TJ Maxx Family Apparel
Valero Service Stations
Whole Foods Market Grocery Stores
Source: HdL, Coren & Cone
City of Cupertino
Top 25 Sales Tax Producers
For Calendar Year 2023
(Unaudited)
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Function/Program 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Council and Commissions 1.55 1.60 1.55 2.35 2.35 2.51 2.53 7.58 7.28 7.23
Administration 10.75 10.85 10.57 14.12 15.47 15.15 17.85 19.85 24.30 21.80
Innovation & Technology 10.25 11.40 13.95 14.55 15.05 14.95 11.93 11.93 13.43 14.93
Administrative Services 12.00 12.30 12.30 12.00 14.00 16.00 15.90 16.90 18.90 17.90
Parks & Recreation 31.28 32.18 33.08 35.13 34.80 32.10 31.90 27.88 29.48 27.63
Community Development 24.80 27.30 28.18 28.08 28.13 28.29 28.49 32.49 37.49 34.39
Public Works 77.12 82.12 84.12 84.52 84.95 88.75 90.15 92.12 94.12 88.12
Law Enforcement 2.00 2.00 2.00 2.00 2.00 0.00 0.00 0.00 0.00 0.00
Total 169.75 179.75 185.75 192.75 196.75 197.75 198.75 208.75 225.00 212.00
Source: City of Cupertino Budget
City of Cupertino
Full-Time Equivalent City Employees by Function/Program
Last Ten Fiscal Years
(Unaudited)
0
50
100
150
200
250
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Public Works
Community
Development
Parks &
Recreation
Administrative
Services
Innovation &
Technology
Administration
Council and
Commissions
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2015 2016 2017 2018 2019
Law Enforcement Sheriff Response
Priority One-Respond within 5 minutes 4.90 Min.4.90 Min.5.07 Min 4.23 Min.4.39 Min.
Priority Two-Respond within 9 minutes 6.56 Min.6.56 Min.8.00 Min.7.49 Min.6.23 Min.
Priority Three-Respond within 20 minutes 10.52 Min. 10.52 Min. 15.79 Min 14.79 Min. 12.11 Min.
Public Works
Street Sweeping 575 Curb Miles 575 Curb Miles 534 Curb Miles 534 Curb Miles 534 Curb Miles
Street Maintenance 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call
Number of development permit
applications received 428 434
Number of encroachment permits received 121 136
Storm Drain Inlets Inspected/Cleaned 815 1063
Roadway Signs Repaired/Replaced 404 721
Number of trees planted vs. removed 53/67 155/192
Parks & Recreation
Number of reservations at Quinlan Center 560 402
Number of rounds of golf at BBF Golf Course 28,193 27,205
Sports Center Memberships 2,000 1,989 2,015 1,850 1,952
Number of Senior Center classes offered 246 320
Senior Center Memberships 2,549 2,493 2,094 2,260 2,171
Quinlan Community Center Rental Revenue $110,033 $104,150 $128,778 $72,948 $139,590
Community Development
Approved Building Plan Sets 95% Within 7 Work Days 95% Within 7 Work Days 95% Within 7 Work Days 95% Within 7 Work Days 95% Within 7 Work Days
Discretionary Land Use Applications 99% Within 21 Work Days 99% Within 21 Work Days 99% Within 21 Work Days 99% Within 21 Work Days 99% Within 21 Work Days
Public Notice of Upcoming Projects 100% Within 10 Days 100% Within 10 Days 100% Within 10 Days 100% Within 10 Days 100% Within 10 Days
Number of preliminary reviews 82 90
Number of planning applications received 169 138
Number of permits received 2322 2,321
Number of inspections requested 16026 13,625
Administrative Services
Accounts Payable Processing 7 Days 7 Days 7 Days 7 Days 7 Days
Business License Renewal Certificates 3 Days 3 Days 3 Days 3 Days 3 Days
Number of regular recruitments 21 21
Number of new hires 26 16
Number of temporary new hires 101 105
Number of vendor checks processes 6793 6,536
Number of payroll checks process 10387 10,301
Number of business license applications 1294 1,154
Number of journal entries posted 2830 4,521
Number of receipts processed 9766 13,913
Library
Volumes in Collection 361817 364,557 369,924 367,979 367,101
Annual Gate Count 869762 880,894 835,073 873,862 904,349
Annual Circulation Children's Items 1474996 1,544,095 1,448,265 1,453,173 1,535,842
Annual Circulation Adult and Teen Items 999766 1,032,326 950,453 980,609 1,049,166
Adult Classes and Events 209 215 242 206 207
Adult Classes and Events Attendence 11860 8,855 9,242 7,622 8,304
Teen Classes and Events 52 78 66 79 52
Teen Classes and Events Attendence 3393 3,135 2,571 2,495 1,283
Children's Classes and Events 458 493 440 426 424
Children's Classes and Events Attendence 25529 28,532 25,857 24,675 22,851
Volunteer Hours 11786 10,000 9,645 10,302 10,191
Sources: City of Cupertino PM & WIs and Santa Clara County Library District
Function/Program
City of Cupertino
Operating Indicators by Function/Program
Last Ten Fiscal Years
(Unaudited)
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2020 2021 2022 2023 2024
Law Enforcement Sheriff Response
Priority One-Respond within 5 minutes 3.51 Min.3.40 Min.5.33 Min 6.57 Min 5.81 Min
Priority Two-Respond within 9 minutes 6.37 Min.6.07 Min.6.94 Min.7.46 Min 6.32 Min
Priority Three-Respond within 20 minutes 11.96 Min. 11.80 Min. 11.73 Min 12.72 Min 7.86 Min
Public Works
Street Sweeping 534 Curb Miles 534 Curb Miles 534 Curb Miles 534 Curb Miles 534 Curb Miles
Street Maintenance 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call
Number of development permit
applications received 428 127 128 127 111
Number of encroachment permits received 134 577 426 449 478
Storm Drain Inlets Inspected/Cleaned 1638 1802 80%53%4%
Roadway Signs Repaired/Replaced 346 1151 3.5%2.0%2.0%
Number of trees planted vs. removed 164/190 187/202 211/187 153/105 42/41
Parks & Recreation
Number of reservations at Quinlan Center 526 8 260 405 450
Number of rounds of golf at BBF Golf Course 28,952 43,650 45367 37961 38984
Sports Center Memberships 1,802 1,655 1186 1394 1565
Number of Senior Center classes offered 258 100 183 235 373
Senior Center Memberships 2,171 1,470 210 1087 1493
Quinlan Community Center Rental Revenue $139,590 $5,507 $115,093 $126,670 $146,087
Community Development
Approved Building Plan Sets 95% Within 7 Work Days 95% Within 7 Work Days 95% Within 7 Work Days 95% Within 7 Work Days 95% Within 7 Work Days
Discretionary Land Use Applications 99% Within 21 Work Days 99% Within 21 Work Days 99% Within 21 Work Days 99% Within 21 Work Days 99% Within 21 Work Days
Public Notice of Upcoming Projects 100% Within 10 Days 100% Within 10 Days 100% Within 10 Days 100% Within 10 Days 100% Within 10 Days
Number of preliminary reviews 110 163 142 127 66
Number of planning applications received 194 237 301 232 262
Number of permits received 2,534 2,364 2380 2618 2665
Number of inspections requested 14,596 13,374 11906 15181 15485
Administrative Services
Accounts Payable Processing 7 Days 7 Days 7 Days 7 Days 7 Days
Business License Renewal Certificates 3 Days 3 Days 3 Days 3 Days 3 Days
Number of regular recruitments 28 24 33 29 21
Number of new hires 14 21 38 31 23
Number of temporary new hires 38 17 77 70 71
Number of vendor checks processes 5,906 4,457 4993 5130 4541
Number of payroll checks process 10,802 7,816 8119 9176 9047
Number of business license applications 1,032 1,061 884 969 1078
Number of journal entries posted 4,558 3,915 3635 3695 4555
Number of receipts processed 18,992 10,367 9353 11275 10191
Library
Volumes in Collection 368,461 350,088 367,745 380,365 375,019
Annual Gate Count 620,007 128,912 387,285 683,303 743,644
Annual Circulation Children's Items 1,192,880 1,207,878 1,771,986 1,844,305 1,847,352
Annual Circulation Adult and Teen Items 831,114 750,602 1,056,451 1,190,995 1,250,904
Adult Classes and Events 396 459 62 181 221
Adult Classes and Events Attendence 9,986 19,223 861 5,140 6,318
Teen Classes and Events 57 31 21 51 50
Teen Classes and Events Attendence 8,495 7,151 916 2,002 1,337
Children's Classes and Events 477 464 105 491 524
Children's Classes and Events Attendence 26,032 52,634 7,711 30,386 35,305
Volunteer Hours 6,592 465 4305.8 4228 4,207
Sources: City of Cupertino PM & WIs and Santa Clara County Library District
Function/Program
City of Cupertino
Operating Indicators by Function/Program (Continued)
Last Ten Fiscal Years
(Unaudited)
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2015 2016 2017 2018 2019
Public Works
Centerlane Miles of Streets 142 142 142 142 142
Streetlights 2,950 2,950 2,950 2,950 2,950
Traffic Signals 48 48 48 52 52
Culture & Recreation
Parks and Open Spaces 21 21 21 21 21
Park and Landscape Acreage 169 169 169 169 169
City Trails 33333
Golf Courses 11111
Community Center 11111
Community Hall 11111
Senior Center 11111
Sports Center 11111
Swimming Pools 11111
Tennis Courts 28 28 28 28 28
Sports Fields 41 41 41 41 41
City Library 11111
Source: City of Cupertino Budget Book/GIS Team
Function/Program
City of Cupertino
Capital Assets Statistics by Function/Program
Last Ten Fiscal Years
(Unaudited)
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2020 2021 2022 2023 2024
Public Works
Centerlane Miles of Streets 142 142 142 142 142
Streetlights 2,950 2,950 2950 2870 2870
Traffic Signals 52 52 52 61 61
Culture & Recreation
Parks and Open Spaces 21 21 21 21 21
Park and Landscape Acreage 169 169 169 169 169
City Trails 33355
Golf Courses 11111
Community Center 11111
Community Hall 11111
Senior Center 11111
Sports Center 11111
Swimming Pools 11111
Tennis Courts 28 28 28 28 28
Sports Fields 41 41 41 41 41
City Library 11111
Source: City of Cupertino Budget Book/GIS Team
Function/Program
City of Cupertino
Capital Assets Statistics by Function/Program (Continued)
Last Ten Fiscal Years
(Unaudited)
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Community Economic Profile
Cupertino, with a population of 60,869 and City limits stretching across 13 square miles, is considered one
of the most prestigious cities to live and work in the Bay Area.
