Comprehensive Annual Financial Report

Fiscal Year Ended June 30, 2015 City of Murrieta, California

www.murrieta.org 

CITY OF MURRIETA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

Year Ended June 30, 2015

Prepared By: Finance Department

City of Murrieta Comprehensive Annual Financial Report

Year Ended June 30, 2015

TABLE OF CONTENTS PAGE I. INTRODUCTORY SECTION Letter of Transmittal i List of Principal Officers v Organizational Chart vi GFOA Certificate of Achievement for Excellence in Financial Reporting vii II. FINANCIAL SECTION Independent Auditor’s Report 1 Management’s Discussion & Analysis 4 Basic Financial Statements: Government-wide Financial Statements Statement of Net Position 19 Statement of Activities 20 Fund Financial Statements Balance Sheet - Governmental Funds 21 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of the Statement of Net Position

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Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds

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Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities

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Statement of Net Position - Proprietary Funds - Internal Service 27 Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds

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Statement of Cash Flows - Proprietary Funds 29 Statement of Fiduciary Net Position - Fiduciary Funds 30 Statement of Changes in Net Position - Fiduciary Funds 31 Notes to Financial Statements 32 Required Supplementary Information Schedule of Funding Progress for OPEB 67 Schedule of the City’s Proportionate Share of the Net Pension Liability 68 Schedule of Plan Contributions 69 Budgetary Comparison Schedules: General Fund 70 Fire District 71 Housing Authority 72 Community Service District 73 Notes to Required Supplementary Information 74 Supplementary Information

Combining Balance Sheet - Nonmajor Governmental Funds 75 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Funds

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Budgetary Comparison Schedules - Special Revenue Funds: Block Grants 81

City of Murrieta Comprehensive Annual Financial Report

Year Ended June 30, 2015

TABLE OF CONTENTS - Continued PAGE Seized Assets Forfeitures 82 SLESF 83 Murrieta Public Library 84 NPDES 85 Budgetary Comparison Schedules - Debt Service Funds Citywide 86 Combining Statement of Net Position - Internal Service Funds 87 Combining Statement of Revenues, Expenses and Changes in Net Position - Internal Service Funds

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Combining Statement of Cash Flows - Internal Service Funds 89 Combining Balance Sheet - All Agency Funds 90 Combining Statement of Changes in Fiduciary Assets and Liabilities - All Agency Funds 91 III. STATISTICAL SECTION Statistics

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Net Position by Component 93 Changes in Net Position 95 Fund Balances of Governmental Funds 99 Changes in Fund Balances of Governmental Funds 101 Assessed Value and Estimated Actual Value of Taxable Property 103 Direct and Overlapping Property Tax Rates 104 Principal Property Tax Payers 106 Property Tax Levies and Collections 107 Ratios of Outstanding Debt by Type 108 Ratios of General Bonded Debt Outstanding 109 Direct and Overlapping Governmental Activities Debt 110 Legal Debt Margin Information 111 Demographic and Economic Statistics 112 Principal Employers 113 Full-time-Equivalent City Government Employees by Function/Program 114 Operating Indicators by Function/Program 115 Capital Asset Statistics by Function/Program 116

INTRODUCTORY SECTION

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CITY OF MURRIETA 1 Town Square

Murrieta, CA 92562

December 23, 2015 Honorable Mayor, Members of the City Council and City Manager: The City of Murrieta staff is pleased to present the Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2015. The information found in this report is provided by the Finance Department to the City Council and the public to assist those interested in the city’s fiscal condition. The City assumes full responsibility for the completeness and reliability of the information contained in this report and has established a framework of internal controls for this purpose. Because the cost of any internal control should not outweigh its benefit, internal controls have been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. The independent auditing firm of Van Lant & Fankhanel LLP has issued an unqualified opinion on the City of Murrieta’s financial statements indicating they are free from material misstatement and present fairly the financial position and results of operations of the various funds and account groups of the City. All disclosures necessary to enable the reader to gain an understanding of the City’s financial activities have been included. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview and analysis of the basic financial statements. MD&A complements this letter of transmittal and should be read in conjunction with it. PROFILE OF THE CITY OF MURRIETA Murrieta is located in Southwestern Riverside County and encompasses approximately 28 square miles. Murrieta became a city on July 1, 1991, after voters approved cityhood by an overwhelming margin in November 1990. It is organized as a general law California city and operates under a council/manager form of government. The Murrieta Community Services District (MCSD) was activated on July 1, 1993, as a subsidiary of the City of Murrieta to take over functions previously provided by County Service Area 143. The MCSD provides parks and recreation services to the residents of Murrieta, as well as street lighting, street sweeping and landscape maintenance.

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The Murrieta Fire Protection District was formed in 1948 as an independent, self-governed special district that provides fire protection services. Effective July 1, 1993, the district was reorganized as a subsidiary district of the City. The Murrieta Redevelopment Agency was established in July 1992. An amended redevelopment plan in conformity with the City’s General Plan was adopted in June 1999. The original RDA plan consisted of approximately 1,127 acres located in seven non-contiguous land areas located throughout the City of Murrieta. The plan was amended again in July 2006 to add another 1,193 acres. On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 that provided for the dissolution of all redevelopment agencies in the State of California. The Murrieta Redevelopment Agency (agency) was dissolved and ceased to operate as a legal entity as of February 1, 2012. This action has impacted the reporting entity of the City of Murrieta which had previously reported the redevelopment agency as a blended component unit. Activity of the former redevelopment agency during the dissolution period is being reported in a fiduciary fund (private-purpose trust fund) in the financial statements of the City. The City elected to create the Murrieta Housing Authority in order to continue the housing activities of the former redevelopment agency. The activity of the Housing Authority is being reported as a special revenue fund. The Murrieta Public Library officially opened in April 1999 and is under full authority of the City of Murrieta. Murrieta has experienced significant growth since the mid-1980s and is part of one of the fastest growing areas in California. With a 1980 population of some 2,500 in the area, Murrieta now is home to an estimated 106,425 residents. ECONOMIC CONDITION AND OUTLOOK Murrieta is a young, affluent community ideally located at the junction of the I-15 and I-215 freeways with close proximity to San Diego, Los Angeles and Orange Counties. Murrieta is in the path of growth for these counties and affords business the opportunity to take charge of the future, today. With a population of just over 106,000 and continually recognized as one of the safest cities in the nation, it is easy to see why Murrieta is the ‘Future of Southern California!’ Incorporated in 1991, Murrieta experienced a 343% increase in population in just 24 years and boasts an educated, high-income population comparable to communities in San Diego and Orange Counties. Murrieta’s top-notch school district is rated in the top 10% of the nation and reports a 94.5% graduation rate. The three high schools are rich with robotics clubs, entrepreneurial classes and even offer Mandarin as a foreign language study. New retail centers, industrial buildings and Class A offices have been completed with more in the planning process. With over 2,000 acres of additional available land, Murrieta is attracting upscale retail centers and quality hotels, as well as research and development/medical technology firms and first-rate healthcare facilities. Both Kaiser Permanente and Rady Children’s Hospital are in the process of opening new medical facilities in Murrieta; happily joining the growing healthcare cluster that already includes Loma Linda Medical Center and Rancho Springs Medical Center. Marriott just opened one

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hotel and has another under construction; the Hampton Inn has started construction of a hew hotel in Murrieta as well. The City is encouraging business growth and job creation in the area immediately surrounding Loma Linda Medical Center. To help facilitate, the City has conducted environmental studies in that area to help make the ground “shovel-ready” for the development of Office and Research Parks. Along with efforts to attract jobs to Murrieta, the City also believes there is an opportunity to “grow” jobs in their business incubator. The Murrieta Innovation Center, which is the City’s former City Hall, is home to five start-up technology companies. Murrieta is working with organizations such as SCORE, SBDC and InSoCal CONNECT to attract and grow more technology companies for the region. FINANCIAL INFORMATION The City’s financial records for general governmental operations are maintained on a modified accrual basis. Revenues are recorded when available and measurable, and expenditures are recorded when the services or goods are received and the liability is incurred. Management of the City is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the government are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of the control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. Reporting Entity This Comprehensive Annual Financial Report presents information on the financial position and operations of the City of Murrieta as a single comprehensive reporting entity. The City of Murrieta as well as the Murrieta Fire District, Murrieta Community Services District, Murrieta Public Library, and the Murrieta Financing Authority have been included in this report in accordance with criteria established by the Governmental Accounting Standards Board (GASB). The reporting entity consists of all of the funds and account groups of the primary government (the City of Murrieta), as well as its component units that are legally separate organizations. Blended component units, which are legally separate from the City, but are so intertwined with the City that they are, in substance, the same as the City, include the Murrieta Fire District, Murrieta Community Services District, and the Murrieta Public Library. Long-term Financial Planning Fiscal Year 2014/15 turned out to be a pivotal year for Murrieta. After a sluggish first half of the year, revenues picked up steam in the second half and the General Fund revenue ended up 8.2% higher than the previous year. The City had instituted many cost saving measures including reductions in staffing and employee compensation. At year end, there

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were a total of 59 frozen full-time positions and staff has been paying most or all of the employees’ portion of their annual PERS contributions. Please refer to Note 9B for more information on the PERS retirement funding policy. In order to continue to provide essential City services such as police, fire, street maintenance and library services, the City established a five-year plan utilizing economic contingency funds set aside for this purpose. The City utilized these funds to bridge the gap and maintain services during the recession. As a result of the improving economy, the City was able to end fiscal year 2014-15 without utilizing any economic contingency funds. The City continues to maintain operating reserves of at least 25% for its Library, Fire and General Funds. Despite the recent economic challenges, Murrieta has retained the position as one of the safest cities in the nation in which to live. Budget Process The City Council approves a two-year operating budget and an annual five-year capital improvement program. Public hearings are conducted prior to their adoption. Supplemental appropriations, when required during the year, are also approved by Council. Expenditures may not exceed appropriations at the fund level. The City Manager is authorized to approve operating transfers between departments within a fund without limit. All other budget adjustments require City Council approval. The City maintains budgetary controls to ensure compliance with legal provisions embodied in the annual appropriated budget. AWARDS AND ACKNOWLEDGEMENTS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Murrieta for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2014. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report. This report must satisfy both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City strives to develop a Comprehensive Annual Financial Report which will continue to meet the Certificate of Achievement Program’s requirements, and this report will be submitted to GFOA to determine its eligibility for another certificate. The preparation and development of this report were made possible by the cooperation of the entire City staff and the diligent work of the Finance Department staff. I would also like to express my appreciation to the City Council and City Manager for their support throughout the year. Respectfully submitted, Joy Canfield Administrative Services Director

City of Murrieta List of Principal Officers

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City Manager Rick Dudley 461-6002

Assistant City Manager Kim Summers 461-6116

Administrative Services Director Joy Canfield 461-6437

City Clerk Sarah Manwaring 461-6035

Economic Development Director Bruce Coleman 461-6021

Fire Chief Scott Ferguson 461-6152

Police Chief Sean Hadden 461-6365

Development Services Director Ivan Holler 461-6078

City of Murrieta Organizational Chart 

 

Citizens of Murrieta

City Council

Planning Commission Traffic Commission

Library Advisory Commission Community Service Commission.

Police Chief

City Clerk

Administrative Services Director

Development Services Director

Assistant City Manager

Assistant to the City Manager

Economic Development

Director

City Manager

City Attorney

Fire Chief

Finance

Human Resources/

Risk

Information Services

Planning

Engineering

Building & Safety

Library

Parks & Recreation

Public Works Maintenance

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FINANCIAL SECTION

Independent Auditor’s Report

The Honorable City Council City of Murrieta, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Murrieta (the “City”), as of and for the year ended June 30, 2015, and the related notes to the financial statements which collectively comprise the City’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 accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion 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 risks of material 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.

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Murrieta, as of June 30, 2015, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle As described in Note 9 to the financial statements, in 2015, the City adopted new accounting guidance, GASB Statement No. 68, Accounting and Financial Reporting for Pensions. Our opinion is 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 and required supplementary information 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 required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, the schedules listed in the supplementary information section of the table of contents, and statistical section, are presented for purposes of additional analysis and are not a required part of the basic financial statements.

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The schedules listed in the supplementary information section of the table of contents are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedules listed in the supplementary information section of the table of contents are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated December 23, 2015 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

December 23, 2015

MANAGEMENT’S DISCUSSION AND ANALYSIS This is the thirteenth year the City of Murrieta has issued its financial statements in the format prescribed by the provisions of Government Accounting Standards Board (GASB) Statement No. 34. The impact of the new reporting model on the financial statements constitutes the biggest change in the way governmental activities have previously been reported. GASB Statement No. 34 requires the City to provide this overview of its financial activities for the fiscal year, and should be read in conjunction with the accompanying basic financial statements. FINANCIAL HIGHLIGHTS Program and general revenues were $77,314,538. The cost of governmental activities was $81,360,225. The City’s net position decreased by $4,045,687 as a result of this year’s operations. The City’s net position also reflects a decrease of $24,254,281 due to a restatement detailed in footnote

15. The City’s net position yielded an overall decrease of $28,299,968. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City of Murrieta’s basic financial statements. The City of Murrieta’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements.

COMPONENTS OF THE ANNUAL FINANCIAL REPORT

Management’s Discussion and Analysis Summary

Basic Financial Statements Government-wide Financial Statements Fund Financial Statements Notes to the Financial Statements

Required Supplementary Information Detail

Government-wide financial statements

The government-wide financial statements are designed to provide readers with a broad overview of the City of Murrieta’s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the City of Murrieta’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Murrieta is improving or deteriorating.

The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (i.e. uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City of Murrieta that are principally supported by taxes and intergovernmental revenues (government activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Murrieta include general government, public safety, community development, culture and recreation, and public works.

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The government-wide financial statements include not only the City, but also the Murrieta Financing Authority, the Murrieta Fire Protection District, the Murrieta Community Services District, and the Murrieta Public Library. Although these entities are legally separate, they function, for all practical purposes, as a part of the City, and therefore, have been included as blended component units as an integral part of the primary government.

Fund financial statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Murrieta, like other local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City of Murrieta can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental Funds

Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide statements, governmental fund financial statements focus on near-term and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Murrieta maintains 23 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, the Development Impact Fund, the Fire District Fund, the Other Grants fund, the Housing Authority Fund, the Federal Grants Fund, the Community Service District Fund, and the Area Drainage Capital Projects Fund, all of which are considered to be major funds. Data from the other 15 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements in the supplementary information section of this report. The City of Murrieta adopted an operating budget for its general fund and two of the six other major funds. A budgetary comparison statement has been provided for the General Fund, the Fire District Fund, and the Community Service District Fund in order to demonstrate compliance with this budget.

Proprietary Funds

The City of Murrieta maintains only the internal service fund type of proprietary funds. The internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its Information Technology and Risk Management activities. Because the City does not maintain Enterprise type proprietary funds, all of the internal service funds’ activities have been included within governmental activities in the government-wide financial statements.

Fiduciary Funds

Fiduciary funds are used to account for resources held for the benefit of parties outside the

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government. Fiduciary funds are not reflected in the government-wide financial statement due to the fact that the resources of those funds are not available to support the City of Murrieta’s own programs.

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.

Combining Statements

The combining statements referred to earlier in connection with non-major governmental funds are presented immediately following the notes to the financial statements.

Government-wide Financial Analysis Our analysis focuses on the net position (Table 1) of the City’s governmental activities reported in the government-wide statements.

Table 1

The City’s net position decreased 4.9% from the prior year ($572,943,810 to $544,643,842). The decrease of $28,299,968 comes from the change in net position of $(4,045,687) and a restatement (explained in more detail in note 15 to the financial statements) of $(24,254,281) as recorded in the Statement of Activities and flows through to the Statement of Net Position.

Capital assets have decreased by $165,924. The decrease represents the difference between additions, deletions and depreciation taken in the current year. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.

Current assets increased by $4,571,299. Cash balances increased by $4,405,024 while the various receivable balances decreased by $3,007,316 and prepaid costs increased $7,500. A loan receivable from the Successor Agency of the former Murrieta Redevelopment Agency of $4,815,894 was established this year and is explained in more detail in note 14 to the financial statements. The

Net Position

Governmental Activities

June 2015 June 2014

Current and Other Assets $120,219,142 $115,647,843

Capital Assets $493,485,862 $493,651,786

Total Assets $613,705,004 $609,299,629

Deferred Outflows of Resources $ 8,718,423 $ 0

Other Liabilities $ 11,454,202 $ 7,848,430

Long-term Debt Outstanding $ 58,012,855 $ 28,507,389

Total Liabilities $ 69,467,057 $ 36,355,819

Deferred Inflows of Resources $ 8,312,528 $ 0 Net Position:

Net Investment in Capital Assets $484,398,241 $484,691,786

Restricted $ 79,838,467 $ 81,040,723

Unrestricted $(19,592,806) $ 7,211,301

Total Net Position $544,643,842 $572,943,810

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sale of a parcel of land (reported as land held for resale) for less than book value subsequent to year-end, resulted in a decrease in net realizable value of $1,649,803 at year-end.

Other Liabilities reflect a net increase of $3,605,772 primarily due to a decrease in the various payable accounts totaling $1,416,680 and an increase in deposits payable of $206,558 mostly found in the non-major Developer Agreement Fund. An increase in construction/development activity resulted in an increase in deposits in lieu of construction. A loan payable to the Successor Agency of the former Murrieta Redevelopment Agency for $4,815,894 was established this year and is explained in more detail in note 14 to the financial statements.

Long-term liabilities which increased this year included; the newly recorded net pension liability of $28,169,327; the newly recorded capital Lease payable of $827,621; claims and judgments payable of $4,547,306; compensated absences payable of $384,876; and the other post-employment benefit (OPEB) liability of $1,309,552. The redemption of the current portion of the certificates of participation bonds payable for $700,000 and the elimination of the pension related debt of $5,033,216, resulted in an overall net increase in long-term debt of $29,505,466.

Government Activities The Statement of Activities presents program revenues and expenses and general revenues in detail. All of these are elements of the Changes in Net Position summarized in Table 2. Table 2

Changes in Net Position

Governmental Activities June 2015 June 2014

Expenses Governmental Activities: General Government $ 13,272,032 $ 6,318,278 Public Safety $ 37,185,694 $ 36,928,765 Community Development $ 4,620,996 $ 2,637,132 Culture & Recreation $ 14,018,797 $ 13,911,513 Public Works $ 11,854,445 $ 24,140,175 Interest on Long-Term Debt $ 408,261 $ 378,161 Total Expenses $ 81,360,225 $ 84,314,024 Revenues Program Revenues Charges for Services $ 16,057,684 $ 14,683,825 Operating Contributions and Grants $ 1,910,891 $ 1,890,262 Capital Contributions and Grants $ 13,734,932 $ 14,474,319 Total Program Revenues $ 31,703,507 $ 31,048,406 General Revenues Taxes Property taxes Property transfer tax

$ 25,375,863 $ 599,789

$ 22,877,110 $ 465,828

Transient occupancy tax $ 180,655 $ 152,266 Sales taxes $ 13,869,833 $ 13,293,897 Franchise taxes $ 3,698,577 $ 3,690,452 Business license taxes $ 653,483 $ 594,633 Motor Vehicle in Lieu $ 0 $ 0 Use of money and property $ 1,032,747 $ 1,111,918 Other $ 200,084 $ 1,083,894 Total General Revenues $ 45,611,031 $ 43,269,998 Total Revenues $ 77,314,538 $ 74,318,404 Change in Net Position $ (4,045,687) $ (9,995,620)

Net Position - Beginning Balance $ 572,943,810 $591,860,117 Restatement of Net Position $ (24,254,281) $ (8,920,687) Net Position- Ending Balance $ 544,643,842 $572,943,810

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Total governmental activities expenses decreased by $2,953,799 to $81,360,225. This represents a 3.5% decrease from the prior year.

General government expenses increased by $6,953,754. The increase in expenses in the fund financial statements was $630,011. The remaining expense variance of $6,323,743 occurred during the conversion to the entity-wide statements and included: the addition of claims expense estimated to be $3,000,000 related to a lawsuit for which damages have yet to be quantified; an increase in losses on the disposal of fixed assets totaling $828,802; a change in net position of the internal service fund totaling $2,098,673 a majority of which includes an increase in administration and general expenses of $668,991, an increase in claims expense of $1,505,029 and an increase in interdepartmental charges of $170,951; an increase in the compensated absences liability of $732,970 and; a decrease in the OPEB obligation of $157,375.

At the fund financial statement level, police activities increased $659,620, and fire activities increased $315,739, both as a result of minor increases in salaries, overtime and worker’s compensation expenses. Those increases net against a decrease in depreciation of $72,543, a decrease in pension expense related to GASB 68 totaling $504,460, and a decrease in Supplemental Law Enforcement program expenses of $128,815, resulted in a Government wide increase in public safety totaling $256,929 or .7% for the year.

Community Development expenses increased by $1,983,864. The most significant change from the previous year included the Housing Authority recognizing a reduction at year-end in net realizable value of property sold subsequent to year-end totaling $1,649,803. During the year, the planning department added needed positions including a limited term assistant planner and two part-time planners. As a result, personnel costs increased 14.5% or $100,196. In addition, legal costs increased $27,494 and planning and building and safety contract services increased by $99,913 and $61,611 respectively. These increases were approved in order to address the increased development within the city. In an effort to encourage economic development in Murrieta, the Economic Development department increased marketing efforts to the tune of approximately $30,000 which represents a 45% increase from the previous year.

Culture and Recreation expenses increased $107,284 in the current year. Library operation costs increased $69,600 while the Community Services District’s (CSD) operation’s costs decreased by $59,613. Including other minor variances the overall net increase at the fund level was only $14,359. Depreciation increased by $92,925, which represents the majority of the increase in costs over prior year amounts reported.

Public Works expenses decreased by $12,285,730 in the current year. Public works expenses at the fund level increased overall by only $29,437. Functional depreciation increased by $723,025 resulting from infrastructure projects capitalized in the prior year being depreciated in the current year. The capital outlay adjustment to government fund expenditures decreased by $13,038,192 as the large construction project’s costs were incurred in previous years and completed last year and a limited number of small projects were started in the current year.

It is normal for interest on long-term debt to decrease as principal balances outstanding decrease. A principal reduction of $700,000 in the current year resulted in a decrease in bond related interest of $7,590. In the prior year, the City elected to expense immaterial bond premium/discounts which resulted in a reduction of prior year interest of $37,690. Overall, interest increased by $30,100 as current year interest was not reduced for premiums/discounts.

Program revenues increased a total of $655,101 to $31,703,507. This represents a 2.1% increase over the previous year.

Charges for services increased $1,373,859 during the current year. General governmental charges

increased 6.8% or $21,888.The community development department and public works department charges increased 38.3% or $441,369 and 12.2% or $188,977 respectively. These increases are the direct result of the increase in new projects started during the year. Community development

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plan checks increased from 210 in the prior year to 225 in the current year while engineering permits increased from 630 last year to 663 this year. Culture and recreation charges net increase in the current year was $67,054. This increase was the result of inconsistent treatment of ball field electricity reimbursements. In the previous year, this revenue category was included in miscellaneous general revenues and in the current year is more appropriately reported as functional revenue. Public safety charges for services increased $660,591 in the current year. While the fire department’s subscriptions fees for the year equaled last year’s totals, actual emergency medical service charges increased $258,718 or 319%. Fire services including plan check reviews, inspection and fire engineering charges increased $303,651 as a result of increased building activity within the City. The police department’s charges increased $68,966 over prior year totals due to continued and increased participation in special police activity programs.

Operating contributions and grant revenue increased in total by $20,629. Last year the fire department received $141,208 in funding from the Federal Government as reimbursement for assisting in fighting fires within the national park system with no funding received in the current year. On the other hand, revenue received from Cal EMA for assisting with local fires increased by $142,604 this year. Fire’s FEMA EMPG grant revenue increased by $55,222 as reimbursements were received in the current year for expenses incurred in the prior year. Police services grant revenues decreased by a total of $98,612. Major notable variances include: a $35,723 reduction in the school district resource officer contract; a $23,097 decrease in the Department of Justice INCA task force activity; a $59,733 decrease in the Central Pact (AB109) task force funding and; a $25,594 increase in the State Mandated (SB90) cost reimbursements. In addition to the above, the City received an additional reimbursement from the State of California for police related SB90 claims from 1999 to 2000 totaling $17,514.

Capital grants and contributions decreased this year by $739,387. While police asset forfeiture revenues increased this year by $931,771, public work’s capital grants decreased by $1,671,158. Negative variances occur when capital construction funding is received in prior years and not received in the current year or when the funding received in prior years exceeds the funding received in the current year. Both are an indication that the projects have been completed or are approaching completion. Positive variances occur when current year funding exceeds prior year funding or when funding is received for the first time in the current year. Details of the changes in all capital funding sources are noted below in Table 3.

Table 3 Changes in Capital Grants and Contributions

Total Total Increase Funding Source 6/30/2014 6/30/2015 (Decrease)

Developer Contributions 36,182 10,872 (25,310) Developer Impact Fees 488,381 4,658,715 4,170,334 Measure A 1,879,770 2,028,421 148,651 Gas Tax 3,290,069 2,982,304 (307,765) Water District Reimbursement Agreements 637,300 22,004 (615,296) State Local Partnership Program Grant 2,735,604 764,397 (1,971,207) Air Quality Management District Funding 129,309 132,043 2,734 Community Development Block Grants 11,925 224,369 212,444 Cal Trans HDRR Grant (19,010) 82,595 101,605 Recycling Grant 28,309 27,851 (458) Office of Traffic Safety Grant 25,226 726 (24,500) Riverside County Transportation Committee Grant 2,543,587 356,413 (2,187,174) Surface Transportation Grant 1,801,731 769,324 (1,032,407) Federal Grants 857,112 1,042,740 185,628 National Pollutant Discharge Elimination System (9,974) 416,769 426,743 Area Drainage Fund 38,798 215,389 176,591

Totals 14,474,319 13,734,932 (739,387)

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Chart 1Expenses & Program Revenues

Governmental ActivitiesJune 30, 2015

Expenses Program Revenues

General revenues increased $2,341,033 to $45,611,031 or 5.4% in the current year.

