Financial Report 06-30-2012City of Cupertino, California
www.cupertino.org
2012
2011
Comprehensive AnnuAl
FinAnCiAl report
For fiscal
year ended
June 30, 2012
CITY OF CUPERTINO, CALIFORNIA
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
FOR FISCAL YEAR ENDED
JUNE 30, 2012
PREPARED BY:
CITY OF CUPERTINO
ADMINISTRATIVE SERVICES DEPARTMENT
FINANCE DIVISION
CITY OF CUPERTINO Comprehensive Annual Financial Report For the Year Ended June 30, 2012 Table of Contents
INTRODUCTORY SECTION Page
Table of Contents .................................................................................................................................................. i
Letter of Transmittal ........................................................................................................................................... iii
Organization Chart ............................................................................................................................................ viii
City Council and Directory of City Officials ..................................................................................................... ix
Commissions and Committees ............................................................................................................................ x
Certificate of Award for Excellence in Financial Reporting ............................................................................. xi
FINANCIAL SECTION
Independent Auditor’s Report ......................................................................................................................... 1 Management’s Discussion and Analysis (Unaudited) ................................................................................... 3 Basic Financial Statements: Government-wide Financial Statements:
Statement of Net Assets ................................................................................................................... 20
Statement of Activities ..................................................................................................................... 21 Fund Financial Statements:
Balance Sheet .................................................................................................................................... 23
Reconciliation of the Balance Sheet of Governmental Funds to the
Statement of Net Assets - Governmental Activities ........................................................................ 24
Statement of Revenues, Expenditures and Changes in Fund Balances ............................................. 25
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities - Governmental Activities ......................................................................... 26
Statement of Revenues, Expenditures and Changes in Fund Balances –
Budget to Actual - General Fund .................................................................................................... 27 Proprietary Funds:
Statement of Fund Net Assets ........................................................................................................... 29
Statement of Revenues, Expenses and Changes in Fund Net Assets ................................................ 30
Statement of Cash Flows ................................................................................................................... 31 Fiduciary Funds:
Statement of Fiduciary Net Assets .................................................................................................... 33
Statement of Changes in Fiduciary Net Assets…............................................................................ .34 Notes to the Basic Financial Statements ................................................................................................ 35 Required Supplementary Information (Unaudited):
Schedules of Funding Progress ........................................................................................................... 66
CITY OF CUPERTINO Comprehensive Annual Financial Report For the Year Ended June 30, 2012 Table of Contents
FINANCIAL SECTION (Continued) Page
Other Supplementary Information:
Schedule of Revenues, Expenditures, and Changes in Fund Balance –
Budget and Actual - Public Facilities Corporation Debt Service Fund ............................................ 68 Nonmajor Governmental Funds:
Combining Balance Sheet ................................................................................................................. 70
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances .............................................................................................................. 72
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual ............................................................................ 74 Internal Service Funds:
Combining Statement of Net Assets ................................................................................................. 78
Combining Statement of Revenues, Expenses and
Changes in Fund Net Assets ........................................................................................................... 79
Combining Statement of Cash Flows ................................................................................................ 80 Agency Fund:
Statement of Changes in Assets and Liabilities ............................................................................... 82
STATISTICAL SECTION
Financial Trends:
Net Assets by Component – Last Ten Fiscal Years .................................................................................. 84
Changes in Net Assets – Last Ten Fiscal Years ........................................................................................ 85
Fund Balances of Governmental Funds – Last Ten Fiscal Years ............................................................ 87
Changes in Fund Balance of Governmental Funds – Last Ten Fiscal Years ........................................... 88 Revenue Capacity:
Assessed and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years ............................. 89
Property Tax Rates – All Overlapping Governments – Last Ten Fiscal Years ....................................... 90
Principal Property Taxpayers – Current Year and Nine Years Ago ........................................................ 91
Property Tax Levies and Collections – Last Ten Fiscal Years ................................................................. 92 Debt Capacity:
Ratio of Outstanding Debt by Type – Last Ten Fiscal Years ................................................................... 93
Direct and Overlapping Bonded Debt ....................................................................................................... 94
Legal Bonded Debt Margin Information – Last Ten Fiscal Years ........................................................... 95
Ratio of General Bonded Debt Outstanding – Last Ten Fiscal Years ...................................................... 96 Demographic and Economic Information:
Demographic and Economic Statistics – Last Ten Calendar Years ......................................................... 97
Principal Employers – Current Year and Nine Years Ago ....................................................................... 98 Operating Information:
Full-Time Equivalent City Employees by Function/Program – Last Ten Fiscal Years .......................... 99
Operating Indicators by Function/Program – Last Eight Fiscal Years .................................................. 100
Capital Asset Statistics by Function/Program – Last Ten Fiscal Years ................................................. 101
COMMUNITY PROFILE
INTRODUCTORY SECTION
CITIZENS OF CUPERTINO
City Council
City Attorney
Carol Korade
City Manager
David Brandt
Director of
Administrative Services
Carol Atwood
Director of Community
Development
Aarti Shrivastava
Director of Parks and
Recreation
Mark Linder
Director of Public Works
Timm Borden
City Treasurer
Carol Atwood
Finance Director
David Woo
IT Manager
Mariyah Serratos
City Clerk
Grace Schmidt
Code Enforcement
Emergency
Preparedness
Neighborhood Watch
City Planner
Gary Chao
Building Official
Albert Salvador
Economic Development
Manager
Vacant
Sr. Recreation Supervisor
Senior Center
July Lamy
Recreation Supervisor
Sports Center
Don McCarthy
Recreation Supervisor
Youth Programs
Christine Hanel
Recreation Supervisor
Facilities/Community
Events
Tom Walters
Assistant Public Works
Director
Roger Lee
Grounds Supervisor
John Bisely
Facilities Supervisor
Chris Orr
Trees/ROW
Supervisor
Jonathan Ferrante
Fleet/Streets Supervisor
Chris Mertens
Capital Improvement
Project Manager
Katherine Jensen
Environmental
Programs Manager
Cheri Donnelly
Senior Civil Engineer
David Stillman
Citizens Advisory
Commissions and
Committees Public &
Environmental
Affairs Director
Rick Kitson
Community
Relations
CITY OF CUPERTINO, CALIFORNIA Fiscal Year 2011-12 CITY COUNCIL
Mark Santoro Orrin Mahoney
Mayor Vice Mayor
Barry Chang Rod Sinks
Councilmember Councilmember
DIRECTORY OF CITY OFFICIALS
David Brandt - City Manager
Carol Korade - City Attorney
Carol Atwood – Director of Administrative Services
Timm Borden – Director of Public Works
Mark Linder – Director of Parks and Recreation
Aarti Shrivastava - Director of Community Development
Gilbert Wong
Councilmember
CITY OF CUPERTINO, CALIFORNIA
Fiscal Year 2011/12
COMMISSIONS AND COMMITTEES
AUDIT COMMITTEE PARKS & RECREATION COMMISSION Angela Chen David Fung Barry Chang David Greenstein Rod Sinks David Lee Eno Schmidt Darcy Paul Raymond Yin Marcia St. Clair HOUSING COMMISSION LIBRARY COMMISSION
Harvey Barnett Rose Grymes Jimmy Chien Adrian Kolb Krista Wilson Janet Riddell Nicole Maroko Ann Stevenson Rajeev Raman Susanna Tsai FINE ARTS COMMISSION PLANNING COMMISSION
KC Chandratreya Paul Brophy Jessi Kaur Clinton Brownley Russell Leong Winnie Lee Rajeswari Mahaliagan Marty Miller Marvin Spielman Don Sun PUBLIC SAFETY COMMISSION BICYCLE PEDESTRIAN COMMISSION
Nina Daruwalla William Chan Andy Huang Mark Fantozzi Lily Lim Ashish Kolli Robert McCoy Jill Mitsch Daniel Nguyen Alan Takahashi TEEN COMMISSION ECONOMIC DEVELOPMENT
Jacqueline Do Sanika Puranik Carol Atwood Erin Cooke Ashley Ding Hadar Sachs Orrin Mahoney Aarti Shrivastava Anand Hemmady Emily Szeto Timm Borden Rod Sinks Dana Lujack Madeline Yip Mike Foulkes John Zirelli Greg Pommier Mike Rohde Kevin McClelland Darcy Paul Maria Streeby Winnie Lee TECHNOLOGY, INFORMATION & FISCAL STRATEGIC COMMITTEE COMMUNICATIONS COMMISSION Peter Friedland Gilbert Wong Mark Linder Wallace Iimura Mark Santoro Aarti Shrivastava Shishir Chavan Carol Atwood David Woo
Rod Livingood Timm Borden
Beverly Siegel
FINANCIAL SECTION
INDEPENDENT AUDITOR’S REPORT
Honorable Mayor and Members of the
City Council of the City of Cupertino, California
We have audited the financial statements of the governmental activities, the business-type activities,
each major fund, and the aggregate remaining fund information of the City of Cupertino, California (the
City) as of and for the year ended June 30, 2012, which collectively comprise the City’s basic financial
statements 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 basic financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards in the United States of
America and the standards for financial audits contained in Government Auditing 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.
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, California as of June 30,
2012 and the respective changes in the financial position and cash flows, where applicable, thereof and
for the year then ended, in conformity with accounting principles generally accepted in the United
States of America.
As discussed in Note 14, pursuant to ABx1 26 adopted by the State of California which was validated
by the California Supreme Court on December 28, 2011, the Redevelopment Agency of the City of
Cupertino has been dissolved and its assets turned over to and liabilities assumed by Successor
Agencies effective January 31, 2012. Certain transactions undertaken by the Redevelopment Agency of
the City of Cupertino prior to the date of dissolution may be subject to review by the State as discussed
in Note 14, but the effect of that review can not be determined as of June 30, 2012.
In accordance with Government Auditing Standards, we have also issued our report dated September
20, 2012, on our consideration of the City's internal control over financial reporting and on our tests of
its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on the
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be considered in assessing
the results of our audit.
Accounting principles generally accepted in the United States of America require that Management’s
Discussion and Analysis and budgetary comparison information be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements, is required
by the Governmental Accounting Standards Board, who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic or historical
context. We have applied certain limited procedures to this information in accordance with generally
accepted auditing standards in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information for
consistency with management’s responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an
opinion or provide any assurance on the information because the limited procedures do not provide us
with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that comprise
the City’s financial statements as a whole. The Introductory Section, Supplemental Information, and
Statistical Section are presented for purposes of additional analysis and are not a required part of the
financial statements. The Supplemental Information is the responsibility of management and was
derived from and relates directly to the underlying accounting and other records used to prepare the
financial statements. The information has been subjected to the auditing procedures applied in the audit
of the financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the financial
statements or to the financial statements themselves, and other additional procedures in accordance with
generally accepted auditing standards in the United States of America. In our opinion, the Supplemental
Information is fairly stated in all material respects in relation to the basic financial statements as a
whole. The Introductory and Statistical Sections have not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or
provide any assurance on them.
September 20, 2012
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2012
This describes the City of Cupertino’s financial performance for the year. Please read it in conjunction with the
accompanying Transmittal Letter and Basic Financial Statements.
2011‐12 FINANCIAL HIGHLIGHTS
Governmental activity revenues climbed 3% over last year while expenses increased 1%.
Revenues from business-type activities were flat while expenses went up 3% from the prior year.
Governmental net assets increased 1% to $163,130,000 while business-type net assets rose 3% to
$10,882,000.
General Fund revenues increased 10% from the prior year while General Fund expenditures rose 4%.
General Fund expenditures came in 10% under budget, with revenues 10% over budget.
The General Fund balance grew 32% to end the year at $26,098,000.
OVERVIEW OF THE 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 position.
The City-Wide Financial Statements provide a long-term view of the City’s activities as a whole, and
comprise the Statement of Net Assets and the Statement of Activities. These statements are prepared on the
accrual basis, which means they measure the flow of all economic resources of the City as a whole. The accrual
basis of accounting is similar to the accounting used by most private sector companies. The Statement of Net
Assets provides information about the financial position of the City as a whole, including all its capital assets
and long-term liabilities. The Statement of Activities provides information about all the City’s revenues and all
its expenses, with the emphasis on measuring net revenues or expenses for each of the City’s programs. The
Statement of Activities explains in detail the change in Net Assets for the year. Over time, increases or
decreases in net assets can be indicators of whether the financial condition of the City is improving or
deteriorating.
All of the City’s activities are grouped into Governmental activities and Business-type activities, as explained
below. The Statement of Net Assets and the Statement of Activities provide a summary of these two types of
activities for the City as a whole.
Governmental activities—Most of the City’s basic services are considered to be governmental activities,
including public works, law enforcement, community development, recreation, public & environmental
affairs, and general administration. These services are supported by general City revenues such as property,
sales and other taxes, and by specific program revenues such as developer fees and grants.
The City’s governmental activities include the activities of a separate legal entity, the Cupertino
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. As allowed in the State’s redevelopment agency
dissolution acts, the City’s Redevelopment Agency Special Revenue Fund elected to transfer its housing
assets and liabilities into the City’s Low and Moderate Income Housing Assets Special Revenue Fund as of
February 1, 2012. See Note 14 to the Basic Financial Statements.
Business-type activities—All the City’s enterprises are reported here, including solid waste management
and some of the City’s recreational operations. Unlike governmental services, these services are supported
by charges paid by users based on the amount of the service they use.
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2012
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, expenditures, assets, and liabilities; they exclude
long-term assets and liabilities. Because these statements focus on the near-term inflows and outflows of
spendable resources, such information may be useful in evaluating near-term financing requirements.
The Fund Financial Statements provide detailed information about each of the City’s most significant funds,
called major funds. Cupertino’s Fund Financial Statements include governmental, enterprise and internal
service funds as discussed below. Each major fund is presented individually, with all non-major funds
summarized and presented only in a single column. Subordinate schedules, which follow the Notes to Basic
Financial Statements, present the detail of these non-major funds. Major funds present the significant activities
of the City for the year, and may change from year to year as a result of changes in the pattern of City’s
activities and public interest. For example, the Capital Improvement Projects Fund may or may not appear as a
major fund depending on the volume of construction activity in a certain year.
Governmental Fund financial statements are prepared on the modified accrual basis, which means they measure
only current financial resources and uses. They present essentially the same functions reported as governmental
activities in the government-wide financial statements. However, capital assets and other long-lived assets,
along with long-term liabilities, are not presented in the Governmental Fund financial statements.
Reconciliations are provided to facilitate a comparison between governmental funds and governmental activities
statements to allow a better understanding of the long-term impact of the government’s near-term financial
decisions.
Enterprise and Internal Service Fund financial statements are prepared on the full accrual basis and include all
their assets and liabilities, current and long-term. Enterprise funds are used to report the same functions
presented as business-type activities in the government-wide financial statements, and in more detail in the fund
financial statements.
Since the City’s Internal Service Funds provide goods and services only to the City’s governmental and
business-type activities, their activities are reported only in total at the fund level. Internal Service Funds may
not be major funds because their revenues are derived from other City funds. These revenues are eliminated in
the City-wide financial statements and any related profits or losses are returned to the activities which created
them, along with any residual net assets of the Internal Service Funds. For this City, internal service activities
predominantly benefit governmental rather than business-type functions, and are therefore included within
governmental activities in the government-wide financial statements.
Comparisons of budget and actual financial information are included in the Basic Financial Statements for the
General Fund and other major Special Revenue Funds. Since none of the City’s Special Revenue Funds are
considered major funds, budgetary comparison schedules for these funds are included in this document as
supplemental information only.
Fiduciary Fund statements provide financial information about the activities of the Successor Agency to the
Redevelopment Agency and of a special assessment district. The City’s fiduciary activities are reported in the
separate Statement 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.
As stipulated in the State’s redevelopment agency dissolution acts, the City’s Redevelopment Agency Special
Revenue Fund transferred its non-housing assets and liabilities into a Successor Agency Private-Purpose Trust
Fund as of February 1, 2012. See Note 14 to the Basic Financial Statements.
The City additionally acts strictly as an agent for a special assessment district holding amounts collected from
property owners prior to transferring the money to the districts’ bond trustees.
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2012
The Notes to Basic Financial Statements provide additional detail that is essential to a full understanding of
the information provided in the government-wide and fund financial statements.
CITY‐WIDE FINANCIAL ACTIVITIES
This analysis focuses on the net assets and changes in net assets of the City’s Governmental Activities (Tables 1
and 2) and Business-Type Activities (Tables 3 and 4) presented in the City-wide Statement of Net Assets and
Statement of Activities that follow. The Change in Net Asset Tables 2 and 4 show activity from a revenue and
expense perspective.
Governmental Activities
2012 2011
Assets:
Cash and investments 45,832$ 43,353$
Other assets 10,474 11,685
Capital assets 161,380 164,734
Total assets 217,686 219,772
Liabilities:
Long term debt 43,940 44,010
Other liabilities 10,615 14,130
Total liabilities 54,555 58,140
Net assets:
Invested in capital assets, net of debt 117,440 120,724
Restricted 7,573 7,779
Unrestricted 38,117 33,129
Total net assets 163,130$ 161,632$
Table 1
Condensed Statement of Net Assets at June 30
(in thousands)
Governmental Activities
The City’s net assets from governmental activities rose 1% from the prior year. The following significant
changes within asset, liability, and net asset categories occurred:
Increased sales tax receipts were the primary cause of the cash and investments increase.
Normal depreciation lowered capital assets. Other liabilities declined because a May 2012 debt
refunding eliminated, for this year only, the debt service payment usually due every July 1. Sales tax
consulting agreement liabilities also fell.
Approximately 45% of the unrestricted net assets increase came from revenues, non-capital expenses,
transfers and extraordinary items, 50% came from capital asset and long-term debt decreases, and 5%
from a decrease in assets restricted for debt, transportation, housing, storm drain, environmental, park,
and public communication purposes.
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2012
As the Sources of Revenue chart above shows, property and sales taxes make up more than half of governmental
revenue. The Functional Expenses chart below includes only current year expenses with Public Works action on
streets, facilities, parks and storm drains comprising the largest activity. The chart does not include capital
outlays or principal payments on debt. Capital outlays are instead shown as additions to capital assets and
principal payments are reported as long-term liability reductions.
The Statement of Activities presents program revenues, expenses, and general revenues. These are all elements
of the Changes in Governmental Net Assets summarized in the next table.
Sources of Revenues, Governmental Activities 2011-12
Charges for
Services
14%
Operating Grants &
Contributions
5%Capital Grants &
Contributions
2%
Property Tax
24%Sales Tax
34%
Transient
Occupancy Tax
6%
Utility User Tax
6%
Franchise Tax 6%
Other Taxes
3%
Functional Expenses, Governmental Activities 2011-12
Administration
4%
Law Enforcement
18%
Public & Environmental
Affairs
4%
Administrative Services
9%
Recreation Services
9%
Community Development
10%
Public
Works
42%
Interest
4%
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2012
Table 2
Condensed Changes in Net Assets for the Year Ended June 30
(in thousands)
Governmental Activities
2012 2011
Expenses
Administration $1,837 $1,860
Law enforcement 8,777 8,435
Public and environmental affairs 1,743 1,626
Administrative services 4,309 3,994
Recreation services 4,577 4,529
Community development 4,922 5,962
Public works 20,388 19,667
Interest on long-term debt 1,838 2,032
Total expenses 48,391 48,105
Revenues
Program revenues:
Charges for services 7,292 6,533
Operating grants and contributions 2,509 2,351
Capital grants and contributions 781 1,973
Total program revenues 10,582 10,857
General revenues:
Taxes:
Property tax 7,479 7,297
Property tax in-lieu of motor vehicle fee 4,487 4,405
Incremental property tax 203 1,252
Sales tax 17,326 14,539
Transient occupancy tax 3,113 2,537
Utility user tax 3,265 3,228
Franchise tax 2,808 2,841
Other taxes 1,377 1,491
Intergovernmental, unrestricted:
Motor vehicle license fee 29 259
Investment earnings 61 259
Gain on sale of capital assets ---- 497
Miscellaneous 83 90
Total general revenues 40,231 38,695
Total revenues 50,813 49,552
Excess of revenues over expenses,
before extraordinary item and transfers 2,422 1,447
Extraordinary item – Assets transferred to Successor Agency (1,131) ----
Transfers 207 ----
Change in net assets 1,498 1,447
Beginning net assets 161,632 160,185
Ending net assets 163,130 161,632
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2012
City-wide Governmental Revenues
Table 2 shows that total governmental revenues climbed $1,261,000 or 3% over last year, finishing at
$50,813,000.
Sales taxes rose significantly due to reason stated in the General Fund portion of this Analysis.
Incremental property taxes received before the Redevelopment Agency’s dissolution on January 31, 2012, fell
$1,049,000 or 84% from last year. After the Agency’s dissolution, $1,131,000 in remaining non-housing assets
was transferred to the City’s Successor Agency trust fund that is reported separately within this CAFR.
General property taxes and property taxes in-lieu of motor vehicle fees rose 2% over last year as further
described in the General Fund portion of this Analysis.
The prior year $497,000 one-time gain on the sale of capital assets resulted from the June 2011 sale of the City’s
equity share in the former City Manager’s residence.
Program revenues declined $275,000 or 3% from last year, with less received in public works capital project
grants, but more earned in charges for services because of building and development application growth
including Apple’s new corporate headquarters and several tenant improvements. Capital project grants revenues
fluctuate every year because of different grants awarded annually.
To finance the Stevens Creek Corridor Park capital project, the City’s recreational enterprise transferred
$207,000 to the City’s public works governmental unit this year.
The state stopped allocating motor vehicle license fees to cities in 2011-12. Continued low interest rates and
increased portfolio liquidity caused the investment earning decrease.
City-wide Governmental Expenses
City-wide governmental expenses in Table 2 rose $286,000 or 1% above 2010-11. Law Enforcement, Public &
Environmental Affairs, Administrative Services, and Public Works rose while Community Development and
debt interest declined. Administration and Recreation Services were relatively stable.
Law Enforcement was higher because of internal service charges. Public & Environmental Affairs rose due to
smoking cessation and green program grant spending and due to communication equipment replacement.
Administrative Services climbed because of the biannual election. More Public Works outlays went into
infrastructure repair, maintenance, and depreciation. Community Development fell because the Redevelopment
Agency paid $1 million to the Santa Clara County Housing Trust in 2010-11. Annual debt service interest
dropped because of the Public Facilities Corporation’s May 2012 refunding of its certificates of participation.
Change in Net Assets
The City-wide $1,498,000 governmental net asset increase was 4% improved over the increase of a year ago.
Excluding an extraordinary item and transfer, the increase was 67% over the increase of a year ago.
Business Type Activities
Business-type activities in the City-wide Financial Statements include the City’s four enterprise funds.
Enterprise funds are used to account for recreational and solid waste management operations that are financed
and operated in a manner similar to private business enterprises where the intent is that the costs of providing
services and facilities to the general public on a continuing basis can be financed or recovered primarily through
user fees. The major proprietary funds section of this report provides more information on business-type results.
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2012
As shown in Table 3, business-type net assets totaled $10,882,000 at June 30, 2012, an increase of $325,000
from the prior year with unrestricted net assets and capital assets rising $278,000 and $47,000 respectively.
As described in Table 4, overall revenues of $6,442,000 this year were similar to last year. Expenses for all
business-type activities rose 3% over last year to $5,910,000. The $325,000 net asset increase fell below the
$705,000 increase of 2010-11, caused by a current year $207,000 transfer to governmental activities for the
Stevens Creek Corridor Park project along with lower operating incomes from the Recreation and Blackberry
Farm enterprises.