Economic health is an essential component to maintaining a balanced city, which provides high-level
opportunities and services that create and help sustain a sense of community and quality of life. Public and
private interests must be mutual so that success as a partnership is a direct reflection of success as a
community. The cornerstone of this partnership is a cooperative and responsive government that fosters
residential and business prosperity and strengthens working relationships among all sectors of the
community.
Because Cupertino is a mature, 93% built-out city, the City of Cupertino focuses on business retention and
revitalization, while at the same time, being supportive of redevelopment projects to bring in new
investment. Cupertino is world-renowned as the home to high-tech giant Apple, Inc., and as a community
with stellar public schools. De Anza College, one of the largest single-campus community colleges in the
country, is another major employer and a magnet for attracting local and international students. The City’s
proactive economic development efforts and a high-touch approach has resulted in an innovative
environment for start-ups and growing companies to thrive, including Bromium, Moxo Cupertino,
DURECT, Xisilicon Semiconductor Inc, Claspp, Panasonic Venture Group, Altia Systems, Mirapath,
Aemetis Inc, Mist Systems, and many more. The City strives to retain our companies and a ract new ones
through active outreach and a responsive, streamlined, and customer-oriented entitlement process.
Cupertino has a number of mixed-use development projects offering diverse retail and dining options, as
well as providing additional housing opportunities to meet the needs of the growing community. There are
also quite a few development projects underway including: Westport Cupertino, Marina Plaza, Alan Row,
and Canyon Crossing. Further, City Council recently approved the 283,000 square foot mixed
Office/Commercial Apple development at 19191 Vallco Parkway.
The Main Street and Nineteen800 mixed-use developments have created a vibrant downtown area for
Cupertino, offering a large selection of restaurants and retailers, including Alexander’s Steakhouse,
Eureka!, Oren’s Hummus, Lazy Dog, Ippudo, Pasta Armellino, HaiDiLao Hot Pot Restaurant, Pineapple
Thai, Pressed Juicery, Orangetheory, 85 Degree Bakery, SomiSomi, Sul & Beans, Kura Sushi, Vitality
Bowls, La Pizzeria, Tan-cha, Koja Kitchen, Bishops Cuts & Colors, Capezio, Howard’s Shoes, and Meet
Fresh. Housing, office, and the Residence Inn by Marriott are available to support the thriving area.
Serving as a long-time retail anchor for the community, The Marketplace has a variety of stores and
restaurants popular with students, families, and working professionals. They include Galpao Gaucho, Daiso,
Marukai Groceries, Harumi Sushi, La Patisserie Bakery, Beard Papa’s, Legend’s Pizza, Icicles, Kong’s
Tofu & BBQ, Rori Rice, One Pot Shabu Shabu, Olarn Thai, and Erik’s DeliCafé to name a few.
Cupertino Village, a shopping center located in the northeast portion of the City, is home to 99 Ranch
Market, Duke of Edinburgh Pub & Restaurant, MOD Pizza, Ten Ren Tea, Fantasia Coffee & Tea, Kee Wah
Bakery, Happy Lemon, and many other Asian restaurants, bakeries, and shops. The property owners have
received approval to construct a new full-service boutique hotel with 185 rooms to accommodate business
and leisure travelers.
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Cupertino features many other retail opportunities, including TJ Maxx and Home Goods, Whole Foods,
Target, Party City, and over 180 restaurants to serve residents and the local workforce. There are now seven
hotels providing over 1,000 rooms, to serve the area: The Alo Cupertino, Cupertino Hotel, Hilton Garden
Inn, Hyatt House, Juniper Hotel operated by Curio, Marriott Courtyard, and Residence Inn by Marriott.
Another longtime retail anchor in north Cupertino is Homestead Square Shopping Center, located at
Homestead Road and De Anza Boulevard. This shopping center includes a 24-hour Safeway, Ulta Beauty,
Ross Stores, Pet Club, Michael’s, Rite Aid, FedEx, and numerous restaurants, such as Fish’s Wild, Pho
Hoa Noodle Soup, Yayoi Teishoku Japanese Restaurant, Starbucks, Chipotle, and financial institutions.
Recently approved is the redevelopment of The Oaks Shopping Center site, located off of State Route 85
freeway and across from De Anza College. The Westport Cupertino project will be a mixed-used
development consisting of 259 housing units (Rowhouse/Townhomes, senior apartments), 35 memory care
rooms, and 20,000 square feet of commercial space.
Apple Park, Apple’s newest corporate campus, features approximately 2.8 million square feet of office and
R&D space north of Highway 280 between Wolfe Road and Tantau Avenue. A state-of-the-art Visitors
Center, Observation Deck, flagship retail store, and café are open to the public.
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CITY OF CUPERTINO
Agenda Item
24-13528 Agenda Date:
11/25/2024 Agenda #: 3.
Subject:ACTION ITEM Review and accept the City-Wide Policy Inventory and Gap Analysis Report
Review and accept the City-Wide Policy Inventory and Gap Analysis Report
Presenter: Moss Adams
4:35(20)
CITY OF CUPERTINO Printed on 11/22/2024Page 1 of 1
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AUDIT COMMITTEE STAFF REPORT
Meeting: November 25, 2024
Subject
Revised Citywide Policy Inventory and Gap Analysis Final Report
Recommended Action
Receive the Revised Citywide Policy Inventory and Gap Analysis Final Report
Reasons for Recommendation
Background
An inventory of Citywide Administrative and City Council policies were included as a
project in the Fiscal Year 2023-24 Council Work Program. This project was separated into
two parts:
Administrative policies being inventoried by the City‘s internal auditor, Moss
Adams, as part of their FY 2023-24 Internal Audit Workplan and are presented to
Audit Committee because in their inclusion in that plan; and
City Council policies inventoried by city staff are presented to City Council only
The Audit Committee received the initial Citywide Policy Inventory and Gap Analysis
Final Report on October 31, 2024. The Audit Committee (3-0-2) reviewed and accepted
the report. As part of the review of Council Policies, Administrative Services staff in
collaboration with City Manager and City Attorney’ Office determined four policies were
inadvertently labeled administrative when they should have been Council policies as they
were adopted via resolution by Council. These include Records Retention, Sponsorship,
Trusted Electronics System and Naming of City Facilities. As a result, staff reached out to
Moss Adams to revise the report and remove the four Council adopted policies. The
revised final report is included as attachment A.
Next Steps
Administrative Policies and Council Policies will be brought to Council at a future date.
After Council receives the report, staff may begin working on implementing the report’s
recommendations on administrative policies consistent with prior internal audit
recommendations. Internal audit status reports are available on the City’s website at
cupertino.org/internal-audit.
205
Sustainability Impact
No sustainability impact.
Fiscal Impact
No fiscal impact. The City’s Internal Audit contract is included in the contracts category
of the accounting program in the FY 2023-24 and FY 2024-25 Adopted Budgets. Council
policy inventory is being completed by staff within existing appropriations.
California Environmental Quality Act
Not applicable.
_____________________________________
Prepared by: Toni Oasay-Anderson, Senior Management Analyst
Reviewed by: Kristina Alfaro, Director of Administrative Services
Tina Kapoor, Interim Assistant City Manager
Approved for Submission by: Pamela Wu, City Manager
Attachments:
A – Revised Citywide Administrative Policy Inventory and Gap Analysis Final Report
206
FINAL REPORT
City of Cupertino
CITY-WIDE POLICY INVENTORY AND GAP ANALYSIS
November 21,2024
Moss Adams LLP
999 Third Avenue, Suite 2800
Seattle, WA 98104
(206)302-6500
207
City-Wide Policy Inventory and Gap Analysis
FOR INTERNAL USE OF CITY OF CUPERTINO ONLY
Table of Contents
Background, Scope, and Methodology 1
A.Background 1
B.Scope and Methodology 1
Overall Results 4
Prioritized P&P Work Plan 5
A.Administrative Services 5
B.City Manager’s Office 5
C.Community Development 6
D.Innovation and Technology 6
E.Law Enforcement 7
F.Parks and Recreation 7
G.Public Works 8
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City-Wide Policy Inventory and Gap Analysis |1
FOR INTERNAL USE OF CITY OF CUPERTINO ONLY
BACKGROUND, SCOPE, AND METHODOLOGY
The City of Cupertino (the City)requested that Moss Adams LLP (Moss Adams), as the City’s internal
auditor,perform an inventory of Citywide Administrative policies and procedures (P&Ps)and provide
a gap analysis to determine whether gaps in coverage exist, and develop a prioritized P&P work plan
to support the City in addressing identified gaps. The objectives of this project were to:
Determine which Citywide departments are adequately covered by comprehensive and current
P&Ps.