Revenue from taxes increased by $3,304,014 this year. Property taxes increased 10.9% this year which equates to $2,498,753, while property transfer taxes increased by $133,961, which equates to a healthy increase of 28.8%. These substantial increases are the result of continued escalation of property values in conjunction with low mortgage rates spurring an increase in the number of properties sold within the City. Sales tax increased $575,936, transient occupancy tax increased $28,389, franchise taxes increased $8,125 and business license taxes increased $58,850. This equates to an increase in the number of new businesses opening and increased spending within the city. Both are signs the economy continues to recover.

Revenue from use of money and property continued to decrease ($79,171) this year as high yield, long-term investments mature and are replaced with significantly lower yield investments. On the bright side, recent investment yields are on the rise but are still significantly lower than the pre-recession yields.

Other revenues decreased $883,810 this year, the majority of which is attributable to the one time receipt of a $500,000 contribution received last year for the creation of the Town Hall Association Permanent Fund. Other revenue items received in the prior year and not in the current year include the receipt of a risk pool premium refund of $149,841 and liquidated damages received totaling $24,150. Revenues recognized in the wrong year (considered immaterial) represented an overall decrease of $31,594. Revenues recorded as miscellaneous other decreased by $14,872. Donations received in the current year were $20,800 less than what was received in the previous year. Ball field electricity reimbursements totaling $112,779 were reported as other revenue last year but are being reported with charges for services in the current year.

Chart 1 (Expenses and Program Revenues) highlights the cost of each of the City’s five largest programs (general government, public safety, community development, culture & recreation and public works), as well as the associated program revenue. Developer impact fees comprise a large portion of the culture and recreation revenues, and are allocated towards the construction of capital projects. Public works expenses include large capital projects that are funded from prior years’ development impact fees and revenues include capital grant contributions for expenses incurred in prior years. The other three categories indicate the overall cost of the government is more than the revenues generated to support it. The City is not fully recovering the cost of these services with program revenues from user fees and other contributions. The general revenues are used to make up the difference.

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Chart 2 (General Revenues by Source) identifies the various general (or discretionary) revenues available for government programs and services. Financial Analysis of the City’s Funds The City of Murrieta uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The focus of the City of Murrieta’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Murrieta’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City of Murrieta’s governmental funds reported combined ending fund balances of $101,874,784. Included in this amount are net increases in fund balances for the General Fund of $2,849,126, for the Development Impact fund of $490,653, for the Fire District fund of $106,305, the Federal Grants fund of $775,177, the Community Services District fund of $4,077 and the Area Drainage fund of $51,817. In accordance with GASB Statement No. 54 the combined ending fund balance of $101,874,784 is reported as: non-spendable totaling $5,330,894; restricted totaling $68,942,318; committed totaling $12,930,415; assigned totaling $229,744; and the remaining $14,441,413 is reported as unassigned. The non-spendable category represents that portion of fund balance that cannot be spent because it is either (a) not in a spendable form or (b) legally or contractually required to be maintained intact. The restricted category represents that portion of fund balance that reflects constraints placed on the use of resources that are either (a) externally imposed by creditors, grantors, contributors, or laws/regulations of other governments or (b) imposed by law through constitutional provisions or enabling legislation. The committed category represents that portion of fund balance that can only be used for specific purposes pursuant to constraints imposed by formal action of the City of Murrieta’s highest level of decision making authority (City Council) and remains binding unless removed in the same manner. The assigned category represents that portion of fund balance that includes amounts that are constrained by the City of Murrieta’s intent to be used for specific purposes, but that are neither restricted nor committed. Intent was established at either the highest level of decision making, or by an official designated for that purpose. The remaining category, unassigned, is that portion of fund balance that does not fall into one of the four other categories and may only be reported as a positive number in the General Fund. In other governmental funds, if expenditures incurred for specific purposes exceeded the amounts restricted, committed, or assigned, it may be necessary to report a negative unassigned fund balance.

Property Taxes55.6%

Other.4%

Use of Money2.3%

Sales Taxes30.4%

Other Taxes3.1%

Franchise Taxes8.1%

Chart 2General Revenues by Source

June 30, 2015

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General Fund

The General Fund is the chief operating fund of the City of Murrieta. At the end of the current fiscal year, excluding other financing sources (uses), the General Fund had revenues over expenditures of $2,800,640. The unassigned fund balance of the General Fund was $15,381,707 while total fund balance was $24,786,164. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 43 percent and total fund balance represents 69.3 percent of total fund expenditures. General Fund revenues increased $2,796,449 to $38,578,326 in fiscal year 2014/15. Revenues from taxes increased by $1,836,263 as a result of: an increase in sales tax revenue of $530,333; an increase of $28,389 in transient occupancy taxes; and an increase of $58,851 in business license tax revenue, all of which are the result of additional spending within the City. General property taxes increased $1,077,890 and property transfer taxes increased $133,961 as a result of an increase in the quantity of and the increased median sales price of single family residences sold during the current year. License and permit revenues increased $366,722 mainly due to increases in the number of miscellaneous building and safety permits issued. Intergovernmental revenues increased by $165,075 because the State of California paid many of the mandated cost reimbursement claims from 1999 through 2004 that had been deferred in previous years. Charges for services revenue increased $465,124 primarily due to: an increase of $209,236 in engineering plan check fees; an increase in inspection fees of $88,171; and an increase of $71,352 in building and safety plan check fees and; an increase in the general plan fee collected totaling $10,800, all of which are the result of increased building activity within the city. Revenues related to recovery of costs and reimbursement for damage to city property increased $32,655 over last year totals. Code enforcement revenues increased $21,389 as a result of the one half person increase in compliance enforcement. Fines and forfeiture revenue increased $42,921, $30,521 of which is related to an increase in administrative citations thanks to the transition of a code enforcement officer from part-time to full-time. Fines related to false alarms increased by $12,100 due to an increase in collection efforts. Even though interest rates have increased ever so slightly, revenue from use of money and property decreased $104,289 as higher yielding long-term investments matured and have been replaced with significantly lower yield investments. Revenues recorded as miscellaneous because they don’t fall into any of the other categories mentioned above, increased $21,173. Significant changes include a $10,980 increase in directional sign revenue resulting from the increase in new housing development within the City and an increase in donations to the City totaling $10,204. General Fund expenditures were $35,777,686, an increase of $2,196,401 from the prior year expenditures of $33,581,285. This increase is attributable to increases in the general government, public safety, community development, culture and recreation and public works functional cost categories of $651,884, $659,620, $363,553, $19,908, and $118,703, respectively. Capital outlay, increased by $382,730. Only significant variances are discussed below. Significant increases noted in departments reported in the general government function included a $102,282 increase in administration, a $78,849 increase in human resources, a $48,946 increase in city clerk, a $127,711 increase in finance and a $281,084 increase in the non-departmental cost category. Administration salaries, public employee retirement system (PERS) retirement, PERS medical, training, and membership dues all increased by $96,557 mostly due to the addition of a management analyst position for 12 months as opposed to 7 months in the previous year, and the implementation of a citywide customer service training program. Salaries and benefits in the human resources department increased by $45,218 due to the reorganization of the department which included leave buyouts and the addition of temporary part-time positions in order to staff the department for half of the year. Non personnel costs increased $33,631, $21,501 of which was the result of increased recruitment expenses as previously frozen positions were starting to be filled and an increase in legal services of $13,821 related to increased personnel issues. City clerk department personnel costs decreased by $56,403 as there were no retirement related buyouts in the current year. Non personnel costs increased by $105,349 primarily due to the $95,734 increase in election costs incurred for the November, 2014 city council elections. Finance department salaries and benefits increased by $20,587 in conjunction with the reorganization of the finance, human resources

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and information services departments. Non personnel costs increased by $107,123, the majority of which was related to an increase in contracted services totaling $100, 648. Contracted sales tax audits resulted in large fees for the discovery and recovery of misallocated sales tax revenue. A contribution of $200,000 to the post employment benefit trust and an increase in the number of retiree’s resulting in a $35,640 increase in retiree medical costs, made up the majority of the non-departmental cost increases. In addition; non-departmental contract services included 2 new contracts and increased the contract limit for lobbying activities, all to the tune of $80,876 and; subscription-membership dues decreased $32,059 as payment timing differences resulted in larger balances in the prior year. The public safety function is made up of four components, all of which experienced increases in the current year. Police administration increased $35,416. Code enforcement increased $23,074. Police operations increased $71,258. The largest increase occurred in support services with a total of $529,873. Within support services, personnel costs increased by $424,869, the majority of which included increases in: salaries and overtime of $270,582 as previously frozen positions were staffed; leave buyouts of $50,719 and; PERS retirement of $102,696 which coincides with the salary increases and an increase in PERS rates of 1.736% for classic employees. Non personnel costs increased $105,004, a majority of which ($73,109) was related to increases in many of the services for which the police department contracts. The only other significant variance noted was the increase in the information technology and insurance coverage allocations totaling $17,928. Community development is made up of 3 departments including economic development, planning, and building and safety. Economic development costs increased $58,823, $24,656 of which was related to minor increases in all of the personnel related accounts and the remaining $34,167 was mostly the result of an increase in spending relating to marketing activities. Planning department personnel related costs increased by $100,196 with the addition of a limited term assistant planner and two part-time planners. Non personnel costs increased $137,844. The most significant increase was to contract services for $127,407 which included additional legal, planning, landscape architect and traffic engineering consultant services. The building and safety department cost’s increased by $66,690, with the majority being an increase in contract services. Planning and building and safety’s additional costs were directly related to the upswing in construction activity within the city. Public works functional costs are made up of charges from the engineering, maintenance, street- lighting and facilities maintenance departments. Engineering operations and maintenance cost increases of $102,251 were attributable to a $58,896 increase in the various contract services including plan checking, project inspection, engineering and legal and a $35,682 increase in maintenance supply expense. Public works maintenance costs decreased again this year by a total of $29,313. No one account varied by a significant amount. The street lighting cost variances were also minimal. Facility maintenance expenses increased $45,702 specifically in the building maintenance account. Additional maintenance costs were incurred with the replacement of the city hall heating and air conditioning system.

Development Impact Fund

This fund accounts for developer contributions and other revenue sources that are restricted by law or administrative action to expenditures for development purposes related to infrastructure including roads, sidewalks, storm drains, facilities, parks and open space. Development Impact Fund revenues increased by $4,172,273 to $4,822,765. The significant increase in construction activity resulted in an increase in the revenues collected from developers totaling $4,170,334. While revenues increased 641%, expenditures decreased 55% or $4,792,549 to $3,956,921. Expenditures decreased as several major projects were completed in the prior year including the Guava storm drain, the interstate 15 (I-15) and Cal Oaks overpass and the California Oaks Sports Park Teen Center.

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Fire District Fund This fund accounts for proceeds of property taxes and other sources that are restricted by law or administrative action to expenditures for the operation of the City’s five fire stations.

Revenues increased by $1,254,336 to $12,815,938. General and supplemental property taxes increased $898,365 this year as the economy continues to recover. Special assessment taxes, intergovernmental revenues, interest and fines and forfeitures all increased or decreased by nominal amounts. Charges for services revenues increased $530,967. While emergency medical services subscription revenues increased a mere $3,544, the emergency medical service charges increased $258,718. Revenues for performing plan checks, inspections and fire engineering increased $127,533, $63,118 and $112,873 respectively. These increases are all directly related to the increase in development activity in the City. Miscellaneous revenues decreased by $176,640 as an unexpected refund of a risk pool premium from the 1990’s totaling $149,841 was received in the prior year and no such refund was received in the current year. Donations received in the current year were $11,403 less than what was received in the prior year as last year’s donations included $10,000 received from the Riverside County Community Improvement Designation fund that was not repeated in the current year. Expenditures increased by $1,177,573 to $13,236,804. Again this year, the General Fund’s administrative charge of $400,000 for services provided to the fire district was suspended. Fire administration’s overall costs remained consistent with prior year totals. Fleet maintenance overall costs increased by $75,539. Of that amount, $74,144 was attributable to an increase in vehicle maintenance. As fire vehicles age, maintenance of the vehicles will understandably increase. Emergency response personnel costs increased $269,316. Salaries and wages increased $145,539 to reflect step increases. PERS retirement costs increased $121,145 in conjunction with the salary increases and a PERS rate increase of .189%. The most significant increase was $832,071 in capital outlay which represents the purchase of a ladder truck needed to accommodate new higher story construction within the City.

Other Grants

The Other grants fund accounts for expenditures of all grants other than Federal and grants required to be reported separately. Revenues decreased $4,842,993 to $681,230 and expenditures decreased $3,206,942 to $1,314,999 as the State Transportation Improvement Program grant was completed during the year and the California Department of Transportation I-15 interchange grant project is nearing completion.

Housing Authority

This fund accounts for the City’s affordable housing programs which facilitate housing development and affordable housing opportunities. Revenues increased by $122,029 to $128,659 because the Murrieta Redevelopment Successor Agency transferred Redevelopment Property Tax Trust Fund money to the housing authority as a reimbursement for costs incurred during the dissolution of the Murrieta Redevelopment Agency. Expenditures increased $1,641,727 to $1,697,479 as a result of a year-end entry required to adjust the value of land sold subsequent to year-end to its net realizable value at year-end.

Federal Grants Fund

This fund accounts for expenditures made for programs and projects approved and funded (on a cost reimbursement basis) by the Federal Government. Revenues increased from the prior year by $914,877 to $1,003,262 and expenditures decreased by $717,413 to $228,085. Expenses incurred in the prior year and receipt of reimbursement for those expenses in the current year account for the increase in revenues. All of the grants reported in this fund had decreased activity (all below $35,000) with the exception of the Homeland Security Grant; expenses increased from $53,013 in the prior year to $118,094 in the current year.

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Community Service District Fund

This fund accounts for the benefit assessments and a special tax that is charged to property owners within local zones A through I and lighting and landscape districts (LLD) 1 through 28 for recreation, park and open space maintenance, street lighting, street sweeping and slope maintenance services within the districts. Revenues decreased this year by $53,999 to $9,072,453. The benefit assessments decreased overall by $28,544 most of which was noted in LLD 25. This district has excess reserves and no maintenance charges so assessments are declining until the City incurs maintenance costs. Miscellaneous revenue decreased $118,294. Last year’s total miscellaneous revenue included $112,779 in ball field electricity reimbursements. This year’s ball field electricity reimbursements totaling $89,879 were recorded as a charge for services instead of as miscellaneous revenue. This would also account for the $86,974 increase in charges for services. Expenses decreased by $59,613 to $9,980,118 in the current year. Personnel costs increased $33,040 which included an increase in salaries of $20,481 and an increase in PERS retirement of $13,304 related to the salary increases and a PERS rate increase of 1.255%. Operation costs decreased $46,468 with the largest reduction noted in the water account. The community services district local zones experienced an overall decrease in expenses totaling $42,392 also with the largest reductions in the water accounts. The water savings were the result of turf reduction efforts and aggressive water saving efforts to stay within water district set parameters in order to avoid penalties. Lighting and landscape district’s expenses compared to the prior year varied minimally.

Area Drainage Fund

This fund accounts for revenues in the form of mitigation fees imposed by the county of Riverside for construction of drainage facilities. Revenues increased by $184,346 to $259,629 in the current year. Mitigation fees increased $176,591 this year. While there are many new projects ongoing within the city, only seven were subject to this mitigation fee, an increase of 3 from the previous year. Revenue from use of money and property increased $7,051 due to a slight increase in cash balances in the fund. Expenditures decreased by $543,606 to $207,812 as the Guava Street: Jefferson to Murrieta Creek, the Line D and D1-Madison to Jefferson, and the Guava Bridge over Murrieta Creek projects near completion or reach the Area Drainage funding source budget limits.

General Fund Budgetary Highlights General fund revenues were higher than the final amended budget by $2,907,896. The largest budget/actual variance noted resulted from the receipt of a reimbursement for land parcels (used by another city for a freeway off ramp project) totaling $1,063,802. This was a non-budgeted item because the City had no idea of when the reimbursement would be received. Another component of the variance was an unbudgeted transfer in from the former Vehicle Maintenance Internal Service fund totaling $453,664 which no longer operates as an internal service fund for financial statement reporting purposes and is now being reported as part of the General Fund. Revenue categories experiencing the most significant variances between the final amended budget and actual included charges for services, which exceeded the final budget by $525,903 and licenses and permits which exceeded the final budget by $314,123. Charges for services exceeded final budgeted amounts: for community development plan checks by $47,540; for building and safety plan checks by $108,164; for engineering plan checks by $189,380 and; for engineering inspection charges by $70,446. All of these increases were due to the increase in building activity within the city. Revenues related to recovery of costs for repairing damage to city property is reported as charges for services and is not a budgeted item. The reimbursements received in the current year totaled $56,575. Licenses and permits exceeded final budgeted

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amounts for building and safety totaling $238,478 and the planning department’s permit issue fees totaling $74,363. These excess revenues are also the result of increased construction activity within the City. Actual intergovernmental revenues exceeded the final budgeted amount by $262,995, most of which is due to unexpected payments received from the State of California for extremely aged SB90 claims. SB90 claims aren’t usually budgeted because of the uncertainty of timing and amount of payment. Revenue from use of money and property exceeded the final budget by $145,504 as the City is very conservative when estimating these revenues due to the uncertainty of future increases in interest rates. Fines and forfeitures actual revenue exceeded the final budget by $136,486. The largest variances were noted in code enforcement administrative violation fines totaling $38,244 and penal code traffic safety fines totaling $72,987. All other revenue categories varied from final budgeted revenues by minimal amounts. The actual expenditures of the General Fund were $2,418,894 less than the final amended budget. This, along with revenues exceeding projections eliminated the need for use of the originally budgeted economic contingency. The city attorney department expenses were under budget by $152,017 as more of the attorney fees are being direct charged to the various departments. Total non-departmental expenditures were $369,098 less than budgeted, the majority of which was the result of not having to use contingency money set aside for retirements, unemployment claims and other unexpected costs. The building maintenance department expenses were $403,129 less than budgeted. The city clerk department actual costs were less than final budget by $184,689. The finance department actual costs were less than the final budget by $206,124. The police department, as a whole, recognized a savings of $1,006,258. These favorable variances were the result of continuing cost savings measures implemented by management including salary savings from leaving vacant positions unfilled and negotiated changes in employee compensation including contributions towards retirement and healthcare costs. Budgeted street lighting costs exceeded actual costs by $112,847 but only exceeded the prior year totals by $3,218. The City had budgeted for energy cost increases that have yet to occur. The original FY2014/15 budget was approved in June of 2013 as the second year of a two year budget. Revenue adjustments totaling $2,149,496 were made during the current year and included a $1,939,496 increase to taxes and an $815,000 increase to charges for services. These adjustments were made to reflect the upswing in revenues that had begun in the previous year. The budget for several other revenue types was reduced as these revenues didn’t appear to be on schedule with the original budget estimates. The reductions included $270,000 to fines and forfeitures, $192,000 to miscellaneous revenues and $128,000 to use of money and property. Adjustments to increase budgeted expenses totaling $3,520,357 were made during the year the majority of which were to: increase capital outlay by $435,000 in order to replace various departments’ aged vehicles, the purchase of which had been deferred for several years; increase transfers out to include a transfer of $933,973 to the community services district fund in order to cover prior year fund balance deficits, to supplement operations and to fund previously deferred maintenance projects; include a transfer of $127,755 to the risk management fund in order to cover increases in the worker’s compensation rates; increase various maintenance accounts to the sum of $540,000 in order to complete desperately needed repairs that had been deferred for several years; increase various contract service accounts by a total of $247,500 for items like cost allocation, classification, and feasibility studies; increase the post retirement benefit account by $200,000 for approved prefunding and; increase various department salary accounts totaling $782,185 for staffing of previously frozen positions, the mid-year addition of a crime analysis manager, department reorganizations and a to fund a labor negotiation contingency. The remaining adjustments were made to various accounts in order to account for prior year carryovers. Capital Assets At the end of FY 2014/15, the City had capital assets (net of accumulated depreciation) of $493,485,862, including land, construction in progress (CIP), buildings and improvements, improvements to land, parkland improvements, equipment (including vehicles) and infrastructure. Current year additions to all asset categories totaled $15,948,801 while deletions totaled $7,535,753. The remainder of the change is related to an increase in accumulated depreciation for current year’s depreciation.

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Table 3 Long-Term Debt At the end of the current fiscal year, the City of Murrieta had bonded debt and a capital lease outstanding, along with a liability for claims and judgments, an obligation for employee post employment benefits (OPEB), compensated absences payable, and Net Pension liabilities totaling $ 55,012,855. New debt this year includes: the capital lease payable of $827,621 which is the funding source of the new fire ladder truck and; net pension liabilities totaling $28,169,327 which is required to be reported in the financial statements in accordance with GASB 68, implemented in the current year.

Table 4

City of Murrieta Capital Assets*

(Net of Depreciation) Governmental Activities

June 2015 June 2014

Land $179,185,750 $175,623,275

Construction in Progress $ 14,775,177 $ 12,316,425

Buildings & Improvements $ 44,732,982 $ 46,221,445

Improvements to Land $ 2,558,576 $ 2,714,610

Parkland Improvements $ 18,931,499 $ 19,136,500

Equipment $ 5,846,727 $ 5,858,273

Infrastructure $227,455,151 $231,781,258

Total Capital Assets $493,485,862 $493,651,786

*More detailed information about the City’s capital assets is presented in Note 1 and Note 4 to

the financial statements.

City of Murrieta Outstanding Debt*

Governmental Activities June 2015 June 2014

Certificates of Participation Series 2005 $ 1,620,000 $ 1,905,000

Certificates of Participation Series 2007 $ 6,640,000 $ 7,055,000

Capital Lease Payable $ 827,621 $ 0

Net Pension Liability $ 28,169,327 $ 0

Pension Related Debt $ 0 $ 5,033,216

Claims and Judgments $ 7,201,175 $ 2,653,869

OPEB Liability $ 9,308,754 $ 7,999,202

Compensated Absences $ 4,245,978 $ 3,861,102

Total Outstanding Debt $ 58,012,855 $28,507,389

*More detailed information about the City’s long-term debt is presented in Note 5 and Note 15 to the financial statements.

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Economic Factors and Next Year’s Budgets In preparation of the 2015/16 budget, management looked at the following economic factors:

Sales tax revenues continue to improve as the economy recovers

Property tax revenues, which had declined dramatically in recent years, continue to recover and are anticipated to increase due to the housing market recovery

A priority of the City is to maintain a high quality of services while adopting a balanced budget. The proposed budget for FY 2015/16 is balanced utilizing a minimal amount of economic contingency funds as outlined in the City’s five year financial plan. Contacting the City’s Financial Management This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Administrative Services Director at: Administrative Services Director City of Murrieta 1 Town Square Murrieta, CA 92562 (951) 461-6437 jcanfield@murrieta.org

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BASIC FINANCIAL STATEMENTS

GovernmentalActivities

ASSETSCash and Investments 92,186,898$ Receivables:

Accounts 485,720 Taxes 3,930,754 Loans 2,906,482 Accrued Interest 779,571

Prepaid Costs 15,000 Due from Other Governments 4,114,507 Loan Receivable from Successor Agency 4,815,894 Land Held for Resale 8,309,003 Restricted Assets:

Cash and Investments with Fiscal Agent 2,675,313 Capital Assets Not Being Depreciated 193,960,927 Capital Assets, Net of Depreciation 299,524,935

Total Assets 613,705,004

DEFERRED OUTFLOWS OF RESOURCESDeferred Pension Contributions 6,731,394 Proportionate Share Contribution Differences 1,974,053 Pension Actuarial Amounts 12,976

Total Deferred Outflows of Resources 8,718,423

LIABILITIESAccounts Payable 3,727,087 Accrued Liabilities 1,970,329 Accrued Interest 111,426 Due to Other Governments 1,252 Payable to Successor Agency 4,815,894 Deposits Payable 828,214 Noncurrent Liabilities:

Due Within One Year 3,765,523 Due in More Than One Year 54,247,332

Total Liabilities 69,467,057

DEFERRED INFLOWS OF RESOURCESPension Actuarial Amounts 8,312,528

NET POSITIONNet Investment in Capital Assets 484,398,241 Restricted for:

Community DevelopmentExpendable: 19,395,885 Nonexpendable: 500,000

Public Safety 9,298,720 Public Works 40,984,394 Capital Projects 8,560,702 Debt Service 1,098,766

Unrestricted (19,592,866) Total Net Position 544,643,842$

City of MurrietaStatement of Net Position

June 30, 2015

The accompanying notes are an integral part of this statement.

