HomeMy WebLinkAboutFY 2015 Sunriver Service District.pdf Financial Statements
As of and For the Year Ended June 30, 2015
Sunriver Service District
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Sunriver Service District
Table of Contents
June 30, 2015
IndependentAuditor's Report.................................................................................................................................... 1
Management's Discussion and Analysis....................................................................................................................4
Financial Statements
Statementof Net Position.................................................................................................................................... 10
Statementof Activities......................................................................................................................................... 11
BalanceSheet—General Fund............................................................................................................................. 12
Statement of Revenues, Expenditures and Changes in Fund Balance—General Fund....................................... 13
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of the
General Fund to the Statement of Activities........................................................................................................ 14
Notesto Financial Statements.............................................................................................................................. 15
Required Supplementary Information
Schedule of Revenues, Expenditures and Changes in Fund Balance—Budget to Actual—General Fund .........41
Schedule of Revenues, Expenditures and Changes in Fund Balance—Budget to Actual—Reserve (Sub-
Fundof General Fund).........................................................................................................................................43
Schedule of Proportionate Share of the Net Pension Liability ............................................................................44
Scheduleof Employer Contributions...................................................................................................................45
Other Supplementary Information
Combining Balance Sheet—General Fund and Reserve Sub-Fund.....................................................................46
Combining Statement of Revenues, Expenditures and Changes in Fund Balance—General Fund and
ReserveSub-Fund................................................................................................................................................47
Scheduleof Property Tax Transactions...............................................................................................................48
Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters
Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards.......49
Audit Comments and Disclosures Required by State Regulations..........................................................................51
Independent Auditor's Report Required by Oregon State Regulations...................................................................52
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Independent Auditor's Report
Deschutes County Commissioners and Managing Board
Sunriver Service District
Sunriver, Oregon
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and the general
fund of Sunriver Service District(the District), as of and for the year ended June 30,2015, and the related
notes to the financial statements,which collectively comprise the District's basic financial statements as
listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounring principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement,whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards,issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the rislcs of inaterial misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity's preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal control. Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
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Opinions
In our opinion,the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities and the general fund of the District, as of June
30, 2015, and the respective changes in financial position for the year then ended in accordance with
accounting principles generally accepted in the United States of America.
Emphasis of a Matter—Adoption of New Accounting Standard
As described in Notes 1 and 9 to the financial statements, the District adopted the provisions of GASB
Statement No. 68,Accounting and Financial Reporting for Pensions and GASB Statement No. 7l,
Pension Transition for Contributions Made Subsequent to the Measurement Date,which has resulted in a
restatement of the net position as of July O1, 2014. Our opinions are not modified with respect to this
matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's
Discussion and Analysis, Schedule of Employer's Share of Net Pension Liability and Schedule of
Employer Contributions, Schedule of Revenues, Expenditures and Changes in Fund Balance—Budget to
Actual—General Fund and Reserve Fund(Budgetary Schedules) and as listed in the table of contents,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 the
Management's Discussion and Analysis, Schedule of Employer's Share of Net Pension Liability and
Schedule of Employer Contributions in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management's responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic
financial statements. We do not express an opinion or provide any assurance on the Management's
Discussion and Analysis, Schedule of Employer's Share of Net Pension Liability or Schedule of
Employer Contributions 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 collectively
comprise the District's basic financial statements. The budgetary schedule described above is the
responsibility of management and was derived from and relate directly to the underlying accounting and
other records used to prepare the basic financial statements. The budgetary schedule has been subjected to
the auditing procedures applied in the audit of the basic financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting
and other records used to prepare the basic financial statements or to the basic financial statements
tbemselves, and other additional procedures in accordance with auditing standards generally accepted in
the United States of America. In our opinion, the budgetary schedule is fairly stated, in all material
respects, in relation to the basic financial statements as a whole.
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Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the District's financial statements. The Combining Balance Sheet and Combining Statement of
Revenues, Expenditures and Changes in Fund Balance for the General Fund and Reserve Sub-Fund
(Combining Schedules) and the Schedule of Property Tax Transactions are presented for purposes of
additional analysis and are not a required part of the financial statements. The Combining Schedules and
Schedule of Property Tax Transactions are the responsibility of management and were derived from and
relates directly to the underlying accounting and other records used to prepare the basic financial
statements. Such infonnation has been subjected to the auditing procedures applied in the audit of the
basic financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in accordance
with auditing standards generally accepted in the United States of America. In our opinion, the
Combining Schedules and Schedule of Property Tax Transactions are fairly stated, in all material
respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated November 19,
2015 on our consideration of the District'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 internal control
over financial reporting or on compliance. That report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the District's internal control over
financial reporting and compliance.
Report on Other Legal and Regulatory Requirements
In accordance with the Minimum Standards ofAudits of Oregon Municipal Corporations, we have issued
our report dated November 19, 2015 on our consideration of the District's compliance with certain
provisions of laws and regulations, including the provisions of Oregon Revised Statutes as specified in
Oregon Administrative Rules. The purpose of that report is to describe the scope of our testing of
compliance and the results of that testing and not to provide an opinion on compliance.
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Boise, Idaho
November 19, 2015
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Sunriver Service District
Management's Discussion and Analysis
June 30, 2015
As management of Sunriver Service District, we offer readers of Sunriver Service District's financial statements
this narrative overview and analysis of the financial activities of Sunriver Service District, for the fiscal year
ended June 30, 2015.
Financial Highlights
• The assets and deferred outflows of resources of Sunriver Service District exceeded its liabilities and
deferred inflows of resources at June 30, 2015,by$3,667,354. Unrestricted net position was $3,026,555.
• As of June 30, 2015, Sunriver Service District's governmental fund reported an ending fund balance of
$3,897,061,which is 86%of total governmental fund Fiscal Year 2014-2015 revenues. Of this amount,
$2,750,051 is unassigned and$1,147,010 is assigned for future expenditures.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to Sunriver Service District's basic financial
statements. These basic financial statements comprise three components: 1) government-wide financial
statements; 2) fund financial statements; and 3)notes to the financial statements. This report also contains other
supplementary information in addition to the basic financial statements themselves.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of Sunriver
Service District's finances, in a manner similar to a private-sector business.
The Statement of Net Position presents information on all of Sunriver Service District's assets and deferred
outflows of resources and liabilities and deferred inflows of resources with the difference reported as net position.
Over time, increases or decreases in net position inay serve as a useful indicator of whether the financial position
of Sunriver Service District is improving or deteriorating.
The Statement of Activities presents information showing how Sunriver Service District's net position changed
during the fiscal year ended June 30, 2015. Changes in net position are reported when the underlying event
giving rise to the change occurs,regardless of the timing of the related cash, or other financial assets, flows. Thus,
revenues and expenses are reported in this statement for some items, for example,property taxes and accrued
vacation that will result in cash flows in future fiscal periods.
Each of these government-wide financial statements, Statement of Net Position and Statement of Activities,
shows the functions of Sunriver Service District that are supported primarily by taxes and inter-governmental
revenues (governmental activities). The governmental activity of Sunriver Service District is public safety.
The government-wide financial statements can be found on pages 10-1 1 of this report.
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Sunriver Service District
Management's Discussion and Analysis
June 30, 2015
A comparison of the summarized government-wide statements to the prior year is as follows:
Statements of Net Position
June 30, 2014
June 30, 2015 (as restated) Change
Assets
Current assets $ 4,226,375 $ 3,502,735 $ 723,640
Noncurrent assets 569,849 - 569,849
Capital assets,net 640,799 844,569 (203,770)
Total assets 5,437,023 4,347,304 1,089,719
Deferred Outflows of Resources 244,597 250,351 (5,754)
Liabilities
Current liabilities 197,887 170,611 27,276
Noncurrentliabilities 716,802 1,873,959 (1,157,157)
Totalliabilities 914,689 2,044,570 (1,129,881)
Deferred Inflows of Resources 1,099,577 - 1,099,577
Net Position
Net investment in capital assets 640,799 844,569 (203,770)
Unrestricted 3,026,555 1,708,516 1,318,039
Total net position $ 3,667,354 $ 2,553,085 $ 1,ll4,269
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Sunriver Service District
Management's Discussion and Analysis
June 30, 2015
Statements of Activities
Year Ended
Year Ended June 30, 2014
June 30, 2015 (as restated) Change
Program revenues
Charges for services $ 194,838 $ 205,903 $ (11,065)
Grant revenue 10,264 4,845 5,419
General revenues
Property taxes 4,227,197 4,112,375 114,822
Investment earnings 23,ll5 17,282 5,833
Miscellaneous 40,167 39,347 820
4,495,581 4,379,752 115,829
Expenses
Public safety 3,381,312 4,122,179 (740,867)
Change in Net Position 1,114,269 257,573 856,696
Net Position, Beginning of Year 2,553,085 3,328,084 (774,999)
Less prior period adjustment for GASB 68 - (1,032,572) 1,032,572
Net Position, End of Year $ 3,667,354 $ 2,553,085 $ 1,114,269
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated
for specific activities or objectives. The District, like other state and local government entities, uses fund
accounting to ensure and demonstrate compliance with finance-related legal requirements. Sunriver Service
District funds are classified as a governmental fund.
Governmental Funds Governmental funds are used to account for essentially the same functions as governmental
activities in the government-wide financial statements. However,unlike the government-wide financial
statements, governmental fund financial statements focus on near-term inflows and outflows of spendable
resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information
may be useful in evaluating a government's near-term financing requirements.
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Sunriver Service District
Management's Discussion and Analysis
June 30, 2015
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is
useful to compare the information presented for governmental funds with similar information presented for
governmental activities in the government-wide financial statements. By doing so, readers may better understand
the long-term impact of the government's near-term financing decisions. A reconciliation from the General Fund
Balance Sheet to the Government-wide Statement of Net Position and a reconciliation from the General Fund
Statement of Revenues, Expenditures and Changes in Fund Balance to the Government-wide Statement of
Activities have been included in this report.
The District reported activity in one governmental fund during the fiscal year ended June 30,20]5. Information
on each of the two sub-funds is shown in the Combining Balance Sheet Accounts and the Combining Schedule of
Revenues, Expenditures and Changes in Fund Balance that is presented as Other Supplementary Information.
The District adopts an annual budget for each of its sub-funds. A budgetary comparison statement has been
provided to demonstrate compliance with the annual budgets.
The Basic General Fund Financial Statements can be found on pages 12-14 of this report.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the
government-wide and fund financial statements. The notes to the financial statements can be found on pages 15-
40 of this report.
Government-wide Financial Analysis
Net position, at a specific point in time, serves as a useful indicator of an entity's financial position. In the case of
Sunriver Service District, assets and deferred outflow of resources exceed liabilities and deferred inflows of
resources by $3,667,354 at June 30, 2015.
Seventeen percent of Sunriver Service District's net position represents its investment in capital assets (equipment
and vehicles). This is a decrease from 33% at June 30, 2014. Sunriver Service District uses these capital assets to
provide services to citizens and these net assets are not available for future spending. Tbe remaining net position
may be used to meet the District's on-going obligations to citizens and creditors.
