comprehensive a financial r - santa barbara county · is designed to complement md&a and should...

COUNTY OF SANTA BARBARA STATE OF CALIFORNIA

COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2003

ROBERT W. GEIS, CPA AUDITOR-CONTROLLER

Titan IV space launch amid Lompoc flower fields

Front Cover

Photograph by Bruce Fall

The Titan IV Missile, launched from Vandenberg Air Force Base, is the nation's largest,most powerful expendable space launch vehicle. It provides primary access to space forcritical national security and civil payloads.

COUNTY OF SANTA BARBARA STATE OF CALIFORNIA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FOR FISCAL YEAR ENDED June 30, 2003

Prepared Under the Supervision of Robert W. Geis, CPA

Auditor-Controller

i

COUNTY OF SANTA BARBARA, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT June 30, 2003 TABLE OF CONTENTS

Page INTRODUCTORY SECTION Letter of Transmittal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 FINANCIAL SECTION Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Management’s Discussion and Analysis (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Statement of Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Fund Financial Statements: Balance Sheet – Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual: General Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Road Special Revenue Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Public Health Special Revenue Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Social Services Special Revenue Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Flood Control Districts Special Revenue Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Statement of Net Assets – Proprietary Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Statement of Revenues, Expenses, and Changes in Fund Net Assets – Proprietary Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Statement of Cash Flows – Proprietary Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Statement of Fiduciary Net Assets – Fiduciary Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Statement of Changes in Fiduciary Net Assets – Fiduciary Funds. . . . . . . . . . . . . . . . . . . . . 34 Notes to the Basic Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet – Nonmajor Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . 78 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – Nonmajor Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – Capital Projects Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Combining Statement of Net Assets – Internal Service Funds . . . . . . . . . . . . . . . . . . . . . 111 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets – Internal Service Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 Combining Statement of Cash Flows – Internal Service Funds . . . . . . . . . . . . . . . . . . . . . 113 Combining Statement of Changes in Assets and Liabilities – Agency Funds . . . . . . . . . . . . . . 115 Capital Assets Used in the Operation of Governmental Funds: Schedule By Source . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Schedule by Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Schedule of Changes by Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

ii

COUNTY OF SANTA BARBARA, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT June 30, 2003 TABLE OF CONTENTS, Continued

Page STATISTICAL SECTION (Unaudited) Miscellaneous Statistical Data Estimated Population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 Number of County Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 Major Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 Principal Taxpayers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 Demographics Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 Assessed Property and New Construction Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Revenues and Expenses (by function) – Government-Wide . . . . . . . . . . . . . . . . . . . . . . . . . 124

Revenues (by source) and Expenditures (by function) – Governmental Funds . . . . . . . . . . . . . . . 125 Revenues by Source – Governmental Funds (graphical trend) . . . . . . . . . . . . . . . . . . . . 126 Expenditures by Function – Governmental Funds (graphical trend) . . . . . . . . . . . . . . . . . . 127 Computation of Legal Debt Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 Assessed Value of Taxable Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 Property Tax Levies, Collections, and Delinquencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 Property Tax Rates – Direct and Overlapping Governments . . . . . . . . . . . . . . . . . . . . . . . . 131 Ratio of Annual Debt Service Expenditures to Total Governmental Expenditures . . . . . . . . . . . . . 132 Direct and Overlapping Bonded Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 Schedule of Insurance-in-Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 Public Official Blanket Bond Coverage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 GLOSSARY Glossary for the Comprehensive Annual Financial Report . . . . . . . . . . . . . . . . . . . . . . . . . . 136

INTRODUCTORY SECTION

1

August 8, 2003

To the Citizens of Santa Barbara County:

The Comprehensive Annual Financial Report (CAFR) of the County of Santa Barbara (the County) for the fiscal year ended June 30, 2003, is hereby submitted as mandated by Sections 25250 and 25253 of the Government Code of the State of California. These statutes require the County to issue annually a report on its financial posi-tion and activity, and that this report be audited by an independent firm of certified public accountants. The CAFR is prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and audited in accordance with auditing standards generally accepted in the United States of America.

This report consists of management’s representations concerning the finances of the County. Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management of the County has es-tablished a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the County’s finan-cial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their bene-fits, the County’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all mate-rial respects.

The County’s basic financial statements have been audited by KPMG LLP, a firm of licensed certified public ac-countants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the County for the fiscal year ended June 30, 2003, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial state-ments; and evaluating the overall financial statement presentation. The independent auditors concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the County’s basic financial statements for the fiscal year ended June 30, 2003, are fairly presented in conformity with GAAP. The independent auditors’ report is presented as the first component of the financial section of this report.