Identify the gaps within each policy, including areas where:
○There were no documented policies to support departmental functions
○Existing policies that are outdated or in need of minor updates or additions,and;
○Current internal control or gap coverage is missing key components.
Prioritize policy gaps based on overall risk and develop an implementation plan to provide the
City with recommendations for prioritizing and addressing identified policy gaps.
This engagement was performed in accordance with Standards for Consulting Services established
by the American Institute of Certified Public Accountants. Accordingly, we provide no opinion,
attestation, or other form of assurance with respect to our work or the information upon which our
work is based. This report was developed based on our assessment of the City’s departmental
Administrative P&Ps we requested as of October 2023, however, some departments required
additional time to provide all P&Ps and therefore, P&Ps were received up through June 2024.The
procedures we performed do not constitute an examination in accordance with generally accepted
auditing standards or attestation standards.
The scope of this project included Administrative P&Ps in each of the following City departments:
Administrative Services
City Manager’s Office
Community Development
Innovation and Technology
Law Enforcement
Parks and Recreation
Public Works
○Capital Improvement Program
The scope does not include the City’s finance and accounting functional areas, which were
addressed in our report titled “Fiscal Policy Inventory and Gap Analysis” from May 2022. The scope
also does not include City Council P&Ps and P&Ps adopted by Council Resolution, which are more
legislative in nature compared to the in-scope Administrative P&Ps, which are more operationally
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City-Wide Policy Inventory and Gap Analysis |2
FOR INTERNAL USE OF CITY OF CUPERTINO ONLY
focused.Citywide Administrative P&Ps are reviewed and approved by the City Manager and
department-specific P&Ps are reviewed and approved by the respective Department Head.
All Administrative P&Ps available as of October 2023 through June 2024 were provided to Moss
Adams to assess as part of this project. Other P&P documents, informal process documentation,or
guideline documents that are not approved formal P&Ps at the City level may exist; however, they
were not included in this analysis and are therefore not included in the results presented in this report.
The procedures performed included:
Citywide P&P Inventory
We worked with the City to determine that the following departments would be included in the
scope of this project:
○Administrative Services
○City Manager’s Office
○Community Development
○Innovation and Technology
○Law Enforcement
○Parks and Recreation
○Public Works
−Capital Improvement Program
For each department, we performed the following:
○Obtained all available P&P documents.
○Documented a full inventory of existing P&Ps, including a summary of the coverage areas
and age of each P&P.
○Discussed the full inventory of results with the City to ensure that all P&Ps were provided and
included in the inventory for each department listed above.
Citywide P&P Gap Analysis
We performed a full gap analysis of departmental P&Ps including:
○Identifying potential gaps in coverage for the current departmental P&Ps.
○Assessing the current departmental P&Ps for opportunities to improve the overall content and
flow/structure, incorporate best practices, and improve internal controls, where possible, to
provide effective resources for employees.
○Summarizing the gaps identified for all policies within the gap analysis.
○Categorizing the significance and extent of the identified gaps as follows: full gaps, major
gaps,or minor gaps. Additionally, we identified policies that need to be reviewed for potential
updates.
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Prioritized P&P Work Plan Development
Based on the results of the P&P inventory and gap analysis performed, we developed detailed
recommendations, by department,for the City to use as a road map for developing,amending, or
updating policies. We assigned a risk level (high, medium,or low), as described in the following table,
and a recommended priority order by phase based on the risk level. We discussed the prioritized
policies work plan with management, gathered input on the work plan, and made updates, as
appropriate.
Gaps identified during the analysis were categorized as follows:
Full Gap:Documented P&Ps do not exist for the area.
Major Gap:Some P&P documentation exists; however, there are major gaps in overall coverage.
Minor Gap:P&Ps cover most of the key areas but require some updating or additional coverage.
Update Needed:The P&P needs to be reviewed for potential updates.
The assessed risk level, category descriptions,and recommended phases/timing for addressing the
gaps and related recommendations are described in the following table. The risk levels were
assigned based on our understanding of the City, insights gained from management, the inherent risk
in each area,and the level and significance of gaps identified.
Assessed
Risk Level Category Description
Recommended
Phase/Timing
High Risk ●Area is inherently high risk
●Gaps identified were either full gaps (i.e.,no P&P coverage) or
major gaps
●Area is a high priority for the City’s operations and structure
Phase One
(within 6 months of
fiscal year end –
June 2025)
Medium Risk ●Area is inherently high or medium risk; however, a lack of
documented P&Ps may only represent a medium risk to the City
●Gaps identified were either full gaps or major gaps
●Area is a high priority for the City’s operations and structure
Phase Two
(within 12 months
of fiscal year end –
December 2025)
Low Risk ●Area is inherently low risk
●Gaps identified were either minor in significance or magnitude,or
the area only needed review or updating
●Area is a low priority for the City’s operations and structure
Phase Three
(within 18 months
of fiscal year end –
June 2026)
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City-Wide Policy Inventory and Gap Analysis |4
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OVERALL RESULTS
Throughout the P&P inventory and gap analysis, we found that the Citywide departments have a
variety of P&P documents; however, they are not consistently utilized, structured, or based on
standard templates Citywide.
The City does not have a defined Citywide P&P framework and,as a result, in many cases it was
unclear what level of policy a document fell under or whether a P&P was a policy, memorandum, or
standard operating procedure.
In addition, the City does not have a standard template/format and there does not appear to be a
structure for ensuring all policies are supported by underlying procedures.
Utilizing a defined P&P framework with standard templates will help streamline the City’s P&P
resources. This framework can be used to define responsibilities at both the City Council and
management level.
After completing the policy and procedure gap analysis for the Law Enforcement Department we were
informed that given that they contract with Santa Clara Sheriff’s Office the City’s policies and
procedures are not public record and could not be provided. As we were not able to review these
policies, we recommend that the City assess whether the policies cover the topics detailed below.In
the Prioritized P&P Work Plan, we have marked the Type of Gap, Associated Risk, and
Recommended Priority Level columns as “N/A” as the City will need to perform this assessment.
The City can utilize the Prioritized P&P Work Plan,presented in the following section,to carry out
their efforts in developing and updating their Citywide P&Ps. In addition to the following summary
table, we have provided management with a detailed Prioritized P&P Work Plan,which includes all
results from the inventory and gap analysis performed and detailed recommendations by area.
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City-Wide Policy Inventory and Gap Analysis |5
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PRIORITIZED P&P WORK PLAN
Policy Name Type of Gap Associated Risk
Recommended
Priority Level
Vehicle Use Policy Minor Gap Medium 2
Anti-Bullying Policy and Signature Sheet Update Needed Low 3
Children in the Workplace Policy Updated Needed Low 3
Debt Management Policy Update Needed Low 3
Employee Events Minor Gap Low 3
Employee Service –Retirement Awards
Policy
Minor Gap Low 3
Hiring Retired Annuitants Policy Update Needed Low 3
Interim Parking Policy Update Needed Low 3
Rec Bucks Program Policy Update Needed Low 3
Reclass Policy Update Needed Low 3
Return to Work Policy Update Needed Low 3
Risk Management Policy Update Needed Low 3
Salary Admin Procedures Update Needed Low 3
Surety Deposit Policy Update Needed Low 3
Travel Policy Update Needed Low 3
Unclaimed Property Update Needed Low 3
Volunteer Intern Process Policy Update Needed Low 3
Policy Name Type of Gap Associated Risk
Recommended
Priority Level
Candidate Restriction on Campaign Activity Minor Gap Medium 2
Redaction Policy Minor Gap Medium 2
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City-Wide Policy Inventory and Gap Analysis |6
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Policy Name Type of Gap Associated Risk
Recommended
Priority Level
Social Media Policy Minor Gap Medium 2
Business Cards for Councilmembers,
Commissioners, and Staff
Minor Gap Low 3
City Hall Meeting Room Use Policy Minor Gap Low 3
Council Orientation Guidelines Update Needed Low 3
Employee and City Officer Restrictions -
Political Activities
Update Needed Low 3
News Media Contact Relations Policy Update Needed Low 3
Outgoing Mayor & Councilmember Gifts
Policy
Update Needed Low 3
Telephone Etiquette Policy Minor Gap Low 3
Policy Name Type of Gap Associated Risk
Recommended
Priority Level
New Planning Employee Training Manual Minor Gap Medium 2
Comparison Matrix for Existing and New
Construction
Minor Gap Low 3
Plans Required to be Prepared Minor Gap Low 3
Protection of Wiring during Construction Minor Gap Low 3
Reinspection Fee Policy Minor Gap Low 3
Temporary Certificate of Occupancy
Procedure
Minor Gap Low 3
Survey Policy No Gap N/A N/A
Policy Name Type of Gap Associated Risk
Recommended
Priority Level
City Channel Policies and Procedures Update Needed Medium 2
Intranet Policy Update Needed Medium 2
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Policy Name Type of Gap Associated Risk
Recommended
Priority Level
Photo Identification Policy Update Needed Medium 2
Technology Use Policy Minor Gap Medium 2
Email Retention Policy Update Needed Low 3
Electronic Communications Policy Minor Gap Low 3
Internet Access and Use Policy Minor Gap Low 3
MS Teams Governance Update Needed Low 3
Policy Name Type of Gap Associated Risk
Recommended
Priority Level
Arrest and Detention Policy and
Procedures
N/A N/A N/A
Bias-Free Policing Policy and Procedures N/A N/A N/A
Complaints and Discipline Policy and
Procedures
N/A N/A N/A
Reporting and Accountability Policy and
Procedures
N/A N/A N/A
Training and Professional Development
Policy and Procedures
N/A N/A N/A
Use of Force Policy and Procedures N/A N/A N/A
Policy Name Type of Gap Associated Risk
Recommended
Priority Level
Cupertino Senior Center Internal Policies Update Needed Medium 2
Front Office Rental Policies and
Procedures
Minor Gap Medium 2
Sport Center Sign Policy Update Needed Medium 2
Community Special Events in Memorial
Park Approved
Update Needed Low 3
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City-Wide Policy Inventory and Gap Analysis |8
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Policy Name Type of Gap Associated Risk
Recommended
Priority Level
Capital Improvement Program: Capital
Improvement Policy
Major Gap High 1
Paper Procurement Policy Minor Gap Medium 2
Polychlorinated biphenyls (PCB) Demo
Management Policy
Minor Gap Medium 2
Pool Vehicle Use Minor Gap Medium 2
Banner Policy Update Needed Low 3
Bicycle Commute Policy Update Needed Low 3
Building Exteriors and Bridge Maintenance Update Needed Low 3
Complete Street Policy Update Needed Low 3
Compost Site Operations Update Needed Low 3
Dark Traffic Signal Policy Update Needed Low 3
Dedication Requirement Policy Update Needed Low 3
Emergency Response Update Needed Low 3
Environmental Preferred Purchasing Policy Update Needed Low 3
Impervious Material in Parkstrip Update Needed Low 3
Integrated Pest Management Policy Update Needed Low 3
Key Policy Update Needed Low 3
Maint. Of City Medians Update Needed Low 3
Monitoring Wells Policy Update Needed Low 3
Opening/Closing City Parks Update Needed Low 3
Parkstrip Policy Update Needed Low 3
Public Works Confirmation Fee Update Needed Low 3
Record Keeping -Spraying Chem.