Governmental Activities
Governmental activities, the only type of activity of Sunriver Service District,resulted in an increase of
$1,114,269 in Sunriver Service District's net position during the fiscal year ended June 30, 2015, which was
$856,696 more than the increase during the prior fiscal year. The largest difference between the two years was an
increase of$114,822 in property tax revenue and a decrease in public safety expenses of$740,867, due to
implementation of the new standard for retirement pension accounting which resulted in a decrease in public
safety expense of$747,442.
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Sunriver Service District
Management's Discussion and Analysis
June 30, 2015
Financial Analysis of the District's Funds
Sunriver Service District uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements.
Governmental fund The focus of Sunriver Service District's governmental fund is to provide information on near-
terin inflows, outflows and balances of spendable resources. Such information is useful in assessing Sunriver
Service District's financing requirements. In particular, unassigned fund balance may serve as a useful measure of
a government's net resources available for spending as of the end of the fiscal year.
As of June 30, 2015, $3,897,061 is the reported ending fund balance for Sunriver Service District's governmental
fund, of which $1,147,010 was held in the General Fund Reserve Sub-Fund and assigned for future majar
equipment replacement and the remaining $2,750,051 was held in the General Fund and was unassigned at June
30, 2015.
General Fund (Operating)Budgetary Highlights
The District transferred appropriations between expenditure categories and from contingency to cover
unanticipated expenditures. General Fund actual revenues exceeded estimated revenues by $121,226, due
primarily to property tax collections being higher than estimated amounts. General Fund expenditures were
$2,284,4801ess than budgeted due to $1,931,115 of unused contingency and fewer expenditures in the personal
services and materials and services categories.
Capital Assets and Debt Administration
Capital Assets
Sunriver Service District's investment in capital assets for its governmental activities as of June 30, 2015, is
$640,799, net of accumulated depreciation,which is a decrease of$203,770 from June 30,2014. Investment in
capital assets is primarily equipment and vehicles. During the fiscal year, the District expended$7,900 for
equipment and recognized$211,670 in depreciation expense. In addition, construction in progress totaled$50,216
on two projects not completed as of June 30, 2015. Tbe two projects relate to improvements to the fire building
and construction of a fire training facility.
Subsequent to the fiscal year ended June 30, 2015,but prior to issuance of the report,the District committed to
purchasing a Pierce Velocity Pumper Truck for a total cost of$643,650, and a commitment to purchase an
ambulance remount with an estimated cost of$179,000.
Additional information on Sunriver Service District's capital assets is included in Note 3.
Long-term Debt
Sunriver Service District has no long-term debt; therefore, the District has not been separately rated by any of the
bond rating agencies.
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Sunriver Service District
Management's Discussion and Analysis
June 30, 2015
Key Economic Factors and Budget Information for the Future
Retirement contribution rates for July 1, 2015 to June 30, 2017 are 13.66% for Tier 1/Tier 2 (a decrease from
15.03% for July 1, 2013 to June 30, 2015) and 9.65% for OPSRP police and fire (an increase from 9.15% for July
1, 2013 to June 30, 2015.)
It is anticipated that the cost of providing health benefits to District employees will increase by 5%in the next
fiscal year.
A Supreme Court decision will significantly affect the amounts reported as Net Pension Assets and Liabilities in
the fiscal year ended June 30, 2016. Pension expense in the govermnent-wide financial statements could increase
by over$1 million due to the effects of this decision.
Requests for Information
This financial report is designed to provide a general overview to those parties interested in Sunriver Service
District's finances. Questions concerning any of the information provided in this report or requests for additional
information should be addressed to Sunriver Service District,P.O. Box 2108, Sunriver, Oregon 97707.
9
Sunriver Service District
Statement of Net Position
June 30, 2015
Primary
Government-
Governmental
Activities
Assets
Cash and investments $ 4,040,044
Accounts receivable, net 42,513
Property taxes receivable 120,879
Prepaid items 22,939
Net pension asset 569,849
Equipment and vehicles, net 640,799
Total assets 5,437,023
Deferred Outflows of Resources
Changes in employer proportion and differences between employer contributions
and proportionate share of contributions 14,996
Contributions subsequent to measurement date 229,601
Total deferred outflows of resources 244,597
Liabilities
Accounts payable 94,180
Accrued payroll and related taxes 103,707
Accrued vacation 249,719
Noncurrent liabilities -due after one year
OPEB obligation 467,083
Total liabilities 914,689
Deferred Inflows of Resources
Differences between projected and actual investment earnings 1,099,577
Net Position
Net investment in capital assets 640,799
Unrestricted 3,026,555
Total net position $ 3,667,354
See Notes to Financial Statements 10
Sunriver Service District
Statement of Activities
Year Ended June 30, 2015
Primary
Government-
Governmental
Activities
Expenses
Public safety $ 3,381,312
Program Revenues
Charges for services 194,838
Capital grants 8,650
Operating grants 1,614
Total program revenues 205,102
Net program expenses (3,176,210)
General Revenues
Property taxes levied for general purposes 4,227,197
Earnings on investments 23,115
Miscellaneous 40,167
Total general revenues 4,290,479
Changes in Net Position 1,114,269
Net Position, Beginning of Year(as restated) 2,553,085
Net Position, End of Year $ 3,667,354
See Notes to Financial Statements 11
Sunriver Service District
Balance Sheet—General Fund
June 30, 2015
Assets
Cash and investments $ 4,040,044
Property taxes receivable 120,879
Accounts receivable,net of allowance for uncollectible accounts 42,513
Total assets $ 4,203,436
Liabilities
Accounts payable $ 94,180
Accrued payroll and related taxes 103,707
Total liabilities 197,887
Deferred Inflows of Resources
Unavailable revenue -property taxes 108,488
Fund Balance
Assigned for future expenditures 1,147,010
Unassigned 2,750,051
Total fund balance 3,897,061
Total Liabilities, Deferred Inflows of Resources and Fund Balance $ 4,203,436
Fund Balance $ 3,897,061
Amounts reported for governmental activities in the Statement of Net Position are different because:
Capital assets used in governmental activities are not�nancial resources and,
therefore, are not reported on the Balance Sheet. 640,799
Net pension assets and related deferred outflows of resources are not financial
resources and,therefore, are not reported on the Balance Sheet. 814,446
Prepaid items are reported as expenditures in the period paid and are not reported
as assets on the Balance Sheet. 22,939
Some of the District's taxes will be collected after year-end,but are not currently
available resources and, therefore, are deferred in the funds. 108,488
Deferred inflows of resources are not expenditures expected to be liquidated
with expendable available financial resources and,therefore, are not reported
on the Balance Sheet. (1,099,577)
Long-term liabilities are not due and payable in the current period and, therefore,
are not reported on the Balance Sheet. (716,802)
Net Position of Governmental Activities,Page 10 $ 3,667,354
See Notes to Financial Statements 12
Sunriver Service District
Statement of Revenues, Expenditures and Changes in Fund Balance—General Fund
Year Ended June 30, 2015
Revenues
Taxes and assessments $ 4,250,893
Interest income 23,1 15
Charges for services 194,838
Grant revenue l 0,264
Other revenues 40,167
Total revenues 4,S l 9,277
Expenditures
Public safety 3,797,638
Capital outlay 7,900
Total expenditures 3,805,538
Excess of Revenues over Expenditures 713,739
Other Financing Sources
Proceeds from sale of assets 6,800
Total other financing sources 6,800
Net Change in Fund Balance 720,539
Fund Balance, Beginning of Year 3,176,522
Fund Balance, End of Year $ 3,897,061
See Notes to Financial Statements 13
Sunriver Service District
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of the General Fund to
the Statement of Activities
Years Ended June 30, 2015
Net Change in Fund Balance -Total Governmental Fund, Page 13 $ 720,539
Amounts reported for governmental activities in the Statement of Activities are different because:
Governmental funds report capital outlays as expenditures. However, in the
Statement of Activities,the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense.
Amount expended for capital assets 7,900
Depreciation (211,670)
Proceeds from sale of assets (6,800)
Gain on disposition of assets 6,800
Some expenses do not require the use of current financial resources and,
therefore, are not reported as expenditures in governmental funds.
Accrued vacation (30,508)
Prepaid items (480)
OPEB obligation (95,258)
Change in net pension asset, and related deferred inflows and deferred outflows
of resources are not resources in the current fiscal year or are not expected
to be liquidated with expendable available financial resources and, therefore,
are not reported as revenues and expenditures in governmental funds. 747,442
Property tax revenue is recognized under the modified accrual basis of
accounting only to the extent it has been collected within sixty days of year-end.
On the accrual basis Statement of Activities, such revenue is recognized
regardless of when collected. (23,696)
Changes in Net Position of Governmental Activities,Page 11 $ 1,114,269
See Notes to Financial Statements 14
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Note 1 - Organization and Summary of Significant Accounting Policies
The District
Sunriver Service District(the District)was formed as a political subdivision of Deschutes County(the Counry),
Oregon, on July 1, 2002,by voter approval to provide services to the community of Sunriver, Oregon. Services
provided by the District are currently limited to law enforcement, fire prevention and protection and emergency
medical services.
Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities)
report information on all of the non-fiduciary activities of the primary government and its component units.
Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported
separately from business-rype activities,which rely to a significant extent on fees and charges for support. The
District has no business-type activities or fiduciary funds.
The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment
are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or
segment. Program revenues include: 1) charges to customers ar applicants who purchase, use, or directly benefit
from goods, services or privileges provided by a given function or segi�nent and 2) grants and contributions that
are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and
other items not properly included among program revenues are reported instead as general revenues.
Measurement Focus,Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus and the
accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is
incurred. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar
items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus and
the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and
available. Revenues are considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be
available if they are collected within sixty days of the end of the current fiscal period. Revenues received after this
period, are considered unavailable. Expenditures are recorded when a liability is incurred, as under accrual
accounting. However, expenditures related to compensated absences and other post-employment benefits are
recorded only when payment is due.
Property taxes and intergovernmental revenue associated with the current fiscal period are considered susceptible
to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are
considered to be measurable and available only when cash is received by the District.
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial
statements.
15
Sunriver Service District
Notes to Financial Statements
June 30, 2015
The District reports one governmental fund which is budgeted as follows:
General-The General Fund is utilized to account for the transactions of the District. Property taxes and
law enforcement contracts are its principal sources of revenue. Expenditures are for the operation and
administration of the District.
Reserve Sub-Fund-The Reserve Sub-Fund accumulates resources for acquisition of capital assets.
Transfers from the General Fund and interest are its principal sources of revenue. Expenditures are for
capital outlay of the District.
Budget Policy
The District prepares a budget for all funds,which meets the requirements of state laws. The resolution
authorizing appropriations for each fund sets the level by which expenditures cannot legally exceed
appropriations. Total personal services, materials and services, debt services and capital outlay by department are
the levels of control established by resolution. The detailed budget document contains more specific detailed
information for the above-mentioned expenditure categaries. Unexpected additional resources may be added to
the budget through the use of a supplemental budget and appropriations resolution. Original and supplemental
budgets may be modi6ed by the use of appropriation transfers between the levels of control. Appropriations lapse
as of year-end.
Reporting Entity
The District's financial statements include the accounts of all District operations. The criteria for including
organizations as component units within the District's reporting entity, as set forth in GASB 61, The Financial
Reporting Entiry: Omnibus, include whether:
• The organization is legally separate(can sue and be sued in its own name).
• The District holds the corporate powers of the organization.
• The District appoints a voting majority of the organization's board.