19

Net (Expense)Charges Operating Capital Revenue and

for Grants and Grants and Changes in NetFunctions/Programs Expenses Services Contributions Contributions Net Position

Governmental Activities:General Government 13,272,032$ 344,956$ -$ -$ (12,927,076)$ Public Safety 37,185,694 3,372,277 1,771,525 934,577 (31,107,315) Community Development 4,620,996 1,593,650 127,269 - (2,900,077) Culture and Recreation 14,018,797 9,011,424 561 - (5,006,812) Public Works 11,854,445 1,735,377 11,536 12,800,355 2,692,823 Interest on Long-Term Debt 408,261 - - - (408,261)

Total Governmental Activities 81,360,225$ 16,057,684$ 1,910,891$ 13,734,932$ (49,656,718)

General Revenues:Taxes:

Property Taxes, Levied for General Purpose 25,375,863 Property Transfer Tax 599,789 Transient Occupancy Taxes 180,655 Sales Taxes 13,869,833 Franchise Taxes 3,698,577 Business Licenses Taxes 653,483

Use of Money and Property 1,032,747 Other 200,084

Total General Revenues 45,611,031

Change in Net Position (4,045,687)

Net Position - Beginning of Year 572,943,810

Restatement of Net Position (24,254,281)

Net Position - End of Year 544,643,842$

City of MurrietaStatement of Activities

Year Ended June 30, 2015

Program Revenues

The accompanying notes are an integral part of this statement.

20

DevelopmentGeneral Impact Fire District Other Grants

ASSETSPooled Cash and Investments 23,388,593$ 22,689,931$ 8,429,105$ -$ Receivables:

Accounts 127,887 100,000 55,375 - Taxes 3,171,737 - 531,342 - Loans - - - - Accrued Interest 378,899 - - -

Prepaid Costs 15,000 - - - Due from Other Governments 604,236 - 198,624 780,850 Loan Receivable from Successor Agency 4,815,894 - - - Due from Other Funds 483,980 - - - Land Held for Resale - - - - Restricted Assets:

Cash and Investments with Fiscal Agents - - - -

Total Assets 32,986,226$ 22,789,931$ 9,214,446$ 780,850$

LIABILITIESAccounts Payable 1,277,229$ 331,017$ 173,277$ 696,984$ Accrued Liabilities 1,045,657 19,765 579,849 26,354 Deposits Payable 280,364 - - - Due to Other Governments 1,252 - - - Payable to Successor Agency 4,815,894 - - - Due to Other Funds - - - 37,104

Total Liabilities 7,420,396 350,782 753,126 760,442

DEFERRED INFLOWS OF RESOURCESUnavailable Revenues:

Accounts 361,863 100,000 10,907 - Grants - - - 776,739 Taxes 417,803 - - - Accrued Interest - - - -

Total Deferred Inflows of Resources 779,666 100,000 10,907 776,739

FUND BALANCES (DEFICITS)Nonspendable 4,830,894 - - - Restricted - 22,339,149 8,352,961 20,409 Committed 4,441,271 - - - Assigned 132,292 - 97,452 - Unassigned 15,381,707 - - (776,740)

Total Fund Balances (Deficits) 24,786,164 22,339,149 8,450,413 (756,331)

Total Liabilities, Deferred Inflows ofResources, and Fund Balances (Deficits) 32,986,226$ 22,789,931$ 9,214,446$ 780,850$

Special Revenue

City of MurrietaBalance Sheet

Governmental FundsJune 30, 2015

The accompanying notes are an integral part of this statement.

21

TotalCapital Projects Non-major Total

Housing Federal Community Area Governmental GovernmentalAuthority Grants Service District Drainage Funds Funds

-$ -$ 6,094,884$ 6,049,465$ 21,986,564$ 88,638,542$

- - 47,593 - 2,209 333,064 - - 140,072 - 87,603 3,930,754

2,906,482 - - - - 2,906,482 400,672 - - - - 779,571

- - - - - 15,000 - 169,460 300 - 2,361,037 4,114,507 - - - - - 4,815,894 - - - - - 483,980

8,309,003 - - - - 8,309,003

- - - - 2,675,313 2,675,313

11,616,157$ 169,460$ 6,282,849$ 6,049,465$ 27,112,726$ 117,002,110$

15,043$ 10,178$ 510,789$ 75,119$ 341,848$ 3,431,484$ - 37,318 85,993 - 144,601 1,939,537 - - 22,310 - 525,540 828,214 - - - - - 1,252 - - - - - 4,815,894

108,213 121,964 - - 216,699 483,980

123,256 169,460 619,092 75,119 1,228,688 11,500,361

- - 11,722 - 449,591 934,083 - 133,728 - - 963,940 1,874,407 - - - - - 417,803

400,672 - - - - 400,672

400,672 133,728 11,722 - 1,413,531 3,626,965

- - - - 500,000 5,330,894 11,092,229 - 5,652,035 - 21,485,535 68,942,318

- - - 5,974,346 2,514,798 12,930,415 - - - - - 229,744 - (133,728) - - (29,826) 14,441,413

11,092,229 (133,728) 5,652,035 5,974,346 24,470,507 101,874,784

11,616,157$ 169,460$ 6,282,849$ 6,049,465$ 27,112,726$ 117,002,110$

Special Revenue

22

Fund balances of governmental funds 101,874,784$

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

Governmental funds report all contributions in relation to the Annual RequiredContribution (ARC) for OPEB as expenditures, but in the Statement of Net Position any excess or deficiencies in relation to the ARC are recordedas an asset or a liability. (9,308,754)

Capital assets used in governmental activities are not financial resources and,therefore, are not reported in the funds. 492,995,923

Long term liabilities including bonds payable, compensated absences and pensionrelated debt are not due and payable in the current period and, therefore, arenot reported in the funds:

Bonds payable (8,260,000)Capital Lease Payable (827,621)Compensated absences (4,202,381)Claims Liability (3,000,000)Net Pension Liability (28,169,327)

Amounts for deferred inflows and deferred outflows related to the City's NetPension Liability are not reported in the funds:

Deferred Pension Contributions 6,731,394Pension Actuarial Amounts - Outflows 12,976Proportionate Share Contribution Differences 1,974,053Pension Actuarial Amounts - Inflows (8,312,528)

Accrued interest payable for the current portion of interest due on long-termliabilities has not been reported in the governmental funds. (111,426)

In governmental funds, other long-term assets are not available to pay for currentperiod expenditures and, therefore, are deferred in the funds. 3,626,965

Internal service funds are used by management to charge the costs of certainactivities, such as vehicle maintenance, self-insurance, and informationtechnology, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement ofNet Position. (380,216)

Net position of governmental activities 544,643,842$

City of MurrietaReconciliation of the Balance Sheet of Governmental Funds

to the Statement of Net PositionJune 30, 2015

The accompanying notes are an integral part of this statement.

23

General DevelopmentFund Impact Fire District Other Grants

REVENUESTaxes 32,877,872$ -$ 9,856,205$ -$ Assessments - - 1,472,008 - Licenses and Permits 1,154,123 - - - Intergovernmental 1,069,995 - 423,523 680,980 Charges for Services 2,380,123 - 909,276 - Use of Money and Property 348,104 164,050 98,220 250 Fines and Forfeitures 582,486 - 31,787 - Developer Participation 10,872 4,658,715 - - Miscellaneous 154,751 - 24,919 -

Total Revenues 38,578,326 4,822,765 12,815,938 681,230

EXPENDITURESCurrent:

General Government 5,641,682 - - - Public Safety 23,675,330 - 12,374,970 84,506 Community Development 2,923,517 - - - Culture and Recreation 225,488 - - 22,162 Public Works 2,651,307 18,595 - -

Capital Outlay 660,362 3,938,326 861,834 1,208,331 Debt Service:

Principal Retirement - - - - Interest and Fiscal Charges - - - -

Total Expenditures 35,777,686 3,956,921 13,236,804 1,314,999

Excess (Deficiency) of RevenuesOver Expenditures 2,800,640 865,844 (420,866) (633,769)

OTHER FINANCING SOURCES (USES)Transfers In 821,545 - - - Transfers Out (1,836,861) (375,191) (300,450) - Capital Lease - - 827,621 - Sale of Capital Assets 1,063,802 - - -

Total Other Financing Sources (Uses) 48,486 (375,191) 527,171 -

Net Change in Fund Balances 2,849,126 490,653 106,305 (633,769)

Fund Balances, Beginning of Year 21,937,038 21,848,496 8,344,108 (122,562)

Prior Period Adjustment - - - -

Fund Balances, End of Year 24,786,164$ 22,339,149$ 8,450,413$ (756,331)$

City of MurrietaStatement of Revenues, Expenditures, and Changes in Fund Balances

Governmental FundsYear Ended June 30, 2015

Special Revenue

The accompanying notes are an integral part of this statement.

24

TotalCapital Projects Non-major Total

Housing Federal Community Area Governmental GovernmentalAuthority Grants Service District Drainage Funds Funds

-$ -$ -$ -$ 1,713,703$ 44,447,780$ - - 8,262,722 - 285,901 10,020,631 - - - - - 1,154,123

121,135 1,003,262 - - 7,521,771 10,820,666 - - 654,331 704 278,553 4,222,987

1,024 - 146,096 43,536 161,706 962,986 - - - - 49,270 663,543 - - - 215,389 - 4,884,976

6,500 - 9,304 - 55,073 250,547

128,659 1,003,262 9,072,453 259,629 10,065,977 77,428,239

- - - - 6,360 5,648,042 - 52,068 - - 308,383 36,495,257

1,697,479 - - - - 4,620,996 - - 9,980,118 - 1,927,303 12,155,071 - - - 4,767 2,018,738 4,693,407 - 176,017 - 203,045 5,726,790 12,774,705

- - - - 700,000 700,000 - - - - 399,412 399,412

1,697,479 228,085 9,980,118 207,812 11,086,986 77,486,890

(1,568,820) 775,177 (907,665) 51,817 (1,021,009) (58,651)

- - 933,973 - 1,555,731 3,311,249 - - (22,231) - (768,560) (3,303,293) - - - - - 827,621 - - - - 1,063,802

- - 911,742 - 787,171 1,899,379

(1,568,820) 775,177 4,077 51,817 (233,838) 1,840,728

12,661,049 (908,905) 5,647,958 5,922,529 25,016,616 100,346,327

- - - - (312,271) (312,271)

11,092,229$ (133,728)$ 5,652,035$ 5,974,346$ 24,470,507$ 101,874,784$

Special Revenue

25

Net Changes in Fund Balances - Total Governmental Funds 1,840,728$

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

Governmental funds report all contributions in relation to the Annual Required Contribution (ARC) for OPEB as expenditures, however in the Statement ofActivities only the ARC is an expense. (1,309,552)

Governmental funds report capital outlays as expenditures. However, in the Statementof Activities, the costs of those assets is allocated over their estimated useful livesas depreciation expense. This is the amount by which depreciation exceededcapital outlays in the current period. (400,945)

Issuance of long-term debt (e.g., bonds, leases) provides current financial resourcesto governmental funds, while the repayment of long-term debt principal consumesthe current financial resources of governmental funds. (127,621)

Accrued interest for long-term liabilities. This is the net change in accrued interestfor the current period. (8,849)

The amounts below included in the Statement of Activities do not provide (require)the use of current financial resources and, therefore, are not reported as revenuesor expenditures in governmental funds (net change):

Net Pension Liability 7,222,242Claims Liability (3,000,000)

Compensated absences expenses reported in the Statement of Activities do notrequire the use of current financial resources and, therefore, are not reported asexpenditures in governmental funds. (400,413)

Amounts for deferred inflows and deferred outflows related to the City's NetPension Liability are not reported in the funds. This is the net change in deferredinflows and outflows related to the net pension liability:

Deferred Pension Contributions 315,051Pension Actuarial Amounts - Outflows 12,976Proportionate Share Contribution Differences 1,974,053Pension Actuarial Amounts - Inflows (8,312,528)

Revenues reported in the Statement of Activities, which are not considered availableto finance current expenditures, are not reported as revenues in the governmentalfunds. (113,701)

Internal Service Funds are used by management to charge the costs of certain activities,such as information technology and self-insurance, to individual funds. The netrevenue (expense) of the internal service funds is reported with governmentalactivities. (1,737,128)

Change in Net Position of Governmental Activities (4,045,687)$

City of MurrietaReconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances

of Governmental Funds to the Statement of ActivitiesYear Ended June 30, 2015

The accompanying notes are an integral part of this statement.

26

GovernmentalActivities -

InternalService Funds

ASSETSCurrent:

Cash and Investments 3,548,356$ Accounts Receivable 152,656

Total Current Assets 3,701,012

Noncurrent:Capital Assets - Net of Accumulated Depreciation 489,939

Total Noncurrent Assets 489,939

Total Assets 4,190,951$

LIABILITIESCurrent:

Accounts Payable 295,603$ Accrued Liabilities 30,792 Accrued Compensated Absences 12,569 Accrued Claims and Judgments 2,016,654

Total Current Liabilities 2,355,618

Noncurrent:Accrued Compensated Absences 31,028 Accrued Claims and Judgments 2,184,521

Total Noncurrent Liabilities 2,215,549

Total Liabilities 4,571,167

NET POSITIONNet Investment in Capital Assets 489,939 Unrestricted (870,155)

Net Position (380,216)

Liabilities and Net Position 4,190,951$

City of MurrietaStatement of Net Position

Proprietary FundsJune 30, 2015

The accompanying notes are an integral part of this statement.

27

GovernmentalActivities -

Internal ServiceFunds

OPERATING REVENUESInterdepartmental Charges 4,373,392$ Franchise Taxes 78,200 Miscellaneous 158,250

Total Operating Revenue 4,609,842

OPERATING EXPENSESAdministration and General 3,627,587 Claims Expense 2,706,944 Depreciation Expense 40,639

Total Operating Expenses 6,375,170

Operating Income (Loss) (1,765,328)

NONOPERATING REVENUES (EXPENSES)Interest Revenue 36,156

Total Nonoperating Revenues (Expenses) 36,156

Income (Loss) Before Transfers (1,729,172)

Transfers In 445,708 Transfers Out (453,664)

Change in Net Position (1,737,128)

Total Net Position, Beginning of Year 1,634,560

Prior Period Adjustment (277,648)

Total Net Position, End of Year (380,216)$

City of MurrietaStatement of Revenues, Expenses, and Changes in Net Position

Proprietary FundsYear Ended June 30, 2015

The accompanying notes are an integral part of this statement.

28

GovernmentalActivities -

Internal ServiceFunds

CASH FLOWS FROM OPERATING ACTIVITIESCash Received from Interfund Service Provided 4,496,945$ Cash Paid to Suppliers for Goods and Services (2,792,848) Cash Paid to Employees for Services (778,719) Claims Paid (1,135,309) Other Operating Income 158,086

Net Cash Provided (Used) by Operating Activities (51,845)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIESTransfers In (To) Other Funds (7,956)

Net Cash Provided (Used) by Capital and Related Financing Activities (7,956)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIESPurchases of Capital Assets (275,660)

Net Cash Provided (Used) by Capital and Related Financing Activities (275,660)

CASH FLOWS FROM INVESTING ACTIVITIESInterest Received 36,156

Net Cash Provided (Used) by Investing Activities 36,156

Net Increase (Decrease) in Cash and Cash Equivalents (299,305)

Cash and Cash Equivalents, Beginning of the Year 3,847,661

Cash and Cash Equivalents, End of the Year 3,548,356$

Reconciliation of Operating Income (Loss) toNet Cash Provided (Used) by Operating Activities:Operating Income (Loss) (1,765,328)$

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

Depreciation 40,639 (Increase) Decrease in Accounts Receivable 45,189 Increase (Decrease) in Accounts Payable 90,638 Increase (Decrease) in Accrued Liabilities 5,248 Increase (Decrease) in Claims and Judgments 1,547,306 Increase (Decrease) in Compensated Absences (15,537)

Total Adjustments 1,713,483

TOTAL CASH PROVIDED (USED) BY OPERATING ACTIVITIES (51,845)$

City of MurrietaStatement of Cash Flows

Proprietary FundsYear Ended June 30, 2015

The accompanying notes are an integral part of this statement.

29

Successor AgencyAgency Private-purposeFunds Trust Fund

ASSETSPooled Cash and Investments 5,372,249$ 18,355,729$ Receivables:

Accounts 722,437 - Taxes - -

Receivable from City of Murrieta - 4,815,894 Restricted Assets:

Cash and Investments with Fiscal Agents 21,446,285 4,227,836

Total Assets 27,540,971$ 27,399,459

LIABILITIESAccounts Payable 141,360$ 10,482 Accrued Liabilities - 6,027 Deposits Payable 5,729,006 - Interest Payable - 927,545 Loan Payable to City of Murrieta - 4,815,894 Due to Bondholders 21,670,605 - Bonds Payable - 47,390,000

Total Liabilities 27,540,971$ 53,149,948

NET POSITIONNet Position (Deficit) Held in Trust for Successor Agency (25,750,489)$

City of MurrietaStatement of Fiduciary Net Position

Fiduciary FundsJune 30, 2015

The accompanying notes are an integral part of this statement.

30

SuccessorAgency

Private-purposeTrust Fund

ADDITIONSTaxes 3,407,917$ Interest Income 118,443

Total Additions 3,526,360

DEDUCTIONSAdministrative Costs 415,501 Interest on Bonds 2,266,773

Total Deductions 2,682,274

Change in Net Position 844,086

Net Position - Beginning of Year (26,594,575)

Net Position - End of Year (25,750,489)$

City of MurrietaStatement of Changes in Net Position

Fiduciary FundsYear Ended June 30, 2015

The accompanying notes are an integral part of this statement.

31

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A) Reporting Entity

The City of Murrieta is a reporting entity, which consists of the primary government and component units: Reporting Entity: Primary Government City of Murrieta Component Units: Murrieta Financing Authority Murrieta Fire Protection District Murrieta Community Services District Murrieta Public Library Board As required by accounting principles generally accepted in the United States of America, these financial statements present the City of Murrieta (the primary government) and its component units. Component units are entities for which the government is considered to be financially accountable. The City was incorporated on July 1, 1991, under the laws of the State of California and enjoys all the rights and privileges applicable to a General Law City. It is governed by an elected five-member board. The City operates under a council-manager form of government and currently provides a wide variety of services to its citizens, including: police, fire, public services, community development, general and administrative and other services. As required by accounting principles generally accepted in the United States of America, these financial statements present the City and its component units. Component units are legally separate entities that meet any one of the following three tests: 1. The City appoints the voting majority of the board of the potential component unit and is able to impose

its will on the component unit and/or is in a relationship of financial benefit or burden with the potential component unit.

2. The potential component unit is fiscally dependent upon the City. 3. The financial statements would be misleading if data from the potential component units were not

included. Component units are legally separate entities. However, the City Council serves in separate sessions as the

governing body of these related Agencies and they are, in substance, part of the City’s operations, so data from these units are combined with data of the City. Based on the above criteria, the accompanying financial statements include the financial activities of the following entities: Blended Component Units The Murrieta Financing Authority was formed on March 1, 1993, by a joint powers agreement between the City and the Redevelopment Agency of the City of Murrieta. The City appoints the voting majority of the board and the City has operational responsibility for the Authority. It was created for the purpose of assisting in the financing and refinancing of certain redevelopment activities of the Agency and certain public programs and projects of the City, and for the purpose of aiding in the financing and refinancing of public capital improvements. Separate financial statements are not prepared for the Authority.

32

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued The Murrieta Fire Protection District was an independent (self-governed) special district formed pursuant to the State of California Health and Safety Code commencing with Section 13800, for the purpose of providing fire protection services. Effective July 1, 1993, the District was reorganized to a subsidiary district of the City of Murrieta. The District continues to operate as a special district under the same Health and Safety Code provisions. As a subsidiary district, the City Council of the City of Murrieta now serves as the District’s governing Board of Directors and the City has operational responsibility for the District. The operations of the Fire Protection District are reported as a special revenue fund. Separate financial statements are not prepared for the District. On June 25, 1992, the Board of Supervisors of the County of Riverside adopted Resolution No. 50-90 to form the Murrieta Community Services District (MCSD) as a subsidiary of the City of Murrieta and detach the area within the City boundaries from the county service area (CSA143). The formation of MCSD and the detachment from CSA143 were effective on July 1, 1993. As a subsidiary district, the City Council of the City of Murrieta now serves as the District’s governing Board of Directors and the City has operational responsibility for the District. The operations of the Community Services District are reported as a special revenue fund. Separate financial statements are not prepared for the District. The Murrieta Public Library Board was established on February 17, 1998, by City Ordinance 185. The City provides for the Murrieta public library system and adopted the provisions of an act of the legislature of the State of California entitled “Municipal Libraries” as set forth in Education Code Section 18900 et. seq. regarding the regulation and maintenance of a public library system. The City Council of the City of Murrieta now serves as the library’s governing Board of Directors and the City has operational responsibility for the District. The operations of the Murrieta Public Library are reported as a special revenue fund. Separate financial statements are not prepared for the library.

B) 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 nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities that rely, to a significant extent, on fees and charges for support. The primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. 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 or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, 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 included among program revenues are reported instead, as general revenues. Separate financial statements are provided for governmental funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

33

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued C) Basis of Accounting and Measurement Focus

Government-wide fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Fiduciary activities of the City are not included in these statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 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 government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Property taxes, franchise taxes, licenses and interest associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. The City reports the following major governmental funds: The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Development Impact Special Revenue Fund accounts for developer contributions and other revenue sources that are restricted by law or administrative action to expenditures for development purposes. The Fire District Special Revenue Fund accounts for proceeds of property taxes and other sources that are restricted by law or administrative action to expenditures for the operation of the City’s fire stations. The Other Grants Special Revenue Fund accounts for revenue received and expenditures made for grant related programs and projects. The Housing Authority Special Revenue Fund accounts for the revenue received from the City’s affordable housing programs which facilitate housing development and affordable housing opportunities. The Federal Grants Special Revenue Fund accounts for revenue received and expenditures made for Federal approved programs and projects. The Community Service District Special Revenue Fund accounts for the benefit assessments and a special tax that is charged to property owners within the District to provide recreation, park development, street lighting, and slope maintenance. The Area Drainage Capital Projects Fund accounts for mitigation fees imposed by the County of Riverside for construction of drainage facilities to be maintained by the Riverside County Flood Control and Water Conservation District.

34

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued The City also reports the following fund types: Internal Service Funds - These funds account for goods and services provided by one City department to other City departments or agencies. These activities include self-insurance and information technology. Agency Funds - These funds are for the receipt of assessments related to issuance of Community Facilities District and Assessment District bonds and to pay the debt service on these bonds. Private Purpose Trust Fund - This fund is used to account for the balances and transactions of the Successor Agency to the Murrieta Redevelopment Agency. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the government's proprietary funds function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s internal service funds are charges to funds for services. Operating expenses for the internal service funds include the costs of sales and services, maintenance of capital assets, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. The City’s internal service funds are presented in the proprietary fund financial statements. Because the principal users of the internal services are the City’s governmental activities, the financial statements of the internal service funds are consolidated in the governmental activities column when presented in the government-wide financial statements. To the extent possible, the cost of these services is reported in the appropriate functional activity (general government, public safety, community development, etc.).

D) Cash and Investments

Investments for the City, as well as for its component units, are reported at fair value. The State Treasurer’s Investment Pool operates in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the pool shares. For purposes of the statement of cash flows, cash equivalents represents demand deposits of proprietary funds held in financial institutions or in cash management pools where funds can be added or withdrawn at anytime without prior notice or penalty and cash equivalents are highly liquid investments with a maturity of three months or less from the date of purchase.

35

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

E) Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of the interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Advances between funds, as reported in the fund financial statements, are offset by a nonspendable fund balance account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. All trade and property tax receivables are shown net of an allowance for uncollectibles. Property tax revenue is recognized in the fiscal year for which the taxes have been levied providing they become available. Available means then due, or past due and receivable within the current period and collected within the current period or expected to be collected soon enough thereafter (not to exceed 60 days) to be used to pay liabilities of the current period. The County of Riverside collects property taxes for the City. Tax liens attach annually as of 12:01 A.M. on the first day in January preceding the fiscal year for which the taxes are levied. The tax levy covers the fiscal period July 1 to June 30. All secured personal property taxes and one-half of the taxes on real property are due November 1; the second installment is due February 1. All taxes are delinquent, if unpaid, on December 10 and April 10, respectively. Unsecured personal property taxes become due on the first of March each year and are delinquent on August 31.

F) Inventories and Prepaid Items All inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. As of June 30, 2015, the City has no inventory. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.

G) Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks and similar items), are reported in the Governmental Activities column of the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000; and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset's life are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed.

36

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Property, plant and equipment of the primary government, as well as the component units, is depreciated using the straight-line method over the following estimated useful lives:

Building and Improvements 20 to 50 years Equipment 5 to 20 years Furniture and Fixtures 10 to 20 years Infrastructure 20 to 50 years

H) Compensated Absences

All vacation and sick leave pay is accrued when incurred in the government-wide financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Murrieta has six employee bargaining groups, and each group has its own Memorandum of Understanding (MOU). Management is unrepresented and has a compensation plan. All MOUs or plans provide for annual leave (used for both vacation and sick leave) or vacation leave when taken, with a cash-out of unused/accrued leave upon termination. Maximum accrual limits for each MOU or plan are:

Murrieta General Employees Association (MGEA) 544 hours Murrieta Police Officers Association (MPOA) 544 hours Murrieta Police Management Association (MPMA) 544 hours Murrieta Supervisors Association (MSA) 594 hours Management/Confidential (M/C): Confidential At-will Employees

644 Hours 1,000 hours

The Murrieta Firefighters Association (MFA) and Murrieta Fire Management Association (MFMA) 24-hour

battalion chiefs' vacation leave maximum accruals are limited to the equivalent of two years' accrual (annual accruals vary with longevity of employee). MFMA 40-hour battalion chiefs' maximum annaul leave accrual is limited to 644 hours.

