Financial Report 06-30-2003CITY OF CUPERTINO, CALIFORNIA
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
FOR FISCAL YEAR ENDED
JUNE 30, 2003
PREPARED BY:
CITY OF CUPERTINO
FINANCE DEPARTMENT
CAROL A. ATWOOD
DIRECTOR OF ADMINISTRATIVE SERVICES
INTRODUCTORY SECTION
CITY OF CUPERTINO, CALIFORNIA
Comprehensive Annual Financial Report
For the Year Ended June 30, 2003
Table of Contents
Page
[ INTRODUCTORY SECTION [
Table of Contents ................................................................................................. i
Letter of Transmittal ............................................................................................. iv
Organization Chart ............................................................................................... xiii
Commissions and Committees ................................................................................. xiv
City Council and Directory of City Officials ................................................................. xv
Certificate of Award for Excellence in Financial Reporting ................................................ xvi
[FINANCIAL SECTION J
Independent Auditor's Report on Basic Financial Statements ......................................... 3
Management's Discussion and Analysis ....................................................................4
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets ............................................................................... 20
Statement of Activities ................................................................................. 21
Fund Financial Statements:
Major Governmental Funds:
Balance Sheet ........................................................................................ 23
Reconciliation of the Governmental Funds--Balance Sheet with the
Statement of Net Assets .......................................................................... 24
Statement of Revenues, Expenditures, and Changes in Fund Balance ........................ 25
Reconciliation of the Net Change in Fund Balances Total Governmental
Funds with the Statement of Activities ......................................................... 26
Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual:
General Fund ....................................................................................... 27
CITY OF CUPERTINO
Comprehensive Annual Financial Report
For the Year Ended June 30, 2003
Table of Contents
Page
FINANCIAL SECTION (Continued):
Major Proprietary Funds:
Statement of Net Assets ............................................................................. 29
Statement of Revenue, Expenses, and Changes in Fund Net Assets ........................... 30
Statement of Cash Flows ............................................................................ 31
Fiduciary Funds:
Statement of Fiduciary Net Assets .................................................................. 32
Notes to Basic Financial Statements ...................................................................... 33
Supplemental Information:
Major Governmental Funds Other Than the General Fund and Special Revenue Funds:
Schedule o£ Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual:
Public Facilities Corporation Debt Service Fund .............................................. 56
Non-major Governmental Funds:
Combining Balance Sheets .............................................................................58
Combining Statements of Revenues, Expenditures, and Changes
in Fund Balance .................................................................................... 60
Combining Schedule o£ Revenues, Expenditures, and Changes
in Fund Balance - Budget and Actual ............................................................ 62
Internal Service Funds:
Combining Statement of Net Assets ................................................................... 67
Combining Statements of Revenues, Expenses and Changes in Net Assets ...................... 68
Combining Statements of Cash Flows ................................................................. 69
Fiduciary Funds:
Combining Statement of Changes in Assets and Liabilities - All Agency Funds .............. 71
ii
CITY OF CUPERTINO, CALIFORNIA
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2003
Table of Contents
Page
STATISTICAL SECTION ]
General Governmental Expenditures by function -
Last Ten Fiscal Years (Table 1) ............................................................. 76
General Govemmemal Revenues by Source -
Last Ten Fiscal Years (Table 2) .............................................................. 78
Assessed and Estimated Actual Values of Taxable Property -
Last Ten Fiscal Years (Table 3) .............................................................. 79
Property Tax Rates - Direct and Overlapping Governments -
Last Ten Fiscal Years (Table 4) .............................................................. 80
Principal Taxpayers (Table 5) ........................................................................... 81
Computation of Legal Debt Margin (Table 6) ......................................................... 82
Ratio of General Bonded Debt to Assessed Value and Bonded Debt
Per Capita - Last Ten Fiscal Years (Table 7) ................................................ 83
Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total
General Governmental Expenditures - Last Ten Fiscal Years (Table 8) .................. 84
Demographic Statistics - Last Ten Fiscal Years (Table 9) ............................................ 85
Property Values, Construction and Bank Deposits -
Last Ten Fiscal Years (Table 10) .............................................................. 86
Community Profile ......................................................................................... 87
iii
CITY OF
cuPeP no
November 1, 2003
To the Citizens of Cupertino, Honorable Mayor,
Members of the City Council and City Manager
The Comprehensive Annual Financial Report (CAFR) for the City of Cupertino (the City) for the
fiscal year ended June 30, 2003, is submitted herewith. The Introductory Section includes 1)
this transmittal letter, 2) an organizational chart, and 3) a list of principal officials. The
Financial Section includes 1) a new narrative section referred to as Management's Discussion
and Analysis (MD&A), 2) the basic financial statements and related notes, 3) required
supplemental information, 4) the combining financial statements for non-major funds, and 5) the
independent auditors' report. The Statistical Section includes several tables of unaudited data
depicting the financial history of the City as well as miscellaneous statistics.
Although the City's annual report has always been prepared in accordance with generally
accepted accounting principles for local governments as prescribed by the Governmental
Accounting Standards Board (GASB), this year's report has been reformatted to comply with the
new financial reporting model established by GASB Statement 34, Basic Financial Statements -
and Management's Discussion and Analysis - for State and Local Governments, effective for the
City July 1, 2002. GASB 34 provides significant changes in the accounting and reporting of
governmental activities. The new financial reporting model is intended to improve financial
reporting by supplying information not previously available in local government financial
statements, much of it in government-wide formats. In this first year of GASB 34
implementation, financial statement users are guided through the new formats with introductions
and explanations to the new schedules. We hope this effort will assist in the reader's transition
from the City's previous financial reporting to the new GASB 34 formats.
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. 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 Comprehensive Annual Financial Report includes all component units, funds and account
groups of the City. It reports all activities for which the City is considered to be financially
accountable. The general governmental funds provide a full range of services, including all
functions set forth in the organization chart on page xiii. This financial report incorporates data
for the City of Cupertino, the Cupertino Public Facilities Corporation, and the Cupertino
Redevelopment Agency.
iv
Printed on Recycled Paper
The City operates under a Council-City Manager form of government. There are five council
members, including the Mayor, who serve four-year terms. The City Council appoints the City
Manager who is responsible for the daily administration of the City affairs. The City Council
also appoints the City Attorney and the City Treasurer. All other employees are appointed by the
City Manager.
ECONOMIC CONDITIONS AND OUTLOOK
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 11 square miles and is bordered by the cities of San
Jose, Saratoga, Sunnyvale, Santa Clara and Los Altos.
CUPERTINO
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 has been a major attraction for
families wishing to settle in close proximity to jobs in
the Santa Clara Valley.
Cupertino is the world headquarters for major
corporations such as Apple Computer, Portal
Software, and Symantec. Key divisions of Hewlett-
Packard and Borland Software are also located in
Cupertino. The City has eight large shopping centers
including its own regional mall, Vallco Fashion Park.
Developments at the national, state and local level
continue to present fiscal challenges to all municipalities in the area. On the national level, the
costs of an inconclusive war in Iraq and maintenance of the country's heightened state of security
serve to dampen hints of economic recovery. As economists argue whether the national recovery
is "sustainable", it is clear that California's economy has not realized significant growth, and
continues to operate under a massive State budget deficit. California municipalities persist in
their efforts to protect local government revenues from the State Treasury's reach, but an ongoing
shift of local tax funding by the State has made further grabs seem inevitable.
The Silicon Valley's economy has been hardest hit, with reduced demand in the electronics and
technology manufacturing industry, and the highest unemployment rates in the country. The City
of Cupertino experienced its third consecutive year of decline in sales tax revenue, with most
other tax revenues falling behind as well. Property taxes have grown at a very moderate pace, as
property values have maintained healthy assessments throughout the economic downturn. And
with declining yields and cash holdings, the City's investment income has fallen 50% in the past
two years.
V
However, the City has been able to maintain its fiscal stability through prudent use of reserves,
proactive debt refinancing, aggressive pursuit of available revenues, and conservative fiscal
management. As economic recovery builds throughout the State and into the Silicon Valley, the
City plans to increase it efforts in the area of economic development, make the most of the
Redevelopment Agency to improve utilization at Vallco Mall, and collaborate with other local
agencies to maximize resources and funding for regional programs.
SALES TAX TREND
Economic development has become a focal point for Cupertino. This year the City will
implement programs specifically targeted to business retention, expansion and attraction,
including a policy for personal contact with local business leaders. The City's top 10 sales tax
producers will be asked to participate in a program of reporting timely sales tax information
directly to the City. Because the City's sales tax has been largely dependent on the success of the
region's high tech industry, sales tax revenues have continued to decline from the exceptional
levels of 199%2000. But as Northern California straggles to recover from the economic
downturn, the City stands ready to tap the possibilities of its newly formed Redevelopment
Agency, with the Vallco project area as the cornerstone. The City will work towards enhancing
retail at this regional mall and pursue other opportunities to strengthen its economic position.
$14,000
$12,000
$10,000
$8,000
$6,00o
$4,000
$2,000
$o
1994 1995
1996
1997 1998
1999
2000 2001
2002
mACTUAL ]
1ADJBYCPIJ
2OO3
(In thousands)
vi
MAJOR INITIATIVES
Current Year Projects
1. Foster a Sense of Community
· Continue partnerships with area schools to add value to the quality of education and
recreational prospects in the City.
· Offer opportunities and programs to address the needs of our diverse community.
· Foster a better sense of community through recreation activities, outreach programs, and
expansion of community events, and implementation of our Neighborhood Captains
Program.
2. Ensure Land Use is Compatible with Community Character
· Ensure that the "walkable city" concept is present (trails, paths, public access) in all
developmenffredevelopment projects.
· Develop a master plan for the City Center and Town Center, including a full service
hotel, park, and new library.
· Implement the San Tomas/Saratoga Creek Plan, and investigate feasibility of
opportunities of the Stevens Creek Trail.
· Optimize community benefit with the remaining office, industrial and commercial
development approvals.
· Complete annexations of individual parcels of the Monta Vista areas.
3. Protect and Promote our Public Safety
· Continue to expand our "safe routes to school" program.
· Evaluate methods for communicating (electronically and in writing) to our non-English
speaking population regarding crime prevention.
· Continue emphasis on our neighborhood watch and disaster preparedness programs.
4. Enhance Services
· Identify needs and provide affordable housing opportunities to Cupertino teachers and
other local workers.
· Expand quality municipal services to newly annexed regions of the City.
· Expand access to our City Council and Commission meetings by making them available
worldwide through the City's website.
· Enhance responses to customer inquiries through our new "Access Cupertino" program.
vii
5. Ensure the Financial Health of the Community
· Encourage a healthy environment for retail growth.
· Add a revenue enhancement incentive policy component of review for new development.
· Monitor revenue trends and proactively adjust our expenditures to ensure a balanced
budget and preservation of customer service.
6. Pursue Infrastructure Improvements
· Design, finance and construct a new Library and Civic Center Park.
· Redesign and upgrade the Cupertino Sports Center and Teen Center.
· Continue an active street improvement program.
Future Projects
The City will continue to focus on a number of important long-term issues. These issues include
holding the line on City expenditures, partnership opportunities with our schools and other
agencies, continued automation, funding of the capital improvement program and enhancing
economic development efforts.
The City is currently constructing several major capital improvements throughout our
community. As work progresses on our City Center (which includes the new library) and Sports
Center, master plans will be implemented at the Blackberry Farm Golf and Picnic Facility, and
transportation projects will remain a priority. Such growth in capital spending will directly
impact our revenues, service efforts and traffic configurations.
viii
Department Focus - Efforts and Accomplishments
Each year, we feature a department in the city that has made notable contributions to the
organization or community. This year, the spotlight falls on the Emergency Preparedness
Division.
The mission of the division is to facilitate disaster readiness/preparedness of residents,
employees, government, businesses, special districts, and agencies within the City of Cupertino.
This is done through public education, training, and information exchange. Specific
accomplishments this year include:
Expanded the Community Emergency Response Team training (CERT) from four to five
classes, training approximately 35 citizens per class. The City now has over 500 residents
trained.
Expanded the Kaleidoscope Public Safety Camps for grades 6-12 from two to three. More
than 150 students have completed the training.
Conducted five first aid and CPR classes, which trained
over 200 citizens.
Completed one EOC terrorism functional exercise with
County Fire, twenty student volunteers, Nova Care Clinic
and the Cupertino Amateur Radio Emergency System
(CARES) to improve communication and coordination
between groups.
Provided on-site fire extinguisher service to Cupertino residents to encourage preparedness
and make it easier for residents to have extinguishers serviced.
Participated in three School Outreach Career Days offered to elementary and middle school
students.
Facilitated the organization of two new neighborhood CERT teams, bringing the total to ten.
We congratulate the Emergency Preparedness Department for their achievements in all of their
projects and wish them continued success in the implementation of their programs.
ix
FINANCIAL INFORMATION SYSTEMS
Accounting System and Budgetary Control
The City's accounting records are maintained on a modified accrual basis of accounting for all
governmental fund types and agency funds. Under this basis, revenues am recognized when
susceptible to accrual, i.e., both measurable and available, and expenditures, other than interest
on long-term obligations which is recorded when paid, are recognized when the liability is
incurred. The accrual basis of accounting is used by the proprietary fund types where revenues
are recognized when earned and expenses are recorded when incurred. In compiling the
government-wide financial statements in conformance with GASB 34, the accrual basis of
accounting is used to report all of the City's financial activities. Since the fund financial
statements are still compiled using the modified accrual method for governmental funds, a
reconciliation report is provided to show the changes between the two reporting methods.
In developing and evaluating the City's accounting system, consideration is given to the
adequacy of internal accounting controls. Such 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. 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 internal
accounting controls adequately safeguard assets and provide reasonable assurance of the proper
recording of financial transactions.
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 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
level of budgetary control (i.e., the level at which expenditures cannot legally exceed the
appropriated amount) is the functional level.
Changes in Financial Reporting
In addition to providing for new, government-wide financial statements and formatting, GASB
34 requires a Management's Discussion and Analysis (referred to as MD&A) with the intent of
giving readers an objective and easily readable analysis of the City's financial performance for
the year. Much of the information needed for the new MD&A was previously provided in this
transmittal letter; it includes a discussion of the basic financial statements, some condensed
financial information, an analysis of the City's financial position and results of operations on
both a City-wide and Fund basis. Comparative figures are available only on the fund basis in this
first year of GASB 34 implementation. The Management Discussion and Analysis begins on
page four.
X
One of the most significant and far-reaching new requirements of GASB 34 deal with the
reporting of general infrastructure assets. GASB defines public infrastructure assets as long-lived
capital assets associated with Governmental Activities that normally are stationary in nature and
can be preserved for a significantly greater number of years than most capital assets. Therefore,
the City needed to capture cost information for land, roads, bridges, sidewalks, streetlights, storm
drains, and traffic signal systems. An inventory for each of these infrastructure systems existed
within the various asset management systems in place within the Public Works Department, but
the data had to be updated, and a valuation determined for each infrastructure item. GASB 34
requires that infrastructure assets be reported at historical cost or deflated replacement cost.
Some estimates had to be made drawing on price-level indices to the likely year of acquisition.
These assets then were depreciated over their estimated useful lives. The City already had
information regarding its general fixed assets, however, these assets had not previously been
capitalized outside of the those used for business-type (enterprise fund) activities. For proper
presentation of these assets, accumulated depreciation was calculated, current-year capital
acquisitions and depreciation were determined by functional area; and the book value of capital
assets disposed of during the year was calculated. Utilizing these estimates and cost data, the
City was able to report infrastructure and other capital asset inventories in compliance with
GASB Statement 34 as of July 1, 2002.
Cash Management
The City maintains a cash and investment pool for all City funds. The City's funds are invested
by the City Treasurer according to the investment policy adopted by the City Council. The
objectives of the policy are legality, safety, liquidity, diversity and yield. The policy addresses
soundness of financial institutions and the types of investments permitted by the California
government code.
The City investments may include obligations of the U.S. Treasury, agencies and
instrumentalities, commercial paper, banker's acceptances, corporate bonds, repurchase
agreements, certificates of deposit and the State Treasurer's Local Agency Investment Fund.
Total investment earnings for all funds was approximately $1.5 million.
Risk Management
The City maintains a program of commercial insurance combined with self-insurance for
substantially all of its governmental operations except for major construction projects and
contractor-supplied services. In such cimumstances, insurance to protect the City is provided by
each contractor.
INDEPENDENT AUDIT
City Ordinance requires an annual audit of the financial records by an independent certified
public accounting firm selected by the City Council. The City's general purpose financial
statements were audited by Maze and Associates, and their opinion thereon is included in the
Financial Section of this report.
xi
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 Comprehensive Annual Financial Report for the year ended June 30, 2002.
In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily
readable and efficiently organized Comprehensive Annual Financial Report, whose contents
conform to program standards. Such reports must satisfy both generally accepted accounting
principles and applicable legal requirements. A Certificate of Achievement is valid for a period
of one year only. We believe our current report continues to meet the program's requirements
and we are submitting it to the GFOA to determine its eligibility for another certificate.
ACKNOWLEDGMENTS
I would like to express my appreciation to the City employees, City Manager, and the members
of the City Council for their interest in conducting the financial operations of the City in a
responsible manner. Special thanks go to the Finance staff, Dixie Farley, Tina Mao, and Beth
Ebben, for their continued support and dedication. Special recognition goes to Dorothy Steenfott
for her efforts in the preparation and production of this report, and to Jennifer Chang and Carol
Augustine, who spent many hours to ensure the accurate implementation of GASB Statement
#34. Compliance with the statement's requirements in the reporting of infrastructure inventories
and historical valuations was also made possible through the efforts of the Public Works
Department.
Respectfully submitted,
Carol A. Atwood
Director of Administrative Services
xii
xiii
CITY OF CUPERTINO, CALIFORNIA
Fiscal Year 2002/03
COMMISSIONS AND COMMITTEES
AUDIT COMMITTEE
PARKS & RECREATION COMMISSION
Michael Chang
Gillian Enos
Tom Hall
Dolly Sandoval
Rod Brown
Jeanne Bradford
Frank Jelinch
Roger Peng
Kris Wang
HOUSING COMMISSION
TELECOMMUNICATIONS COMMISSION
Julia Abdala
Richard Abdalah
Sarah Hathaway-Feit
Mahesh Nihalani
Frances Seward
Salvatore Algeri
David Eggleston
L. T. Guttadauro
Steven Ting
Ernest Tsui
FINE ARTS COMMISSION
LIBRARY COMMISSION
Nancy Canter
David Kim
Hema Kundargi
Shirley Lin Kinoshita
Janet Mohr
Carl Orr
Rita Young
Sheila Mohan
Janet Riddell
Eno Schmidt
Katherine Stakey
Yuhfen Diana Wu
PUBLIC SAFETY COMMISSION
PLANNING COMMISSION
Barry Chang
Nolan Chen
Emma Darknell
Philippe Dor
Hugh Riddell
Angela Chen
Chuck Corr
Marry Miller
Taghi Saadati
Gilbert Wong
TEEN COMMISSION
ECONOMIC DEVELOPMENT
Princess Castaneda
Akshita Deora
Patty Fang
Erin Gatley
Piyush Goyal
Christopher Haley
Zack Kolev
Alexander Lee
Kenny Lin
Emily Liu
Kevin Schroeder
Danh Trang
Angelica Zen
Carol Atwood
Jody Hansen
Sandra James
David Knapp
Richard Lowenthal
Orrin Mahoney
Mark McKenna
Steve Piasecki
Ralph Quails
Gilbert Wong
BICYCLE PEDESTRIAN COMMISSION
Hua Julia Fu
David Greenstein
Robert Levy
Geoffrey Paulsen
Joseph Walton
xiv
CITY OF CUPERTINO, CALIFORNIA
Fiscal Year 2002/03
CITY COUNCIL
Michael Chang
Mayor
Sandra James
Vice Mayor
Richard LowenthaI
Councilmember
Patrick Kwok
Councilmember
Dolly Sandoval
Councilmember
DIRECTORY OF CITY OFFICIALS
David W. Knapp - City Manager
Charles T. Kilian - City Attorney
Carol Atwood - Director of Administrative Services
Rick Kitson - Public Information Officer
Steve Piasecki - Director of Community Development
Ralph Qualls- Director of Public Works
Kimberly Smith - City Clerk
Therese Smith - Director of Parks and Recreation
XV
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Cupertino,
California
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2002
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
President
Executive Director
xvi
NOTES
xvii
FINANCIAL SECTION
NOTES
2
&
SSOCIA TES
To the City Council
City of Cupertino, California
INDEPENDENT AUDITOR'S REPORT ON
BASIC FINANCIAL STATEMENTS
ACCOUNTANCY CORPORATION
1931 San Miguel Drive - Suite 100
Walnut Creek, California 94596
(925) 930-0902 · FAX (925) 930-0135
E-Mail: maze@mazeassociates, com
Web$ite: www. mazea$$ociate$.com
We have audited the basic financial statements of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the City of Cupertino as of and for the year ended June 30, 2003,
as listed in the Table of Contents. These financial statements are the responsibility of the City's management. Our
responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards in the United States of America and
generally accepted government audit standards issued by the comptroller General of the United States of America.
Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the financial
statements are free of material misstatement. An audit includes examining on a test basis evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
We have a}so issued our report on the City's internal controls and compliance with laws, rules and regulations which is
dated January 22, 2004.
In our opinion, the basic 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 of Cupertino at June 30, 2003 and the results of its operations and the cash flows
of its proprietary fund types thereof and the respective budgetary comparisons listed as part of the basic financial
statements for the year then ended, in conformity with generally accepted accounting principles in the United States of
America.
The basic component unit financial statements referred to above follow the requirements of the Government Accounting
Standards Board's Statement No. 34, Basic Financial Statements-and Management 's Discussion and Analysis-for State
and Local Governments, No. 36, Recipient Reporting for Certain Non-exchange Revenues, an Amendment of GASB
Statement No. 33, No. 37, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local
Governments; Omnibus. and No. 38, Certain Financial Statement Note Disclosures, as discussed in Note 1 to the basic
component unit financial statements.
Management's Discussion and Analysis is required by the Government Accounting Standards Board, but is not part
of the basic component unit financial statements. We have applied certain limited procedures to this information,
principally inquiries of management regarding the methods of measurement and presentation of this information, but
we did not audit this information and we express no opinion on it.
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The
supplemental section listed in the Table of Contents are presented for purposes of additional analysis and are not a
required part of the basic financial statements of the City of Cupertino. Such information has been subjected to the
auditing procedures applied in our audit of the basic financial statements, and in our opinion are fairly stated in all
material respects in relation to the basic financial statements taken as a whole.
The statistical section listed in the Table of Contents was not audited by us, and we do not express an opinion on this
information.
January 22, 2004
3
A Professional Corporation
CITY OF CUPERTINO
MANAGEMENT'S DISCUSSION AND ANALYSIS
Fiscal 2003 is the first year the City is required to issue its financial statements in the format proscribed
by the provisions of Government Accounting Standards Board Statement 34 (GASB 34), which requires
the City to provide this overview (MD&A) of its financial activities for the fiscal year. The MD&A is
intended to provide an objective and easily readable analysis of the City's financial performance for the
year. Please read it in conjunction with the accompanying Transmittal Letter and Basic Financial
Statements.
FISCAL 2003 FINANCIAL HIGHLIGHTS
The City continued to be affected by another year of economic slowdown and the State of California's
escalating budgetary crisis. After the economy declined dramatically in fiscal year 2001/02, City
revenues continued on a downward slide, led by a $1.6 million decrease in Sales Tax, the City's largest
revenue source. Growth in property tax slowed to 3%. Investment earnings fell almost 20% in an
environment where yields on short-term investments crawled below 2%, and the ten-year Treasury yield
declined to a 45-year low. A second year of decreases in revenues from charges for services hit the City's
Enterprise funds hardest, as consumer demand for recreational and other community services remained
tepid.
Against this backdrop of declining revenues, the City persisted in guarding its limited reserves, which are
held to protect the City from economic fluctuations and catastrophic events. In order to finance the
construction of a new library facility and other capital projects, the City took advantage of historically
low interest rates to refinance its existing debt with a new COP issuance of over $56.6 million. The
transaction provided additional funding of $16 million, and lowered the City's annual debt service
payments by approximately $1.2 million per year.
Financial highlights of the year include the following:
The City's total net assets decreased $6.4 million during the fiscal year. At June 30, 2003, net assets
totaled $120.5 million.
· Total City revenues, including program and general revenues, were $39.0 million, while total
expenses were $45.4 million.
· Net assets in Governmental funds were $113.3 million, while net assets in business activities were
$7.3 million.
Governmental Program Revenues were $6.3 million; Governmental Program Expenses were $38.7
million.
· Revenues from Business-Type activities were $7.4 million; expenses associated with these same
activities were $6.7 million.
- General Fund revenues and expenditures were $27.7 million and $25.6 million, respectively.
~ The General Fund balance was $16.9 million at the 2003 fiscal year end.
The City adopted Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial
Statements - and Managements's Discussion and Analysis -for State and Local Governments, effective
July 1, 2002. In adopting this new financial reporting standard, the City recorded certain adjustments as
described in Note 14 to the financial statements.
4
OVERVIEW OF TIlE COMPREItENSIYE ANNUAL lZlNANEIAL REPORT
This Comprehensive Annual Financial Report is in six parts: 1) Introductory section, which includes the Transmittal Letter and general information,
2) Management's Discussion and Analysis (this part),
3) The Basic Financial Statements, which include the Government-wide and the Fund financial
statements, along with the Notes to these financial statements,
4) Required Supplemental Information,
5) Combining statements for Non-major Governmental Funds and Fiduciary Funds,
6) Statistical information.
The Basic Financial Statements
The Basic Financial Statements comprise the City-wide Financial Statements and the Fund Financial
Statements; these two sets of financial statements provide two different views of the City's financial
activities and financial position.
The City-wide Financial Statements provide a longer-term view of the City's activities as a whole, and
comprise the Statement of Net Assets and the Statement of Activities. The Statement of Net Assets
provides information about the financial position of the City as a whole, including all its capital assets and
long-term liabilities on the full accrual basis, similar to that used by corporations. As such, increases or
decreases in total net assets will, over time, reflect changes in the fiscal health of the City. The Statement
of Activities provides information about all the City's revenues and all its expenses, also on the full
accrual basis, with the emphasis on measuring net revenues or expenses of each the City's programs. The
Statement of Activities explains in detail the change in Net Assets for the year.
All of the City's activities am grouped into Govemment Activities and Business-type activities, as
explained below. All the amounts in the Statement of Net Assets and the Statement of Activities are
separated into Governmental Activities and Business-type Activities in order to provide a summary of
these two activities of the City as a whole.
The Fund Financial Statements report the City's operations in more detail than the government-wide
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 and expenditures and fund
balances; they exclude capital assets, long-term debt and other long-term amounts.
Major Funds account for the major financial activities of the City and are presented individually, while
the activities of Non-major funds are presented in summary, with subordinate schedules presenting the
detail for each of these other funds. Major Funds are explained below.
The fiduciary statements provide financial information about the activities of the Special Assessment
Districts, for which the City acts solely as agent.
The Government-wide Financial Statements
The Statement of Net Assets and the Statement of Activities present information about the following:
Governmental activities-- Most of the City's basic services are considered to be governmental
activities, including general government, community development, public safety, public works,
culture-recreation, public improvements, planning and zoning, and general administration services.
These services are supported by general City revenues such as taxes, and by specific program
revenues such as developer fees.
5
The City's governmental activities include the activities of a separate legal entity, the Cupertino
Redevelopment Agency, because the City is considered to be financially accountable for the Agency.
The Cupertino Public Facilities Corporation, from which the City leases its major facilities through the
payment of long-term debt, is also included as a component unit.
Business-type activities--All of the City's enterprise activities are reported here, including solid
waste collection and disposal, and the recreational operations of each of the City's various community
facilities. Unlike governmental services, these services are supported by charges paid by users based
on the amount of the service they use.
City-wide financial statements are prepared on the accrual basis, which means they measure the flow of
all economic resources of the City as a whole.
Fund Financial Statements
The Fund Financial Statements provide detailed information about each of the City's most significant
funds, called Major Funds. The concept of major funds, and the determination of which are major funds,
was established by GASB Statement 34 and replaces the concept of combining like funds and presenting
them in total. Instead, each Major Fund is presented individually, with all Non-major Funds summarized
and presented only in a single column. Subordinate schedules present the detail of these Non-major
funds. Major Funds present the major activities of the City for the year, and may change from year to
year as a result of changes in the pattern of City's activities.
Fund Financial Statements include governmental, enterprise and internal service funds as discussed
below.
Governmental Fund Financial Statements are prepared on the modified accrual basis, which means they
measure only current financial resources and uses. Capital assets and other long-lived assets, along with
long-term liabilities, are not presented in the Governmental Fund Financial Statements.
Enterprise and Internal Service Fund financial statements are prepared on the full accrual basis, as in the
past, and include all their assets and liabilities, current and long-term.
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 assets of the Internal Service Funds.
Comparisons of Budget and Actual financial information are presented only for the General Fund and
other Major funds that are Special Revenue Funds.
Fiduciary Statements
The City is the agent for certain assessment districts, holding amounts collected from property owners
which await transfer to these Districts' bond trustees. The City's fiduciary activities are reported in the
separate Statements of Fiduciary Net Assets and the Agency Funds Statement of Changes in Assets and
Liabilities. These activities are excluded from the City's other financial statements because the City
cannot use these assets to finance its own operations.
6
FINANCIAL ACTIVITIES OF THE CITY AS A WHOLE
This analysis focuses on the net assets and changes in net assets of the City's Governmental Activities
(Tables 1, 2 and 3) and Business-Type Activities (Tables 4 and 5) presented in the City-wide Statement of
Net Assets and the Statement of Activities that follow.
Governmental Activities
Table 1
Governmental Net Assets at June 30, 2003
(in millions)
Cash and investments $ 52.8
Other assets 5.5
Capital assets 118.5
Total assets 176.8
Long-term debt outstanding
Other liabilities
54.8
8.7
Total liabilities 63.5
Net assets:
Invested in capital assets, net of debt 79.7
Restricted 9.1
Unrestricted 24.5
Total net assets $113.3
Net assets of $113.3 million at June 30, 2003 were comprised of the following elements:
· Unrestricted cash and investments of $33.4 million, $3.5 million restricted for debt service, and
$15.9 million of bond proceeds restricted for the construction of capital assets.
· $1.6 million loans issued in the administration of the City's various grant-supported housing
programs; and $1.5 million in conjunction with the City's executive housing assistance program.
Accrued revenues of $1.§ million (primarily taxes) and $0.6 in grants receivable.
Capital assets of $118.$ million, net of depreciation charges. This net valuation includes $60.8
million in Land, which is not depreciated; $15.2 million in City facilities, including Building,
improvements, machinery and equipment; and $37.1 invested in the City's major infrastructure
systems (roads, bridges, storm drains, etc.) In addition, $5.4 million of construction in progress
was also capitalized, though not depreciated, this year.
Operational accounts payable of $4.9 million and accrued payroll of $2.8 million (including $1.7
million in vacation and sick leave payable.)
Refundable deposits of $0.8 million from developers and others in the community development
permitting process.
Deferred revenue of $0.2 million, most of which is associated with grant funds received, but not
yet expended according to grant restrictions.
Long-term debt of $54.8 million, representing the principal balance outstanding at fiscal year end.
Net assets invested in capital assets of $79.7 million, the difference between net capital assets and
related long term debt.
Restricted net assets of $9.1 million, the result of external restrictions placed upon special
revenue, capital projects and debt service funds.
Unrestricted net assets of $24.5 million, which can be used to finance day-to-day operations
without constraints established by debt covenants or other legal requirements. As in the past, the
Council has elected to further restrict and designate general fund balances. GASB Statement 34
does not permit the reporting of such designations on the face of the government-wide statement
of net assets, but they are detailed in the notes to the financial statements. These reserves and
designations reflect the Council's desire to set aside funds for economic and other uncertainties,
and to be available for future capital needs.
Table ~
Changes in Governmental Net Assets
(in Millions)
Revenues:
Program revenues:
Charges for services
Operating grants and contributions
Capital grants and contributions
$ 2.9
2.4
1.0
General revenues:
Property taxes 4.1
Sales and use taxes 8.9
Other taxes 7.5
Other 4.5
Transfers 0.:2
Total revenues 31.5
Expenses:
General government 11.3
Public safety 6.1
Law enforcement 17.5
Interest on long term debt 3.8
Total expenses 38.7
Change in net assets
Net Assets - Beginning
Net Assets - Ending
(7.2)
120.5.
$113.3
The main factor contributing to the decline in govermmental net assets can be found in the long-term
refinancing debt issuance in October 2002. The refunded debt reserve funds ($5.1 million) that were
deposited into the escrow to payoff the old debt, are required to be reflected as expenditures. Expended
from the City's Public Facilities Corporation, this major expenditure is reflected as a Public Works
expense.
In addition, the cost of governmental activities outstripped the revenues made available from taxes and
other general revenues as discussed below. Table 3 presents the net cost of each of the City's major
programs--general government, police, fire, development and engineering, public works, parks and
recreation, capital asset maintenance and preservation, and interest on long-term debt. Net cost is defined
as total program cost less the revenues generated by those specific activities, and reflects the financial
burden that was placed on the City's taxpayers by each of the programs.
Governmental Activltle~
(in ~iUion~)
Cost of
Governmental Activities
Total Cost Net Cost
General government
Law Enforcement
Public Works
Community Development
Parks and Recreation
Interest on Long-term Debt
$ 6.O $ 5.7
6.0 5.3
17.5 14.5
3.2 1.2
2.2 2.0
3.8 3.8
Totals $ 38.7 $ 32.5
The cost for all governmental activities this year was $38.7 million. The City's taxpayers paid for
approximately 73 percent of these costs through general revenues and charges for services. Grants
and contributions funded the balance of the costs of governmental activities.
General governmental costs comprise 15.4 percent of governmental services expenses, and
include Administration (City Council, City Manager and City Attorney activities), Public
Information, and Administrative Services.
The City's costs for Law Enforcement, procured by contract with the Santa Clara County
Sheriff's Office, were partially offset by various fines ($468 thousand) and by state grants ($218
thousand).
Public Works expenses include transportation, engineering, environmental programs and the
maintenance of the City's streets, grounds and facilities. Also included are capital improvements.
Projects. Offsetting revenues include state and county operating grants ($802 thousand), federal
capital grants ($892 thousand), and facility rental ($233 thousand).
Community Development programs include Planning, Building and Housing Services.
Development fees for plan checks and building permits make up the majority of the $1.6 million
revenues that offset the costs of these programs. Housing mitigation fees, along with Community
Development grants and loans, provided revenues of $387 thousand for the City's housing
services program.
Most of the costs of the City's Park and Recreation programs are reported as business-type
activities for which fees are charged to recover the costs of the programs. However, many
community events, programs and services are available to the public free of charge. The costs of
administering these general (governmental) activities are partially offset by facility rental fees,
which amounted to $162 thousand in fiscal year 2002-03.
10
l~us~ness-type 3,cfivifies
Table 4
Business-Type Net Assets
(in Millions)
Business-Type Activities
2003 2002
Cash and investments $ 7.6 $ 8.2
Other current assets 0.5 0.4
Capital assets 0.7 0.8
Total assets 8.8 9.3
Other liabilities 1.5 3.0
Total liabilities 1.5 3.0
Net assets:
Invested in capital assets, net of debt 0.7 0.8
Restricted
Unrestricted 6.6 5.6
Total net assets $ 7.3 $ 6.4
The net assets of business-type activities increased $861 thousand in fiscal 2003, primarily as the result of
net revenues over expenditures in the Resources Recovery Program and in the City's Recreation
Programs, as discussed below. Investment and miscellaneous earnings contributed $331 thousand to the
increase in Net Assets while operating earnings contributed a net of $754 thousand. $225 thousand was
transferred to the General Fund as provided for in the Operating Budget for the fiscal year.
11
q~able ~
Changes in Business-Type Net Revenues
Net Revenues from Business-type activities:
Resources Recovery
Blackberry Farm
Cupertino Sports Center
Recreation Programs
Senior Center
Business-type Activities
2003 2002
$549,286 $654,609
(5,939) 110,597
(20,278) 20,621
317,170 147,165
(85,882) (61,587)
Total Business-type Activities
$754.357 871.405
Program revenues of Business-type Activities increased $279 thousand in fiscal 2003, and although these
activities as a whole were profitable, the relatively weak economy allowed only a slow growth in revenue
from charges for services in all of these funds. Mild losses were incurred in the Blackberry Farm and
Senior Center Funds, as increased operating revenues were not enough to offset increased expenses and
budgeted transfers out. The Sports Center showed a profit only after inclusion of moderate interest
income.
THE CITY'S FUND FINANCIAL STATEMENTS
Governmental Funds
The general government functions are accounted for in the General, Special Revenue, Debt Service and
Capital Project funds. At June 30, 2003, the City's governmental funds reported combined fund balances
of $48.3 million, which is an increase of $5.6 million or 13.2% compared with the prior year. This
increase was largely the result of a combined increase in the Library Construction and Debt Service Funds
of $9.2 million. A net decrease of $5.7 million in the General Fund offset these changes in fund balances.
Other governmental funds, mainly capital improvement funds, increased over $2.1 million. These non-
major funds accounted for $13.7 million, or 28% of all fund balances at June 30, 2003.
The table on the following page presents governmental fund revenues by source and the related changes
for the prior year. Revenues for these funds totaled approximately $31.3 million in fiscal year 2002/03, a
decrease of 14.62% from the preceding fiscal year. The General Fund accounted for 29% of this
decrease, as sales tax revenues reflected the difficult economic environment with a $1.6 million drop.
Park dedication fees, a much more variable revenue collected at the completion of major development
projects, was short of the prior year's peak by $2.3 million. Revenue from use of money and property
also decreased significantly in 2002-03 due to falling interest rates on the City's investment portfolio.
The Local Agency Investment Fund (LAIF), which typically constitutes half of the portfolio, was yielding
1.70% at June 30, 2003, as opposed to the 2.69% at the prior fiscal year end, and 5.78% from two years
ago. The City's portfolio as a whole yielded 2.74% in June.
Gas Tax Fund revenues were down $837 thousand. An additional drop in intergovernmental revenues
was due in part to the cessation of reimbursement from the state for mandated programs and processes
($128 thousand). Revenues from charges for services also decreased somewhat this year, although the
drop is not indicative of any significant trend. In particular, charges for plan checks dropped almost
$80,000, but only as a result of the checks being done in-house. The City was able to offset these reduced
revenues by avoiding the higher cost of contracting out this service.