Application Training
Update Needed Low 3
Road Improvement Requirement Policy Update Needed Low 3
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City-Wide Policy Inventory and Gap Analysis |9
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Policy Name Type of Gap Associated Risk
Recommended
Priority Level
School Sites Update Needed Low 3
SOP Fleet 2000 Update Needed Low 3
Steel Plate Requirements for Excavations
in the Public ROW
Update Needed Low 3
Stormwater Re-Inspection Fee Update Needed Low 3
Street and Easement Vacations Update Needed Low 3
Street Name Policy Update Needed Low 3
Street Lighting Systems Update Needed Low 3
Street Signs & Markings Update Needed Low 3
Street Tree maintenance Update Needed Low 3
Weekend Work Furlough Program Update Needed Low 3
Work Zone Traffic Control Update Needed Low 3
217
218
CITY OF CUPERTINO
Agenda Item
24-13529 Agenda Date:
11/25/2024 Agenda #: 4.
Subject:INFORMATIONAL ITEM Budget Format Review Update
Budget Format Review Update
Presenter: Kristina Alfaro, Director of Administrative Services
4:55(10)
CITY OF CUPERTINO Printed on 11/22/2024Page 1 of 1
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CITY OF CUPERTINO
Agenda Item
24-13530 Agenda Date:
11/25/2024 Agenda #: 5.
Subject:INFORMATIONAL ITEM Receive the Agreed Upon Procedures (AUP)Review -GANN
Limit, Investment Policy, Storm Drain
Receive the Agreed Upon Procedures (AUP)Review -GANN Limit,Investment Policy,Storm
Drain
Presenter: Jonathan Orozco, Finance Manager and The Pun Group
5:05(15)
CITY OF CUPERTINO Printed on 11/22/2024Page 1 of 1
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City of Cupertino
Cupertino, California
Independent Accountants’ Report on
Agreed-Upon Procedures Applied to
Appropriations Limit Schedule
For the Fiscal Year Ended June 30, 2023
221
200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
INDEPENDENT ACCOUNTANTS’ REPORT ON
APPLYING AGREED-UPON PROCEDURES
To the Honorable Mayor and Members of City Council
of the City of Cupertino
Cupertino, California
We have performed the procedures enumerated below on the appropriation limit of the City of Cupertino, California
(the “City”) for the year ended June 30, 2023. The City’s management is responsible for the Appropriations Limit
Schedule.
The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose
of meeting the requirements of Section 1.5 of Article XIII-B of the California Constitution, which was agreed by the
City and the League of California Cities (as presented in the publication entitled Agreed-upon Procedures Applied to
the Appropriations Limitation Prescribed by Article XIII-B of the California Constitution). This report may not be
suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this
report and may not meet the needs of all users of this report and, as such, users are responsible for determining
whether the procedures performed are appropriate for their purposes.
The procedures performed and associated findings are as follows:
1.We obtained the completed worksheets used by the City to calculate its appropriations limit for the year
ended June 30, 2023, and verified that the limit and annual calculation factors were adopted by resolution of
the City Council. We also verified that the population and inflation options were selected by a recorded vote
of the City Council.
Finding: No exceptions were noted as a result of our procedures.
2.For the accompanying Appropriations Limit Schedule, we added the prior year’s limit to the total
adjustments, and agreed the resulting amount to the current year’s limit.
Finding: No exceptions were noted as a result of our procedures.
3.We agreed the current year information presented in the accompanying Appropriations Limit Schedule to
corresponding information in worksheets used by the City.
Finding: No exceptions were noted as a result of our procedures.
4.We agreed the appropriations limit presented in the accompanying Appropriations Limit Schedule to the
appropriations limit adopted by the City Council.
Finding: No exceptions were noted as a result of our procedures.
222
To the Honorable Mayor and Members of City Council
of the City of Cupertino
Cupertino, California
Page 2
2
We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in
accordance with attestation standards established by the American Institute of Certified Public Accountants. We were
not engaged to and did not conduct an examination or review engagement, the objective of which would be the
expression of an opinion or conclusion, respectively, on agreed-upon procedures applied to the appropriations
limitation schedule. Accordingly, we do not express such an opinion or conclusion. Had we performed additional
procedures, other matters might have come to our attention that would have been reported to you.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the
relevant ethical requirements related to our agreed-upon procedures engagement.
This report is intended solely for the information and use of the City Council and management of the City and is not
intended to be and should not be used by anyone other than these specified parties.
Santa Ana, California
May 28, 2024
223
City of Cupertino
Appropriations Limit Schedule
For the Year Ended June 30, 2023
See accompanying Notes to the Appropriations Limit Schedule.
3
Amount Source
A. Appropriations Limit FY 2021-2022 114,666,491$ Prior year appropriation
limit adopted by the City
B. Calculation Factors:
1) Population increase %0.9954 California Department of Finance
2) Inflation increase %1.0755 California Department of Finance
3) Total adjustment %1.0706 (B1 x B2)
C. Annual Adjustment Increase 8,090,031 {(B3-1) x A}
D. Other Adjustments:
1) Loss responsibility (-)- N/A
2) Transfer to private (-)- N/A
3) Transfer to fees (-)- N/A
4) Assumed responsibility (+)- N/A
E. Total Adjustments 8,090,031 (C+D)
F. Appropriations Limit FY 2022-2023 122,756,522$ (A+E)
224
City of Cupertino
Notes to the Appropriations Limit Schedule
For the Year Ended June 30, 2023
4
Note 1 – Purpose of Limited Procedures Review
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), California
governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes. Effective
for years beginning on or after July 1, 1990, under Section 1.5 of Article XIIIB, the annual calculation of the
appropriations limit is subject to the agreed-upon procedures in connection with the annual audit.
Note 2 – Method of Calculation
Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July 1990, the appropriations limit is
required to be calculated based on the limit for the fiscal year 1986-87, adjusted for the inflation and population
factors discussed in Notes 3 and 4 below.
Note 3 – Population Factors
A California governmental agency may use as its population factor either the annual percentage change of the
jurisdiction’s own population or the annual percentage change in population of the county where the jurisdiction
is located. The factor adopted by the City for the year ended June 30, 2023, represents the annual percentage
change in population for the City.
Note 4 – Inflation Factors
A California governmental agency may use as its inflation factor either the annual percentage change in the 4th
quarter per capita personal income (which percentage is supplied by the California Department of Finance) or the
percentage change in the local assessment roll from the preceding year due to the change of local nonresidential
construction. The factor adopted by the City for the year ended June 30, 2023, represents the annual percentage
change for per capita personal income.
Note 5 – Other Adjustments
A California government agency may be required to adjust its appropriations limit when certain events occur,
such as the transfer of responsibility for municipal services to, or from, another government agency or private
entity. The City had no such adjustments for the year ended June 30, 2023.
225
City of Cupertino
Cupertino, California
Independent Accountants’ Report on
Applying Agreed-Upon Procedures to
Investments
March 31, 2023
226
200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
INDEPENDENT ACCOUNTANTS’ REPORT ON
APPLYING AGREED-UPON PROCEDURES
To the Honorable Mayor and the Members of City Council
of the City of Cupertino
Cupertino, California
We have performed the procedures enumerated below on the City’s Investment Policy of the City of Cupertino (the
“City”) as of March 31, 2023. The City’s management is responsible for the Investment Policy.
The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose,
which is assisting users in understanding the Investment Policy. This report may not be suitable for any other purpose.
The procedures performed may not address all the items of interest to a user of this report and may not meet the needs
of all users of this report, and as such, users are responsible for determining whether the procedures performed are
appropriate for their purposes.
The procedures and associated findings are as follows:
1. Obtained the Investment Policy (the “Policy”), dated May 2022, approved by the Honorable Mayor and the
City Council Members, and compared the investments authorized by the Policy with the investments listed in
the March 2023 Treasurer’s Investment Report to determine if all investment types are allowed by the
investment policy.
Finding: No exceptions were noted as a result of our procedures.
2. Compared the City’s Investment Policy with California Government Code Section 53601 to determine
whether the City’s Investment Policy complied with California Government Code Section 53601.
Finding: No exceptions were noted as a result of our procedures.
3. Compared the March 2023 Treasurer’s Investment Report with California Government Code Section 53646
to ensure that the March 2023 Treasurer’s Investment Report complied with California Government Code
Section 53646.