The independent audit of the basic financial statements of the County was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the County’s separately issued Single Audit Report.

GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the ba-sic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The County’s MD&A can be found immediately following the report of independent auditors.

COUNTY OF SANTA BARBARA

OFFICE OF THE AUDITOR-CONTROLLER

ROBERT W. GEIS, C.P.A. Auditor-Controller

JOHN J. TORELL, C.P.A. Assistant Auditor-Controller

County Administration Bldg. 105 E. Anapamu Street, Rm. 303

Santa Barbara, CA 93101 (805) 568-2100

Mailing Address: P.O. Box 39

Santa Barbara, CA 93102-0039 FAX (805) 568-2016

2

Profile of the Government The County, located approximately 100 miles north of Los Angeles and 300 miles south of San Francisco, was established by an act of the State legislature on February 18, 1850. The County occupies 2,744 square miles, one-third of that is located in the Los Padres National Forest. The County population is 410,300 as of January 1, 2003. Approximately 33% of the residents live in the unincorporated area. There are eight incorporated cities located within the County: Santa Barbara, Santa Maria, Lompoc, Goleta, Carpinteria, Guadalupe, Solvang, and Buellton. The largest cities in the County, and their respective populations, are Santa Barbara, the County seat – 90,500 (22%), Santa Maria – 82,100 (20%), and Lompoc – 41,850 (10%). The largest employment categories in the County include services, wholesale and retail trade, public administration, and manufacturing. The mild climate, picturesque coastline, scenic mountains and numerous parks and beaches make the County a popular tourist and recreational area.

Policymaking and legislative authority is vested in the County Board of Supervisors (the Board), which consists of an elected supervisor from each of five districts. The Board is responsible among other things, for passing or-dinances, adopting the budget, appointing committees and appointing the County Administrator and non-elected department heads. Supervisors are elected to four-year staggered terms with two supervisors being elected in even-year elections and three supervisors being elected in odd-year elections. The County has five elected de-partment heads responsible for the offices of the County Clerk-Recorder-Assessor, Auditor-Controller, District Attorney, Sheriff, and Treasurer-Tax Collector-Public Administrator. The following organization chart is presented so that it reflects the various functional categories reported in the government-wide statement of activities, along with the names of the principle officials.

The County, with an average of 4,295 full-time equivalent employees, provides a full range of services to its residents as depicted above on the organization chart. Following is a brief summary of some of the service ef-forts and accomplishments of the Santa Barbara County departments. As in past years, we have included a few media highlights in an effort to enhance areas of importance that have been reported by the media over the past year.

Policy & Executive

Naomi Schwartz, Chair First District Supervisor

Susan Rose Second District Supervisor

Gail Marshall Third District Supervisor

Joni Gray Fourth District Supervisor

Joe Centeno, Vice Chair Fifth District Supervisor

Michael Brown County Administrator General County Revenues & Programs Stephen Shane Stark County Counsel

Thomas W. Sneddon Jr. District Attorney James Egar Public Defender Gary Blair Court Special Services

Law & Justice

John Scherrei Fire Susan J. Gionfriddo Probation James Anderson Sheriff

Public Safety

James Broderick Alcohol, Drug, & Mental Health Services (ADMHS) Karin Roser Child Support Services Roger E. Heroux Public Health Services Charlene Chase Social Services

Health & Public Assistance

Robert W. Geis, CPA Auditor-Controller

Joseph E. Holland, CPFO Clerk-Recorder-Assessor

Ron Cortez General Services

(Vacant) Human Resources

Bernice James Treasurer-Tax Collector & Public Administrator

General Government & Support Services

William Gillette Agriculture & Cooperative Extension

Edward Moses Housing & Community Development

Terri Maus-Nisich Parks

Dr. Valentin Alexeeff Planning & Development

Philip M. Demery Public Works

Community Resources & Public Facilities

3

Service Efforts and Accomplishments

This functional area has 209 employees and ex-penses of $37 million. The District Attorney, Public Defender and Courts Special Services are all about protecting the rights and ensuring the safety of the citizens. Working with law enforcement, the District Attorney filed 2,700 felonies and 11,000 misde-meanors with the courts while the Public Defender’s caseload reached 23,700. There is an increasing emphasis throughout the law and justice system on prevention and enforcement remedies.