12
Table 6
Revenues Classified by Source
Governmental Fund Types
Increase/(Decrease)
from previous year
Revenues by Source Amount % of Total Amount Percent
Taxes $20,200,250 64.53% $(3,884,168) (I6.13)%
Use of Money & Property 1,910,503 6.10 (359,132) (15.82)
Intergovernmental 6,318,523 20.18 (792,375) (11.14)
License s and Permits 1,410,572 4.51 100,102 7.64
Charges for Services 855,844 2.73 (292,891) (25.49)
Fines and Forfeitures 550,377 1.76 (65,850) (10.69)
Other Revenue 59,219 0.19 (67,967) (53.44)
Total $31.305.288 100.00% $~(5.362.281) (14.62)~%
Governmental fund expenditures increased $5 million this year to a new total of $44.1 million, an
increase from the preceding fiscal year of 12.9%. Expenditures by major service area and the related
changes from the prior fiscal year are shown in the following table:
Table 7
Expenditures Classified by Major Service Area
Governmental Fund Types
Increase/(Decrease)
from previous year
Expenditures by Service Area Amount % of Total Amount Percent
Administration $1,474,924 3.35% $10,759 0.73%
Law Enfomement 6,015,036 13.65 249,828 4.33
Public Information 703,431 1.60 (4,454) (0.63)
Administrative Services 3,475,991 7.89 161,047 4.86
Recreation Services 2,104,167 4.77 245,829 13.23
Community Development 3,177,406 7.21 (1,296,382) (28.98)
Public Works 10,440,335 23.69 (639,624) (5.77)
Capital Outlay 6,812,856 15.46 1,377,006 25.33
Debt Service:
Principal 6,925,948 15.71 4,550,948 191.62
Interest 2,939,757 6.67 379,784 14.84
Total
$44.069.851 100.00v& ~ 12.90%
13
For the most part, City departments were able to hold the llne on operational expenditures in this year of
declining tax revenues. An effort to expand classes and programs that meet the needs of the City's
culturally diverse senior population is reflected in higher costs in Parks and Recreation. The 29 percent
drop in Community Development expenditures is the result of prior year funding ($1.6 million) of a major
multi-family rental housing development through a local non-profit organization, largely with the use of
specific federal grants funding. Capital spending varies widely from year to year, and in 2002-03, several
large construction projects were initiated, including the replacement of the municipal library and
surrounding civic plaza improvements. Capital project spending increased by nearly $1.4 million.
Although departmental expenditures stayed level, principal outlays for debt service increased $4.5
million. The near two-fold increase was the result of the recording of the 2002 Refinancing and Capital
Improvement Project COP issuance. The issuance allowed the City to refinance its outstanding $43
million debt, borrow an additional $16 million, and realize an on-going decrease in annual debt service
payments of approximately $1.2 million. However, the use of debt reserve funds ($5.1 million) to refund
the prior debt is required to be reported as current year expenditures.
Proprietary Funds
Proprietary funds include the City's enterprise funds and internal service funds. Enterprise funds are used
to account for operations that are financed and operated in a manner similar to private business enterprise
where the intent is that the costs of providing goods or services to the general public on a continuing basis
be financed or recovered primarily through user charges. Each fund is considered a major proprietary
fund, and analysis of these operations is provided in the discussion of the City's business-type activities
earlier in this report.
Enterprise fund net assets totaled $7.3 million at June 30, 2003, an increase of $860 thousand. Enterprise
operating revenues were $7.4 million this year, up $365 thousand from last year, while net non-operating
revenues were down $85 thousand to a new total of $276 thousand this year. This decrease was due
mainly to lower cash balances in the Resources Recovery fund, which yielded less interest in income than
in the prior year ($73 thousand.) Enterprise Fund operating expenses were $6.6 million in fiscal 2003, up
$426 thousand from the prior year.
Internal Service Funds are used to account for the financing of services provided by one department or
agency to other departments or agencies of the City on a cost-reimbursement basis. Because the services
are provided primarily to the general government, these operations are reported as part of government
activities in the citywide financial statements under GASB 34. In essence, any income or losses that are
related to an internal service fund activity represent an adjustment of the expenses recorded by the various
governmental functions. The following table shows actual revenues, expenses (including depreciation)
and results of operations for the fiscal year ended June 30, 2003.
Table 8
Revenues, Expenses, and Results of Operations
Internal Service Funds
Fund
Management Information Systems
Workers' Compensation
Equipment Revolving
Long-Term Disability
Operating Operating Operating Net
Revenues Expenses Income Income/(Loss)
$828,720 $1,021,688 $(192,968) $ 97,831
155,665 253,567 (97,902) (57,851)
901,240 885,343 15,897 57,646
72,460 80,453 (7,993) (6,881)
Totals
$1.958.08~5 $_2.241.051 $1282.966)
$ 90.745
14
Resources are being accumulated in the Equipment Revolving fund and the Management Information
Systems fund to provide for future replacement of existing equipment.
Major Governmental Funds
General Fund
General Fund revenues decreased approximately $1.7 million this fiscal year due mainly to decreased tax
revenues. Property taxes increased slightly ($144 thousand) as assessed valuations rose 3.4%. But sales
tax revenues slid almost $1.6 million (15%), after having fallen 12% the previous year. Utility user taxes
and franchise fees both declined - $66 thousand (2.5%) and $98 thousand (4.3%), respectively - from last
year. With the addition of a new hotel in Cupertino (for a total of four hotels), transient occupancy tax
revenue increased $132 thousand (5%) Permits for home construction contributed $1.4 million to General
Fund revenues, up 7.6% from the prior year. Return on investments decreased $266 thousand (19.4%) as
a result of the decline in short-term interest rates, and lower cash balances.
General Fund expenditures decreased overall and were less than budgeted. Expenditures decreased $342
thousand in fiscal 2003, to a total of $25.6 million. Community Development expenditures decreased the
most significantly from the prior year, as construction of a major below-market rate housing project was
completed early in the fiscal year.
Transfers out of the General Fund increased to $25.5 million in Fiscal 2003 as a result of the transfer to
fund the Library Construction ($16.4 million) project.
Table 9
General Fund Budget and Actual Comparison
(in millions)
Budgeted Amounts
Original Final Actual Variance
Revenues (amount available for appropriation) $30.61 $28.92 $27.72 $( 1.20)
Charges for Appropriation (26.05) 27.29 (25.56) 1.73
Other Financing Sources (9.35) 8.49 (7.89) 0.60
Excess (Deficiency)
($4.79) ($6.86) $(5.73) 1.13
General Fund revenue shortfalls became apparent early in the fiscal year, and appropriate budget
adjustments were made at mid-year. Cost cutting resulted in departmental savings, offsetting the negative
variances of revenues that still fell short of the mid-year expectations.
At June 30, 2003, the General Fund Balance comprised $13.1 million in unreserved, undesignated
balances, with $3.8 million reserved almost entirely for loans receivable, affordable housing and public
access television. Only .the unreserved portion represents available liquid resources, since the reserved
portion is represented by non-cash assets or by open purchase orders. Council has specifically designated
amounts of unreserved balances for emergency preparedness, capital projects, and as a buffer in times of
further economic uncertainty.
15
Other Ma]or Governmental Funds
(Non-major funds are not presented separately in the Basic Financial statements, but are individually
presented as Supplemental Information.)
Public Facilities Corporation
This fund accounts for the payments of principal and interest on certificates of participation (COPs), the
long term debt issued to provide for funding many of the City's major parks and facilities. This year the
fund activity reflects the refunding of all prior COP issues, with the issuance of a COP principal amount
of $56,640,000. The refinancing effectively consolidated the City's long-term debt through the Public
Facilities Corporation and provided addition funding of $17.3 million for the library construction project
and other current capital improvements. By extending the term of debt repayment to 30 years at the lower
interest rates available when issued, the new debt configuration allows the City lower lease payments to
the Corporation on an annual basis going forward. Part of the refinancing called for the release of
previously held debt reserve funds. Expenditures of the Public Facilities Corporation fund reflected this
refunding of debt reserves, increasing from $4.9 million in the prior year to almost $9.9 million in 2002-
03. As a result, fund balances decreased from $5.1 million to slightly over $0.7 million.
Library Construction Fund
This fund accounts for the activities related to the demolition of the existing library facility and the
construction of a new public library at the City's Civic Center. Council reviewed and endorsed the
project in September 2002. The site was cleared and construction began in July 2003. The project is
expected to be completed in October 2004. In the 2003-04 fiscal year, Library Construction Fund
revenues consisted of a transfer from the General Fund of $16.4 million. Fund expenditures totaled $2.8
million.
Proprietary Funds
Resource Recovery Fund
The Resource Recovery Fund operating revenues increased $160 thousand this year to a total of 2.5
million, while operating expenses were $1.9 million, an increase of $170,000. Non-operating revenues in
the form of interest income ($186 thousand) was $72 thousand less than in the prior year. Overall, net
assets in the fund increased to nearly $5.8 million. The Resource Recovery Fund's entire fiscal year end
Net Assets balance was unrestricted.
Blackberry Farm Fund
Blackberry Farm incurred a slight operating loss ($18 thousand) in the current year, in contrast with the
net operating income of $110 thousand in the prior year. Revenues increased only $14 thousand to $1.48
million, while expenses increased $143 thousand this year. After a $75,000 transfer to the General Fund,
net assets of this Fund decreased a total of $81 thousand.
Much of the fund's $801 thousand total net assets are invested in capital assets. A master plan for the
Blackberry Farm facilities is currently underway to determine the most effective use of these assets for
the community in the future.
16
Cupertino Sports Center Fund
Net assets of the Cupertino Sports Center Fund remained the same as last year, despite the closure of the
facility in May 2003 for renovation. Activities of this fund generated essentially the same $1.1 million as
in 2001-02, while incurring only minor expenditure increases. Almost the entire $437 thousand of fund
net assets are unrestricted, although the major renovations should add to the undepreciated net assets next
year.
Recreation Programs Fund
Net income for the City's recreation programs grew to $335,291 before transfers out this year compared
with $163,474 last year, as charges for programs increased almost 11% to $1.9 million. Expenditures
held steady, thus creating increased net assets totaling $256,992 at year-end. None of the Recreation
Programs Fund's net assets are restricted.
Senior Center Fund
Although operating revenue at Cupertino's Senior Center increased slightly ($32,000) to $485,000,
operating expenses also increased, by $56,000 compared with last year. The Senior Trips program is a
large portion of this fund's revenues and expenditures, and is growing as one of the services most enjoyed
by Cupertino's senior residents. The negative ending net assets of ($13,000) should be short-lived as
several new programs become more fully developed and self-supporting.
CAPITAL ASSETS
At the end of fiscal 2003 the City had $118.5 million, net of depreciation, invested in a broad range
capital assets used in governmental activities, as shown in Table 10 below (further detail may be found in
Note 5 to the financial statements):
Table 10
Net Capital Assets at Year-end
(in Millions)
Governmental Activities:
Land
Construction in progress
Buildings
Improvements other than buildings
Machinery and Equipment
Roads, curbs, gutters, sidewalks, medians and bridges
Storm rain structures and mains
Traffic signals
2003
$60.8
5.4
8.2
4.8
2.2
25.9
10.9
0.3
2002
$60.8
0.9
9.3
5.7
2.6
27.9
11.7
0.4
Totals
$118.5
$119.3
17
Table 10 (cont.)
Net Capital Assets at Year-end
(in Millions)
Business-type Activities
Land
Improvements other than buildings
Machinery and equipment
2003 2002
$ O.4 $ O.4
0.2 0.3
0.1 0.1
Totals $0.7 $0.8
The City depreciates all its capital assets except for land and construction in progress. This is the first
year that the City has reported infrastructure components as required by GASB 34. After posting a charge
for depreciation of $5.4 million for the fiscal year, accumulated depreciation for governmental capital
assets totaled $125 million at June 30, 2003.
DEBT ADMINISTRATION
Each of the City's debt issues is discussed in detail in Note 6 to the financial statements. In October
2002, the City effectively consolidated all previous debt issues and procured additional bond financing of
$17 million dollars for the construction of a new public library and other capital improvements projects.
As in the past, the City's debt comprises Certificates of Participation (COPs) issued by the Cupertino
Public Facilities Corporation, and is serviced by the City through lease payments to the corporation. The
2002 issuance consists of fixed rate serial COPs bearing coupon interest at 2.0 % to 5.0%, maturing
annually through 2024, and two term bonds with a 4.75% rate maturing in 2027 and 2030. The total of
the outstanding issuance is $54,770,000.
SPECIAL ASSESSMENT DISTRICT DEBT
At June 30, 2003, a total of $195,000 in special assessment district debt was outstanding, issued by one
special assessment district. This debt is secured by a traffic impact fee, charged as a special assessment
on the real property in the district issuing the debt, and is not the City's responsibility. The City acts
solely as the District's agent in the collection and remittance of the assessment.
ECONOMIC OUTLOOK AND MAJOR INITIATIVES
The impact of the economic environment and a description of the City's major initiatives for the coming
year are discussed in detail in the accompanying Transmittal Letter.
CONTACTING THE CITY'S FINANCIAL MANAGEMENT
This Comprehensive Annual Financial Report is intended to provide citizens, taxpayers, investors, and
creditors with a general overview of the City's finances. Questions about this Report should be directed
to the Finance Department at City Hall, 10300 Torre Avenue in Cupertino.
18
CITY OF CUPERTINO I
STATEMENT OF NET ASSETS AND
STATEMENT OF ACTIVITIES
The Statement of Net Assets and the Statement of Activities are entirely new statements required by
Government Accounting Standards Board Statement 34. Their purpose is to summarize the entire City's
financial activities and £mancial position. They are prepared on the same basis as is used by most
businesses, which means they include all the City's assets and all its liabilities, as well as all its revenues
and expenses. This is known as the full accrual basis--the effect of all the City's transactions is taken into
account, regardless of whether or when cash changes hands, but all material internal transactions between
City funds have been eliminated.
The Statement of Net Assets reports the difference between the City's total assets and the City's total
liabilities, including all the City's capital assets and all its long-term debt. The Statement of Net Assets
presents similar information to the old balance sheet format, but presents it in a way that focuses the reader
on the composition of the City's net assets, by subtracting total liabilities from total assets.
The Statement of Net Assets summarizes the financial position of all the City's Governmental Activities in a
single column, and the financial position of all the City's Business-Type Activities in a single column; these
columns are followed by a Total column which presents the financial position of the entire City.
The City's Governmental Activities include the activities of its General Fund, along with all its Special
Revenue, Capital Projects and Debt Service Funds. Since the City's Internal Service Funds service these
Funds, their activities are consolidated with Governmental Activities, after eliminating inter-fund
transactions and balances. The City's Business Type Activities include all its Enterprise Fund activities.
The Statement of Activities reports increases and decreases in the City's net assets. It is also prepared on the
full accrual basis, which means it includes all the City's revenues and all its expenses, regardless of when
cash changes hands. This differs from the "modified accrual" basis used in the Fund financial statements,
which reflect only current assets, current liabilities, available revenues and measurable expenditures.
The format of the Statement of Activities differs considerably from those used in the past. It presents the
City's expenses first, listed by program, and follows these with the expenses of its business-type activities.
Program revenues--that is, revenues which are generated directly by these programs--am then deducted
from program expenses to arrive at the net expense of each governmental and business-type program. The
City's general revenues are then listed in the Governmental Activities or Business-type Activities column,
as appropriate, and the Change in Net Assets is computed and reconciled with the Statement of Net Assets.
Both these Statements include the financial activities of the City, the Cupertino Redevelopment Agency, and
the Cupertino Public Facilities Corporation, which are legally separate but am component units of the City
because they am controlled by the City, which is financially accountable for their activities.
This is the first year in which the City of Cupertino has prepared its financial statements in accordance with
GASB Statement 34. These new financial statements along with the fund financial statements and footnotes
are called Basic financial Statements; the term General Purpose Financial Statements is no longer used.
19
CITY OF CUPERTINO
STATEMENT OF NET ASSETS
JUNE 30, 2003
ASSETS
Cash and investments (Note 2)
Receivables:
Loans (Note 3)
Prepaid expenses
Other assets
Capital assets, net of accumulated depreciation (Note 5)
Total Assets
LIABIL[iiES
Accounts payable and accruals
Accrued payroll and benefits
Deposits
Deferred revenue
Long-term debt (Note 6):
Due within one year
Due in more than one year
Total Liabilities
NET ASSETS (Note 7)
Invested in capital assets, net of related debt
Restricted for:
Special revenue projects
Capital projects
Affordable housing
Public access television
Debt service
Total Restricted Net Assets
Unrestricted
Total Net Assets
Goverranental Business-Type
Activities Activities Total
$52,770,107 $7,620,817 $60,390,924
2,341,115 410,388 2,751,503
3,091,010 3,091,010
57,976 26,398 84,374
3,884 3,884
118,530,714 688,331 119,219,045
176,794,806 8,745,934 185,540,740
4,911,589 358,194 5,269,783
2,830,045 193,060 3,023,105
841,638 211,100 1,052,738
182,251 721,735 903,986
1,220,000 1,220,000
53,550,000 53,550,000
63,535,523 1,484,089 65,019,612
79,705,041 688,331 80,393,372
5,939,086 5,939,086
1,099,093 1,099,093
448,895 448,895
889,074 889,074
705,643 705,643
9,081,791 9,081,791
24,472,451 6,573,514 31,045,965
$113,259,283 $7,261,845 $120,521,128
See accompanying notes to financial statements
20
STATEMENT OF ACTI¥ITIE$
THE YEAR ENDED JL~qE 30, 2003
Punctions/Pro~rams Expenses
Govenanental Activities:
Administration $1.635.846
Law enforcement 6.041,831
Public infommtion 763.254
Administrative services 3.556,129
Recreation services 2,156.972
Community development 3,234.456
Public works 17.534.128
Interest on long term debt 3.796.472
Pro,ram Revenues
Operating Capital
Charges for Grants and Grants and
Services Contributions Contributions
Change~ in Net Assets
Governmental Business-type
Activities Aefivitie~
($1.635.846)
$468,110 $218.364 (5.355.357)
(763,254)
294,577 (3.261.552)
161.969 20.097 (1.974.906)
1,624.181 387.726 $47.250 (1.175.299)
348.905 1.762.012 917.961 (14.505.250)
(3.796.472)
Total Government al Activilies 38.719.088 2.897.742 2.388,199 965.21l (32A67,936)
Business-type Activities:
Resource recov~y 1,897,425 2.397.439 49.272
Blackberry fam~ 1,497,420 1.479.312 12.169
Cupe~ino sports center 1.130.077 1,109.799
Recreation programs 1.554.834 1,872.004
Senior center 570.412 484.530
Total
($1.635.846)
(5.355.357)
(763.254)
(3.261.552)
(1.974.906)
(1.175.299)
(14.505.250)
(3.796,472)
(32,467,936)
$549.286 549.286
(5.939) (5.939)
(20.278) (20.278)
317.170 317.170
(85.882) (85.882)
Tot al Bu siness-type Aotl vities 6,650,168 7,343,084 61A41
754,357 754,357
Total $45.369.256 $10.240.826 $2A49.640 $965.211 (32.467.936) 754.357 (31.713.579)
Prope~y taxes
Incremental prope~y [ax
Sales taxes
Other taxes
Motor vehicle in lieu
Inv~tm~t earnings
Miscellaneous
Transfers (Note 4)
Net As.set s-B e~aning
4.100.856 4.100.856
25.831 25,831
8.843.792 8.843.792
7.531.948 7.531.948
3,215.866 3.215.866
1,207.017 211.093 1.418,110
79.280 120.403 199.683
225.000 /225,000)
25,229,590 106,496 25,336,086
(7.238.346) 860.853 (6.377.493)
120.497.629 6.400.992 126.898.621
$113.259.283 $7.261.845 $120.521.128
21
FUND FINANCIAL STATEMENTS
GASB 34 revises the format of the Fund Financial Statements so that only individual major funds are
presented, while non-major funds are combined in a single column. Major funds are defined generally as
having significant activities or balances in the current year. No distinction is made between Fund types and
the practice of combining like funds and presenting their totals in separate columns (Combined Financial
Statements) has been discontinued, along with the use of the General Fixed Assets and General Long-term
Debt Groups of Accounts.
The funds described below were determined to be Major Funds by the City for fiscal 2003. Individual
non-major funds may be found in the Supplemental section.
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.
PUBLIC FACILITIES CORPORATION FUND
This fund accounts for the payments of principal and interest on certificates of participation issued to
provide for the financing of the City Hall/Library, Wilson Park and Memorial Park and other City facilities,
through the issuance of certificates of participation.
LIBRARY CONSTRUCTION FUND
This fund accounts for costs associated with demolition of an old library building, and the design and
construction of a new library on that site.