Sick leave is payable when an employee is unable to work because of illness. Employees with continuous

employment of five years or more may receive a payment of 25% of unused sick leave when they resign or retire at the then rate of compensation. Employees with continuous employment over ten years may receive a payment of 50% of the unused sick leave when they resign or retire at the then rate of compensation. Police management employees with continuous employment over 15 years may receive a payment of 75% of the unused sick leave when they resign or retire.

The liability for compensated absences will be paid in future years from the Fire, Library, Community Services

District, Information Technology, and General Funds.

37

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

I) Long-Term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the governmental activities statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses.

J) Fund Equity In the government-wide financial statements, net position is classified in the following categories: Net investment in capital assets describes the portion of net position which is represented by the current net book value of the City’s capital assets, less the outstanding balance of any debt issued to finance these assets. Restricted describes the portion of net position which is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulation, laws, or other restrictions which the City cannot unilaterally alter. Unrestricted describes the portion of net position which is not restricted to use.

K) Deferred Outflows/Inflows of Resources

In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents consumption of net position that applies to future period(s) and so will not be recognized as an outflow of resources (expense) until then. The City currently has three items that qualify for reporting in this category. Each of these items are a result of the City’s implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions. See Note 9 – Pension Plans for more information. In addition to liabilities, the statement of financial position 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 a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has one item, which arises only under the modified accrual basis of accounting, and another, which is a result of the City’s implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, which qualify for reporting in this category. Under the modified accrual basis of accounting, the item, unavailable revenue, is reported in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes, special assessments, grant receivables, and other miscellaneous receivables. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.

38

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

L) Net Position Flow Assumption

Sometimes the City will fund outlays for a particular purpose from both restricted (e.g. restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted – net position and unrestricted – net position in the statement of net position, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City’s policy to consider restricted – net position to have been depleted before unrestricted – net position.

M) Fund Balances

Fund balances in governmental funds are reported in classifications that comprise a hierarchy based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the City’s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last. The following classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used: Nonspendable Fund Balance - Amounts that cannot be spent either because they are in nonspendable form or are required to be maintained intact. Restricted Fund Balance - Amounts that are constrained to specific purposes by state or federal laws, or externally imposed conditions by grantors or creditors. Committed Fund Balance - The City Council, as the City’s highest level of decision making authority, may commit fund balance for specific purposes pursuant to constraints imposed by resolution. These committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use through the same type of formal action taken to establish the commitment. City Council action to commit fund balance needs to occur within the fiscal reporting period; however, the amount can be determined subsequently. Assigned Fund Balance - Amounts that are constrained by the City’s intent to be used for specific purposes, but are neither restricted nor committed, should be reported as assigned fund balance. The City’s fund balance policy delegates the authority to assign amounts to be used for specific purposes to the City Manager or designee for the purpose of reporting these amounts in the annual financial statements. Unassigned Fund Balance - These are either residual positive net resources of fund balance in excess of what can properly be classified in one of the other four categories, or negative balances. The General Fund is the only fund that reports a positive unassigned fund balance.

39

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

N) Pensions

For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City of Murrieta’s California Public Employees’ Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. 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.

O) Explanation of Certain Differences Between the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances and the Government-wide Statement of Activities The governmental funds statements of revenues, expenditures and changes in fund balances includes a reconciliation between net changes in fund balances - total governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that “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.” The details of this $(400,945) difference are:

Capital Outlay $ 15,673,142Depreciation Expense (14,166,315)Loss on Disposition of Assets (1,907,772) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities $ (400,945)

Another element of that reconciliation states “the issuance of long-term debt (e.g., bonds, leases) provides

current financial resources to governmental funds, while the repayment of long-term debt principal consumes the current financial resources of governmental funds.” The details of this $(127,621) are:

Bond Repayments $ 700,000Issuance of Capital Lease (827,621) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities $ (127,621)

P) Implementation of Governmental Accounting Standards Board (GASB) Pronouncements

Governmental Accounting Standards Board Statement No. 72

In February of 2015, GASB issued Statement No. 72, Fair Value Measurement and Application. This statement was issued to address accounting and financial reporting issues related to fair value measurements. This GASB Statement is required to be implemented in financial statements issued for the periods beginning after June 15, 2015. The City has elected not to early implement this statement and has not determined its effect on the financial statements.

40

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

2) STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY The following non-major funds had deficit fund balances at June 30, 2015:

Deficit Fund Equity

Special Revenue Funds: Block Grants $ (24,544) SB 1266 Prop. 1B Funds $ (5,272)

These deficits will be eliminated when unavailable revenues are recognized as revenues in the future.

3) CASH AND INVESTMENTS

As of June 30, 2015, cash and investments were reported in the accompanying financial statements:

Governmental Activities $ 94,862,211Fiduciary Funds 49,402,099 $ 144,264,310

The City of Murrieta maintains a cash and investment pool that is available for use for all funds. Each fund types'

position in the pool is reported on the combined balance sheet as cash and investments. The City has adopted an investment policy which authorizes it to invest in various investments.

A) Deposits

At June 30, 2015, the carrying amount of the City’s deposits was $3,423,211 and the bank balance was $3,633,655. The ($210,444) difference represents outstanding checks and other reconciling items.

The California Government Code requires California banks and savings and loan associations to secure a City’s deposits by pledging government securities with a value of 110% of a City’s deposits. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of a City’s total deposits. The City Treasurer may waive the collateral requirements for deposits which are fully insured up to $250,000 by the FDIC. The collateral for deposits in federal and state chartered banks is held in safekeeping by an authorized Agent of Depository recognized by the State of California Department of Banking. The collateral for deposits with savings and loan associations is generally held in safekeeping by the Federal Home Loan Bank in San Francisco, California as an Agent of Depository. These securities are physically held in an undivided pool for all California public agency depositors. Under Government Code 53655, the placement of securities by a bank or savings and loan association with an “Agent of Depository” has the effect of perfecting the security interest in the name of the local governmental agency. Accordingly, all collateral held by California Agents of Depository are considered to be held for, and in the name of, the local governmental agency.

41

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

3) CASH AND INVESTMENTS – Continued

A) Deposits - Continued

Under provision of the City’s investment policy, and in accordance with the California Government Code, the following investments are authorized: U.S. Treasury Obligations (bills, notes, and bonds) U.S. Government Agency Obligations Banker’s Acceptances Commercial Paper Negotiable Certificates of Deposit Medium-term Corporate Notes Shares of Beneficial Interest Local Agency Investment Fund (LAIF) Time Deposits Money Market Mutual Funds

B) Investments Authorized by Debt Agreements

The above investments do not address investment of debt proceeds held by a bond trustee. Investments of debt proceeds held by a bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy.

C) Investments in State Investment Pool

The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in accordance with State statute. The State Treasurer’s Office audits the fund annually. The fair value of the position in the investment pool is the same as the value of the pool shares.

D) GASB Statement No. 31

The City adopted GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, as of July 1, 1997. GASB Statement No. 31 establishes fair value standards for investments in participating interest earning investment contracts, external investment pools, equity securities, option contracts, stock warrants and stock rights that have readily determinable fair values. Accordingly, the City reports its investments at fair value in the balance sheet. All investment income, including changes in the fair value of investments, is recognized as revenue in the operating statement.

42

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

3) CASH AND INVESTMENTS - Continued E) Credit Risk

At June 30, 2015, the City has various investments including Federal Agency Securities, U.S. Treasury Obligations, Corporate Medium-term Notes, Money Market Funds and investments in External Investment Pools. The City’s investment policy does not limit investments in Federal Agency Securities and Treasury Obligations to ratings issued by nationally recognized statistical rating organizations. As of June 30, 2015, the City’s investments in Federal Agency Securities consisted of investments with Federal Home Loan Bank, Federal Farm Credit Bank, Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation. At June 30, 2015, all Federal Securities and Treasury Obligations were rated “AA+” by Standard & Poor’s. The City’s investment policy does restrict investments in Corporate Medium-term Notes (MTN’s) to those rated A or better by a nationally recognized statistical rating organization. As of June 30, 2015, the City’s investments in external investment pools and money market mutual funds are unrated.

F) Custodial Credit Risk

The custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. As of June 30, 2015, none of the City’s deposits or investments were exposed to custodial credit risk.

G) Concentration of Credit Risk

The City’s investment policy imposes restrictions on percentages that the City can invest in certain types of investments and with any one issuer for certain types of investments. GASB 40 requires a separate disclosure if any single issuer comprises more than 5% of the total investment value. As of June 30, 2015, the City’s investments with each of the following issuers exceed 5% of its total investments:

Amount Percentage Issuer Invested of Portfolio

Federal National Mortgage Association $ 10,523,565 7.6% Federal Farm Credit Bank 7,962,225 5.7% Federal Home Loan Bank 9,972,145 7.1% Federal Home Loan Mortgage Corporation 20,844,463 15%

Investments guaranteed by the U.S. government and investments in mutual funds and external investment pools are excluded from this requirement.

43

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

3) CASH AND INVESTMENTS – Continued H) Interest Rate Risk

The City’s investment policy limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The City’s investment policy states that the weighted average maturity of the portfolio should not exceed two years, and the City will not invest in securities maturing more than five years from date of purchase. The only exception to these maturity limits shall be the investment of the gross proceeds of tax-exempt bonds. The City has elected to use the segmented time distribution method of disclosure for its interest rate risk.

Remaining Investment Maturities

Investment Type 6 months or

less 6 months to

1 year

1 to 3 years

3 to 5 years

Fair Value U.S. Treasury Securities $ 7,079,550 $ - $14,078,210 $ 5,940,655 $ 27,098,415Federal Agency Securities 9,009,950 2,002,040 29,069,638 9,220,770 49,302,398Corporate Bonds - 1,998,780 12,882,317 - 14,881,097Commercial Paper - - - - -Money Market Fund 90,739 - - - 90,739LAIF 19,342,223 - - - 19,342,223Cash with Fiscal Agent: Money Market Mutual Funds 28,349,434 - - - 28,349,434 Total $63,871,896 $ 4,000,820 $56,030,165 $15,161,425 $139,064,306

44

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

4) CAPITAL ASSETS Capital asset activity for the year ended June 30, 2015, is as follows:

Beginning Ending Balance Additions Deletions Transfers Balance Governmental Activities: Capital Assets, Not Being Depreciated:

Land $ 175,623,275 $ 4,037,600 $ 1,468,368 $ 993,243 $ 179,185,750 Construction in Progress 12,316,425 6,792,696 - (4,333,944) 14,775,177 Total Capital Assets, Not Being Depreciated

187,939,700

10,830,296

1,468,368

(3,340,701)

193,960,927

Capital Assets Being Depreciated: Buildings and Improvements 61,707,774 936,753 1,000,000 - 61,644,527 Improvements to Land 3,412,003 - - - 3,412,003 Parkland Improvements 25,138,000 133,698 3,738 993,695 26,261,655 Equipment 16,930,413 734,675 472,855 517,223 17,709,456 Infrastructure 358,708,161 3,313,379 4,590,792 1,829,783 359,260,531 Total Capital Assets Being Depreciated

465,896,351

5,118,505

6,067,385

3,340,701

468,288,172

Less Accumulated Depreciation: Buildings and Improvements 15,486,329 2,050,216 625,000 - 16,911,545 Improvements to Land 697,393 156,034 - - 853,427 Parkland Improvements 6,001,500 1,309,263 1,308 20,701 7,330,156 Equipment 11,072,140 1,264,382 453,092 (20,701) 11,862,729 Infrastructure 126,926,903 9,427,058 4,548,581 - 131,805,380 Total Accumulated Depreciation 160,184,265 14,206,953 5,627,981 - 168,763,237 Total Capital Assets Being Depreciated, Net

305,712,086

(9,088,448)

(439,404)

3,340,701

299,524,935

Government Activities Capital Assets, Net

$ 493,651,786

$ 1,741,848

$ (1,907,772)

$ -

$ 493,485,862

Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental Activities: General Government $ 1,188,555 Public Safety 1,563,574 Public Works 9,591,099 Culture and Recreation 1,863,725 Total Depreciation Expense $14,206,953

45

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

5) LONG-TERM DEBT A) Bonds Payable

1. On February 15, 2005, the Murrieta Financing Authority issued $4,100,000 of Certificates of Participation to finance the City Hall Facility. The Authority and the City have entered into a lease agreement whereby the City will lease the project from the Authority. The Certificates shall mature on March 1 in each of the years and shall pay interest starting at 3.000% and increasing each year thereafter. The Certificates maturing on March 1, 2015 and after, are subject to optional redemption prior to maturity, in whole or in part.

The following is a schedule by years of future minimum debt service requirements as of June 30, 2015:

Year Ending June 30, Principal Interest Total

2016 $ 295,000 $ 72,456 $ 367,4562017 310,000 59,181 369,1812018 325,000 45,231 370,2312019 335,000 30,606 365,6062020 355,000 15,531 370,531

Total $ 1,620,000 $ 223,005 $ 1,843,005

2. On October 24, 2007, the Murrieta Financing Authority issued $9,550,000 of Refunding Certificates of

Participation to advance refund the 1997 Certificates of Participation. The bonds consist of $6,945,000 serial bonds with annual maturity dates from April 1, 2008 through April 1, 2023, with interest rates ranging from 3.50% to 5.00% and term bonds of $2,605,000 with an interest rate of 4.54% and annual maturity dates from April 1, 2024 through April 1, 2027. Interest is payable semiannually beginning April 1, 2008.

The following is a schedule by years of future minimum debt service requirements as of June 30, 2015:

Year Ending June 30, Principal Interest Total

2016 $ 435,000 $ 290,458 $ 725,4582017 450,000 274,145 724,1452018 475,000 251,645 726,6452019 490,000 233,239 723,2392020 510,000 213,639 723,639

2021-2025 2,920,000 703,946 3,623,9462026-2027 1,360,000 89,906 1,449,906

Total $ 6,640,000 $ 2,056,978 $ 8,696,978

46

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

5) LONG-TERM DEBT - Continued

B) Capital Lease Payable The City entered into a lease purchase agreement dated September 11, 2014 to purchase a fire truck. The purchase cost and accumulated depreciation of the fire truck acquired through the capital lease at June 30, 2015 was $827,621 and $0, respectively. The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2015, were as follows:

Year Ending June 30, Lease Payment

2016 $ 219,838 2017 219,837 2018 219,838 2019 219,837

Total 879,350

Less amount representing interest (51,729) Present value of net minimum lease payments $ 827,621

C) Changes in Long-term Debt

The following is a schedule of changes in long-term debt of the City for the fiscal year ended June 30, 2015:

The OPEB liability is fully liquidated by the General Fund.

Beginning Ending Due Within Balance Additions Deletions Balance One Year Bonds Payable: Certificates of Participation, Series 2005

$ 1,905,000

$ -

$ 285,000

$ 1,620,000

$ 295,000

Refunding Certificates of Participation, Series 2007

7,055,000

-

415,000

6,640,000

435,000

Pension Related Debt 5,033,216 - 5,033,216 - -Net Pension Liability - 35,391,569 7,222,242 28,169,327 -Capital Lease Payable - 827,621 - 827,621 199,395Claims and Judgments 2,653,869 5,706,944 1,159,638 7,201,175 2,016,654OPEB Liability 7,999,202 2,265,641 956,089 9,308,754 -Compensated Absences 3,861,102 4,299,815 3,914,939 4,245,978 819,474 Total Long-Term Debt $ 28,507,389 $ 48,491,590 $ 18,986,124 $ 58,012,855 $ 3,765,523

47

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

5) LONG-TERM DEBT - Continued

D) Defeased Bonds

In 2007-2008, the City defeased the Certificates of Participation Series 1997 by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the financial statements. At June 30, 2015, the following bond issues are considered defeased:

Outstanding Original Balance at Amount June 30, 2015 Certificates of Participation, Series 1997 $ 11,000,000 $ 6,665,000

E) Fiduciary Fund

As of June 30, 2015, the following long-term debt is reported in a private-purpose trust fund due to the dissolution of redevelopment agencies by the State of California: On August 1, 2002, the Agency issued the Murrieta Redevelopment Project Tax Allocation Bonds of 2002 in the amount of $12,000,000. The bonds bear interest at rates varying from 1.40% to 3.75%. Interest on the bonds is payable semi-annually each February 1 and August 1 beginning August 1, 2003.

The following is a schedule by years of future minimum debt service requirements as of June 30, 2015:

Year Ending June 30, Principal Interest Total

2016 $ 320,000 $ 435,150 $ 755,150 2017 335,000 419,184 754,184 2018 350,000 402,488 752,488 2019 370,000 384,937 754,937 2020 390,000 366,413 756,413

2021-2025 2,235,000 1,521,434 3,756,434 2026-2030 2,860,000 890,500 3,750,500 2031-2033 2,075,000 158,875 2,233,875

Total $ 8,935,000 $ 4,578,981 $ 13,513,981

On February 23, 2005, the Murrieta Redevelopment Agency issued $12,195,000 Murrieta Redevelopment Project 2005 Tax Allocation Bonds for the purpose of financing redevelopment activities. The bonds consist of $6,395,000 serial bonds with annual maturity dates from August 1, 2006 through August 1, 2025, with interest rates ranging from 3.0% to 4.375% and term bonds of $2,570,000 with an interest rate of 4.5%, maturing August 1, 2030, and term bonds of $3,230,000 with an interest rate of 5.0%, maturing August 1, 2035. Interest is payable semiannually beginning August 1, 2005.

48

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

5) LONG-TERM DEBT - Continued The following is a schedule by years of future minimum debt service requirements as of June 30, 2015:

Year Ending June 30, Principal Interest Total

2016 $ 300,000 $ 440,124 $ 740,1242017 315,000 428,199 743,1992018 325,000 415,399 740,3992019 340,000 402,099 742,0992020 350,000 388,299 738,299

2021-2025 1,985,000 1,704,738 3,689,7382026-2030 2,460,000 1,219,419 3,679,4192031-2035 3,075,000 576,475 3,651,475

2036 715,000 17,875 732,875

Total $ 9,865,000 $ 5,592,627 $ 15,457,627

On July 12, 2007, the Murrieta Redevelopment Agency issued $31,610,000 Murrieta Redevelopment Project 2007 Tax Allocation Bonds for the purpose of financing redevelopment activities in the project area. The bonds consist of $6,190,000 serial bonds with annual maturity dates from August 1, 2008 through August 1, 2021, with interest rates ranging from 4.00% to 4.375 %, term bonds of $1,950,000 with an interest rate of 5.0% and annual maturity dates from August 1, 2022 through August 1, 2024, term bonds of $3,065,000 with an interest rate of 4.75% and annual maturity dates from August 1, 2025 through August 1, 2028, term bonds of $14,100,000 with an interest rate of 5.0% and annual maturity dates from August 1, 2029 through August 1, 2037, and escrow term bonds of $6,305,000 with an interest rate of 4.7%, and annual maturity dates from August 1, 2011 through August 1, 2037. Interest is payable semiannually beginning February 1, 2008. The following is a schedule by years of future minimum debt service requirements as of June 30, 2015:

June 30, Principal Interest Total

2016 $ 610,000 $ 1,360,899 $ 1,970,899 2017 635,000 1,334,949 1,969,949 2018 665,000 1,307,846 1,972,846 2019 685,000 1,281,615 1,966,615 2020 720,000 1,249,088 1,969,088

2021-2025 4,115,000 5,709,764 9,824,764 2026-2030 5,185,000 4,599,289 9,784,289 2031-2035 7,850,000 3,108,965 10,958,965 2036-2038 8,125,000 646,618 8,771,618

Total $ 28,590,000 $ 20,599,033 $ 49,189,033

49

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

5) LONG-TERM DEBT - Continued The following is a schedule of changes in long-term debt of the Successor Agency for the fiscal year ended June 30, 2015.

Loan Payable to the City of Murrieta

The loan payable to the City of Murrieta for $4,815,894 is the result of re-establishing loans between the City and the former redevelopment agency. See Note 14 for additional information related to this loan.

6) INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS

The following represents the composition of interfund balances as of June 30, 2015: A) Due To / From Other Funds

DUE TO Non-major Other Housing Federal Governmental Grants Authority Grants Funds Total

DUE FROM General Fund $ 37,104 $ 108,213 $ 121,964 $ 216,699 $ 483,980

Total $ 37,104 $ 108,213 $ 121,964 $ 216,699 $ 483,980

These were the result of routine interfund transactions due to eliminating temporary deficit cash balances. B) Interfund Transfers

TRANSFERS OUT Development Internal Community Non-major General Impact Fire Service Service Governmental

TRANSFERS IN Fund Fund District Funds District Funds Total General Fund $ - $ - $ 300,450 $ 453,664 $ 22,231 $ 45,200 $ 821,545 Community Service 933,973 - - - - - 933,973 Internal Service Funds 445,708 - - - - - 445,708 Non-major Governmental Funds

457,180

375,191

-

-

-

723,360

1,555,731

Total $ 1,836,861 $ 375,191 $ 300,450 $ 453,664 $ 22,231 $ 768,560 $ 3,756,957

Beginning Ending Due Within Balance Additions Deletions Balance One Year Bonds Payable: Tax Allocation Bonds, Series 2002 $ 9,240,000 $ - $ 305,000 $ 8,935,000 $ 320,000 Tax Allocation Bonds, Series 2005 10,155,000 - 290,000 9,865,000 300,000 Tax Allocation Bonds, Series 2007 29,170,000 - 580,000 28,590,000 610,000 Total $ 48,565,000 $ - $ 1,175,000 47,390,000 $ 1,230,000

50

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

6) INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS - Continued

During the year, interfund transfers were made for purposes of financing administrative costs, capital improvements and repayment of debt. Specifically, the following transfers were made: Certain funds made payments to the General Fund for administrative costs incurred. These transfers to

the General Fund for the year were $300,450 from the Fire District Fund, $22,231 from the Community Service District Fund, and $45,200 from Non-major Government Funds.

The Development Impact Fund transferred $375,191 to the Citywide Debt Service Fund for debt service. Non-major Governmental Funds transferred $723,360 to the Citywide Debt Service Fund for debt service

purposes. The General Fund transferred $445,708 and $457,180 to the Internal Service Funds and Non-major

Governmental Funds, respectively, for project costs. The Internal Service Funds transferred $453,664 to the General Fund to combine the Equipment

Replacement Internal Service as part of the General Fund. The General Fund transferred $933,973 to the Community Services District to help offset increased water

costs due to the drought and to fund deferred maintenance projects.

51

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

7) FUND BALANCE Details of the City's governmental fund balances at June 30, 2015, are presented below: General Development Fire Other Housing Fund Impact District Grants Authority Nonspendable: Prepaid Costs $ 15,000 $ $ $ $ Long-term Receivable 4,815,894 Endowments

Restricted for: Infrastructure Development Fire Protection 1,131,147 8,352,961 Public Safety 168,900 Public Library Services 537,970 Regional Transportation Improvement Projects

12,190,569

Capital Improvement Projects 334,731 Land Acquisition 1,533,832 Housing 11,092,229 Street Maintenance Air Pollution Reduction Measures Storm Drain Pollution Reduction Measures

3,093,349

Community Service Programs 77,719 20,409 Recreation Capital Projects 3,270,932 Special District Operations Historic Preservation Debt Service Committed to: Public Safety 302,337 Capital Improvement Projects 2,302,187 Area Drainage Continuing Appropriations 66,750 Land Acquisition 1,769,997 Assigned to: General Plan 96,431 Repairs and Equipment 22,920 93,821 Special Programs 4,560 3,631 Produce for People 8,381

Unassigned 15,381,707 (776,740) Total Fund Balance (Deficit) $ 24,786,164 $ 22,339,149 $ 8,450,413 $ (756,331) $ 11,092,229

52

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

7) FUND BALANCE - Continued

Total Community Non-major Federal Services Area Governmental Grants District Drainage Funds Total

Nonspendable: Prepaid Costs $ $ $ $ 15,000 Long-term Receivable 4,815,894 Endowments 500,000 500,000

Restricted for: Infrastructure Development 1,652,242 1,652,242 Fire Protection 9,484,108 Public Safety 934,852 1,103,752 Public Library Services 2,218,819 2,756,789 Regional Transportation Improvement Projects

12,190,569

Capital Improvement Projects 334,731 Land Acquisition 1,533,832 Housing 11,092,229 Street Maintenance 14,684,656 14,684,656 Air Pollution Reduction Measures 390,324 390,324 Storm Drain Pollution Reduction Measures

505,876

3,599,225

Community Service Programs 143,437 241,565 Recreation Capital Projects 3,270,932 Special District Operations 5,416,770 5,416,770 Historic Preservation 91,828 91,828 Debt Service 1,098,766 1,098,766 Committed to: Public Safety 302,337 Capital Improvement Projects 2,514,798 4,816,985 Area Drainage 5,974,346 5,974,346 Continuing Appropriations 66,750 Land Acquisition 1,769,997 Assigned to: General Plan 96,431 Repairs and Equipment 116,741 Special Programs 8,191 Produce for People 8,381

Unassigned (133,728) (29,826) 14,441,413 Total Fund Balance (Deficit) $ (133,728) $ 5,652,035 $ 5,974,346 $ 24,470,507 $101,874,784

53

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

7) FUND BALANCE - Continued

The unassigned category above encompasses fund designations that do not satisfy the criteria of the other categories presented. The $20,197,601 reported in the General Fund includes the council approved economic contingency of $5,009,915 and operating reserve of $9,599,427. Included in Committed fund balance of the General Fund are encumbrances of $66,750. The encumbrances represent amounts at year-end that are expected to be honored upon performance by the vendor in the following fiscal year.