This functional area has 88 staff positions and ex-penses of $7 million. Setting policy, adopting the budget and providing legal services are its workload drivers.

Policy and Executive

With 422 employees and expenses of $27 million this functional area provides general government services to the citizens for important issues such as elections, and also provides support services to County operations such as payroll and human re-sources. The departments provide financial integrity for the County, quality services for our biggest asset which is our employees, as well as management of the County’s financial assets.

The workload of this function includes property tax assessment and tax collection on 122,100 parcels, elections involving 195,100 registered voters and cash management investment services. The 24 County departments also receive services such as bill paying, mail, purchasing, insurance, telephone, financial systems, and computer technology.

General Government And Support Services

This functional area has 1,321 staff positions and expenses of $142 million. Protection of the commu-nity including people and their property through law enforcement, fire protection, custody of adult and juvenile criminals and probation monitoring of of-fenders are the workload drivers.

The Fire Department stayed busy responding to 8,750 emergency calls. They maintain a strong haz-ardous material control program, fire prevention services and emergency response plan.

The Sheriff patrol services logged 1.41 million miles and Sheriff custody processed and booked 17,496 adult offenders through the local County jail.

The Probation Department processed over 6,000 juvenile referrals, supervised over 1,400 juveniles and 6,000 adult cases each month, provided 63,400 days of institutional care for minors in two juvenile halls and two camps, and prepared 2,500 adult sen-tencing reports for the courts.

Public Safety

New Sheriff Takes the Helm Santa Maria Times October 9, 2003

Law and Justice

California Crime Index for Santa Barbara County

5

10

15

20

1993 2002

Source: 2003 Economic Outlook, UCSB Economic Forecast Project,Department of Justice

crimes per thousand people

The County Administrator utilizes a sophisticated set of management systems to assist County de-partments in delivering services in accordance with the Board of Supervisors’ strategic goals, opera-tional priorities, and budgeted resources.

The Board adopted an ordinance that was a collabo-rative solution between the agricultural and environ-mental communities for preservation of oak re-sources.

The County received the Government Finance Officer’s

Association Distinguished Budget Presentation Award for its fiscal

year 2002-03 budget.

Supervisors Vote to Protect Oaks UCSB Nexus April 16, 2003

www.sbcountyjobs.com

Public Service in Paradise

4

Service Efforts and Accomplishments

With 1,589 employees and expenses of $222 million these federal and state funded programs serve the less advantaged County residents. They strive to improve the health of the community through pre-ventive health services, aiding individuals and fami-lies to become emotionally, socially and fiscally self sufficient, serving children and families by enforcing child support orders and providing a comprehensive array of alcohol, drug and mental health services.

A sample of their workload includes over 15,900 ADMHS clients served, over 153,000 child support payments worth $28 million processed, 60,000 as-sistance claims worth $35 million paid to eligible re-cipients and over 100,000 treated at Public Health clinics. The departments in this functional area are now collaborating more than ever to deliver inte-grated services to what frequently is a common cli-ent base.

28 employees with expenses of $16 million service a variety of general county programs. Included are Debt Service, Developing Strategies, and Economic Development which are generally managed by the policy and executive group. The Children and Families Commission has its own governing body but remains a part of the County financial entity. Transfers to other government entities like libraries and LAFCO are also accounted for in this unit.

Health & Public Assistance

General County Programs

This functional area has 536 employees and ex-penses of $65 million. The departments in this func-tional area are devoted to enhancing the quality of life in Santa Barbara County. They look to preserve and protect natural resources, foster safe long-term land use, protect agriculture and maintain essential public works facilities to make everyday life as safe and convenient as possible.

These departments completed more than 29,000 building inspections, maintained or enhanced 380 of the 1,800 road lane miles, completed 200 flood con-trol work requests, and provided services at 25 ma-jor county parks.

Community Resources And Public Facilities

County’s Poor, Sick May Suffer State Cutbacks Santa Barbara News-Press September 30, 2002

There are three business-type activities in the County: Solid Waste, Transit and Laguna Sanitation. A fee for service structure covers the costs of 102 employees and expenses of $22 million. Workload at solid waste includes waste reduction through recy-cling at 10,000 tons per month, landfill waste dis-posal of 18,345 tons per month and approval of the Tajiguas landfill expansion. Our future waste system program remains a long-term strategic issue for the community.

Business Activities

Housing & Community Develop-ment begins its first year as a

new department.