• The District is able to impose its will on the organization.
• The organization has the potential to impose a financial benefit/burden on the District.
• There is fiscal dependency by the organization on the District.
There were no specific agencies which required consideration under the criteria inthe current fiscal year for
inclusion in the District's reporting entity.
Cash,Investment in External Investment Pool and Investment Income
Cash includes amounts in demand deposits, cash on hand and amounts in investment pools that have the general
characteristics of demand deposit accounts, such as the State of Oregon Treasurer's Local Governmental
Investment Pool.
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Sunriver Service District
Notes to Financial Statements
June 30, 2015
Investment in External Investment Pool and Investment Income
The District is invested in the Local Government Investment Pool (LGIP), which is included in the Oregon Short-
Term Fund (OSTF). The OSTF is an external investment pool, as defined in GASB Statement No. 31,Accounting
and Financial Reporting for Certain Investments and for External Investment Pools. The OSTF is not registered
with the U.S. Securities and Exchange Commission as an investment company. Fair value of the LGIP is
calculated at the same value as the number of pool shares owned. Investments in the Short-Term Fund are
governed by ORS 294.135, Oregon Investment Council, and portfolio guidelines issued by the Oregon Short-
Term Fund Board. The LGIP exchanges shares at$1.00 per share; an investment in the LGIP is neither insured
nor guaranteed by the FDIC or any other government agency. Although the LGIP seeks to maintain the net asset
value of share investments at$1.00 per share, it is possible to lose money by investing in the pool.
Chapter 294 of the Oregon Revised Statutes authorizes municipal governments to invest their funds in a variety of
investments including federal, state, and local government debt obligations; time deposit accounts, certificates of
deposit, and savings accounts in qualified public depositories; the State of Oregon Local Government Investment
Pool; and certain other investments. The District's investment policy specifies that investments will be limited to
demand deposits with approved institutions,the Oregon Local Government Investment Pool, direct obligations of
the United States and obligations guaranteed by the United States, and certificates of deposit with Oregon banks.
Accounts Receivable
Accounts receivable, consisting entirely of ambulance receivables, are shown net of an allowance for
uncollectible accounts. The allowance of$21,352 at year-end is based on prior experience in collecting
ambulance receivables. Revenues are reported net of estiinated uncollectible amounts on the Statement of
Revenues, Expenditures and Changes in Fund Balance and on the Statement of Activities.
Capital Assets
Capital assets, comprised primarily of equipment and vehicles, are reported in the government-wide financial
statements. In the governmental fund statements, capital assets are charged to expenditures as purchased. Capital
assets are recorded at historical cost. Donated assets are recorded at estimated fair market value as of the date of
tbe donation.
Capital assets are defined by the District as assets with an inirial cost of$5,000 or more and an estimated useful
life greater than one year. Additions or improvements and other capital outlays that significantly extend the useful
life of an asset, or that significantly increase the capacity of an asset, are capitalized. Other costs incurred for
repairs and maintenance are expensed as incurred. Major outlays for capital assets and improvements are
capitalized as projects are constructed.
Depreciation on exhaustible assets is recorded as an allocated expense in the Statement of Activities with
accumulated depreciation reflected in the Statement of Net Position and is calculated on the straight-line basis
over the following estimated usefu] lives:
Asset Years
Vehicles 2-18
Operating equipment 5-16
Office equipment 5
17
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Compensated Absences
Accumulated vested vacation pay is accrued as it is earned. Accrued vacation payable is recorded at actual
accrued hours times current pay rates plus related fringe benefits. The amount represents a reconciling item
between the fund-level and government-wide presentations.
Sick pay,which does not vest, is recognized when leave is taken.
Property Taxes/Unavailable Revenue
Property taxes are assessed on a July 1 -June 30 fiscal year basis. The taxes are levied as of July 1 based on
assessed values as of January 1.Property tax payments are due in three equal installments on November 15,
February 15 and May 15. A discount of 3% is available if taxes are paid in full by November 15 and a discount of
2% on the unpaid balance is available if taxes are paid in full by February 15.
Property taxes attach as an enforceable lien July 1 and are considered delinquent if not paid by the following May
15. The Deschutes County Treasurer is the tax collection agent for the District. The District's 2015 fiscal year tax
levy was $4,340,899.
Tax revenue is considered available for expenditure upon receipt by the County,which serves as the intermediary
collection agency. Uncollected property taxes are shown on the governmental balance sheet as receivables.
Collections within sixty days subsequent to year-end have been accrued and the remaining taxes receivable are
recorded as deferred inflow of resources on the modified accrued basis of accounting since they are not deemed
available to finance operations of the current period.
Deferred Outflows/Inflows of Resources
In addition to assets,the Government-wide Statement of Net Position and/or the Governinental Fund Balance
Sheet will sometimes report a separate section for deferred outflows of resources. This separate financial
statement element, deferred outflows of resources, represents a consumption of net position that applies to a
future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The
District reports in this category the contributions to the PERS retirement plan made subsequent to the
measurement date and the changes in employer proportion.
In addition to liabilities,the Government-wide Statement of Net Position and/or the Governmental Fund Balance
Sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement
element, deferred inflows of resources,represents an acquisition of net position that applies to future period(s)
and so will not be recognized as an inflow of resources (revenue)until that time. Deferred inflows of resources, as
a result of the accounting for the District's defined benefit retirement plans, are reported on the Government-wide
Statement of Net Position. Deferred inflows of resources are reported on the Governmental Fund Balance Sheet
as a result of reporting using the modified accrual method. The government fund reports unavailable revenues
from property taxes. These amounts are deferred and recognized as an inflow of resources in the period the
amounts become available.
Pension Plans
For purposes of ineasuring the net pension liability(asset) and pension expense, information about the fiduciary
net position of the Oregon Public Employee Retirement System cost-sharing multiple employer defined benefit
pension plan (benefit plan) and additions to/deductions from the benefit plan's fiduciary net position have been
18
Sunriver Service District
Notes to Financial Statements
June 30, 2015
determined on the same basis as they are reported by the benefit plan. For this purpose,benefit payments
(including refunds of employee contributions) are recognized when due and payable in accordance with the
benefit terms. Investments are reported at fair value.
Fund Balance Reporting
The Governmental Accounting Standards Board(GASB) has issued Statement No. 54,Fund Balance Reporting
and Governmental Fund Type Definitions(GASB 54). This Statement defines the different types of fund balances
that a governmental entity must use for financial reporting purposes.
GASB 54 requires the fund balance amounts to be properly reported within one of the fund balance categories
listed below:
1) Nonspendable, such as fund balance associated with inventories,prepaids, long-term loans and notes
receivable, and property held for resale(unless the proceeds are restricted, committed or assigned).
2) Restricted fund balance category includes amounts that can be spent only for specific purposes stipulated
by constitution, external resource providers or through enabling legislation.
3) Committed fund balance classification includes amounts that can be used only for the specific purposes
determined by a formal action of the District's governing board(the District's highest level of decision-
making authority). Once adopted, the limitation imposed by the ordinance remains in place until a similar
action is taken(the adoption of another ordinance)to remove or revise the limitation.
4) Assi�ned fund balance classification is intended to be used by the government for specific purposes but
does not meet the criteria to be classified as restricted or committed. Assignments are made by the
District's governing board based on the Chiefs' direction.
5) Unassi_�fund balance is the residual classification for the government's general fund and includes all
spendable amounts not contained in the other classifications.
The District reduces restricted amounts first when expenditures are incurred for purposes for which both restricted
and unrestricted(committed, assigned or unassigned) amounts are available. The District reduces committed
amounts first, followed by assigned amounts and then unassigned amounts when expenditures are incurred for
purposes for which amounts in any of those unrestricted fund balance classifications could be used.
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 reported amounts
and disclosures. Accordingly, actual results could differ from these estimates.
New Accounting Pronouncement
As of July 1,2014,the District adopted GASB Statement No. 68,Accounting and Financial Reporting for
Penszons and GASB Statement No. 71,Pension Transition for Contributions Made Subsequent to the
Measurement Date. The implementation of these standards requires governments calculate and report the costs
and obligations associated with pensions in their basic financial statements. Employers are required to recognize
pension amounts for all benefits provided through the plan which include the net pension asset or liability,
deferred outflows of resources, deferred inflows of resources, and pension expense. The effect of the
implementation of these standards on beginning net position is disclosed in Note 9 and the additional disclosures
required by these standards are included in Note 4.
19
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Note 2 - Cash and Investments
Custodial Credit Risk
Custodial credit risk is the risk that in the event of a bank failure, the District's deposits may not be returned to it.
State statutes require that all bank deposits in excess of the FDIC or FSLIC insurance amounts be collateralized
through the Oregon State Treasurer's Public Funds Collateralization Program. This program provides a structure
for specified depositories to participate in a shared liability collateral pool. Securities pledged by individual
institutions may range from 10%to 110%of public fund deposits depending on the financial institution's level of
capitalization as determined by its federal regulatory authority. The District does not have a formal investment
policy that further limits custodial credit risk. The District had bank balances at June 30, 2015 as follows:
Insured(FDIC) $ 250,000
Collateralized by securities held by the pledging financial institution in the financial
institution's name 228,505
Total $ 478,505
Carrying value $ 447,687
Investments in External Investment Pool
The District's investments are reported at fair value, as discussed in Note 1. At June 30,2015, the LGIP was not
rated by an independent rating agency. The District's investment in LGIP at June 30, 2015 and related maturity
was as follows:
Maturities 2015
Oregon State Local Government
Investment Pool Daily $ 3,592,357
Interest Rate Risk
State Statutes generally limit investment maturities to 18 months, or the date of anticipated use of the funds. The
District does not have a formal policy in place that further limits investment maturities as a means of managing its
exposure to fair value losses arising from increasing interest rates. The District does not have a formal investment
policy that further limits interest rate risk.
Credit Risk
State Statutes limit the investment in bonds issued by the State of Oregon and its political subdivisions to bonds
with one of the three highest credit ratings of a nationally recognized rating. State Statutes limit the investment in
bonds issued by the States of California,Idaho, and Washington and political subdivisions of those states to bonds
with one of the two highest credit ratings of a nationally recognized rating. The District does not have a formal
investment policy in place that further lunits credit risk. The Oregon Local Government Investment Pool does not
have a rating. The Investment Pool invests as defined by State Statute.
20
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Concentration of Credit Risk
The District does not have a formal investment policy in place limiting the amount that may be invested with any
one bank or institution.
Note 3 - Capital Assets
Capital asset activiry for the fiscal year ended June 30, 2015, is as follows:
Balance Balance
June 30, 2014 Additions Deletions June 30,2015
Vehicles $ 2,257,991 $ - $ (34,353) $ 2,223,638
Operating equipment 380,787 8,635 (14,653) 374,769
Office equipment 48,664 - - 48,664
Construction in progress 50,950 - (735) 50,215
2,738,392 8,635 (49,741) 2,697,286
Less accumulated depreciation (1,893,823) (211,670) 49,006 (2,056,487)
$ 844,569 $ (203,035) $ (735) $ 640,799
Depreciation expense of$211,670 was charged to public safety.
Note 4 - Participation in Public Employees Retirement System
Name of Pension Plan
The Oregon Public Employees Retirement Systems (PERS or the System) consists of a single cost-sharing
multiple employer defined benefit pension plan.