2012 2011
Assets:
Cash and investments 10,905$ 10,394$
Other assets 258 389
Capital assets 825 778
Total assets 11,988 11,561
Other liabilities 1,106 1,004
Total liabilities 1,106 1,004
Net assets:
Invested in capital assets 825 778
Unrestricted 10,057 9,779
Total net assets 10,882$ 10,557$
Table 3
Condensed Statement of Net Assets at June 30
(in thousands)
Business Type Activities
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2012
2012 2011
Expenses
Resources recovery 1,566$ 1,801$
Blackberry farm 461 457
Sports center 1,897 1,717
Recreation programs 1,986 1,753
Total expenses 5,910 5,728
Revenues
Program revenues:
Charges for services 6,430 6,362
Operating contributions and grants - -
Total program revenues 6,430 6,362
General revenues:
Investment income 12 71
Total revenues 6,442 6,433
Transfers (207) -
Change in net assets 325 705
Beginning net assets 10,557 9,852
Ending assets 10,882$ 10,557$
(in thousands)
Business Type Activities
Condensed Changes in Net Assets For The Year Ended June 30
Table 4
MAJOR GOVERNMENTAL FUNDS
General Fund
General Fund Revenues
General Fund revenues of $47,533,000 ended up $4,316,000 or 10% above the final budget and $4,675,000
above the original budget for the year ended June 30, 2012. This was $4,338,000 or 10% above last year. Sales
taxes, transient occupancy taxes, and charges for services showed the strongest gains from a year ago while
intergovernmental and use of money and property suffered the largest declines. Similarly, sales taxes, transient
occupancy taxes, and charges for services accounted for much of the revenue exceeding budget. Table 5
displays year-to-year variations, while Table 6 shows budget versus actual differences.
Property taxes ended the year at $11,916,000, up 2% or $266,000 from last year and consistent with the final
and original budgets. The increase reflects a 0.753% consumer price index increase for existing property
owners, assessed value increases on certain properties under Proposition 8, and beginning signs of recovery in
the South Bay real estate market.
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2012
Sales taxes jumped $2,787,000 or 19% above last year to finish at $17,326,000. It exceeded the final budget by
$2,631,000 or 18%, with the final budget $412,000 or 3% above the original. Quarterly tax collections exceeded
the prior year in three of the four quarters, with growth in the business-to-business sector, led by Apple, Inc.,
driving the increase. Business-to-business, historically a volatile sector, comprised 75% of sales taxes, far
exceeding San Francisco Bay Area and State averages. The City’s sales tax per capita of $333 tops other County
cities. Future revenues will be impacted when Hewlett-Packard, a major sales tax provider, leaves the City in
fiscal 2012-13. The California State Board of Equalization notified the City on October 10, 2012 that the Board
proposes a $10,550,721 reallocation of the City’s past sales taxes to the county-wide pool. Under the Board’s
procedures, the City will petition and appeal the reallocation. Up to half of the potential loss may be recovered
by a refund of what the City paid under a sales tax consulting agreement and by what the City would receive
back through the county-wide pool.
The City’s four hotels paid $3,113,000 in transient occupancy taxes this year; $576,000 or 23% over last year’s
performance. It was 20% or $523,000 better than the final and original budget. Average revenue per available
room for all four hotels rose from $101 to $111 reflecting the pickup in business travel to companies located in
the City. Additionally, the voter-approved increase in the City’s transient occupancy tax rate from 10% to 12%
of the room charge became effective January 1, 2012.
The City’s 2.4% utility user tax on telecommunication, gas, and electric services provided $3,265,000 in
revenues that were relatively flat compared to last year. However, it was $275,000 or 8% under the original and
final budget as growth in taxable telecom services did not occur as expected.
Franchise taxes, other taxes, licenses and permit fees were relatively unchanged from last year. Other taxes
surpassed the original and final budget by 12% led by unexpected construction tax growth. Licenses and permits
exceeded original and final budget by 11% as commercial development and tenant improvements continued
from last year. Franchise taxes originate from electric, gas, water, solid waste, and cable utilities. Other taxes
include business license, construction, and property transfer taxes. The County assesses the transfer tax, at $1.10
per $1,000 in sales price, upon recording the ownership change, and gives the City one-half of the tax.
Zoning, planning, and engineering review fees comprise three-quarters of the charges for services category, with
non-enterprise recreational programs encompassing the rest. The category improved from $1,945,000 last year
to $2,880,000 this year, a 48% rise. It finished $1,229,000 or 74% over the final budget. Entitlement fees for
Apple’s new corporate headquarters and other commercial developments continued to be collected, the Senior
Center’s recreational trip revenues grew, and Blackberry Farm pool, concession, and picnic fees climbed. The
Senior Center and Blackberry Farm revenue budget increased $99,000 during the year.
Intergovernmental revenues of $413,000 fell 40% or $276,000 from last year, and fell short of the final budget
by 11% or $42,000. To balance their budget, the State halted the distribution of vehicle license fees to cities in
2011-12 and reduced State mandated cost reimbursements. The City decreased the budget by $184,000 during
the year to reflect the net loss of vehicle license fees offset by new grants awarded.
General Fund cash is part of the City’s pooled investment portfolio. Investment returns of the pool are allocated
to the Fund based on the Fund’s monthly cash balance. These returns plus the renting of City facilities comprise
use of money and property revenues that declined 11% from 2010-11, to finish at $648,000, a result that was
$321,000 or 33% under budget expectations. The continued low interest rate environment and the portfolio’s
concentration in safe, short-term Treasuries because of market turmoil and credit risk, has kept investment
returns at a steady, but relatively low amount for the last three years. Since interest rates did not increase as
anticipated and the City has not diversified into higher-yielding, less secure investments, the interest income fell
below budget. Additionally the City increased the liquidity of the portfolio in spring 2012 in anticipation of a
large transfer of cash to the retiree health trust in 2012-13. Rent income rose 8% over last year from increased
recreational and public facility usage. A further explanation of the investment picture for the year is in Note 2 of
the Basic Financial Statements.
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2012
Fines and forfeitures fell 5% or $34,000 off of prior year and $12,000 or 2% below budget, to complete the year
at $662,000. Revenues have been decreasing for several years as courts assess lower fines.
Other revenues of $264,000 nearly tripled over last year because of energy saving reimbursements and rebates.
A one-time $1,055,000 sale of the City’s equity share in the City Manager’s residence occurred last year.
Transfers into the General Fund dropped 90% from $337,000 last year to $35,000 this year. The Capital Project
Improvement Fund returned less capital project savings to the General Fund.
Revenue by Source Amount % of Total Amount Percent
Taxes:
Property $ 11,916 25% $ 266 2%
Sales 17,326 36% 2,787 19%
Transient occupancy 3,113 7% 576 23%
Utility user 3,265 7% 37 1%
Franchise 2,808 6% (33)-1%
Other 1,337 3% (44)-3%
Use of money & property 648 1% (80) -11%
Intergovernmental 413 1% (276) -40%
Licenses and permits 2,901 6% (1)0%
Charges for services 2,880 6% 935 48%
Fines and forfeitures 662 1% (34)-5%
Other 264 1% 205 347%
Total revenues $ 47,533 100% $ 4,338 10%
Other financing sources:
Sale of capital assets - 0% (1,055) -100%
Transfers in 35 100% $ (302) -90%
Total other financing sources $ 35 100% $ (1,357)-97%
Fiscal 2012 From Fiscal 2011
Table 5
Revenue Changes
General Fund, Fiscal 2012 vs. 2011
(in thousands)
Increase/(Decrease)
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2012
Over/(Under)
Original Final Actual Final
Taxes:
Property 11,951$ 11,951$ $ 11,916 (35)$
Sales 14,283 14,695 17,326 2,631
Transient occupancy 2,590 2,590 3,113 523
Utility user 3,540 3,540 3,265 (275)
Franchise 2,860 2,860 2,808 (52)
Other 1,190 1,190 1,337 147
Use of money & property 969 969 648 (321)
Intergovernmental 555 371 413 42
Licenses and permits 2,618 2,618 2,901 283
Charges for services 1,552 1,651 2,880 1,229
Fines and forfeitures 650 650 662 12
Other 100 132 264 132
Total revenues 42,858$ 43,217$ 47,533$ 4,316$
Transfers in 35$ 35$ 35$ -$
Table 6
Budgeted Amounts
(in thousands)
General Fund, 2011-12
Revenue Budget and Actual Comparisons
General Fund Expenditures
Fiscal 2011-12 overall expenditures, at $34,846,000, were $1,184,000 or 4% higher than last year. However,
this result came in 10% or $3,883,000 under the final budget and $2,662,000 below the original budget. Year-to-
year and budget versus actual results by General Fund department are described below and in Tables 7 and 8.
Administration expenditures of $1,533,000 were flat compared to last year while finishing $222,000 or 13%
under final budget. Budget savings came from the City Manager position vacancy and contingency budget,
AlertSCC signup program and City Attorney salaries and supplies.
Law Enforcement sheriff contract costs of $8,446,000 were under the final budget by $574,000 or 6%. The
budget contains dollars for anticipated service levels and unexpected events or incidences. By the end of the
year, the actual rate of general law enforcement, service requests, emergency calls, patrol, and investigations
resulted in budget savings for the City. Having the Sheriff contract helps the City contain public safety costs as
reflected in the steadiness of the expense with the previous year. Funds for school traffic safety were carried
over from the previous year and added to the original budget.
Public and Environmental Affairs expenditures of $1,660,000 rose $163,000 or 11% over prior year, but came in
$66,000 and 4% under budget. Smoking cessation and green program grant spending and equipment
replacement set-asides for the City television channel and website were higher. The budget increased $67,000
during the year mostly because of the new grants.
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2012
Administrative Services outlays were $409,000 or 11% above a year ago and finished 14% or $700,000 under
final budget. The biannual City Council election and one-time transient occupancy tax ballot measure occurred
this year and the City paid more to the County for additional library operating hours. Most of the budget savings
were realized in finance, city clerk, human resources and insurance. The budget was increased $261,000 during
the year for debt refunding, election, personnel litigation, and volunteer management purposes.
Non-enterprise Recreation expenditures ended up $104,000 or 2% below final budget, but exceeded last year’s
spending by $203,000 or 5%. Senior Center recreational trip and class expenses went up in line with increased
revenues. One-time smoking cessation grant expenditures occurred in this department also. The budget rose
$180,000 during the year because of the new grant, higher Senior Center outlays, and budget carryovers for the
renovated bocce ball court and redesigned department catalog.
Community Development costs of $3,434,000 were $869,000 or 20% below the final budget due to personnel
savings in the planning, economic development and building code enforcement divisions and contract service
savings in mid and long-term planning. Costs grew 6% or $196,000 from last year in order to process more
planning and building applications. Prior year budget carryovers for municipal code updates, permit process
improvements, microfilming, Apple campus, and area plan reviews made the final budget $168,000 higher than
the original.
Public Works maintenance, repair, and engineering expenditures of $11,337,000 rose a modest 2% or $185,000
over the prior year. It was $1,360,000 or 11% under final budget due to staff vacancies, lower-than-expected
maintenance and repair costs and lower traffic engineering & street lighting costs. Outstanding purchase and job
orders and a school traffic safety budget carried over from last year comprised the $490,000 increase from
original to final budget.
Transfers out of the General Fund dropped from $7,049,000 in 2010-11 to $6,431,000 in 2011-12, with
$3,534,000 for annual debt service, $1,000,000 for retiree health obligations, $750,000 for road maintenance,
$634,000 for capital project reserves, $200,000 for accrued leave payouts, $215,000 for new information
technology and equipment, and a $68,000 subsidy for storm drain management. The decrease from 2010-11
resulted primarily from lower information technology and retiree health funding.
Service Area Amount % of Total Amount Percent
Administration $ 1,533 4% $ 5 0%
Law enforcement 8,446 24% 11 0%
Public and environmental affairs 1,660 5% 163 11%
Administrative services 4,104 12% 409 11%
Recreation services 4,320 12% 203 5%
Community development 3,434 10% 196 6%
Public works 11,337 33% 185 2%
Capital outlay 12 0% 12 100%
Total expenditures $ 34,846 100% $ 1,184 4%
Transfers out $ 6,431 100% $ (618)-9%
Table 7
Increase/(Decrease)
From Fiscal 2011
Expenditure Changes from Prior Year
General Fund, Fiscal 2012 vs. 2011
(in thousands)
Fiscal 2012
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2012
Under
(Over)
Service Area Original Final Actual Final
Administration $ 1,740 $ 1,755 $ 1,533 $ 222
Law enforcement 8,980 9,020 8,446 574
Public and environmental affairs 1,659 1,726 1,660 66
Administrative services 4,543 4,804 4,104 700
Recreation services 4,244 4,424 4,320 104
Community development 4,135 4,303 3,434 869
Public works 12,207 12,697 11,337 1,360
Capital outlay - - 12 (12)
Total expenditures $ 37,508 $ 38,729 $ 34,846 $ 3,883
Transfers out $ 6,431 $ 6,431 $ 6,431 $ -
Budgeted Amounts
(in thousands)
General Fund, 2011-12
Expenditure Budget and Actual Comparison
Table 8
General Fund Balance
The General Fund carried a June 30, 2012 ending fund balance of $26,098,000, up 32% or $6,291,000 from the
prior year. The City assigns $12,500,000 of this for general economic uncertainty, $1,400,000 for state budget
actions that impact City revenues, $2,000,000 for economic fluctuations, $500,000 for potential PERS liabilities,
and $1,329,000 in one-time revenues for future projects. $1,004,000 represents non-spendable rehabilitation
and employee housing loan receivables and prepaid expenses. $696,000 is restricted for public access
programming. Finally, $6,669,000 is unassigned as of June 30, 2012, but intended for purchase orders and future
budget actions.
The fund balance rise resulted from revenues exceeding expenditures by $12,686,000 offset by a net of transfers
and sale proceeds of $6,395,000. The unassigned fund balance benefitted the most from the increase, growing
by $2,984,000 after excluding encumbrances. The fund balance growth allowed the City to establish economic
fluctuation, PERS liability, and one-time revenue reserve assignments totaling $3,829,000. The remaining
$534,000 utility user tax reserve was transferred to capital projects. Loan receivables and prepaid expenses
decreased by $21,000. Public access programming funds increased $33,000.
Public Facilities Corporation
On May 9, 2012, a $43,940,000 par amount of 2012 Certificates of Participation (COPs) was issued to currently
refund the 2002 COPs, to fund a reserve fund for the 2012 COPs, and pay costs in connection with issuance.
This current refunding was undertaken to reduce debt service payments over the next eighteen years by
$6,518,000 or $362,000 per year. On a present value basis, adjusted for issuance and reserve funds, the debt
service savings total $6,637,000 or 15% of the refunded principal. The new COPs fixed interest rates range from
0.35% to 3.125% through the July 1, 2030 maturity, with a true interest cost of 2.81% over that time. The COPs
were issued with an $884,000 premium. $44,898,000 in new debt proceeds and Corporation funds were given to
the bond trustee to accomplish the refunding.
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2012
The Corporation paid $995,000 in interest and trustee expenditures on the old 2002 COPs this year prior to the
refunding. The 2012 refunding cost the Corporation $615,000 in underwriter discounts and $228,000 in issuance
costs. Since the old COPs were refunded before their principal and interest payment due in June 2012, and since
the first debt payment on the new COPs is not due until December 2013, essentially one semiannual debt service
payment was eliminated and instead used toward refunding costs and the creation of a six-month debt payment
reserve held in trust and reported as a restricted cash asset.
See Note 7 to the Basic Financial Statements and the Debt Administration section of this Analysis for more
information.
MAJOR PROPRIETARY FUNDS
Resources Recovery
The City renewed its Recology solid waste franchise agreement for five years commencing in November 2010
with a minor revenue rate increase and a restructuring of how the City and franchisee share revenues and costs.
Accordingly, in the first full year of the renewal, this solid waste enterprise fund experienced an 11%
comparative yearly decrease in residential and commercial pickup revenues, offset by 15% lower contract
expenses for collection, landfill disposal, and recycling. Operating income improved from $129,000 last year to
$162,000 this year. With interest earnings, net assets increased by $169,000, close to the growth of last year, to
end the year with a $6,175,000 unrestricted balance.
Blackberry Farm
City employees, with a teaching professional on contract, staff the City-owned Blackberry Farm golf course and
pro shop. Golfing green fees declined from the previous year, as the older demographics of golf course users
continued to negatively impact rounds played. Operating revenues of $411,000 in 2011-12 represented an 8%
or $37,000 fall from the prior year. Expenses were flat at $461,000 this year with minimal staffing levels
maintained at the course and water costs kept steady until a capital project can get underway that will look at
cost-saving irrigation alternatives. Four-hundred thousand dollars transferred from Recreation Programs last
year will finance the project. With lower revenues, the golf course’s operating loss increased from $9,000 last
year to $50,000 this year. After interest income, net assets declined $49,000, compared to last year’s $397,000
increase that included the $400,000 transfer from Recreation. At June 30, 2012, unrestricted net assets were
$820,000.
Cupertino Sports Center
Tennis lesson, membership, fitness class and rent revenues of $1,966,000 rose by $243,000 or 14% over last
year, resulting from more lesson revenues generated by the private tennis program operator. With contract
instructor, facility support, and maintenance costs growing by $181,000 or 11%, operating income in 2011-12
improved to $68,000, compared to $6,000 produced in 2010-11. After adding-in interest earnings, the increase
in net assets of $69,000 brought unrestricted net assets to $441,000 by year-end.
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2012
Recreation Programs
Cultural events, youth and teen programs, sports, dance and fitness classes generated $2,326,000 in revenues
that were a modest 3% better than last year, for this enterprise operating out of the Quinlan Community Center,
Monta Vista Recreation Center, McClellan Ranch, Creekside Park building, eight school sites, and various
parks. Ongoing program expenses, including full-time administrative and programming staff, part-time activity
leaders, and class instructors on contract increased $233,000 or 13% from 2010-11. Operating income declined
to $340,000 compared to $507,000 a year ago. The fund transferred $207,000 to Other Governmental Funds for
the Stevens Creek Corridor Park project. After interest earnings and transfers, the fund ended up with an
increase in net assets of $137,000 and an unrestricted net asset balance of $2,621,000 that is intended for future
capital, equipment, insurance, and reserve needs.
CAPITAL ASSETS
At June 30, 2012 the City had $162,205,000, net of depreciation, invested in a broad range of capital assets used
in governmental and business-type activities, as shown in Table 9 and in Note 6 to the Basic Financial
Statements. While the City’s capital asset total declined by 2%, equipment acquisitions and street lights
provided major capital additions with depreciation of existing assets offsetting the additions.
2012 2011
Governmental Activities:
Land 60,471$ 60,471$
Easements 19,492 19,105
Buildings 22,465 23,961
Improvements other than buildings 16,107 17,042
Machinery and equipment 1,616 1,195
Roads, curbs, gutters, sidewalks, medians and bridges 33,373 34,511
Streetlights 1,937 1,777
Storm drain structures and mains 4,591 5,304
Traffic signals 1,328 1,368
Total Governmental Activities 161,380 164,734
Business-Type Activities
Buildings 273 257
Improvements other than buildings 494 435
Machinery and equipment 58 86
Total Business-Type Activities 825 778
Total City 162,205$ 165,512$
Table 9
Capital Assets, Net of Depreciation, at June 30
(in thousands)
CITY OF CUPERTINO
Management’s Discussion and Analysis (Unaudited)
For the Year Ended June 30, 2012
DEBT ADMINISTRATION
The City’s only long-term debt liability at June 30, 2012, comes from $43,940,000 in Certificates of
Participation (COPs) issued in May 2012 by the Cupertino Public Facilities Corporation. The certificates
refunded previously issued COPs that financed the Wilson Park, Blackberry Farm, and Creekside Park
purchases, the Memorial Park expansion, the Quinlan Community Center construction, the City Hall remodel,
and the new library opened in 2004. The serial, fixed interest rate debt ranging from 0.35% to 3.125% requires
annual debt payments of approximately $3,171,000 that are covered by the General Fund. The June 30, 2012
outstanding principal of $43,940,000 is due to be paid off by 2030. More information can be found in Note 7 to
the Basic Financial Statements and in the Public Facilities Corporation discussion earlier in this Analysis.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This Comprehensive Annual Financial Report is intended to provide a general overview of the City’s finances.
Further information can be provided by the City of Cupertino Finance Department, 10300 Torre Avenue,
Cupertino CA 95014, phone (408) 777-3220, or by the City website at www.cupertino.org.
STATEMENT OF NET ASSETS AND
STATEMENT OF ACTIVITIES
The Statement of Net Assets and the Statement of Activities summarize the entire City’s financial
activities and financial 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 a balance sheet, 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 presents the City’s expenses first, listed by program, and
follows these with the expenses of its business-type activities. Program revenues, that are revenues which
are generated directly by these programs, are 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 are component units of the
City because they are controlled by the City, which is financially accountable for their activities.
CITY OF CUPERTINO
STATEMENT OF NET ASSETS
JUNE 30, 2012
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments (Note 2) $44,211,375 $10,905,464 $55,116,839
Restricted cash and investments (Note 2) 1,620,874 1,620,874
Receivables:
Accounts 2,661,665 249,267 2,910,932
Interest 35,460 8,702 44,162
Intergovernmental - State Proposition 1A (Note 3) 1,419,497 1,419,497
Loans (Note 4) 1,705,288 1,705,288
Prepaid expenses and other assets 100,777 100,777
Property held for resale (Note 1g) 262,782 262,782
Net OPEB asset (Note 12) 4,287,955 4,287,955
Capital assets (Note 6):
Non-depreciable 79,962,928 79,962,928
Depreciable, net of accumulated depreciation 81,417,329 824,687 82,242,016
Total Assets 217,685,930 11,988,120 229,674,050
LIABILITIES
Accounts payable and accruals 2,796,467 418,184 3,214,651
Accrued payroll and benefits 625,043 59,947 684,990
Deposits 1,973,986 1,973,986
Unearned revenue 934,108 589,744 1,523,852
Compensated absences (Note 1i):
Due in one year 31,490 4,078 35,568
Due in more than one year 2,758,375 34,149 2,792,524
Claims payable (Note 10):
Due in one year 333,694 333,694
Due in more than one year 1,162,284 1,162,284
Long-term debt (Note 7):
Due in one year 1,920,000 1,920,000
Due in more than one year 42,020,000 42,020,000
Total Liabilities 54,555,447 1,106,102 55,661,549
NET ASSETS (Note 8)
Invested in capital assets, net of related debt 117,440,257 824,687 118,264,944
Restricted for:
Special revenue projects 3,139,926 3,139,926
Affordable housing 2,056,778 2,056,778
Public access television 695,564 695,564
Debt service 1,680,597 1,680,597
Total Restricted Net Assets 7,572,865 7,572,865
Unrestricted 38,117,361 10,057,331 48,174,692
Total Net Assets $163,130,483 $10,882,018 $174,012,501
See accompanying notes to financial statements
CITY OF CUPERTINO
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2012
Net (Expense) Revenue and
Program Revenues Changes in Net Assets
Operating Capital
Charges for Grants and Grants and Governmental Business-type
Functions/Programs Expenses Services Contributions Contributions Activities Activities Total
Governmental Activities:
Administration $1,835,551 $6,454 $191,523 ($1,637,574)($1,637,574)
Law enforcement 8,767,652 696,498 100,000 (7,971,154)(7,971,154)
Public and environmental affairs 1,743,703 (1,743,703)(1,743,703)
Administrative services 4,313,647 (4,313,647)(4,313,647)
Recreation services 4,578,762 1,166,323 59,585 (3,352,854)(3,352,854)
Community development 4,923,481 4,919,216 426,371 422,106 422,106
Public works 20,390,551 503,225 1,731,438 $780,761 (17,375,127)(17,375,127)
Interest on long - term debt 1,837,655 (1,837,655)(1,837,655)
Total Governmental Activities 48,391,002 7,291,716 2,508,917 780,761 (37,809,608)(37,809,608)
Business-type Activities:
Resource recovery 1,566,229 1,727,783 $161,554 161,554
Blackberry farm 460,698 411,056 (49,642) (49,642)
Cupertino sports center 1,897,611 1,965,684 68,073 68,073
Recreation programs 1,985,618 2,325,705 340,087 340,087
Total Business-type Activities 5,910,156 6,430,228 520,072 520,072
Total $54,301,158 $13,721,944 $2,508,917 $780,761 (37,809,608) 520,072 (37,289,536)
General revenues:
Taxes:
Property taxes 7,479,132 7,479,132
Property tax in lieu of motor vehicle fee 4,487,412 4,487,412
Incremental property tax 202,793 202,793
Sales taxes 17,326,460 17,326,460
Transient occupancy tax 3,112,934 3,112,934
Utility user tax 3,264,896 3,264,896
Franchise tax 2,808,136 2,808,136
Other taxes 1,377,211 1,377,211
Intergovernmental, unrestricted:
Motor vehicle license fee 29,064 29,064
Investment earnings 61,096 12,338 73,434
Miscellaneous 82,684 82,684
Extraordinary item (Note 14):
Assets transferred to Successor Agencies (1,130,797)(1,130,797)
Transfers (Note 5)207,000 (207,000)
Total general revenues, transfers and extraordinary item 39,308,021 (194,662) 39,113,359
Change in Net Assets 1,498,413 325,410 1,823,823
Net assets, beginning of year 161,632,070 10,556,608 172,188,678
Net assets, end of year $163,130,483 $10,882,018 $174,012,501
See accompanying notes to financial statements
FUND FINANCIAL STATEMENTS
In the Fund Financial Statements 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.