Finding: No exceptions were noted as a result of our procedures.
4. Inquired of the Finance Manager and verified whether investment performance statistics and activity reports
are generated on a quarterly basis for presentation to the oversight (audit) committee, City Manager and the
Honorable Mayor and the City Council Members, as required by the Investment Policy.
Finding: No exceptions were noted as a result of our procedures.
227
To the Honorable Mayor and the Members of City Council
of the City of Cupertino
Cupertino, California
Page 2
5. Inquired of the Finance Manager and documented our understanding of the wire transfer procedures.
Finding: No exceptions were noted as a result of our procedures.
6. Randomly selected three (3) investment sales/maturities from various quarters of Treasurer’s Reports and
performed the following:
Traced investment type to the supporting broker’s confirmation and the Chandler Asset Management,
Inc. (“Chandler”) Report.
Traced the maturity date to the supporting broker’s confirmation and the Chandler Report.
Traced the amount of the investment sold to the supporting broker’s confirmation and the Chandler
Report.
Finding: No exceptions were noted as a result of our procedures.
7. Randomly selected two (2) investments purchased (one as of December 2022 and one as of June 2023 for
fiscal year 2023) from the City’s investment files, and performed the following:
Traced the purchased investments to the corresponding Treasurer’s Investment Report for the month
in which the investments were acquired.
Agreed the amount, terms and interest rate to the Treasurer’s Investment Report.
Verified that the investment type is authorized by the Investment Policy by comparing the type of
investment to the allowable types per the Investment Policy.
Finding: No exceptions were noted as a result of our procedures.
8. Obtained the Principal Custody Solutions (“Principal”) Bank Market/Cost Value Comparison Report, the
City’s third party investment safekeeping custodian, for March 2023 and traced the following from each
investment listed in the Principal statement or other document to the City’s March 2023 Treasurer’s
Investment Report:
Investment description
Market value
Par value/units
Maturity date
Coupon rate
Finding: The accountants noted that the March 2023 Treasurer’s investment report was based on the
investment statement issued by Chandler as of March 31, 2023. In line with our AUP procedures, we were
able to obtain independently the same investment statements from Chandler and Principal, and used the
documents for our testing related to Procedures 8 and 10. We were able to complete the procedures and found
some deviations on the following investment details:
a. Market value - We noted that one hundred ten (110) out of one hundred twenty-four (124) investments do
have different market value per Chandler's investment statement as of March 31, 2023 as compared to the
independently obtained investment statement from Principal. The net effect of variances is summed up to
$5,104, before any related investment accruals. Per inquiry with management, the discrepancy in the
market value is due to the difference in the underlying source of information used in the market value
pricing of investments obtained by the City's investment advisor and custodian for their respective
reports. These types of investments are under level 2 inputs per GASB 72, hence, the valuation is not
based on observable data but rather on market-derived and market-extrapolated ones.
228
To the Honorable Mayor and the Members of City Council
of the City of Cupertino
Cupertino, California
Page 3
b. Maturity date - Based on the results of the performed AUP procedures, the accountants noted that one (1)
out of one hundred twenty-four (124) investments has a deviation related to maturity date. Investment for
FHLMC Multifamily structured with CUSIP 3137BLMZ8 has a different average maturity date presented
per investment report based on Chandler (July 25, 2025) and per investment statement from Principal
(August 25, 2025).
c. Coupon rate - The accountants completed the procedure and it came to our attention that three (3) out of
one hundred twenty-four (124) investments do have different coupon rates presented from the investment
report based on Chandler and from the investment statement as of March 31, 2023 issued by Principal.
We noted that the variances arise from the different pricing sources used. The pricing by Principal was
obtained from Interactive Data Corp (IDC) while Chandler obtained theirs from Bloomberg L.P., both
companies are dominating the market data information industry. For the detailed results of the
procedures, please refer to the table presented below:
Coupon Rate
CUSIP Issuer Per Chandler Per Principal
36265MAC9 GM Financial Auto Lease Trust 1.9 1.850
43815BAC4 Honda Auto Receivables Trust 1.88 1.000
94975H270 Wells Fargo 4.153 4.913
9. Traced three (3) randomly selected Federal Agency investments that were purchased in fiscal year 2023 and
traced the reported ratings to Moody’s rating online.
Finding: No exceptions were noted as a result of our procedures.
10. For the March 2023 Treasurer’s Investment Report, we obtained independently third-party corroborating
evidence from Chandler and Principal of the correct and complete listing of the City's investment portfolio as
of March 31, 2023, and ensured that the details are in agreement with the investment report and City’s
investment files.
Finding: Exceptions were noted. Please refer to the results of Procedure 8 testing for the found deviations in
relation to the investment details.
We were engaged by the City to perform this agreed-upon procedure engagement and conducted our engagement in
accordance with attestation standards established by the American Institute of Certified Public Accountants. We were
not engaged to and did not conduct an examination or review, the objective of which would be the expression of an
opinion or conclusion, respectively, on investments. Accordingly, we do not express such an opinion or conclusion.
Had we performed additional procedures, other matters might have come to our attention that would have been
reported to you.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the
relevant ethical requirements related to our agreed-upon procedures engagement.
This report is intended solely for the information and use of the Members of the City Council and management of the
City and is not intended to be and should not be used by anyone other than those specified parties.
Santa Ana, California
October 22, 2024
229
City of Cupertino
Cupertino, California
Single Audit and
Independent Auditors’ Reports
For the Year Ended June 30, 2023
230
231
City of Cupertino
Single Audit and Independent Auditors’ Reports
For the Year Ended June 30, 2023
Table of Contents
Page
Independent Auditors’ Reports:
Report on Internal Control Over Financial Reporting and on Compliance and
Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards ............................................................ 1
Report on Compliance for Each Major Federal Program; Report on Internal
Control Over Compliance; and Report on the Schedule of Expenditures of
Federal Awards Required by the Uniform Guidance .............................................................................. 3
Schedule of Expenditures of Federal Awards ............................................................................................................ 7
Notes to the Schedule of Expenditures of Federal Awards ........................................................................................ 8
Schedule of Findings and Questioned Costs .............................................................................................................. 9
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200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND
OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Independent Auditors’ Report
To the Honorable Mayor and Members of City Council
of the City of Cupertino
Cupertino, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General
of the United States (“Government Auditing Standards”), the financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of the City of Cupertino,
California (the “City”), as of and for the year ended June 30, 2023, and the related notes to the financial statements,
which collectively comprise the City’s basic financial statements, and have issued our report thereon dated July 1, 2024.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial
reporting (“internal control”) as a basis for designing audit procedures that are appropriate in the circumstances for the
purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements
on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that
there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented,
or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies,
in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged
with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was
not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies
and therefore, material weaknesses or significant deficiencies may exist that were not identified. We identified certain
deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as item 2023-
001 that we consider to be a material weakness.
234
To the Honorable Mayor and Members of City Council
of the City of Cupertino
Cupertino, California
Page 2
2
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s basic financial statements are free from material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements, noncompliance with which could have a direct and material effect on the financial statements. However,
providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do
not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are
required to be reported under Government Auditing Standards.
The City’s Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the findings
identified in our audit and described in the accompanying schedule of findings and questioned costs. The City’s response
was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we
express no opinion on the response.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results
of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This
report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the
entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Santa Ana, California
July 1, 2024
235
200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
REPORT ON COMPLIANCE FOR MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL
OVER COMPLIANCE; AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL
AWARDS REQUIRED BY THE UNIFORM GUIDANCE
Independent Auditors’ Report
To the Honorable Mayor and Members of City Council
of the City of Cupertino
Cupertino, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of Cupertino, California’s (the “City”) compliance with the types of compliance requirements
identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each
of the City’s major federal programs for the year ended June 30, 2023. The City’s major federal program is identified
in the summary of the auditors’ results section of the accompanying Schedule of Findings and Questioned Costs.
In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above
that could have a direct and material effect on its major federal program for the year ended June 30, 2023.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States
of America (“GAAS”); the standards applicable to financial audits contained in Government Auditing Standards, issued
by the Comptroller General of the United States (“Government Auditing Standards”), and the audit requirements of
Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (the “Uniform Guidance"). Our responsibilities under those standards and the
Uniform Guidance are further described in the Auditors’ Responsibilities for the Audit of Compliance section of our
report.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant
ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide
a legal determination of City’s compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation,
and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules,
and provisions of contracts or grant agreements applicable to the City’s federal programs.
236
To the Honorable Mayor and Members of City Council
of the City of Cupertino
Cupertino, California
Page 2
4
Auditors’ Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance
requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance
based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not
a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform
Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance
resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements
referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would
influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the
requirements of each major federal program as a whole.
In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform
audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence
regarding City’s compliance with the compliance requirements referred to above and performing such other
procedures as we considered necessary in the circumstances.
Obtain an understanding of City’s internal control over compliance relevant to the audit in order to design audit
procedures that are appropriate in the circumstances and to test and report on internal control over compliance
in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness
of City’s internal control over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance
that we identified during the audit.
Other Matters
The results of our auditing procedures disclosed instances of noncompliance which are required to be reported in
accordance with the Uniform Guidance and which are described in the accompanying schedule of findings and
questioned costs as item 2023-002. Our opinion on the major federal program is not modified with respect to these
matters.
Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the
noncompliance findings identified in our compliance audit described in the accompanying schedule of findings and
questioned costs. The City’s response was not subjected to the other auditing procedures applied in the audit of
compliance and, accordingly, we express no opinion on the response.