Description of Benefit Terms
All benefits of OPERS are established by the legislature pursuant to ORS Chapters 238 and 238A.
Tier One/Tier Two Retirement Benefit Chapter 238: Tier One/Tier Two Retirement Benefit plan is closed to new
members hired on or after August 29, 2003.
Pension Benefits
The PERS retirement allowance is payable monthly for life. It may be selected from 13 retirement benefit
options. These options include survivorship benefits and lump-sum refunds. The basic benefit is based on
years of service and final average salary. A percentage (2.0 percent for police and fire employees, 1.67
percent for general service employees) is multiplied by the number of years of service and the final average
salary. Benefits may also be calculated under either a formula plus annuity(for members who were
contributing before August 21, 1981) or a money match computation if a greater benefit results.
21
Sunriver Service District
Notes to Financial Statements
June 30, 2015
A member is considered vested and will be eligible at minimum retirement age for a service retirement
allowance if he or she has had a contribution in each of five calendar years or has reached at least 50 years of
age before ceasing employment with a participating employer(age 45 for police and fire members). General
service employees may retire after reaching age 55. Police and fire members are eligible after reaching age
50. Tier One general service employee benefits are reduced if retirement occurs prior to age 58 with fewer
than 30 years of service. Police and fire member benefits are reduced if retirement occurs prior to age 55
with fewer than 25 years of service. Tier Two members are eligible for full benefits at age 60. The ORS
Chapter 238 Defined Benefit Pension Plan is closed to new members hired on or after August 29, 2003.
Death Benefits
Upon the death of a non-retired member,the beneficiary receives a lump-sum refund of the member's
account balance(accumulated contributions and interest). In addition,the beneficiary will receive a lump-
sum payment from employer funds equal to the account balance,provided one or more of the following
conditions are met:
• the member was employed by a PERS employer at the time of death,
• the member died within 120 days after termination of PERS-covered employment,
• the member died as a result of injury sustained while employed in a PERS-covered job, or
• the member was on an official leave of absence from a PERS-covered job at the time of death.
Disability Benefits
A member with 10 or more years of creditable service who becomes disabled from other than duty-connected
causes may receive a non-duty disability benefit. A disability resulting from a job-incurred injury or illness
qualifies a member(including PERS judge members) for disability benefits regardless of the length of PERS-
covered service. Upon qualifying for either a non-duty or duty disability, service time is computed to age 58
(55 for police and fire members)when determining the monthly benefit.
Benefit Changes after Retirement
Members may choose to continue participation in a variable equities investment account after retiring and
may experience annual benefit fluctuations due to changes in the market value of equity investments.
Under ORS 238.360 monthly benefits are adjusted annually through cost-of-living changes. Under current
law,the cap on the COLA in fisca] year 2015 and beyond will vary based on 1.25 percent on the first
$60,000 of annual benefit and 0.15 percent on annual benefits above $60,000.
OPSRP Pension Pro rg am(OPSRP DB�
Pension Benefits
The Pension Program (ORS Chapter 238A)provides benefits to members hired on or after August 29, 2003.
22
Sunriver Service District
Notes to Financial Statements
June 30, 2015
This portion of OPSRP provides a life pension funded by employer contributions. Benefits are calculated
with the following fon�nula for members who attain normal retirement age:
• Police and�re: 1.8 percent is multiplied by the number of years of service and the final average
salary. Normal retirement age for police and fire members is age 60 or age 53 with 25 years of
retirement credit. To be classified as a police and fire member, the individual must have been
employed continuously as a police and fire member for at least five years immediately preceding
retirement.
• General service: 1.5 percent is multiplied by the number of years of service and the final average
salary. Normal retirement age for general service members is age 65, or age 58 with 30 years of
retirement credit.
A member of the OPSRP Pension Program becomes vested on the earliest of the following dates: the date the
member completed 600 hours of service in each of five calendar years,the date the member reaches normal
retirement age, and if the pension program is terminated, the date on which termination becomes effective.
Death Benefits
Upon the death of a non-retired member, the spouse or other person who is constitutionally required to be
treated in the same manner as the spouse,receives for life 50 percent of the pension that would otherwise
have been paid to the deceased member.
Disability Benefits
A member who has accrued 10 or more years of retirement credits before the member becomes disabled or a
member who becomes disabled due to job-related injury shall receive a disability benefit of 45 percent of the
member's salary determined as of the last full month of employment before the disability occurred.
Benefit Changes after Retirement
Under ORS 238A.210 monthly benefits are adjusted annually through cost-of-living changes. Under current
law,the cap on the COLA in fiscal year 2015 and beyond will vary based on 1.25 percent on the first
$60,000 of annual benefit and 0.15 percent on annual benefits above$60,000.
Contributions
PERS funding policy provides for monthly employer contributions at actuarially determined rates. These
contributions, expressed as a percentage of covered payroll, are intended to accumulate sufficient assets to pay
benefits when due. This funding policy applies to the PERS Defined Benefit Plan and the Other Postemployment
Benefit Plans.
Employer contribution rates during the period were based on the December 31, 2011 actuarial valuation as
subsequently modified by 2013 legislated changes in benefit provisions. The rates based on a percentage of
payroll, first became effective 7uly 1, 2013. The state of Oregon and certain schools, community colleges, and
political subdivisions have made lump sum payments to establish side accounts, and their rates have been
reduced.
23
Sunriver Service District
Notes to Financial Statements
June 30, 2015
The employer rate for fiscal year 2014-2015 was 15.03% for Tier 1/Tier 2, 6.42% for OPSRP general employees
and 9.15% for OPSRP Police and Fire employees. The above described amount is in addition to the required 6%
IAP contribution described later. Effective July 1,2015, the rates will be 13.66% for Tier 1/Tier 2, 5.54% for
OPSRP general employees and 9.65% for OPSRP Police and Fire employees based on the December 31, 2013
actuarial valuation.
Employer contributions for the year ended June 30,2015 were $344,715, excluding amounts to fund employer
specific liabilities.
A 10 year schedule of system-wide Defined Benefit Pension Plan Contributions can be found beginning on page
58 of the June 30, 2014 PERS CAFR. A 10 year schedule of the District's Defined Benefit Pension Plan
Contributions can be found in the Required Supplementary Infarmation of this financial statement.
Proportionate Share Allocation Methodology
The basis for the employer's proportion is actuarially determined by comparing the employer's projected long-
term contribution effort to the Plan with the total projected long-term contribution effort of all employers. The
rate for every employer has at least two major components;Normal Cost Rate and Unfunded Actuarial Liability
(UAL) Rate.
The projected long-term contribution effort is estimated by projecting the present value of all future Normal Cost
Rate Contributions (PVFNC). The PVFNC represents the portion of the projected long-term contribution effort
related to future service.
An employer's PVFNC depends on both the Normal Cost Rates charged on the employer's payrolls, and on the
underlying demographics of the respective payrolls. For PERS funding, employers have three different payrolls,
each with a different Normal Cost Rate:
• Tier 1/Tier 2 payroll
• OPSRP General Service payroll
• OPSRP Police &Fire payroll
A UAL exists when Plan assets are less than actuarialliability as measured by the Plan's actuarial funding
valuations. UAL can arise in a biennium when an event such as experience differing from the assumptions used in
tbe actuarial valuation occurs. An amortization schedule is established to eliminate the UAL that arises in a given
biennium over a fixed period of time if future experience follows assumption. The UAL Rate is the upcoming
year's component of the cumulative amortization schedules, stated as a percent of payroll. The UAL represents
the portion of the projected long-term contribution effort related to past service.
The projected long-term contribution effort is equal to the sum of the PVFNC and the UAL. After the einployer's
projected long-term contribution effort is calculated,that amount is reduced by the value of the employer's
supplemental lump-sum payments, known as side accounts,transition surpluses and pre-SLGRP (State and Local
Government Rate Pool) surpluses. Side accounts decrease the employer's projected long-term contribution effort
because side accounts are effectively pre-paid contributions.
The employer's projected long-term contribution effort does not include contributions toward the current value of
transition liabilities and pre-SLGRP liabilities, which PERS has determined meet the definition of separately
financed employer liabilities.
24
Sunriver Service District
Notes to Financial Statements
June 30, 2015
If the calculation of the employer's projected long-term contribution effort yields a negative number, the
employer's portion of the projected long-term contribution effort will be set to zero and the employer will be
allocated no proportionate share of pension amounts.
Pension Plan CAFR
Oregon PERS produces an independently audited CAFR which can be found at:
http://www.ore��ov/pers/Pages/section/financial_reports/financials.aspx.
Actuarial Valuations
The employer contributions rates effective July 1, 2013, through June 30, 2015,were set using the projected unit
credit actuarial cost method.For the Tier One/Tier Two component of the PERS Defined Benefit Plan,this
method produced an employer contribution rate consisting of(1) an amount for normal cost(the estimated
amount necessary to finance benefits earned by the employees during the current service year), (2) an amount far
the amortization of unfunded actuarial accrued liabilities,which are being amortized over a fiXed period with new
unfunded actuarial accrued liabilities being amortized over 20 years. For the OPSRP Pension Program component
of the PERS Defined Benefit Plan,this method produced an employer contribution rate consisting of(a) an
amount for normal cost(the estimated amount necessary to finance benefits earned by the employees during the
current service year), (b) an amount for the amortization of unfunded actuarial accrued liabilities,which are being
amortized over a fixed period with new unfunded actuarial accrued liabilities being amortized over 16 years.
25
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Actuarial Methods and Assumptions Used in Developing Total Pension Liability
Valuation Date December 31, 2012 rolled forward to June 30, 2014.
Experience Study Report 2012,published September 18, 2013
Actuarial cost method Ent A e Normal
Amortized as a level percentage of payroll as layered
Amortization method amortization bases over a closed period; Tier One/Tier Two
UAL is amortized over 20 years and OPSRP pension UAL is
amortized over 16 ears.
Asset valuation method Market value of assets
Actuarial assum tions:
Inflation rate 2.75 ercent
Investment rate of return 7.75 percent
3.75 percent overall payroll growth; salaries for individuals are
Projected salary increases assumed to grow at 3.75 percent plus assumed rates of
merit/longevity increases based on service
Healthy retirees and beneficiaries:
RP-2000 Sex-distinct, generational per Scale AA,with collar
adjustments and set-backs as described in the valuation.
Active members:
Mortality
Mortality rates are a percentage of healthy retiree rates that
vary by group, as described in the valuation.
Disabled retirees:
Mortality rates are a percentage (65%for males, 90%for
females) of the RP-2000 static combined disabled mortaliry
sex-distinct table.
Actuarial valuations of an ongoing plan involve estimates of the value of projected benefits and assumptions
about the probability of events far into the future. Actuarially determined amounts are subject to continual
revision as actual results are compared to past expectations and new estimates are made about the future.
Experience studies are performed as of December 31 of even numbered years. The methods and assumptions
shown above are based on the 2012 Experience Study which reviewed experience for the four-year period ending
on December 31, 2012.
Discount Rate
The discount rate used to measure the total pension liability was 7.75 percent for the Defined Benefit Pension
Plan. The projection of cash flows used to determine the discount rate assumed that contributions from plan
members and those of the contributing employers are made at the contractually required rates, as actuarially
determined. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to
malce all projected future benefit payments of current plan members. Therefore,the long-term expected rate of
return on pension plan investments for ihe Defined Benefit Pension Plan was applied to all periods of projected
benefit payments to determine the total pension liability.