The funds described below were determined to be Major Funds by the City for fiscal 2011-12. 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 DEBT SERVICE FUND
This fund accounts for the payments of principal and interest on certificates of participation issued to
provide for the financing of the Civic Center, Library, Wilson Park, Memorial Park, and other City
facilities.
CITY OF CUPERTINO
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2012
Public Other Total
Facilities Governmental Governmental
General Corporation Funds Funds
ASSETS
Cash and investments (Note 2) $29,043,944 $59,749 $8,033,706 $37,137,399
Restricted cash and investments (Note 2) 1,620,874 1,620,874
Receivables:
Accounts 2,492,473 169,192 2,661,665
Interest 26,434 3,461 29,895
Intergovernmental - State Proposition 1A (Note 3) 1,419,497 1,419,497
Loans (Note 3) 937,011 768,277 1,705,288
Prepaid items 66,428 66,428
Property held for resale (Note 1g) 262,782 262,782
Other assets 3,884 3,884
Total Assets $33,989,671 $1,680,623 $9,237,418 $44,907,712
LIABILITIES
Accounts payable and accruals $2,490,506 $26 $239,195 $2,729,727
Accrued payroll and benefits 569,399 25,844 595,243
Deposits 1,973,986 1,973,986
Advance from other funds (Note 5) 504,497 504,497
Unearned revenue 934,108 934,108
Deferred revenue 1,419,497 129,602 1,549,099
Total Liabilities 7,891,993 26 394,641 8,286,660
Fund balances (Note 8):
Nonspendable 1,003,439 1,003,439
Restricted 695,564 1,680,597 5,196,704 7,572,865
Assigned 17,729,297 3,646,073 21,375,370
Unassigned 6,669,378 6,669,378
TOTAL FUND BALANCES 26,097,678 1,680,597 8,842,777 36,621,052
Total Liabilities and Fund Balances $33,989,671 $1,680,623 $9,237,418 $44,907,712
See accompanying notes to financial statements
CITY OF CUPERTINO
Reconciliation of the
GOVERNMENTAL FUNDS -- BALANCE SHEET
with the
STATEMENT OF NET ASSETS
JUNE 30, 2012
Total fund balances reported on the governmental funds balance sheet $36,621,052
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:
CAPITAL ASSETS
Capital assets used in Governmental Activities are not current assets or financial resources and
therefore are not reported in the Governmental Funds.159,967,332
ALLOCATION OF INTERNAL SERVICE FUND NET ASSETS
Internal service funds are used by management to charge the costs of activities such as
information technology, insurance, equipment acquisition and maintenance, and certain
employees' benefits to governmental funds. The assets and liabilities of the internal service
funds are therefore included in the governmental activities of the statement of net assets. 11,646,556
RECEIVABLES NOT AVAILABLE
Certain receivables are not available to pay for current period expenditures and
therefore are deferred in the governmental funds. 1,549,099
LONG TERM LIABILITIES
The liabilities below are not due and payable in the current period and therefore are not
reported in the governmental funds:
Long-term debt (43,940,000)
Compensated absences (2,713,556)
NET ASSETS OF GOVERNMENTAL ACTIVITIES $163,130,483
See accompanying notes to financial statements
CITY OF CUPERTINO
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2012
Public Other Total
Facilities Governmental Governmental
General Corporation Funds Funds
REVENUES
Taxes $39,764,203 $501,741 $40,265,944
Use of money and property 647,858 13,744 661,602
Intergovernmental 413,145 2,265,743 2,678,888
Licenses and permits 2,900,936 2,900,936
Charges for services 2,880,400 393,546 3,273,946
Fines and forfeitures 661,899 661,899
Other revenue 264,302 264,302
Total Revenues 47,532,743 3,174,774 50,707,517
EXPENDITURES
Current:
Administration 1,533,070 1,533,070
Law enforcement 8,445,917 8,445,917
Public and environmental affairs 1,659,856 1,659,856
Administrative services 4,103,982 4,103,982
Recreation services 4,319,983 4,319,983
Community development 3,434,084 1,328,145 4,762,229
Public works 11,336,973 1,191,221 12,528,194
Capital outlay 12,518 3,510,529 3,523,047
Debt service:
Payment to refunded COP escrow agent $44,897,800 44,897,800
Interest and fiscal charges 1,837,655 1,837,655
Total Expenditures 34,846,383 46,735,455 6,029,895 87,611,733
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 12,686,360 (46,735,455) (2,855,121) (36,904,216)
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 421 421
Issuance of refunding COP's 43,940,000 43,940,000
Premium on COPs issued 883,839 883,839
Transfers in (Note 5)34,820 3,534,000 2,915,606 6,484,426
Transfers (out) (Note 5)(6,430,800)(1,261,626) (7,692,426)
Total Other Financing Sources (Uses) (6,395,559) 48,357,839 1,653,980 43,616,260
NET CHANGE IN FUND BALANCES
BEFORE EXTRAORDINARY ITEM 6,290,801 1,622,384 (1,201,141) 6,712,044
EXTRAORDINARY ITEM (NOTE 14)
Assets transferred to Successor Agency
and Housing Successor (1,130,797) (1,130,797)
NET CHANGE IN FUND BALANCES 6,290,801 1,622,384 (2,331,938) 5,581,247
BEGINNING FUND BALANCES 19,806,877 58,213 11,174,715 31,039,805
ENDING FUND BALANCES $26,097,678 $1,680,597 $8,842,777 $36,621,052
See accompanying notes to financial statements
CITY OF CUPERTINO
Reconciliation of the
NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS
with the
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2012
The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds Statement of
Revenues, Expenditures and Changes in Fund Balance, which measures only changes in current assets and current
liabilities on the modified accrual basis, with the Change in Net Assets of Governmental Activities reported in the
Statement of Activities, which is prepared on the full accrual basis.
NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $5,581,247
Amounts reported for governmental activities in the Statement of Activities
are different because of the following:
CAPITAL ASSETS TRANSACTIONS
Governmental Funds report capital outlays as expenditures. However,
in the Statement of Activities the cost of those assets is capitalized and allocated over
their estimated useful lives and reported as depreciation expense.
Expenditures for capital assets reported as:
Capital outlay 3,252,093
Easement received during the year 386,816
Depreciation expense is deducted from the fund balance (7,477,056)
LONG TERM DEBT TRANSACTIONS
Proceeds from issuance of long term debt is deducted from fund balance (43,940,000)
Premium on long-term debt is deducted from fund balance (883,839)
Payment to escrow agent is added to fund balance 44,897,800
ACCRUAL OF NON-CURRENT ITEMS
The amounts below included in the Statement of Activities do not provide or (require) the use of
current financial resources and therefore are not reported as revenue or expenditures in
governmental funds (net change):
Compensated absences (70,671)
Deferred revenue (289,751)
ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY
Internal Service Funds are used by management to charge the costs of certain activities,
such as equipment acquisition, maintenance, and insurance to individual funds.
The portion of the net revenue (expense) of these Internal Service Funds arising out
of their transactions with governmental funds is reported with governmental activities,
because they service those activities.
Change in Net Assets - All Internal Service Funds 41,774
CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES $1,498,413
See accompanying notes to financial statements
CITY OF CUPERTINO
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2012
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual Amounts (Negative)
Revenues:
Taxes $36,414,000 $36,826,240 $39,764,203 $2,937,963
Use of money and property 969,000 969,000 647,858 (321,142)
Intergovernmental 555,000 370,928 413,145 42,217
Licenses and permits 2,618,000 2,618,000 2,900,936 282,936
Charges for services 1,552,000 1,651,000 2,880,400 1,229,400
Fines and forfeitures 650,000 650,000 661,899 11,899
Other revenue 100,000 131,500 264,302 132,802
Amounts available for appropriation 42,858,000 43,216,668 47,532,743 4,316,075
Charges for appropriation (outflows)
Current
Administration 1,740,559 1,754,548 1,533,070 221,478
Law enforcement 8,979,762 9,020,304 8,445,917 574,387
Public and environmental affairs 1,659,182 1,725,882 1,659,856 66,026
Administrative services 4,542,741 4,804,399 4,103,982 700,417
Recreation services 4,244,038 4,423,994 4,319,983 104,011
Community development 4,134,702 4,303,324 3,434,084 869,240
Public works 12,207,380 12,696,719 11,336,973 1,359,746
Capital outlay 12,518 (12,518)
Total charges for appropriations 37,508,364 38,729,170 34,846,383 3,882,787
EXCESS OF REVENUES
OVER EXPENDITURES 5,349,636 4,487,498 12,686,360 8,198,862
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 421 421
Transfers in 34,820 34,820 34,820
Transfers (out) (6,430,800) (6,430,800) (6,430,800)
Total other financing sources (uses) (6,395,980) (6,395,980) (6,395,559) 421
NET CHANGE IN FUND BALANCE ($1,046,344) ($1,908,482) 6,290,801 $8,199,283
BEGINNING FUND BALANCE 19,806,877
ENDING FUND BALANCE $26,097,678
See accompanying notes to financial statements
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 City has identified the funds below as major proprietary funds for fiscal 2011-12.
RESOURCES RECOVERY FUND
This fund accounts for activity related to the collection, disposal, and recycling of solid waste. A private
company has been issued an exclusive franchise to perform these services.
BLACKBERRY FARM FUND
This fund accounts for activities related to operating the City-owned golf course.
CUPERTINO SPORTS CENTER FUND
This fund accounts for the operation and maintenance of the Cupertino Sports Center.
RECREATION PROGRAMS FUND
This fund accounts for activities of the City’s community centers and park facilities.
CITY OF CUPERTINO
PROPRIETARY FUNDS
STATEMENT OF NET ASSETS
JUNE 30, 2012
Business-type Activities-Enterprise Funds Governmental
Cupertino Activities-
Resources Blackberry Sports Recreation Internal Service
Recovery Farm Center Programs Totals Funds
ASSETS
Current Assets:
Cash and investments (Note 2) $6,159,077 $865,047 $620,278 $3,261,062 $10,905,464 $7,073,976
Accounts receivable 247,587 1,680 249,267
Interest receivable 4,974 695 497 2,536 8,702 5,565
Prepaid items 30,465
Total current assets 6,411,638 865,742 620,775 3,265,278 11,163,433 7,110,006
Noncurrent assets:
Advances to other funds (Note 5)504,497
Net OPEB asset (Note 12)4,287,955
Capital Assets (Note 6):
Depreciable, net of
accumulated depreciation 33,834 67,250 109,622 613,981 824,687 1,412,925
Total noncurrent assets 33,834 67,250 109,622 613,981 824,687 6,205,377
Total Assets 6,445,472 932,992 730,397 3,879,259 11,988,120 13,315,383
LIABILITIES
Current Liabilities:
Accounts payable and accruals 225,128 14,121 97,823 81,112 418,184 66,740
Accrued payroll and benefits 7,239 4,867 10,859 36,982 59,947 29,800
Compensated absences (Note 1i) 453 2,892 733 4,078 31,490
Claims payable (Note 10)333,694
Unearned revenue 64,012 525,732 589,744
Total current liabilities 232,820 21,880 173,427 643,826 1,071,953 461,724
Non-current Liabilities:
Compensated absences (Note 1i) 3,793 24,219 6,137 34,149 44,819
Claims payable (Note 10)1,162,284
Total Liabilities 236,613 46,099 179,564 643,826 1,106,102 1,668,827
NET ASSETS (Note 8)
Invested in capital assets 33,834 67,250 109,622 613,981 824,687 1,412,925
Unrestricted 6,175,025 819,643 441,211 2,621,452 10,057,331 10,233,631
Total Net Assets $6,208,859 $886,893 $550,833
$3,235,433 $10,882,018 $11,646,556
See accompanying notes to financial statements
CITY OF CUPERTINO
PROPRIETARY FUNDS
STATEMENT OF REVENUE, EXPENSES
AND CHANGES IN FUND NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2012
Business-type Activities-Enterprise Funds Governmental
Cupertino Activities-
Resources Blackberry Sports Recreation Internal Service
Recovery Farm Center Programs Totals Funds
OPERATING REVENUES
Charges for services $1,711,749 $394,711 $1,964,486 $2,324,233 $6,395,179 $3,184,342
Other 16,034 16,345 1,198 1,472 35,049 7,550
Total Operating Revenues 1,727,783 411,056 1,965,684 2,325,705 6,430,228 3,191,892
OPERATING EXPENSES
Salaries and benefits 192,249 144,079 310,558 470,229 1,117,115 2,778,597
Materials and supplies 7,264 79,526 154,907 111,632 353,329 375,974
Contractual services 1,363,365 232,940 1,403,836 1,312,019 4,312,160 497,316
Insurance and claims and premium 465,848
Depreciation (Note 6) 3,351 4,153 28,310 91,738 127,552 455,592
Total Operating Expenses 1,566,229 460,698 1,897,611 1,985,618 5,910,156 4,573,327
Operating Income (Loss) 161,554 (49,642) 68,073 340,087 520,072 (1,381,435)
NONOPERATING REVENUES
Investment income 7,308 914 551 3,565 12,338 8,209
Total Nonoperating Revenues 7,308 914 551 3,565 12,338 8,209
Income (Loss) Before Transfers 168,862 (48,728) 68,624 343,652 532,410 (1,373,226)
Transfers in (Note 5)1,445,000
Transfers (out) (Note 5) (207,000) (207,000) (30,000)
Change in net assets 168,862 (48,728) 68,624 136,652 325,410 41,774
Net Assets-Beginning of year 6,039,997 935,621 482,209 3,098,781 10,556,608 11,604,782
Net Assets-End of year $6,208,859 $886,893 $550,833 $3,235,433 $10,882,018 $11,646,556
See accompanying notes to financial statements
CITY OF CUPERTINO
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2012
Business-type Activities-Enterprise Funds
Governmental
Cupertino Activities-
Resources Blackberry Sports Recreation Internal Service
Recovery Farm Center Programs Totals Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $1,737,742 $411,169 $1,946,600 $2,451,507 $6,547,018 $3,191,892
Cash payments to suppliers
for goods and services (1,262,778) (306,815) (1,609,937) (1,383,296) (4,562,826) (2,611,989)
Cash payments to employees (190,108) (139,448) (321,485) (462,056) (1,113,097) (884,774)
Cash payments for judgment and claims (465,848)
Net cash provided (used) by operating activities 284,856 (35,094) 15,178 606,155 871,095 (770,719)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers in 1,445,000
Transfers out (207,000) (207,000) (30,000)
Cash Flows from Noncapital
Financing Activities (207,000) (207,000) 1,415,000
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisitions of capital assets (45,539) (24,888) (104,292) (174,719) (935,830)
Cash Flows from Capital and
Related Financing Activities (45,539) (24,888) (104,292) (174,719) (935,830)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 12,729 1,891 1,169 5,922 21,711 15,651
Cash Flows from Investing Activities 12,729 1,891 1,169 5,922 21,711 15,651
Net Cash Flows 297,585 (78,742) (8,541) 300,785 511,087 (275,898)
Cash and investments at beginning of year 5,861,492 943,789 628,819 2,960,277 10,394,377 7,349,874
Cash and investments at end of year $6,159,077 $865,047 $620,278 $3,261,062 $10,905,464 $7,073,976
Reconciliation of operating income (loss) to
net cash provided by operating activities:
Operating income (loss) $161,554 ($49,642) $68,073 $340,087 $520,072 ($1,381,435)
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation 3,351 4,153 28,310 91,738 127,552 455,592
Change in assets and liabilities:
Accounts receivable 9,959 113 67 111,459 121,598 9,000
Prepaid expense (12,517)
Net OPEB assets 277,451
Accounts payable and accruals 107,851 5,651 (51,194) 40,355 102,663 43,342
Accrued payroll and benefits 1,120 585 1,002 8,173 10,880 2,414
Deposits (8,591)
Deferred revenue (19,151) 14,343 (4,808)
Claims payable (155,975)
Compensated absences 1,021 4,046 (11,929) (6,862)
Net cash provided (used) by operating activities $284,856 ($35,094) $15,178 $606,155 $871,095 ($770,719)
See accompanying notes to financial statements
FIDUCIARY FUNDS
Fiduciary Funds include a private-purpose trust fund that accounts for the accumulation of resources to be
used for payments at appropriate amounts and times in the future.
Fiduciary Funds also include agency funds that account for assets held by the City as an agent for
individuals, private organizations, other governmental units, or other entities. Agency Funds are custodial
in nature and do not involve measurement of operation results. Such funds have no equity since all assets
are due to individuals or other entities in the future.
SUCCESSOR AGENCY TO REDEVELOPMENT AGENCY PRIVATE-PURPOSE TRUST
FUND
This fund holds the net assets of the City’s former redevelopment agency. The net assets are dedicated to
remaining agency obligations.
AGENCY FUNDS
Special district assessments held by the City, acting as an agent for bond debt service payments, comprise
City Agency funds. The City is not liable for the debt payments.
CITY OF CUPERTINO
FIDUCIARY FUNDS
STATEMENT OF NET ASSETS
JUNE 30, 2012
Successor
Agency to
Redevelopment
Agency
Private-purpose Agency
Trust Fund Funds
ASSETS
Cash and investments (Note 2)$1,018,175 $81,403
Interest receivable 794
Total Assets $1,018,969 $81,403
LIABILITIES
Accounts payable $248,624
Deposits $81,403
Total Liabilities 248,624 $81,403
NET ASSETS
Held in trust for restricted purposes $770,345
See accompanying notes to financial statements
CITY OF CUPERTINO
FIDUCIARY FUND
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
JUNE 30, 2012
Successor
Agency to
Redevelopment
Agency
Private-purpose
Trust Fund
ADDITIONS
Use of money and property $1,668
Total additions $1,668
DEDUCTIONS
Community development activities $362,120
Total deductions $362,120
Change in net assets before extraordinary item (360,452)
EXTRAORDINARY ITEM (NOTE 14)
Assets transferred to Successor Agency 1,130,797
Change in net assets 770,345
Net assets - beginning of year
Held in trust for restricted purposes $770,345
See accompanying notes to financial statements
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Reporting Entity
The City of Cupertino, California (the City) was incorporated on October 3, 1955, under the laws of the
State of California. The City operates under a Council - City Manager form of government and provides
services through the following departments: Administrative Services, Community Development, City
Manager, Parks and Recreation, Public and Environmental Affairs, and Public Works/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 Recology for garbage and recycling
services.
The accompanying basic financial statements include all funds and boards and commissions that are
controlled by the City Council. The basic financial statements include the City’s blended component
units, entities for which the City is considered to be financially accountable. A blended component unit,
although a legally separate entity, is in substance, part of the City’s operations and so data from this unit
is combined with the City.
Blended component 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 (the 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. Pursuant to ABx1 26 adopted by the State of California which was validated
by the California Supreme Court on December 28, 2011, the Agency has been dissolved and its assets
turned over and liabilities assumed by the successor agency effective January 31, 2012. Separate
financial statements are not issued for the Redevelopment Agency.
The Corporation does not issue separate financial statements, since it is reported separately in the City’s
basic financial statements.
(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. The Government Accounting Standards Board (GASB) is the
acknowledged standard setting body for establishing accounting and financial reporting standards
followed by governmental entities in the United States.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b) Measurement Focus, Basis of Accounting and Basis of Presentation (Continued)
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. 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 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. Expenses include direct and indirect types. Direct expenses are those that are specifically
associated with a program or function and, therefore, are clearly identifiable to a particular function.
Indirect expenses such as depreciation, information technology, insurance and equipment replacement
are included in expenses for individual activities and functions. Program revenues include (a) charges
paid by the recipients of goods or services offered by the programs and (b) grants and contributions that
are restricted to meeting the operational or capital needs of a particular program. Revenues that are not
classified as program revenues, including taxes, are presented as general revenues. Program revenues
and direct expenses related to interfund services are included and indirect expenses funded by interfund
transfers are excluded from the Statement of Activities. The Statement of Net Assets eliminates
interfund balances between governmental funds and interfund balances between proprietary funds.
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 – are 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 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.
Major Funds - The City’s major governmental and enterprise funds are identified and presented
separately in the fund financial statements. All other funds, called nonmajor funds, are combined and
reported in a single column, regardless of their fund type.
Major funds are defined as funds, which have either assets, liabilities, revenues or expenditures in
excess of ten percent of their fund-type total and five percent of the aggregate total for both
governmental funds and enterprise funds. The General Fund is always a major fund. The City may
select other funds it believes should be presented as major funds.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b) Measurement Focus, Basis of Accounting and Basis of Presentation (Continued)
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 Debt Service Fund accounts for the payments of principal and
interest on certificates of participation issued to provide for the financing of City Hall, Library, Wilson
Park, Memorial Park, and other City facilities.
The City reports all its enterprise funds as major funds in the accompanying financial statements:
The Resources Recovery Fund accounts for activity related to the collection, disposal, and recycling of
solid waste. A private company has been issued an exclusive franchise to perform these services.
The Blackberry Farm Fund accounts for activities related to the municipal golf course.
The Cupertino Sports Center Fund accounts for the operation and maintenance of the Cupertino
Sports Center.
The Recreation Programs Fund accounts for activities of the City’s community centers and park
facilities.
The City also reports the following fund types:
Internal Service Funds. These funds account for workers’ compensation, management information
systems maintenance and replacement, equipment maintenance and replacement, retiree health costs,
accrued leave payouts, and long-term disability coverage; all of which are provided to other departments
on a cost-reimbursement basis.
Fiduciary Fund Types. The financial activities of these funds are excluded from the Government-wide
financial statements. The Successor Agency to Redevelopment Agency Private-Purpose Trust Fund
accounts for net assets restricted to satisfying the remaining obligations of the former Redevelopment
Agency. See Note 14 for more information. The Agency Fund accounts for the City’s role as an agent
for repaying special assessment debt described in Note 7.
Basis of Accounting - The government-wide and proprietary financial statements are reported using the
economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded
when earned and expenses are recorded at the time liabilities are incurred, regardless of when the
related cash flows take place.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b) Measurement Focus, Basis of Accounting and Basis of Presentation (Continued)
Governmental funds are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. Under this method, revenues are recognized when measurable
and available. The City considers all revenues reported in the governmental funds to be available if the
revenues are collected within sixty days after year-end. Expenditures are recorded when the related
fund liability is incurred, except for principal and interest on long-term debt which are recognized as
expenditures to the extent the City has provided financial resources to a debt service fund for payment
of these liabilities that mature early in the following year. General capital asset acquisitions are reported
as expenditures in governmental funds. Proceeds from long-term debt and acquisitions under capital
leases are reported as other financing sources.