22
CITY OF CUPERTINO
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2003
ASSETS
Cash and investments (Note 2)
Receivables:
Accounts
Loans (Note 3)
Prepaid expense
Advance to other funds (Note 4)
Other assets
Total Assets
LIABILITIES
Accounts payable and accruals
Accrued payroll and benefits
Deposits
Advance from other funds (Note 4)
Deferred revenue
Total Liabilities
Fund balance (Note 7)
Reserved for:
Encumbrances
Debt service
Advances to other funds
Prepaid expense
Capital projects
Loans receivable
Affordable housing
Low and moderate income housing
Public access television
Unreserved:
Designated
Undesignated, reported in:
Special Revenue Funds
Capital Projects Funds
TOTAL FUND BALANCES
Total Liabilities and Fund Balances
General
Public
Facilities
Corporation
Library
Constraction
Other
Governmental
Funds
Total
Govm~m~ental
Funds
$15,303,165 $4,239,828
1,759,296
2,016,997
57,976
174,400
3,884
$17,168,336
$13,371,748
581,819
1,074,013
$50,083,077
2,341,115
3,091,010
57,976
174,400
3,884
$19,315,718 $4,239,828 $17,168,336 $I5,027,580 $55,751,462
$937,276
472,83I
841,638
182,251
$3,534,185
$124,916
$257,312
23,128
174,400
877,422
$4,853,689
495,959
841,638
174,400
1,059,673
2,433,996 3,534,185 124,916 1,332,262 7,425,359
705,643
738,565
15,944,327
2,775,610 3,709,522
705,643
174,400
57,976
15,944,327
711,974 2,728,971
448,895
15,537 15,537
889,074
195,347
174,400
57,976
2,016,997
448,895
889,074
13,099,033 68,333 5,383,627 18,550,993
· 1,990,579 1,990,579
292,195 2,817,991 3,110,186
I6,881,722 705,643 17,043,420 13,695,318 48,326,103
$19,315,718 $4,239,828 $17,168,336 $15,027,580 $55,751,462
See accompanymg notes to fmancialstatements
23
CITY OF CU!~ERTINO
Reconciliation of the
GOVERNMENTAL FUNDS -- BALANCE SHEET
with the
STATEMENT OF NET ASSETS
JUNE 30, 2003
Total fund balances reported on the governmental funds balance sheet
Amounts reported for Governmental Activities in the Statement of Net Assets
are different from those reported in the Governmental Funds above because of the following:
CAI)Il'AL ASSETS
Capital assets used in Governmental Activities are not current assets or financial resources and
therefore are not reported in the Governmental Funds.
ALLOCATION OF INTERNAL SERVICE FUND NET ASSETS
Internal service funds are not govermnental funds. However, they are used by management to
charge the costs of certain activities, such as insurance and central services and maintenance
to individual governmental funds. The net current assets of the Internal Service Funds are therefore
included in Governmental Activities in the following line items in the Statement of Net Assets.
Cash and investments
Capital a~sets, net of accumulated depreciation
Accounts payable and accruals
Accrued payroll and benefits
ACCRUAL OF NON-CURRENT REVENUES AND EXPENSES
Revenues which are deferred on the Fund Balance Sheets because they are not available currently
are taken into revenue in the Statement of Activities.
LONG TERM ASSETS AND LIABILITIES
The assets and liabilities below are not due and payable in the current peried and therefore are not
reported in the Funds: Long- term debt
Non-current portion of compensated absences
NET ASSETS OF GOVERNMENTAL ACTIYflIES
See accompanying notes to financial statements
$48,326,103
116,968,136
2,687,030
1,562,578
(57,900)
(741,287)
877,422
(54,770,000)
(1,592,799)
$113,259,283
24
CITY OF CUPERTINO
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
FOR THE YEAR ENDED JUNE 30, 2003
REVENUES Taxes
Use of money and property
Intergovernmental
Licenses and permits
Charges for services
Fines and forfeitures
Other revenue
EXPENDITURES
Cuxrent:
Adrnh~istration
Law enforcement
Public information
Administralive ser~ces
Recreation services
Conm~mfity development
Public works
Capital outhy
Debt service Principal
Interest and fiscal charges
Total Expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Bond proceeds (Note 6)
Payment to refunded debt
escrow agent (Note 6)
Transfers in (Note 4)
Tramfers (out) (Note 4)
Total Other Financing Sources (Uses)
NET CHANGE IN FUND BALANCES
BEGINNING FUND BALANCES:
As reported originally
· GASB 34 Implementation adjusm~ent (Note 14)
As adjusted
ENDING FIJND BALANCES
Public Other Total
Facilities Library Governmental Governmental
General Co~poration Construction Funds Funds
$20,102,569 $97,681 $20,200,250
1,498,412 $73,449 338,642 1,910,503
3,644,686 2,673,837 6,318,523
1,410,572 1,410,572
503,590 352,254 855,844
540,923 9,454 550,377
16,139 43,080 59,219
27,716,891 73,449 3,514,948 31,305,288
1,474,924 1,474,924
6,015,036 6,015,036
703,431 703,431
3,450,455 25,536 3,475,991
2,104,167 2,104,167
3,021,838 155,568 3A77,406
8,778,192 1,662,143 10,440,335
14,943 $2,802,967 3,994,946 6,812,856
6,925,948 6,925,948
2,939,757 2,939,757
25,562,986 9,865,705 2,802,967 5,838,193 44,069,851
2,153,905 (9,792,256 (2,802,967) (2,323,245) (12.764,563)
17,305,284 40,372,235
(39,208.286
312~438 4,239,000
(25,503,100)
57,677,519
(39,208,286)
16,400,000 4,824,100 25,775,538
(337,438). (25,840,538)
(7,885,378) 5,402,949 16,400,000 4,486,662 18,404,233
(5,731,473) (4,389,307) 13,597,033 2,163,417 5,639,670
21,282,616 5,094,950 3,446,387 11,484,016 41,307,969
1,330,579 47,885 1,378,464
22,613,195 11,531,901 42,686,433
$16,881,722 $705,643 $17,043,420 $13,695,318 $48,326,103
See accompanying notes to £mancial statements
25
CITY OF CUPERTINO
Re conciliation of the
NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS
with the
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2003
The sckedule below reconciles the Net Changes in Fund Balances reported on the Ooverarcental Funds Statermnt of
Revenues, Expenditures and Changes in Fund Balance, which measures only changes in current assets and current
liabilities on thc modified accrual basis, with the Change in Net Assets of Goverara:ntal Activities reported in the
S tatenent of Activities, which is prepared on the full accraal basi~
NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS
Amounts reported for governmental activities itt the Staten~nt of Activities
are different because of the following:
CAPITAL ASSETS TRANS ACTIONS
@overramntnl Funds report capital outlays as expenditures. However,
in the Statement of Activities the cost of those assets is capitalized and allocated over
their estirmted usehl lives and reported as depreciation expense.
The capital outlay expenditures are therefore added back to fund balance
(Net of internal service fund additions of $207,558)
Depreciation expense is deducted fromthe fund balance
(Depreciation expense is net of internal service fund depreciation
of $557,602 which has already been allocated to serviced funds)
Retirerm~ts of capital assets
LONG TE1LM DEBT PROCEEDS AND PAYMENTS
Bond proceeds provide current fit~ancial remurces to governmental funds, but
iaming debt increases long-term liabilities in the S tatermnt of Net
Repayment of bond principal is an expenditure in the governrr~ntal funds, but
in the S tatermnt of Net Assets the repayrc~nt reduces long-term liabilifie~
Proceeds from the issuance of debt are deducted from fund balance
Payment to rethnded debt escrow agent, net, is added back to fund balance
Repayrmnt of debt principal is added back to fund balance
ACCRUAL OF NON-CURP~NT ITEMS
The an~unts below included in the Staten~nt of Activities do not provide or (require) the ur~ of
current financial resources and therefore are not reported as revenue or expenditures in
governnentnl funds (net change):
ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY
Internal Service Funds are used by xranagement to charge the costs of certain activities,
such as equiptrent acquisition, maintenance, and iasuxanee to individual fund~
71~e portion of the net revenue (expense) of these Internal Service Funds axising out
of their transactions with goveran~ntal funds is reported with governmental activities,
because they service those activities.
Change in Net Assets- All Internal Service Funds
CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES
$5,639,670
4,991.630
(4,872,839)
(504,736)
(57,677,519
38,351,571
6,925,948
(214,335)
31,519
90,745
($7,238,346
26
CITY OF CUPERT~qO
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR TH~ YEAR ENDED JUNE 30, 2003
Use of money and property
I~t er goverarnent al
Licenses and permits
Charges for services
Fines and forfeitures
Other revenue
Amounts available for appropriation
Charges for appropriation (outflows)
Administration
Law enforcement
Public information
Administrative services
Recreation services
Community development
Public works
Capital outlay
Total charges for appropriations
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Bond Proceeds
Transfers in
Transfers (out)
Total other financing sources(uses)
EXCESS (DEFICIENCY) OF REVENUES AND OTHER
SOURCES OVER EXPENDITURES AND OTHER USES
BEGiNNING FUND BALANCES: As reported originally
GASB 34 Implementation adjustment (Note 14)
As adjusted
ENDING FUND BALANCES
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual Amounts (Negative)
$23,470,000 $21,435,000 $20,102,569 ($1,332,431)
1,400,000 1,370,000 1,498,412 128,412
3,502,000 3,799,905 3,644,686 (155,219)
1,150,000 1,182,000 1,410,572 228,572
335,000 381,250 503,590 122,340
600,000 600,000 540,923 (59,077)
150,000 152,600 16,139 (136,461)
30,607,000 28,920,755 27,716,891 (1,203,864)
1,519,000 1,578,736 1,474,924 103,812
6,042,000 6,325,411 6,015,036 310,375
748,000 765,602 703,431 62,171
3,592,000 3,679,872 3,450,455 229,417
2,330,000 2,254,911 2,104,167 150,744
2,745,000 3,525,796 3,021,838 503,958
9,074,000 9,149,071 8,778,192 370,879
14,943 14,943
26,050,000 27,294,342 25,562,986 1,731,356.
4,557,000 1,626,413 2,153,905 527,492
15,665,000 16,703,000 17,305,284 602,284
1,725,000 312,438 312,438
(26,742,000) (25,503,100) (25,503,100)
(9,352,000) (8,487,662) (7,885,378) 602,284
($4,795,000) ($6,861,249) (5,731,473) $1,129,776
21,282,616
1,330,579
22,613,195
$16,881,722
See accompanying notes to financial statements
27
MAJOR PROPRIETARY FUNDS
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 concept of major funds established by GASB Statement 34 extends to Proprietary Funds. The City has
identified the funds below as major proprietary funds for fiscal 2003.
GASB 34 does not provide for the disclosure of budget vs. actual comparisons regarding proprietary funds
that are major funds.
RESOURCE RECOVERY FUND
This fund accounts for activity related to the collection and disposal of solid waste. A private company has
been issued an exclusive franchise to perform these services.
BLACKBERRY FARM FUND
This fund accounts for activities related to operating the picnic area and golf course.
CUPERTINO SPORTS CENTER FUND
This fund accounts for the operation and maintenance of the Cupertino Sports Facility.
RECREATION PROGRAMS FUND
This fund accounts for activities of the City' s community center.
SENIOR CENTER FUND
This fund accounts for the activities of the City's senior center.
28
PROPRIETARy FUNDS
STATEMENT OF NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2003
ASSETS
Current assets:
Cash a~ld investments (Note 2)
Accounts receivable
Prepaid expense
Total current assets
Capital assets, net of
accunmlated depreciation (Note 6)
Total Assets
LIABILITIES
Current Liabilities:
Accounts payable and accruals
Accrued payroll and benefits
Deposits
Deferred revenue
Total currere liabilities
Total LiabilRias
NET ASSETS
Invested in capital assets,
net of related debt
U~estricted
Total Net Assets
Business-type Activities-Ent eaprise Funds Govenm~ental
C'upex~ino Activities-
Re.sources Blackberry Sports Recreation Senior Internal Service
Recovery Faint Center pro,rams Center Totals Funds
$5,713,895 $397,840 $600,173 $758,621 $150,288 $7,620,817 $2,687,030
333,806 76,582 410,388
26,398 26,398
6,047,701 397,840 600,173 835,203 176,686 8,057,603 2,687,030
238 678,195 4,428 5,470 688,331 1,562,578
6,047,939 1,076,035 604,60I 835,203 182,156 8,745,934 4,249,608
266,835 52,906 20,849 10,050 7,554 358,194 57,900
5,412 110,500 13,285 40,791 23,072 193,060 741,287
111,840 250 99,010 211,100
128,733 527,370 65,632 721,735
272,247 275,246 163,117 578,211 195,268 1,484,089 799,187
272,247 275,246 163,117 578,21I 195,268 1,484,089 799,187
238 678,195 4,428 5,470 688,331 1,562,578
5,775,454 122,594 437,056 256,992 (18,582) 6,573,514 1,887,843
$5,775,67~2 $800,789 $441,484 $256,992 ($13,112)
See accompanying~otestofmancinistatenmnts
$7,261,845 $3,450,421
29
CITY OF C~ERTIN0
PROPRIETARY FUNDS
STATEMENT OF REVENUE, EXPENSES
AND CHANGES IN FUND NET ASSETS
FOR THE YEAR ENDED JUN~ 30, 2003
OPERATING REVENUES
Charges for services
Otter
Total Operating Revexmes
OPERATING EXPENSES
Salaries and benefits
Materials and supplies
Operating Income (Loss)
Transfers (out) (Note 4)
Business-t~e Activities-Enterprise Funds Governmental
Cupertino Activities-
Resources Blackber~ Sports Recreation Senior Internal Service
$2,435,794 $1,351,481 $1,077,986 $1,872,002 $483,970 $7,221,233 $1,958,085
~04,859 127,831. 4,426 679 1,386 239,181
2,540,653 1,479,312 1,082,412 1,872,681 485,356 7~460,414 1,958,085
130,575 604,253 229.017 480,754 67,503 1,512,102 545,039
6,938 424,649 134,784 142,023 493,902 1,202,296 555,456
1,759,312 388,410 765,673 932,057 7,444 3,852,896 260,669
322,285
600 80,108 603 L563 82,874 557,602.
1,897,425 1,497,420 1,130,077 1,554,834 570,412 6,650,168 2,241,051
643,228 (18,108) (47,665) 317,847 (85,056) 810,246 (282,966)
186,246 12,169 52,341 I7,444 7,407. 275,607
186,246 12, I69 52,341 17,444 7,407 275,607 83,711
335,291 (77,649) 1,085,853 (I99,255)
290,000
(100,000) (50,000), (225,000)
829,474 (5,939) 4.676
(75,OOO)
83,711
(75,000) (100,000) (50,000) (225,000) 290,000
829,474 (80,939) 4,676 235,291 (127,649) 860,853 90,745
4,946,218 881,728 436,808 21,701 114,537 6,400,992 3.359,676
$5,775,692 $800,789 $441,484 $256,992 ($13,112) $7,261,845 $3,450,421
30
CASlt FLOWS FROM OPERATING ACTIVITiES
Cash payments to suppliers
Net cash provided by operating activities
CASH ~OWS FROM NONCAPITAL
FINANCING ACTIVITIES
Cash Flows fr om Investing Activities
Net Cash Flows
Cash and invest~r~nts at begimfing of year
Recm~ciliation of operating ixmome (loss) to
net cash provided by eper afing activities:
Operating income (los~)
Adjustments to reconcile operating iimome to
net cash provided by operating activities:
Depreciation
Change iii assets atd liabilities:
Accounts receivable
Prepaid expense
Net cash provided by operating activities
CFi~f OF CUPERTINO
PROPRIETARy FUNDS
STATEMENT OF CAStt FLOWS
FOR THE YEAR ENDED JUNE 30, 2003
Business-type Activities-Enterprise Funds
Cupertino Activities-
Resources Blackberry Sports Recreation Senior Internal Service
Recovery Farm Center Pro,rams Cm~ter Totals Funds
$2.588.463 $1.481.016 $1.098.537 $l.886.227 $493.568 $7.547.811 $1.967.513
(3.333.937) (800.949) (911.687) (1.105.141) (505.078) (6.656.792) (1.120.428)
(130.112) (614.190) (224.939) (477.799) (63.038) (1.510.078) (543.840)
(875.586) 65.877 (38.089) 303.287 (74.548) (619.059) 303.245
(75,000) (100,000)
(75.000) (100.000)
290.000
(50.000) (225.000)
(50.000) (225.000) 290.000
(9.754)
(9.754) (207.558)
(9.754) (9.754) (207.558)
186.246 12.169 52.340 17.444 7.408 275.607 83.711
186.246 i2.169 52.340 17.444 7.408 275.607 83.711
(689.340) (6.708) 14.251 220.731 (117.140) (578.206) 469.398
6.403.235 404.548 585.922 537.890 267.428 8.199~023 2.217.632
$5.713.895
$397.840 $600.173 $758.621 $150.288 $7.620.817 $2.687.030
$643.228 ($18.108) ($47.665) $317.847 ($85.056) $810.246 ($282.966)
600 80.108 603 1.563 82.874 557,602
47.810 1.704 2~500 (68.921) 6.298 (10.609) 9.428
(18.398) (18.398)
6.322
(1.567.687) 8.767 (11.230) (3L06I) (3.732) (1.604.943) 11.660
463 (9.937) 4.078 2.955 4.465 2.024 1.199
3.343 (250) (13.207) (10.114)
13.875 82.467 33.519 129.861
($875.586) $65.877 ($38.089) $303.287 ($74.548) ($619.059) $303.27~5
31
CITY OF CUPERTINO
FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET ASSETS
JUNE 30, 2003
ASSETS
Cash and investments (Note 2)
Total Assets
Agency
Funds
$197,023
$197,023
$197,023
$197,023
LIABILITIES
Deposits
Total Liabilities
See accompanying notes to financial statements
32
CITY OF CUPERTINO, CALIFORNIA
(1)
NOTES TO BASIC FINANCIAL STATEMENTS
June 30,2003
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Reportin~ 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 Information, and Public Works/Engineering. 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 the Los Altos Garbage Company for
garbage and recycling services.
The accompanying basic financial statements include all funds, account groups, and
boards and commissions that are controlled by the City Council. The basic financial
statements include the City's blended component units, entities for which the City is
considered to he 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 units - The Cupertino Public Facilities 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 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 Cupertino
Redevelopment Agency was formed in 2000 under the California Health & Safety Code
to assist in the elimination of areas considered to be in a blighted condition. The City
Council acts as the Board of Directors of the Corporation and the Agency. The Mayor
and Vice Mayor of the City have been elected President and Vice President, respectively,
of the Corporation. The City Clerk has been elected Secretary, and the City's Director of
Administrative Services has been appointed Treasurer of both entities.
Separate financial statements for those component units that issue them are available
from the City at 10300 Torte Avenue, Cupertino, CA 95014-3202.
(b) Measurement Focus, Basis of Accounting and Basis of Presentation
The City's Basic Financial Statements are prepared in conformity with accounting
principles generally accepted in the United States of America. The Government
Accounting Standards Board is the acknowledged standard setting body for establishing
accounting and financial reporting standards followed by governmental entities in the
U.S.A.
33
(1)
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Measurement Focus, Basis of Accounting and Basis of Presentation (continued)
The accompanying financial statements are presented on the basis set forth in
Government Accounting Standards Board Statements No. 34, Basic Financial
Statements--and Management's Discussion and Analysis--for State and Local
Governments, No. 36, Recipient Reporting for Certain Non-exchange Revenues, an
Amendment of GASB Statement No. 33, No. 37, Basic Financial Statements--and
Management's Discussion and Analysis--for State and Local Governments; Omnibus, and
No. 38, Certain Financial Statement Note Disclosures.
These Statements require that the financial statements described below be presented.
Government-wide Statements: The Statement of Net Assets and the Statement of
Activities display information about the primary government (the City) and its
component units. These statements include the financial activities of the overall City
government, except for fiduciary activities. Eliminations have been made to minimize the
double counting of internal activities. These statements distinguish between the
governmental and business-type activities of the City. Governmental activities generally
are financed through taxes, intergovernmental revenues, and other nonexchange
transactions. Business-type activities are financed in whole or in part by fees charged to
external parties.