26
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Depletion Date Projection
GASB 67 generally requires that a blended discount rate be used to measure the Total Pension Liability(the
Actuarial Accrued Liability calculated using the Individual Entry Age Normal Cost Method). The long-term
expected return on plan investments may be used to discount liabilities to the extent that the plan's Fiduciary Net
Position(fair marlcet value of assets) is projected to cover benefit payments and administrative expenses. A 20-
year high quality(AA/Aa or higher) municipal bond rate must be used for periods where the Fiduciary Net
Position is not projected to cover benefit payments and administrative expenses. Determining the discount rate
under GASB 67 will often require that the actuary perform complex projections of future benefit payments and
asset values. GASB 67 (paragraph 67) does allow for alternative evaluations of projected solvency, if such
evaluation can reliably be made. GASB does not contemplate a specific method for making an alternative
evaluation of sufficiency; it is left to professional judgment.
The following circumstances justify an alternative evaluation of sufficiency for Oregon PERS:
• Oregon PERS has a formal written policy to calculate an Actuarially Determined Contribution(ADC),
which is articulated in the actuarial valuation report.
• The ADC is based on a closed,layered amortization period, which means that payment of the full ADC
each year will bring the plan to a 100%funded position by the end of the amortization period if future
experience follows assumption.
• GASB 67 specifies that the projections regarding future solvency assume that plan assets earn the
assumed rate of return and there are no future changes in the plan provisions or actuarial methods and
assumptions, which means that the projections would not reflect any adverse future experience which
might impact the plan's funded position.
Based on these circumstances, it is the independent plan actuary's opinion that the detailed depletion date
projections outlined in GASB 67 would clearly indicate that the Fiduciary Net Position is always projected to be
sufficient to cover benefit payments and administrative expenses.
Assumed Asset Allocation
Asset Class/Strategy Low Range High Range OIC Target
Cash 0.0% 3.0% 0.0%
Debt Securities 15.0°/a 25.0% 20.0%
Public Equity 32.5% 42.5% 37.5%
Private Equity 16.0% 24.0% 20.0%
Real Estate 9.5% 15.5% 12.5%
Alternative Equity 0.0% 10.0% 10.0%
Opportunity Portfolio 0.0% 3.0% 0.0%
Total 100%
27
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Long-Term Expected Rate of Return
To develop an analytical basis for the selection of the long-term expected rate of return assumption, in July 2013
the PERS Board reviewed long-term assumptions developed by both the plan actuary's capital market
assumptions team and the Oregon Investment Council's (OIC) investment advisors. The table below shows the
plan actuary's assumptions for each of the asset classes in which the plan was invested at that time based on the
OIC long-term target asset allocation. The OIC's description of each asset class was used to map the target
allocation to the asset classes shown below. Each asset class assumption is based on a consistent set of underlying
assumptions, and includes adjustment for the inflation assumption. These assumptions are not based on histarical
returns, but instead are based on a forward-looking capital market economic model.
Compound Annual
Asset Class Target Return (Geometric)
Core Fixed Income 7.20% 4.50%
Short-Term Bonds 8.00°/a 3.70%
Intermediate-Term Bonds 3.00% 4.10%
High Yield Bonds 1.80% 6.66%
Large Cap US Equities 11.65% 7.20%
Mid Cap US Equities 3.88% 7.30%
Small Cap US Equities 2.27% 7.45%
Developed Foreign Equities 14.21% 6.90%
Emerging Foreign Equities 5.49% 7.40%
Private Equity 20.00% 8.26%
Opportunity Funds/Absolute Return 5.00% 6.01%
Real Estate (Property) 13.75% 6.51%
Real Estate (REITS) 2.50% 6.76%
Commodities 7.71% 6.07%
Assumed Inflation-Mean 2.75%
Sensitivity Analysis of Net Pension (Asset)/Liability to Changes in the Discount Rate
1%Decrease: Current Discount 1%Increase:
6.75% Rate: 7.75% 8.75%
Employers'Net Pension Liability/(Asset) -
System-Wide $4,800,084,328 $ (2,266,715,991) $(8,243,569,472)
Employers'Net Pension Liability/(Asset) -
Employer-Specific $ 1,206,734 $ (569,849) $ (2,072,421)
Changes in Plan Provisions
Senate Bill 822, signed into law in May 2013, eliminated the SB 656/HB 3349 tax remedy payments for benefit
recipients who are not subject to Oregon income tax, because they do not reside in Oregon, and limited the 2013
post-retirement COLA to 1.5% of annual benefit.
Senate Bill 861, signed into law October 2013, limited the post-retirement COLA for years beyond 2013 to 1.25%
on the first$60,000 of annual benefit and .15% on annual benefits above $60,000.
28
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Senate Bi11862, signed into law in October 2013,makes targeted changes such as allowing garnishment of PERS
benefits for convicted felons. These changes do not significantly affect Plan liabilities and were not reflected in
the valuation.
For GASB 67 and 68, the Total Pension Liability must be calculated based on the benefit terms legally in effect as
of the relevant fiscal year-end for the plan. Due to the timing of the benefit changes,this means only Senate Bill
822 is reflected in the June 30, 2013 Total Pension Liability,but that the combined effects of Senate Bills 822 and
861 are reflected in the June 30,2014 Total Pension Liability. The decrease in the Total Pension Liability
resulting from Senate Bill 861, measured as of June 30, 2014, created a($2,423.6) million reduction in Plan
pension liabilities.
Changes in Assumptions
A summary of key changes implemented since the December 31, 2011 valuation are described briefly below.
Additional detail and a comprehensive list of changes in methods and assumptions can be found in the 2012
Experience Study for the System,which was published on September 18, 2013, and can be found at:
http://www.ore o�n.gov/pers/docs/2012%20Exp%20Studv°/o20Updated.pdf
Changes in Actuarial Methods and Allocation Procedures
Actuarial Cost Method—The Actuarial Cost Method was changed from the Projected Unit Credit(PUC) Cost
Metllod to the Entry Age Normal (EAN) Cost Method. This change will allow PERS to use the same cost method
for contribution rate calculations as required for financial reporting under GASB Statements 67 and 68.
Tier UTier 2 UAL Amortization—In combination with the change in cost method,the Board chose to re-amortize
the outstanding Tier 1/Tier 2 UAL as of December 31, 2013 over a closed period of 20 years as a level percentage
of projected payrolL Gains and losses between subsequent rate-setting valuations will be amortized over a closed
20 year period from the valuation in which they are first recognized.
Contribution Rate Stabilization Method
The "grade-in range"over which the rate collar gradually doubles was modified so that the collar doubles as
funded status (excluding side accounts) decreases from 70%to 60% or increases from 130%to 140%.Previously
the ranges had been 80%to 70% and 120%to 130%. The modification to the grade-in range was made in
combination with the change to actuarial cost method, as discussed at the July 2013 PERS Board public meeting.
Allocation of Liability for Service Se_�
For purposes of allocating Tier 1/Tier 2 member's actuarial accrued liability at�nong multiple employers, the
valuation uses a weighted average of the Money Match methodology and the Full Formula methodology used by
PERS when the member retires. The weights are determined based on the prevalence of each formula among the
current Tier 1/Tier 2 population. For the December 31, 2010 and December 3l, 2011 valuations, the Money
Match was weighted 40 percent for General Service members and 10 percent for Police &Fire members. For the
December 31,2012 and December 31, 2013 valuations, this weighting has been adjusted to 30 percent for
General Service members and 5 percent for Police&Fire members, based on a projection of the proportion of
liability attributable to Money Match benefits at those valuation dates.
29
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Chan�es in Economic Assumptions
Investment Return and Interest Crediting—The assumed investrnent return and interest crediting to both regular
and variable account balances was reduced to 7.75%. Previously, the assumed investment return and interest
crediting to regular account balances was 8.00% and the assumed interest crediting to variable account balances
was 8.25%. OPSRP Administrative Expenses—Assumed administrative expenses for the OPSRP System were
reduced from$6.6 million per year to $5.5 million per year. Healthcare Cost Inflarion—The healthcare cost
inflation for the maximum RHIPA subsidy was updated based on analysis performed by the Plan actuary's
healthcare actuaries. This analysis includes the consideration of the excise tax that will be introduced in 20]8 by
the Patient Protection and Affordable Care Act.
Chan�es in Demo�raphic Assumptions
Healthy Mortality—The healthy mortality assumption is based on the RP2000 generational mortality tables with
group-specific class and setback adjustments. The group-specific adjustments have been updated to more closely
match recently observed system experience.
Disabled Mortality—The disabled mortality assumption base was changed from the RP2000 healthy tables to the
RP2000 disabled tables. Gender-specific adjustments were applied to align the assumption with recently observed
system experience.
Disability, Retirement from Active Status, and Termination—Rates for disability,retirement from active status,
and termination were adjusted. Termination rates were changed from being indexed upon age to being indexed
upon duration from hire date.
Changes in Salary Increase Assumptions
Merit Increases, Unused Sick Leave, and Vacation Pay—Assumed merit increases were lowered for School
District members. Unused Sick Leave and Vacation Pay rates were adjusted.
Retiree Healthcare Participation—The RHIA participation rate for healthy retirees was reduced from 48%to 45%.
The RHIPA participation rate was changed from a uniform rate of l 3%to a service-based table of rates.
Plan Fiduciary Net Posirion as a Percentape of Total Pension Liability
See Schedule of Changes in Net Pension (Asset)/Liability on page 57 of the PERS June 30, 2014 CAFR. Also see
Required Supplementary Information Schedule of Proportionate Share of Net Pension Liability included in this
statement.
Covered Pavroll for Emplo.�
See Schedule of Proportionate Shares which can be found at http://www.oregon.gov/pers/EMP/pages/index.aspx.
30
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Mortality
Healthy Retired Members—The following healthy retired mortality tables were first adopted in the December 31,
2010 valuation, except for the School District male and Police and Fire male table, which was adopted in the
December 31, 2012 valuation.
Basic Table �'Z000, Generational Combined Active/Healthy Annuitant,
Sex Distinct
School District male No collar, set back 24 months
Other General Service male Blended 25 percent blue collar/75 percent white collar, set
(including male back 12 months
beneficiary)
Police and Fire male
Blended 25 percent blue collar/75 percent white collar, set
back 12 months
School District female White collar, set back 24 months
Other female(including
female beneficiary) �ite collar, no set back
Disabled Retired Members—The following disabled retiree mortality rates were first adopted for the December
31, 2012 actuarial valuation.
Basic Table RP 2000, Static, Combined, Disabled,No Collar, Sex Distinct
Male 65 ercent of Disabled table
Female 90 ercent of Disabled table
Non-Annuitant Members—The following mortality rates were first adopted for non-annuitant members for the
December 31, 2012 actuarial valuation, except for the Other General Service male and School District female
rates which were adopted in the December 31, 2010 valuation.
Basic Table Percent of Health Retired Mortalit Tables
School District male 70°/o
Other General Service male 85
Police and Fire inale 95
School District female 60
Other female 55
Ad Hoc Postemployment Benefit Changes
See changes in plan provisions.