Unearned revenues are considered on a full accrual basis, while deferred revenues are based on the
modified accrual measure.
Fiduciary financial statements consist of a private-purpose trust fund and agency fund. The
measurement focus and basis of accounting of the private-purpose trust fund is similar to a proprietary
fund. The agency fund reports only assets and liabilities and therefore has no measurement focus. It
recognizes receivables and payables on a full accrual basis.
Property taxes, transient occupancy taxes, utility taxes, franchise taxes, interest and special assessments
are susceptible to accrual. Other receipts and taxes are recognized as revenue when the cash is received.
Sales taxes collected and held by the state at year end on behalf of the City are also recognized as
revenue. Sales tax consultant payments which are contingent on revenues collected are netted against
the related revenues.
Under the terms of grant agreements, the City may fund certain programs with a combination of cost-
reimbursement grants, categorical block grants, and general revenue. The City’s policy is to first apply
restricted grant resources to such programs, followed by general revenues if necessary. Grant revenues
are recognized after eligibility and billing occurs, but may be deferred if not received within sixty days
of year-end. Because of the cost-reimbursement and recognition nature of some grants, certain capital
project funds may carry deficit fund balances until billing and receipt of grants. The City may also front
the capital outlays with cash advances from other funds.
Non-exchange transactions, in which the City gives or receives value without directly receiving or
giving equal value in exchange, include property taxes, grants, entitlements, and donations. On the
accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied
or assessed. Revenue from grants is recognized as described above. Entitlement and donation revenues
are recognized when cash is received.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989,
generally are followed in both the government-wide statements for the business-type activities and
proprietary fund financial statements to the extent that those standards do not conflict with or contradict
guidance of GASB. Governments also have the option of following subsequent private-sector guidance
for business-type activities and enterprise funds, subject to the same limitation. The City has elected not
to follow subsequent private-sector guidance.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(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. Operating appropriations lapse at fiscal year end.
In May of each year, the City Manager submits to the City Council a proposed budget for the fiscal year
beginning July 1. Public hearings on the proposed budget are held during the month of June and the
budgets for all fund types are legally adopted by Resolution prior to June 30. Original budget amounts
are presented on the accompanying budgetary statements include these legally adopted amounts.
The City’s legal level of budgetary control is at the functional level. The City Manager is responsible
for controlling the City’s expenditures in accordance with the adopted budget. The City Manager is
authorized to administer and transfer appropriations between budget accounts within the operating
budget when in his opinion such transfers become necessary for administrative purposes. Any revision
which increases total appropriations must be approved by the City Council. Requests for additional
personnel or capital outlay also require the approval of the City Council.
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 projects 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.
(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
capital assets are recorded at their estimated fair value on the date donated. Public domain
(infrastructure) capital assets consisting of roads, bridges, curbs, gutters, medians, sidewalks, drainage
and lighting systems have been capitalized and depreciated. Capital assets are defined as assets with an
initial individual cost of more than $5,000 for general capital assets and $100,000 for intangible assets.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(e) Capital Assets (Continued)
Depreciation is recorded using the straight-line method over the following useful lives:
Years
Buildings 15 - 25
Improvements 10 - 15
Vehicles 4 - 10
Street equipment 3 - 20
Water equipment 3 - 50
Office equipment 3 - 5
Road, curbs, gutters, sidewalks, medians and bridges 30 - 40
Streetlights 20
Storm drain structure and mains 40
Traffic signals 20
Major outlays for capital assets and improvements are capitalized as projects are constructed. For
enterprise funds, interest incurred during the construction phase is reflected in the capitalized value of
the asset constructed, net of interest earned on the invested proceeds over the same period. Some capital
assets may be acquired using federal and state grant funds, or they may be contributed by developers or
other governments. These contributions are accounted for as revenues at the time the capital assets are
contributed.
(f) Land Held for Redevelopment
Land held for redevelopment is stated at the lowest of historical cost, net realizable value determined
upon the execution of disposition and development agreement, or agreed-upon sales price. The land
was purchased using Federal grant funds for housing activities.
On July 1, 2010, the City entered into a Disposition and Development Agreement (DDA) with a
developer. In accordance with the DDA, the City would transfer the land held for redevelopment in the
amount of $615,000 to the developer at no cost for the purpose of developing four single-family
detached homes at an affordable price to very low income homebuyers. At September 13, 2011, the
City transferred the property to the developer. At June 30, 2012, there are no remaining balances for
land held for Redevelopment.
(g) Property Held for Resale
The City operates an affordable housing program funded by development impact fees that are recorded
in the Housing Development Special Revenue Fund. To effectuate a change in private ownership of a
condominium built under the program, the City, using Housing Development Fund cash, purchased the
unit from the former owner on August 11, 2011 for $262,557 and recorded the asset as Property Held
for Resale in the same Fund until the City ultimately sold the unit to a new owner on July 6, 2012 for
the same price, with the cash proceeds deposited into the same Fund.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(h) Claims and Judgment Payable
Claims and judgments payable are accrued when the liability is incurred and the amount can be
reasonably estimated. Claims and judgments payable are recorded in an internal service fund for
workers’ compensation and long-term disability, and other claims and judgments are recorded in the
General Fund or enterprise funds, as appropriate.
(i) Compensated Absences
Compensated absences comprise vested accumulated vacation and sick leave. The City’s liability for
compensated absences is recorded in governmental or business-type activities as appropriate. The
liability for compensated absences is determined annually. For all governmental funds, amounts
expected to be “permanently liquidated,” such as what is due to be paid because of a realized
employment action, are recorded as fund liabilities; the long-term portion is recorded in the Statement of
Net Assets.
Compensated absences are liquidated by the fund that has recorded the liability. The long-term portion
of governmental activities compensated absences are liquidated primarily by the General Fund, using
the Compensated Absences and Long-Term Disability internal service fund to account for termination
payouts.
The changes in compensated absences for the year ended June 30, 2012 were as follows:
Governmental
Activities
Business-Type
Activities Total
Beginning Balance $2,727,785 $45,089 $2,772,874
Additions 458,515 458,515
Payments (396,435) (6,862) (403,297)
Ending Balance $2,789,865 $38,227 $2,828,092
Current Portion $31,490 $4,078 $35,568
Non-current Portion $2,758,375 $34,149 $2,792,524
(j) Property Tax Calendar
All property taxes are levied and collected by the County of Santa Clara. Secured taxes are levied on
July 1, are due in two installments on November 1 and February 1 and become delinquent after
December 10 and April 10. Unsecured taxes are levied on July 1 and become delinquent on August 31.
The lien date for secured and unsecured property taxes is January 1.
The City, in fiscal year 1993-94, adopted an alternative method of property tax distribution (the “Teeter
Plan”). Under this method, the City receives 100% 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.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(k) 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.
(l) 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.
(m) Prepaid Items
Prepaid items are reported under the consumption method, which recognizes the expenditures/expense
in the period associated with the service rendered or goods consumed.
(n) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in
the United States of America requires management to make estimates and assumptions that affect
certain amounts and disclosures. Accordingly, actual results could differ from those estimates.
(o) New Funds and Closed Fund
The Low and Moderate Income Housing Asset Special Revenue Fund was established to account for the
activities related to the assets assumed by the City as Housing Successor to the housing activities of the
former Redevelopment Agency.
The Successor Agency to the Redevelopment Agency Private Purpose Trust Fund was established to
account for the activities of the Successor Agency to the former Redevelopment Agency.
The Redevelopment Agency Fund was closed as of January 31, 2012 as the result of the dissolution of the
Redevelopment Agency discussed in Note 14.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 2 – 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 the provisions of the California Government Code with the priority of safety, liquidity and
yield. The policy addresses the safekeeping of securities, types of investment instruments, diversification,
maturities, reporting requirements, and internal control. 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 Statement of Net
Assets and the balance sheet as “cash and investments.”
(a) Policies
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 market value
of 150% of the deposit, as collateral for these deposits. Under California Law, this collateral is held in a
separate investment pool by another institution in the City’s name and places the City ahead of general
creditors of the institution.
The City and its fiscal agents invest in individual investments and in investment pools. Individual
investments are evidenced by specific identifiable securities instruments, or by an electronic entry
registering the owner in the records of the institution issuing the security, called the book entry system.
Security instruments owned by the City are held in safekeeping by a third party custodian acting as agent
for the City under the terms of a custody agreement.
The City’s investments are carried at fair value. The City adjusts the carrying value of its investments to
reflect their fair value at each fiscal year end, and it includes the effects of these adjustments in investment
income for that fiscal year.
(b) Classification
The City's total cash and investments, at fair value, are presented on the accompanying financial
statements in the following allocation:
Private -
Primary Purpose Agency
Government Trust Fund Funds Total
Cash and Investments $55,116,839 $1,018,175 $81,403 $56,216,417
Restricted Cash and Investments:
Held by Fiscal Agent for Bond Repayments 1,620,874 1,620,874
Total Cash and Investments $56,737,713 $1,018,175 $81,403 $57,837,291
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 2 – CASH AND INVESTMENTS (Continued)
(c) Authorized Investments by the City
The City’s Investment Policy and the California Government Code allow the City to invest its pooled
idle funds in the following, under limits and provisions that address interest rate risk, credit risk, and
concentration of credit risk. This does not include the City’s investments of debt proceeds held by fiscal
agents that are governed by the provisions of debt agreements of the City.
Minimum Maximum Maximum
Maximum Credit Percentage of Investment in
Authorized Investment Type Maturity Quality Portfolio One Issuer
U.S. Treasury Obligations 5 years N/A None None
U.S. Agency Securities * 5 years N/A None None
California Local Agency Investment
Fund (LAIF) N/A N/A
Up to $50
million None
Non-negotiable Certificates of 10% of portfolio;
Deposits (time deposits) 5 years N/A 30% *** 5% of issuer's net worth. **
State of California registered state
warrants, treasury notes, or bonds 5 years N/A None None
California local agency bonds, notes,
warrants, or other obligations 5 years N/A None None
Bond issued by the local agency 5 years N/A None None
Bankers' Acceptances 180 days N/A 40% None
10% of portfolio;
Commercial Paper 270 days A-1+/P-1 25% 5% of issuer's net worth;
10% of outstanding paper of
issuer. **
10% of portfolio; Negotiable Certificates of Deposit 5 years N/A 30% 5% of issuer's net worth. **
10% of portfolio; Repurchase Agreements 1 year N/A None 5% of issuer's net worth. **
10% of portfolio; Medium Term Corporate Notes 5 years A or better 30% 5% of issuer's net worth. **
Money market mutual funds investing
in U.S. Treasury, Government
Agency securities or repurchase
agreements collaterized by
U.S. Treasury or Government
Agency securities
5 years
Aaa/AAA
20%
None
* Securities issued by agencies of the federal government such as the Government National Mortgage Association (GNMA), the
Federal Farm Credit System (FFCB), the Federal Home Loan Bank (FHLB), the Federal National Mortgage Association
(FNMA), the Student Loan Marketing Association (SLMA), and the Federal Home Loan Mortgage Association (FHLMC).
** Represents restriction in which the City’s investment policy is more restrictive than the California Government Code.
*** 30% maximum % of portfolio if using a private sector entity to assist in the placement of the time deposits. No maximum for
others.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 2 – CASH AND INVESTMENTS (Continued)
(d) Authorized Investments by Debt Agreements
The City must maintain required amounts of cash and investments with trustees or fiscal agents under
the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged reserves to
be used if the City fails to meet its obligations under these debt issues. The California Government
Code requires these funds to be invested in accordance with City ordinances, bond indentures or State
statutes. The City’s Investment Policy allows investments of bond proceeds to be governed by
provisions of the related bond indentures. The following identifies the investment types that are
authorized for investments held by fiscal agents under the terms of the bond indentures of the related
debt issue:
Minimum Maximum
Maximum Credit Percentage of
Authorized Investment Type Maturity Quality Portfolio
Cash or obligations of the U.S. including U.S. Treasury obligations N/A N/A None
Federal agencies obligations which represent full faith
and credit of the U.S. N/A N/A None
Direct federal agencies obligations which are not fully
guaranteed by the full faith and credit of the U.S. N/A N/A None
U.S. dollar denominated deposit accounts, federal funds and 360 days P-1, A-1+, A-1 None
bankers' acceptances with domestic commercial banks
Commercial Paper 270 days P-1, A-1 None
Money market funds N/A Aaam or AAAm-G None
Pre-refunded municipal obligations that are not callable
prior to maturity or as to which irrevocable instructions N/A None
have been given to call on the date specified in the notice
Highest rating
category
Municipal obligations or General obligations of states N/A Aaa, AAA, A2, A None
California Local Agency Investment Fund (LAIF) N/A N/A Up to $50
million
Shares in a California common law trust established pursuant
to Title 1, Division 7, Chapter 5 of the California Government
Code which invests exclusively in investments permitted by N/A N/A None
Section 53635 of Title 5, Division 2, Chapter of the California
Government Code, as it may be amended.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 2 – CASH AND INVESTMENTS (Continued)
(e) Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair
value to changes in market interest rates.
Information about the sensitivity of the fair values of the City’s investments (including investments held
by bond trustees) to market interest rate fluctuations is provided by the following table that shows the
distribution of the City’s investments by maturity or earliest call date:
12 Months 13 to
Investment Type or less 24 Months Total
U.S. Treasury Securities $20,044,920 $27,978,180 $48,023,100
Local Agency Investment Fund 598,652 598,652
Money Market Mutual Funds 7,563,809 7,563,809
Total Investments $28,207,381 $27,978,180 56,185,561
Cash in banks and on hand 1,651,730
Total Cash and Investments $57,837,291
The City is a participant in the Local Agency Investment Fund (LAIF) that is regulated by California
Government Code Section 16429 under the oversight of the Treasurer of the State of California. The
Local Investment Advisory Board (Board) has oversight responsibility for LAIF. The Board consists of
five members as designated by State Statute. The City reports its investment in LAIF at the fair value
amount provided by LAIF, which is the same as the value of the pool share. The balance is available for
withdrawal on demand, and is based on the accounting records maintained by LAIF, which are recorded
on an amortized cost basis. Included in LAIF’s investment portfolio are U.S. Treasuries, Federal
Agency obligations, time deposits, negotiable certificates of deposits, commercial paper, corporate
bonds, and security loans. These investments had weighted average maturity of 268 days.
Money market mutual funds are available for withdrawal on demand. At June 30, 2012, money market
mutual funds, used for pooled investment and held by fiscal agent purposes, had a weighted average
maturity of approximately 45 days.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 2 – CASH AND INVESTMENTS (Continued)
(f) Credit Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the
investment. This is measured by the assignment of a rating by a nationally recognized statistical rating
organization. Presented below is the actual rating as of June 30, 2012 for each investment type,
including those with fiscal agents, as provided by Moody’s ratings:
Investment Type Ratings Total
Money Market Mutual Funds AAA $7,563,809
Exempt from Credit Rating Disclosure:
U.S. Treasury Securities Exempt 48,023,100
Not Rated:
Local Agency Investment Fund Not Rated 598,652
Total Investments $56,185,561
(g) Concentration of Credit Risk
The City’s investment policy contains certain limitations on the amount that can be invested in any one
issuer. In certain categories, these limitations are more restrictive than those required by California
Government Code Sections 53600 et seq. Excluding those issued or explicitly guaranteed by the U.S.
government and investments in the local agency investment fund and mutual funds, the City did not
have investments that represent 5% or more of total City-wide investments.
NOTE 3 – PROPOSITION 1A BORROWING BY THE STATE OF CALIFORNIA
Under the provisions of Proposition 1A and as part of the 2009‐10 budget package passed by the
California state legislature on July 28, 2009, the State of California borrowed 8% of the amount of
property tax revenue, including those property taxes associated with the in‐lieu motor vehicle license
fee, the triple flip in lieu sales tax, and supplemental property tax, apportioned to cities, counties and
special districts (excluding redevelopment agencies). The State of California is required to repay this
borrowing plus interest by June 30, 2013. The amount of this borrowing pertaining to the City was
$1,419,497.
This borrowing by the State of California was recognized as a receivable in the accompanying basic
financial statements. Under the modified accrual basis of accounting, the borrowed tax revenues are not
permitted to be recognized as revenue in the governmental fund financial statements until the tax
revenues are received from the State of California (expected to be fiscal year 2012‐13). In the
government‐wide financial statements, the tax revenues were recognized in the fiscal year for which
they were levied (fiscal year 2009‐10).
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 4 – LOANS RECEIVABLE
(a) Related Party Loans
In conjunction with the City’s executive housing assistance program, a loan totaling $584,360 has been
provided to an executive manager. The 40-year loan bear an interest rate equal to the 11th District Cost
of Funds at the time of the loan, and requires bi-weekly principal and interest payments. In addition,
there is a two percent deferral on the interest rate for the first five years of the loan, at which time the
interest rate may be adjusted to the current 11th District Cost of Funds for the remainder of the loan. At
June 30, 2012, the balance remaining on the loan was $452,669 .
(b) Housing Program Loans
On June 30, 1995, the City loaned $821,000 to Community Housing Developers, a California nonprofit
public benefit corporation. The note bears interest at three percent per annum, compounded annually,
payable to the extent of surplus cash, and all unpaid principal and interest due June 30, 2035. At
June 30, 2012, the balance remaining on the loan was $821,000.
On June 6, 1996, the City loaned $320,000 to Cupertino Community Services, a California nonprofit
public benefit corporation. The note bears interest at three percent per annum and due on July 14, 2026.
At June 30, 2012, the balance on the loan was $242,971.
In addition to these loans, the City has $188,648 in housing and other loans receivable at June 30, 2012.
These loans bear interest at 3 to 6 percent and are due by June 30, 2025.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 5 - INTERFUND TRANSACTIONS
Transfers between funds during the fiscal year ended June 30, 2012 were as follows:
Fund Making Transfers Fund Receiving Transfers Amount Transferred
General Fund Public Facilities Corporation Debt Service Fund $3,534,000 (A)
Non-major governmental funds 1,451,800 (B), (C), (E), (G)
Internal Service Funds 1,445,000 (D)
Non-major governmental funds General Fund 4,820 (F)
Non-major governmental funds 1,256,806 (B), (C), (E), (G)
Recreation Programs Enterprise Fund Non-major governmental funds 207,000 (H)
Internal Service Funds General Fund 30,000 (I)
$7,929,426
Total Interfund Transfers
The reasons for these transfers are set forth below:
(A) For annual lease payment for 2002 Certificate of Participation Debt.
(B) For capital project infrastructure reserve.
(C) To fund street maintenance & environmental management.
(D) To fund retiree medical, IT, equipment replacement, and compensated absences.
(E) To return project savings to Capital Improvement Reserve
(F) To return project funding to General Fund.
(G) To return street pavement project savings to Capital Improvement Reserve.
(H) To fund Stevens Creek Corridor Park phase II project.
(I) To return prior year unused mail archive project money to General Fund.
Internal Balances – The City-wide financial statements had no net interfund receivables and payable
remaining after the elimination of all such balances within governmental and business-type activities.
Advance to and advance from other funds
During fiscal year ended June 30, 2010, the Equipment Internal Service Fund loaned the General Fund
$504,497 for payment of the Prop 1A borrowing by the State of California. The General Fund is
expected to repay the funds upon receipt of the repayment from the State of California during fiscal year
ended June 30, 2013.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 6 - CAPITAL ASSETS
A summary of changes in governmental activities capital assets is as follows:
Balance at Balance at
June 30, 2011 Additions Retirements June 30, 2012
Governmental activities
Capital assets not being depreciated:
Land $60,470,969 $60,470,969
Easements 19,105,143 $386,816 19,491,959
Total capital assets not being depreciated 79,576,112 386,816 79,962,928
Capital assets being depreciated:
Buildings 40,748,297 22,986 40,771,283
Improvements other than buildings 40,467,664 862,692 41,330,356
Machinery and Equipment - governmental funds 1,967,948 21,671 1,989,619
Road, curbs, gutters, sidewalks, medians and bridges 124,446,764 1,940,849 126,387,613
Streetlights 8,294,089 249,805 8,543,894
Storm drain structure and mains 31,916,460 87,062 32,003,522
Traffic signals 6,066,875 70,987 6,137,862
Total capital assets being depreciated 253,908,097 3,256,052 257,164,149
Less accumulated depreciation for:
Buildings (16,787,485) (1,518,340)(18,305,825)
Improvements other than buildings (23,425,440) (1,797,478)(25,222,918)
Machinery and Equipment - governmental funds (1,705,189) (81,629)(1,786,818)
Road, curbs, gutters, sidewalks, medians and bridges (89,935,689) (3,078,963)(93,014,652)
Streetlights (6,516,655) (89,950)(6,606,605)
Storm drain structure and mains (26,612,821) (800,098)(27,412,919)
Traffic signals (4,699,412) (110,596)(4,810,008)
Total accumulated depreciation (169,682,691) (7,477,054)(177,159,745)
Net governmental fund program
Capital assets being depreciated 84,225,406 (4,221,002)80,004,404
Internal service fund capital assets
Machinery and equipment 5,900,456 943,447 ($539,005)6,304,898
Less Accumulated depreciation (4,967,769) (455,592) 531,388 (4,891,973)
Net internal service fund capital assets
Being depreciated 932,687 487,855 (7,617)1,412,925
Governmental activity capital assets, net $164,734,205 ($3,346,331) ($7,617) $161,380,257
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 6 - CAPITAL ASSETS (Continued)
A summary of changes in business-type activities capital assets is as follows:
Balance at Balance at
June 30, 2011 Additions Retirements June 30, 2012
Business-type activities:
Capital assets being depreciated:
Buildings $293,372 $43,746 $337,118
Improvements other than buildings 492,361 130,972 623,333
Machinery and Equipment 272,088 272,088
Total capital assets being depreciated 1,057,821 174,718 1,232,539
Less accumulated depreciation for:
Buildings (36,566) (27,753)(64,319)
Improvements other than buildings (57,435) (72,113)(129,548)
Machinery and Equipment (186,299) (27,686)(213,985)
Total accumulated depreciation (280,300) (127,552)(407,852)
Total capital assets, being depreciated, net 777,521 47,166 824,687
Business-type activity capital assets, net $777,521 $47,166 $824,687
Depreciation expense was charged to functions and programs based on their usage of the related assets.
Depreciation expense was charged to governmental activities as follows:
Administration $238,489
Public and environment affairs 16,670
Administrative Services 26,216
Parks and Recreation 87,593
Public Works 7,108,086
Internal Service funds 455,592
Total $7,932,646
Depreciation expense was charged to the business-type activities as follows:
Resources Recovery $3,351
Blackberry Farms 4,153
Cupertino Sports Center 28,310
Recreation Program 91,738
Total $127,552
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 7 - LONG-TERM DEBT
(a) Cupertino Public Facilities Corporation Certificates of Participation
Original Balance Balance
Issue June 30,June 30, Current
Amount 2011 Additions Retirements 2012 Portion
Governmental Activity Debt:
2002 Refinancing and Capital
Improvement Project,
2.00-5.00%, due 07/01/2030 $56,640,000 $44,010,000 $44,010,000
2012 Refinancing Certificates
of Participation
0.350-3.125%, due 07/01/2030 43,940,000 $43,940,000 $43,940,000 $1,920,000
Total long-term debt 44,010,000 43,940,000 44,010,000 43,940,000 $1,920,000
Less current portions (1,545,000)(1,920,000)
Non-current portions $42,465,000 $43,940,000 $44,010,000 $42,020,000
The Cupertino Public Facilities Corporation issued Certificates of Participation to provide financing for
the construction of the Community Center, improvements of the City Hall and the Library in July 1986;
purchase of Wilson Park in 1989; finance the Memorial Park Expansion in 1990; and purchase the
Blackberry Farm and Fremont Older site in 1991. The Cupertino Public Facilities Corporation, as
lessor, leased real property to the City (under the Lease Agreement with the lessee) and assigned the
base rental payments to the trustee for the benefit of the owners of the certificates of participation. The
rental payments 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 (“Prior
COPS”). Payment of the principal and interest were insured by a financial guaranty insurance policy
issued by Ambac Assurance Corporation (Ambac). The reserve fund required for the 2002 COPs was
funded with a reserve fund surety bond issued by Ambac. Interest payments on the 2002 COPS were
payable semi-annually on January 1 and July 1.