Report on Internal Control Over Compliance
Our consideration of internal control over compliance was for the limited purpose described in the Auditors’
Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal
control over compliance that might be material weaknesses or significant deficiencies in internal control over
compliance and therefore, material weaknesses or significant deficiencies may exist that were not identified. However,
as discussed below, we did identify certain deficiencies in internal control over compliance that we consider to be
material weaknesses.
237
To the Honorable Mayor and Members of City Council
of the City of Cupertino
Cupertino, California
Page 3
5
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does
not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect
and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material
weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over
compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance
requirement of a federal program will not be prevented, or detected and corrected, on a timely basis.
A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal
control over compliance with a type of compliance requirement of a federal program that is less severe than a material
weakness in internal control over compliance, yet important enough to merit attention by those charged with
governance. We consider the deficiencies in internal control over compliance described in the accompanying schedule
of findings and questioned costs as item 2023-002 to be a material weakness.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over
compliance. Accordingly, no such opinion is expressed.
Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the internal
control over compliance findings identified in our compliance audit described in the accompanying schedule of findings
and questioned costs. The City’s response was not subjected to the other auditing procedures applied in the audit of
compliance and, accordingly, we express no opinion on the response.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal
control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly,
this report is not suitable for any other purpose.
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
We have audited the financial statements of the governmental activities, the business-type activities, each major fund,
and the aggregate remaining fund information of the City, as of and for the year ended June 30, 2023, and the related
notes to the financial statements, which collectively comprise City’s basic financial statements. We issued our report
thereon dated July 1, 2024, which contained unmodified opinions on those financial statements. Our audit was
performed for the purpose of forming opinions on the financial statements that collectively comprise the basic financial
statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional
analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such
information is the responsibility of management and was derived from and relates directly to the underlying accounting
and other records used to prepare the basic financial statements. The information has been subjected to the auditing
procedures applied in the audit of the financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS.
In our opinion, the Schedule of Expenditures of Federal Awards is fairly stated in all material respects in relation to the
basic financial statements as a whole.
Santa Ana, California
October 22, 2024, except for the Schedule of Expenditures of Federal Awards, which is as of July 1, 2024
238
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239
City of Cupertino
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2023
See accompanying Notes to the Schedule of Expenditures of Federal Awards.
7
Assistance Grant
Listing Identification Federal Expenditures
Number Number Expenditures to Subrecipients
U.S. Department of Housing and Urban Development
Direct Program:
CDBG - Entitlement Grants Cluster:
Community Development Block Grants/Entitlement Grants 14.218
B-22MC-06-0057 196,616$ 125,278$
Total U.S. Department of Housing and Urban Development 196,616 125,278
Department of Transportation
Passed through State of California Department of Transportation:
Highway Planning and Construction 20.205
HSIPL-5318 (030)182,297 -
Total U.S. Department of Transportation 182,297 -
U.S. Department of Treasury
Direct Program:
COVID-19 Coronavirus State and Local Fiscal Recovery Funds 21.027
1505-0271 6,100,745 -
Total U.S. Department of Treasury 6,100,745 -
U.S. Department of Health and Human Services
Direct Program:
Medical Reserve Corps Small Grant Program 93.008
MRC RISE 22-0039 18,677 -
Total U.S. Department of Health and Human Services 18,677 -
Total Expenditures of Federal Awards 6,498,335$ 125,278$
Federal Grantor/Pass - Through
Grantor/Program Title
240
City of Cupertino
Notes to the Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2023
8
Note 1 – Reporting Entity
The financial reporting entity, as defined by the Governmental Accounting Standard Board (“GASB”), consists of the
primary government, which is the City of Cupertino, California (the “City”), organizations for which the primary
government is financially accountable, and other organizations for which the nature and significance of their
relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements
to be misleading or incomplete.
Note 2 – Basis of Presentation
The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") includes the federal award activity
of the City under programs of the federal government for the year ended June 30, 2023. The information in this Schedule
is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the “Uniform Guidance”).
Because the Schedule presents only a selected portion of the operations of City, it is not intended to and does not present
the financial position of the City.
Note 3 – Summary of Significant Accounting Policies
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized
following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not
allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits
made in the normal course of business to amounts reported as expenditures in prior years.
Note 4 – Indirect Cost Rate
The City has not elected to use the 10-percent de minimis indirect rate as allowed under the Uniform Guidance.
241
City of Cupertino
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2023
9
Section I – Summary of Auditors’ Results
Financial Statements
Type of report the auditors issued on whether the financial
statements audited were prepared in accordance with GAAP: Unmodified
Internal control over financial reporting:
Material weakness(es) identified? 2023-001
Significant deficiency(ies) identified? None reported
Noncompliance material to financial statements noted? No
Federal Awards
Internal control over major programs:
Material weakness(es) identified? 2023-002
Significant deficiency(ies) identified? None reported
Type of auditors’ report issued on compliance for major programs Unmodified
Any audit findings disclosed that are required to be reported in
accordance with 2 CFR 200.516(a)? Yes
Identification of major programs:
Assitance Listing Number(s) Name of Federal Program or Cluster Federal Expenditure s
21.027 Coronavirus State and Local Fiscal Recovery Funds 6,100,745$
Total Expenditures of All Major Federal Programs 6,100,745$
Total Expenditures of Federal Awards 6,498,335$
Percentage of Total Expenditures of Federal Awards 93.88%
Dollar threshold used to distinguish between type A and type B programs $750,000
Auditee qualified as low-risk auditee in accordance with 2 CFR 200.520? No
242
City of Cupertino
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2023
10
Section II – Financial Statement Findings
A. Current Year Findings – Financial Statement Audit
2023-001 – Internal Control Over Financial Reporting – Prior Year Adjustments, Year-End Closing, and
Delay in Issuance of the Single Audit
Criteria:
Management is responsible for the preparation and fair presentation as well as the accuracy of its financial
statements including disclosures in accordance with accounting principles generally accepted in the United States
of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
As part of satisfying that responsibility, management should ensure complete year-end closing and diligently
produce reliable and accurate financial information.
Generally accepted auditing standards defined internal control as a process – affected by the Members of City
Council, management, and other personnel – designed to provide reasonable assurance regarding the achievement
of objectives in the following categories:
Reliability of financial reporting
Effectiveness and efficiency of operations, and
Compliance with applicable laws and regulations.
In essence, accounting policies and procedures would aid the City in providing training for accounting personnel,
communicating and providing a source of reference to approved policies, and maintaining consistency of recording
financial transactions.
Management is responsible for providing timely and accurate financial information. Since the City has expended
over $750,000 of expenditures of federal awards, Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Aware (“Uniform Guidance”),
states the City is required to submit the Data Collection Form and the reporting package to the Federal Audit
Clearinghouse and the State Controller’s Office, which include the Basic Financial Statements of the City, within
the earlier of 30 days after receipt of auditors’ report, or nine month after the end of the audit period.
Condition:
During the year ended June 30, 2023, he City also recorded prior period adjustment in the governmental activities
in the amount of $1,562,736 due to correction of recording loans related interest receivable. The City also recorded
prior period adjustments in the General Fund and the Housing Development Special Revenue Fund in the amount
of $509,278 and $4,725,458, respectively, due to correction of recording loans related interest receivable and the
restatement of unavailable revenue related to the loans receivable to the fund balance.
The City has experienced significant delays in the preparation of the annual comprehensive financial report and
issuance of the Single Audit required under Uniform Guidance. Due to the delay in issuance of the Single Audit
report, the Data Collection Form was not submitted timely.
243
City of Cupertino
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2023
11
Section II – Financial Statement Findings
A. Current Year Findings – Financial Statement Audit (Continued)
2023-001 – Internal Control Over Financial Reporting – Prior Year Adjustments, Year-End Closing, and
Delay in Issuance of the Single Audit (Continued)
Cause:
No formal process in place.
Context and Effect:
A prior period adjustment is reported and the delay in the report issuance as noted in the Condition.
The City is neither in compliance with Uniform Guidance nor is it meeting its current demands for external financial
reporting.
Recommendation:
We recommend the City update its policy to review and reconcile the general ledger. The policy and procedures
should also include the year-end closing procedures and the accounts to be reconciled in accordance with
Governmental Accounting Standards Board Statements and provide training to staff to properly perform the
reconciliation and closing.
In addition, the policy and procedures should include critical due dates and develop a listing of assignment,
including department coordinated items, based on available resources to meet those due dates.
Views of Responsible Officials:
Management concurs the finding.
B. Prior Year Findings – Financial Statement Audit
No prior year financial statement findings were noted.
244
City of Cupertino
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2023
12
Section III – Federal Award Findings
A. Current Year Findings and Questioned Costs – Major Federal Award Program Audit
2023-002 - Reporting – Internal Control and Compliance over Reporting (Material Weakness)
Identification of the Federal Programs:
Assistance Listing Number: 21.027
Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds
Federal Agency: Department of Treasury
Pass-Through Entity: N/A
Federal Award Number and Award Year: 1505-0271
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Pursuant to 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over the
Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal
controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government”
issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO). These would include
segregation of duties over report preparation and submission to ensure compliance with deadline requirements.
Further, per State and Local Fiscal Recovery Funds (“SLRF”) requirements, the recipients are also required to
obligate funds incurred related to revenue replacement under “provision of government services” sub-expenditure
category.
Condition:
The City did not have proper segregation of duties in place for the preparation, approval and submission of the
American Rescue Plan Act (“ARPA”) -related reportorial requirements to the U.S. Department of Treasury. Further,
the audit team noted that the City did not properly obligate the funds related to revenue replacement category on its
annual project and expenditures report resulting to incorrect reporting. Subsequently, the City corrected the
obligation of funds during the March 2024 annual reporting.
Cause:
There was no policy and procedure in place to enhance the internal control over the report submission. In addition,
the City was not familiar with the obligation requirement.