The Statement of Activities presents a comparison between direct expenses and program
revenues for each segment of the business-type activities of the City and for each
function of the City's governmental activities. Direct expenses are those that are
specifically associated with a program or function and, therefore, are clearly identifiable
to a particular function. Program revenues include (a) charges paid by the recipients of
goods or services offered by the programs, (b) grants and contributions that are restricted
to meeting the operational needs of a particular program and (c) development fees and
permits, all of which are capital grants under California law. Revenues that are not
classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about
the City's funds, including fiduciary funds and blended component units. Separate
statements for each fund category - governmental, proprietary, and fiduciary - am
presented. The emphasis of fund financial statements is on major individual
governmental and enterprise funds, each of which is displayed in a separate column. All
remaining governmental and enterprise funds are aggregated and reported as nonmajor
funds.
Proprietary fund operating revenues, such as charges for services, result from exchange
transactions associated with the principal activity of the fund. Exchange transactions are
those in which each party receives and gives up essentially equal values. Nonoperating
revenues, such as subsidies and investment earnings, result from nonexchange
transactions or ancillary activities.
34
(1)
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Measurement Focus, Basis of Accounting and Basis of Presentation (continued)
Major Funds - GASB Statement 34 defines major funds and requires that the City's
major governmental and business-type funds be identified and presented separately in the
fund financial statements. All other funds, called non-major funds, are combined and
reported in a single column, regardless of their fund-type.
Major funds are defined as funds which have either ~/ssets, liabilities, revenues or
expenditures equal to ten percent of their fund-type total and five percent of the grand
total. The General Fund is always a major fund. The City may select other funds it
believes should be presented as major funds, and has selected the Library Construction
Fund to be treated as Major Fund in 2002.
The City reported the following major governmental funds in the accompanying
financial statements:
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.
The Public Facilities Corporation Fund accounts for the payments of principal and
interest on certificates of participation issued to provide for the advance refunding of the
City Hall/Library, Wilson Park and Memorial Park certificates of participation.
The Library Construction Fund accounts for costs associated with demolition of an old
library building, and the design and construction of a new library on that site
The City reports its enterprise funds as major funds in the accompanying financial
statements:
The Resource Recovery Fund accounts for activity mlated to the collection and disposal of
solid waste. A private company has been issued an exclusive franchise to perform these
services.
The Blackberry Farm Fund accounts for activities related to operating the picnic area and
golf course.
The Cupertino Sports Center Fund accounts for the operation and maintenance of the
Cupertino Sports Facility.
The Recreation Programs Fund accounts for activities of the City's community center.
The Senior Center Fund accounts for the activities of the City's senior center.
The City also reports the following fund types:
35
(1)
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30,2003
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Measurement Focus, Basis of Accounting and Basis of Presentation (continued)
Internal Service Funds. These funds account for workers' compensation, management
information system maintenance and replacement, equipment maintenance and
replacement, and long-term disability coverage; all of which are provided to other
departments on a cost-reimbursement basis.
Fiduciary Fund. This fund accounts for deposits held by the City as an agent.
Basis of Accounting - The government-wide, proprietary, and fiduciary fund 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, claims and judgments, and
compensated absences, which are recognized as expenditures to the extent they have
matured. 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.
Property taxes, utility taxes, franchise taxes, interest and special assessments are
susceptible to accrual. Sales taxes collected and held by the state at year end on behalf
of the City are also recognized as revenue. Other receipts and taxes are recognized as
revenue when the cash is received.
Grant revenues are recognized in the fiscal year in which all eligibility requirements are
met. 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.
Thus, both restricted and unrestricted net assets may available to finance program
expenditures. The City's policy is to first apply restricted grant resources to such
programs, followed by general revenues if necessary.
The City follows statements and interpretations of the Financial Accounting Standards
Board and its predecessors that were issued on or before November 30, 1989, in
accounting for its business-type activities, unless they conflict with Government
Accounting Standards Board pronouncements.
36
(1)
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIE~ (continued)
(b) Measurement Focus, Basis of Accounting and Basis of Presentation (continued)
GASB 33 Non-Exchange Transaction - 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, entitlements, and donations is recognized in the fiscal
year in which all eligibility requirements have been satisfied.
(c) Budgetary Practices
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. All 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.
The City Manager is responsible for controlling the City's expenditures in accordance
with the adopted budget. The City Manager is authorized to transfer appropriations
within functional expenditure classifications. Any revision which requires transfers
between functional expenditure classifications or 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. The legal level of budgetary control is at the
functional level.
The City Council made $7,559,153 in supplemental appropriations during the year as
follows: general fund $3,271,192; special revenue funds $4,287,961. Amended budget
amounts included in the accompanying budgetary statements include supplemental
appropriation.
Budgets for governmental funds are adopted on a basis consistent with generally
accepted accounting principles. Budget information is presented for the general, special
revenue and debt service funds only. Capital project funds are budgeted on a long-term
project-by-project basis and, hence, budgets for these funds are not presented in the basic
financial statements.
37
(1)
CITY OF CUPERTINO, CALIFORNIA
NOTES TO I}A~IC FINANCIAL STATEMENTg
June 30, 2003
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Cash 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.
(e) Capital Assets
Capital assets are recorded at cost or estimated historical cost if purchased or
constructed. Donated fixed assets are recorded at their estimated fair value on the date
donated.
Prior year public domain (infrastructure) capital assets consisting of roads, bridges,
curbs, gutters, streets, sidewalks, drainage and lighting systems are not capitalized.
Current year infrastructure costs have been capitalized.
Depreciation is recorded using the straight-line method over the following useful lives:
Years
Buildings 25
Improvements 31
Vehicles 4-10
Street equipment 3-20
Water equipment 3-50
Office equipment 3-5
Road, curbs, gutters, sidewalks, medians and 3040
bridges
Streetlights 20
Storm drain structure and mains 40
Traffic signals 20
(e)
The City capitalizes fixed assets exceeding $1,000.
Capital Assets (Continued)
Major outlays for capital assets and improvements are capitalized as projects are
constructed. 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. GASB Statement 34 requires that these
contributions be accounted for as revenues at the time the capital assets are contributed.
38
CITY OF CUPERTINO, CALIFORNIA
O)
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(f) Claims and Judgments 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. General liability claims
and judgments are not material and are not accrued.
(g) Compensated Absences
Compensated absences comprise vested accumulated vacation and sick leave. The City's
liability for compensated absences is recorded in Governmental Activities or various
Proprietary funds as appropriate. The liability for compensated absences is determined
annually. For all governmental funds, amounts expected to be "permanently liquidated"
are recorded as fund liabilities; the long-term portion is recorded in the Statement of Net
Assets.
The changes in compensated absences were as follows:
Governmental
Activities
Additions
Balance $1,581,832
698
(553,65(
Business-Type
Activities Total
$103,112 $1,684,944
26,994 725,720~
(29,037 (582,687)
Ending Balance
Current Portion
$1,726,908 $101,069 $1,827,977
$73,918 i $73,918
(h) Fund Equity
Reservations of fund balances represent those portions of fund balances which are not
available for appropriation or expenditure or are legally restricted for a specific future
use. Designated fund balances represent management's tentative plans for future use of
financial resources.
(i) 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 March 1 and
become delinquent on December 10 and April 10. Unsecured taxes are due on July 1
and become delinquent on August 31. The lien date for secured and unsecured property
taxes is March 1.
39
(1)
(2)
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(i) Property Tax Calendar (continued)
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% 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.
(j) Interfund Transactions
Transactions constituting reimbursements to a fund for expenditures/expenses initially
made from it that are properly applicable to another fund, are recorded as
expenditures/expenses in the reimbursing fund and as reductions of
expenditures/expenses in the fund that is reimbursed.
(k) Statement of Cash Flows
For purposes of reporting cash flows for the City's proprietary funds, pooled cash and
investments are considered cash equivalents as the proprietary funds can access pooled
cash and investments in a manner similar to a demand deposit account.
(1) Bond Discounts and Issue Costs
Debt discounts and issuance costs are recognized in the current period. Debt discounts
and issuance costs incurred by proprietary fund types are amortized over the term of the
debt using the bonds-outstanding method, which approximates the effective interest
method.
CASH AND INVESTMENTS
The City's pooled idle funds are invested pursuant to investment policy guidelines adopted by
the City Council. The objectives of the policy are to invest funds to the fullest extent possible
and to invest in accordance with provisions of California Government Code with the priority of
safety, liquidity and yield. The policy addresses the safekeeping of securities, types of
investment instruments, the percentage of the portfolio which may be invested, terms to maturity,
reporting requirements, and policy renewal.
The City maintains a cash and investment pool that is available for Use by all funds. Each fund
type's portion of this pool is displayed on the combined balance sheet as "cash and investments".
40
(2)
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
CASH AND INVESTMENTS (continued)
(a) Deposits
California law requires banks and savings and loan institutions to pledge government
securities with a market value of 110% of the City's cash on deposit or first trust deed
mortgage notes with a value of 150% of the deposit as collateral for these deposits.
Under California law this collateral is held in the City's name and places the City ahead
of general creditors of the institution. The City has waived collateral requirements for
the portion of deposits covered by federal deposit insurance.
Cash in banks is entirely insured (Category 1) or collateralized by the institution holding
the deposit in the City's name (Category 2), as discussed above.
The carrying amount of the City's cash deposits was $1,154,395 at June 30, 2003. Bank
balances before reconciling items were $1,892,442, of which was $257,629 insured
(Category 1) and $1,634,813 was collateralized (Category 2) at June 30, 2003.
(b) Investments
Investments made by the City are classified as to credit risk into three categories.
Category 1 includes securities insured or registered, or held by the City or its agent in the
City's name. Category 2 includes securities uninsured and unregistered, and held by the
counterparty's trust department or agent in the City's name. Category 3 includes
securities uninsured and unregistered, and held by the counterparty or by its trust
department or agent, but not in the City's name.
The City's investment portfolio is stated at fair value based on quotes obtained at June
30. It is generally the City's intent to hold investments until maturity. At year-end, the
City's investment balances were as follows:
Category 1:
U.S. Treasur, Notes
U.S. Government A ' Securities
Non-categorized investtn ents:
Government SecuritiesMon ,Market
Mutual Funds
Investment Fund
Total Investments
.osits with Banks
Certificates of D msit
Cash on hand
Funds Funds
Total
$2,528,515 $2,528,515
19,770,202 19,770,202
4,154,706 4,i54,706
32,972,930 I 32,972,930
59,426,353 I 59,426,353
957,372 $155,788 1,113,160
41,235 41,235
7,199 7,199
Total Cash and Investments $60,390,924 $197,023
$60,587,947
Interest earned on pooled cash resources is allocated to funds which require interest to be
added based on the ratio of the individual funds' monthly cash balance to the total pool.
41
(2)
(3)
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
CASH AND INVESTMENTS (continued)
(b) Investments (continued)
Cash and investments are classified in the financial statements as shown below, based on
whether or not their use is restricted under the terms of City debt instruments or Agency
agreements.
For purpose of the statement of cash flows, the City considers all highly liquid
investments (including restricted assets), with a maturity of three months or less from the
original date of purchase, to be cash equivalents.
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is
regulated by Califomia Government Code Section 16429 under the oversight of the
Treasurer of the State of California. The fair value of the City's investment in this pool
is reported in the accompanying financial statements at amounts based upon the City's
pro-rata share of the fair value provided by LAIF for the entire LA1F portfolio (in
relations to the amortized cost of that portfolio). The balance available for withdrawal is
based on the accounting records maintained by LAP, which are recorded on an
amortized cost basis. Included in LAIF's investment portfolio are collateralized
mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to
certain state funds, and floating rate securities issued by federal agencies, government
sponsored enterprises, and corporations.
RELATED PARTY LOAN
In conjunction with the City's executive housing assistance program, loans totaling $1,535,860
have been provided to three executive managers. These 40-year loans bear an interest rate equal
to the 11® district cost of funds at the time of the loan, and require monthly principal and interest
payments. In addition, them is a two pement deferral on the interest rate for the first five years of
the loan. At June 30, 2003, the balance remaining on the three loans was $1,456,315.
42
(4)
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30,2003
INTERFUND TRANSACTIONS
Transfers between funds during the fiscal year ended June 30, 2002 were as follows:
Fund Receiving T ran sfers ] ~t Fund Making Transfers ! Transferred
~,Ge neral Fund:
]
Special Revenue Funds:
Gas T ax
Leadership Development
Public Facilities Corporation Debt Service Fund
Capital Projects Funds:
Capital Improvement Projects
Remodel
Four Seasons Park
~orts Center Building
[Internal Service Funds:
Management Information Systems
Equipment Revolving
Total Interfund Transfers
Park Dedcat on Special Revenue Fund t ~ $25.000
~Senmr Center Expansmn Capital ProJects Fg 62,438
Senior Center Enterprise Fund 50,000
!Blackberry Farm Enterprise Fund i 75,000
Recreation Programs Enterprise Fund i 100
General Fund 501,000
General Fund 16,100
!General Fund
General Fund
General Fund
General Fund
Gas Tax Special Revenue Fund
General Fund
General Fund
General Fund
]The reasons for these transfers are set forth
All park dedication fees collected are transferred to the General Fund.
(B) Close CIP project
2,934,000
16,400,000
412,000
250,000
711,000
270,000
20,000
$26.065,538
eted (enterprise funds) transfer of excess earnings over expenditures for cost reimbursement to the General Fund2
tax projects( budget and midyear adjustment)
(E) To augment Leadership Cupertino program ~
For debt service
capital projects (budget and midyear adjustments)
(H) To provide budgeted new technology equipment
(I) To provide budgeted new equipment for parks, street and tree maintenance
As of June 30, 2003 the developer of the Agency' s primary project area had not begun to redevelop.
As a result, tax increment revenues are not yet sufficient to finance Agency operations. To assist the
Agency until project redevelopment generates additional tax increment revenues, the City has
advanced funds to the Agency to finance operations. As of June 30, 2003 the balance of the advance
is $174,400.
43
(4)
(s)
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
INTERFUND TRANSACTIONS (continued)
Internal Balances - Internal balances are presented only in the City-wide financial statements.
They represent the net interfund receivables and payables remaining after the elimination of all
such balances within governmental and business-type activities.
CAPITAL ASSETS
A summary of changes in general capital assets follows:
Balance at
June 30, 2002
Governmental activities
ICapital assets not being depreciated:
i Land $60,835.080
Construction in progress 851,511
Additions Retirements
$4,521,96I
Balance at
June 50,2003
$60,835,080
5,373,472
Total capital assets not being depreciated
61.686,591 4,521,961
Capital assets being depreciated:
Buildings 16,242,616
Improvements other than buildings 19,060,775
Machinery and Equipment 5,851,203 274,722
Road, curbs, gutters, sidewalks, medians
and bridges 95,137,d95 402,505
Streetllght s 6,500,000
Storm drain structure and mains 31,091,215
Traffic signals 4,241,250
Total capital assets being depreciated 178,124,554 677,227
($1,545,614 14,697,002
19,060,775
(45,695) 6,080,230
95,540,000
4,241,250
(I,591.309) 177,210,472
Less accumulated depreciation for:
Buildings
Machinery and Equipment
Road, curbs, gutters, sidewalks, medians
and bridges
Streetlights
Storm drain structure and mains
Traffic sign als
Total accumulated depreciation
Net capital assets being depreciated
Governmental activity capital assets, net
6,955,772 611,345 (1,040,878
13,385,511 843,090 14,228,601
3,219,894 715,145 (45,695) 3,889,344
67,219,364 2,436,368 69,655,732
6,500,000 6,500,000
19,442,657 777,280 20,219,937
3,821,244 47,213 3,868,457
120,544,442 i 5,430,441 (1,086,573) 124,888,310
57.580,112 (4,753,214
$119,266,703 ($231,253)
(504,736 52,322,162
($504,736 $118,530,714
44
(s)
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
CAPITAL ASSETS (continued)
l~alanee at ]'~ ['l aa anee at ]
June 30,20~j[ Additions i. LRetirements []June 30,200~[
Bustness-type acttvtttes: ]' ]! [ : l
Capital assets ~ing depreciated:
Improvements other than b~l~ngs 635,500 635,500
,. ~ ac_~j~yZ, aD~.~q217~[ .......................... 315375 $9,754 ($36,437) 288,692
_. ~pj2~. 5 ~pj~ pj a_~j)~, ae~S).~?2 ......... 95o,8~s 9,754 (36,437) 924,192
Less accumulated depreciation for:
Improvements other than b~l~n~ 365,449 53,006 418,455
_ .~2cZ?f.y j22.¢~.~ q2~ eEL....................... 213,904 29,868 ~ (36,435 207,335
Total accumulated depreciation 579,353 ~ 82,874 ~ ~ (36,437) 625,790
_~c~ ~[~.~ s seL~j~rS~¢_~ ....... ~ 371,522 ~.~i~'~ ~ ~ ~-~14~ ~
B~iness-type activity capital assets, net $761,451 ~ ($73A20)~1 I $688,331
Depreciation expense was charged to functions and programs based on their usage of the related
assets. The amounts allocated to each function or program were as follows:
iGovernmental Activities '. 7
i *--- 5~tP~![~°n ..... ....................... ] i $136,807
Admm~trative serwces ~ [ ._~ i 40,567
, [pte r~}Le~ fu[da ................ [ ...........I ......... } 557,602
45
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
(5) CAPITAL ASSETS (continued)
Business-Type Activities
Recover
Farms
Center
Senior Center
$600
80,108
603
(6)
LONG-TERM DEBT
(a) Cupertino Public Facilities Corporation Certificates of Participation
Certificates of Participation:
1992 Wilson~mofial ~fundlng B, i
-j.. 3.00-6.25%, ref=~d 101102 14,585,0~
1993 O~n S~ce Re fun~ng ~
2002 Refinancing and Capital , j ~ J
j~.oo-5.oo~,~OT~ao3~ 5*,640,0001 l~k~b¥[! ~,s7o,~ ~g~f~o766~$~,22o,ooo
~ ~118 700 000 ~n2,370 000 ~$56 640 000 $44 240 ~ 'i$54 77~,0~
The Cupertino Public Facilities Corporation issued Certificates of Participation to
provide financing for the construction of the Community Center, remodeling of City Hall
and the Library in July of 1986, to purchase Wilson Park in 1989, to finance Memorial
Park Expansion in 1990, and to purchase Blackberry Farm and Fremont Older site in
1991. 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 are scheduled to be sufficient in both time and amount, when the principal and
interest of the certificates are due.
On October 1, 2002, $56,640,000 principal amount of 2002 Refinancing and Capital
Improvement Project Certificates of Participation, (2002 COPs) were issued to finance
the costs of acquiring and constructing a new public library and to refund the 1992A COPs,
the 1992B COPS and the 1993A COPs ("Refunded COPS").
46
(6)
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
LONG-TERM DEBT .(continued)
(a) Cupertino Public Facilities Corporation Certificates of Participation (continued)
A portion of the proceeds from the 2002 COPS were used along with moneys from the
Refunded COPS to advance refund the outstanding Refunded Bonds by pumhasing U.S.
government securities which were deposited in an irrevocable trust with an escrow agent to
provide for all future debt service payments on the Refunded Bonds. As a result, the
Refunded Bonds were considered to be defeased and the liability for those obligations was
removed along with the trust assets from the City's financial statements.
The cash flow savings representing the difference between debt service on the Refunded
COPs and the portion of 2002 COPS debt service payments attributable to refunding
Refunded COPS amounted to $8,724,288. The economic gain representing the present
value of the cash flow saving amounted to $2,521,514.
In December 1992, the City issued $10,785,000 of Certificates of Participation with the
effective interest rates ranging from 2.875% to 5.75% (the 1992 Capital Improvement
Refunding A certificates) to provide for the advance refunding of the City Hall/Library
Certificates of Participation Series 1986.