The 2002 COPs were payable by a pledge of revenues from the lease payments payable by the City
pursuant to the Lease Agreement between the Cupertino Public Facilities Corporation and the City for
the use and possession of the Site and Facility as described in the Lease Agreement. For the year-ended
June 30, 2012, interest paid totaled $992,572.
On May 9, 2012, $43,940,000 principal amount of 2012 Refinancing Certificates of Participation (2012
COPs) were issued to currently refund the 2002 COPs, to fund a reserve fund for the 2012 COPS, and
pay costs incurred in connection with issuance. This current refunding was undertaken to reduce debt
service payments over the next 18 years by $6,518,000, and resulted in an economic gain (difference
between the present value of the debt service requirements on the old and new bonds discounted at the
effective interest rate on the new debt and adjusted for any additional cash) of $6,637,000.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 7 - LONG-TERM DEBT (Continued)
The 2012 COPs are payable by a pledge of revenues from the lease payments payable by the City
pursuant to the Lease Agreement between the Cupertino Public Facilities Corporation and the City for
the use and possession of the Site and Facility as described in the Lease Agreement. The City also
covenanted in the Lease Agreement to include all lease payments in its annual budget. Total debt
service payments remaining on the 2012 COPs is $57,073,759 payable through July 1, 2030. For the
year-ended June 30, 2012, the bonds had no principal or interest due.
(b) Cupertino Public Facilities Corporation Certificates of Participation
Annual debt service requirements for the 2012 COPs are shown below:
For the Year
Ending June 30 Principal Interest
2013 $1,920,000 $1,255,422
2014 2,040,000 1,128,838
2015 2,055,000 1,118,638
2016 2,090,000 1,077,538
2017 2,135,000 1,035,738
2018 - 2022 11,470,000 4,382,938
2023 - 2027 13,275,000 2,580,740
2028 - 2031 8,955,000 553,907
Total $43,940,000 $13,133,759
Governmental Activities
(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 principal balance outstanding of the bonds and any accrued and
unpaid interest is due and payable on October 1, 2031. The City has no legal or moral liability with
respect to the payment of this debt. The amount of outstanding conduit debt principal at June 30, 2012
was $725,796.
NOTE 8 - NET ASSETS AND FUND BALANCES
Net Assets are measured on the full accrual basis while Fund Balance is measured on the modified accrual
basis.
Net Assets – The government-wide and proprietary fund financial statements utilize a net assets
presentation. Net assets are categorized as follows:
Invested in Capital Assets, net of related debt – This category groups all capital assets including,
infrastructure, into one component of net assets. Accumulated depreciation and outstanding balances of
debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance
in this category.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 8 - NET ASSETS AND FUND BALANCES (Continued)
Restricted – This category represents net assets that have external restrictions imposed by creditors,
grantors, contributors or laws or regulations of other governments and restrictions imposed by law
through constitutional provisions or enabling legislation. At June 30, 2012, the government-wide
statement of net assets reported restricted assets of $7,572,865 in governmental activities.
Unrestricted – This category represents net assets of the City that do not meet the definition of “invested
in capital assets, net of related debt” or “restricted.”
Fund Balances – As prescribed by GASB Statement No. 54, governmental funds report fund balance in
classifications based primarily on the extent to which the City is bound to honor constraints on the
specific purposes for which amounts in the funds can be spent. Fund balances for governmental funds
are made up of the followings:
Nonspendable Fund Balance – includes amounts that are (a) not in spendable form, or (b) legally or
contractually required to be maintained intact. The “not in spendable form” criterion includes items that
are not expected to be converted to cash, for example: prepaid items, land held for redevelopment and
long-term notes receivable.
Restricted Fund Balance – includes amounts that can be spent only for the specific purposes stipulated
by external resource providers, constitutionally or through enabling legislation. Restrictions may
effectively be changed or lifted only with the consent of resource providers.
Committed Fund Balance – includes amounts that can only be used for the specific purposes determined
by a formal action of the City’s highest level of decision-making authority, the City Council.
Commitments may be changed or lifted only by the City taking the same formal action that imposed the
constraint originally (for example: resolution and ordinance). The City has no amount in this category.
Assigned Fund Balance – comprises amounts intended to be used by the City for specific purposes that
are neither restricted nor committed. Intent is expressed by the City Council or official to which the City
Council has delegated the authority to assign amounts to be used for specific purposes.
Unassigned Fund Balance – is the residual classification for the General Fund and includes all amounts
not contained in the other classifications. Unassigned amounts are technically available for any purpose.
In circumstances when an expenditure may be made for which amounts are available in multiple fund
balance classifications, the fund balance in General Fund will generally be used in the order of
restricted, unassigned, and then assigned reserves. In other governmental funds, the order will generally
be restricted and then assigned.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 8 - NET ASSETS AND FUND BALANCES (Continued)
The City Council has established reserve policy levels for various capital and contingency purposes.
These balances are reported as part of the governmental funds’ assigned fund balance as follows:
Fund Amount Purpose
General Fund:
Economic uncertainty I $12,500,000 For economic downturns and major unforeseen outlays.
Economic uncertainty II 1,400,000
For state borrowing of local funds under Proposition 1A and
other shifts of funds to address state budget deficits.
Economic fluctuation 2,000,000 For unexpected fluctuations in the economy.
PERS liability 500,000 For potential PERS liabilities.
One-time revenue 1,329,297 One-time revenues for future projects
Capital Project Funds:
Capital Improvement reserve 945,570 Reserves set aside for future capital projects.
Infrastructure Reserve 1,100,000 Funds set aside for citywide infrastructure improvements.
Budgeted projects 1,524,579 Resources for project budgets.
Designated project 75,924 Designated, but not budgeted for specific project.
Total assigned fund balances $21,375,370
Fund balances for all major and nonmajor governmental funds as of June 30, 2012, were distributed as
follows:
General
Public
Facilities
Corporation
Other
Governmental
Funds Total
Nonspendable:
Loans receivable $937,011 $937,011
Prepaid items 66,428 66,428
Subtotal 1,003,439 1,003,439
Restricted for:
Public access television 695,564 695,564
Debt service $1,680,597 1,680,597
Storm drain system $864,531 864,531
Parks and open space 618,867 618,867
Environmental management 329,629 329,629
Streets and road projects 1,326,899 1,326,899
Housing programs 2,056,778 2,056,778
Subtotal 695,564 1,680,597 5,196,704 7,572,865
Assigned to:
General government 17,729,297 17,729,297
Capital projects 3,646,073 3,646,073
Subtotal 17,729,297 3,646,073 21,375,370
Unassigned 6,669,378 6,669,378
Total $26,097,678 $1,680,597 $8,842,777 $36,621,052
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 9 - COMMITMENTS AND CONTINGENCIES
(a) Federal and State Grant
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, 2012, 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.
(b) Encumbrances
The City uses encumbrances to control expenditure commitments for the year. Encumbrances represent
commitments related to executor contracts not yet performed and purchase orders not yet filled.
Commitments for such expenditure of monies are encumbered to reserve a portion of applicable
appropriations. Encumbrances still open at year end are not accounted for as expenditures and
liabilities, but as restricted, or assigned fund balance. As of June 30, 2012, the City had the following
encumbrances outstanding:
Governmental Funds:
General Fund $172,659
Other Governmental Funds 1,088,951
Total encumbrances $1,261,610
(c) Lease Agreement with County of Santa Clara
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 for Cupertino’s portion of book circulation and increase of assessed
valuation. This is an operating lease with a renewable option. At June 30, 2012, the cost and carrying
value of the building which opened in October 2004, is $21,935,325 and $15,788,626 respectively, with
$6,146,699 in accumulated depreciation.
(d) Consulting Agreement for Sales Taxes
The City entered into agreements with two companies to provide services consisting of the assessment
and creation of new sales and use tax revenue sources for the City. The City agreed to pay the
companies based on a sliding scale payment schedule dependent on the level of new sales tax revenue
realized by the City as defined in the consulting agreements. The agreements with the companies expire
February 19, 2013 and June 30, 2016.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 10 - LIABILITIES UNDER SELF-INSURANCE AND RISK MANAGEMENT
(a) General and Property Liability
The City is self-insured for the first $250,000 of general and property liability for each occurrence, and
the excess (up to $10,000,000 for each occurrence and annual aggregate) is covered through the City’s
participation in the Association of Bay Area Governments Pooled Liability Assurance Network (ABAG
PLAN). The risk pool consists of 31 agencies within the San Francisco Bay Area. The stated purpose
of the ABAG PLAN is to provide certain levels of liability insurance coverage, claims management, risk
management services, and legal defense to its participating members. ABAG PLAN is governed by a
Board of Directors, which comprises officials appointed by each participating member. Premiums paid
to ABAG are subject to possible refund based on the results of actuarial studies and approval by the
Board of Directors. Complete financial statements for ABAG PLAN may be obtained from their offices
at the following address: ABAG PLAN, Finance Department, P.O. Box 2050, Oakland, CA 94604.
Premiums are revised each year based on the City’s claims experience and risk exposure. For the year
ended June 30, 2012, the City paid ABAG PLAN premiums of $172,208.
(b) Workers’ Compensation Liability
The City belongs to the CSAC Excess Insurance Authority (EIA), a joint power authority which
provides excess workers’ compensation liability claims coverage above the City’s self-insured retention
of $500,000 per occurrence. Losses above the self-insured retention are pooled with excess reinsurance
purchased to a $50,000,000 statutory limit. EIA was established in 1979 for the purpose of creating a risk
management pool for all California public entities. EIA is governed by a Board of Directors consisting of
representatives of its member public entities. Complete financial statements for EIA may be obtained
from their offices at the following address: CSAC Excess Insurance Authority, Finance Department,
75 Iron Point Circle, Suite 200, Folsom, CA 95630. For the year ended June 30, 2012, the City paid
premiums of $59,504 to EIA.
It is the City’s practice to obtain biennial actuarial studies for the self-insured workers’ compensation
liability. The claims liabilities included in the workers’ compensation internal service fund is based on
the results of actuarial studies and include amounts for claims incurred but not reported and loss
adjustment expenses. Claim liabilities are calculated considering the effects of inflation, recent claim
settlement trends, including frequency and amount of payouts, and other economic and social factors.
Inflation of 2.5%, annual rate of return of 3%, claim severity increase at 2.5% were assumed. In the
current year, management used actuarial estimates based on an 80% confidence level.
Settlements have not exceeded insurance coverage in the past three years.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 10 - LIABILITIES UNDER SELF-INSURANCE AND RISK MANAGEMENT
Changes in the balances of workers’ compensation claims liabilities during the years ended June 30 are
as follows:
2012 2011
Claims liability, beginning of year $1,651,953 $1,633,943
Incurred claims and changes in estimate 57,022 244,857
Claim payments and credits (212,997) (226,847)
Total claims liability, end of year 1,495,978 1,651,953
Less current portion (333,694) (388,594)
Non-current portion $1,162,284 $1,263,359
NOTE 11 - DEFINED BENEFIT PENSION PLAN
(a) Plan Description
Substantially all City employees are eligible to participate in pension plans offered by California Public
Employees Retirement System (CalPERS), an agent multiple employer defined benefit pension plan
which acts as a common investment and administrative agent for its participating member employers.
CalPERS provides retirement and disability benefits, annual cost of living adjustments and death
benefits to plan members, who must be public employees and beneficiaries. The City’s employees
participate in the Miscellaneous Employee Plan (Plan). Benefit provisions under the Plan are
established by State statute and City resolution. Benefits are based on years of credited service and
compensation. Audited annual financial statements are available from CalPERS at www.calpers.ca.gov.
(b) Funding Policy
The contribution requirements of plan members and the City are established and may be amended by
CalPERS. The City is required to contribute at an actuarially determined rate. Based on the
June 30, 2010 actuarial report, the Plan’s provisions and benefits in effect at June 30, 2012, are
summarized as follows:
Miscellaneous
Benefit vesting schedule 5 years service
Benefit payments Monthly for life
Eligible retirement age 50
Benefits, as a % of annual salary
multiplied by years of service and
annual salary 2% - 2.7%
Required employee contribution rates 8%
Required employer contribution rates 20.690%
The City covered 75% of the employees’ required payroll contributions for fiscal year 2012. The City
uses the actuarially determined percentages of payroll to calculate and pay 100% of the required
contributions to CalPERS. This results in no net pension obligations or unpaid contributions.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 11 - DEFINED BENEFIT PENSION PLAN (Continued)
(c) Annual Pension Cost
The required contribution was determined as part of June 30, 2010 actuarial valuations using the entry
age normal method. The actuarial value of CalPERS assets was determined using techniques that
smooth the effects of short-term volatility in the market value of investments over a fifteen-year period.
The excess of the total actuarial accrued liability over the actuarial value of plan assets is called the
unfunded actuarial accrued liability. Funding requirements are determined by adding the normal cost
and an amortization of the unfunded liability as a level percentage of assumed future payrolls. Initial
unfunded liabilities are amortized over a closed period that depends on the plan’s date of entry into
CalPERS. Subsequent plan amendments are amortized as a level percentage of pay over a closed 20-
year period. Gains and losses that occur in the operation of the plan are amortized over a 30-year rolling
period, which results in an amortization of about 6% of unamortized gains or losses each year.
Recent Annual Pension Costs, which equal the Annual Required Contribution to CALPERS, were as
follows:
Fiscal Year Annual Pension Cost (APC) Contribution
6/30/2010 $1,841,350 100%
6/30/2011 2,088,898 100%
6/30/2012 2,657,476 100%
(d) Funded Status and Funding Progress
The significant actuarial assumptions used to prepare the City’s June 30, 2010 actuarial valuation
include the following:
Valuation date:June 30, 2010
ARC:Determined for fiscal year 2012/2013
Actuarial Cost Method:Entry Age Normal Cost Method
Amortization Method:Level percent of payroll
Average Remaining Period 21 Years as of Valuation Date
Asset Valuation Method:15 Year Smoothed Market
Actuarial Assumptions:
Investment Rate of Return:7.75% (net of administrative expenses)
Projected Salary Increase:3.55% to 14.45% depending on Age, Service and type of employment
Inflation:3.00%
Payroll Growth:3.25%
Individual Salary Growth:A merit scale varying by duration of employment coupled with an assumed
annual inflation growth of 3.00% and an annual production growth of 0.25%.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 11 - DEFINED BENEFIT PENSION PLAN (Continued)
CalPERS’ latest available actuarial data and funding progress are set forth below at their actuarial
valuation date as of June 30, 2010.
Actuarial accrued liability (AAL)$79,939,987
Actuarial value of plan assets (61,358,259)
Unfunded actuarial accrued liability (UAAL) $18,581,728
Funded ration (actuarial value of plan assets/AAL) 76.8%
Covered payroll (active plan members)$12,428,055
UAAL as a percentage of covered payroll 149.5%
Actuarial valuations of an on-going plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Amounts determined
regarding the funded status of the plan and the annual required contribution of the City are subject to
continual revision as actual results are compared with past expectations and new estimates are made
about the future. The schedule of funding progress, presents multi-year trend information about whether
the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued
liabilities for benefits. The schedule of funding progress, presented as required supplementary
information following the notes to basic financial statements, presents multi-year trend information
about whether the actuarial value of plan assets is increasing or decreasing over time relative to the
actuarial accrued liability for benefits.
NOTE 12 - OTHER POST EMPLOYMENT BENEFITS (OPEB)
(a) Plan Description
Permanent employees who retire under the City’s CalPERS retirement plan are, pursuant to their
respective collective bargaining agreements, eligible to have their medical insurance premiums paid by
the City. Retirees receive the amount necessary to pay the cost of his/her enrollment, including the
enrollment of his/her family members, in a health benefit plan provided by CalPERS up to the
maximum received by active employees in their respective bargaining unit.
The City contracts with CalPERS for this insured-benefit plan established under the state Public
Employees’ Medical and Hospital Care Act (PEMHCA). The plan offers employees and retirees three
CalPERS’ self-funded options, setup as insurance risk pools, or offers various third-party insured health
plans. The plan’s medical benefits and premium rates are established by CalPERS and the insurance
providers. The City contribution is established by City resolution. Retirees and active employees pay
the difference between the premium rate and the City’s contribution. Premiums and City contributions
are based on the plan and coverage selected by actives and retirees, with the City’s potential
contribution ranging from zero to $1,326 per month per employee or retiree. The responsibility for
benefit payments has transferred to the insurers and the City does not guarantee the benefits in the event
of default by the insurers. A comprehensive annual financial report of CalPERS, inclusive of their
benefit plans, is available at www.calpers.ca.gov.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 12 - OTHER POST EMPLOYMENT BENEFITS (OPEB) (Continued)
(a) Plan Description (Continued)
The City participates in the Public Agency Retirement System (PARS) Public Agencies Post Retirement
Health Care Plan Trust Program (PARS Trust), an agent-multiple employer irrevocable trust established
to fund other postemployment benefits. The PARS Trust is approved by the Internal Revenue Code
Section 115 and invests funds in equity, bond, and money market mutual funds. Copies of PARS Trust
annual financial report may be obtained from PARS at 4350 Von Karman Avenue, Suite 100, Newport
Beach, CA 92660. A separate report for the City’s portion of the PARS Trust is available at the City’s
Finance Department.
An employee is eligible for lifetime medical benefits under the OPEB Plan, along with his/her spouse or
declared domestic partner at the time of retirement, if all criteria listed below are met:
The employee was hired or the City Council member was elected prior to August 1, 2004, and the
employee has five or more full-time years of service and the City Council member has five or more
years of elected service with the City of Cupertino; or
The employee was hired or the City Council member was elected on or after August 1, 2004, and
the employee has ten or more full-time and/or elected years of CalPERS service, five years of which
must be from the City of Cupertino; and
The employee is eligible for retirement as defined under the CalPERS retirement system; and
The employee retires from the City of Cupertino.
In addition, the eligible employee’s dependent children at the time of retirement who are under 23 years
old are eligible for medical benefits. In addition to extending the eligibility of dependents from age 23
to age 26 in accordance with the recent healthcare reform act, effective July 1, 2010, employees that
retire or resign from service with the City of Cupertino and who are not eligible for retiree medical
benefits can continue on the City’s medical and dental plans provided that they pay the premiums in full.
(b) Funding Policy
OPEB Plan contributions are set by the adopted budget. The cost of the benefits provided by the OPEB
Plan is currently being paid by the City on a fully pre-funded basis. The City has expressed intent to
fully fund the annual required contribution (ARC) each year. Based on the actuarial valuation date of
January 1, 2011, the annual required contribution rate is 14.20% of annual covered payroll. For the year
ended June 30, 2012, the City contributed $900,000 to the PARS Trust and paid $722,549 in healthcare
premium payments to pre-fund OPEB Plan.
(c) Annual OPEB Cost and Funded Status
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of certain events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined
regarding the funded status of the plan and the annual required contributions of the employer are subject
to continual revision as actual results are compared with past expectations and new estimates are made
about the future. The schedule of funding progress, presented as required supplementary information
following the notes to the financial statements, presents multi-year trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued
liabilities for benefits.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 12 - OTHER POST EMPLOYMENT BENEFITS (OPEB) (Continued)
(c) Annual OPEB Cost and Funded Status (Continued)
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan members) and include the types of benefits provided at the
time of each valuation and the historical pattern of sharing of benefit costs between the employer and
plan members to that point. The actuarial methods and assumptions used include techniques that are
designed to reduce effects of short-term volatility in actuarial accrued liabilities and the actuarial value
of assets, consistent with long-term perspective of the calculations.
The other significant actuarial assumptions used to prepare the City’s January 1, 2011 actuarial
valuation include the following:
Valuation date:January 1, 2011
Actuarial Cost Method: Entry Age Normal Cost Method
Amortization Method: Level percent of payroll (assuming 3.25% per year growth in total payroll)
Amortization Period:Closed initial 20 years period. At January 1, 2011, remaining amortization period is 18 years.
Asset Valuation Method: Market value
Actuarial Assumptions:
Investment Rate of Return: 6.00% (net of investment expenses)
Projected Salary Increases: 3.25%
Inflation: 3.00%
Increases in Pay:Assumed annual rates of future pay increases are based on the current CalPERS
age and service based assumptions.
Medical Inflation: Year Gross City Maximum
2011 10.0%3.5%
2012 8.0%3.5%
2013 7.0%3.5%
2014 6.0%3.5%
2015 5.0%3.5%
2016+ 5.0%3.5%
In addition, PEMHCA is a community-rated plan, where the same premiums apply for all plan
participants regardless of the presence or number of active employees. There is no implicit rate subsidy
in the premiums for pre-Medicare retirees.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 12 - OTHER POST EMPLOYMENT BENEFITS (OPEB) (Continued)
(c) Annual OPEB Cost and Funded Status (Continued)
The City’s annual OPEB cost and actual contributions to the OPEB Plan for the past three years are as
follows:
Fiscal Year
OPEB Annual
Cost (AOC)
Actual
Contribution
Percentage of
AOC
Contributed
Net OPEB
Obligation
(Asset)
6/30/2010 $2,043,000 $7,616,760 373% ($3,746,683)
6/30/2011 1,870,000 2,688,723 144% (4,565,406)
6/30/2012 1,900,000 1,622,549 85% (4,287,955)
The City’s Net OPEB asset is recorded in the Retiree Medical Internal Service Fund and is calculated as
of June 30, 2012 as follows:
Annual required contribution $1,800,000
Interest on prior year net OPEB asset (273,924)
Adjustment to annual required contribution 373,924
Annual OPEB cost 1,900,000
Insurance premiums paid on behalf of retirees (722,549)
Contributions to trust (900,000)
Decrease (increase) in net OPEB asset 277,451
Net OPEB obligation (asset) June 30, 2011 (4,565,406)
Net OPEB obligation (asset) June 30, 2012 ($4,287,955)
The latest available actuarial data and funding progress are set forth below at their actuarial valuation
date of January 1, 2011.
Actuarial accrued liability (AAL) $20,869,058
Actuarial value of planned assets (7,438,341)
Unfunded actuarial accrued liability (UAAL) $13,430,717
Funded Ratio (actuarial value of plan assets/AAL) 35.6%
Covered payroll (active plan members)$12,724,000
UAAL as a percentage of covered payroll 105.6%
NOTE 13 – CONCENTRATION RISK
The City has an economic dependency on revenues generated directly or indirectly from one company.
For the year ended June 30, 2012, more than 10% of the City General Fund’s total revenues are derived
from the company. The City’s operations would be adversely impacted if there are any significant
declines in taxes received from the company.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 14 – REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY
ACTIVITIES
Effective January 31, 2012, all Redevelopment Agencies are to be dissolved. Certain assets of the
Redevelopment Agency Low and Moderate Income Housing Fund are to be distributed to a Housing
Successor; and all remaining Redevelopment Agency assets and liabilities are to be distributed to a
Successor Agency.