Santa Barbara County Building Permits Issued and Building Valuation

$0$60

$120$180$240$300

92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03

Fiscal Years

Mill

ions

0

2,000

4,000

6,000

Perm

its

Actual Valuation Bacara and Camino Real MarketplacePermits Issued, (02/03 Projected)

Projected to 6/03

CalWorks Caseload

3000

3500

4000

4500

5000

5500

Jul-97 Jul-98 Jul-99 Jul-00 Jul-01 Jul-02

Cas

eloa

d

Jun-03

5

Economy: Santa Barbara County is slowing in its tenth consecutive year of eco-nomic expansion. The following highlights and graphs are evidence of the changing economy.

Employment • The unemployment rate increased from 3.5% to 4.1%. • Santa Barbara County lost 692 jobs in 2002.

Income • Real total personal income grew at the same rate as last year at

1.3% • The average annual salary was $34,973 in 2002, an increase of

3.3%, or about the rate of inflation.

Retail Sales • Real retail sales increased to $5.2 billion, a growth rate of only 1%. • Retail sales have been flat for the past two years due to the post

September 11 slowdown in tourism, declining consumer optimism, and geopolitical uncertainties.

Real Estate • Non-residential valuations in 2002 were very near 2001 levels. How-

ever, in the key market segments for new space, activity is down countywide.

• Residential sales and prices continue to increase as an estimated 3,088 homes were sold with an average median price of $392,000.

• The housing-affordability index remains low at 17.6%.

Tourism • Santa Barbara County tourism has suffered since the events of Sep-

tember 11. • Room sales fell by 10% in fiscal year 2002

Factors Affecting Financial Condition

Financial Indicators We are experiencing a slowdown in our economic driven general revenues due to slower growth in the U.S., California and the local economy. The County’s overall revenue growth stalled, strong property tax growth was offset by decreases in state and federal government funding. Next year will be quite different, as expenditures will out pace revenues. Commitments to collective employee bargaining agreements will cause salaries to rise, significant re-tirement rate increases are expected and workers’ compensation costs continue to go up. More reduc-tions due to the California State budget seem inevita-ble.

Unemployment Rate

Retail Sales

Hotel/Motel Room Sales

Median Home Price

Most of the information about the Local Economy is derived from the 2003 Santa Barbara County Economic Outlook printed April 2003 and based on the 2002 calendar year (with permission from the UCSB Economic Forecast Project).

Economic Indicators The U.S. economy is expected to grow slowly this year and the California economy is expected to underper-form that of the nation. Santa Barbara will grow more slowly than its neighboring counties yet should outpace the State. Events of the last two years have hurt the California economy including 9/11, the energy crisis, the High Tech losses, the stock market downturn and the large budget deficits. Fortunately, the economics of the real estate market have remained strong. With weakened national and state economies, we can expect a continued slowdown in local economic growth.

County Economy Should Hold Firm Santa Barbara News-Press January 26, 2003

3

4

5

6

7

8

1993 2002

percent

3.5

4.5

5.5

1997 2002

billions of dollars

200

250

300

350

400

1993 2002

thousands of dollars

110

130

150

170

190

210

230

250

1993 2002

millions of dollars

6

Factors Affecting Financial Condition – Continued

Budget Policy: The annual budget serves as the foundation for the County’s financial planning and control. The County Budget Act, as presented in California Government Code sections 29005 and 30200 establish the general provisions and requirements concerning county budget matters. The County also prepares a separate County Performance Based Budget that is based on guidelines provided by the Government Finance Officers As-sociation of the United States and Canada (GFOA). The performance based budget focuses on strategic planning and outcome based measures, while the County Budget Act focuses on appropriation controls for each fund, de-partment and object level appropriations. The County starts the budget process by having the Board review and update its strategic plan and a set of budget principles. All departments submit requests for appropriation and estimates of available financing, the County Administrator reviews the request and prepares a recommendation. Hearings are set during the month of June, final budget changes are approved by the Board and the final budget is adopted prior to the start of the next fiscal year. The Auditor-Controller prepares a tabulation of the budget in its final form for submission to the State Controller and loads the budget to the financial system dur-ing the first month of the new fiscal year. The adopted budget is prepared by fund, department and cost cen-ters. Monthly estimates for both revenues and expenditures are also used to assist departments with budgetary control and each department meets four times per year with the County Administrator to review the status of their budgets. Quarterly budget status reports are submitted for Board of Supervisor hearings.