In December 1992, the City issued $14,585,000 of Certificates of Participation with the
effective interest rates ranging from 3% to 6.25% (the 1992 Wilson/Memorial Park
Refunding B certificates) to provide for the advance refunding of the Wilson Park
Certificates of Participation Series 1989 (the 1989 certificates), and the Memorial Park
Expansion Certificates of Participation Series 1990 (the 1990 certificates).
In April 1993, the City issued $36,600,000 of Certificates of Participation with the
effective interest rates ranging from 3.25% to 5.75% (the 1993 Open Space Refunding A
certificates) to provide for the advance refunding of the Open Space Certificates of
Participation Series (the 1991 certificates). The deferred debt was fully repaid on March
31, 2001.
47
(6)
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
LONG-TERM DEBT ,(continued)
(a) Cupertino Public Facilities Corporation Certificates of Participation (continued)
Annual debt service requirements for the Certificates of Participation are shown below:
Governmental Activities
For the Year
Ending Stme 30 Principal
2004 $1220,000
2005 1,245,000
2006 1270,1300
2007 1295,000
2008 1355,1300
Interest
$2,312,038
2287,638
2262,738
2,237,338
2,179,063
2009-2013 7,520,000 10,140,557
2014-2018 ~ ~ 9,000,000 I 8,663,055
2024-2028 [ i14,045,1300 3,621,412
20 9_ 0 6,5 0,000 473,099
(b) 1915 Act Bonds Without City Commitment
The City acts as agent for the property owners of parcels upon which assessments were
made for local improvements. The City collects the assessments and forwards the
collections to bond holders. The City is not directly liable for the repayment of special
assessment district bonds as such bonds and interest payable are secured by fixed lien
assessments on real property; however, the City has determined that it is not probable
that the government would assume responsibility for all or part of the debt in the event of
default. The amount of unmatured bond principal at June 30, 2003 was $195,000.
(c) Conduit Debt
On October 1, 2001, the City authorized the issuance of the multi-family housing
revenue bonds in an amount up to $1.6 million to assist a developer in financing the cost
of site acquisition and construction of a 24 unit multi-family rental housing project. The
bonds are payable solely out of loan repayments received from the developer. The City
has no legal or moral liability with respect to the payment of this debt.
48
(7)
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
NET ASSETS AND FUND BALANCES
GASB Statement 34 adds the concept of Net Assets, which is measured on the full accmal basis, to
the concept of Fund Balance, which is measured on the modified accrual basis.
Net Assets - Net Assets is the excess of all the City's assets over all its liabilities, regardless of
fund. Net Assets am divided into three captions under GASB Statement 34. These captions
apply only to Net Assets, which is determined only at the Government-wide level, and are
described below:
Invested in Capital Assets, net of related debt describes the portion of Net Assets which is
represented by the current net book value of the City's capital assets, less the outstanding balance of
any debt issued to finance these assets.
Restricted describes the portion of Net Assets which is restricted as to use by the terms and
conditions of agreements with outside parties, governmental regulations, laws, or other restrictions
which the City cannot unilaterally alter. These principally include developer fees received for use
on capital projects, debt service requirements, redevelopment funds restricted to low and moderate
income purposes.
Governmental fund balances represent the net current assets of each fund. Net current assets
generally represent a fund's cash and receivables, less its liabilities. Portions of a fund's balance
may be reserved or designated for future expenditure.
Fund Balances, Reserves and Designations - In the Fund financial statements, fund balances
represent the net current assets of each fund. Net current assets generally represent a fund's cash
and receivables, less its liabilities. Portions of a fund's balance may be reserved or designated
for future expenditure.
The unreserved-designated fund balances include amounts which have been internally designated
to be set aside and are not considered to be available for immediate appropriation. The
components of the unreserved-designated fund balance for the Governmental Funds at June 30,
2003 are as follows:
I ! 2003
49
(8)
(9)
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
COMMITMENTS AND CONTINGENCIES
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, 2001, 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.
The City has an agreement, expiring in 2019, to lease a building to the County of Santa Clara for
the purpose of providing library service to the City's residents. The lease requires a minimum
annual payment of $120,000 adjusted annually for Cupertino's portion of book circulation and
increase of assessed valuation. This is an operating lease with a renewable option.
The future minimum rentals from such leases are as follows:
For the Year
2004 ',i $120,000
2007 : 120,000
2019 i 60,000
Total I $1,860,000
The old library building was demolished during fiscal 2002/03 and the City is the process of
constructing a new public library. The City expects to renegotiate the lease agreement with the
County of Santa Clara during fiscal 2003/04.
LIABILITIES UNDER SELF-INSURANCE AND RISK MANAGEMENT
The City is self-insured for the first $500,000 of workers' compensation claims per occurrence.
The City provides for excess workers' compensation insurance through an outside administrator
up to $10,000,000. During the fiscal year 2001/02, the City had a two year analysis performed of
its workers' compensation program by an independent actuary. This resulted in an increase in
the City's reserve for unpaid claims of approximately $1,756. There were no significant
reductions in insurance coverage from the prior year nor did settlements exceed insurance
coverage for the past four fiscal years. In addition, the City is self-insured for general and
automobile liability claims for the first $100,000 per occurrence. Excess coverage is provided by
the outside administrator up to $10,000,000. Claims liability is based upon the administrator's
estimate of ultimate loss payout.
5O
(9)
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
LIABILITIES UNDER SELF-INSURANCE AND RISK MANAGEMENT .(continued)
Changes in the balances of claim liabilities during the past two fiscal years are as follows:
iClaims liability, June 30, 2001
$385,986
158,836
(10) OTHER POST EMPLOYMENT RETIREMENT BENEFITS
Permanent employees who retire under the City's retirement plan (PERS) 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 up to the maximum
received by active employees in their respective bargaining unit. The cost of retiree medical
insurance premiums are recognized as an expenditure when benefits are paid. There were 78
retirees participating in the plan as of June 30, 2003.
Retiree medical insurance premium expenses for the past five fiscal years ended June 30, are as
follows:
1999 $183,330
2000 244,824
2001 299,054
2002 346,202
2003 427,312
51
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
(11) DEFERRED COMPENSATION PLAN
Due to the passage of the Small Business Job Protection Act (Act) of 1996, and the issuance of
Governmental Accounting Standards Board Statement No. 32 "Accounting and Financial
Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans," governmental
entities who have established deferred compensation plans under Internal Revenue Code Section
457 are required to establish trusts to hold plan assets for the exclusive benefit of plan
participants and their beneficiaries. This Act supercedes previous regulations, which required
that plan assets remain the property of the City until paid or made available to the participants,
subject only to the City's general creditors. In compliance with the new regulations, the City
established separate trusts to hold plan assets. The value of assets held in trust under Section 457
deferred compensation plans is approximately $9,498,783 as of June 30, 2003, which have been
excluded from the financial statements.
(12) DEFINED BENEFIT PENSION PLAN
(a) Plan Description
The City of Cupertino's defined benefit pension plan provides retirement and disability
benefits, annual cost-of-living adjustments, and death benefits to plan members and
beneficiaries. The plan is part of the Public Agency portion of the Califomia Public
Employees Retirement System (CalPERS), an agent multiple-employer plan
administered by CalPERS, which acts as a common investment and administrative agent
for participating public employers within the State of California.
A menu of benefit provisions as well as other requirements are established by State
statutes within the Public Employees' Retirement Law. The City selects optional benefit
provisions from the benefit menu by contract with CalPERS and adopts those benefits
through local ordinance. CalPERS issues a separate comprehensive annual financial
report. Copies of the CalPERS' annual financial report may be obtained from the
CalPERS Executive Office, 400 P Street, Sacramento, CA 95814.
(b) Funding Policy
Active plan members are required to contribute 7% of their annual covered salary, which
is paid by the City on behalf of the employee. The City is required to contribute the
actuarially determined remaining amounts necessary to fund the benefits for its members.
The actuarial methods and assumptions used are those adopted by the CalPERS Board of
Administration. The required employer contribution rate for fiscal year 2002/03 was
0%. The contribution requirements of the plan members are established by State statute
and the employer contribution rate is established and may be amended by CalPERS.
52
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
(12) DEFINED BENEFIT PENSION PLAN (continued)
(c) Annual Pension Cost:
For fiscal year 2002/03, the City's annual pension cost and the City's actual contribution
was $712,014. The required contribution for fiscal year 2002/03 was determined as part
of the June 30, 2001 actuarial valuation using the entry age normal actuarial cost method
with the contributions determined as a percent of pay. The actuarial assumptions
included a) 8.25% investment rate of return (net of administrative expenses); b)
projected salary increases that vary by duration of service ranging from 3.75% to 14.20%
for miscellaneous members and c) no cost-of-living adjustment. Both (a) and (b) include
an inflation component of 3.5% and a payroll growth of 3.75%. The actuarial value of
the City of Cupertino's assets was determined using a technique that smoothes the effect
of short-term volatility in the market value of investments over a two to five year period
depending on the size of investment gains and/or losses. The City of Cupertino's
overfunded actuarially accrued liability is being amortized as a level percentage of
projected payroll on a closed basis. The remaining amortization period at June 30, 2003
was 19 years.
Three year trend information for City of Cupertino:
Annual Percentage
Fiscal Year Pension of APC
Ending Cost (APC) Contributed
6/30/01 $570,875 100.0%
6/30/02 619,288 100.0%
6/30/03 712,014 100.0%
Funding Analysis for CALPERS (in thousands)
Miscellaneous Plan:
l
Actuarial
I Entry Age
Valuation! Accrued
Date [
1999 $25,153,864
2000
2001 I 32,474,733
Unfunded
Value of Overfunded'
A s s ets Liab ilit'
($8,900,641
37,433,639 (
38,534,381 (6,059,64~
Annual
Funded Covered
Ratio ,roll
135.4% $7,167,431
127.9% 7,849,639
118.7%! 8,533,904
Unfunded
ed
of Pa
(124.2%
(104.1%
(71.0%
53
CITY OF CUPERTINO, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2003
(13) JOINT POWERS AGREEMENT
The City is a member of Silicon Valley Animal Control Authority, (the Authority), established in
2000 to deliver animal control services. The Authority provides its own field services and has an
agreement with the Humane Society of Santa Clara Valley to provide facilities, personnel, shelter
and animal services. The Authority is governed by a Board of Directors consisting of
representatives from member Cities.
During the fiscal year ended June 30, 2003 the City contributed $218,468 to the Authority. Audited
financial statements are available from the Authority at 2340-A Walsh Avenue, Santa Clara, CA
95051.
(14) GASB 34 IMPLEMENTATION AD,~USTMENTS
In accordance with GASB 34 requirements, the City changed its method of accounting for the
following items:
As of July 1, 2002, the City closed contributed capital in the amount of $382,283 to beginning
net assets recorded in Internal Service Funds.
As of July 1, 2002 the City removed compensated absences liabilities of $1,330,579 and $47,885
recorded in the General Fund and Environmental Management Special Revenue Fund
respectively, and recorded them in the Governmental Activities. The effect of this change was to
increase liabilities of $1,378,464 in Governmental Activities, and reduce the liabilities and
increase fund balances by $1,330,579 and $47,885 in the General Fund and Environmental
Management Special Revenue Fund, respectively.
(15) DEFICIT FUND BALANCE
As of June 30, 2003, the General Fund had advanced to the Redevelopment Agency (RDA) for
staffing costs, legal and consulting fees. As the Vallco Agency Project Area was not formalized
until October 19, 2000, such expenditures have resulted in a deficit fund balance of $156,585.
Once the project tax increment is generated, the RDA will repay the advance.
54
MAJOR GOVERNMENTAL FUNDS OTHER THAN THE GENERAL FUND AND /
SPECIAL REVENUE FUNDS
J
This section is provided for the presentation of Budget-to-Actual Statements for the Public Facilities
Corporation Debt Service Fund. Although the fund is considered to be a major governmental fund,
GASB Statement 34 dictates that budget-to-actual information in the basic financial statements should be
limited to the General Fund and major Special Revenue Funds. All other major governmental fund
schedules with such information must be included as Supplemental Information.
55
CITY OF CUPERTINO
PUBLIC FACILITIES CORPORATION DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR. TIlE FISCAL YEAR ENDED JUNE 30, 2003
REVENUES
Use of money and property
Total Revenues
EXPENDITURES
Debt se~ice:
Principal
Interest
Total Expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES ~[ISES)
Bond proceeds
Payment to refunded debt escrow agent
Transfers/n
Total Other Fin~cing Sources (Uses)
EXCESS (DEFICIENCY) OF REVENUES AND
OTHER SOURCES OVER EXPENDITURES
AND OTHER USES
BEGINNING FUND BALANCES
ENDING FUND BALANCES
Budget Actual
Variance
Positive
(Negative)
$73,449 $73,449
73,449 73,449
$4,199,000 6,925,948 (2,726,948)
40,000 2,939,757 (2,899,757
4,239,000 9,865,705 (5,626,705
(4,239,000) (9,792,256 (5,553,256
40,372,235 40,372,235
(39,208,286 (39,208,286
4,239,000 4,239,000
4,239,000 5,402,949 1,163,949
(4,389,307 (4,389,307
5,094,950
$705,643
56
NON-MAJOR GOVERNMENTAL FUNDS
All funds not defined as major funds for the Fund Financial Statements are consolidated in one column
entitled "Other Governmental Funds". These non-major funds are identified and included in this
supplemental section and includes all the City's Special Revenue Funds and all Capital Project Funds
other than the Library Construction Fund.
The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are
legally restricted to expenditures for specified purposes.
Storm Drain - Accounts for the construction and maintenance of storm drain facilities including
drainage and sanitary sewer facilities.
Park Dedication - 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.
Environmental Management - Accounts for all activities related to operating the non-point source
pollution program.
Gas Tax - Accounts for the City's gas tax apportionment 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.
Housing Development - Accounts for the Federal Housing and Community Development Grant
Program activities administered through the county. Monies in this fund are governed by the
program rules.
Leadership Cupertino - Accounts for revenue and expenditures for the purpose of supporting a
leadership training course in the community.
Redevelopment Vallco - Accounts for revenue and expenditures related to the construction of a
redevelopment agency project area at the Vallco Regional Mall.
The Capital Project Funds are used to account for financial resources to be used for the acquisition or
construction of major capital facilities (other than those financed by Proprietary Funds).
Capital Improvement Projects - Accounts for activities related to the acquisition or construction
of major capital facilities.
Senior Center Expansion - Accounts for activities related to design and construction of additional
space for the Senior Center.
Four Seasons Park - Accounts for activities related to the construction of the Four Seasons Park
located at the southeast comer of DeAnza Boulevard and Stevens Creek Boulevard.
Sports Center Building - Accounts for activities related to the design and construction of a new
Sports Center.
57
CITY OF CUPERTINO
NON-MAJOR GOVERNMENTAL FqJNDS
COMBINING BALANCE SHEETS
JUNE 30, 2003
SPECIAL REVENUE FUNDS
Assets
Cash and investments
Accounts receivable
Loans receivable
Total assets
Storm Park Environmental Gas Tax Housing
Drain Dedication Management Fund Development
$1,340,848 $212,929 $171,877
2,704,315 $979,020
32,941 33,495
1,074,013
$1,340,848 $212,929 $171,877 $2,737,256 $2,086,528
$18,825 $11,319 $186,437 $11,656
1,026 3,283 15,206 561
362,039
19,851 14,602 201,643 374,256
Liabilities and fund balances
Accounts payable and accruals
Accrued payroll m:td benefits
Advance from other funds
Deferred revenue
Total Liabilities
Fund balances
Reserved for:
Encumbrances
Loans receivable
Low and moderate income housing
Unreserved:
Designated
Undesignated
Total fund balances
Total liabilities and fund balances
36,176 9,465 1,031,287 1,573
711,974
481,612 1,504,326
803,209 212,929 147,810 998,725
1,320,997 212,929 157,275 2,535,613 1,712,272
$1,340,848 $212,929 $171,877 $2,737,256 $2,086,528
58
SPECIAL
REVENUE FUNDS
CAPITAL PROJECTS FUNDS
Total
Capital Seffxor Four Sports Nonmajor
Leadership Redevelopment Improvement Center Seasons Center Governmental
Cupertino Vallco Projects Expansion Park Buildin~ Funds
$1,425 $20,867
$4,893,862 $1,072,735 $1,973,870 13,371,748
515,383 581,819
1,074,013
$1,425 $20,867 $5,409,245 $1,072,735 $1,973,870 $15,027,580
$1,397
$8,987 $9,355 $9,336 $257,312
$3,052 23,128
I74,400 174,400
515,383 877,422
1,397 177,452 524,370 9,355 9,336 1,332,262
1,487,186 137,362 72,561
2,775,610
711,974
15,537 15,537
3,397,689 5,383,627
28 (172,122) 926,018 1,891,973 4,808,570
28 (156,585) 4,884,875 1,063,380 1,964,534 13,695,318
$1,425 $20,867 $5,409,245 $1,072,735 $1,973,870 $15,027,580
59
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2003
SPECIAL REVENUE FUNDS
REVENUES Taxes
Use of money and propex'ty
Intergovernmental
Charges for services
Frees and forfeitures
Other revenue
Total Revenues
EXPENDITURES
Current
Administrative services
Community development
Public works
Capital outlay
Total Ex~nditures
EXCESS (DEFICIENCY) OF'REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers (out)
Total Other Financing Sources (Uses)
EXCESS (DEFICIENCY) OF REVENUES AND
OTHER SOURCES OVER EXPENDITURES
AND OTHER USES
BEGINNING FUND BALANCES:
As repol~ed originally
GASB 34 Implementation adjustment
As adjusted
ENDING FUND BALANCES
Stomt Park Environmental Oas Tax Housing
Drain Dedication Management F~md Development
$18,141 $47,251
47.779 1,296
$2.216 $108,018 $177,297
1.694,828 60,208
352,254
43,080
109,000 48,547 354,470 L802,846 237,505
55,570
351,535 1,310,608
296,242 1,552,699
296,242 351,535 2,863,307 55,570
(187,242) 48,547 2,935 (1,060,461) 181,935
501,000
(25,000) (250,000)
(25,000) 251,ooo
(187,242) 23,547 2,935 (809,461) 181,935
1,508,239 189,382 106,455 3,345,074 1,530,337
47,885
1,508,239 189,382 154.340 3,345,074 1,530,337
$1,320,997 $212,929 . $157,275 $2,535,613 $1,712,272
60
SPECIAL
REVENUE FUNDS
CAPITAL PROJECTS ~S
Capital Senior Four Sports
Leadership Redevelopment Improvement Center Seasons Center
Cupertino Vallco Pro)ects Expansion Park Bnildin~
Total
Nonmajor
Govenunental
Funds
$9,454
9,454
$32,289
2,036
34,325
$918,801
918,801
1,601,539 $13,590
1,601,539 13,590
$97,681
338,642
2,673,837
352,254
9,454
43,080
3,514,948
25,536
99,998
25,536 99,998
$154,490 $376,386
25,536
155,568
1,662,143
3,994,946
154,490 376,386 5,838,193
(16,082) (65,673) (682,738) (13,590) (154,490) (376,386) (2,323,245)
16,100
16,100
2,934,000 662,000 711,000 4,824,100
(62,438) (337,438)
2,934,000 (62,438) 662,000 711,000 4,486,662
18 (65,673) 2,251,262 (76,028) 507,510 334,614 2,163,417
10 (90,912) 2,633,613
10 (90,912) 2,633,613
$28 ($156,585) $4,884,875
76,028 555,870 1,629,920 11,484,016
47,885
76,028 555,870 1,629,920 11,531,901
$1,063,380 $1,964,534 $13,695,318
61
BUDGETED NON-MAJOR FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2003
SPECIAL REVENUE FUNDS
REVENUES
Taxes
Use of money and property
lntergovermnental
Charges for services
STORM DRAIN
Budget Acm~
PARK DEDICATION
Variance Variance
Positive Positive
(Negative) Budget Actual (Negadve)
$50,000 $18,141 ($31,859) $25,000 $47,251 $22,251
50,000 47,779 (2,221) 1,296 1,296
43,080 43,080
Total Revenues 100,000 109,000 9,000 25,000 48,547 23,547
EXPENDITURES
Current:
Administrative services
commumty development
Pubfic works
Capital outlay
Total Expeadimres
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfe~ (out)
Total Other Fina,-wmg Sources (Uses)
EXCESS (DEFICIENCY) OF REVENUES AND
OTHER SOURCES OVER EXPENDITURES
AND OTHER USES
BEGINNING FUND BALANCES:
As reported originally
OASB 34 Implementation a~justment
As adjusted
ENDING FUND BALANCES
1,312,401 296,242 1,016,159 $211,652 211,652
1,312,401 296,242 1,016,159 211,652 211,652
(1,212,401) (187,242) 1,025,159 (186,652) 48,547 235,199
(25,000) (25,000)
(25,000) (2~,ooo)
($1,212A01~) (187,242) $1,025,159 ($211,652) 23,547 $235,199
1,508,239 189,382
189,382
$212,929
1,508,239
$1,320,997
62
SPECIAL REVENUE FUNDS
ENVIRONMENTAL
MANAGEMENT OAS TAX
HOUSING DEVELOPMENT
Varhnce Va6ance Variance
Positive Positive Positive
Budget Actual (Negative) Budget Actual (Negative) Budget Actual (Negative)
$2,000 $2,216 $216 $100,000 $108,018 $8,018 $71,000 $177,297 $106,297
1,684,000 1,694,828 10,828 60,000 60,208 208
355,000 352,254 (2,746)
357,000 354,470 (2,530) 1,784,000 1,802,846 18,846 131,000. 237,505 106,505
351,535 051,535) 1,301,574 1,310,608 (9,034)
4,297,693 1,552,699 2,744,994
321,685 55,570 266,115
351,535 (351,535) 5,599,267 2,863,307 2,735,960 321,685 55,570 266,115
357,000 2,935 (354,065) (3,815,267) (1,060,461) 2,754,806 (190,685) 181,935 372,620
501,000 501,000
(250,000) (250,000)
251,000 251,000
$357,000 2,935 ($354,065) ($3,564,267) (809,461) $2,754,806 ($190,685) 181,935 $372,620
106,455 3,345,074 1,530,337
47,885
154,340 3,345,074 1,530,337
$157,27~5 $2,535,61~3 $1,712,27.~_2
(Continued)
63
BUDGETED NON-MAJOR FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES lN FUND BALANCES
BUDGET AND ACTUAL
FOR TKE FISCAL YEAR ENDED JUNE 30, 2003
SPECIAL REVENUE FUNDS
LEADERSHIP CUPERTINO REDEVELOPMENT VALLCO
REVENUES
Taxes
Use of money and property
Inturgoverranenlal
Charges for services
Fines and forfeitures
Other revenue
Total Rever~es
EXPENDITURES
Adnfinistmtive services
Cornnmmty development
Public works
Capital outlay
Total Expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers (out)
Total Other Fi~maalng Sources (Uses)
EXCESS (DEFICIENCY) OF REVENUES AND
OTHER SOURCES OVER EXPENDITURES
AND OTHER USES
BEGINNING FUND BALANCES:
As repo~ted originally
GASB 34 Implementation adjustment
As adjusted
ENDING FUND BALANCES
Budget
Positive Positive
Actual (Negative) Budget Actual (Negative)
$28,000 $9,454 ($18,546)
$27,000 $32,289 $5,289
2,036 2,036
28,000 9,454 (18,546) 27,000 34,325 7,325
38,000 25,536 12,464
100,608 99,998 610
38,000 25,536 12,464 100,608 99,998 610
(I0,000) (16,082)
16,100 16,100
(6,082). (73,608) (65,673) 7,935
16,100 16,100
$6,10~0 18 ($6,082) ($73,6081) (65,673) $7,93.~_5
10 (90,912)
10 (90,912)
$28 ($156,585)
64
TOTALS
Budget
Positive
Actu~d (Negative)
$102,000 $97,681 ($4,319)
223,000 338,642 115,642
1,744,000 1,755,036 11,036
355,000 352,254 (2,746)
28,000 9,454 (18,546)
43,080 43,080
2,452,000 2,596,147 144,147
38.000 25,536 12,464
422.293 155.568 266.725
1.301.574 1,662,143 (360,569)
5.821.746 1.848.941 3.972.805
7.583,613 3,692.188 3.891.425
(5.131.613) (1.096.041) 4,035.572
517.100 517.100
(275.000) (275,000)
242.100 242.100
($4,889,513) (853.941) $4.035,572
47.885
3.291,396
$2,437,455
65
INTERNAL SERVICE FUNDS
Internal Service Funds are used to finance and account for special activities and services provided by one
department or program to other departments of the City on a cost reimbursement basis.