8) SUMMARY DISCLOSURE OF SELF-INSURANCE CONTINGENCIES

The City is exposed to various risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The City currently reports all of its risk management activities in its Risk Management Internal Service Fund. The City is self-insured at various levels for different exposures: $125,000 on each general liability claim, $250,000 on each workers’ compensation claim and $250,000 on employment practices liability claims. Above the self insurance layer, the City participates in the Public Entity Risk Management Authority (PERMA) for pooled layers of losses and excess policies. The general liability limit is $50,000,000 through excess coverage with the California State Association of Counties Excess Insurance Authority (CSAC-EIA). Workers’ compensation excess is with the Local Agency Risk Management Authority (LAWCX) with the statutory limit required by state law and $5,000,000 of employers’ liability. Employment practices liability is with the Employment Risk Management Authority (ERMA) to a limit of $1,000,000 with excess provided by CSAC-EIA up to $50,000,000. Property insurance is for replacement coverage, excluding earthquake, with a deductible from $2,500 to $25,000 depending on the nature of the loss. The employee dishonesty bond limit is $1,000,000 with a deductible from $1,000 to $5,000 depending on the loss. Claims expenditures and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. These losses include an estimate of claims that have been incurred but not reported (IBNR). At June 30, 2015, the amount of these liabilities was $7,201,175. The amount represents an estimate of $5,362,806 for reported claims through June 30, 2015, and $1,838,369 of IBNR. This liability is the City’s best estimate based on available information. There are no significant reductions in insurance coverage from prior years and also there have been no settlements exceeding the insurance coverage for each of the past three fiscal years. The following represents the changes in claims liabilities:

Claims and Liability at Changes in Claim Liability at

Year Beginning Estimates Payments End

2015 $ 2,653,869 $ 5,706,944 $ (1,159,638) $ 7,201,1752014 2,339,385 784,288 (469,804) 2,653,869

54

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

8) SUMMARY DISCLOSURE OF SELF-INSURANCE CONTINGENCIES - Continued

The City of Murrieta is a member of the Public Entity Risk Management Authority (a joint powers authority) for the purpose of pooling losses and claims of general liability and workers’ compensation with those of other member cities and agencies. The City continues to carry commercial insurance, both primary and excess, for all other risks of loss.

The Murrieta Fire District belongs to the Fire Agencies Insurance Risk Authority (FAIRA), a joint powers authority,

for the purpose of pooling losses and claims for excess liability, property and physical damage. 9) PENSION PLANS

General Information about the Defined Benefit Pension Plans Plan Descriptions – All qualified permanent and probationary employees are eligible to participate in the City’s Miscellaneous Employee Pension Plans, cost-sharing multiple employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS). Benefit provisions under the Plans are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website. Benefits Provided – The Plans are cost-sharing multiple-employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS). A full description of the pension plan benefit provisions, assumptions for funding purposes but not accounting purposes, and membership information is listed in the June 30, 2013 Annual Actuarial Valuation Report. Details of the benefits provided can be obtained in Appendix B of the June 30, 2013 actuarial valuation report. This report is a publically available valuation report that can be obtained at CalPERS’ website under Forms and Publications.

Miscellaneous Miscellaneous

Miscellaneous Tier II PEPRA

Prior to On or after On or after

Hire date January 1, 2013 January 1, 2013 January 1, 2013

Benefit formula 2.7% @ 55 2% @ 60 2% @ 62

Benefit vesting schedule 5 years service 5 years service 5 years service

Benefit payments monthly for life monthly for life monthly for life

Retirement age 55 60 62

Monthly benefits, as a % of eligible compensation Highest single year 3-year average 3-year average

Required employee contribution rates 8% 7% 6.500%

Required employer contribution rates 20.115% 8.476% 6.500%

55

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

9) PENSION PLANS - Continued

Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the year ended June 30, 2015, the contributions recognized as part of pension expense for each Plan were as follows:

Safety Police Safety Police

Safety Police Tier II PEPRA

Prior to On or after On or after

Hire date January 1, 2013 January 1, 2013 January 1, 2013

Benefit formula 3% @ 50 3% @ 55 2.7% @ 57

Benefit vesting schedule 5 years service 5 years service 5 years service

Benefit payments monthly for life monthly for life monthly for life

Retirement age 50 55 57

Monthly benefits, as a % of eligible compensation Highest single year 3-year average 3-year average

Required employee contribution rates 9% 9% 11.5%

Required employer contribution rates 30.661% 21.367% 11.5%

Safety Fire Safety Fire

Safety Fire Tier II PEPRA

Prior to On or after On or after

Hire date January 1, 2013 January 1, 2013 January 1, 2013

Benefit formula 3% @ 50 3% @ 55 2.7% @ 57

Benefit vesting schedule 5 years service 5 years service 5 years service

Benefit payments monthly for life monthly for life monthly for life

Retirement age 50 55 57

Monthly benefits, as a % of eligible compensation Highest single year 3-year average 3-year average

Required employee contribution rates 9% 9% 11.5%

Required employer contribution rates 33.056% 33.056% 11.5%

Miscellaneous Safety

Contributions - employer 1,514,903$ 3,115,527$

Contributions - employee (paid by employer) - 895,020

56

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

9) PENSION PLANS - Continued

Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions As of June 30, 2015, the City reported net pension liabilities for its proportionate shares of the net pension liability of each Plan as follows:

The City’s net pension liability for each Plan is measured as the proportionate share of the net pension liability. The net pension liability of each of the Plans is measured as of June 30, 2014, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2013 rolled forward to June 30, 2014 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability as of June 30, 2013 and 2014 was as follows:

Proportionate Share of

Net Pension Liability

Miscellaneous 9,629,244$

Safety 18,540,083

Total Net Pension Liability 28,169,327$

Miscellaneous Safety

Proportion - June 30, 2013 0.3651% 0.48962%

Proportion - June 30, 2014 0.3896% 0.49428%

Change - Increase (Decrease) 0.0245% 0.00466%

57

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

9) PENSION PLANS - Continued For the year ended June 30, 2015, the City recognized pension expense of $5,525,450. At June 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

$6,731,394 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Deferred Outflows Deferred Inflows

of Resources of Resources

Pension contributions subsequent to measurement date 6,731,394$ -$

Differences between actual and expected experience - -

Changes in assumptions - -

Change in employer's proportion and differences

between the employer's contributions and the

employer's proportionate share of contributions 1,987,029 1,342,619

Net differences between projected and actual

earnings on plan investments - 6,969,909

Total 8,718,423$ 8,312,528$

Year Ended

June 30,

2016 (1,512,331)$

2017 (1,512,331)

2018 (1,558,360)

2019 (1,742,477)

2020 -

Thereafter -

58

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

9) PENSION PLANS - Continued Actuarial Assumptions – The total pension liabilities in the June 30, 2013 actuarial valuations were

determined using the following actuarial assumptions:

The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2013 valuation were based on the results of a January 2014 actuarial experience study for the period 1997 to 2011. Further details of the Experience Study can be found on the CalPERS website. Discount Rate – The discount rate used to measure the total pension liability was 7.50% for each Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.50 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7.50 percent will be applied to all plans in the Public Employees Retirement Fund (PERF). The stress test results are presented in a detailed report that can be obtained from the CalPERS website. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

All Plans

Valuation date June 30, 2013

Measurement date June 30, 2014

Actuarial cost method entry-age normal

Actuarial assumptions:

Discount rate 7.50%

Inflation 2.75%

Payroll growth 3.00%

Projected salary increase (1)

Investment rate of return 7.50% (2)

Mortality (3)

(1) Depending on age, service and type of employment

(2) Net of pension plan investment expenses, including inflation

(3) Derived using CalPERS’ Membership Data for all Funds.

59

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

9) PENSION PLANS - Continued In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses.

Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate – The following presents the City’s proportionate share of the net pension liability for each Plan, calculated using the discount rate for each Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

New Strategic Real Return Real Return

Asset Class Allocation Years 1 - 10 (1) Years 11+ (2)

Global Equity 47% 5.25% 5.71%

Global Fixed Income 19% 0.99% 2.43%

Inflation Sensitive 6% 0.45% 3.36%

Private Equity 12% 6.83% 6.95%

Real Estate 11% 4.50% 5.13%

Infrastructure and Forestland 3% 4.50% 5.09%

Liquidity 2% -0.55% -1.05%

(1) An expected inflation of 2.5% used for this period.

(2) An expected inflation of 3.0% used for this period.

Miscellaneous Safety

1% Decrease 6.50% 6.50%

Net Pension Liability 15,325,119$ 30,125,102$

Current Discount Rate 7.50% 7.50%

Net Pension Liability 9,629,244$ 18,540,083$

1% Increase 8.50% 8.50%

Net Pension Liability 4,902,209$ 8,994,528$

60

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

9) PENSION PLANS - Continued Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports. Payable to the Pension Plan At June 30, 2015, the City reported a payable of $0 for the outstanding amount of contributions to the pension plan required for the year ended June 30, 2015.

Defined Contribution Plan In accordance with the Federal Omnibus Budget Reconciliation Act of 1990, the City provides pension benefits for all of it’s hourly employees through a defined contribution plan provided and administered by Public Agency Retirement Services. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. All hourly employees are eligible to participate from the date of employment. Federal legislation requires a contribution of at least 7.5% to a retirement plan. The plan is established by City ordinance. The City contributes 1.3% of the employees’ salary as deferred compensation. Additionally, employees contribute 6.2% of salary towards this program on a pre-tax basis. The City’s contribution for each employee (and interest earned by the accounts) is fully vested immediately. For the year ended June 30, 2015, the City’s payroll covered by the plan was $469,537. The City recognized pension expense of $6,143 (1.3% of current covered payroll), and employees contributed $29,310 (6.2% of current covered payroll). Employees are immediately vested in their own and City contributions and earnings on those contributions.

10) POST-EMPLOYMENT BENEFITS

A) Plan Description The City provides other post-employment benefits (OPEB) through the California Employers’ Retiree

Benefit Fund (CERBT), an agent multiple-employer defined benefit healthcare plan administered by the California Public Employees’ Retirement System (CalPERS):

The MGEA and MSA groups and employees covered by the Management and Confidential Compensation Plan hired prior to January 1, 2008 who choose to continue their CalPERS health insurance upon retirement, are eligible to receive a monthly contribution to a Retirement Health Savings Plan (RHS) in the amount of $833.43. Those hired after January 1, 2008 but before July 14, 2014 and retire with 10 years of City service can receive $360.00 per month until Medicare age and then will receive the minimum mandated amount for employer contributions to participate in Public Employees Medical and Hospital Care Act (PEMHCA). Those hired after January 1, 2008 but before July 14, 2014 and retire with less than 10 years of City service and those hired after July 15, 2014 and retire from the City, will receive the minimum mandated amount for employer contributions to participate in PEMCHA (PEMCHA minimum).

61

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

10) POST-EMPLOYMENT BENEFITS - Continued

Employees of the MPOA and MPMA groups hired prior to July 1, 2007 who choose to continue their CalPERS health insurance upon retirement are eligible to receive a monthly contribution to a Retirement Health Savings Plan (RHS) in the amount of $833.43. Those hired after July 1, 2007 who retire with 10 years of City service can receive $360.00 per month until Medicare age and then will receive the PEMCHA minimum contribution. Those hired after July 1, 2007, who retire with less than 10 years of City service will receive the PEMCHA minimum contribution. Employees of the MFA and MFMA groups hired prior to January 1, 2010 who choose to continue their CalPERS health insurance upon retirement are eligible to receive a monthly contribution to a Retirement Health Savings Plan (RHS) in the amount of $833.43. Those hired after January 1, 2010 who retire with 10 years of City service can receive $360.00 per month until Medicare age and then will receive the PEMCHA minimum contribution. Those hired after January 1, 2010, who retire with less than 10 years of City service will receive the PEMCHA minimum contribution. Separate financial statements for the CERBT may be obtained by writing to CalPERS at Lincoln Plaza North 400 Q Street, Sacramento, CA 95814 or by visiting the CalPERS website at www.calpers.ca.gov.

B) Funding Policy The contribution requirements of plan members and the City are established and may be amended by the

City, City Council and/or the employee associations. Currently, contributions are not required from plan members. A contribution of $956,089 was made during the 2014-2015 fiscal year.

As a result, the City calculated and recorded a Net OPEB Obligation, representing the difference between

the Annual Required Contribution (ARC) and actual contributions, as presented below:

Annual Required Contribution (ARC) $ 2,449,277 Interest on Net OPEB Obligation 387,205 Adjustment to ARC (570,841) Annual OPEB Cost 2,265,641 Contribution Made (956,089) Increase (Decrease) in Net OPEB Obligation 1,309,552 Net OPEB Obligation (Asset) - July 1, 2014 7,999,202 Net OPEB Obligation (Asset) - June 30, 2015 $ 9,308,754

The contribution rate of 4.70% is based on the ARC of $2,449,277, an amount actuarially determined in

accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis is projected to cover the annual normal cost and the amortization of unfunded actuarial liabilities (or funding excess) over a thirty year period.

62

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

10) POST-EMPLOYMENT BENEFITS - Continued C) Annual OPEB Costs and Net OPEB Obligation (Asset) The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the Net OPEB

Obligation for the 2014-15 fiscal year and the two preceding years were:

Percentage of Net OPEB Fiscal Year Annual Annual OPEB Obligation

Ended OPEB Cost Cost Contributed (Asset)

6/30/13 $ 2,239,588 27.90% $ 6,532,275 6/30/14 2,185,545 32.88% 7,999,202 6/30/15 2,265,641 42.19% 9,308,754

D) Funded Status and Funding Progress Actuarial valuations 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 City are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future.

As of July 1, 2013, the most current actuarial valuation date, the plan was 10.7% funded. The actuarial

accrued liability for benefits was $20.4 million and the actuarial value of assets was $2.2 million, resulting in an unfunded actuarial accrued liability (UAAL) of $18.2 million. The covered payroll was $21.0 million and the ratio of the UAAL to the covered payroll was 86.7%.

The schedule of funding progress presented as required supplementary information following the notes to

the financial statements, presents multiyear trend information about whether the actuarial value of the plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

E) Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as

understood by the employer and 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 volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the July 1, 2013 actuarial valuation, the Entry Age normal cost, level percent of pay method was used. The

actuarial assumptions include a 4.84% investment rate of return, which is a blended rate of the expected long-term investment return on plan assets and on the employers’ own investments calculated based on the funded level of the plan at the valuation date, projected salary increase of 3.25%, inflation rate of 3.0%, and an annual healthcare cost trend rate of 8.50% initially, 4.64% ultimately. The actuarial value of assets is set equal to the reported market value of assets. The UAAL is being amortized as a level percentage of payroll on an open basis. The remaining amortization period at June 30, 2015 was twenty-four years. The number of active participants is 284.

63

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

11) JOINT FINANCING ACQUISITION AGREEMENTS On September 1, 1991, the City entered into a joint financing and acquisition agreement with the Community Facilities District No. 89-5 (Rancon Business Center) of the County of Riverside and Rancon Business Center/Rancho California, a California joint venture. On July 1, 1991, the City of Murrieta was incorporated. The boundaries of the CFD No. 89-5 are completely within the boundaries of the City of Murrieta; however, the Rancho California Water District now functions as the legislative body of the CFD No. 89-5. On October 24, 1991, the CFD No. 89-5 issued its $18,825,000 Series 1991 Bonds to provide financing for the construction and acquisition of certain public facilities, which include the acquisition and construction of certain roads and associated landscaping facilities. Funds for the bond debt service requirements, as they come due, are to be obtained from a special tax levied against properties within the CFD No. 89-5. The road facilities that were previously to be owned, maintained and operated by the County are to be owned, maintained and operated by the City. On December 1, 1991, the City entered into a joint financing and acquisition agreement with the Community Facilities District No. 89-4 (Walsh Medical Arts Center) of the County of Riverside and Kevin P. Walsh and Regina M. Walsh. The boundaries of the CFD No. 89-4 are completely within the boundaries of the City; however, the board of the County will continue to function as the legislative body of the CFD No. 89-4. On December 20, 1991, the CFD No. 89-4 issued its $4,825,000 Series 1991 Bonds to provide financing for the construction and acquisition of certain public facilities, which include the acquisition and construction of certain roads and associated landscaping facilities and certain flood control and drainage facilities. Funds for the bonds debt service requirements, as they come due, are to be obtained from a special tax levied against properties within the CFD No. 89-4. The road facilities that were previously to be owned, maintained and operated by the County are to be owned, maintained and operated by the City. The flood facilities that were previously to be owned, maintained and operated by the Riverside County Flood Control and Water Conservation District are to be owned, maintained and operated by the City.

12) COMMUNITY FACILITIES DISTRICT (CFD) BONDS (NON-CITY OBLIGATION) The City has issued special tax bonds for various CFDs, which are payable from special taxes levied on property within the Community Facilities Districts according to a methodology approved by the voters within the District and by the City Council. Neither the faith and credit nor taxing power of the City is pledged to the payment of the bonds. Reserves have been established from the bond proceeds to meet delinquencies should they occur. If delinquencies occur beyond the amounts held in those reserves, the City has no duty to pay the delinquency out of any available funds of the City. The City acts solely as an agent for those paying taxes levied and the bondholders. As of June 30, 2015, the remaining balance on the bonds was $116,065,000.

13) JOINTLY GOVERNED ORGANIZATION

The City, in conjunction with four other governmental entities, created the Southwest Communities Financing Authority (Authority) on November 30, 2004. The Authority was formed to issue bonds for the construction of an animal shelter to be used by the member agencies. The Authority’s board is comprised of one member from each participating entity. The City has the following fiscal obligations: debt repayment of any bonds issued, administrative costs and operation of the animal shelter. The debt service payments and the animal shelter operating costs will be prorated to each member based on the percentage of the animals housed at the facility, on an annual basis. The administrative costs will be borne equally by all members. For the year ended June 30, 2015, the City's share of the lease payments was $244,371, and was paid from the General Fund.

64

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

14) CONTINGENT LIABILITIES AND COMMITMENTS Claims and Lawsuits

Various claims and lawsuits are pending against the City. Although the outcome of these claims and lawsuits is not presently determinable, in the opinion of the City’s management, on advice of legal counsel, it is unlikely that they will have a material adverse effect on the accompanying financial statements. The City, in prior years, loaned money to the former redevelopment agency totaling $5,370,000 for the purchase of land and other redevelopment projects. In November 2009, the Board of Directors of the former redevelopment agency approved loan repayment schedules for the two loans which provided for the repayment of the loans plus accrued interest at the rate earned by moneys deposited in the California Local Agency Investment Fund (LAIF) through June 30, 2009. In December 2011, as approved in the 2011-12 operating budget on June 21, 2011, the former redevelopment agency made accelerated loan repayments to the General Fund to payoff the loans of $3,130,591 and $1,369,563 using funds from the former redevelopment agency Low and Moderate Income Housing Fund and the Tax Increment Redevelopment Fund, respectively. The State Department of Finance (DOF) has ruled these loan repayments are unallowable under the law and the City must return the loan repayments that were made to the County. Currently, the City has taken legal action challenging the DOF's decision. Management, in consultation with legal counsel, believe the accelerated loan repayments paid to the General Fund were allowable under the law. It is unclear at this time what the outcome of the DOF's decision will be. However, in order for the Successor Agency to receive their notice of completion, the City, in protest, repaid $4,815,894 to the Successor Agency on December 17, 2015, and the Successor Agency subsequently remitted the $4,815,894 to the County on the same date. Therefore, a liability of $4,815,894 has been established in the General Fund and Governmental Activities as of June 30, 2015. In addition, a loan receivable from the Successor Agency has also been established to reflect the reinstatement of the loans between the City and the former Redevelopment Agency. The loan receivable is considered long-term in nature, and therefore, is included in nonspendable fund balance in the General Fund. The Successor Agency Private-purpose Trust Fiduciary Fund, as of June 30, 2015, includes a receivable from the City of Murrieta of $4,815,894 as a result of this transaction. In addition, a loan payable to the City of Murrieta has been established to reflect the reinstatement of the loans between the City and former Redevelopment Agency. The City has received Federal and State funds for specific purposes that are subject to review by the grantor agencies. These programs are subject to audit by the grantor agencies and upon further examination by the grantors, certain costs could be disallowed. The City expects any such amounts to be immaterial. Contingency The collectability of the loan receivable from the Successor Agency to the General Fund and Governmental Activities of $4,815,894 is contingent upon approval by the Oversight Board of the Successor Agency to make a finding that the loans were for legitimate redevelopment purposes and to be placed on the Recognized Obligation Payment Schedule (ROPS) as enforceable obligations. The DOF can allow repayment of the loans to be included as enforceable obligations on the ROPS once the Successor Agency receives a finding of completion. Once the loans are included on the ROPS, the loan will be repaid from the Redevelopment Property Tax Trust Fund (RPTTF) amounts received by the Successor Agency over a 10-year period. It is management’s belief the Oversight Board of the Successor Agency will make the finding that the loans were for legitimate redevelopment purposes at their next scheduled meeting.

65

City of Murrieta Notes to Financial Statements

Year Ended June 30, 2015

15) RESTATEMENT OF NET POSITION The beginning net position in the Statement of Activities was restated by ($24,254,281). This restatement is the net result of the adjustment to record the City’s Net Pension Liability of $23,942,010, in accordance with GASB 68 implementation and an adjustment to accrued revenues and receivables for Gas Tax of $312,271. Included as part of the prior period adjustment for the Net Pension Liability is the deletion of the Pension Related Debt as recorded in prior years. This is now included as part of the Net Pension Liability. In addition, the restatement of net position in the Statement of Revenues, Expenses, and Changes in Net Position, Proprietary Funds was to transfer capital assets to governmental activities upon closure of the City’s Vehicle Maintenance Internal Service Fund. The $277,648 is the net book balance of the capital assets transferred.

66

REQUIRED SUPPLEMENTARY INFORMATION

City of Murrieta Required Supplementary Information

June 30, 2015

SCHEDULE OF FUNDING PROGRESS FOR OPEB (Amounts in Thousands)

UAAL as a Actuarial Actuarial Actuarial Unfunded Percentage

Valuation Valuation Value of Accrued AAL Funded Covered of Covered Interest Salary Type Date Assets Liability (UAAL) Ratio Payroll Payroll Rate Rate

Actuarial 1/1/2010 $ 1,683 $ 13,382 $ 11,699 12.6% $ 24,284 48.2% 5.05% 3.25% Actuarial 7/1/2011 1,902 17,292 15,390 11.0% 22,830 67.4% 4.91% 3.25% Actuarial 7/1/2013 2,182 20,376 18,194 10.7% 20,987 86.7% 4.84% 3.25%

67

City of Murrieta Required Supplementary Information

June 30, 2015

Notes to the Schedule of the City’s Proportionate Share of the Net Pension Liability Benefit Changes: None Changes in Assumptions: None *Fiscal year 2015 is the first year of implementation, therefore only one year of information is available.

Miscellaneous Risk Pool

2015

Proportion of the Net Pension Liability 0.15475%

Proportionate Share of Net Pension Liability 9,629,244$

Covered - Employee Payroll 9,600,588$

Proportionate Share of the Net Pension Liability

as a percentage of Payroll 100.30%

Plan's Fiduciary Net Position 33,305,762$

Plan Fiduciary Net Position as a Percentage of the

Total Pension Liability 77.57%

Safety Risk Pool

2015

Proportion of the Net Pension Liability 0.29795%

Proportionate Share of Net Pension Liability 18,540,083$

Covered - Employee Payroll 15,173,521$

Proportionate Share of the Net Pension Liability

as a percentage of Payroll 122.19%

Plan's Fiduciary Net Position 67,949,151$

Plan Fiduciary Net Position as a Percentage of the

Total Pension Liability 78.56%

SCHEDULE OF THE CITY'S PROPORTIONATE SHARE

OF THE NET PENSION LIABILITY

Last 10 Years*

68

City of Murrieta Required Supplementary Information

June 30, 2015

Notes to the Schedule of Plan Contributions Valuation Date: 6/30/2013 *Fiscal year 2015 is the first year of implementation, therefore only one year of information is available.