Capital Budget Policy: Each year a 5-year Capital Improvement Program (CIP) is compiled. The CIP is a plan for short range and long range capital acquisition and development. It also includes plans to improve or rehabilitate County-owned roads and facilities. The plan provides the mechanism for estimating capital requirements; setting priorities; planning, scheduling, and implementing projects; developing revenue policy for proposed improvements; monitoring and evaluating the progress of capital projects; and informing the public of projected capital improve-ments and unfunded needs. While the CIP covers a five-year planning period, it is updated each year to reflect on-going changes as new projects are added, existing projects modified, and completed projects deleted from the plan document. The five-year CIP does not appropriate funds, rather it serves as a budgeting tool, identifying those Capital Budget appropriations to be made through the adoption of the County’s annual budget.

Debt Administration: In January 1991, the Board adopted a formal written Debt Management Policy for man-agement of municipal debt. The policy provides general guidelines for the decision making process with regard to the issuance of debt instruments. The goal of the policy is to properly utilize debt as a major financing tool for the County. The use of debt must provide general or specific benefits to its citizens in relation to the cost of repayment levied upon those citizens. The County issued new certificates of participation during fiscal year 2001-02 totaling $31 million to finance eight major capital projects. This was the County’s first major debt issue since fiscal year 1990-91.

Cash Management: Short-term available cash is pooled by the County Treasurer for investment purposes, in-cluding demand deposits, certificates of deposit, U.S. Government Treasury and Agency securities, bankers’ accep-tances, corporate bonds and notes, repurchase agreements, commercial paper and the State of California Local Agency Investment Fund. The maturities of the investments range from 1 day to 5 years, with a weighted average maturity of 852 days. The average yield on investments was 3.27% during fiscal year 2002-03. The County's in-vestment performance compared favorably to the average yield rate of 2.76% for 2-year U.S. Treasury constant maturities for the past twenty-eight months. The County policy also provides for directed investments beyond 5 years upon approval by the Board. These investments had a maturity range from 7 to 11 years and an average yield on investment was 6.07% during FY 2002-03. Investment income includes unrealized appreciation (depreciation) in the fair value of investments. Increases in fair value during the current year, however, do not necessarily represent trends that will continue; nor is it always possible to realize such amounts, especially in the case of temporary changes in the fair value of investments that the government intends to hold to maturity.

Risk Management: The County has self-insurance programs for general liability, unemployment insurance, em-ployee dental insurance, medical malpractice and workers' compensation claims. General liability claims and medi-cal malpractice claims are self-insured up to $500,000 per occurrence with excess coverage provided through the California State Association of Counties (CSAC) Excess Insurance Authority. Workers' compensation claims are self-insured up to $300,000 per occurrence with excess coverage provided through the CSAC Excess Insurance Author-ity for the balance up to $5 million for employer's liability and $45 million for workers' compensation statutory li-ability; the County assumes the risk of claims above these amounts.

7

Certificate of Achievement: The GFOA awarded a Certificate of Achievement for Excellence in Financial Report-ing to the County for its CAFR for the fiscal year ended June 30, 2002. This was the twelfth consecutive year that the County has achieved this prestigious award. This report must satisfy both generally accepted accounting princi-ples and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe our current CAFR continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligi-bility for another certificate.

In addition, the County also received the GFOA’s Distinguished Budget Presenta-tion Award for its annual budget document for the fiscal year beginning July 1, 2002. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communications device.

Also, the County received the GFOA’s Award for Outstanding Achievement in Popu-lar Annual Financial Reporting for its Popular Annual Financial Report for the fiscal year ended June 30, 2002. This award is a prestigious national award recognizing conformance with the highest standards for preparation of state and local govern-ment popular reports. In order to receive this award, a government unit must pub-lish a Popular Annual Financial Report, whose contents conform to program stan-dards of creativity, presentation, understandability and reader appeal.

Acknowledgments: The preparation of the Comprehensive Annual Financial Re-port and its timely issuance is the result of a concentrated, dedicated, and coordi-nated effort by the entire Auditor-Controller staff. We would like to acknowledge the special efforts of the Financial Reporting Division and our independent auditors, KPMG LLP, for their assistance in the report preparation. We would also like to thank all County departments and Internal Audit who participated in its prepara-tion.