The redevelopment agency dissolution acts, ABx1 26 and AB 1484, require reviews examining the
activities of the former Redevelopment Agency and current Successor Agency (Agencies) to ultimately
determine the amount available for distribution to other taxing entities. Specifically, the County Auditor-
Controller (CAC) must conduct an agreed-upon procedure review as of January 31, 2012 and the
Successor Agency must conduct a due diligence review as of June 30, 2012 by engaging either the CAC
or a licensed accountant approved by the County Auditor-Controller. The Successor Agency opted to
have the CAC conduct the due diligence review. The CAC has completed the agreed-upon procedure
and the due diligence reviews of all funds of the Agencies and concluded that there was no amount
available for distribution to other taxing entities. On August 30, 2012, the Oversight Board of the
Cupertino Successor to the Redevelopment Agency reviewed and heard public comment on both
reviews. On September 6, 2012, the Board approved the reviews and authorized the transmission of the
amount available for distribution to the State Department of Finance and to the County Auditor-
Controller.
In addition, ABx1 26 and AB 1484 direct the State Controller to review the activities of all
redevelopment agencies to determine whether an asset transfer between an agency and any public
agency occurred on or after January 1, 2011. If an asset transfer did occur and the public agency that
received the asset is not contractually committed to a third party for the expenditure or encumbrance of
the asset, the legislation purports to require the State Controller to order the asset returned to the
Successor Agency. The Successor Agency reported such asset transfers to the State Controller and the
CAC. The State Controller has not scheduled its asset transfer review. In its agreed-upon procedure
review disclosed above, the CAC concluded that no assets were to be returned to the Successor Agency
under the legislation.
The City’s elected to become the Housing Successor and on February 1, 2012, certain housing assets were
transferred to the City’s Low and Moderate Income Housing Asset Special Revenue Fund.
The dissolution acts provide a mechanism for paying remaining obligations of the Agencies and for
affecting the eventual dissolution of the Successor Agency. On May 22, 2012, the Oversight Board
approved the final obligations of the Agencies. AB 1484 directs that the Successor Agency will dissolve
within one year after final payment.
CITY OF CUPERTINO
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 14 – REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY
ACTIVITIES (Continued)
The City also elected to become the Successor Agency and on February 1, 2012 the Redevelopment
Agency’s remaining assets were distributed to and liabilities assumed by the Successor Agency. ABx1 26
required the establishment of an Oversight Board to oversee the activities of the Successor Agency and
one was established on March 27, 2012. A summary of assets distributed and liabilities assumed by the
Successor Agency, reported as an Extraordinary Item, is presented below:
Transfer to
Successor
Agency to Transfer to
Assets Redevelopment Low and
and Agency Moderate Ending
Liabilities Private-purpose Income Balance
(Prior to transfer) Trust Fund Housing Assets January 31, 2012
ASSETS
Cash and investments $1,255,297 ($1,130,797) ($124,500) $0
Total assets 1,255,297 (1,130,797) (124,500) 0
NET ASSETS $1,255,297 ($1,130,797) ($124,500) $0
NOTE 15 – SUBSEQUENT EVENTS
The California State Board of Equalization notified the City on October 10, 2012 that the Board proposes
a $10,550,721 reallocation of the City’s past sales taxes to the county-wide pool. Under the Board’s
procedures, the City will petition and appeal the reallocation. Up to half of the potential loss may be
recovered by a refund of what the City paid under a sales tax consulting agreement and by what the City
would receive back through the county-wide pool.
CITY OF CUPERTINO
Required Supplementary Information (Unaudited)
For the Year Ended June 30, 2012
Schedule of Funding Progress – CalPERS Defined Benefit Retirement Miscellaneous Plan:
Unfunded
Entry Age Unfunded Annual (Overfunded)
Valuation Accrued Value of (Overfunded) Funded Covered Liability as %
Date Liability Assets Liability Ratio Payroll of Payroll
6/30/2008 $65,337,134 $54,571,233 10,765,901 83.5% $11,009,984 97.8%
6/30/2009 74,955,504 57,934,851 17,020,653 77.3% 11,668,964 145.9%
6/30/2010 79,939,987 61,358,259 18,581,728 76.8% 12,428,055 149.5%
Schedule of Funding Progress – Defined Benefit Other Post Employment Benefits Plan:
Unfunded
Actuarial Unfunded Actuarial
Actuarial Accrued Actuarial Actuarial Liability as
Valuation Liability Value of Accrued Funded Covered Percentage of
Date Entry Age Assets Liability Ratio Payroll Covered Payroll
1/1/2007 $21,981,544 $21,981,544 0.00% $11,118,000 197.71%
1/1/2009 18,069,366 18,069,366 0.00% 11,892,000 151.95%
1/1/2011 20,869,058 $7,438,341 13,430,717 35.64% 12,724,000 105.55%
MAJOR GOVERNMENTAL FUNDS OTHER THAN THE
GENERAL FUND AND SPECIAL REVENUE FUNDS
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 government fund, budget-
to-actual information in the basic financial statements is limited to the General Fund and major Special
Revenue Funds. All other major governmental fund schedules with such information are therefore
included as Supplemental Information.
PUBLIC FACILITIES CORPORATION DEBT SERVICE FUND
This fund accounts for the payments of principal and interest on certificates of participation issued to
provide for the financing of the Civic Center, Library, Wilson Park, Memorial Park, and other City
facilities.
CITY OF CUPERTINO
PUBLIC FACILITIES CORPORATION DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2012
Variance
Positive
Budget Actual (Negative)
EXPENDITURES
Debt service:
Payment to refunded COP escrow agent $44,015,156 $44,897,800 ($882,644)
Interest and fiscal charges 2,822,874 1,837,655 985,219
Total Expenditures 46,838,030 46,735,455 102,575
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (46,838,030) (46,735,455) 102,575
OTHER FINANCING SOURCES (USES)
Issuance of long-term debt 44,160,000 43,940,000 (220,000)
Premium on long-term debt issued 785,450 883,839 98,389
Transfers in 3,534,000 3,534,000
Total Other Financing Sources (Uses) 48,479,450 48,357,839 (121,611)
NET CHANGE IN FUND BALANCE $1,641,420 1,622,384 ($19,036)
BEGINNING FUND BALANCE 58,213
ENDING FUND BALANCE $1,680,597
NONMAJOR GOVERNMENTAL FUNDS
All funds not considered as major funds on the Fund Financial Statements are consolidated in one column
entitled “Other Governmental Funds.” These non-major funds are identified and included in this
supplementary section and includes the City’s Special Revenue Funds and Capital Project Funds.
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 Improvement - Accounts for the construction and maintenance of storm drain
facilities including drainage and sanitary sewer facilities. Revenues were collected from
developers as a result of connections to the storm drainage sewer system.
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 / Clean Creeks - Accounts for all activities related to operating the
non-point source pollution program. A parcel tax provides revenues.
Transportation - Accounts for the City's gas tax, sales tax and grant revenues and expenditures
related to the maintenance and construction of City streets. All revenue in this fund is restricted
exclusively for street and road purposes including related engineering and administrative
expenditures.
Housing Development - Accounts for the Federal Housing and Community Development Grant
Program activities administered through the County. Monies collected from developers that
mitigate the impact of housing needs are also included. Monies in this fund are governed by the
program’s rules.
Redevelopment Agency – Accounts for the Vallco redevelopment project area and low and
moderate income housing funds.
Low and Moderate Income Housing Assets – Accounts for the activities related to the housing
assets assumed by the City as Housing Successor to the former Redevelopment Agency. The
activities are governed by California redevelopment law and must be used to provide housing for
people with low and moderate incomes.
Capital Projects Funds account for the financial resources committed to the construction or improvement
of major facilities.
Capital Improvement Projects Fund – Accounts for activities related to the acquisition or
construction of major capital facilities.
Stevens Creek Corridor Park Capital Projects Fund – Accounts for the design and construction
of the Stevens Creek Corridor Park projects.
Don Burnett Bicycle-Pedestrian Bridge – Accounts for the design and construction of a bicycle
footbridge extension of Mary Avenue over Interstate 280. It includes gateways, paths, residential
buffering elements, and landscaping.
CITY OF CUPERTINO
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS
JUNE 30, 2012
SPECIAL REVENUE FUNDS
Storm Environmental
Drain Park Management/Housing
Improvement Dedication Clean Creeks Transportation Development
Assets
Cash and investments $863,836 $617,171 $335,467 $1,293,848 $1,180,397
Accounts receivable 1,200 79,511 67,546
Interest receivable 695 496 248 1,076 946
Loans receivable 768,277
Property held for resale 262,782
Total assets $864,531 $618,867 $335,715 $1,374,435 $2,279,948
Liabilities
Accounts payable and accruals $288 $28,663 $92,395
Accrued payroll and benefits 5,798 18,873 1,173
Deferred revenue 129,602
Total Liabilities 6,086 47,536 223,170
Fund balances
Restricted $864,531 $618,867 329,629 1,326,899 2,056,778
Assigned
Total fund balances 864,531 618,867 329,629 1,326,899 2,056,778
Total liabilities and fund balances $864,531 $618,867 $335,715 $1,374,435 $2,279,948
SPECIAL
REVENUE
FUNDS CAPITAL PROJECT FUNDS
Low and Don Burnett Total
Moderate Capital Stevens Creek Bicycle Nonmajor
Redevelopment Income Improvement Corridor Pedestrian Governmental
Agency Housing Assets Projects Park Bridge Funds
$2,794,356 $921,216 $27,415 8,033,706
1,059 19,876 169,192
3,461
768,277
262,782
$2,795,415 $941,092 $27,415 $9,237,418
$20,000 $97,849 $239,195
25,844
129,602
20,000 97,849 394,641
5,196,704
2,775,415 843,243 $27,415 3,646,073
2,775,415 843,243 27,415 8,842,777
$2,795,415 $941,092 $27,415 $9,237,418
CITY OF CUPERTINO
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2012
SPECIAL REVENUE FUNDS
Storm Environmental
Drain Park Management/Housing
Improvement Dedication Clean Creeks Transportation Development
REVENUES
Taxes $81,180 $40,500 $177,268
Use of money and property 966 721 $341 $710 8,346
Intergovernmental 1,701,964 227,013
Charges for services 15,757 367,045 10,000
Total Revenues 82,146 56,978 367,386 1,712,674 412,627
EXPENDITURES
Current:
Community development 1,072,980
Public works 36,143 363,947 791,131
Capital outlay 50,919 1,784,365
Total Expenditures 87,062 363,947 2,575,496 1,072,980
EXCESS OF REVENUES
OVER (UNDER) EXPENDITURES (4,916) 56,978 3,439 (862,822) (660,353)
OTHER FINANCING SOURCES (USES)
Transfers in 67,800 950,000
Transfers (out)(43,806)
Total Other Financing Sources (Uses)67,800 906,194
NET CHANGE IN FUND BALANCES
BEFORE EXTRAORDINARY ITEM (4,916) 56,978 71,239 43,372 (660,353)
EXTRAORDINARY ITEM
Assets transferred to Successor Agency/
Housing Successor
NET CHANGE IN FUND BALANCES (4,916) 56,978 71,239 43,372 (660,353)
BEGINNING FUND BALANCES 869,447 561,889 258,390 1,283,527 2,717,131
ENDING FUND BALANCES $864,531 $618,867 $329,629 $1,326,899 $2,056,778
SPECIAL
REVENUE
FUNDS CAPITAL PROJECT FUNDS
Low and Don Burnett Total
Moderate Capital Stevens Creek Bicycle Nonmajor
Redevelopment Income Improvement Corridor Pedestrian Governmental
Agency Housing Assets Projects Park Bridge Funds
$202,793 $501,741
2,660 13,744
$321,766 $15,000 2,265,743
744 393,546
205,453 322,510 15,000 3,174,774
130,665 $124,500 1,328,145
1,191,221
773,767 862,691 $38,787 3,510,529
130,665 124,500 773,767 862,691 38,787 6,029,895
74,788 (124,500) (451,257) (847,691) (38,787) (2,855,121)
787,806 1,110,000 2,915,606
(1,107,820) (110,000) (1,261,626)
(320,014) 1,000,000 1,653,980
74,788 (124,500) (771,271) 152,309 (38,787) (1,201,141)
(1,255,297) 124,500 (1,130,797)
(1,180,509) (771,271) 152,309 (38,787) (2,331,938)
1,180,509 3,546,686 690,934 66,202 11,174,715
$2,775,415 $843,243 $27,415 $8,842,777
CITY OF CUPERTINO
BUDGETED NON-MAJOR FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2012
SPECIAL REVENUE FUNDS
STORM DRAIN IMPROVEMENT PARK DEDICATION
Variance Variance
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)
REVENUES
Taxes $50,000 $81,180 $31,180 $150,000 $40,500 ($109,500)
Use of money and property 20,000 966 (19,034) 10,000 721 ($9,279)
Intergovernmental
Charges for services 15,757
Total Revenues 70,000 82,146 12,146 160,000 56,978 (118,779)
EXPENDITURES
Current:
Community development
Public works 86,587 36,143 50,444
Capital outlay 889,146 50,919 838,227
Total Expenditures 975,733 87,062 888,671
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (905,733) (4,916) 900,817 160,000 56,978 (103,022)
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers (out)
Total Other Financing Sources (Uses)
NET CHANGE IN FUND BALANCES
BEFORE EXTRAORDINARY ITEM ($905,733) (4,916) $900,817 $160,000 56,978 ($103,022)
EXTRAORDINARY ITEM
Assets transferred to Successor Agency
NET CHANGE IN FUND BALANCES
BEGINNING FUND BALANCES 869,447 561,889
ENDING FUND BALANCES $864,531 $618,867
SPECIAL REVENUE FUNDS
ENVIRONMENTAL MANAGEMENT/
CLEAN CREEKS TRANSPORTATION HOUSING DEVELOPMENT
Variance Variance Variance
Positive Positive Positive
Budget Actual (Negative) Budget Actual (Negative) Budget Actual (Negative)
$50,000 $177,268 $127,268
$1,000 $341 ($659) $10,000 $710 ($9,290) 85,000 8,346 (76,654)
1,524,000 1,701,964 177,964 391,000 227,013 (163,987)
433,800 367,045 (66,755)10,000 10,000
434,800 367,386 (67,414) 1,534,000 1,712,674 178,674 526,000 412,627 (113,373)
1,150,479 1,072,980 77,499
556,802 363,947 192,855 885,362 791,131 94,231
2,175,517 1,784,365 391,152
556,802 363,947 192,855 3,060,879 2,575,496 485,383 1,150,479 1,072,980 77,499
(122,002) 3,439 125,441 (1,526,879) (862,822) 664,057 (624,479) (660,353) (35,874)
67,800 67,800 950,000 950,000
(43,806) (43,806)
67,800 67,800 906,194 906,194
($122,002) 71,239 $193,241 ($620,685) 43,372 $664,057 ($624,479) (660,353) ($35,874)
258,390 1,283,527 2,717,131
$329,629 $1,326,899 $2,056,778
(Continued)
CITY OF CUPERTINO
BUDGETED NON-MAJOR FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2012
SPECIAL REVENUE FUND
LOW AND MODERATE
REDEVELOPMENT AGENCY INCOME HOUSING ASSETS
Variance Variance
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)
REVENUES
Taxes $250,000 $202,793 ($47,207)
Use of money and property 2,660 2,660
Intergovernmental
Charges for services
Total Revenues 250,000 205,453 (44,547)
EXPENDITURES
Current:
Community development 1,137,000 130,665 1,006,335 $250,000 $124,500 $125,500
Public works
Capital outlay
Total Expenditures 1,137,000 130,665 1,006,335 250,000 124,500 125,500
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (887,000) 74,788 961,788 (250,000) (124,500) 125,500
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers (out)
Total Other Financing Sources (Uses)
NET CHANGE IN FUND BALANCES
BEFORE EXTRAORDINARY ITEM ($887,000) 74,788 $961,788 ($250,000) (124,500) $125,500
EXTRAORDINARY ITEM
Assets transferred to Successor Agency (1,255,297) 124,500
NET CHANGE IN FUND BALANCES (1,180,509)
BEGINNING FUND BALANCES 1,180,509
ENDING FUND BALANCES
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 does not extend to internal service funds because they do not do business with
outside parties. For the Statement of Activities, the net revenues or expenses of each internal service fund
are eliminated by netting them against the operations of the City departments that generated them. The
remaining balance sheet items are consolidated with these same funds in the Statement of Net Assets.
However, internal service funds are still presented separately in the Fund financial statements.
Information Technology - Accounts for the activities related to the maintenance and replacement
of the City’s technology infrastructure.
Workers’ Compensation - 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 and other equipment.
Compensated Absences and Long-Term Disability - Accounts for accrued leave payouts and the
City’s long term disability insurance program.
Retiree Medical – Contains funds set-aside for other post employment retirement benefits.
CITY OF CUPERTINO
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET ASSETS
JUNE 30, 2012
Compensated
Absences and
Information Workers' Equipment Long-Term Retiree
Technology Compensation Revolving Disability Medical Total
ASSETS
Current Assets:
Cash and investments $3,149,120 $2,029,602 $1,531,943 $144,069 $219,242 $7,073,976
Interest receivable 2,532 1,621 1,232 4 176 5,565
Prepaid items 30,465 30,465
Total current assets 3,182,117 2,031,223 1,533,175 144,073 219,418 7,110,006
Noncurrent Assets:
Advances to other funds 504,497 504,497
Net OPEB assets 4,287,955 4,287,955
Capital assets:
Capital assets, Depreciable net of
accumulated depreciation 471,409 941,516 1,412,925
Total noncurrent assets 471,409 1,446,013 4,287,955 6,205,377
Total Assets $3,653,526 $2,031,223 $2,979,188 $144,073 $4,507,373 $13,315,383
LIABILITIES
Current Liabilities:
Accounts payable and accruals $23,223 $43,517 66,740
Accrued payroll and benefits 18,885 $877 10,038 29,800
Compensated absences $31,490 31,490
Claims payable 333,694 333,694
Total current liabilities 42,108 334,571 53,555 31,490 461,724
Non-current Liabilities:
Compensated absences 37,742 7,077 44,819
Claims payable 1,162,284 1,162,284
Total non-current liabilities 37,742 1,162,284 7,077 1,207,103
Total Liabilities 79,850 1,496,855 60,632 31,490 1,668,827
NET ASSETS
Invested in capital assets 471,409 941,516 1,412,925
Unrestricted 3,102,267 534,368 1,977,040 112,583 $4,507,373 10,233,631
Total Net Assets $3,573,676 $534,368 $2,918,556 $112,583 $4,507,373 $11,646,556
CITY OF CUPERTINO
INTERNAL SERVICE FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENSES AND
CHANGES IN FUND NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2012
Compensated
Absences and
Information Workers' Equipment Long-Term Retiree
Technology Compensation Revolving Disability Medical Total
OPERATING REVENUES
Charges for services $1,681,500 $406,450 $1,032,610 $63,782 $3,184,342
Other 7,550 7,550
Total Operating Revenues 1,681,500 406,450 1,040,160 63,782 3,191,892
OPERATING EXPENSES
Salaries and related expenses 520,960 24,607 333,030 $1,900,000 2,778,597
Materials and supplies 101,927 274,047 375,974
Contractual services 359,062 138,254 497,316
Insurance claims and premium 150,411 315,437 465,848
Depreciation 222,799 232,793 455,592
Total Operating Expenses 1,204,748 175,018 978,124 315,437 1,900,000 4,573,327
Operating Income (Loss)476,752 231,432 62,036 (251,655) (1,900,000) (1,381,435)
NONOPERATING REVENUES (EXPENSES)
Interest income 4,000 2,119 1,855 65 170 8,209
Total Nonoperating Revenues (Expenses)4,000 2,119 1,855 65 170 8,209
Income (Loss) Before Transfers 480,752 233,551 63,891 (251,590) (1,899,830) (1,373,226)
Transfers in 200,000 45,000 200,000 1,000,000 1,445,000
Transfers (out)(30,000)(30,000)
Change in Net Assets 650,752 233,551 108,891 (51,590) (899,830) 41,774
BEGINNING NET ASSETS 2,922,924 300,817 2,809,665 164,173 5,407,203 11,604,782
ENDING NET ASSETS $3,573,676 $534,368 $2,918,556 $112,583 $4,507,373 $11,646,556
CITY OF CUPERTINO
INTERNAL SERVICE FUNDS
COMBINING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2012
Compensated
Absences and
Information Workers' Long-Term Retiree
Technology Compensation Equipment Disability Medical Total
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $1,681,500 $406,450 $1,040,160 $63,782 $3,191,892
Cash payments to suppliers for goods and services (468,176) (146,975) (374,289)($1,622,549) (2,611,989)
Cash payments to employees (519,187) (24,499) (337,651) (3,437)(884,774)
Cash payment for judgment and claims (150,411)(315,437)(465,848)
Cash Flows from (used for) Operating Activities 694,137 84,565 328,220 (255,092) (1,622,549) (770,719)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers in 200,000 45,000 200,000 1,000,000 1,445,000
Transfers out (30,000) (30,000)
Cash Flows (used for) Noncapital Financing Activities 170,000 45,000 200,000 1,000,000 1,415,000
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Purchase of capital assets (396,851)(538,979)(935,830)
Cash Flows from Capital and Related
Financing Activities (396,851)(538,979)(935,830)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 6,212 3,916 3,627 413 1,483 15,651
Cash Flows from Investing Activities 6,212 3,916 3,627 413 1,483 15,651
Net Cash Flows 473,498 88,481 (162,132) (54,679) (621,066) (275,898)
Cash and investments at beginning of year 2,675,622 1,941,121 1,694,075 198,748 840,308 7,349,874
Cash and investments at end of year $3,149,120 $2,029,602 $1,531,943 $144,069 $219,242 $7,073,976
Reconciliation of operating income (loss) to net cash flows
from operating activities:
Operating income (loss)$476,752 $231,432 $62,036 ($251,655) ($1,900,000) ($1,381,435)
Adjustments to reconcile operating income (loss)
to net cash flows from operating activities:
Depreciation 222,799 232,793 455,592
Change in assets and liabilities:
Accounts receivable 9,000 9,000
Prepaid expenses (12,517) (12,517)
Net OPEB asset 277,451 277,451
Accounts payable and accruals 5,330 38,012 43,342
Accrued payroll and benefits 1,997 108 309 2,414
Compensated absences (224)(4,930) (3,437)(8,591)
Claims Payable (155,975)(155,975)
Cash Flows from Operating Activities $694,137 $84,565
$328,220 ($255,092) ($1,622,549) ($770,719)
AGENCY FUNDS
All Agency Funds, representing all fiduciary funds of the City, are 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.
These funds are presented separately from the Governmental and Fund Financial Statements.
Special district assessments held by the City, acting as an agent for bond debt service payments, comprise
City Agency funds. The City is not liable for the debt payments.
CITY OF CUPERTINO
Statement of Changes in Assets and Liabilities
All Agency Funds
For the year ended June 30, 2012
Balance Balance
June 30, 2011 Additions Deletions June 30, 2012
All Agency Funds
Assets
Cash and investments $81,403 $81,403
Liabilities
Deposits $81,403 $81,403
STATISTICAL SECTION
STATISTICAL SECTION
This part of the City’s Comprehensive Annual Financial Report presents detailed information as a context
for understanding what the information in the financial statements, note disclosures, and required
supplementary information says about the City’s overall financial health. In contrast to the financial
section, the statistical section information is not subject to independent audit.
Financial Trends
These schedules contain trend information to help the reader understand how the City’s financial
performance and well being have changed over time:
1. Net Assets by Component
2. Changes in Net Assets
3. Fund Balances of Governmental Funds
4. Changes in Fund Balance of Governmental Funds
Revenue Capacity
These schedules contain information to help the reader assess the City’s most significant own-
source revenue, property tax.