2015

Contractually Required Contributions (actuarially determined) 5,546,829$

Contributions in relation to the actuarially determined

Contributions (5,546,829)

Contribution Deficiency (Excess) -$

Covered-Employee Payroll 24,774,109$

Contributions as a Percentage of CoveredEmployee Payroll 22.39%

SCHEDULE OF PLAN CONTRIBUTIONS

Last 10 Years*

69

Variance withFinal Budget

Actual PositiveOriginal Final Amounts (Negative)

Budgetary Fund Balance, July 1 21,937,038$ 21,937,038$ 21,937,038$ -$

Resources (Inflows):Taxes 30,897,300 32,836,796 32,877,872 41,076Licenses and Permits 855,000 840,000 1,154,123 314,123Intergovernmental 807,000 807,000 1,069,995 262,995Charges for Services 1,039,220 1,854,220 2,380,123 525,903Use of Money and Property 330,600 202,600 348,104 145,504Fines and Forfeitures 716,000 446,000 582,486 136,486Developer Participation - - 10,872 10,872Miscellaneous 393,280 201,280 154,751 (46,529)Transfers In 367,881 367,881 821,545 453,664 Proceeds from Sale of Capital Asset - - 1,063,802 1,063,802

Amounts Available for Appropriation 57,343,319 59,492,815 62,400,711 2,907,896

Charges to Appropriations (Outflows):City Council 135,790 143,865 113,677 30,188City Attorney 600,000 356,084 204,067 152,017Administration 781,699 891,680 881,708 9,972Human Resources 509,616 633,606 567,852 65,754Animal Control 538,862 539,362 539,289 73Non-departmental 1,329,235 1,421,602 1,052,504 369,098Building Maintenance 763,955 1,093,746 690,617 403,129City Clerk 786,006 824,466 639,777 184,689Finance 1,706,546 1,848,932 1,642,808 206,124Police Administration 1,680,408 1,786,330 1,612,348 173,982Code Enforcement 578,652 617,252 425,666 191,586Police Operations 12,260,955 11,943,023 11,444,708 498,315Police Support Services 9,770,065 10,334,963 10,192,608 142,355Community Development 866,249 1,305,825 1,303,916 1,909Building and Safety 908,384 950,242 949,993 249Economic Development 613,591 691,352 669,608 21,744Community Promotion 200,861 225,861 225,488 373Maintenance 308,687 310,091 277,995 32,096Street Lighting 197,800 197,800 84,953 112,847Engineering 1,293,583 1,607,789 1,597,742 10,047Capital Outlay 224,960 790,662 660,362 130,300Transfers Out 457,180 1,518,908 1,836,861 (317,953)

Total Charges to Appropriations 36,513,084 40,033,441 37,614,547 2,418,894

Budgetary Fund Balance, June 30 20,830,235$ 19,459,374$ 24,786,164$ 5,326,790$

City of MurrietaBudgetary Comparison Schedule By Department

Budget and Actual - General Fund Year Ended June 30, 2015

Budgeted Amounts

70

Variance withFinal Budget

Actual PositiveOriginal Final Amounts (Negative)

Budgetary Fund Balance, July 1 8,344,108$ 8,344,108$ 8,344,108$ -$

Resources (Inflows):Taxes 8,955,800 9,525,800 9,856,205 330,405Assessments 1,528,000 1,490,000 1,472,008 (17,992)Intergovernmental - 278,797 423,523 144,726Charges for Services 559,000 559,000 909,276 350,276Use of Money and Property 154,110 104,110 98,220 (5,890)Fines and Forfeitures 25,000 25,000 31,787 6,787Miscellaneous 130,296 130,296 24,919 (105,377)Capital Lease - - 827,621 827,621

Amounts Available for Appropriation 19,696,314 20,457,111 21,987,667 1,530,556

Charges to Appropriations (Outflows):Public Safety 11,994,330 12,434,381 12,374,970 59,411Capital Outlay 15,000 168,745 861,834 (693,089)Transfers Out 300,450 300,450 300,450 -

Total Charges to Appropriations 12,309,780 12,903,576 13,537,254 (633,678)

Budgetary Fund Balance, June 30 7,386,534$ 7,553,535$ 8,450,413$ 896,878$

City of MurrietaBudgetary Comparison ScheduleBudget and Actual - Fire District

Year Ended June 30, 2015

Budgeted Amounts

71

Variance withFinal Budget

Actual PositiveOriginal Final Amounts (Negative)

Budgetary Fund Balance, July 1 12,661,049$ 12,661,049$ 12,661,049$ -$

Resources (Inflows):Iintergovernmental - - 121,135 121,135Use of Money and Property - - 1,024 1,024Miscellaneous - - 6,500 6,500Transfers In - - - -

Amounts Available for Appropriation 12,661,049 12,661,049 12,789,708 128,659

Charges to Appropriations (Outflows):Community Development 64,744 64,744 1,697,479 (1,632,735)Capital Outlay - - - - Transfers Out - - - -

Total Charges to Appropriations 64,744 64,744 1,697,479 (1,632,735)

Budgetary Fund Balance, June 30 12,596,305$ 12,596,305$ 11,092,229$ (1,504,076)$

City of MurrietaBudgetary Comparison Schedule

Budget and Actual - Housing AuthorityYear Ended June 30, 2015

Budgeted Amounts

72

Variance withFinal Budget

Actual PositiveOriginal Final Amounts (Negative)

Budgetary Fund Balance, July 1 5,647,958$ 5,647,958$ 5,647,958$ -$

Resources (Inflows):Assessments 8,129,176 8,129,176 8,262,722 133,546Charges for Services 624,500 624,500 654,331 29,831Use of Money and Property 100,023 100,023 146,096 46,073Miscellaneous 500 500 9,304 8,804Transfers In - 933,973 933,973 -

Amounts Available for Appropriation 14,502,157 15,436,130 15,654,384 218,254

Charges to Appropriations (Outflows):Culture and Recreation 10,171,997 10,872,987 9,980,118 892,869Capital Outlay - - - - Transfers Out 22,231 22,231 22,231 -

Total Charges to Appropriations 10,194,228 10,895,218 10,002,349 892,869

Budgetary Fund Balance, June 30 4,307,929$ 4,540,912$ 5,652,035$ 1,111,123$

City of MurrietaBudgetary Comparison Schedule

Budget and Actual - Community Service DistrictYear Ended June 30, 2015

Budgeted Amounts

73

City of Murrieta Notes to Required Supplementary Information

June 30, 2015

Budgetary Data General Budget Policies The City Council approves the bi-annual budget submitted by the City Manager prior to the beginning of the new fiscal year. Public hearings are conducted prior to its adoption by Council. Supplemental appropriations, where required during the period, are also approved by the Council. There were several supplemental appropriations required during the year. At fiscal year-end, all operating budget appropriations lapse. Expenditures are monitored at the departmental level for the general fund and the fund level for all other funds with a legally adopted budget. These levels are considered the legal level of control. Department heads are authorized to transfer budgeted amounts within their departments, within the same fund, with the approval of the City Manager. Transfers of appropriations between departments may be made only by authority of the City Manager. Transfers of appropriations between funds may be made only by authority of the City Council. Formal budgetary integration is employed as a management control device during the fiscal year for all governmental funds. Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for all governmental funds except for certain special revenue and capital projects funds, which adopt project-length budgets. Encumbrances Encumbrances are estimations of costs related to unperformed contracts for goods and services. These commitments are recorded for budgetary control purposes in the General, Special Revenue and similar governmental funds. Encumbrances outstanding at year-end are reported as a committed fund balance. They represent the estimated amount of the expenditure ultimately to result if unperformed contracts in process at year-end are completed. They do not constitute expenditures or estimated liabilities. Excess of Expenditures Over Appropriations

Fund Expenditure Appropriations Excess Fire District Special Revenue Fund

$ 13,537,254

$ 12,903,576

$ 633,678

Housing Authority Special Revenue Fund

1,697,479

64,744

1,632,735

The Development Impact Fee, TUMF, Federal Grants, Gas Tax, Measure A, Air Quality Management District, Other Grants, Developer Agreements, SB 1266 Prop. 1B, and Reimbursement Agreement Special Revenue funds and the Area Drainage Capital Projects Fund are appropriated on a project-length capital improvement budget process. The City did not adopt a budget for the Community Facilities District and Southwest Road and Bridge Capital Projects funds or the Town Hall Association Permanent Fund.

74

SUPPLEMENTARY INFORMATION

NON-MAJOR GOVERNMENTAL FUNDS

Air Quality

State Gas Management

Tax Measure A District Block Grants

ASSETS

Cash and Investments 8,764,501$ 5,764,033$ 372,139$ -$

Receivables:

Accounts - - 504 -

Taxes - - - -

Due From Other Governments - 517,565 34,649 230,817

Restricted Assets:

Cash and Investments with Fiscal Agents - - - -

Total Assets 8,764,501$ 6,281,598$ 407,292$ 230,817$

LIABILITIES

Accounts Payable 236,749$ 58,637$ 671$ 8,235$

Accrued Liabilities 59,927 6,130 16,297 9,058

Deposits Payable - - - -

Due to Other Funds - - - 213,524

Total Liabilities 296,676 64,767 16,968 230,817

DEFERRED INFLOWS OF RESOURCES

Unavailable Revenues:

Accounts - - - -

Grants - - - 24,554

Total Deferred Inflows of Resources - - - 24,554

FUND BALANCES (DEFICITS)

Nonspendable - - - -

Restricted 8,467,825 6,216,831 390,324 -

Committed - - - -

Unassigned - - - (24,554)

Total Fund Balances (Deficits) 8,467,825 6,216,831 390,324 (24,554)

Total Liabilities, Deferred Inflows ofResources, and Fund Balances (Deficits) 8,764,501$ 6,281,598$ 407,292$ 230,817$

Special Revenue

City of MurrietaCombining Balance Sheet

Non-major Governmental FundsJune 30, 2015

75

SB 1266 Reimbursement

Seized Assets Murrieta Developer Prop 1B Agreement

Forfeitures SLESF Public Library Agreement Funds NPDES Fund TUMF

844,430$ -$ 2,185,784$ 3,040,502$ -$ 453,502$ -$ -$

- 1,674 31 - - - - -

- - 87,603 - - - - -

27,107 84,734 - - 5,272 509,096 - -

- - - - - - - -

871,537$ 86,408$ 2,273,418$ 3,040,502$ 5,272$ 962,598$ -$ -$

18,088$ -$ 11,372$ 164$ 5,272$ 2,608$ -$ -$

1,830 - 46,836 - - 4,523 - -

- - - 525,540 - - - -

- 3,175 - - - - - -

19,918 3,175 58,208 525,704 5,272 7,131 - -

- - - - - 449,591 - -

- - - - 5,272 - - -

- - - - 5,272 449,591 - -

- - - - - - - -

851,619 83,233 2,215,210 - - 505,876 - -

- - - 2,514,798 - - - -

- - - - (5,272) - - -

851,619 83,233 2,215,210 2,514,798 (5,272) 505,876 - -

871,537$ 86,408$ 2,273,418$ 3,040,502$ 5,272$ 962,598$ -$ -$

(Continued)

Special Revenue

76

Debt

Service Permanent Total

Community South Non-major

Facilities West Road Town Hall Governmental

District and Bridge Citywide Association Funds

ASSETS

Cash and Investments -$ 58,064$ -$ 503,609$ 21,986,564$

Receivables:

Accounts - - - - 2,209

Taxes - - - - 87,603

Due From Other Governments - 951,797 - - 2,361,037

Restricted Assets:

Cash and Investments with Fiscal Agents 1,576,497 - 1,098,816 - 2,675,313

Total Assets 1,576,497$ 1,009,861$ 1,098,816$ 503,609$ 27,112,726$

LIABILITIES

Accounts Payable -$ 2$ 50$ -$ 341,848$

Accrued Liabilities - - - - 144,601

Deposits Payable - - - - 525,540

Due to Other Funds - - - - 216,699

Total Liabilities - 2 50 - 1,228,688

DEFERRED INFLOWS OF RESOURCES

Unavailable Revenues:

Accounts - - - - 449,591

Grants - 934,114 - - 963,940

Total Deferred Inflows of Resources - 934,114 - - 1,413,531

FUND BALANCES (DEFICITS)

Nonspendable - - - 500,000 500,000

Restricted 1,576,497 75,745 1,098,766 3,609 21,485,535

Committed - - - - 2,514,798

Unassigned - - - - (29,826)

Total Fund Balances (Deficits) 1,576,497 75,745 1,098,766 503,609 24,470,507

Total Liabilities, Deferred Inflows ofResources, and Fund Balances (Deficits) 1,576,497$ 1,009,861$ 1,098,816$ 503,609$ 27,112,726$

Capital Projects

City of MurrietaCombining Balance Sheet

Non-major Governmental Funds (Continued)June 30, 2015

77

Air QualityState Management

Gas Tax Measure A District Block GrantsREVENUES

Taxes -$ -$ -$ -$ Assessments - - - - Intergovernmental 2,982,304 2,028,421 166,138 208,019 Charges for Services 9,500 - - - Use of Money and Property 60,733 47,697 2,334 - Fines and Forfeitures - - - Developer Participation - - - - Miscellaneous - - - -

Total Revenues 3,052,537 2,076,118 168,472 208,019

EXPENDITURESCurrent:

General Government - - - 6,134 Public Safety - - - - Community Development - - - - Culture and Recreation - - - - Public Works 1,303,221 5,035 188 -

Capital Outlay 1,664,577 2,645,104 28,317 224,369 Debt Service:

Principal Retirement - - - - Interest and Fiscal Charges - - - -

Total Expenditures 2,967,798 2,650,139 28,505 230,503

Excess (Deficiency) of Revenues OverExpenditures 84,739 (574,021) 139,967 (22,484)

OTHER FINANCING SOURCES (USES)Transfers In - - - - Transfers Out - (723,360) - -

Total Other FinancingSources (Uses) - (723,360) - -

Net Change in Fund Balances 84,739 (1,297,381) 139,967 (22,484)

Fund Balances - Beginning 8,695,357 7,514,212 250,357 (2,070)

Prior Period Adjustment (312,271) - - -

Fund Balances - Ending 8,467,825$ 6,216,831$ 390,324$ (24,554)$

City of MurrietaCombining Statement of Revenues, Expenditures and Changes in Fund Balances

Non-major Governmental FundsYear Ended June 30, 2015

Special Revenue

78

SB 1266 ReimbursementSeized Assets Murrieta Developer Prop. 1B Agreement

Forfeitures SLESF Public Library Agreement Funds NPDES Fund TUMF

-$ -$ 1,713,703$ -$ -$ -$ -$ -$ - - - - - 285,901 - -

942,641 258,193 561 - 870,674 - 47,137 - 258,796 - 10,257 - - - - -

3,920 - 17,552 21,388 - 3,139 - - - - 49,270 - - - - - - - - - - - - - - - 55,073 - - - - -

1,205,357 258,193 1,846,416 21,388 870,674 289,040 47,137 -

- - - - - - 226 - 237,017 71,366 - - - - - -

- - - - - - - - - - 1,925,879 - - - - - - - - 1,952 - 707,916 406 -

374,418 - - 3,870 764,397 - 21,738 -

- - - - - - - - - - - - - - - -

611,435 71,366 1,925,879 5,822 764,397 707,916 22,370 -

593,922 186,827 (79,463) 15,566 106,277 (418,876) 24,767 -

- - - - - 457,180 - - - - (45,200) - - - - -

- - (45,200) - - 457,180 - -

593,922 186,827 (124,663) 15,566 106,277 38,304 24,767 -

257,697 (103,594) 2,339,873 2,499,232 (111,549) 467,572 (24,767) -

- - - - - - - -

851,619$ 83,233$ 2,215,210$ 2,514,798$ (5,272)$ 505,876$ -$ -$

(Continued)

Special Revenue

79

DebtService Permanent Total

Community South Non-majorFacilities West Road Town Hall GovernmentalDistrict and Bridge Citywide Association Funds

REVENUESTaxes -$ -$ -$ -$ 1,713,703$ Assessments - - - - 285,901 Intergovernmental - 17,683 - - 7,521,771 Charges for Services - - - - 278,553 Use of Money and Property 741 415 178 3,609 161,706 Fines and Forfeitures - - - - 49,270 Developer Participation - - - - - Miscellaneous - - - - 55,073

Total Revenues 741 18,098 178 3,609 10,065,977

EXPENDITURES Current:

General Government - - - - 6,360 Public Safety - - - - 308,383 Community Development - - - - - Culture and Recreation - - - 1,424 1,927,303 Public Works - 20 - - 2,018,738

Capital Outlay - - - - 5,726,790 Debt Service:

Principal Retirement - - 700,000 - 700,000 Interest and Fiscal Charges - - 399,412 - 399,412

Total Expenditures 0 20 1,099,412 1,424 11,086,986

Excess (Deficiency) of Revenues OverExpenditures 741 18,078 (1,099,234) 2,185 (1,021,009)

OTHER FINANCING SOURCES (USES)Transfers In - - 1,098,551 - 1,555,731 Transfers Out - - - - (768,560)

Total Other FinancingSources (Uses) - - 1,098,551 - 787,171

Net Change in Fund Balances 741 18,078 (683) 2,185 (233,838)

Fund Balances - Beginning 1,575,756 57,667 1,099,449 501,424 25,016,616

Prior Period Adjustment - - - - (312,271)

Fund Balances - Ending 1,576,497$ 75,745$ 1,098,766$ 503,609$ 24,470,507$

Capital Projects

City of MurrietaCombining Statement of Revenues, Expenditures and Changes in Fund Balances

Non-major Governmental Funds (Continued)Year Ended June 30, 2015

80

Variance withFinal Budget

Final Actual PositiveBudget Amounts (Negative)

Budgetary Fund Balance, July 1 (2,070)$ (2,070)$ -$

Resources (Inflows):Intergovernmental - 208,019 208,019Transfer In - - -

Amounts Available for Appropriation (2,070) 205,949 208,019

Charges to Appropriation (Outflow):General Government - 6,134 (6,134) Capital Outlay - 224,369 (224,369)

Total Charges to Appropriations - 230,503 (230,503)

Budgetary Fund Balance, June 30 (2,070)$ (24,554)$ (22,484)$

City of MurrietaBudgetary Comparison Schedule

Block Grants - Special Revenue FundYear Ended June 30, 2015

81

Variance withFinal Budget

Final Actual PositiveBudget Amounts (Negative)

Budgetary Fund Balance, July 1 257,697$ 257,697$ -$

Resources (Inflows):Intergovernmental - 942,641 942,641Charges for Services 200,000 258,796 58,796Use of Money and Property 2,500 3,920 1,420

Amounts Available for Appropriation 460,197 1,463,054 1,002,857

Charges to Appropriation (Outflow):Public Safety 288,813 237,017 51,796Capital Outlay 61,012 374,418 (313,406)Transfers Out - - -

Total Charges to Appropriations 349,825 611,435 (261,610)

Budgetary Fund Balance, June 30 110,372$ 851,619$ 741,247$

City of MurrietaBudgetary Comparison Schedule

Seized Assets Forfeitures - Special Revenue FundYear Ended June 30, 2015

82

Variance withFinal Budget

Final Actual PositiveBudget Amounts (Negative)

Budgetary Fund Balance, July 1 (103,594)$ (103,594)$ -$

Resources (Inflows):Intergovernmental 168,816 258,193 89,377Use of Money and Property - - -

Amounts Available for Appropriation 65,222 154,599 89,377

Charges to Appropriation (Outflow):Public Safety 168,816 71,366 97,450

Total Charges to Appropriations 168,816 71,366 97,450

Budgetary Fund Balance, June 30 (103,594)$ 83,233$ 186,827$

City of MurrietaBudgetary Comparison ScheduleSLESF - Special Revenue Fund

Year Ended June 30, 2015

83

Variance withFinal Budget

Final Actual PositiveBudget Amounts (Negative)

Budgetary Fund Balance, July 1 2,339,873$ 2,339,873$ -$

Resources (Inflows):Taxes 1,666,300 1,713,703 47,403Intergovernmental - 561 561 Charges for Services 2,500 10,257 7,757Use of Money and Property 15,000 17,552 2,552Fines and Forfeitures 70,000 49,270 (20,730)Miscellaneous 61,336 55,073 (6,263)

Amounts Available for Appropriation 4,155,009 4,186,289 31,280

Charges to Appropriation (Outflow):Culture and Recreation 2,079,018 1,925,879 153,139Capital Outlay - - - Transfers Out 45,200 45,200 -

Total Charges to Appropriations 2,124,218 1,971,079 153,139

Budgetary Fund Balance, June 30 2,030,791$ 2,215,210$ 184,419$

City of MurrietaBudgetary Comparison Schedule

Murrieta Public Library - Special Revenue FundYear Ended June 30, 2015

84

Variance withFinal Budget

Final Actual PositiveBudget Amounts (Negative)

Budgetary Fund Balance, July 1 467,572$ 467,572$ -$

Resources (Inflows):Assessments 455,000 285,901 (169,099)Use of Money and Property - 3,139 3,139Transfers In 457,180 457,180 -

Amounts Available for Appropriation 1,379,752 1,213,792 (165,960)

Charges to Appropriation (Outflow):Public Works 912,180 707,916 204,264Transfers Out - - -

Total Charges to Appropriations 912,180 707,916 204,264

Budgetary Fund Balance, June 30 467,572$ 505,876$ 38,304$

City of MurrietaBudgetary Comparison ScheduleNPDES - Special Revenue Fund

Year Ended June 30, 2015

85

Variance withFinal Budget

Final Actual PositiveBudget Amounts (Negative)

Budgetary Fund Balance, July 1 1,099,449$ 1,099,449$ -$

Resources (Inflows):Use of Money and Property - 178 178Transfers In 1,099,002 1,098,551 (451)

Amounts Available for Appropriation 2,198,451 2,198,178 (273)

Charges to Appropriation (Outflow):Debt Service:

Principal Retirement 700,000 700,000 - Interest and Fiscal Charges 399,002 399,412 (410)

Transfers Out - - -

Total Charges to Appropriations 1,099,002 1,099,412 (410)

Budgetary Fund Balance, June 30 1,099,449$ 1,098,766$ (683)$

City of MurrietaBudgetary Comparison Schedule

Citywide - Debt Service FundYear Ended June 30, 2015

86

INTERNAL SERVICE FUNDS

Information Vehicle RiskTechnology Maintenance Management Total

ASSETSCurrent:

Cash and Investments 1,491,119$ -$ 2,057,237$ 3,548,356$ Accounts Receivable 19,649 - 133,007 152,656

Total Current Assets 1,510,768 - 2,190,244 3,701,012

Noncurrent:Capital Assets, Net of Depreciation 489,939 - - 489,939

Total Noncurrent Assets 489,939 - - 489,939

Total Assets 2,000,707$ -$ 2,190,244$ 4,190,951$

LIABILITIESCurrent:

Accounts Payable 23,815$ -$ 271,788$ 295,603$ Accrued Liabilities 30,792 - - 30,792 Accrued Compensated Absences 12,569 - - 12,569 Accrued Claims and Judgments - - 2,016,654 2,016,654

Total Current Liabilities 67,176 - 2,288,442 2,355,618

Noncurrent:Accrued Compensated Absences 31,028 - - 31,028 Accrued Claims and Judgments - - 2,184,521 2,184,521

Total Noncurrent Liabilities 31,028 - 2,184,521 2,215,549

Total Liabilities 98,204 - 4,472,963 4,571,167

NET POSITIONNet Investment in Capital Assets 489,939 - - 489,939 Unrestricted 1,412,564 - (2,282,719) (870,155)

Total Net Position 1,902,503 - (2,282,719) (380,216)

Total Liabilities and Net Position 2,000,707$ -$ 2,190,244$ 4,190,951$

City of MurrietaCombining Statement of Net Position

Internal Service FundsJune 30, 2015

Governmental Activities - Internal Service Funds

87

Information Vehicle RiskTechnology Maintenance Management Total

OPERATING REVENUESInterdepartmental Charges 1,888,670$ -$ 2,484,722$ 4,373,392$ Franchise Taxes 78,200 - - 78,200 Miscellaneous 164 - 158,086 158,250

Total Operating Revenues 1,967,034 - 2,642,808 4,609,842

OPERATING EXPENSESAdministration and General 1,934,342 - 1,693,245 3,627,587 Claims - - 2,706,944 2,706,944 Depreciation 40,639 - - 40,639

Total Operating Expenses 1,974,981 - 4,400,189 6,375,170

Operating Income (Loss) (7,947) - (1,757,381) (1,765,328)

NONOPERATING REVENUES (EXPENSES)Interest Revenue 10,665 - 25,491 36,156

Income (Loss) Before Operating Transfers 2,718 - (1,731,890) (1,729,172)

Transfers In 317,953 - 127,755 445,708 Transfers Out - (453,664) - (453,664)

Change in Net Position 320,671 (453,664) (1,604,135) (1,737,128)

Net Position - Beginning of Year 1,581,832 731,312 (678,584) 1,634,560

Prior Period Adjustment - (277,648) - (277,648)

Net Position - End of Year 1,902,503$ -$ (2,282,719)$ (380,216)$

City of MurrietaCombining Statement of Revenues, Expenses and Changes in Net Position

Internal Service FundsYear Ended June 30, 2015

Governmental Activities - Internal Service Funds

88

Information Vehicle RiskTechnology Maintenance Management Total

CASH FLOWS FROM OPERATING ACTIVITIESCash Received from Interfund Service Provided 1,947,410$ -$ 2,549,535$ 4,496,945$ Cash Paid to Suppliers for Goods and Services (1,236,979) (20,460) (1,535,409) (2,792,848) Cash Paid to Employees for Services (778,719) - - (778,719) Claims Paid - - (1,135,309) (1,135,309) Other Operating Income - 158,086 158,086

Net Cash Provided (Used) By Operations (68,288) (20,460) 36,903 (51,845)

CASH FLOWS FROM NONCAPITALFINANCING ACTIVITIES

Transfers In (To) Other Funds 317,953 (453,664) 127,755 (7,956)

Net Cash Provided (Used) By NonCapitalFinancing Activities 317,953 (453,664) 127,755 (7,956)

CASH FLOWS FROM CAPITAL AND RELATEDFINANCING ACTIVITIES

Purchases of Capital Assets (275,660) - - (275,660)

Net Cash Provided (Used) By Capital and RelatedFinancing Activities (275,660) - - (275,660)

CASH FLOWS FROM INVESTING ACTIVITIESInterest Received 10,665 - 25,491 36,156

Net Cash Provided (Used) By InvestingActivities 10,665 - 25,491 36,156

Net Increase (Decrease) in Cash andCash Equivalents (15,330) (474,124) 190,149 (299,305)