Effect or Potential Effect:
Failure to implement proper segregation of duties, and failure to report correct expended amounts under provision
of government services in the annual report resulted in noncompliance with the compliance requirements. Not
obligating the fund timely could potentially lose the funding.
245
City of Cupertino
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2023
13
Section III – Federal Award Findings (Continued)
A. Current Year Findings and Questioned Costs – Major Federal Award Program Audit (Continued)
2023-002 - Reporting – Internal Control and Compliance over Reporting (Material Weakness) (Continued)
Questioned Costs:
None.
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
Yes. See prior year finding 2022-001.
Recommendation:
We recommend that the City strengthen their report submission process and procedures to ensure all required
reports are properly reviewed and approved and submitted. Further, we recommend the City to have in depth staff
training with regard to the grant compliance requirements in order to avoid misinterpretation of the necessary
requirements.
Views of Responsible Officials:
Management concurs the finding.
246
City of Cupertino
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2023
14
Section III – Federal Award Findings (Continued)
B. Prior Year Findings and Questioned Costs – Major Federal Award Program Audit
2022-001 Reporting – Internal Control and Compliance over Reporting
Identification of the Federal Programs:
Assistance Listing Number: 21.027
Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds
Federal Agency: Department of Treasury
Pass-Through Entity: N/A
Federal Award Number and Award Year: N/A
Condition:
During the prior year audit, the auditors observed that the City did not have a control in place to ensure proper
segregation of duties between report preparation, approval and submission to the US. Department of Treasury, as
well a control to ensure timely submission of ARPA reports. As such, the required Project and Expenditure report
was not submitted on a timely basis.
Status:
Finding carried forward into fiscal year 2023. Refer to finding 2023-002.
247
City of Cupertino
Cupertino, California
Independent Accountants’ Report on
Applying Agreed-Upon Procedures
on 2019 Clean Water and Storm Protection Fee
For the Calendar Year Ended December 31, 2023
248
200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
INDEPENDENT ACCOUNTANTS’ REPORT ON
APPLYING AGREED-UPON PROCEDURES
To the Honorable Mayor and Members of the City Council
of the City of Cupertino
Cupertino, California
We have performed the procedures enumerated below on the City of Cupertino, California (the “City”) in evaluating
whether the 2019 Clean Water and Storm Protection Fee is in accordance with the provisions for the calendar year
ended December 31, 2023. The City’s management is responsible for receipt of 2019 Clean Water and Storm
Protection fees.
The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose
of assisting users in understanding the 2019 Clean Water and Storm Protection Fee. The City’s management has
agreed to and acknowledged that the procedures performed are appropriate for its purposes. This report may not be
suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this
report and may not meet the ends of all users of this report and, as such, users are responsible for determining whether
the procedures performed are appropriate for their purposes.
The procedures and associated findings are as follows:
1. We selected 100% of the revenue transactions recorded in the Environmental Management/Clean Creeks
Special Revenue Fund (Fund 230) and recorded in the Charges for Services General Service Fees (GL account
#230-81-802-450-405) for the period January 1, 2023 thru December 31, 2023 and performed the following
procedures:
a. Observed the Clean Water and Storm Protection fees have been deposited and recorded in Fund
230 within the account #230-81-802-450-405 per Section 3.38.160A of the Cupertino Municipal
Code.
b. Obtained the County tax remittance statement for each specific receipt (as provided by the
County) and observed the cash collected in total on the statement agrees to the amount deposited
in Fund 230 in accordance with Section 3.38.070 of the Cupertino Municipal Code, which
specifies that the City elects to have fees collection on the tax roll in the same manner as property
taxes.
c. Obtained the City support (e.g., schedule of fees billed to property owners in situation where the
fee was not included in the annual tax assessment) and observed the cash collected in total per the
Schedule agrees to the amount deposited in Fund 230 in accordance with Section 3.38.090 of the
Cupertino Municipal Code, which specifies that the City Finance Department bills out fees to
property owners in situations where the fee was not included in the annual tax assessment.
Finding: No exceptions were noted as a result of our procedures. However, we noted that the 2023 storm
drain fees were not fully received until the current fiscal year for the three (3) billed clients of the City
summed up to $4,639.
249
To the Honorable Mayor and Members of the City Council
of the City of Cupertino
Cupertino, California
Page 2
2. We selected 60% of the non-payroll expenditure transactions recorded in Fund 230 for the period
January 1, 2023 thru December 31, 2023 and performed the following procedures:
a. Obtained the City invoices and purchase orders for the expenditures selected, and observed the
description of expenditures on the invoice and purchase order, as well as the assigned object code
on the purchase order from the City were for allowed purposes per Section 3.38.010B of the
Cupertino Municipal Code, which specifies allowable activities are defined as acquisition,
construction, reconstruction, maintenance, and operation of the storm drainage system of the City
or related green infrastructure or other activities required by the City’s NPDES permits, to repay
principal and interest on any bonds which may hereafter be issued for said purposes, to repay
loans or advances which may hereafter be made for said purposes.
b. Obtained the City invoices and purchase orders for the nonpayroll expenditures selected and
observed the description of expenditures on the invoice and purchase order were for allowed
purposes per Section 3.38.0160A and 3.38.0160B of the Cupertino Municipal Code. Section
3.38.160A of the Cupertino Municipal Code specifies allowable from the overall perspective as
direct costs and administrative costs, while 3.38.160B of the Cupertino Municipal Code
specifically defines direct costs as wages and salaries and costs of employee fringe benefits and
mileage reimbursement attributable to said collection activities, with administrative costs as all
costs for computer service, materials, postage supplies and equipment.
c. Obtained the City documentation for all refunds issued and observed the Finance Director
authorized the refund through written approval in accordance with Section 3.38.170 of the
Cupertino Municipal Code.
Finding: No exceptions were noted as a result of our procedures.
3. We sampled one pay period (selected on a haphazard basis) between January 1, 2023 and December 31, 2023
to recompute employee allocation in the general ledger for activity recorded in Fund 230 and compared to the
City’s calculations as follows:
a. Sampled at least 10% of the time cards of applicable employees charged in Fund 230 to the
selected payroll period (selected on a haphazard basis) and observed written approval by
supervisors.
b. Obtained documentation of the general ledger distribution for the payroll period selected and
recalculated the distribution and agreed the results to the budgeted allocation and the functional
allocation matrix established by management. The budgeted allocation shall be specified by City-
established allocation worksheets used to estimate the amount of actual time spent on the
acquisition, construction, reconstruction, maintenance, and operation of the storm drainage
system of the City or related green infrastructure or other activities required by the City’s NPDES
permits.
Finding: No exceptions were noted as a result of our procedures.
250
To the Honorable Mayor and Members of the City Council
of the City of Cupertino
Cupertino, California
Page 3
We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in
accordance with attestation standards established by the American Institute of Certified Public Accountants. We were
not engaged to and did not conduct an examination or review engagement, the objective of which would be the
expression of an opinion or conclusion, respectively, on the 2019 Clean Water and Storm Protection Fee.
Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other
matters might have come to our attention that would have been reported to you.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the
relevant ethical requirements related to our agreed-upon procedures engagement.
This report is intended solely for the information and use of the City Council and the management of the City and is
not intended to be and should not be used by anyone other than these specified parties.
Santa Ana, California
July 17, 2024
251
City of Cupertino
Cupertino, California
Independent Accountants’ Report on
Applying Agreed-Upon Procedures
on 2019 Clean Water and Storm Protection Fee
For the Calendar Year Ended December 31, 2022
252
200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
INDEPENDENT ACCOUNTANTS’ REPORT ON
APPLYING AGREED-UPON PROCEDURES
To the Honorable Mayor and Members of the City Council
of the City of Cupertino
Cupertino, California
We have performed the procedures enumerated below on the City of Cupertino, California (the “City”) in evaluating
whether the 2019 Clean Water and Storm Protection Fee is in accordance with the provisions for the calendar year
ended December 31, 2022. The City’s management is responsible for receipt of 2019 Clean Water and Storm
Protection fees.
The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose
of assisting users in understanding the 2019 Clean Water and Storm Protection Fee. The City’s management has
agreed to and acknowledged that the procedures performed are appropriate for its purposes. This report may not be
suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this
report and may not meet the ends of all users of this report and, as such, users are responsible for determining whether
the procedures performed are appropriate for their purposes.
The procedures and associated findings are as follows:
1. We selected 100% of the revenue transactions recorded in the Environmental Management/Clean Creeks
Special Revenue Fund (Fund 230) and recorded in the Charges for Services General Service Fees (GL account
#230-81-802-450-405) and account #230-81-802-450-405 for the period January 1, 2022 thru
December 31, 2022 and performed the following procedures:
a. Observed the Clean Water and Storm Protection fees have been deposited and recorded in Fund
230 within the account #230-81-802-450-405 per Section 3.38.160A of the Cupertino Municipal
Code.
b. Obtained the County tax remittance statement for each specific receipt (as provided by the
County) and observed the cash collected in total on the statement agrees to the amount deposited
in Fund 230 in accordance with Section 3.38.070 of the Cupertino Municipal Code, which
specifies that the City elects to have fees collection on the tax roll in the same manner as property
taxes.
c. Obtained the City support (e.g., schedule of fees billed to property owners in situation where the
fee was not included in the annual tax assessment) and observed the cash collected in total per the
Schedule agrees to the amount deposited in Fund 230 in accordance with Section 3.38.090 of the
Cupertino Municipal Code, which specifies that the City Finance Department bills out fees to
property owners in situations where the fee was not included in the annual tax assessment.
Finding: No exceptions were noted as a result of our procedures. However, we noted that the 2022 storm
drain fees were not fully received until the current fiscal year brought by the ongoing discussions on billed
storm drain fees to Caltrans Department of Transportation amounted to $586.