Respectfully submitted,

Other Information

Michael F. Brown Robert W. Geis, CPA County Administrator Auditor-Controller

The activities related to these programs are accounted for in separate internal service funds for actuarial tracking and are consolidated into one risk management fund for financial reporting. Claims administration services are pro-vided by the County Risk Management Division, except for unemployment insurance and employee medical/dental insurance which are administered by the County Personnel Department. The liabilities included in the funds are based on the results of actuarial studies and include amounts for claims incurred but not reported. It is the County's practice to obtain actuarial reviews every year. Revenues of the various self-insurance funds, together with funds to be provided in the future, are expected to provide adequate resources to meet liabilities as they come due. Property damage claims are insured on an occurrence basis up to $225 million by various insurance car-riers. All properties are insured at full replacement values.

Factors Affecting Financial Condition – Continued

FINANCIAL SECTION

MANAGEMENT’S DISCUSSION AND ANALYSIS

The information in this section is not covered by the Independent Auditors' Report, but is presented as required supplementary information for the benefit of the readers of the comprehensive annual financial report.

10

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) As management of the County of Santa Barbara, California (the County), we offer readers of the County’s financial statements this narrative overview and analysis of the financial activities of the County for the fiscal year ended June 30, 2003. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in the County’s basic financial statements, which immediately follow this section. All dollar amounts, unless otherwise indicated, are expressed in thousands of dollars.

FINANCIAL HIGHLIGHTS • The assets of the County exceeded its liabilities at the close of the most recent fiscal year by $413,910 (net assets). Of

this amount $56,387 (unrestricted net assets) may be used to meet the County’s ongoing obligations to citizens and creditors and $113,852 (restricted net assets) may be used for the County’s ongoing obligations related to programs with external restrictions. The remaining $243,671 represents the County’s investment in capital assets, less any related outstanding debt used to acquire those assets (invested in capital assets, net of related debt). (See further detail at Table 1 on page 12.)

• The County’s total net assets increased by $26,007 during the current fiscal year. The increase in unrestricted net assets of $2,028 represents the degree to which increases in ongoing revenue exceeded increases in ongoing expenses. The decrease in restricted net assets of $11,452 is attributable to various factors as discussed in the government-wide financial analysis on pages 12-13. The $35,431 increase in net assets invested in capital assets, net of related debt, represents capital purchases less depreciation plus the retirement of related long-term debt. (See further detail at Table 1 on page 12 and Table 2 on page 13.)

• As of June 30, 2003, the County’s governmental funds reported total ending fund balances of $203,650, a decrease of 4% in comparison with the prior year. Approximately 91%, or $186,095, of this total amount, is available for spending (unreserved fund balance). (See further discussion in Financial Analysis of the County’s Funds on page 16.)

• At the end of the current fiscal year, unreserved fund balance for the General Fund was $40,773 or 17% of total General Fund expenditures. (See further discussion in Financial Analysis of the County’s Funds on page 16.)

• The County’s investment in capital assets increased by $41,894 or 16%. During the current fiscal year, the County transferred $1,471 in capital assets to the new City of Goleta and $849 to other agencies. The County also received a land donation valued at $7,686. (See further detail at Table 3 on page 18.)

• The County’s total long-term debt increased by $76. (See further detail at Table 4 on page 19.)

OVERVIEW OF THE FINANCIAL STATEMENTS Management’s Discussion and Analysis is intended to serve as an introduction to the County’s basic financial statements. The County’s basic financial statements include three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements.

Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the County’s finances, in a manner similar to a private-sector business.

The statement of net assets presents information on all of the County’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the County is improving or deteriorating.

The statement of activities presents information showing how the County’s net assets changed during the most recent fiscal year. All changes in net assets 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 result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave).

The government-wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (governmental 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 County include policy and executive, law and justice, public safety, health and public assistance, community resources and public facilities, general government and support services, and general County programs. The business-type activities of the County include solid waste, sanitation services, and transit operations.

Component units are included in the basic financial statements and consist of legally separate entities for which the County is financially accountable and that have substantially the same governing board as the County or provide services entirely to the County. They include the Children and Families Commission, County Service Areas, Santa Barbara County Fire Protection District, Flood Control and Water Conservation Districts, Lighting Districts, Sanitation and Sewer Maintenance Districts, Sandyland Seawall Maintenance District, Redevelopment Agency of the County of Santa Barbara, the Santa Barbara County Finance Corporation, and the Water Agency.

11

The government-wide financial statements can be found on pages 21-22 of this report. 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 County, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the County 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 financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the County’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 County’s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statements of revenues, expenditures, and changes in fund balances provide a reconciliation to the government-wide financial statement in order to facilitate this comparison between governmental funds and governmental activities.