Change in Proportionate Share
There was no change in proportionate share for fiscal years ending June 30, 2013 and June 30, 2014. Because the
proportionate share is actuarially determined, it was calculated as of the December 31, 2012 valuation date used to
develop results for both the June 30, 2013 and June 30, 2014 Measurement Dates. In future measurement periods,
there will be changes in proportionate shares from the beginning of the period to the end.
31
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Deferred Items
Deferred items are calculated at the system-wide level and are allocated to employers based on their proportionate
share. For fiscal year ending June 30, 2014,there was:
• No difference between expected and actual experience;
• No difference due to changes of assumptions;
• A net difference between projected and actual earnings which is being amortized over a closed five year
period. One year's amortization is being recognized in the employer's total pension expense for fiscal
year 2014.
• No changes in proportion
• A difference between employer contributions and proportionate share of contributions, which is being
amortized over 5.6 years,the remaining service lives of a11 plan participants,including retirees. One year
of this amortization is included in the employer's total pension expense for fiscal year 2014.
• The amortization schedule on the employer specific actuarial schedule shows the remaining 4 years
amortization for the difference in investment returns and 4.6 years for the difference between
proportionate share and actual contributions.
Independent Auditors Report
The independent auditors report on the Schedule of Allocations (Proportionate Shares) and Schedule of Pension
Amounts will be published on the PERS employer website. http://www.oregon.gov/pers/EMP/pages/index.aspx
Chan�es in Plan Provisions
Senate Bill 822, signed into law in May 20l 3, eliminated the SB 656/HB 3349 tax remedy payments far
beneficiaries not subject to Oregon income tax and limited the 2013 post-retirement COLA to 1.5 percent of
annual benefit. The effects of this legislation were reflected in the December 31, 2012 valuation.
Senate Bill 861, signed into law in October 2013,limited the post-retirement COLA for years beyond 2013 to
1.25 percent on the first$60,000 of annual benefit and 0.15 percent on annual benefits above $60,000. The effects
of this legislation were reflected in the December 31, 20l 2 valuation.
The December 31, 2012 valuation was rolled forward to the measurement date of June 30, 2014.
Employer Contributions
PERS includes accrued contributions when due pursuant to legal requirements, as of June 30 in its Statement of
Changes in Fiduciary Net Position. These are normally included in the employer statements cut off as of the fifth
of the following month. PERS does not try to accrue contributions based on paydate.
Beginning with fiscal year 2015,PERS will be able to report cash contributions and UAL side account
amortization by employer, and will publish this information on the PERS Website.Prior to fiscal year 2015,
contributions to the OPSRP Defined Benefit plan were not accounted for by employer, as all employers were
pooled for actuarial purposes.
32
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Elements of Changes in Net Position
Information regarding system-wide changes in net position can be found in the Schedule of Changes in Net
Pension Liability found on page 57, of the June 30, 2014 PERS CAFR at
http://www.ore�on.�ov/pers/Pages/section/financial_reports/financials.aspx
Net Pension Liability
Net pension liabilities are calculated at the system-wide level and are allocated to employers based on their
proportionate share. UAL Side Accounts are included as assets in this calculation. The rate setting actuarial
valuation will continue to allocate the UAL Side Account,transitional or pre-SLGRP liabilities or surpluses as
adjustments to the respective employers.
IAP Plan Description—OPSRP Individual Account Program (OPSRP IAP)
Pension Benefits
An IAP member becomes vested on the date the employee account is established or on the date the rollover
account was established. If the employer makes optional employer contributions for a member,the member
becomes vested on the earliest of the following dates: the date the member completes 600 hours of service in each
of five calendar years, the date the member reaches normal retirement age, the date the IAP is terminated, the date
the active member becomes disabled, or the date the active member dies.
Upon retirement, a member of the OPSRP Individual Account Program(IAP) may receive the amounts in his or
her employee account,rollover account, and vested employer account as a lump-sum payment or in equal
installments over a 5-, 10-, 15-, 20-year period or an anticipated life span option. Each distribution option has a
$200 minimum distribution limit.
The required employee contribution of 6% is paid by the District as a result of a collective bargaining agreement.
Death Benefits
Upon the death of a non-retired member,the beneficiary receives in a lump sum the member's account balance,
rollover account balance, and vested employer optional contribution account balance. If a retired member dies
before the installment payments are completed, the beneficiary may receive the remaining installment payments
or choose a lump-sum payment.
Recordkeeping
PERS contracts with VOYA Financial to maintain IAP participant records.
33
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Changes in Plan Provisions Subsequent to Measurement Date
The Oregon Supreme Court on April 30, 2015, ruled that the provisions of Senate Bill 861, signed into law in
October 2013, that limited the post-retirement COLA on benefits accrued prior to the signing of the law was
unconstitutional. Benefits could be modified prospectively,but not retrospectively. As a result, those who retired
before the bills were passed will continue to receive a COLA tied to the Consumer Price Index that normally
results in a 2%increase annually. PERS will make restoration payments to those benefit recipients.
PERS members who have accrued benefits before and after the effective dates of the 2013 legislation will have a
blended COLA rate when they retire.
This is a change in benefit terms subsequent to the measurement date of June 30,20]4,which will be reflected in
the next year's actuarial valuations. The impact of the Moro decision on the total pension liability and employer's
net pension liability(asset)has not been fully determined. However,PERS' third-party actuaries have estimated
tbe impact of the Moro decision under one possible methodology,which is summarized below.
June 30, 2014 Measurement Date
After Moro
Prior to Moro (estimatedl
Net pension liability(asset) $ (569,849) $ 666,206
Schedule of Pension Amounts under GASB 68
Measurement Date [MD] of the Net Pension
Liability/(Asset) [NPL/(A)] June 30, 2014
December 31,
Actuarial Valuation Date(liability rolled forward to MD) 2012
The District's proportionate share at prior MD 0.02513985%
The District's proportionate share at MD 0.02513985%
The District's proportionate share of system NPL/(A) at prior MD $ 1,282,923
The District's proportionate share of system NPL/(A) at MD $ (569,849)
District Pension Expense for Measurement Period
District's proportionate share of system Pension EXpense/(Income) $ (523,106)
Net amortization of deferred amounts from:
Changes in proportionate share -
Differences between District contributions and
District's proportionate share of system
contributions 3,260
District's Total Pension Expense/(Income) $ (519,846)
34
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Deferred
Outflow Deferred Inflow
of Resources of Resources
Net difference between projected and actual earnings on $ - $ 1,099,577
investments
Changes in proportion and differences between employer
contributions and proportionate share of contributions 14,996 -
Contributions subsequent to measurement date 229,601 -
Total $ 244,597 1,099,577
Net Deferred Outflow/(Inflow) of Resources (excluding
contributions subsequent to measurement date) $ (1,084,581)
The District's contributions made subsequent to the measurement date will be recognized in the District's pension
expense in the following year.
Amounts reported as deferred outflows or inflows of resources related to pension will be recognized in pension
expense/(income) as follows:
Amounts
Subsequent fiscal .�� Reported
2015 -2016 $ (271,634)
2016 -2017 (271,634)
2017 -2018 (271,634)
2018 -2019 (271,634)
2019 -2020 1,955
Thereafter -
Total $ (1,084,581)
Note 5 - Other Post-Employment Benefits
Oregon Public Employees Retirement System -Retirement Health �nsurance Account(RffiA)
Plan Description As a member of Oregon Public Employees Retirement System(OPERS)the District contributes
to the Retirement Health Insurance Account(RHIA) for each of its eligible employees. RHIA is a cost-sharing
multiple-employer defined benefit other postemployment benefit plan administered by OPERS. RHIA pays a
monthly contribution(currently $60 per month)toward the cost of Medicare companion health insurance
premiums of eligible retirees. Oregon Revised Statute(ORS) 238.420 established this trust fund. Authority to
establish and amend the benefit provisions of RHIA reside with the Oregon Legislature. The Plan is closed to new
entrants after January 1, 2004. OPERS issues a publicly available financial report that includes financial
statements and required supplementary information. That report may be obtained by writing to Oregon Public
Employees Retirement System, P.O. Box 23700, Tigard, OR 97281-3700.
35
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Fundin_ P�ol�icy Because RHIA was created by enabling legislation(ORS 238.420), contribution requirements of
the Plan members and the participating employers were established and may be amended only by the Oregon
Legislature. ORS require that an amount equal to $60 or the total monthly cost of Medicare companion healxh
insurance premiums coverage,whichever is less, shall be paid from the Retirement Health Insurance Account
established by the employer, and any monthly cost in excess of$60 shall be paid by the eligible retired member in
the manner provided in ORS 238.410. To be eligible to receive this monthly payment toward the premium cost
the member musr (1)have eight years or more of qualifying service in PERS at the time of retirement or receive a
disability allowance as if the member had eight years or more of creditable service in PERS; (2)receive both
Medicare Parts A and B coverage and(3) enroll in a PERS-sponsored health plan. A surviving spouse or
dependent of a deceased PERS retiree who was eligible to receive the subsidy is eligible to receive the subsidy if
he or she(1)is receiving a retirement benefit or allowance from PERS or(2)was insured at the tune the member
died and the member retired before May 1, l 991.
Participating public employers are contractually required to contribute to RHIA at a rate assessed each year by
OPERS, currently 0.59% of annual covered payroll for Tier 1 and Tier 2 employees and 0.49% for OPSRP
employees. The OPERS Board of Trustees sets the employer contribution rate based on the annual required
contribution of the employers (ARC), an amount actuarially determined in accordance with the parameters of
GASB Statement 45. The ARC represents a level of funding that,if paid on an ongoing basis,is projected to
cover normal cost each year and a��nortize any unfunded actuarial liabilities (or funding excess) of the Plan over a
period not to exceed thirty years. The District's contributions to RHIA for which equaled the required
contributions each year were included with the payments for the retirement plan described in Note 4 above and
amounted to approximately $10,056, $10,526 and $7,475,respectively, for the years ended June 30, 2015,2014
and 2013.
Sunriver Service District Retiree Health Plan
Plan Description The District does not have a formal post-employment benefits plan for any employee groups.
However the District is required by Oregon Revised Statutes 243.303 to provide retirees with group health
insurance from the date of retirement to age 65 at the same rate provided to current employees. Although the
District does not pay any portion of the retirees'healthcare insurance, a retired employee receives the implicit
benefit of a lower healthcare premium which is subsidized among the premium cost of coverage for active
employees. GASB Statement 45 is applicable to the District due to this implicit rate subsidy. This "plan" is not a
stand-alone plan and therefore does not issue its own fnancial statements.
Fundin_ P�ol�icX Although the District does not currently have any retirees participating in their health insurance
plan, it will,when applicable, collect insurance premiums from all retirees each month and deposit them in the
General Fund. The District will then pay healthcare insurance premiums for all retirees at the blended rate for
each family classification. The annual required contribution(ARC)to the Plan includes the employer's pay-as-
you-go amount and an additional amount calculated to prefund future benefits.
On January 1, 2012 the District changed insurance carriers to a health plan arrangement that is not community
rated and began accounting for the implicit rate subsidy. The District elected to use the alternative measurement
method,which is an alternative to an actuarial study that is available only to employers with less than 100 plan
participants. Since the District was formed in 2002 and does not have many employees,it does not have
significant historical experience data on which to base some of the assumptions normally applied to determine its
ARC. The District had an actuary perform a separate study to estimate its OPEB liability as a result of changes in
its health plan arrangement.