253
To the Honorable Mayor and Members of the City Council
of the City of Cupertino
Cupertino, California
Page 2
2.We selected 60% of the non-payroll expenditure transactions recorded in Fund 230 for the period
January 1, 2022 thru December 31, 2022 and performed the following procedures:
a.Obtained the City invoices and purchase orders for the expenditures selected, and observed the
description of expenditures on the invoice and purchase order, as well as the assigned object code
on the purchase order from the City were for allowed purposes per Section 3.38.010B of the
Cupertino Municipal Code, which specifies allowable activities are defined as acquisition,
construction, reconstruction, maintenance, and operation of the storm drainage system of the City
or related green infrastructure or other activities required by the City’s NPDES permits, to repay
principal and interest on any bonds which may hereafter be issued for said purposes, to repay
loans or advances which may hereafter be made for said purposes.
b.Obtained the City invoices and purchase orders for the nonpayroll expenditures selected and
observed the description of expenditures on the invoice and purchase order were for allowed
purposes per Section 3.38.0160A and 3.38.0160B of the Cupertino Municipal Code. Section
3.38.160A of the Cupertino Municipal Code specifies allowable from the overall perspective as
direct costs and administrative costs, while 3.38.160B of the Cupertino Municipal Code
specifically defines direct costs as wages and salaries and costs of employee fringe benefits and
mileage reimbursement attributable to said collection activities, with administrative costs as all
costs for computer service, materials, postage supplies and equipment.
c.Obtained the City documentation for all refunds issued and observed the Finance Director
authorized the refund through written approval in accordance with Section 3.38.170 of the
Cupertino Municipal Code.
Finding: No exceptions were noted as a result of our procedures.
3.We sampled one pay period (selected on a haphazard basis) between January 1, 2022 and December 31, 2022
to recompute employee allocation in the general ledger for activity recorded in Fund 230 and compared to the
City’s calculations as follows:
a.Sampled at least 10% of the time cards of applicable employees charged in Fund 230 to the
selected payroll period (selected on a haphazard basis) and observed written approval by
supervisors.
b.Obtained documentation of the general ledger distribution for the payroll period selected and
recalculated the distribution and agreed the results to the budgeted allocation and the functional
allocation matrix established by management. The budgeted allocation shall be specified by City-
established allocation worksheets used to estimate the amount of actual time spent on the
acquisition, construction, reconstruction, maintenance, and operation of the storm drainage
system of the City or related green infrastructure or other activities required by the City’s NPDES
permits.
Finding: No exceptions were noted as a result of our procedures.
254
To the Honorable Mayor and Members of the City Council
of the City of Cupertino
Cupertino, California
Page 3
We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in
accordance with attestation standards established by the American Institute of Certified Public Accountants. We were
not engaged to and did not conduct an examination or review engagement, the objective of which would be the
expression of an opinion or conclusion, respectively, on the 2019 Clean Water and Storm Protection Fee.
Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other
matters might have come to our attention that would have been reported to you.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the
relevant ethical requirements related to our agreed-upon procedures engagement.
This report is intended solely for the information and use of the City Council and the management of the City and is
not intended to be and should not be used by anyone other than these specified parties.
Santa Ana, California
July 17, 2024
255
CITY OF CUPERTINO
Agenda Item
24-13531 Agenda Date:
11/25/2024 Agenda #: 6.
Subject:INFORMATIONAL ITEM Receive the proposed Audit Committee 2025 Schedule and
Workplan
Receive the proposed Audit Committee 2025 Schedule and Workplan
Presenter: Jonathan Orozco, Finance Manager
5:20(10)
CITY OF CUPERTINO Printed on 11/22/2024Page 1 of 1
powered by Legistar™256
January 29, 2024
Regular Meeting
March 21,2024
Special Meeting
April 22, 2024
Regular Meeting
June 24, 2024
Special Meeting
July 22, 2024
Regular Meeting
October 28, 2024
Regular Meeting
October 31, 2024
Special Meeting
November 25, 2024
Special Meeting
Appoint Audit Committee Chair and
Vice Chair
Approve Prior Meeting Minutes Approve Prior Meeting Minutes Approve Prior Meeting Minutes Approve Prior Meeting Minutes Approve Prior Meeting Minutes
Receive the committee’s roles and
responsibilities (CMC 2.88.100)
OPEB & Pension Trust Performance
Report for Quarter Ending December
31, 2023 and March 31, 2024
FY 2022‐23 ACFR and Supplemental
Reports Review
OPEB & Pension Trust Performance
Report for Quarter Ending June 30,
2024
OPEB & Pension Trust Performance
Report for Quarter Ending
September 30, 2024
Review of FY 2023‐24 ACFR and
Supplemental Reports
Receive PARS Presentation Quarterly Treasurerʹs Investment
Report for Quarter Ending December
31, 2023 and March 31, 2024
Moss Adams ‐ Enterprise Risk
Assessment Report
Quarterly Treasurerʹs Investment
Report for Quarter Ending June 30,
2024
Quarterly Treasurerʹs Investment
Report for Quarter Ending
September 30, 2024
Internal Audit ‐ Citywide Policy
Review
Receive Chandler Investments
Presentation
Internal Audit and Fraud, Waste, and
Abuse Programs Update
Internal Audit Program Internal Audit and Fraud, Waste, and
Abuse Program Update
Internal Audit and Fraud, Waste,
and Abuse Program Update
Budget Format Review Update
Receive The Pun Group Presentation Annual Review of City Investment
Policy
Internal Audit ‐ Citywide Policy
Review
Agreed Upon Procedures (AUP)
Review ‐ GANN Limit, Investment
Policy, Storm Drain
Receive Moss Adams Presentation Review of FY 2022‐23 ACFR and
Supplemental Reports (tentative)
Annual Review of OPEB and Pension
Trust Investment Policies
Discuss Agreed Upon Procedures
(AUP) ‐ Credit Card
Receive Budget Feedback on the
City’s current recommended Service
Level Reductions (SLRs)
Fiscal Year 2023‐24 ACFR Update Receive the proposed Audit
Committee 2025 Schedule and
Workplan
Budget Format Review
Receive the proposed Audit
Committee 2024 Schedule and
Workplan
Summary of Duties – Powers – Responsibilities of
Cupertino Audit Committee
Source: Cupertino, CA Municipal Code, Chapter 2.88.100: Audit Committee
The powers and functions of the Audit Committee shall be as follows:
A: To review the annual audit report and management letter;
B: To recommend appointment of auditors;
C. To review the quarterly Treasurer’s Investment report;
D. To recommend a budget format;
E. To review City investment policies and internal controls of such policies.
F. To recommend appointment of internal auditors;
G. To review internal audit reports.
H. To review quarterly Fraud, Waste, and Abuse Program reports. (Ord. 22-2243 § 1, 2023; Ord. 20-2208, § 1, 2020; Ord. 1679, § 1 (part), 1995)
CITY OF CUPERTINO ‐ AUDIT COMMITTEE 2024 SCHEDULE AND WORK PLAN
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January 27, 2025
Regular Meeting
April 28, 2025
Regular Meeting
July 28, 2025
Regular Meeting
October 27, 2025
Regular Meeting
November/December 2025
Special Meeting
Appoint Audit Committee Chair and Vice Chair Approve Prior Meeting Minutes Approve Prior Meeting Minutes Approve Prior Meeting Minutes Approve Prior Meeting Minutes
Approve Prior Meeting Minutes OPEB & Pension Trust Performance Report for Quarter
Ending March 31, 2025
OPEB & Pension Trust Performance Report for Quarter
Ending June 30, 2025
OPEB & Pension Trust Performance Report for Quarter
Ending September 30, 2025
Review of FY 2024‐25 ACFR and Supplemental Reports
OPEB & Pension Trust Performance Report for Quarter
Ending December 31, 2024
Quarterly Treasurerʹs Investment Report for Quarter
Ending March 31, 2025
Quarterly Treasurerʹs Investment Report for Quarter
Ending June 30, 2025
Quarterly Treasurerʹs Investment Report for Quarter
Ending September 30, 2025
Quarterly Treasurerʹs Investment Report for Quarter
Ending December 31, 2024
Internal Audit and Fraud, Waste, and Abuse Programs
Update
Internal Audit and Fraud, Waste, and Abuse Program
Update
Internal Audit and Fraud, Waste, and Abuse Program
Update
Internal Audit and Fraud, Waste, and Abuse Programs
Update
Annual Review of City Investment Policy Annual Review of OPEB and Pension Trust Investment
Policies
Receive the committee’s roles and responsibilities (CMC
2.88.100)
Internal Audit Program Fiscal Year 2024‐25 ACFR Update
Receive PARS Presentation FY 23‐24 Agreed Upon Procedures (AUP) Review ‐
GANN Limit, Investment Policy, Storm Drain
Budget Format Review (Tentative)
Receive Chandler Investments Presentation
Receive The Pun Group Presentation
Receive Moss Adams Presentation
Summary of Duties – Powers – Responsibilities of
Cupertino Audit Committee
Source: Cupertino, CA Municipal Code, Chapter 2.88.100: Audit Committee
The powers and functions of the Audit Committee shall be as follows:
To review the annual audit report and management letter;
To recommend appointment of auditors;
To review the quarterly Treasurer’s Investment report;
To recommend a budget format;
To review City investment policies and internal controls of such policies.
To recommend appointment of internal auditors;
To review internal audit reports.
To review quarterly Fraud, Waste, and Abuse Program reports. (Ord. 22-2243 § 1, 2023; Ord. 20-2208, § 1, 2020; Ord. 1679, § 1 (part), 1995)
CITY OF CUPERTINO ‐ AUDIT COMMITTEE 2025 SCHEDULE AND WORK PLAN
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