1. Assessed and Estimated Actual Value of Taxable Property
2. Property Tax Rates, All Overlapping Governments
3. Principal Property Taxpayers
4. Property Tax Levies and Collections
Debt Capacity
These schedules present information to help the reader assess the affordability of the City’s
current levels of outstanding debt and the City’s ability to issue additional debt in the future:
1. Ratio of Outstanding Debt by Type
2. Computation of Direct and Overlapping Debt
3. Computation of Legal Bonded Debt Margin
4. Ratio of General Bonded Debt Outstanding
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the
environment within which the City’s financial activities take place:
1. Demographic and Economic Statistics
2. Principal Employers
Operating Information
These schedules contain service and infrastructure data to help the reader understand how the
information in the City’s financial report relates to the services the City provides and the
activities it performs:
1. Full-Time Equivalent City Government Employees by Function
2. Operating Indicators by Function/Program
3. Capital Assets Statistics by Function/Program
Sources
Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual
Financial Reports for the relevant year.
2003200420052006200720082009201020112012Governmental ActivitiesInvested in capital assets, net of related debt 79,705,041$ 85,425,753$ 86,530,017$ 83,064,879$ 80,343,053$ 85,173,998$ 103,341,905$ 120,405,290$ 120,724,205$ 117,440,257$ Restricted9,081,791 7,416,930 7,291,925 8,329,671 9,265,565 9,926,770 6,661,074 8,692,175 7,721,962 7,572,865 Unrestricted24,472,451 18,541,954 21,202,795 26,916,679 39,243,717 43,242,639 33,290,050 31,087,861 33,185,903 38,117,361 Total governmental activities net assets 113,259,283 111,384,637 115,024,737 118,311,229 128,852,335 138,343,407 143,293,029 160,185,326 161,632,070 163,130,483 Business-Type ActivitiesInvested in capital assets, net of related debt688,331 645,290 578,962 497,681 467,416 84,126 136,127 788,213 777,521 824,687 Unrestricted6,573,514 7,314,068 6,028,989 6,291,439 6,977,436 7,849,147 8,949,142 9,063,616 9,779,087 10,057,331 Total business-type activities net assets7,261,845 7,959,358 6,607,951 6,789,120 7,444,852 7,933,273 9,085,269 9,851,829 10,556,608 10,882,018 Primary GovernmentInvested in capital assets, net of related debt 80,393,372 86,071,043 87,108,979 83,562,560 80,810,469 85,258,124 103,478,032 121,193,503 121,501,726 118,264,944 Restricted9,081,791 7,416,930 7,291,925 8,329,671 9,265,565 9,926,770 6,661,074 8,692,175 7,721,962 7,572,865 Unrestricted31,045,965 25,856,022 27,231,784 33,208,118 46,221,153 51,091,786 42,239,192 40,151,477 42,964,990 48,174,692 Total primary government net assets120,521,128$ 119,343,995$ 121,632,688$ 125,100,349$ 136,297,187$ 146,276,680$ 152,378,298$ 170,037,155$ 172,188,678$ 174,012,501$ (Unaudited)Fiscal Year Ended June 30CITY OF CUPERTINONet Assets by ComponentLast Ten Fiscal Years(Accrual basis of accounting)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012ExpensesGovernmental activities:Administration 1,635,846$ 1,430,523$ 1,280,339$ 1,354,543$ 1,675,443$ 1,636,284$ 1,769,500$ 1,911,665$ 1,860,451$ 1,837,072$ Law enforcement6,041,831 6,090,038 6,179,326 6,577,199 7,148,187 7,679,467 8,804,195 8,385,476 8,434,885 8,776,633 Public and environmental affairs763,254 710,754 824,317 914,024 1,186,929 1,216,164 1,624,210 1,653,034 1,625,876 1,743,151 Administrative services3,556,129 3,923,377 3,750,174 4,208,389 3,874,003 3,923,217 4,001,738 4,080,134 3,993,654 4,309,503 Recreation services2,156,972 2,234,509 2,173,936 2,359,966 2,517,725 3,845,873 4,206,343 4,444,536 4,528,968 4,577,243 Community development3,234,456 2,678,109 3,269,475 4,541,965 4,090,959 4,059,740 6,177,879 4,351,975 5,961,774 4,922,237 Public works17,534,128 15,546,461 14,585,232 16,384,026 16,230,274 16,569,310 18,104,649 19,320,151 20,224,662 20,387,508 Interest on long-term debt3,796,472 2,317,837 2,289,526 2,262,913 2,239,657 2,183,403 2,118,714 2,076,264 2,032,464 1,837,655 Total governmental activities expense38,719,088 34,931,608 34,352,325 38,603,025 38,963,177 41,113,458 46,807,228 46,223,235 48,662,734 48,391,002 Business-type activities:Resource recovery1,897,425 1,793,083 2,927,060 2,101,198 2,122,805 2,056,061 1,998,184 2,018,147 1,801,599 1,566,229 Blackberry farm1,497,420 1,353,362 1,341,712 1,302,855 975,064 450,206 495,845 457,169 457,065 460,698 Cupertino sports center1,130,077 1,352,509 1,452,957 1,448,048 1,623,839 1,547,402 1,594,325 1,478,143 1,716,741 1,897,611 Recreation programs1,554,834 1,590,302 1,689,436 1,729,194 1,830,401 1,853,217 1,739,892 1,854,648 1,753,156 1,985,618 Senior center570,412 493,244 438,440 588,818 771,570 - - - - - Total business-type activities expense6,650,168 6,582,500 7,849,605 7,170,113 7,323,679 5,906,886 5,828,246 5,808,107 5,728,561 5,910,156 Total primary government expense45,369,256 41,514,108 42,201,930 45,773,138 46,286,856 47,020,344 52,635,474 52,031,342 54,391,295 54,301,158 Program RevenuesGovernmental activities:Charges for services:Administration- - - 23,201 3,618 10,711 2,240 21,873 15,801 6,454 Law enforcement468,110 838,457 694,952 722,164 1,031,736 799,350 869,295 811,676 797,757 696,498 Administrative services294,577 16,650 - - - - - - - - Recreation services161,969 148,337 163,462 240,074 193,752 847,424 801,280 930,773 1,020,159 1,166,323 Community development1,624,181 1,903,277 4,164,792 5,286,336 4,768,026 3,551,478 3,586,993 3,310,355 4,149,620 4,919,216 Public works348,905 325,959 286,280 201,250 200,969 135,942 157,311 556,636 549,065 503,225 Operating grants and contributions2,388,199 2,496,689 593,657 3,403,762 3,048,512 2,392,987 4,014,036 2,042,557 2,351,287 2,508,917 Capital grants and contributions965,211 3,612,102 2,164,907 522,950 3,496,095 5,696,124 4,759,485 5,511,359 1,972,951 780,761 Total government activities program revenue 6,251,152 9,341,471 8,068,050 10,399,737 12,742,708 13,434,016 14,190,640 13,185,229 10,856,640 10,581,394 Business-type activities:Charges for services:Resource recovery2,397,439 2,398,819 2,395,282 2,203,127 2,254,416 2,254,790 2,100,704 2,104,299 1,931,076 1,727,783 Blackberry farm1,479,312 1,301,092 1,218,958 1,155,986 1,101,564 640,771 596,944 568,770 447,797 411,056 Cupertino sports center1,109,799 1,184,860 1,385,837 1,419,672 1,655,169 1,605,545 1,732,282 1,578,330 1,722,700 1,965,684 Recreation programs1,872,004 1,910,599 2,167,705 2,331,409 2,396,720 2,493,214 2,364,037 2,249,191 2,260,296 2,325,705 Senior center484,530 456,211 473,787 704,390 690,603 - - - - - Operating grants and contributions 61,441 84,660 28,860 135,539 14,343 14,309 14,471 6,895 - - Total business-type activities program revenue 7,404,525 7,336,241 7,670,429 7,950,123 8,112,815 7,008,629 6,808,438 6,507,485 6,361,869 6,430,228 Total primary government program revenue 13,594,236 16,677,712 15,738,479 18,349,860 20,855,523 20,442,645 20,999,078 19,692,714 17,218,509 17,011,622 (Continued)(Accrual basis of accounting)(Unaudited)Fiscal Year Ended June 30CITY OF CUPERTINOChanges in Net AssetsLast Ten Fiscal Years
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012(Accrual basis of accounting)(Unaudited)Fiscal Year Ended June 30CITY OF CUPERTINOChanges in Net AssetsLast Ten Fiscal YearsNet (Expense) Revenue:Governmental activities (32,467,936) (25,590,137) (26,284,275) (28,203,288) (26,220,469) (27,679,442) (32,616,588) (33,038,006) (37,806,094) (37,809,608) Business-type activities754,357 753,741 (179,176) 780,010 789,136 1,101,743 980,192 699,378 633,308 520,072 Total primary government net expense(31,713,579) (24,836,396) (26,463,451) (27,423,278) (25,431,333) (26,577,699) (31,636,396) (32,338,628) (37,172,786) (37,289,536) General Revenues and TransfersGovernmental activities:Taxes:Property taxes4,100,856 3,944,459 4,296,940 4,728,811 6,529,772 6,941,910 7,491,965 7,488,701 7,296,970 7,479,132 Property tax in lieu of motor vehicle fee (1)- - 2,930,000 3,569,300 3,652,509 3,894,502 4,299,902 4,420,912 4,404,795 4,487,412 Incremental property tax25,831 76,570 15,974 185,676 187,276 220,267 1,211,128 1,322,925 1,251,777 202,793 Sales taxes8,843,792 8,654,185 9,224,661 10,671,642 11,252,341 13,154,749 14,139,190 9,930,530 14,539,243 17,326,460 Transient occupancy tax 1,679,225 1,632,514 1,790,917 2,054,904 2,511,184 2,711,590 2,140,274 2,142,137 2,536,501 3,112,934 Utility user tax2,566,265 2,636,264 2,705,888 2,809,587 3,011,755 3,175,724 3,205,073 3,271,452 3,227,942 3,264,896 Franchise tax2,175,913 2,194,651 2,217,313 2,353,575 2,537,018 2,547,439 2,618,125 2,597,930 2,841,344 2,808,136 Other taxes1,110,545 1,248,437 3,146,516 2,534,393 2,661,449 1,709,892 1,317,767 1,211,899 1,491,316 1,377,211 Intergovernmental (2)3,215,866 2,460,137 978,059 (300,039) 364,261 266,789 171,621 166,440 259,289 29,064 Investment earnings1,207,017 526,560 684,952 669,820 1,752,177 1,451,973 889,823 295,059 259,217 61,096 Miscellaneous79,280 166,714 545,155 189,262 291,423 103,529 81,342 119,393 1,144,429 82,684 Gain on sale of land- - - 1,222,849 1,510,410 - - - - - Extraordinary items (3)- - - - - - - - - (1,130,797) Transfers225,000 175,000 1,388,000 800,000 500,000 992,150 - - 15 207,000 Total Government Activities25,229,590 23,715,491 29,924,375 31,489,780 36,761,575 37,170,514 37,566,210 32,967,378 39,252,838 39,308,021 Business-type activities:Investment earnings211,093 95,127 215,769 201,159 366,596 378,828 171,804 67,182 71,486 12,338 Transfers(225,000) (175,000) (1,388,000) (800,000) (500,000) (992,150) - - (15) (207,000) Total business-type activities106,496 (56,228) (1,172,231) (598,841) (133,404) (613,322) 171,804 67,182 71,471 (194,662) Total primary government25,336,086 23,659,263 28,752,144 30,890,939 36,628,171 36,557,192 37,738,014 33,034,560 39,324,309 39,113,359 Change in Net AssetsGovernment activities(7,238,346) (1,874,646) 3,640,100 3,286,492 10,541,106 9,491,072 4,949,622 (70,628) 1,446,744 1,498,413 Business-type activities860,853 697,513 (1,351,407) 181,169 655,732 488,421 1,151,996 766,560 704,779 325,410 Total primary government(6,377,493)$ (1,177,133)$ 2,288,693$ 3,467,661$ 11,196,838$ 9,979,493$ 6,101,618$ 695,932$ 2,151,523$ 1,823,823$ (1) Replaced the reduced motor vehicle license fee (an intergovernmental revenue) in 2005.(2) The 2006 state take-away of sales taxes, property taxes, and vehicle license fees is reported in this category.(3) Asset transfer to Successor to Redevelopment Agency fiduciary trust in 2012.
20032004200520062007200820092010General FundReserved3,782,689$ 3,897,270$ 3,864,969$ 2,931,046$ 2,711,586$ 2,668,914$ 2,325,283$ 2,308,290$ Unreserved13,099,033 12,632,286 18,313,846 23,866,568 23,634,874 16,997,569 19,871,574 13,622,828 Total General Fund16,881,722 16,529,556 22,178,815 26,797,614 26,346,460 19,666,483 22,196,857 15,931,118 All Other Governmental FundsReserved20,891,656 9,784,645 2,701,067 4,925,900 8,555,042 11,240,851 4,180,483 5,465,423 Unreserved, reported in:Special Revenue Funds3,976,517 3,736,446 3,618,814 6,249,004 6,844,632 7,270,331 3,692,187 5,113,020 Capital Project Funds6,576,208 2,236,730 1,663,033 (1,208,341) (472,405) 7,631,866 968,077 3,788,810 Total All Other Governmental Funds31,444,381 15,757,821 7,982,914 9,966,563 14,927,269 26,143,048 8,840,747 14,367,253 Total Governmental Funds48,326,103$ 32,287,377$ 30,161,729$ 36,764,177$ 41,273,729$ 45,809,531$ 31,037,604$ 30,298,371$ 2011 (1)2012General FundNonspendable1,023,950$ 1,003,438$ Restricted663,254 695,564 Assigned14,739,394 17,729,297 Unassigned3,380,279 6,669,379 Total General Fund19,806,877 26,097,678 All Other Governmental FundsNonspendable615,000 - Restricted6,314,106 6,877,301 Assigned4,303,822 3,646,073 Total All Other Governmental Funds11,232,928 10,523,374 Total Governmental Funds31,039,805$ 36,621,052$ (1)The City implemented GASB Statement No. 54 under which governmental fund balances are reported as nonspendable, restricted, assigned and unassigned compared to reserved and unreserved.Fiscal Year Ended June 30CITY OF CUPERTINOFund Balances of Governmental FundsLast Ten Fiscal Years(Modified accrual basis of accounting)(Unaudited)
2003200420052006200720082009201020112012RevenuesTaxes20,200,250$ 21,004,405$ 23,614,623$ 25,616,553$ 28,903,993$ 34,589,139$ 36,395,950$ 30,994,583$ 37,582,299$ 40,265,944$ Use of money and property1,910,503 940,963 1,119,399 1,607,837 2,169,977 2,490,444 1,300,508 774,219 792,035 661,602 Intergovernmental6,318,523 7,236,955 5,567,266 5,896,167 8,200,519 8,285,280 6,896,394 7,539,835 3,543,641 2,678,888 Licenses and permits1,410,572 1,540,760 2,896,000 3,614,953 3,325,844 2,656,017 2,740,463 2,583,131 2,901,944 2,900,936 Charges for services855,844 930,050 1,568,935 2,143,729 2,062,067 1,728,099 1,707,533 1,701,157 2,311,216 3,273,946 Fines and forfeitures550,377 723,748 559,791 629,586 926,310 722,087 761,320 736,239 695,666 661,899 Other59,219 1,009,260 1,792,795 245,176 154,235 95,388 80,835 689,941 73,881 264,302 Total revenues31,305,288 33,386,141 37,118,809 39,754,001 45,742,945 50,566,454 49,883,003 45,019,105 47,900,682 50,707,517 ExpendituresCurrent:Administration1,474,924 1,222,581 1,162,096 1,236,390 1,287,101 1,351,273 1,336,921 1,469,004 1,528,070 1,533,070 Law enforcement6,015,036 5,950,849 6,144,695 6,499,911 6,975,517 7,456,661 8,133,168 8,384,310 8,434,885 8,445,917 Public and environmental affairs703,431 686,798 758,314 853,484 1,121,437 1,169,247 1,486,443 1,487,265 1,497,263 1,659,856 Administrative services3,475,991 3,758,806 3,671,303 4,103,497 3,715,994 3,797,156 3,634,043 3,733,414 3,695,076 4,103,982 Recreation services2,104,167 2,141,431 2,121,366 2,302,995 2,403,296 3,745,244 3,789,260 4,003,764 4,117,477 4,319,983 Community development3,177,406 2,563,242 3,156,908 4,467,655 3,969,837 3,931,055 5,841,428 4,125,739 5,693,541 4,762,229 Public works10,440,335 9,322,086 9,637,314 10,386,055 10,477,727 11,137,935 11,914,584 11,961,218 12,234,726 12,528,194 Capital outlay6,812,856 20,246,237 10,025,935 2,771,502 4,292,169 8,334,093 22,262,369 4,710,360 5,281,927 3,523,047 Debt service:Principal repayment6,925,948 1,220,000 1,245,000 1,270,000 1,295,000 1,355,000 1,415,000 1,460,000 1,500,000 - Interest and fiscal charges2,939,757 2,317,837 2,289,526 2,262,913 2,239,657 2,183,403 2,118,714 2,076,264 2,032,464 1,837,655 Payment to refunded debt escrow agent39,208,286 - - - - - - - - 44,897,800 Total expenditures83,278,137 49,429,867 40,212,457 36,154,402 37,777,735 44,461,067 61,931,930 43,411,338 46,015,429 87,611,733 Excess (deficiency) of revenues over(under) expenditures(51,972,849) (16,043,726) (3,093,648) 3,599,599 7,965,210 6,105,387 (12,048,927) 1,607,767 1,885,253 (36,904,216) Other Financing Sources (Uses)Bond proceeds57,677,519 - - - - - - - - 44,823,839 Proceeds from sale of capital assets- - - 2,422,849 1,663,842 - - - 1,055,449 421 Transfers in25,775,538 4,765,307 7,904,763 8,364,084 9,658,000 19,136,165 5,035,925 7,788,417 5,684,483 6,484,426 Transfers out(25,840,538) (4,760,307) (6,936,763) (7,784,084) (14,777,500) (20,705,750) (7,758,925) (10,135,417) (7,883,751) (7,692,426) Total other financing sources57,612,519 5,000 968,000 3,002,849 (3,455,658) (1,569,585) (2,723,000) (2,347,000) (1,143,819) 43,616,260 Extraordinary ItemAssets transferred to Successor Agencies- - - - - - - - - (1,130,797) Change in fund balances5,639,670$ (16,038,726)$ (2,125,648)$ 6,602,448$ 4,509,552$ 4,535,802$ (14,771,927)$ (739,233)$ 741,434$ 5,581,247$ Debt service as a percentage ofnoncapital expenditures (1)64.2% 12.1% 11.7% 10.6% 10.6% 9.8%8.9% 9.1% 8.7% 55.6%(1) Noncapital expenditures is total expenditures less capital assets added each year to statement of net assets.(Modified accrual basis of accounting)(Unaudited)Fiscal Year Ended June 30CITY OF CUPERTINOChanges in Fund Balances of Governmental FundsLast Ten Fiscal Years
Total Assessed &Direct
Total SBE Secured Est. Full Market Tax
Fiscal Year Secured (a)Unsecured (a)NonUnitary Exemptions Valuation (a)Rate
2003 8,119,969,820 565,212,987 332,959 75,795,294 8,685,515,766 1.69%
2004 8,689,558,802 530,097,614 223,580 80,704,482 9,219,879,996 1.73%
2005 9,159,184,070 367,378,773 278,536 80,678,889 9,526,841,379 1.66%
2006 9,942,314,157 350,391,447 259,809 88,612,732 10,292,965,413 4.37%
2007 10,794,991,704 381,307,801 213,610 94,957,979 11,176,513,115 5.74%
2008 11,512,949,952 417,564,226 - 96,690,910 11,930,514,178 5.87%
2009 12,637,622,059 533,413,208 1,390,000 99,950,894 13,172,425,287 6.26%
2010 12,979,346,158 564,277,611 1,390,000 99,947,559 13,545,013,769 6.51%
2011 13,017,910,372 476,332,025 1,390,000 96,704,811 13,495,632,397 6.51%
2012 13,219,574,367 527,310,319 1,390,000 96,081,912 13,748,274,686 6.24%
(a) Net of exemptions
Source: HdL, Coren & Cone
CITY OF CUPERTINO
Assessed and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
(Unaudited)
$0
$2
$4
$6
$8
$10
$12
$14 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Billions Secured Property Unsecured Property
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Basic Levy1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 - - - - - - - 0.0122 0.0095 0.0047 County Library Retirement Levy0.0024 0.0024 0.0024 0.0024 0.0024 0.0024 0.0024 0.0024 0.0024 0.0024 County Retirement Levy0.0388 0.0388 0.0388 0.0388 0.0388 0.0388 0.0388 0.0388 0.0388 0.0388 Cupertino Elementary0.0329 0.0357 0.0360 0.0350 0.0289 0.0337 0.0306 0.0312 0.0308 0.0290 El Camino Hopital 2003- - - - 0.0129 0.0129 0.0129 0.0129 0.0129 0.0129 Foothill/DeAnza College 19990.0108 0.0110 0.0129 0.0119 0.0346 0.0113 0.0123 0.0322 0.0326 0.0297 Fremont High0.0246 0.0249 0.0268 0.0260 0.0243 0.0241 0.0339 0.0306 0.0365 0.0415 Los Gatos/Saratoga High 19980.0530 0.0417 0.0409 0.0371 0.0351 0.0345 0.0330 0.0352 0.0377 0.0381 Santa Clara Unified0.0252 0.0263 0.0344 0.0861 0.0797 0.0271 0.0743 0.0701 0.0519 0.0836 Santa Clara Valley Water District0.0072 0.0087 0.0092 0.0078 0.0072 0.0071 0.0061 0.0074 0.0072 0.0064 Saratoga Elementary0.0387 0.0385 0.0361 0.0356 0.0351 0.0363 0.0363 0.0388 0.0437 0.0444 West Valley College 2004- - - 0.0140 0.0126 0.0118 0.0032 0.0140 0.0139 0.0074 West Valley College Bond 2004 (Bab)- - - - - - - - - 0.0063 Total Direct & Overlapping Rates 1.2336 1.2280 1.2375 1.2947 1.3116 1.2400 1.2838 1.3258 1.3179 1.3452 City's Share of 1% Levy0.02236 0.02234 0.02234 0.04343 0.05725 0.05706 0.05661 0.05641 0.05644 0.05650 Redevelopment Rate1.04840 1.04990 1.05040 1.04900 1.04840 1.04830 1.04730 1.04860 1.04840 1.04760 Total Direct Rate0.01687 0.01726 0.01664 0.04374 0.05742 0.05870 0.06263 0.06510 0.06507 0.06238Source: HdL, Coren & Cone(Per $100 Assessed Valuation)(Unaudited)County Bond 2008 Hospital FacilityCITY OF CUPERTINOProperty Tax RatesAll Overlapping GovernmentsLast Ten Fiscal Years
2012Percentage of2003Percentage ofAssessed Total Assessed Assessed Total AssessedValuationValuationValuationValuationApple Inc.916,229,008$ 6.66%244,260,894$ 2.81%Campus Holdings Inc.403,586,555 2.94%- - Hewlett Packard- - 371,029,334 4.27%Tandem Computers Inc.- - 236,815,869 2.73%Vallco Shopping Mall LLC92,759,700 0.67%- - Cupertino City Center Buildings- - 74,584,523 0.86%Sumitomo Bank Leasing and Financing- - 73,427,002 0.85%Cupertino Property LP- - 72,800,000 0.84%Irvine Company LLC71,194,693 0.52%- - Teachers Insurance & Annuity- - 65,767,795 0.76%ECI Two Results LLC64,836,485 0.47%- - RWC LLC- - 64,305,598 0.74%Irvine Apartment Commons LP- - 62,633,713 0.72%Rocktino Fee LLC61,822,271 0.45%- - Ridgeview Court Associates- - 55,664,911 0.64%Berg Family Partners LP55,010,687 0.40%- - Cupertino Village LP54,910,380 0.40%- - 500 Forbes LLC54,850,604 0.40%- - Villa Serra Apartments54,556,471 0.40%- - Total1,829,756,854$ 13.31%1,321,289,639$ 15.22%Source: HdL, Coren & ConeTaxpayerCITY OF CUPERTINOPrincipal Property TaxpayersCurrent Year and Nine Years Ago(Unaudited)
Percent ofPercent Delinquent Total Total TaxFiscal Total Current Tax of Levy Tax Tax CollectionsYear Tax Levy Collections Collected (1) Collections (1) Collections to Tax Levy2003 4,126,687 4,126,687 100.00% - 4,126,687 100.00%2004 4,021,029 4,021,029 100.00% - 4,021,029 100.00%2005 4,312,914 4,312,914 100.00% - 4,312,914 100.00%2006 4,914,487 4,914,487 100.00% - 4,914,487 100.00%2007 6,717,048 6,717,048 100.00% - 6,717,048 100.00%2008 7,162,177 7,162,177 100.00% - 7,162,177 100.00%2009 8,703,093 8,703,093 100.00% - 8,703,093 100.00%2010 8,760,881 8,760,881 100.00% - 8,760,881 100.00%2011 8,497,119 8,497,119 100.00% - 8,497,119 100.00%2012 7,681,925 7,681,925 100.00% - 7,681,925 100.00%(1) Per the Teeter Plan, the City receives 100% of the tax levy, while the County receives delinquencies and penalties.Source: City of CupertinoCITY OF CUPERTINOProperty Tax Levies and CollectionsLast Ten Fiscal Years(Unaudited)
Percentage of Estimated % ofFiscal Certificates Actual Market Value PersonalYear of Participation of Taxable Property Per Capita Income 2003 54,770,000 0.63% 1,055 2.40%2004 53,550,000 0.58% 1,033 2.26%2005 52,305,000 0.55% 995 2.01%2006 51,035,000 0.50% 963 1.82%2007 49,740,000 0.45% 929 1.60%2008 48,385,000 0.41% 886 1.44%2009 46,970,000 0.36% 853 1.36%2010 45,510,000 0.34% 815 1.36%2011 44,010,000 0.33% 755 1.70%2012 43,940,000 0.32% 744 1.56%Source: City of CupertinoCITY OF CUPERTINORatios of Outstanding Debt by TypeLast Ten Fiscal Years(Unaudited)
13,748,759,628$
(83,317,937)
13,665,441,691$
Total Debt %City’s Share of
6/30/2012 Applicable (1) Debt 6/30/12
Santa Clara County 316,800,000$ 5.092% 16,131,456$
Foothill-DeAnza Community College District 628,424,288 13.865% 87,131,028
West Valley Community College District 210,961,930 0.641% 1,352,266
Santa Clara Unified School District 441,095,000 2.050% 9,042,448
Fremont Union High School District 260,605,108 29.932% 78,004,321
Cupertino Union School District 120,672,535 48.980% 59,105,408
El Camino Hospital District 142,280,000 1.393% 1,981,960
Santa Clara Valley Water District Benefit Assessment 133,440,000 5.092% 6,794,765
Total Overlapping Tax and Assessment Debt 2,254,278,861 259,543,651
Total Overlapping Tax and Assessment Debt 1.89%
Overlapping Debt:
Santa Clara County General Fund Obligations 770,947,000 5.092% 39,256,621$
Santa Clara County Pension Obligations 383,034,822 5.092% 19,504,133
Santa Clara County Board of Education COP 11,540,000 5.092%587,617
Foothill-De Anza Community College District COP 18,890,000 13.865% 2,619,099
West Valley-Mission Community College District General Fund Obligations 65,715,000 0.641%421,233
Santa Clara Unified School District COP 12,980,000 2.050%266,090
Santa Clara County Vector Control District COP 3,630,000 5.092%184,840
Midpeninsula Regional Open Space Park District COP 138,474,717 7.780% 10,773,333
Subtotal Overlapping General Fund Debt 1,405,211,539 73,612,965
Direct Debt: City of Cupertino Certificates of Participation 43,940,000 100.000% 43,940,000
Total Direct and Overlapping General Fund Debt 1,449,151,539 117,552,965
Combined Total Debt 3,703,430,400$ 377,096,616$ (2)
Ratios to Adjusted Assessed Valuation:
Total Direct Debt ($43,940,000)0.32%
Combined Total Debt 2.76%
-$
(1)
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and
non-bonded capital lease obligations.