Cash and Equivalents - Beginning of Year 1,506,449 474,124 1,867,088 3,847,661

Cash and Equivalents - End of Year 1,491,119$ -$ 2,057,237$ 3,548,356$

Reconciliation of Operating Income to Net CashProvided (Used) by Operating ActivitiesOperating Income (Loss) (7,947)$ -$ (1,757,381)$ (1,765,328)$ Adjustments to Reconcile Operating Income (Loss) to

Net Cash Provided (Used) by Operating Activities:Depreciation 40,639 - - 40,639 (Increase) Decrease in Accounts Receivable (19,624) - 64,813 45,189 Increase (Decrease) in Accounts Payable (71,067) (20,460) 182,165 90,638 Increase (Decrease) in Accrued Liabilities 5,248 - - 5,248 Increase (Decrease) in Claims and Judgments - - 1,547,306 1,547,306 Increase (Decrease) in Compensated Absences (15,537) - - (15,537)

Net Cash Provided (Used) by Operating Activities (68,288)$ (20,460)$ 36,903$ (51,845)$

City of MurrietaCombining Statement of Cash Flows

Internal Service FundsYear Ended June 30, 2015

Governmental Activities - Internal Service Funds

89

AGENCY FUNDS

CommunityTrust Facilities

Accounts Districts Total

ASSETSPooled Cash and Investments 5,076,348$ 295,901$ 5,372,249$ Receivables:

Accounts 685,121 37,316 722,437 Restricted Assets:

Cash and Investments with Fiscal Agents - 21,446,285 21,446,285

Total Assets 5,761,469$ 21,779,502$ 27,540,971$

LIABILITIES Accounts Payable 118,745$ 22,615$ 141,360$ Deposits Payable 5,642,724 86,282 5,729,006 Due to Bondholders - 21,670,605 21,670,605

Total Liabilities 5,761,469$ 21,779,502$ 27,540,971$

City of MurrietaCombining Balance Sheet

All Agency FundsJune 30, 2015

90

Balance BalanceJuly 1, 2014 Additions Deductions June 30, 2015

Trust Accounts

Assets:Pooled Cash and Investments 5,360,370$ 782,228$ 1,066,250$ 5,076,348$ Receivables:

Accounts 706,416 56,700 77,995 685,121

Total Assets 6,066,786$ 838,928$ 1,144,245$ 5,761,469$

Liabilities:Accounts Payable 54,785$ 1,062,578$ 998,618$ 118,745$ Deposits Payable 6,012,001 968,804 1,338,081 5,642,724

Total Liabilities 6,066,786$ 2,031,382$ 2,336,699$ 5,761,469$

Community Facilities Districts

Assets:Pooled Cash and Investments 975,686$ 10,049,765$ 10,729,550$ 295,901$ Receivables:

Accounts 40,906 - 3,590 37,316 Restricted Assets:

Cash and Investments with Fiscal Agents 21,024,769 14,017,903 13,596,387 21,446,285

Total Assets 22,041,361$ 24,067,668$ 24,329,527$ 21,779,502$

Liabilities:Accounts Payable 9,020$ 144,254$ 130,659$ 22,615$ Deposits Payable 124,129 73,875 111,722 86,282 Due to Bondholders 21,908,212 24,023,652 24,261,259 21,670,605

Total Liabilities 22,041,361$ 24,241,781$ 24,503,640$ 21,779,502$

Totals - All Agency Funds

Assets:Pooled Cash and Investments 6,336,056$ 10,831,993$ 11,795,800$ 5,372,249$ Receivables:

Accounts 747,322 56,700 81,585 722,437 Restricted Assets:

Cash and Investments with Fiscal Agents 21,024,769 14,017,903 13,596,387 21,446,285

Total Assets 28,108,147$ 24,906,596$ 25,473,772$ 27,540,971$

Liabilities:Accounts Payable 63,805$ 1,206,832$ 1,129,277$ 141,360$ Deposits Payable 6,136,130 1,042,679 1,449,803 5,729,006 Due to Bondholders 21,908,212 24,023,652 24,261,259 21,670,605

Total Liabilities 28,108,147$ 26,273,163$ 26,840,339$ 27,540,971$

City of MurrietaCombining Statement of Changes in Fiduciary Assets and Liabilities

All Agency FundsFor the Year Ended June 30, 2015

91

STATISTICAL SECTION

Statistical Section This part of the City of Murrieta’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health. Contents Financial Trends These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. * Net Position by Component * Changes in Net Position * Fund Balances of Governmental Funds * Changes in Fund Balances of Governmental Funds Revenue Capacity These schedules contain information to help the reader assess the factors affecting the City’s ability to generate its property taxes. * Assessed Value and Estimated Actual Value of Taxable Property * Direct and Overlapping Property Tax Rates * Principal Property Tax Payers * Property Tax Levies and Collections Debt Capacity These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. * Ratios of Outstanding Debt by Type * Ratios of General Bonded Debt Outstanding * Direct and Overlapping Governmental Activities Debt * Legal Debt Margin Information Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place and help make comparisons over time and with other governments. * Demographic and Economic Statistics * Principal Employers Operating Information These schedules contain information about the City’s operations and resources to help the reader understand how the City’s financial information relates to the services the City provides and the size and scope of its operations. * Full-time Equivalent City Government Employees by Function/Program * Operating Indicators by Function/Program * Capital Assets Statistics by Function/Program Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB Statement 34 in 2003; schedules presenting government-wide information include information beginning in that year.

92

2006 2007 2008 2009 2010 2011 2012

Government activitiesNet Investment in Capital Assets 181,319,538$ 227,255,667$ 388,953,449$ 433,407,576$ 450,849,854$ 461,841,217$ 487,596,294$ Restricted 144,585,135 106,457,194 158,124,475 150,171,342 140,143,883 144,416,695 105,916,664 Unrestricted 67,351,247 59,654,440 31,795,300 34,681,557 27,809,668 9,198,188 8,536,207

Total governmental activities net position 393,255,920$ 393,367,301$ 578,873,224$ 618,260,475$ 618,803,405$ 615,456,100$ 602,049,165$

Business-type activitiesInvested in capital assets, net of related debt -$ -$ -$ -$ -$ -$ -$ Restricted - - - - - - - Unrestricted (996,924) (996,924) - - - - -

Total business-type activities net position (996,924)$ (996,924)$ -$ -$ -$ -$ -$

Primary governmentNet Investment in Capital Assets 181,319,538$ 227,255,667$ 388,953,449$ 433,407,576$ 450,849,854$ 461,841,217$ 487,596,294$ Restricted 144,585,135 106,457,194 158,124,475 150,171,342 140,143,883 144,416,695 105,916,664 Unrestricted 66,354,323 58,657,516 31,795,300 34,681,557 27,809,668 9,198,188 8,536,207

Total primary government activities net position 392,258,996$ 392,370,377$ 578,873,224$ 618,260,475$ 618,803,405$ 615,456,100$ 602,049,165$

Fiscal Year

(Accrual Basis of Accounting)

CITY OF MURRIETA

Net Position by ComponentLast Ten Fiscal Years

93

Government activitiesNet Investment in Capital AssetsRestrictedUnrestricted

Total governmental activities net position

Business-type activitiesInvested in capital assets, net of related debtRestrictedUnrestricted

Total business-type activities net position

Primary governmentNet Investment in Capital AssetsRestrictedUnrestricted

Total primary government activities net position

(Accrual Basis of Accounting)

CITY OF MURRIETA

Net Position by ComponentLast Ten Fiscal Years

2013 2014 2015

494,535,419$ 484,691,786$ 484,398,241$ 91,898,277 81,040,723 79,838,467 5,426,421 7,211,301 (19,592,866)

591,860,117$ 572,943,810$ 544,643,842$

-$ -$ -$ - - - - - -

-$ -$ -$

494,535,419$ 484,691,786$ 484,398,241$ 91,898,277 81,040,723 79,838,467 5,426,421 7,211,301 (19,592,866)

591,860,117$ 572,943,810$ 544,643,842$

Fiscal Year

94

2006 2007 2008 2009 2010 2011 2012ExpensesGovernmental Activities:

General government 6,747,425$ 10,087,751$ 11,082,508$ 12,928,528$ 7,513,228$ 8,455,357$ 6,897,813$ Public safety 20,885,730 25,001,721 30,959,471 33,850,633 37,458,419 34,837,432 35,404,578 Community development 6,231,904 8,021,239 6,709,243 3,054,128 5,045,421 6,826,338 8,076,477 Culture and recreation 7,111,942 9,005,255 9,292,882 11,377,680 12,320,171 12,045,825 12,784,375 Public works 40,669,302 43,265,151 18,387,357 24,144,561 18,482,299 15,250,671 17,365,559 Interest on long-term debt 2,057,929 1,971,126 3,624,665 3,440,842 4,125,708 3,303,110 2,140,885

Total Governmental Activities expenses 83,704,232 97,352,243 80,056,126 88,796,372 84,945,246 80,718,733 82,669,687

Business-Type Activities:Telecommunications/Data 684,542 701,180 - - - - -

Total Business-Type Activities Expenses 684,542 701,180 - - - - -

Total Primary Government Expenses 84,388,774$ 98,053,423$ 80,056,126$ 88,796,372$ 84,945,246$ 80,718,733$ 82,669,687$

Program RevenuesGovernmental Activities:

Charges for services:General government 1,090,882$ 930,371$ 715,509$ 816,962$ 753,046$ 810,478$ 366,290$ Public safety 9,771,582 2,664,576 2,802,342 3,164,725 2,785,027 2,654,643 2,570,293 Community development 3,660,588 2,548,902 1,670,867 1,105,119 663,940 297,620 319,896 Culture and recreation 8,063,034 7,464,736 7,471,929 8,548,740 8,357,740 8,775,704 9,369,690 Public works 11,392,876 5,184,295 3,779,193 1,173,978 1,656,507 942,779 1,648,343

Operating Contributions: General Government - - 479,995 22,231 45,313 394,277 14,735

Public safety 1,100,679 1,617,107 1,524,381 1,782,325 1,413,242 1,080,118 1,300,549 Community development 658,810 176,824 356,959 133,409 173,078 - 9,483 Culture and recreation 221,780 218,829 51,495 284,016 160,211 167,685 49,320 Public works 4,698,485 2,380,541 6,086,037 54,160 14,090 38,106 5,551

Capital Contributions and Grants: General Government - - 709,069 317,931 - - -

Public safety - - - - - - - Community development - - - 544,913 777,198 170,445 77,876 Culture and recreation 1,424,797 4,475,223 48,818 2,620 42 - - Public works 8,403,698 5,158,027 7,527,930 17,979,281 22,049,205 27,871,576 19,933,737

Total Governmental Activities Program Revenues 50,487,211 32,819,431 33,224,524 35,930,410 38,848,639 43,203,431 35,665,763

Business-Type Activities:Charges for services:Telecommunications/Data - - - - - - -

Total Business-Type Activities Program Revenues - - - - - - -

Total Primary Government Program Revenues 50,487,211$ 32,819,431$ 33,224,524$ 35,930,410$ 38,848,639$ 43,203,431$ 35,665,763$

Net (Expense)/RevenueGovernmental Activities (33,217,021) (64,532,812) (46,831,602) (52,865,962) (46,096,607) (37,515,302) (47,003,924) Business-Type Activities (684,542) (701,180) - - -

Total primary Government Net Expense (33,901,563)$ (65,233,992)$ (46,831,602)$ (52,865,962)$ (46,096,607)$ (37,515,302)$ (47,003,924)$

Fiscal Year

CITY OF MURRIETA

Changes in Net PositionLast Ten Fiscal Years(Accrual Basis of Accounting)

95

ExpensesGovernmental Activities:

General governmentPublic safetyCommunity developmentCulture and recreationPublic worksInterest on long-term debt

Total Governmental Activities expenses

Business-Type Activities:Telecommunications/Data

Total Business-Type Activities Expenses

Total Primary Government Expenses

Program RevenuesGovernmental Activities:

Charges for services:General governmentPublic safetyCommunity developmentCulture and recreationPublic works

Operating Contributions: General Government

Public safetyCommunity developmentCulture and recreationPublic works

Capital Contributions and Grants: General Government

Public safetyCommunity developmentCulture and recreationPublic works

Total Governmental Activities Program Revenues

Business-Type Activities:Charges for services:Telecommunications/Data

Total Business-Type Activities Program Revenues

Total Primary Government Program Revenues

Net (Expense)/RevenueGovernmental ActivitiesBusiness-Type Activities

Total primary Government Net Expense

CITY OF MURRIETA

Changes in Net PositionLast Ten Fiscal Years(Accrual Basis of Accounting)

2013 2014 2015

8,198,108$ 6,318,278$ 13,272,032$ 36,573,423 36,928,765 37,185,694

2,536,595 2,637,132 4,620,996 13,482,418 13,911,513 14,018,797 16,197,013 24,140,175 11,854,445

480,193 378,161 408,261

77,467,750 84,314,024 81,360,225

- - -

- - -

77,467,750$ 84,314,024$ 81,360,225$

326,565$ 323,067$ 344,956$ 2,648,661 2,711,686 3,372,277

882,678 1,152,281 1,593,650 8,814,762 8,950,391 9,011,424 1,195,191 1,546,400 1,735,377

94,185 - -

1,541,092 1,856,699 1,771,525 46,032 17,000 127,269

5,073 12,017 561 76 4,546 11,536

- - - - - 934,577

72,426 2,806 - 290,490 -

10,061,189 14,471,513 12,800,355

25,978,420 31,048,406 31,703,507

- - -

- - -

25,978,420$ 31,048,406$ 31,703,507$

(51,489,330) (53,265,618) (49,656,718)

(51,489,330)$ (53,265,618)$ (49,656,718)$

Fiscal Year

96

2006 2007 2008 2009 2010 2011 2012Fiscal Year

CITY OF MURRIETA

Changes in Net PositionLast Ten Fiscal Years(Accrual Basis of Accounting)

General Revenues and Other Changes in Net Position

Governmental Activities:Taxes:

Property taxes, levied for general purpose 16,704,753$ 31,972,045$ 34,737,965$ 33,715,385$ 27,384,429$ 29,693,709$ 26,456,711$ Property transfer tax 1,609,138$ 700,985$ 439,614$ 408,048$ 400,255 404,729 445,731 Transient occupancy taxes 164,164 181,873 159,397 291,746 110,521 129,104 146,137 Sales taxes 12,383,784 12,633,646 11,465,852 9,870,711 10,078,614 9,527,722 11,206,600 Franchise taxes 2,157,628 2,574,499 3,077,945 3,076,644 3,240,625 3,483,301 3,751,261 Business licenses taxes 633,817 642,955 597,638 566,897 524,161 558,341 561,211 Other taxes 24,409 721,447 - - - - -

Intergovernmental, unrestricted: Motor Vehicle In Lieu 505,884 615,029 438,628 340,815 295,966 515,371 53,817

Use of money and property 7,107,090 11,573,196 11,989,086 8,069,835 4,321,331 1,833,434 1,309,413 Gain on sale of assets - - - - - 39,866 Other 1,382,292 1,628,706 622,945 998,700 861,726 85,132 324,024 Transfers - (701,180) (996,924) - - - -

Total Governmental Activities 42,672,959 62,543,201 62,532,146 57,338,781 47,217,628 46,230,843 44,294,771

Business-Type Activities:Transfers - 701,180 996,924 - - - -

Total Business-Type Activities - 701,180 996,924 - - - -

Total Primary Government 42,672,959$ 63,244,381$ 63,529,070$ 57,338,781$ 47,217,628$ 46,230,843$ 44,294,771$

Changes in Net PositionGovernmental Activities 9,455,938$ (1,989,611)$ 15,700,544$ 4,472,819$ 1,121,021$ 8,715,541$ (2,709,153)$ Business-Type Activities (684,542) - 996,924 - - - -

Total Primary Government 8,771,396$ (1,989,611)$ 16,697,468$ 4,472,819$ 1,121,021$ 8,715,541$ (2,709,153)$

97

CITY OF MURRIETA

Changes in Net PositionLast Ten Fiscal Years(Accrual Basis of Accounting)

General Revenues and Other Changes in Net Position

Governmental Activities:Taxes:

Property taxes, levied for general purposeProperty transfer taxTransient occupancy taxesSales taxesFranchise taxesBusiness licenses taxesOther taxes

Intergovernmental, unrestricted: Motor Vehicle In Lieu

Use of money and propertyGain on sale of assetsOtherTransfers

Total Governmental Activities

Business-Type Activities:Transfers

Total Business-Type Activities

Total Primary Government

Changes in Net PositionGovernmental ActivitiesBusiness-Type Activities

Total Primary Government

2013 2014 2015Fiscal Year

23,413,173$ 22,877,110$ 25,375,863$ 407,814 465,828 599,789 145,252 152,266 180,655

11,892,449 13,293,897 13,869,833 3,659,507 3,690,452 3,698,577

579,930 594,633 653,483 - - -

44,899 - - 1,041,780 1,111,918 1,032,747

129,578 - - 382,296 1,083,894 200,084

- - -

41,696,678 43,269,998 45,611,031

- - -

- - -

41,696,678$ 43,269,998$ 45,611,031$

(9,792,652)$ (9,995,620)$ (4,045,687)$ - - -

(9,792,652)$ (9,995,620)$ (4,045,687)$

98

2006 2007 2008 2009

General FundReserved 21,238,782$ 19,613,288$ 16,926,629$ 5,347,868$ Unreserved 22,395,562 26,454,828 15,488,472 29,567,100 NonspendableRestrictedCommittedAssignedUnassigned

Total General Fund 43,634,344$ 46,068,116$ 32,415,101$ 34,914,968$

All Other Governmental FundsReserved 9,499,809$ 10,985,808$ 18,568,716$ 23,542,192$ Unreserved, reported in nonmajor,

Special revenue funds 83,346,273 70,492,895 70,824,253 73,596,857 Capital Projects funds 66,202,768 26,592,886 45,382,511 37,867,258 Debt service funds 8,238,461 11,411,958 23,458,232 18,765,850

NonspendableRestrictedCommittedAssignedUnassigned

Total all other Governmental Funds 167,287,311$ 119,483,547$ 158,233,712$ 153,772,157$

*Format changed with implementation of GASB 54 effective Fiscal Year 2010-2011.

(Modified Accrual Basis Of Accounting)

CITY OF MURRIETA

Fund Balances of Governmental FundsLast Ten Fiscal Years

Fiscal Year

99

2010 2011* 2012* 2013* 2014* 2015*

5,971,361$ - - - - - 22,359,909 - - - - -

4,505,224 5,961 7,500 7,500 4,830,894 309,878 297,615 324,387 - -

2,546,131 4,518,173 4,235,998 4,421,985 4,441,271 3,835,234 135,976 10,073 266,958 132,292

13,302,790 13,928,988 14,861,180 17,240,595 15,381,707

28,331,270$ 24,499,257 18,886,713 19,439,138 21,937,038 24,786,164

30,395,976$ - - - - -

59,867,300 - - - - - 33,647,023 - - - - - 18,019,708 - - - - -

1,463,385 - - 500,000 500,000 113,408,884 95,994,097 80,647,612 70,678,124 68,942,318

28,467,528 13,912,080 12,538,963 8,421,761 8,489,144 - - 803,031 97,320 97,452

(4,179,165) (8,782,368) (5,581,744) (1,287,916) (940,294)

141,930,007$ 139,160,632 101,123,809 88,407,862 78,409,289 77,088,620

Fiscal Year

100

2006 2007 2008

Revenues:Taxes and assessments 50,293,453$ 58,831,956$ 62,169,213$ Licenses and permits 3,076,073 2,424,475 783,220 Intergovernmental 7,040,360 9,930,969 15,204,752 Non-committal debt revenue 4,796,609 - - Charges for services 2,368,224 2,254,941 1,925,991 Use of money and property 7,091,585 11,552,352 11,971,340 Fines and Forfeitures 729,875 712,471 648,103 Contributions 615,721 587,672 539,279 Developer participation 11,779,092 5,140,196 3,641,515 Miscellaneous 2,299,974 2,390,371 1,767,783

Total revenues 90,090,966 93,825,403 98,651,196

Expenditures:General government 7,208,902 9,850,771 10,282,735 Public safety 20,399,726 24,176,851 30,499,961 Community development 5,176,547 6,997,006 6,701,076 Culture and recreation 6,632,388 8,441,994 8,835,916 Public works 36,038,290 31,197,654 2,947,780 Capital outlay 27,828,949 56,747,398 41,659,799 Debt service:

Principal retirement 1,120,000 1,375,000 1,450,000 Interest 1,946,884 1,955,147 2,983,258 Debt issuance costs - - 1,350,867

Total expenditures 106,351,686 140,741,821 106,711,392

Excess (Deficiency) of RevenuesOver (Under) Expenditures (16,260,720) (46,916,418) (8,060,196)

Other financing sources (uses): Transfers in 5,273,407 18,377,937 28,306,184 Transfers out (5,273,407) (19,079,117) (29,303,108) Long-term debt issued - - 41,160,000 Bond Premium - - 128,208 Proceeds from sale of capital assets - - 1,981 Payment to refunded bond escrow agent - - (9,193,600)

Total other financing sources (uses) - (701,180) 31,099,665

Net change in fund balances / net assets (16,260,720)$ (47,617,598)$ 23,039,469$

Debt service as a percentage ofnoncapital expenditures* 4.0% 3.8% 8.0%

*The amount excluded for capital outlay from total expenditures for this calculation was obtained from Note 1 to the financial statements.

Fiscal Year

CITY OF MURRIETA

Changes In Fund Balances of Governmental FundsLast Ten Fiscal Years(Modified Accrual Basis Of Accounting)

101

2009 2010 2011 2012 2013 2014 2015

59,416,164$ 52,286,563$ 57,518,977$ 55,918,852$ 50,460,401$ 51,772,910$ 54,468,411$ 657,604 564,161 649,253 790,947 746,253 787,401 1,154,123

8,565,933 13,022,689 24,586,169 16,768,350 15,144,903 16,367,936 10,820,666 - - - - - - -

2,184,136 1,778,752 2,046,491 1,689,086 2,057,693 3,058,939 4,222,987 8,047,325 4,261,356 1,814,931 1,253,065 948,456 1,009,793 962,986 1,036,518 855,273 921,365 772,086 789,579 615,917 663,543

2,620 777,670 - - - - - 954,407 1,332,578 1,936,466 1,277,615 271,595 563,361 4,884,976

1,044,526 1,074,146 620,341 672,507 367,642 1,065,274 250,547

81,909,233 75,953,188 90,093,993 79,142,508 70,786,522 75,241,531 77,428,239

12,065,833 6,822,925 5,965,657 4,851,578 5,083,750 5,018,031 5,648,042 32,183,607 34,526,023 33,068,906 33,989,280 34,886,674 35,661,325 36,495,257

2,912,359 4,956,648 6,807,151 8,065,285 2,527,676 2,634,365 4,620,996 10,885,073 10,608,429 10,507,684 11,191,708 11,720,485 12,140,712 12,155,071 15,114,766 3,868,318 4,119,950 4,771,087 4,500,070 4,663,970 4,693,407 10,864,777 25,129,299 31,504,303 25,760,360 20,704,195 21,564,512 12,774,705

2,170,349 2,242,778 2,186,994 2,230,000 3,130,000 680,000 700,000 3,376,011 4,065,499 3,245,614 1,901,013 526,772 422,852 399,412

- - - - - - -

89,572,775 92,219,919 97,406,259 92,760,311 83,079,622 82,785,767 77,486,890

(7,663,542) (16,266,731) (7,312,266) (13,617,803) (12,293,100) (7,544,236) (58,651)

4,083,629 3,890,495 6,409,900 23,007,796 1,651,642 1,671,445 3,311,249 (4,083,629) (6,038,789) (6,409,900) (23,703,101) (1,651,642) (1,671,445) (3,303,293)

324,785 - - - - - 827,621 - - - - - - -

12,672 - - 387,771 129,578 43,563 1,063,802 - - - - - - -

337,457 (2,148,294) - (307,534) 129,578 43,563 1,899,379

(7,326,085)$ (18,415,025)$ (7,312,266)$ (13,925,337)$ (12,163,522)$ (7,500,673)$ 1,840,728$

7.8% 8.9% 8.0% 5.8% 5.6% 1.5% 1.8%

Fiscal Year

102

Assessed Value and Estimated Actual Value of Taxable Property

Total Estimated Taxable AssessedLess: Total Taxable Effective Actual Value Value as a

Fiscal Residential Commercial Other Tax-Exempt Assessed Tax Taxable Percentage ofYear Property Property Property Property Value Rate Property* Actual Taxable Value

2006 7,149,061 426,943 1,137,695 (38,923) 8,674,776 0.1089% N/A N/A2007 9,282,961 601,796 1,240,298 (28,162) 11,096,893 0.1165% N/A N/A2008 10,251,620 805,796 1,448,626 (27,805) 12,478,237 0.1242% N/A N/A2009 9,297,716 915,032 1,622,304 (28,562) 11,806,490 0.1322% N/A N/A2010 7,564,257 1,484,393 989,541 (34,223) 10,003,968 0.1444% N/A N/A2011 7,388,775 1,135,410 1,331,702 (34,933) 9,820,954 0.1494% N/A N/A2012 7,378,964 1,309,327 1,108,829 (35,527) 9,761,593 0.1590% N/A N/A2013 7,344,106 1,321,755 1,103,650 (37,228) 9,732,283 0.1723% N/A N/A2014 7,843,786 1,304,769 1,066,174 (36,483) 10,178,246 0.0769% N/A N/A2015 8,692,355 1,339,531 1,097,337 (37,160) 11,092,063 0.0769% N/A N/A

N/A - Data Not Available

*In 1978 the voters passed Proposition 13 which sets the property tax rate at a 1% fixed amount. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to thelimitations described above.