The concept of major funds introduced by GASB Statement 34 does not extend to internal service funds
because they do not do business with outside parties. GASB Statement 34 requires that for the Statement
of Activities, the net revenues or expenses of each internal service fund be 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 Assets.
However, internal service funds are still presented separately in the Fund financial statements.
Management Information Systems - Accounts for the activities related to the maintenance and
replacement of the City's technology infrastructure.
Workers' Compensation - Accounts for the activities in support of the self-insured workers'
compensation program.
Equipment Revolving - Accounts for the activities related to the maintenance and replacement of
the City's vehicle fleet.
Long-Term Disability - Accounts for the activities related to the City's program for long term
disability.
66
ASSETS
Cash am! investments
Total current assets
Capital assets, net of accumulated depreciation
Total Assets
LIABILITIES
Accounts payable and accruals
Accrued payroll and benefits
Total Liabilities
NET ASSETS
Invested ~ capital assets, net of related debt
Uraesthcted
Total Net Assets
CITY OF CUPERT[N0
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET ASSETS
IUNE 30, 2003
Management
Int~mmtion Workers' Equipment
Systems Compensation Revolvin~
Long-Tem~
Disability
Total
$769,023 $1,152,216 $732,622 $33,169 $2,687,030
769,023 1,152,216 732,622 33,169 2,687,030
344,839 1,217,739 1,562,578
1,113,862 1,152,216 1,950,361 33,169 4,249,608
40,988 16,912 57,900
21,681 661,606 58,000 741,287
62,669. 661,606 74,912 799,187
344,839 1,217,739 1,562,578
706,354 490,610 657,710 33,169 1,887,843
$1,051,193 $490,610 $1,875,449 $33,169 $3,450,421
67
CITY oP CL~BR~NO
~NTBRNAL SERVICE FUllS
COMBININO STATEMiENTS OF RBVENUES, EXPBNSBS AND
CHANGES I~ tRIND NET ASSETS
FOR ~ YEAR ENDBD JIf NE 30, 2003
Mmmgcment
Information Workers' Equipment
Systems Compensation Revolvin~
OPERATING REVENUES
Charges for services
Total Operating Revenues
OPERATING EXPENSES
Salaries and related expenses
Materials and supplies
Contractual services
Insurance claims
Depreciation
Total Operating Expenses
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES)
Interest Income
Total Nonoperating Revenues (Expenses)
I~come (Loss) Before Transfers
Transfers in
Net T~ans fers
Change in Net Assets
BEGINNING NET ASSETS
ENDING NET ASSETS
Long-Term
Disability
Total
$828,720 $155,665 $901,240 $72,460 $1,958,085
828,720 155,665 901,240 72,460 1,958,085
287,353 11,735 245,95I 545,039
352,536 202,920 555,456
160,987 99,682 260,669
241,832 80,453 322,285
220,812 336,790 557,602
1,021,688 253,567 885,343 80,453 2,241,051
(192,968) (97,902) 15,897 (7,993) (282,966)
20,799 40,051 21,749 1,112 83,711
20,799 40,051 21,749 1,112 83,711
(172,169) (57,851) 37,646 (6,881) (199,255)
270,000 20,000 290,000
270,000 20,000 290,000
97,831 (57,851) 57,646 (6,881) 90,745
953,362 548,461 1,817,803 40,050 3,359,676
$1,051,193 $490,610 $1,875,449 $33,169
68
CITY 01~ CUPERTINO
1NTERNAL SERVICE FUNDS
COMBEWING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2003
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers
Cash payments to suppliers for goods and services
Cash payments to employees
Cash Flows from Operating Activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers m
Cash Flows from Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED
FiNANCING ACTIVITIES
l:>ur chase of capital assets
Cash Flows from Capital and ReNted
Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
Cash Flows from Investing Activities
Net Cash Flows
Cash and investments at beginning of year
Cash and investments at end of year
Reconciliation of operating income (loss) to net cash flows
from operating activities:
Op~rat~g income (loss)
Adjustments to reconcile operating income (loss)
to net cash flows from operating activities:
Depreciation
Change in asseta mad liabilities:
Accounts tecalvable
Other assets
Accounts payable and accruals
Accrued payroll and benefits
Cash Flows from Operating Activities
Management
Information Workers' Equipment Long-Tema
S),stems Compe~ation Revolvin~ Disability
Total
$830.972 $160,784 $903,154 $72,603 $1,967,513
(502,153) (242,313) (301,831) (74,131) (1,120,428)
(284,122) (12,941) (246.777) (543,840)
44,697 (94,470) 354,546 (1,528) 303,245
270,000 20,000 290,000
270,000 20,000 290,000
(94,857) (112,701) (207,558)
(94,857) (112,701) (207,558)
20,799 40,051 21,749 1,112 83,711
20,799 40,051 21,749 1, I 12 83,711
240,639 (54,419) 283,594 (416) 469,398
528,384 1,206,635 449,028 33,585 2,217,632
$769,023 . $1,152,216 $732,622 $33,169 $2,687,030 .
($192,968) ($97.902) $15,897 ($7,993) ($282,966)
220.812 336,790 557.602
2,252 5,119 1.914 143 9.428
6,322 6,322
11.370 (481) 771 11,660
3.231 (1,206) (826) 1.199
$44,697 ($94,470). $354,546 ($1,528) $303,245
69
L FIDUCIARY FUNDS J
GASB Statement 34 requires that Agency Funds, the only fiduciary funds the City has, be presented
separately from the Governmental and Fund financial statements.
Agency funds, which account for assets held by the City as an agent for individuals, private organizations,
other governmental units and/or other funds, am custodial in nature and do not involve measurement of
results of operations. Such funds have no equity since any assets are due to individuals or other entities at
some future time.
70
CITY OF CUPERTINO
Combining Statement of Changes in Assets and Liabilities
All Agency Funds
For the Fiscal Year Ended June 30, 2003
All Agency Funds
Assets
Cash and investments
Liabilities
Deposits
Balance Balance
June 30, 2002 Additions Deletions June 30, 2003
$205,562 $8,539 $197,023
$205,562 $8,539 $197,023
71
NOTES
72
STATISTICAL SECTION
73
NOTES
74
The statistical section is unchanged by GASB Statement 34. R contains comprehensive statistical
data that relates to physical, economic, social and political characteristics of the City. It is
intended to provide users with a broader and more complete understanding of the City and its
financial affairs than is possible from the financial statements and supporting schedules included
in the financial section.
This section includes comparative information related to the City's revenue sources,
expenditures, property tax valuations, property tax rates, and demographic statistics, all for the
last ten years. Also presented is the computation of the City's legal debt margin, and a listing of
principal taxpayers.
In contrast to the financial section, the statistical section information is not subject to independent
audit.
75
CITY OF CUPERTINO
GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION (1)
LAST TEN FISCAL YEARS
Table 1
Fiscal Law Public Administrative Recreation Community
Year Adminis~ation Enforcement Information Services(2) Services Development
1994 $600,891 $3,501,523 $424,636 $1,465,708 $1,509,808 $1,399,637
1995 (3) $692,704 $3,769,584 $472,633 $1,549,162 $1,004,116 $2,859,582
1996 $809,492 $4,123,214 $513,106 $1,817,122 $1,045,300 $1,580,017
1997 $854,531 $4,118,027 $537,268 $1,750,575 $1,121,666 $1,608,010
1998 $856,836 $4,393,319 $590,667 $1,991,328 $1,164,822 $1,850,490
1999 $1,133,408 $4,892,704 $631,035 $2,008,976 $1,363,410 $2,101,942
2000 $1,242,310 $4,693,565 $796,458 $2,410,754 $1,536,152 $2,349,874
2001 $1,387,086 $5,351,653 $617,894 $3,033,073 $1,774,484 $2,700,888
2002 $1,464,165 $5,765,208 $707,885 $3,314,944 $1,858,338 $4,473,788
2003 $1,474,924 $6,015,036 $703,431 $3,475,99i $2,104,167 $3,177,406
Note:
(1) Includes General, Special Revenue, Debt Service and Capital Project Funds. (Does not
include other financing uses).
(2) Beginning in 1993 the lease payments in Administrative Services have been reallocated
to the Debt Service column.
(3) Excludes losses from sales of investments of $570,085 in 1995.
(4) Beginning in 1999 the debt service for 1915 Act and special assessment debt were excluded
from these tables as it was determined that the City has no obligation for the debt.
Source: City Administrative Services
76
Public
Works
$5,319,244
$6,759,807
$6,209,090
$6,786,574
$9,047,794
$9,167,386
$12,480,766
$10,979,150
$11,079,959
$10,440,335
Capital
Outlay
$1,769,875
$1,683,213
$5,005,071
$1,234,165
$4,412,291
$8,059,124
$3,404,088
$5,348,378
$5,435,850
$6,812,856
Debt
Service (4)
$10,055,907
$6,206,507
$6,196,680
$7,125,413
$5,193,242
$5,178,897
$4,953,360
$4,944,710
$4,934,973
$9,865,705
Total
$26,047,229
$24,997,308
$27,299,092
$25,136,229
$29,500,789
$34,536,882
$33,867,327
$36,137,316
$39,035,110
$44,069,851
77
CITY OF CUPERTINO
GENERAL GOVERNMENTAL REVENUES BY SOURCE (1)
LAST TEN FISCAL YEARS
Table 2
Fiscal Use of Money In~r- Licenses & Charges Fines and Other
Year Taxes(2) and Propeay govemmentM Permits(3) for Services Forfeitures Revenue
1994 $14,339,558 $1,622,393 $3,076,844 $1,680,307 $174,626 $226,714
1995 $14,363,104 $2,490,794 $5,605,848 $1,924,429 $202,055 $456,413
1996 $18,626,169 $2,417,589 $4,660,903 $2,241,106 $193,720 $1,320,878
1997 $18,182,889 $2,671,812 $2,903,880 $2,077,637 $205,366 $792,679
1998 $20,447,603 $2,776,441 $3,602,596 $2,366,376 $241,293 $1,146,454
1999 $18,837,091 $3,114,595 $5,650,954 $2,578,015 $503,223 $475,266
2000 $23,587,459 $2,866,012 $4,807,077 $1,359,949 $887,907 $524,057 $737,066
2001 $23,859,776 $3,336,651 $5,483,956 $1,230,060 $987,563 $470,627 $435,351
2002 $24,321,923 $2,262,622 $7,205,476 $1,310,470 $993,890 $616,227 $127,186
2003 $20,200,250 $1,910,503 $6,318,523 $1,410,572 $855,844 $550,377 $59,219
Note:
(1) Includes General, Special Revenue, Debt Service and Capital Projects Funds. (Does not include
other financing sources.)
(2) Beginning in 1999 the debt service for 1915 Act and special assessment debt were excluded
from these tables as it was determined that the City has no obligation for the debt.
(3) Prior to the fiscal year ended June 30, 2000, revenues derived from Licenses and Permits were included
as Charges for Services.
Source: City Administrative Services
Total
$21,120,442
$25,042,643
$29,460,365
$26,834,263
$30,580,763
$31,159,144
$34,769,527
$35,803,984
$36,837,794
$31,505,288
78
CITY OF CUPERTINO
ASSI~SSEB AND ESTIMATED ACTUAL VALUEg OF TAXAIILE PROPERTY
LAST TEN FISCAL YEARS
Table 3
Total Estimated
Fiscal Total Assessed Full Market
Year Secured Exemptions Unsecured Valuation Valuation
1994 $4,506,162,220 $62,637,400 $605,453,614 $5,174,253,234 $5,174,253,234
1995 $4,563,933,460 $64,604,400 $550,201,549 $5,178,739,409 $5,178,739,409
1996 $4,585,406,820 $65,248,400 $470,880,987 $5,121,536,207 $5,121,536,207
1997 $4,730,865,467 $66,172,400 $440,005,909 $5,170,871,376 $5,298,764,322
1998 $5,078,070,121 $57,445,281 $452,549,925 $5,538,936,459 $5,538,936,459
1999 $5,591,299,195 $67,859,400 $443,973,509 $6,043,669,471 $6,043,669,471
2000 $6,045,504,382 $73,148,676 $500,020,465 $6,553,278,115 $6,553,278,115
2001 $6,986,833,015 $67,242,848 $416,844,493 $7,407,208,836 $7,407,208,836
2002 $7,836,349,904 $82,089,594 $634,624,124 $8,562,981,335 $8,562,981,335
2003 $8,119,969,820 $75,795,294 $565,212,987 $8,685,515,766 $8,685,515,766
Source: County of Santa Clara, Department of Finance
79
CITY OF CUPERTINO
PROPERTY TAX RATES- DIRECT AND OVERLAPPING GOVERNMENTS
(PER $1OO OF ASSESSED VALUE)
LAST TEN FISCAL YEARS
Table 4
1994 1995
County 1.000 1.000
County Bond .........
County Retirement 0.031 .0332 .0338
Library Retirement 0.002 .0024 .0024
Cupertino City Bond .........
Elem and/or Unif Sch Bonds ...... .0182
High School Bonds .........
Junior College Bonds .........
Loan Repay-Cupertino .........
Cupertino San Dist-Bond .........