36
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Far fiscal year 2014-15,the District made no significant contributions to the Plan and there were no retiree
payments. There are currently 23 active employees who receive health care benefits. The monthly contribution
per employee for group health coverage for the year ended June 30, 2015,ranged from$630 for employee-only
coverage to $1,875 for family coverage.
Annual OPEB Cost and Net OPEB Obli a� tion The District's annual other postemployment benefit cost is
calculated based on the annual required contribution of the employer(ARC) , an amount actuarially determined in
accordance with the parameters of GASB Statement 45 or, in the case of the District, estimated under the
alternative measurement method. The ARC represents a level of funding that, if paid on an ongoing basis, is
projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period of not more
than five years. During the year ended June 30, 2014,the District changed its amortization period from 30 years
to five years.
The following table shows the components of the District's annual OPEB cost for the year ended June 30, 2015,
tbe amount actually contributed to the Plan, and changes in the District's OPEB obligation to the Plan.
Annual Required Contribution $ 209,816
Interest on Net OPEB Obligation 14,873
5-Year Amortization of AAL (125,194)
Annual OPEB Cost(Expense) 99,495
Contributions Made (4,237)
Increase in Net OPEB Obligation 95,258
Net OPEB Obligation, Beginning of Year 371,825
Net OPEB Obligation, End of Year $ 467,083
Fundin_ P�o1�iCX The District has elected to not prefitnd the actuarially determined future cost amount of$467,083.
The District funds the benefits on a pay-as-you-go basis. Since the total annual contribution in the current year
was less than the Annual Required Contribution, a liability is presented on the District's Statement of Net
Position.
The District's annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB
obligation for the years ended June 30, 2015, 2014 and 2013 was as follows:
Percentage of
Fiscal Annual Annual OPEB Net OPEB
Year Ending OPEB Cost Contributions Contributed Obligation
June 30, 2015 $ 99,495 $ 4,237 4.26% $ 467,083
June 30, 2014 $ 157,594 $ 1,436 0.91% $ 371,825
June 30, 2013 $ 169,871 $ 359 021% $ 215,667
37
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Funded Status and Fundin_g Pro_�As of July 1, 2012,the most recent alternative valuation date,the Plan was
considered unfunded. The actuarial accrued liability for benefits was $579,601, and the actuarial value of assets
was $0, resulting in an unfunded actuarial accrued liability(UAAL) of$579,601. The covered payroll (annual
payroll of active employees covered by the Plan)was $2,194,542 and the ratio of the UAAL to the covered
payroll was 26.4%.
Actuarial valuations or estimates under the alternative measurement method of an ongoing plan involve estimates
of the value of reported amounts and assumptions about the probability of occurrence of 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 included
below presents trend information about whether the actuarial value of plan assets is increasing or decreasing over
tiine relative to the actuarial accrued liabilities for benefits.
Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the
substanrive 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 the effects of short-term volatiliry in actuarial accrued liabilities and the actuarial value of assets,
consistent with the long-term perspective of the calculations.
Assumptions used in calculating the actuarialliabilities associated with the District's health plan include a 4.0%
investment return and discount rate; an insurance premium annual trend rate of 7.0% and other assumptions as
provided by the alternative measurement method.
The Projected Unit Credit Actuarial Cost Method is used to determine the Normal Cost and Actuarial Accrued
Liability. Under this method,the expected accrued benefit of each participant at benefit commencement
(reflecting future expected increases in salaries and medical premiums) is allocated in equal proportion over the
participant's years of service from hire to expected retirement. The normal cost is the present value of benefits
expected to accrue in the current year. The present value of benefits accrued as of the valuation date is called the
accrued liability. The difference between the accrued liability and the actuarial value of plan assets is called the
unfunded accrued liabiliry. The unfunded accrued liability is being amortized over a closed period of five years.
The District's plan is deemed to be "unfunded"in accordance with the relevant GASB statements.
38
Sunriver Service District
Notes to Financial Statements
June 30, 2015
The table below presents a schedule of funding progress for the most recent actuarial valuation for the District's
postretirement health plan.
Actuarial
Accrued Unfunded UAAL as a
Actuarial Liability (Overfunded) Percentage
Value of (AAL) ALL Funded Covered of Covered
Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll
Date (a) (b) (b-a) (a/b) (c) (b-a1c)
January 1, 2012 $ - $ 533,179 $ 533,179 0°/o $2,300,097 23.2%
July 1, 2012 $ - $ 579,601 $ 579,601 0°/a $2,194,542 26.4%
Note 6 - Risk Management
The District is exposed to various risks of loss related to torts; theft of, dainage to and destruction of assets; errors
and omissions; injuries to employees and others and natural disasters. To reduce the risk of incurring material
losses related to the above, the District pays annual insurance premiums to a commercial slipplier. Limitations on
claims are as follows: General and commercial auto up to $1,000,000; excess liability up to $1,000,000 and
pollution liability up to $100,000.
Tbe District also carries commercial insurance for workers' compensation and employee health and accident
insurance. Settled claims from those risks have not exceeded commercial insurance coverage in any of the past
three fiscal years.
Note 7 - Related Parties
The District has a related party relationship with the Sunriver Owners Association(the Association). The District
leases space from the Association, and contracts with the Association for administrative, clerical and accounting
services. The District incurred expenses of$199,420 for the aforementioned services during the year ended June
30, 2015. Additionally, the Associarion paid the District$36,127 during the year ended June 30, 2015 for bike
patrol and code enforcement services.
Note 8 - Leases
The District leases the fire department building, as well as the office occupied by the police department. Both
leases automatically renew each year for successive one year terms. Rent increases two percent annually and was
$4,798 per month for the fire department lease and$1,057 per month for the police department during the 2014—
2015 fiscal year. Total rent expense of$70,260 was charged to public safety for the year ended June 30, 2015.
The District leases land for the future site of a fire training facility. The District paid a non-refundable $5,000
payment as a lease consideration upon execution of the lease in a prior fiscal year. Upon the completion of certain
project conditions, the District will begin paying$200 per month as a minimum rent for the premises. The lease
term will be twenty years with four consecutive five year renewal term options.
39
Sunriver Service District
Notes to Financial Statements
June 30, 2015
Note 9 - Adoption of New Standard
As of July 1, 2014,the District adopted GASB Statement No. 68,Accounting and Financial Reporting for
Pensions and GASB Statement No. 71,Pension Ti^ansition for Contributions Made Subsequent to the
Measurement Date. The implementation of these standards requires governments calculate and report the cost and
obligations associated with pensions in their financial statements, including additional note disclosures and
required supplementary information. Beginning net position was restated to retroactively report the beginning net
pension liability and deferred outflows of resources related to contributions made after the measurement date as
follows:
Net position at June 30, 2014, as previously reported $ 3,585,657
Net pension liability at June 30, 2014 (1,282,923)
Deferred outflows of resources related to contributions made during the year
ended June 30, 2014 250,351
Net position at July 1, 2014, as restated $ 2,553,085
Note 10 - Subsequent Events
Subsequent to the fiscal year ended June 30, 2015,but prior to issuance of the report,the District committed to
purchasing a Pierce Velociry Pumper Truck for a total cost of$643,650, and an ambulance remount for a total
cost of approximately $179,000.
Subsequent to the fiscal year ended June 30,2015, the District entered into a confidential separation agreement
with an employee. The claim was asserted during the 2014—2015 fiscal year and the terms of the settlement were
determined prior to issuance of the financial statements. As such, the amounts due as a result of the settlement
have been accrued as of June 30, 20l 5 and included in expense.
40
Required Supplementary Information
June 30, 2015
Sunriver Service District
www. debaill� .com
Sunriver Service District
Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget to Actual-General Fund
Year Ended June 30, 2015
Budgeted Amounts Variance With
Original Final Actual Fina] Budget
Revenues
Property taxes $ 4,167,500 $ 4,167,500 $ 4,250,893 $ 83,393
Contract payments 5,000 5,000 5,227 227
Interest income 6,000 6,000 18,964 12,964
Charges for services 197,900 197,900 189,611 (8,289)
Grant revenue - - 10,264 10,264
Miscellaneous 17,500 17,500 40,167 22,667
Total revenues 4,393,900 4,393,900 4,515,126 121,226
Expenditures
Police
Personal services 1,407,411 1,407,4ll 1,263,740 143,671
Materials and services 210,450 220,450 161,660 58,790
1,617,861 1,627,861 1,425,400 202,461
Fire and emergency services
Personal services 1,857,234 1,907,234 1,844,381 62,853
Materials and services 336,370 336,370 316,194 20,176
2,193,604 2,243,604 2,160,575 83,029
Bike Patrol
Personal services 80,508 80,508 51,119 29,389
Materials and services 5,500 15,500 5,802 9,698
86,008 96,008 56,921 39,087
General
Personal services - 25,000 12,184 12,816
Materials and services 157,475 157,475 142,438 15,037
Capital outlay 100 100 (735) 835
Debt service 100 100 - 100
Contingency 2,026,115 1,931,115 - 1,931,115
2,183,790 2,ll3,790 153,887 1,959,903
Total expenditures 6,081,263 6,081,263 3,796,783 2,284,480
41
Sunriver Service District
Schedule of Revenues, Expenditures and Changes in Fund Balance—Budget to Actual—General Fund
Year Ended June 30, 2015
Budgeted Amounts Variance With
Original Final Actual Final Budget
Excess (deficiency) of revenues
over expenditures (1,687,363) (1,687,363) 718,343 2,405,706
Other financing uses
Transfer to Reserve Sub-Fund (270,000) (270,000) (270,000) -
Net Change in Fund Balance (1,957,363) (1,957,363) 448,343 2,405,706
Fund Balance, Beginning of Year 1,957,363 1,957,363 2,301,708 344,345
Fund Balance, End of Year $ - $ - $ 2,750,051 $ 2,750,051
42
Sunriver Service District
Schedule of Revenues, Expenditures and Changes in Fund Balance—Budget to Actual—Reserve (Sub-Fund of
General Fund)
Year Ended June 30, 2015
Budgeted Amounts Variance With
Original Final Actual Final Budget
Revenues
Interest income $ 3,000 $ 3,000 $ 4,151 $ 1,151
Expenditures
Materials and services ]20 120 120 -
Capital outlay 13,800 13,800 8,635 5,165
Total expenditures 13,920 13,920 8,755 5,165
Excess (deficiency) of
revenues over expenditures (10,920) (10,920) (4,604) (4,014)
Other Financing Sources
Proceeds from sale of assets - - 6,800 6,800
Transfer in -General Fund 270,000 270,000 270,000 -
Total other financing sources 270,000 270,000 276,800 6,800
Net Change in Fund Balance 259,080 259,080 272,196 13,116
Fund Balance, Beginning of Year 876,122 876,122 874,814 (1,308)
Fund Balance, End of Year $ 1,135,202 $ 1,135,202 $ 1,147,010 $ 11,808
43
Sunriver Service District
Schedule of Proportionate Share of the Net Pension Liability
Oregon Public Employee Retirement System Defined Benefit Pension Plan
Last 10 Fiscal Years*
(B) Employer Pension Plan
(A) Employer Proportionate (C)/(B) Fiduciary Net
Proportion(%) Share ($) of Proportionate Position
of Collective Collective Net (C) Covered Share as percentage of
Net Pension Pension Employee as percentage of Total Pension
Measurement Date Liability Liability Payroll Covered Payroll Liability
June 30, 2014 0.03% $ (569,849) $ 1,938,853 -29.39% 103.59%
June 30, 2013 0.03% $ 1,282,923 $ 1,962,706 6537% 91.97%
*GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a
full 10-year trend is compiled,the District will present information for those years for which information
is available.