The County maintains 58 individual governmental funds and for financial reporting purposes, these funds have been combined into 28 funds. The County segregates from the General Fund a number of significant functions in major funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General, Road, Public Health, Social Services, Flood Control District and Capital Projects funds, all of which are considered to be major funds. Data for the other 22 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements located in the Combining and Individual Fund Statements and Schedules section of this report.

The County adopts an annual appropriated budget for all of its operating funds. A budgetary comparison statement has been provided for the General Fund and major special revenue funds to demonstrate performance against this budget.

The governmental funds financial statements can be found on pages 23-29 of this report.

Proprietary funds. The County maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The County uses enterprise funds to account for its solid waste, sanitation services, and transit operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the County’s various functions. The County uses internal service funds to account for its information technology services, vehicle operations and maintenance, risk management and insurance, and communications functions. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements.

Proprietary funds provide the same type of information as the government-wide financial statements, but in more detail. The proprietary fund financial statements provide separate information for the Solid Waste Fund and Laguna Sanitation Fund, which are considered to be major funds of the County. Conversely, the four internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements located in the Combining and Individual Fund Statements and Schedules section of this report.

The proprietary funds financial statements can be found on pages 30-32 of this report.

Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the County. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the County’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The external portion of the Treasurer’s Investment Pool and agency funds are reported as fiduciary funds.

The fiduciary funds financial statements can be found on pages 33-34 of this report.

Notes to the basic financial statements. The notes to the basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the basic financial statements can be found on pages 35-72 of this report.

12

GOVERNMENT-WIDE FINANCIAL ANALYSIS

As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the County, assets exceeded liabilities by $413,910 at the close of the current fiscal year.

The largest portion of the County’s net assets, $243,671, reflects its investment in capital assets (e.g. land, buildings, roads, bridges, flood control channels and debris basins, machinery, and equipment), less any related outstanding debt used to acquire those assets. The County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the County’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

An additional portion of the County’s net assets, $113,852 represents resources that are subject to external restrictions on how they may be used. The major restrictions on net assets are for property taxes dedicated to specific services such as flood control and fire protection (42%), state restrictions (32%), debt service (9%), federal and state allocations for roads (6%), and cable television public access funds (3%). Restricted net assets decreased by $11,452 from the prior year. This was primarily due to decreases totaling $17,559 which consisted primarily of the use of Road funds to complete capital projects ($6,477), the release of property tax impounds in the General Fund ($6,108), and a reduction of net assets of the Fire District Fund ($1,322) and the Children and Families Commission Fund ($1,254) as expenses exceeded revenues. This was offset by increases totaling $6,107, which was primarily due to revenues exceeding expenses in the Alcohol Drug and Mental Health Fund ($1,553) and the Affordable Housing Fund ($1,203), an increase in restrictions for elections programs in the General Fund ($898), and an increase in restrictions for Federally Qualified Health Clinics expenditures in the Public Health Fund ($717).

The remaining balance of total net assets of $56,387 is unrestricted and may be used to meet the County’s ongoing obligations to citizens and creditors. Unrestricted net assets increased $2,028 compared to the prior year.

At the end of the current fiscal year, the County reported a positive change of 17% in net assets invested in capital assets, net of related debt. As discussed above, the County’s restricted net assets decreased by 9%, while unrestricted net assets increased by 4%. In the prior fiscal year, the County reported positive changes in all three categories of net assets.

Dollar Percent2002 2003 2002 2003 2002 2003 Change Change

$ 348,192 $ 347,551 $ 28,340 $ 29,177 $ 376,532 $ 376,728 $ 196 0% 219,973 256,570 44,943 50,240 264,916 306,810 41,894 16%

Total assets 568,165 604,121 73,283 79,417 641,448 683,538 42,090 7%

93,822 104,937 1,588 1,425 95,410 106,362 10,952 11% 124,901 125,250 33,234 38,016 158,135 163,266 5,131 3%

Total liabilities 218,723 230,187 34,822 39,441 253,545 269,628 16,083 6%

Invested in capital assets, net of related debt 176,024 209,452 32,216 34,219 208,240 243,671 35,431 17%Restricted 124,371 112,919 933 933 125,304 113,852 (11,452) (9%)Unrestricted 49,047 51,563 5,312 4,824 54,359 56,387 2,028 4%

$ 349,442 $ 373,934 $ 38,461 $ 39,976 $ 387,903 $ 413,910 $ 26,007 7%

TABLE 1 - The County’s Net Assets (in thousands)