SCVWD-State Water Proj 0.009 .0092 .0072
SCVWD-Zone W-1 Bond 0.003 .0023 .0026
TOTALS 1.045 1.047
1996 1997. 1998 1999 2000 2001 2002 2003
1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000
.0341 .0388 .0388 .0388 .0388 .0388 .0388
.0024 .0024 .0043 .0043 .0043 .0043 .0043
.0303 .0292 .0247 .0247 .0247 .0247 .0247
.0076 .0076 .0053 .0053 .0053 .0053 .0053
.0026 0.002 0.002 0.002 0.002 0.002 0.002
1.064 1.077 1.080 1.075 1.075 1.075 1.075 1.071
Source: County of Santa Clara Annual Tax Increment Tables
80
Taxpayer
Hewlett Packard
Apple Computer
Tandem Computers
Vallco International Shopping
Cupertino City Center
Cupertino Property Limited
Irvine Apartments
RWC LLC
Symantec
Ridgeview Court Associates
CITY OF CUPERTINO
PRINCIPAL TAXPAYERS
JUNE 30, 2003
Table 5
Type of Business
Electronic Equipment
Electronic Equipment
Electronic Equipment
Commercial
Land Developer
Land Developer
Residential
Industrial
Commercial
Industrial
2002-03
Assessed
Valuation
$372,085,691
$268,958,878
$237,853,550
$85,491,763
$74,584,523
$72,800,000
$62,633,713
$59,910,596
$56,912,516
$55,664,911
$11346~8961141
Percentage of
Total Assessed
Valuation
4.24%
3.06%
2.71%
0.97%
0.85%
0.83%
0.71%
0.68%
0.65%
0.63%
15.33%
Source: The HdL Companies
81
CITY OF CUPERTINO
COMPUTATION OF LEGAL DEBT MARGIN
JUNE 30, 2003
Table 6
Total Assessed Valuation
$8,685,515,766
Debt limit - 15 percent of Total Assessed Valuation $1,302,827,364
Less - outstanding bonded debts
Legal debt margin
$1,302,827,364
Source: County of Santa Clara and City Administrative Services
82
CITY OF CUPEP. TINO
RATIO OF GENERAL BONDED DEBT TO ASSESSED
VALUE AND BONDED DEBT PER CAPITA
LAST TEN FISCAL YEARS
Table 7
Fiscal Assessed General Bonded Debt
Year Population Value Bonded Debt Per Capita
1994 42,441 $5,174,253,234 ---
1995 43,489 $5,178,739,409 ---
1996 43,627 $5,121,536,207 ---
1997 44,775 $5,298,764,322 ---
1998 46,682 $5,538,936,459 ---
1999 50,000 $6,043,669,471 ---
2000 52,000 $6,553,278,115 ---
2001 50,546 $7,407,208,836 ---
2002 50,546 $8,562,981,335 ---
2003 52,000 $8,685,515,766 ---
Source: County of Santa Clara and City Administrative Services
Ratio of General
Bonded Debt to
Assessed Value
83
CITY OF CUPERTINO
RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED
DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES
LAST TEN FISCAL YEARS
Table 8
Principal Interest
$20,000 $500
Ratio of Debt
Total Debt Total General To General
Service Expenditures (1) Expenditures
Fiscal
Year
1994
1995
(2)
1996
1997
1998
1999
2000
2001
2002
2003
$20,500 $26,047,229 0.0008%
$24,997,308
--- $27,299,092
--- $25,136,229
--- $29,500,789
--- $34,536,882
--- $33,867,327
--- $36,137,316
-~- $39,035,110
--- $44,069,851
(1) Includes General, Special Revenue, Debt Service, and Capital Projects Funds
(2) Excludes losses from sales of investments of $570,085
Source: City Administrative Services
84
CITV OF CUPEI~TIN0
DEMOGRAPHIC STATISTICS
LAST TEN FISCAL YEARS
Table 9
School
Fiscal Median Age Enrollment Unemployment
Year Population (1) Years (2) Grades 9-12 (3) Rate (4)
1994 42,441 36.0 6,969 3.8%
1995 43,489 36.0 6,969 3.8%
1996 43,627 N/A 8,199 2.2%
1997 44,775 N/A 8,380 1.8%
1998 46,682 N/A 8,380 1.7%
1999 50,000 N/A 8,762 1.9%
2000 52,000 N/A 8,822 1.3%
2001 50,546 N/A 8,822 2.4%
2002 50,546 N/A 9,063 4.6%
2003 52,000 N/A 9,108 5.1%
Source: (1) City Administrative Service (2) Cupertino Chamber of Commerce
(3) Fremont Union High School District
(4) Department of Employment Statistics
85
CITY OF CUPERTINO
PROPERTY VALUE, CONSTRUCTION, AND BANK DEPOSITS
LAST TEN YEARS
Table 10
Fiscal
Year
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Property
Value (1) Residential Construction (2)
Assessed Number
Valuation of Units Value
$4,888,101,125 17 $9,055,055
$5,174,253,234 30 $7,579,919
$5,178,739,409 118 $24,626,353
$5,121,536,207 126 $23,423,228
$5,298,764,322 521 $51,129,923
$5,538,936,459 578 $62,019,693
$6,043,669,471 125 $42,771,247
$6,553,278,115 207 $72,983,009
$7,407,208,836 83 $22,251,562
$8,562,981,335 72 $17,674,435
$8,685,515,766 362 $69,763,102
Source: (1) County of Santa Clara, Department of Finance (2) City Building Department
(3) Findley Reports
Commercial
Construction (2)
Value
$271,222
$31,775,355
$45,254,694
$7,476,590
$9,092,350
$3,000,000
$20,109,541
$6,172,755
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COMMUNITY
PROFILE
87
Cupertino owes its name and earliest mention in recorded history to
the 1776 expedition led by the Spaniard, Don Juan Bautista de Anza,
from Sonora, Mexico to the Port of San Francisco to found the
presidio of St. Francis.
Leaving the majority of the party of men, women, and children in
Monterey to rest from their travels, deAnza, his diarist and
cartographer, Petrus Font, and 18 other men pressed on through the
Santa Clara Valley in late March to their San Francisco destination.
With the expedition encamped in what is now Cupertino, Font
christened the creek next to the encampment the Arroyo San Joseph
Cupertino in honor of his patron, San Guiseppe (San Joseph) of
Cupertino, Italy. The arroyo is now known as Stevens Creek.
The village of Cupertino sprang up at the crossroads of Saratoga-
Sunnyvale Road (now DeAnza Boulevard) and Stevens Creek
Boulevard. It was first known as West Side; but, by 1898 the post
office at the Crossroads needed a new name to distinguish it from
other similarly named towns. John T. Doyle, a San Francisco lawyer
and historian, had given the name Cupertino to his winery in
recognition of the name bestowed on the nearby creek by Petrus Font.
In 1904 the name was applied to the Crossroads and to the post office
when the Home Union Store incorporated under the name, The
Cupertino Stores, Inc.
Many of Cupertino's pioneer European settlers planted their land in
grapes. Vineyards and wineries proliferated on Montebello Ridge, on
the lower foothills, and on the flat lands below.
After 1906 a lot more than grape growing was going on in Cupertino. Orchards were thriving and new businesses were
being started. In the late 1940's Cupertino was swept up in Santa Clara Valley's postwar population explosion.
Concerned by unplanned development, higher taxes, and piecemeal annexation to adjacent cities, Cupertino's community
leaders began a drive in 1954 for incorporation. Cupertino rancher Norman Nathanson, the Cupertino - Monta Vista
Improvement Association, and the Fact Finding Committee played important roles in this movement. Incorporation was
approved in the September 27, 1955 election. Cupertino officially became Santa Clara County's 13® City on October 10,
1955.
A major milestone in Cupertino's development was the creation by some of the city's largest landowners of Vallco
Business and Industrial Park in the early 1960's. Of the 25 property owners, 17 decided to pool their land to form Vallco
Park, six sold to Varian Associates, a thriving young electronics firm, founded by Russell Varian, and two opted for
transplanting to farms elsewhere. The name Vallco was derived from the names of the principal developers: Varian
Associates and the Leonard, Lester, Craft, and Orlando families.
88
2003
The City of Cupertino, high-tech heart of Silicon Valley, was
born from a community of farmers. In 1955, when Cupertino
officially became the 13th city in Santa Clara County, its
population was about 2,000 and its geographical area
encompassed 3.76 square miles.
Today, with a population numbering more than 50,000 and city
limits stretching across 11 square miles, Cupertino is considered
to be one of the San Francisco Bay Area's most prestigious cities
in which to live and work.
Among the many factors that make Cupertino so desirable are
the city's highly acclaimed educational programs, its vibrant
business environment, its convenient access to major
transportation systems and its attractive well-planned
neighborhoods.
Schools in Cupertino are operated by the Cupertino Union School District (CUSD) that serve students from kindergarten
through 8t~ grade in several different cities, and the Fremont Union High School District (FUHSD), which operates five
high schools in Cupertino and nearby cities. Twenty elementary schools and four middle schools are under the CUSD
umbrella. Nationally recognized for its innovative use of technology to enrich student learning, the district's reputation
reaches around the world.
One of California's premiere community colleges is also located in Cupertino. DeAnza College serves nearly 25,000
students per quarter. The college operates a planetarium and an Advanced Technology Center, where training in math,
physics, computers and programming is offered. In addition, one of the area's leading performing arts facilities, the Flint
Center, is located on the DeAnza College campus.
As home to many well-known high-tech companies, Cupertino offers a dynamic and exciting business climate. Apple
Computer is headquartered in the city along with Symantec and Portal Software. In addition, key divisions of Hewlett
Packard, Sun Microsystems and Borland are also located in Cupertino.
The City's proactive economic development efforts have resulted in a number of innovative, mutually beneficial
partnerships with local companies. The City strives to retain and attract local companies through policies of balanced
growth and streamlined permitting.
Residents and visitors can browse in a variety of small specialty shops at Vallco Fashion Park. The mall includes Macy's,
Penney's and Sears as anchors and features popular chain stores such as Victoria's Secret, Express and Natural Wonders.
Shoppers can also enjoy iceskating at the mall's ice skating rink.
There's more to a community than its schools, its businesses and its quality of life. A community is people. And,
Cupertino's people come from all over the world. The city prides itself on being a diverse community and appreciates
the cultural differences that make each resident individual and unique. Cupertino has become a place that people are
proud to call home.
89
of L bor For e
Population in County
Total Taxable Sales - County
Population in City Limits
Total Taxable Sales - City
Occupied Dwellings - City
School Enrollment K-8
School Enrollment 9-12
Median Income - City
Median Income - County
Median Age
Economic Growth & Trends
1999 2000 2001 2002
1,647,419 1,682,585 1,674,634 1,668,309
27,488,815 35,683,007 37,692,000 40,781,000
45,095 50,546 50,546 50,546
1,412,000 1,106,635 1,205,736 1,307,202
17,417 18,204 18,403 18,682
15,313 15,200 15,313 15,700
8,822 9,063 9,100 9,108
79,213 78,316 77,740
59,639 62,317 64,136
39 38 38
Non-Manufacturing Employment
Company
Employment
Cupertino Union School District
Foothill/DeAnza Community College
Fremont Union High School District
Sears
Target
JC Penney
PG&E
Mervyns
1,500
1,200
735
294
270
200
167
135
Product
Education
Education
Education
Retail
Retail
Retail
Gas/Electric
Retail
Manufacturing Employment
Company Employment
Apple Computer 6,000
Hewlett-Packard 4,682
Symantec 400
Honeywell-Measurex 220
Produc[
Computers
Computers
Software
Process
Controls
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2003 Cf, ty
The City of Cupertino operates as a general law city with a city council-city manager form of government. Five council
members serve four year, overlapping terms, with elections held every two years. The council meets twice a month on the
first and third Mondays at 6:45 p.m. in City Hall.
Municipal services are provided by the City's 154 full time benefited employees. City departments include administrative
services (finance, human resources, IT, city clerk, outreach programs, code enfomement, and economic development);
community development (planning and building); parks and recreation; public works (engineering, maintenance,
transportation, and environmental); and public information. Police service is contracted through the County of Santa
Clara and fire service is provided through Santa Clara County Fire District.
Assisting the city council are several citizen advisory commissions/committees which include housing,
telecommunications, fine arts, library, planning, audit, parks and recreation, bicycle and pedestrian, and public safety.
Members of the volunteer boards are appointed by the city council and vacancies are announced so that interested
residents may apply for the positions. Residents are kept informed about city services and programs through the
Cupertino Scene, a monthly newsletter; Cupertino's government access cable TV channel; The City Channel; and the
city' s website.
Housing
Rentals for one and two bedroom apartments and duplexes
range from $1,100 to $2,100 per month. Rent for a two
bedroom house ranges from $2,200 to $3,250 per month.
The average price of existing single family homes is
$793,531 as of March 2003. The average
condominiungtownhouse sale price is $446,158.
Community Health Care Facilities
Cupertino is served by the Cupertino Medical Clinic,
NovaCare Occupational Health Services. Nearby hospitals
include El Camino Hospital in Mountain View, O'Connor
Hospital in San Jose, San Jose Hospital, Community
Hospital of Los Gatos, Kaiser Permanente Medical Center
in Santa Clara, Stanford Hospital in Palo Alto, and the
Saratoga Walk-in Clinic in Saratoga.
Utilities
Natural gas and electric - Pacific Gas and Electric
Company, (800) 743-5000.
Telephone - SBC. For residential service call (800) 894-
2355; for business service call (800) 750-2355.
Cable - Comcast, (800) 945-2288.
Garbage - Los Altos Garbage, (408) 725-0420.
Water - San Jose Water Company (408) 279-7900 and
California Water (650) 917-0152.
Sewer Service - Cupertino Sanitary District (408) 253-7071
Tax Rates and Govermnent Services
Residential, commercial, and industrial property is
appraised at full market value as it existed on March 1,
1975, with increases limited to a maximum of 2% annually.
Property created or sold since March 1, 1975 will bear full
cash value as of the time created or sold, plus the 2%
annual increase. The basic tax rate is $1.00 per $100 full
cash value plus any tax levied to cover bonded
indebtedness for county, city, school, or other taxing
agencies. Assessed valuations and tax rates are published
annually after July 1.
Retail Sales Tax: Santa Clara County District: 1%; Local:
1%; State: 6%; County: .25%; Total: 8.25%.
Assessed Valuation: (Secured and Unsecured)
Cupertino: $8,072,696,008 (2002)
County: $189,909,033,048 (2002)
Transportation
Rail - Southern Pacific, San Jose to San Francisco, with
spur line in Cupertino.
Air - Seven miles north of San Jose International Airport;
32 miles south of San Francisco airport.
Bus - Santa Clara County Transit Systems, Greyhound bus
lines
Highways - Interstate Route 280, State Route 85.
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Library
Blackberry Farm
Cupertino Library has the highest circulation among the
members of the Santa Clara County Library system. It
holds a collection of more than 308,000 volumes, as well
as periodicals, compact discs, audio and video cassettes,
CD-ROM's and DVD's.
The library is currently under construction. A temporary
library is located at 10441 Bandley Drive in Cupertino.
The library is open Monday through Thursday 10-9,
Friday and Saturday 10-6, Sunday 12-6. For more
information call (408) 446-1677.
Cupertino Senior Center
Adults over age 50 can find a full calendar of
opportunities for learning, volunteering, and enjoying
life. There are exercise classes (over 30 hours a week), a
computer lab and classes, language instruction including
English as a second language, and cultural and special
interest classes.
This 33 acm recreational facility offers two large
swimming pools, softball field, basketball courts,
volleyball courts, horseshoe pits, and a nine hole golf
course. The picnic grounds are located at 21975 San
Femando Avenue and the golf course is located at 22100
Stevens CmekBoulevard. Telephone: (408) 777-3140.
Center is a 2,000 square foot
house that overlooks the
picnic grounds and golf
course. The center has one
large conference room that
will accommodate up to 25
people. The retreat center is
located at 21979 San
FemandoAvenue. Telephone: (408) 777-3140.
McClellan Ranch Park
The Senior Center is located at 21251 Stevens Creek
Boulevard at Mary in Memorial Park and is open
Monday through Friday 8 a.m. to 5 p.m.
The Quinlan Community Center
The City of Cupertino's Quinlan Community Center is a
27,000 square foot facility that provides a variety of
recreational opportunities. Most prominent is the
Cupertino Room which is a multi-purpose room that can
accommodate 300 people in a banquet format. The
Quinlan Center is also home to the Cupertino Historical
Society. For more information, call (408) 777-3120.
A horse ranch during the 1930's and 40's, this 18-acre
park has the appearance of a working ranch. Preserved
on the property are the original ranch house, milk barn,
livestock barn, and two historic buildings moved from
other sites in the city: Baer's Blacksmith Shop,
originally located at DeAnza and Stevens Creek, and the
old water tower from the Parish Ranch, now the site of
Memorial Park. Also at McClellan Ranch are corrals
where Rolling Hills 4-H Club members raise rabbits,
chickens, sheep, swine, and cattle and a Junior Nature
Museum, which features small live animal exhibits and
dispenses information about bird, animal, and plant
species of the area. McClellan Ranch is located at 22221
McClellan Road. Telephone: (408)777-3120.
Cupertino Sports Center
Cupertino Sports Center is a great place to meet friends.
The facility features 17 tennis courts (12 lighted),
complete locker room facilities, saunas, Jacuzzis, and a
fully equipped fitness center featuring free weights,
Cydesc, and cardio equipment. The center is located at
the comer of Stevens Creek Boulevard and Stelling
Road. Telephone: (408) 777-3160.
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Winner of numerous state and national awards for excellence, our
City's schools are widely acknowledged to be models of quality
instruction.
Cupertino Union School District serves 15,700 students in a 26 square
mile area that includes Cupertino and portions of five other cities. The
district has 20 elementary schools and four middle schools, including
several choice programs. Eighteen schools have received state and/or
national awards for educational excellence.
Student achievement is exceptionally high. Historically, district test
scorns place Cupertino among the premier public school districts in
California. The district is a leader
in the development of a standards-
based system of education and is nationally recognized for leadership in the use of
technology as an effective tool for learning. Quality teaching and parent involvement
are the keys to the district's success.
The Fremont Union High School District serves over 9,000 students in a 42 square
mile area covering all of Cupertino, most of Sunnyvale and portions of San Jose, Los
Altos, Saratoga, and Santa Clara. The five high schools of the district have garnered
many awards and recognition based on both the achievement of students and the
programs designed to support student achievement. Student achievement is at an all
time high based on the statewide Academic Performance Index (AP1). All five high
schools in the district exceeded their state established achievement targets for the 2000
AP1. District students are encouraged to volunteer and/or provide service to
organizations within the community. During their senior year, if students complete 80
hours of service to a non-profit community organization,
that may be worn during their graduation ceremonies.
C pe. mo
CBe2f orr its
they are recognized with a "Community Service Award" medal
Cupertino is served by four local
institutions of higher education:
DeAnza College, the University of San
Francisco, National University and
the UCSC Extension. In addition to
these schools, Cupertino's location
offers easy access to Stanford
University, Santa Clara University and
San Jose State University.
Building on its tradition of excellence and innovation, DeAnza
College challenges students of every background to develop
their intellect, character and abilities; to achieve their
educational goals; and to serve their community in a diverse and
changing world.
DeAnza College offers a wide range of quality programs and
services to meet the work force development needs of our
region. The college prepares current and future employees of
Silicon Valley in traditional classroom settings and through
customized training arranged by employers. Several DeAnza
programs encourage economic development through college
credit courses, short term programs, services for manufacturers,
technical assistance, and/or recruitment and retention services.
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to $
Euphrat Museum of Art
The highly regarded Euphrat Museum of Art adjacent to the Flint Center on the DeAnza College campus traditionally
presents one-of-a-kind exhibitions, publications and events reflecting the rich diverse heritage of our area. The Museum
prides itself on its changing exhibitions of national and international stature, emphasizing Bay Area artists. Museum
hours are 11 a.m. - 4 p.m. Tuesday, Wednesday, Thursday; 6-8 p.m. Tuesday and 11 a.m. - 2 p.m. Saturday. Telephone:
408-864-8836.
Minolta DeAnza Planetarium
Stargazers have a Cupertino facility catering to their interests, the Minolta Planetarium on the DeAnza College campus. It
hosts a variety of planetarium shows and events, including educational programs for school groups and family astronomy
evenings on Saturdays at 7:00 p.m. For more information and current schedule of events, visit the website at
www.planetarium.deanza.fhda or call 408-864-8814.
Flint Center
The cultural life of the Peninsula and South Bay is enhanced by programs presented at the Flint Center for Performing
Arts located at 21250 Stevens Creek Boulevard at DeAnza College campus. The center opened in 1971 and was named in
honor of Calvin C. Flint, the first chancellor of the Foothill-DeAnza Community College District. The box office is open
10 a.m. - 4 p.m. Monday through Friday and one and one half hoars prior to any performance. Box office: 408-864-
8816; administrative office: 408-864-8820.
Cupertino Historical Society
On May 2, 1966, the Cupertino Historical Society was founded as a non-profit organization by a group of 177 longtime
residents concerned about the rapid growth in the area and its impact on the quickly vanishing Cupertino heritage. The
long-term goal of the Society was to develop a museum to preserve the memorabilia that would be so vital in
communicating the history to future generations. On March 30, 1990, the Society opened the Cupertino Historical
Museum dedicated to the preservation and exhibition of the city's history. The museum is a growing repository of
artifacts, documents, photographs, vehicles and equipment of city residents, industries and businesses past and present.
The vitality of the changing community is shown through the rotating exhibitions of the museum. Through its exhibits the
museum attempts to develop and expand the learning opportunities that it offers to the ethnically diverse community of
the City of Cupertino. The Society continues to build partnerships with the local school districts to ensure that the history
of Cupertino is offered as part of the educational curriculum. The Society is located at the Quinlan Community Center,
10185 N. StellingRoad. Telephone: 408-973-8049.
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