44
Sunriver Service District
Schedule of Employer Contributions
Oregon Public Employee Retirement System Defined Benefit Pension Plan
Last 10 Fiscal Years
June 30, 2015 June 30, 2014 June 30, 2013 June 30, 2012
Actuarially determined contributions $ 344,715 $ 370,775 $ 373,768 $ 393,895
Contributions in relation to actuarially
determined contributions 344,715 370,775 373,768 393,895
Contribution deficiency(excess) $ - $ - $ - $ -
Covered-employee payroll $ 1,773,659 $ 1,938,853 $ 1,962,706 $ 2,139,266
Contributions as a percentage of
covered-employee payroll 19.44% 19.12% 19.04% 18.41%
June 30, 2011 June 30, 2010 June 30, 2009 June 30, 2008
Actuarially determined contributions $ 298,2]3 $ 289,961 $ 306,860 $ 30],140
Contributions in relation to actuarially
determined contributions 298,213 289,961 306,860 301,140
Contribution deficiency(excess) $ - $ - $ - $ -
Covered-employee payroll $ 2,033,353 $ ],945,274 $ 1,8]9,490 $ 1,661,261
Contributions as a percentage of
covered-employee payroll 14.67% 14.91% 16.87% 18.13%
June 30, 2007 June 30, 2006
Actuarially determined contributions $ 343,453 $ 3ll,909
Contributions in relation to actuarially
determined contributions 343,453 311,909
Contribution deficiency(excess) $ - $ -
Covered-employee payroll $ 1,567,297 $ 1,466,005
Contributions as a percentage of
covered-employee payroll 21.91% 21.28°/o
45
Other Supplementary Information
June 30, 2015
Sunriver Service District
www. debaill� .com
Sunriver Service District
Combining Balance Sheet—General Fund and Reserve Sub-Fund
June 30, 2015
Reserve
Genera] Fund Sub-Fund Total
Assets
Cash and investments $ 2,893,034 $ 1,147,010 $ 4,040,044
Property taxes receivable 120,879 - 120,879
Accounts receivable, net of
allowance for uncollectible accounts 42,513 - 42,513
Total assets $ 3,056,426 $ 1,147,010 $ 4,203,436
Liabilities
Accounts payable $ 94,180 $ - $ 94,180
Accrued payroll and related taxes 103,707 - 103,707
Totalliabilities 197,887 - 197,887
Deferred Inflows of Resources
Unavailable revenue -property taxes 108,488 - 108,488
Fund Balances
Assigned for future expenditures - 1,147,010 1,147,010
Unassigned 2,750,051 - 2,750,051
Total fund balances 2,750,051 1,147,010 3,897,061
Total Liabilities, Deferred Inflows of Resources
and Fund Balances $ 3,056,426 $ 1,147,010 $ 4,203,436
46
Sunriver Service District
Combining Statement of Revenues, Expenditures and Changes in Fund Balance—General Fund and Reserve Sub-
Fund
Year Ended June 30, 2015
Reserve
General Fund Sub-Fund Total
Revenues
Taxes and assessments $ 4,250,893 $ - $ 4,250,893
Interest incoine 18,964 4,151 23,115
Charges for services 194,838 - 194,838
Grant revenue ]0,264 - ]0,264
Other revenues 40,167 - 40,]67
Total revenues 4,515,126 4,151 4,519,277
Expenditures
Public safety 3,797,518 120 3,797,638
Capital outlay (735) 8,635 7,900
Total expenditures 3,796,783 8,755 3,805,538
Excess (Deficiency) of Revenues over Expenditures 718,343 (4,604) 713,739
Other Financing Sources (Uses)
Proceeds from sale of assets - 6,800 6,800
Transfers in - 270,000 270,000
Transfers out (270,000) - (270,000)
Total other financing sources (uses) (270,000) 276,800 6,800
Net Change in Fund Balance 448,343 272,196 720,539
Fund Balance, Beginning of Year 2,301,708 874,814 3,176,522
Fund Balance, End of Year $ 2,750,051 $ 1,147,010 $ 3,897,061
47
Sunriver Service District
Schedule of Property Tax Transactions
Year Ended June 30, 2015
Beginning Taxes
Balance and Interest Receivable
Tax Year 2014-15 Levy Adjustments (Discounts) Collections June 30, 2015
2014-2015 $ 4,340,899 $ (15,549) $ (108,161) $ 4,147,850 $ 69,339
2013-2014 81,852 (1,322) 3,089 56,370 27,249
2012-2013 36,343 (121) 3,197 24,704 14,715
2011-2012 20,499 (129) 3,499 18,378 5,491
2010-2011 6,712 (62) 1,477 6,583 1,544
2009-2010 1,947 (97) 356 1,178 1,028
2008-2009 1,038 (27) 126 362 775
zoo�-2oos 249 �9� lo z� z23
2006-2007 148 (3) 3 7 141
2005-2006 125 - 6 13 ll 8
Prior 274 - 16 34 256
Totals $ 4,490,086 $ (17,319) $ (96,382) 4,255,506 $ 120,879
Adjustments for Accruals
June 30, 2014 (17,004)
June 30, 2015 12,391
Modified accrual basis tax revenue $ 4,250,893
48
�����
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CP�4s�.�Uti1NES5.AnVI5t�R5
Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed in Accordance with
Govevnment Auditing Standards
Deschutes County Commissioners and Managing Board
Sunriver Service District
Sunriver, Oregon
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Audi2ing Standards,
issued by the Comptroller General of the United States, the financial statements of the governmental
activities and the general fund of Sunriver Service District(the District) as of and for the year ended June
30, 2015, and the related notes to the financial statements, which collectively comprise the District's basic
financial statements, and have issued our report thereon dated November 19, 2015.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District's internal
control over financial reporring(internal control)to determine the audit procedures that are appropriate in
the circumstances for the purpose of expressing our opinions on the financial statements,but not for the
purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly,we
do not eXpress an opinion on the effectiveness of the District's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination
of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement
of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with
governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may
exist that were not identified. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses or significant deficiencies.
www.�ic���rilly�.com 49
877 W.Main St.,Ste.800 � Boise,ID 83702-5858 � T 208.344.7150 I. F 208.344.7435 � EOE
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District's financial statements are free from material
misstatement,we performed tests of its compliance with certain provisions of laws, regulations, contracts, and
grant agreements,noncompliance with which could have a direct and material effect on the determination of
financial statement amounts. However,providing an opinion on compliance with those provisions was not an
objective of our audit, and accordingly,we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance or other matters that are required to be reported under Government Auditing
Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the
results of that testing, and not to provide an opinion on the effectiveness of the District's internal control or on
compliance. This report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the District's internal control and compliance. Accordingly,this communication is not
suitable for any other purpose.
� � �
Boise, Idaho
November 19, 2015
50
Audit Comments and Disclosures Required by State
Regulations
June 30, 2015
Sunriver Service District
www. debaill� .com
Sunriver Service District
Audit Comi�nents and Disclosures Required by State Regulators
June 30, 2015
Audit Comments and Disclosures Required by State Regulations
Oregon Administrative Rules 162-010-0000 through 162-010-0320 of the Minimum Standards for Audits of
Oregon Municipal Corporations,prescribed by the Secretary of State in cooperation with the Oregon State Board
of Accountancy, enumerate the financial statements, schedules, comments, and disclosures required in audit
reparts. The required statements and schedules are set forth in the preceding sections of this report. Required
comments and disclosures related to the audit of such statements and schedules are set forth in the following
pages.
51
�����
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('P,4s�.]�L'c.l\£ti5,Al}V l��f:ti
Independent Auditor's Report Required by Oregon State Regulations
Deschutes County Commissioners and Managing Board
Sunriver Service District
Sunriver, Oregon
We have audited the basic financial statements of Sunriver Service District(the District) as of and for the
year ended June 30, 2015, and have issued our report thereon dated November 19, 20]5. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and
the provisions of the Minimum Standards of Audits of Oregon Municipal Corporations,prescribed by the
Secretary of State. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the basic financial statements are free froin material misstatement.
Compliance
As part of obtaining reasonable assurance about whether the District's financial statements are free of
material misstatement,we performed tests of its compliance with certain provisions of laws,regulations,
contracts, and grants, including provisions of Oregon Revised Statutes as specified in Oregon
Administrative Rules 162-010-0000 through 162-010-0320, as set forth below, noncompliance with
which could have a direct and material effect on the determination of financial statements amounts:
Instances of Non-
OAR Section Compliance Identified
162-010-0000 Preface Not Applicable
162-010-0010 Definitions Not Applicable
162-010-0020 General Requirements None noted
162-010-0030 Contracts None noted
162-010-0050 Financial Statements None noted
162-010-0115 Required Supplementary Information(RSI) None noted
162-010-0120 Supplementary Financial Information None noted
162-010-0130 Schedule of Revenues,Expenditures/Expenses,and Changes in Fund None noted
Balances/Net Position,Budget and Actual (Each Fund)
162-010-0140 Schedule of Accountability for Independently Elected Officials Not Applicable
162-010-0150 Schedule of Property Tax Transactions or Acreage Assessments None noted
162-010-0190 Other Financial or Statistical Information Not Applicable
162-010-0200 Independent Auditor's Review of Fiscal Affairs None noted
162-010-0230 Accounring Records and Internal Control None noted
162-010-0240 Public Fund Deposits None noted
162-010-0250 Indebtedness Not Applicable
162-010-0260 Budget None noted
162-010-0270 Insurance and Fidelity Bonds None noted
162-010-0280 Prograins Funded from Outside Sources Not Applicable
162-010-0295 Highway Funds Not Applicable
162-010-0300 Investments None noted
162-010-0310 Public Contracts and Purchasing Not Applicable
162-010-0315 State School Fund Not Applicable
162-010-0316 Public Charter Schools Not Applicable
162-010-0320 Other Comments and Disclosures Not Applicable
www.�ic���rilly�.com 52
877 W.Main St.,Ste.800 � Boise,ID 83702-5858 � T 208.344.7150 I. F 208.344.7435 � EOE
However,providing an opinion on compliance with those provisions was not an objective of our audit
and, accordingly, we do not express such an opinion. The results of our test disclosed no instances of
noncompliance that are required to be reported under Minimum Standards for Audits of Oregon
Municipal Corporations,prescribed by the Secretary of State.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the District's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the
financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's
internal control over financial reporting. Accordingly, we do not eXpress an opinion on the effectiveness
of the District's internal control over financia] reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination
of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement
of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness,yet important enough to merit attention by those charged with
governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may
exist that were not identified. Given these limitations, during our audit we did not identify any
de�ciencies in internal control that we consider to be inaterial weaknesses or significant deficiencies.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Minimum Standards for Audits of Oregon Municipal Corporations,prescribed by the Secretary of State,
in considering the entity's internal control and compliance. Accordingly,this communication is not
suitable for any other purpose.
�
For Eide Bailly LLP
Boise Idaho
November 19, 2015
53