June 30, 2012
Direct and Overlapping Bonded Debt
CITY OF CUPERTINO
Percentage of overlapping agency's assessed valuation located within boundaries of the city.
Ratios to 2011-12 Assessed Valuation:
State School Building Aid Repayable as of 6/30/12:
Source: MuniServices
Overlapping Tax and Assessment Debt:
(Unaudited)
2011-12 Assessed Valuation
Less: Redevelopment Incremental Valuation
Adjusted Assessed Valuation
Direct and Overlapping General Fund Debt
Total net debtTotal Net Legal applicable to theFiscal Debt Debt Applicable Debt limit as a % ofYear Limit to Limit Margin debt limit2003 325,706,841 - 325,706,841 - 2004 345,745,500 - 345,745,500 - 2005 357,745,500 - 357,256,552 - 2006 376,159,758 - 376,159,752 - 2007 408,373,114 - 408,373,114 - 2008 431,735,623 - 431,735,623 - 2009 473,910,827 - 473,910,827 - 2010 486,725,480 - 486,725,480 - 2011 488,171,639 - 488,171,639 - 2012 495,734,039 - 495,734,039 - Debt Limit:Secured property assessed value, net of exempt real property13,219,574,367$ Adjusted valuation - 25% of assessed valuation3,304,893,592 Debt limit - 15% of adjusted valuation495,734,039 Amount of Debt Subject to Limit:Total Bonded Debt43,940,000 Less: Certificates of Participation not subject to debt limit(43,940,000) Amount of debt subject to limit- Legal Debt Margin495,734,039 Source: City of CupertinoNote: The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value. Effective with the 1981-82 fiscal year, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the time that the legal debt margin was enacted by the State of California for local governments located within the state.CITY OF CUPERTINO(Unaudited)Last Ten Fiscal YearsLegal Debt Margin Information
Ratio of GeneralFiscal Assessed General Bonded Debt Bonded Debt toYear Population Value Bonded Debt Per Capita Assessed Value2003 51,910 8,685,515,766 - - - 2004 51,858 9,219,879,996 - - - 2005 52,590 9,526,841,379 - - - 2006 53,012 10,292,965,413 - - - 2007 53,549 11,176,513,115 - - - 2008 54,584 11,930,514,178 - - - 2009 55,045 13,172,425,287 - - - 2010 55,838 13,545,013,769 - - - 2011 58,302 13,495,632,397 - - - 2012 59,022 13,748,274,686 - - - Sources: HdL, Coren & Cone City of CupertinoCITY OF CUPERTINORatio of General Bonded DebtLast Ten Fiscal Years(Unaudited)
% of % of Population Population CityCity Per Capita School Over 25 with Over 25 with Calendar City County Population Personal Personal Enrollment Unemployment Median High School Bachelor'sYear Population Population % of County Income Income Grades 9-12 Rate Age (1) Degree (1) Degree (1)2002 51,910 1,675,915 3.10% $2,278,527,000 $43,8949,108 5.4% ---2003 51,858 1,656,128 3.13% $2,368,206,000 $45,6679,147 5.4% ---2004 52,590 1,759,585 2.99% $2,595,892,000 $49,3619,138 4.1% ---2005 53,012 1,773,258 2.99% $2,805,559,000 $52,9239,875 3.4% ---2006 53,549 1,794,522 2.98% $3,117,408,000 $58,2169,823 2.8% ---2007 54,584 1,748,976 3.12% $3,369,668,000 $61,734 10,300 3.0% ---2008 55,045 1,857,621 2.96% $3,442,884,000 $62,547 10,300 3.8% ---2009 55,838 1,800,876 3.10% $3,350,250,000 $59,999 10,350 7.2% 40.5 96.5% 69.3%2010 58,302 1,781,642 3.27% $2,586,120,000 $44,357 10,365 7.3% 39.1 96.3% 72.6%2011 59,022 1,809,378 3.26% $2,818,655,000 $47,756 10,625 6.3% 39.2 97.0% 74.7%(1) New statistic available in 2009Sources: HdL, Coren & Cone Fremont Union High School DistrictUS Census BureauCITY OF CUPERTINODemographic and Economic StatisticsLast Ten Calendar Years(Unaudited)
PercentagePercentageNumber of of Total City Number of of Total CityEmployerEmployees Employment Employees EmploymentApple Inc.13,000 13.0%6,000 8.4%Hewlett-Packard3,000 3.0%4,682 6.6%Cupertino Union School District1,474 1.5%1,500 2.1%Foothill/DeAnza Community College District1,291 1.3%1,200 1.7%Fremont Union High School District846 0.8%735 1.0%Symantec- - 400 0.6%Sears(a)- 294 0.4%Chordiant Software285 0.3%- - Trend Micro Inc.250 0.3%- - Health Care Center at The Forum250 0.3%- - Target Stores220 0.2%270 0.4%Cupertino Healthcare and Wellness180 0.2%- - Honeywell-Measurex- - 220 0.3%JCPenney(a)- 200 0.3%(a) Employer located in city in 2012, but not ranked in the top ten for number of employees.Sources: InfoUSA.com Cupertino Union School District Fremont Union High School District Foothill/DeAnza Community College District CA Employment Development Department Labor Market Information US Census BureauCity of CupertinoFiscal Year 2012 Fiscal Year 2003CITY OF CUPERTINOPrincipal EmployersCurrent Year and Nine Years Ago (Unaudited)
Function/Program2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Council/Commissions 0.80 0.80 0.80 0.80 1.40 1.40 1.40 1.47 1.46 1.47Administration 4.90 4.65 4.70 4.70 4.30 4.30 4.85 4.90 4.85 5.05Public & Environmental Affairs 4.40 4.40 4.40 4.40 5.55 6.50 7.45 6.95 6.95 6.95Administrative Services 20.30 20.30 20.35 20.35 21.63 21.88 22.33 22.33 22.34 22.48Parks & Recreation 32.63 33.13 32.13 32.13 31.96 31.76 30.77 30.78 30.78 29.78Community Development / RDA 20.75 20.75 21.15 21.15 22.78 23.78 23.78 23.73 23.78 23.43Public Works 70.22 70.22 71.22 71.22 71.13 71.13 72.17 72.59 72.59 73.59 Total 154.00 154.25 154.75 154.75 158.75 160.75 162.75 162.75 162.75 162.75Source: City of Cupertino BudgetCITY OF CUPERTINOFull-Time Equivalent City Employees by Function/ProgramLast Ten Fiscal Years(Unaudited)0204060801001201401601802003 2004 2005 2006 2007 2008 2009 2010 2011 2012Public WorksCommunity Development /RDAParks & RecreationAdministrative ServicesPublic & Environmental AffairsAdministrationCouncil/Commissions
2005 (a)2006200720082009201020112012Public Safety Sheriff ResponsePriority One5.37 Min. 4.94 Min. 4.94 Min. 5.83 Min. 3.88 Min. 3.95 Min. 4.49 Min. 4.84 Min.Priority Two8.61 Min. 8.09 Min. 7.15 Min. 7.95 Min. 5.94 Min. 5.90 Min. 5.76 Min. 6.44 Min.Priority Three18.92 Min. 16.74 Min. 15.82 Min. 15.73 Min. 9.40 Min. 9.77 Min. 9.79 Min. 10.62 Min.Public WorksStreet Sweeping696 Curb Miles 696 Curb Miles 696 Curb Miles 696 Curb Miles 696 Curb Miles 696 Curb Miles 696 Curb Miles 575 Curb MilesStreet Maintenance 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call 24 Hrs of Call 24 Hrs of CallCulture & RecreationTeen Center Memberships441550510444400447492576Sports Center Memberships9161,0211,3361,4191,7001,3851,5981,776Senior Center Memberships2,0003,1001,9352,1102,2432,2872,3872,470Local Resident Rentals at Blackberry Farm (b)----2891120135Quinlan Community Center Rental Revenue (b)----$80,000 $71,000 $91,000 $133,000Community DevelopmentApproved Building Plan Sets Within 5 Days Within 5 Days Within 5 Days Within 5 Days91% Within 5 Days 96% Within 5 Days 97% Within 5 Days 93% Within 5 DaysDiscretionary Land Use Applications Within 21 Days Within 21 Days Within 21 Days Within 21 Days95% Within 21 Days 100% Within 21 Days 100% Within 21 Days 99% Within 21 DaysPublic Notice of Upcoming ProjectsWithin 10 Days Within 10 Days Within 10 Days Within 10 Days100% Within 10 Days 100% Within 10 Days 100% Within 10 Days 100% Within 10 DaysAdministrative ServicesAccounts Payable Processing 5 Days 5 Days 5 Days 5 Days 5 Days 5 Days 5 Days 7 DaysBusiness License Renewal Certificates 3 Days 3 Days 3 Days 3 Days 3 Days 3 Days 3 Days 3 DaysDuplication Requests 1 Day 1 Day 1 Day 1 Day 1 Day 1 Day By Request Date By Request Date(a) First year of available information (b) New operating indicatorSource: City of CupertinoFunction/ProgramCITY OF CUPERTINOOperating Indicators by Function/ProgramLast Eight Fiscal Years(Unaudited)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Public WorksMiles of Streets 450 450 450 450 450 450 450 450 450 450 Streetlights2,950 2,950 2,950 2,950 2,950 2,950 2,950 2,950 2,950 2,950 Traffic Signals39 39 39 39 39 39 39 39 39 39 Culture & RecreationCity Parks17 17 17 17 17 17 17 18 19 19City Park Acreage150.8 150.8 150.8 150.8 150.8 150.8 150.8 151.4 152.01 152.01City Trails1111111111Golf Courses1111111111Boathouse1111111111Community Center1111111111Community Hall0011111111Senior Center1111111111Sports Center1111111111Swimming Pools1111111111Tennis Courts17 17 17 17 17 17 17 17 17 17Sports Fields1111111111City Library1111111111Source: City of CupertinoFunction/ProgramCITY OF CUPERTINOCapital Asset Statistics by Function/ProgramLast Ten Fiscal Years(Unaudited)
COMMUNITY
PROFILE
History
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 13th
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.
2012 Community Economic Profile
Cupertino, with a population of 59,022 and city limits stretching across 13 square miles, is considered to be one of the San
Francisco Bay Area’s most prestigious cities in which to live and work.
Economic health is an essential component to maintaining a balanced city, which provides high-level opportunities, and
services that create and help sustain a sense of community and quality of life. Public and private interests must be mutual
so that our success as a partnership is a direct reflection of our success as a community. The cornerstone of this
partnership is a cooperative and responsive government that fosters business and residential prosperity and strengthens
working relationships among all sectors of the community.
Our economic development strategies are tailored to address the specific needs of Cupertino. Because this is a mature,
and 90% built-out city, the focus is on business retention and revitalization. Business recruitment is site specific and
targeted to industries that enhance, rather than draw from, our existing business base.
Cupertino is home to many well-known high-tech companies, and offers a dynamic and exciting business climate. Apple
Inc., Verigy, Durect Corporation, and Seagate are headquartered in the city. DeAnza College, one of the largest single-
campus community colleges in the country, is another major employer.
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 active outreach and an
entitlement process that is responsive and customer oriented.
The Vallco shopping center includes Macy’s, JCPenney, and Sears as anchors and features many exciting entertainment
and eating venues. Shoppers can enjoy the latest shows at the AMC 16-screen theater, skating at the mall’s full-size ice
rink, and bowling at the chic and upscale Bowl Mor Lanes. They can begin or top off the evening with fine dining at the
critically-acclaimed Alexander’s Steakhouse or enjoy more casual cuisine at TGI Friday’s, Benihana’s, Dynasty Seafood
Restaurant, Fresh Choice, and the international food court. The city features many other stores and over 160 restaurants to
serve the local workforce and residents.
Four hotels occupy the city: Hilton Garden Inn, Marriott Courtyard, Cupertino Inn and the Cypress Hotel, operated by
the Kimpton Group. A fifth hotel with 123 rooms is under construction on DeAnza Boulevard.
The City of Cupertino has a history of providing high-level municipal services to complement the sense of community
and quality of life enjoyed by our constituents. The City will continue to enhance and promote a strong local economy to
provide municipal services that make Cupertino a place that people are proud to call home.
2012 City Profile
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 Tuesday at 6:45 p.m. in the Community Hall.
The City has 163 authorized full-time benefited employee positions. City departments include Administration (City
Council, commissions, city manager, city attorney); Administrative Services (finance, human resources, information
technology, city clerk, neighborhood watch, emergency preparedness, code enforcement); Community Development
(planning, building, and economic development); Parks and Recreation; Public Works (engineering, maintenance,
transportation, solid waste, and storm drain management); and Public and Environmental Affairs. Police service is
provided by the Santa Clara County Sheriff’s Department, and fire service is provided through the 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, teen, economic
development, strategic planning, 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; The City Channel, Cupertino’s
government access cable TV channel; and the city’s website.
Housing
The average sales price of an existing single-family home is
$1,198,720 as of 2012.
Community Health Care Facilities
Cupertino is served by the Cupertino Medical Clinic,
NovaCare Occupational Health Services. Nearby hospitals
include Kaiser Permanente Medical Center in Santa Clara,
El Camino Hospital in Mountain View, O’Connor Hospital
in San Jose, Community Hospital of Los Gatos, Stanford
Hospital in Palo Alto, and the Saratoga Walk-in Clinic in
Saratoga.
Utilities
Gas & Electric – Pacific Gas and Electric, 800-743-5000.
Phone – AT&T, residential service, 800-894-2355;
business service, 800-750-2355.
Cable – Comcast, 800- 945-2288.
Solid Waste & Recycling – Recology, 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 Government 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: Cupertino 1%, State General Fund
3.9375%, State and Local Revenue Fund 1.0625%, State
Local Public Safety 0.5%, State Local Revenue 0.5%,
County Transportation 0.25%, Local District (Valley
Transportation Authority) 1.125%. Grand Total = 8.375%.
Assessed Valuation: (Secured and Unsecured)
Cupertino: $14,620,390,341 (7/1/12)
County: $308,808,219,666 (7/1/12)
Transportation
Rail – CalTrain service to Gilroy and San Francisco, with
local station four miles north of city; Amtrak station is 10
miles south.
Air –Mineta San Jose International Airport 11 miles south;
San Francisco International Airport 30 miles north.
Bus – Santa Clara Valley Transportation Authority.
Highways – Interstate Route 280, State Route 85.
Community Statistics
Facts and Figures
Population in City Limits 59,022
Median Household Income $131,517
Median Age 39
Registered Voters 25,934
Democrats 9,507
Republicans 5,479
American Independent 367
Other 297
No Political Party designated 10,284
Top 40 Sales Tax Producers
First Quarter 2012
(In Alphabetical Order)
Alexander’s Steakhouse JC Penney Sears
Apple Inc. Jo-Ann Fabrics Shane Diamond Jewelers
Argonaut Window & Door Joy Luck Place Shell Service Station
Benihana of Tokyo Macy’s Staples
BJ’s Bar & Grill Marina Foods Symantec
California Dental Arts Michael’s Arts & Crafts Target
Chevron Service Stations Mirapath TJ Maxx
Cupertino Smog Pros Mobil Service Stations Union 76 Service Station
CVS Pharmacy Outback Steakhouse US Gas Service Station
DeAnza College Campus Center Ricoh Corp. Valero Service Station
Dynasty Restaurant Rohde & Schwarz Verigy
Elephant Bar Rotten Robbie Service Station Verizon Wireless
Hewlett-Packard Ranch 99 Market
Insight Direct Scandinavian Designs
Demographic Information
Asian 63.3%
White, non-Hispanic 31.3%
Hispanic or Latino 3.6%
Black or African American 0.6%
American Indian/Alaska Native 0.2%
Native Hawaiian/Other Pacific
Islander
0.1%
Other .6%
Community and Recreation Services
Blackberry Farm
Blackberry Farm has been upgraded and restored to
improve the natural habitat for native trees, animals, and
fish. Improvements to the park include construction of a
new ticket kiosk, re-plastered pools, a new water slide,
bocce ball, horseshoe courts, and numerous upgrades to
the west bank picnic area. The park is located at 21979
San Fernando Avenue. Telephone: 408-777-3140.
The Blackberry Farm golf course is located at 22100
Stevens Creek Boulevard. Telephone: 408-253-9200.
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 - a multi-
purpose room that can accommodate 300 people in a
banquet format. Telephone: 408-777-3120.
Cupertino Sports Center
The Sports Center is a great place to meet friends. The
facility features 17 tennis courts, complete locker room
facilities, and a fully equipped fitness center featuring
free weights, Cybex, and cardio equipment. A teen
center is also included as well as a child watch center.
The center is located at the corner of Stevens Creek
Boulevard and Stelling Road. Telephone: 408-777-
3160.
Cupertino Senior Center
The Senior Center provides a welcome and friendly
environment for adults over age 50. There is a full
calendar of opportunities for learning, volunteering, and
enjoying life. There are exercise classes, a computer lab
and classes, language instruction including English as a
second language, and cultural and special interest
classes. The center also coordinates trips and socials.
The Senior Center is located at 21251 Stevens Creek
Boulevard and is open Monday through Friday 8 a.m. to
5 p.m. Telephone: 408-777-3150.
Civic Center and Library
The complex has a 6,000 square foot Community Hall,
plaza with fountain, trees and seating areas. City Council
meetings are held in the Community Hall as well as
Planning Commission and Parks and Recreation
Commission sessions.
The 54,000 square foot library continues to be one of the
busiest in the Santa Clara County Library system. For
more information call 408-446-1677.
McClellan Ranch Park
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: 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. 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.
Education
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 18,000 students in a 26 square mile area that
includes Cupertino and portions of five other cities. The district has 20 elementary schools
and five 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 scores 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 10,000 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. Many high schools in the district exceed their established achievement targets for the State
Academic Performance Index. 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, they are recognized with a “Community Service Award” medal that may be worn during their graduation
ceremonies.
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.
Cupertino is served by two local
institutions of higher education:
DeAnza College and the University
of San Francisco. In addition to
these schools, Cupertino’s location
offers easy access to Stanford
University, Santa Clara University
and San Jose State University.
Things to do and See
Euphrat Museum of Art
The highly regarded Euphrat Museum of Art, at its new location next to the new Visual Arts and Performance Center at
DeAnza College, 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 10 a.m. – 3 p.m. Monday through Thursday. Telephone: 408-864-
5464.
Fujitsu Planetarium
Stargazers have a Cupertino facility catering to their interests, the Fujitsu 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. For more information, visit the website at http://planetarium.deanza.edu 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. Tuesday through Friday and one and one half hours 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. On
March 30, 1990, the Society opened the Cupertino Historical Museum dedicated to the preservation and exhibition of the
city’s history. 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. Stelling Road. Telephone: 408-973-1495.
Farmers’ Market
Residents and visitors can visit the farmers’ market every
Friday from 9:00 a.m. to 1:00 p.m. at the Vallco Shopping
Mall parking lot behind JCPenney.
California History Center
The California History Center and Foundation is located on the DeAnza
College campus. The center has published 37 volumes on California history and has a changing exhibit program. The
center’s Stocklmeir Library Archives boasts a large collection of books, a pamphlet file, oral history tapes, videotapes and
a couple thousand student research papers. The library’s collection is for reference only. Heritage events focusing on
California’s cultural or natural history are offered by the center each quarter. For more information, call 408-864-8987.
The center is open September through June 9:30 a.m. to noon and 1:00 p.m. to 4:00 p.m. Tuesday through Thursday.