Source: The HdL CompaniesCity of Murrieta Finance Department

CITY OF MURRIETA

Last Ten Fiscal Years(in thousands of dollars)

103

Direct and Overlapping Property Tax RatesLast Ten Fiscal Years

(rate per $100 of taxable value)

Agency 2006 2007 2008 2009Direct RateCity of Murrieta Library 0.03117 0.03117 0.03117 0.03117 County Free Library - - - - Riverside County General 0.24390 0.24390 0.24390 0.24390 Elsinore Area Elementary School Fund 0.08280 0.08280 0.08280 0.08280 Flood Control Administration 0.00306 0.00306 0.00306 0.00306 Flood Control Zone 7 0.01884 0.01884 0.01884 0.01884 Mt. San Jacinto Junior College 0.04530 0.04530 0.04530 0.04530 Murrieta Cemetary 0.00326 0.00326 0.00326 0.00326 Murrieta Fire Protection-County 0.06710 0.06710 0.06710 0.06710 Murrieta Fire Protection-City - - - - Murrieta General Fund 0.07798 0.07798 0.07798 0.07798 Murrieta Unified School District 0.36550 0.36550 0.36550 0.36550 Riverside County Office of Education 0.04810 0.04810 0.04810 0.04810 Riverside County Reg Park & Open Space 0.00487 0.00487 0.00487 0.00487 Eastern Municipal Water District - - - - Western Municipal Water 9th Fringe 0.00812 0.00812 0.00812 0.00812 Total Direct Rate(1) 1.00000 1.00000 1.00000 1.00000

Overlapping Rates:Eastern Municipal Water District 0.02300 0.02000 0.01300 0.00700 Metropolitan Water District (original area) 0.01220 0.00470 0.00450 0.00430 Menifee School District 0.01435 0.00578 0.00549 0.02370 Murrieta Unified School District 0.10210 0.10282 0.08521 0.10199 Perris Union High School District 0.02350 0.03222 0.02110 0.02031 Rancho California Water District 0.80000 0.80000 0.80000 0.80000 Temecula Unified School District 0.03297 0.02179 0.02519 0.02700 Total Overlapping Rates(2) 1.00812 0.98731 0.95449 0.98430

Combined Total 2.00812 1.98731 1.95449 1.98430

City's Share of 1% Levy Per Prop 13(3) 0.10914 0.10914 0.10914 0.10914

Redevelopment Rate(4) 1.00520 1.00470 1.00450 1.00430

Total Effective Rate(5) 0.12357 0.13107 0.13871 0.14652

Source: The HdL Companies

Notes:

CITY OF MURRIETA

(4) RDA rate is based on the largest RDA tax rate area (TRA) and includes onlyrate(s) from indebtedness adopted prior to 1989 per California State statute.RDA direct and overlapping rates are applied only to the incremental propertyvalues.

(5) Because of California's complicated taxing structure (different values aretaxed at different rates due to proposition 13) and Redevelopment statutes, wehave used an effective rate. The rate has been calculated by dividing totalrevenue by the total revenue base of the government preparing the statisticalsection.

(1) In 1978, California voters passed Proposition 13 which set the property taxrate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies forwhich the subject property resides. In addition to the 1.00% fixed amount,property owners are charged taxes as a % of assessed property values for thepayment of any voter approved bonds.

(2) Overlapping rates are those of local and county governments that apply toproperty owners within the City. Not all overlapping rates apply to all cityproperty owners.(3) City's share of 1% Levy is based on the City's share of the general fund taxrate area with the largest net taxable value within the city. ERAF generalfund tax shifts may not be included in tax ratio figures.

Fiscal Year

104

2010 2011 2012 2013 2014 2015

0.03117 0.03117 0.03117 0.03117 0.03117 0.02850 - - - - - -

0.24390 0.24390 0.24390 0.24390 0.24390 0.22270 0.08280 0.08280 0.08280 0.08280 0.08280 0.07560 0.00306 0.00306 0.00306 0.00306 0.00306 0.00279 0.01884 0.01884 0.01884 0.01884 0.01884 0.01720 0.04530 0.04530 0.04530 0.04530 0.04530 0.04140 0.00326 0.00326 0.00326 0.00326 0.00326 0.00298 0.06710 0.06710 0.06710 0.06710 0.06710 0.06130 - - - - - 0.05310

0.07798 0.07798 0.07798 0.07798 0.07798 0.07108 0.36550 0.36550 0.36550 0.36550 0.36550 0.33370 0.04810 0.04810 0.04810 0.04810 0.04810 0.04390 0.00487 0.00487 0.00487 0.00487 0.00487 0.00445 - - - - - 0.04130

0.00812 0.00812 0.00812 0.00812 0.00812 - 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000

0.09300 0.08900 0.08100 0.08100 0.08100 0.05400 0.00430 0.00370 0.00370 0.00350 0.00350 0.00350 0.03254 0.03436 0.03486 0.03543 0.03421 0.03275 0.08370 0.09221 0.11865 0.12238 0.12272 0.11699 0.02686 0.03126 0.03429 0.03429 0.06970 0.06303 0.80000 0.80000 0.80000 0.80000 0.80000 0.80000 0.02188 0.02317 0.02527 0.02740 0.03696 0.03019 1.06228 1.07370 1.09777 1.10400 1.14809 1.10046

2.06228 2.07370 2.09777 2.10400 2.14809 2.10046

0.10914 0.10914 0.10914 0.10914 0.10914 0.09965

1.00430 1.02070 1.06470 - - -

0.15853 0.16339 0.17285 0.17231 0.07690 0.07692

Fiscal Year

105

Percentage Percentageof Total City of Total City

Taxable Taxable Taxable TaxableAssessed Assessed Assessed Assessed

Taxpayer Value Rank Value Taxpayer Value Rank Value

Loma Linda Univ Medical 207,026,767$ 1 1.87% United Dominion Realty 45,510,500$ 1 0.52%Universal Health Service 64,141,438 2 0.58% Eagle Glen Apartments 43,278,250 2 0.49%Murrieta 492 58,296,599 3 0.53% Murrieta Apartments 42,728,951 3 0.49%Arbors of CA Oaks Prop 53,497,165 4 0.48% Murrieta Oaks LLC 32,576,475 4 0.37%Strata Waterstone LLC 50,783,978 5 0.46% WalMart/Sam's West Inc 28,638,348 5 0.33%Target Corporation 47,593,044 6 0.43% Oleanders Capital Group LLC 28,474,427 6 0.32%FG Murrieta Senior Apts 46,620,700 7 0.42% Camden USA Inc 26,627,722 7 0.30%Wal Mart Realty Co 43,977,489 9 0.40% City of Murrieta 21,460,837 8 0.24%Eagle Glen Apartments 42,549,375 8 0.38% Lennar Homes of California 21,127,023 9 0.24%Health Care Reit Inc 41,001,271 10 0.37% Universal Health Services of Rancho 18,600,559 10 0.21%

Total 655,487,826$ 5.92% 309,023,092$ 3.51%

Source: The HdL Companies and Riverside County Assessor

CITY OF MURRIETA

Principal Property Tax PayersCurrent Year and Nine Years Ago

2015 2006

106

Fiscal Year Ended June

30,

Taxes Levied for the Fiscal

Year AmountPercent of

Levy

Collections in Subsequent

Years(1) AmountPercent of

Levy

2006 12,256,392 11,224,722 92% 651,847 11,876,569 97%2007 16,279,179 13,868,737 85% 926,709 14,795,446 91%2008 18,130,524 14,953,657 82% 904,781 15,858,439 87%2009 16,892,265 14,211,851 84% 731,231 14,943,082 88%2010 14,031,630 9,895,834 71% 435,464 10,331,298 74%2011 13,621,216 12,108,151 89% 448,395 12,556,546 92%2012 13,443,915 12,026,256 89% 385,256 12,411,512 92%2013 13,412,070 12,326,150 92% 325,363 12,651,513 94%2014 14,149,731 13,199,883 93% 329,293 13,529,176 96%2015 15,585,958 14,639,096 94% 388,565 15,027,661 96%

Source:

City of Murrieta Finance DepartmentOffice of Auditor-Controller, Riverside County

(1) The City of Murrieta participates in the Riverside County Teeter program which allows for a 30% advance, one settlement payment for the first installment, a 10% advance and a settlement payment for the second installment, all of which are remitted within the year of levy. One additional settlement payment is made during the subsequent year. After that, data provided by the Riverside County Office of Auditor-Controller for collection of prior year taxes, does not segregate payment information by fiscal year. Therefore, the City is not able to report any additional prior year remittances by specific year of levy.

Collected Within the Fiscal Year of Levy Total Collections to Date

CITY OF MURRIETA

Property Tax Levies and CollectionsLast Ten Fiscal Years

107

General Tax Certificates Bonded Percentage

Fiscal Allocation of Capital Debt of Personal PerYear Bonds Participation Leases in Total Income a Capita a

2006 23,510,000 18,695,000 - 42,205,000 1.70% 453 2007 23,045,000 17,785,000 - 40,830,000 1.52% 421 2008 54,180,000 17,255,000 625,337 72,060,337 2.60% 724 2009 53,460,000 16,200,000 554,772 70,214,772 2.57% 696 2010 52,660,000 15,100,000 211,993 67,971,993 2.49% 670 2011 51,830,000 13,955,000 - 65,785,000 2.38% 627 2012 - 12,810,320 - 12,810,320 0.44% 121 2013 - 9,677,690 - 9,677,690 0.33% 91 2014 - 8,960,000 - 8,960,000 0.30% 84 2015 - 8,260,000 827,621 9,087,621 N/A N/A

N/A - Data Not Available

Notes: to the financial statements.

a See Demographic and Economic Statistics schedule for personal income and population data.

Source: City of Murrieta Finance Department

Details regarding the city's outstanding debt can be found in the notes

General Bonded Debt by Type

CITY OF MURRIETA

Ratios of Outstanding Debt by TypeLast Ten Fiscal Years

108

Tax Certificates PercentFiscal Allocation of Capital of Assessed PerYear Bonds Participation Leases Total Value(1) Capita a

2006 23,510,000 18,695,000 - 42,205,000 0.49% 453 2007 23,045,000 17,785,000 - 40,830,000 0.37% 421 2008 54,180,000 17,255,000 625,337 72,060,337 0.58% 724 2009 53,460,000 16,200,000 554,772 70,214,772 0.59% 696 2010 52,660,000 15,100,000 211,993 67,971,993 0.68% 670 2011 51,830,000 13,955,000 - 65,785,000 0.67% 627 2012 - 12,810,320 - 12,810,320 0.13% 121 2013 - 9,677,690 - 9,677,690 0.10% 91 2014 - 8,960,000 - 8,960,000 0.09% 84 2015 - 8,260,000 827,621 9,087,621 0.08% N/A

N/A-Data not available

Note:

(1) Assessed value has been used because the actual value of taxable property is not readily available in the State of California. See Assessed Value and Estimated Actual Value of Taxable Property schedule for assessed values.

a See Demographic and Economic Statistics schedule for population data.

Source: City of Murrieta Finance Department

Government Activities

Details regarding the city's outstanding debt can be found in the notes to the financial statements.

CITY OF MURRIETA

Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years

109

Direct and Overlapping Governmental Activities DebtAs of June 30, 2015

2014-15 Assessed Valuation: 11,085,595,305$

Gross Bonded City’s ShareOverlapping Tax and Assessment Debt: Debt Balance of DebtCity of Murrieta 1915 Act Bonds 5,524,000$ 100.000% 5,524,000$ City of Murrieta Community Facilities Districts 116,395,335 100.000% 116,065,000$ Total Direct Tax and Assessment Debt 121,589,000

Other Overlapping Tax and Assessment Debt:Metropolitan Water District 110,420,000 0.4710% 520,078 Mt. San Jacinto Community College District 70,000,000 15.3990% 10,779,300 Murrieta Valley Unified School District 153,390,645 82.5830% 126,674,596 Murrieta Valley Unified School District Community Facilities Districts 87,232,663 100.0000% 87,232,663 Temecula Valley Unified School District 52,510,070 0.0120% 6,301 Perris Union High School District 77,983,834 7.1690% 5,590,661 Perris Union High School District Community Facillities District No. 92-1 36,315,000 15.4070% 5,595,052 Menifee Union School District 44,573,642 12.1190% 5,401,880 Eastern Municipal Water District Improvement Districts 22,687 7.041-99.895% 5,603,256 Rancho California Water District Community Facilities Districts 24,700,000 100.0000% 24,700,000 Eastern Municipal Water District Community Facilities Districts 6,245,000 100.0000% 6,245,000 Elsinore Valley Municipal Water District Community Facilities Districts 5,227,000 100.0000% 5,227,000 Western Municipal Water District Community Facilities Districts 6,635,000 100.0000% 6,635,000 Riverside County Community Facilities Districts 3,395,000 100.0000% 3,395,000 Eastern Municipal Water District 1915 Act Bonds 6,325,000 2.9950% 189,434 Total Other Overlapping Tax and Assessment Debt 293,795,221

Combined Total Overlapping Tax and Assessment Debt 415,384,221

Ratios to 2013-2014 Assessed Valuations:Total City Overlapping Tax and Assessment Debt 1.10%

Combined Total Overlapping Tax and Assessment Debt 3.75%

Direct General Fund Debt:City of Murrieta General Fund Obligations 8,260,000 100.000% 8,260,000 Total Direct General Fund Debt 8,260,000

Overlapping General Fund Debt:Riverside County General Fund Obligations 961,952,083$ 4.910% 47,231,847 Riverside County Pension Obligations 320,470,000 4.910% 15,735,077 Riverside County Board of Education Certificates of Participation 1,835,000 4.910% 90,099 Murrieta Valley Unified School District Certificates of Participation 20,625,000 82.583% 17,032,744 Other School District Certificates of Participation 13,830,572 Various 1,147,110

Total Gross Overlapping General Fund Debt 81,236,877 Less: Riverside County self-supporting obligations 371,442

Total Net Overlapping General Fund Debt 80,865,435$

Overlapping Tax Increment Debt (successor Agencies): 272,566,688$ 0.566-100. % 51,282,378$

Total Direct Debt 8,260,000$ Total Gross Overlapping Debt 547,903,476$ Total Net Overlapping Debt 547,532,034$

Grand Total Gross Direct and Overlapping Debt 556,163,476$ (2) Grand Total Net Direct and Overlapping Debt 555,792,034$

Notes:(1) Percentage of overlapping agency's assessed valuation located within boundaries of the city.(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Ratios to Adjusted Assessed Valuation:

Total Direct Debt ($8,260,000)…..…………………………………………….0.07%

Grand total Gross Direct and Overlapping Debt……..………………………5.02%

Grand Total Net Direct and Overlapping Debt………………………...…...…5.02%

Ratios to Redevelopment Incremental Valuation ($1,033,865,407):Total Overlapping Tax Increment Debt……………………………………...…4.96%

Source:

MuniServices, LLC

% Applicable to City (1)

CITY OF MURRIETA

110

Legal Debt Margin Calculation for Fiscal Year 2015

Assessed value 11,092,062,565$ Conversion percentage 25%Adjusted assessed valuation 2,773,015,641

Debt limit (15% of assessed value) 415,952,346 Debt applicable to limit:

General obligation bonds -

Total net debt applicable to limit -

Legal debt margin 415,952,346$

Legal DebtTotal net debt Legal Margin as aApplicable to Debt Percentage of

Fiscal Year Debt Limit Limit Limit Debt limit

2006 325,304,097 - 325,304,097 100%2007 416,133,498 - 416,133,498 100%2008 467,933,921 - 467,933,921 100%2009 442,743,390 - 442,743,390 100%2010 375,148,811 - 375,148,811 100%2011 368,285,780 - 368,285,780 100%2012 366,059,726 - 366,059,726 100%2013 364,960,583 - 364,960,583 100%2014 381,684,202 - 381,684,202 100%2015 415,952,346 - 415,952,346 100%

Note:The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation, however;this provision was enacted when assessed valuation was based upon 25% of market value. Effective with the 1981-82 fiscalyear, each parcel is now assessed at 100% of market value (as of the most recent change in ownership for that parcel).The computations shown above reflet a conversion of assessed valuation data for each fiscal year from the current fullvaluation perspective to the 25% level that was in effect at the time the legal debt margin was enacted by the State ofCalifornia for local governments located within the state.

CITY OF MURRIETA

Legal Debt Margin InformationLast Ten Fiscal Years(dollars in thousands)

111

CITY OF MURRIETA

Demographic and Economic StatisticsLast Ten Fiscal Years

Personal Per CapitaIncome* Personal Unemployment

Fiscal Population (In Thousands) Income RateYear (1) (1) (1) (2)

2006 93,243 2,477,901 26,575 3.2%2007 97,034 2,677,491 27,593 3.9%2008 99,527 2,769,716 27,829 5.5%2009 100,835 2,731,760 27,091 9.0%2010 103,085 2,734,872 26,948 9.8%2011 104,459 2,762,470 26,313 9.0%2012 105,832 2,904,453 27,444 6.3%2013 106,425 2,909,553 27,339 5.4%2014 106,393 2,975,599 27,968 6.6%2015 N/A N/A N/A N/A

N/A-Data not available

Source: (1) The HdL Companies(2) State of California Economic Development Department

112

2015Percentageof Total City

Employer Employees Rank Employment

Murrieta Valley Unified School District 2,041 1 7.50%Southwest Healthcare Systems 1,474 2 5.42%Loma Linda Univ. Medical Center 970 3 3.57%County of Riverside 889 4 3.27%OakGrove Institute 380 5 1.40%City of Murrieta 354 6 1.30%Walmart 350 7 1.29%Target 347 8 1.28%Home Depot 295 9 1.08%Sam's Club 200 10 0.74%

7,300 26.84%

Percentageof Total City

Employer Employees Rank Employment

Murrieta Valley Unified School District 1,579 1 6.24%Southwest Healthcare System 1,200 2 4.74%City of Murrieta 352 5 1.39%Walmart 340 3 1.34%Home Depot 295 4 1.17%Target 225 6 0.89%OakGrove Institute 220 7 0.87%Sam's Club 220 8 0.87%Lowes 200 9 0.79%Best Buy 130 10 0.51%

4,761 18.82%

Source: City of Murrieta Chamber of Commerce

Employment Development Department

CITY OF MURRIETA

Principal EmployersCurrent Year and Nine Years Ago

2006

113

CITY OF MURRIETA

Full-time-Equivalent City Government Employees by Function/ProgramLast Ten Fiscal Years

Fiscal Years: 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Function/Program

General governmentCity Council 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00Administrative Services 34.83 40.18 48.10 50.65 44.45 38.45 38.45 35.10 34.64 38.25

Community DevelopmentEconomic Development 1.65 1.45 1.45 1.50 1.50 2.50 3.00 3.00 3.00 4.00Planning 10.20 12.20 12.20 10.05 10.05 6.55 6.55 5.90 5.90 9.10Building and Safety 16.20 16.20 17.20 16.20 14.20 10.20 10.20 7.20 7.20 8.20Housing Services 0.00 0.00 0.00 3.55 3.65 3.65 0.00 0.00 0.00 0.00Redevelopment 1.38 1.78 1.85 9.85 9.95 9.95 0.00 0.00 0.00 0.00

PoliceAdministration 1.25 1.25 1.50 2.00 2.00 2.00 2.00 2.00 2.00 2.00Operations 57.00 66.00 68.50 65.00 67.00 61.00 61.00 61.00 62.00 66.00Code Enforcement 6.00 5.50 5.50 7.00 5.00 4.00 4.00 4.00 4.00 5.00PD Support 45.63 46.63 60.50 72.00 61.00 62.00 61.00 61.00 62.00 62.00

FireAdministration 11.38 11.38 11.50 12.00 10.00 5.00 5.00 5.00 7.00 7.00Fire Suppression (including Paramedics) 36.00 36.00 48.00 48.00 48.00 48.00 48.00 48.00 48.00 49.00Fire Prevention/Inspection 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 1.00 1.00

Public Works

Admin/Engineering 18.20 20.20 21.20 20.45 18.45 12.45 12.45 11.45 9.95 8.80Maintenance 11.00 11.00 13.00 12.75 12.75 12.75 12.75 12.75 12.75 15.80

Recreation & Community ServicesAdministration 18.50 22.00 23.00 21.50 19.50 12.80 12.80 12.80 11.70 12.65Recreation 9.50 10.50 8.00 11.50 9.50 8.20 8.20 8.20 9.00 9.00Library 10.00 18.50 19.00 14.00 13.00 12.00 12.00 12.00 12.20 12.20

Total Authorized Personnel * 295.72 327.77 367.50 385.00 357.00 318.50 304.40 296.40 297.34 315.00

* Excludes part-time Crossing Guards.

Notes: A full-time employee is scheduled to work 2,080 hours per year (including vacation and sick leave). Full-time-equivalent employment is calculated by dividing total labor hours by 2,080.

Source: City of Murrieta Annual Budget

Fiscal Year

114

CITY OF MURRIETA

Operating Indicators by Function/ProgramLast Ten Fiscal Years

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Function/Program

Community developmentNumber of:

Business licenses (A) 1,436 1,610 1,505 3,112 3,154 2,240 3,329 4,638 4,621 4,631 Plan checks (B) 204 297 275 255 143 192 119 116 210 225 NPDES inspections N/A 35 20 40 20 48 83 84 57 101Code violations (calendar basis) 1,103 1,315 1,119 1,182 1,195 501 4,316 3,403 4,318 4,313

PoliceNumber of:

Part 1 Crimes 2,486 2,375 2,136 1,827 1,592 1,538 1,761 2,213 2,137 1,802Parking violations 570 815 1,346 1,042 1,342 1,212 1,235 1,213 1,089 1,156Traffic (moving) violations 6,846 6,988 6,075 9,691 8,965 5,938 6,069 5,188 4,593 5,208Traffic Collision Reports 725 644 727 735 796 393 440 492 622 762Crime reports 8,682 8,315 8,290 8,317 7,299 6,997 7,654 9,614 7,976 8,121Arrests 2,436 2,573 2,755 2,989 2,136 2,170 2,188 3,847 3,031 3,077

Public worksMiles of:

Street resurfacing/repair N/A 7 10 14 9 0 6 - 2 46 Street sweeping N/A 2,160 2,316 11,760 11,550 11,550 11,580 11,609 11,946 11,952

Number of:Traffic signals maintained 64 75 77 79 83 85 90 91 92 93 Trees pruned per year N/A 2,150 2,215 637 122 425 2,071 1,952 2,473 2,879

Recreation & community servicesNumber of enrollees/attendees:

Aquatics N/A 3,901 4,500 4,750 5,200 5,150 5,225 6,120 6,350 6,450 Community services/seniors N/A N/A 22,305 24,596 24,150 21,564 25,250 25,750 26,250 28,000 Day camp N/A 360 280 285 275 295 290 360 720 415 Park programs N/A 6,000 6,300 7,675 9,064 9,750 1,025 1,450 1,723 1,825 Classes N/A 6,486 7,210 7,210 8,421 9,836 21,551 21,898 24,236 25,368 Special events N/A 4,000 5,103 12,000 32,000 12,500 12,000 16,000 21,000 25,000 Skate park N/A N/A N/A 1,400 4,039 5,371 5,724 5,825 6,285 6,452 Youth center N/A N/A N/A N/A N/A N/A N/A N/A 17,001 22,308

N/A - Data not available(A) - Includes new & renewal licenses, excludes temporary licenses(B) - Excludes temporary plan checks.

Sources: Various city departments.

Fiscal Year

115

Capital Asset Statistics by Function/Program

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Function/Program

General GovernmentCivic Center 1 1 1 1 1 1 1 1 1 1 1Vehicles N/A N/A N/A N/A N/A N/A 7 7 7 7 8Equipment N/A N/A N/A N/A N/A N/A 47 48 48 51 43

Community DevelopmentVehicles N/A N/A N/A N/A N/A N/A 7 7 7 7 7

Public SafetyPolice Stations 1 1 1 1 1 1 1 1 1 1 1Police Vehicles N/A N/A N/A N/A N/A N/A 85 95 105 96 107Police Equipment N/A N/A N/A N/A N/A N/A 93 97 100 106 111Fire Stations 4 4 4 4 5 5 5 5 5 5 5Fire Vehicles N/A N/A N/A N/A N/A N/A 31 32 32 32 33Fire Equipment N/A N/A N/A N/A N/A N/A 100 102 104 104 106

Public WorksVehicles N/A N/A N/A N/A N/A N/A 23 23 22 22 22Equipment N/A N/A N/A N/A N/A N/A 15 15 23 25 26

Culture and recreationPark Sites 34 36 44 46 47 49 49 50 50 50 50Senior Centers 1 1 1 1 1 1 1 1 1 1 1Community Centers 1 1 1 1 1 1 1 1 1 1 1Youth Centers 0 0 0 0 0 0 0 0 0 1 1Equestrian Center 0 0 0 0 0 1 1 1 1 1 1Municipal Pools 1 1 1 1 1 1 1 1 1 1 1Public Library 1 1 1 1 1 1 1 1 1 1 1Vehicles N/A N/A N/A N/A N/A N/A 26 25 24 24 23Equipment N/A N/A N/A N/A N/A N/A 28 28 30 31 30

N/A Information prior to FY 2011 is not available

Sources: Various city departments.

CITY OF MURRIETA

Last Ten Fiscal Years

Fiscal Year

116