Governmental Business-type Activities Activities Total

Total

Long-term liabilities

Net assets:

Total net assets

Current and other assetsCapital assets

Current and other liabilities

Net Assets

$0

$100,000

$200,000

$300,000

$400,000

$500,000

99-00 00-01 01-02 02-03

Unrestricted

Restricted

Invested incapital assets,net of relateddebt

13

The County’s total net assets increased by $26,007 during the current fiscal year. The increase in net assets invested in capital assets, net of related debt, of $35,431 represents capital purchases net of depreciation plus the retirement of related long-term debt. The decrease in restricted net assets, $11,452, results from using restricted net assets to acquire capital assets, releasing property tax impounds and the spending of those assets for their restricted purposes. The increase in unrestricted net assets, $2,028, is due to ongoing revenues exceeding ongoing expenses.


$ 137,597 $ 140,783 $ 19,007 $ 21,641 $ 156,604 $ 162,424 $ 5,820 4% 252,572 236,391 1,573 1,344 254,145 237,735 (16,410) (6%) 272 131 -- -- 272 131 (141) (52%)

105,922 107,279 -- -- 105,922 107,279 1,357 1% 26,078 26,932 -- -- 26,078 26,932 854 3% 21,674 16,134 -- -- 21,674 16,134 (5,540) (26%) 5,877 4,423 -- -- 5,877 4,423 (1,454) (25%) 4,670 3,420 1,414 971 6,084 4,391 (1,693) (28%) 5,537 4,293 96 -- 5,633 4,293 (1,340) (24%)

Total revenues 560,199 539,786 22,090 23,956 582,289 563,742 (18,547) (3%)

6,960 7,235 -- -- 6,960 7,235 275 4% 36,843 36,850 -- -- 36,843 36,850 7 0% 135,606 142,190 -- -- 135,606 142,190 6,584 5% 215,182 221,988 -- -- 215,182 221,988 6,806 3% 68,528 65,268 -- -- 68,528 65,268 (3,260) (5%) 29,843 26,927 -- -- 29,843 26,927 (2,916) (10%) 11,241 15,644 -- -- 11,241 15,644 4,403 39% 4,541 4,610 -- -- 4,541 4,610 69 2% -- -- 20,265 18,295 20,265 18,295 (1,970) (10%) -- -- 2,043 3,825 2,043 3,825 1,782 87% -- -- 36 27 36 27 (9) (25%) -- 32 -- 277 -- 309 309 --

Total expenses 508,744 520,744 22,344 22,424 531,088 543,168 12,080 2%Excess of revenues over expenses

before extraordinary items,special items, and tranfers 51,455 19,042 (254) 1,532 51,201 20,574 (30,627) (60%)

(22,992) (2,253) -- -- (22,992) (2,253) 20,739 (90%) - 7,686 -- -- -- 7,686 7,686 -- (133) 17 133 (17) -- -- -- -- $ 28,330 $ 24,492 $ (121) $ 1,515 $ 28,209 $ 26,007 $ (2,202) (8%)

Special itemExtraordinary item

Laguna sanitation

RevenuesProgram revenues:

Charges for servicesOperating grants and contributionsCapital grants and contributions

General revenues:

Transit

TABLE 2 - The County’s Changes in Net Assets (in thousands)


Total

Property taxesMotor vehicle in-lieu taxSales taxesTransient occupancy taxUnrestricted investment earnings

General government & support services

Other

ExpensesPolicy & executiveLaw & justice

General County programs

Public safety

Increase (decrease) in net assets

Interest on long-term debtSolid waste

Loss on disposal of capital assets

Transfers

Health & public assistanceCommunity resources & public facilities

Increase in Net Assets

-$20,000

$0

$20,000

$40,000

Total Unrestricted Restricted Invested incapital assets,net of related

debt

14

Governmental activities. Governmental activities increased the County’s net assets by $24,492 for the year ended June 30, 2003, thereby accounting for 94% of the total increase in the net assets of the County. Operating revenues exceeded operating expenses by $19,042. Extraordinary items, special items, and transfers provided an additional total increase in net assets of $5,450.

Total revenues for the County’s governmental activities decreased 4%, or $20,413 from the prior year as discussed below.

• As an arm of the state government, operating grants and contributions serve multiple programs representing 44% of the County’s funding for governmental activities and are tied to mandated services such as public assistance, health, and mental health. These revenue sources decreased by $16,181, or 6%, from the prior year primarily due to reduced funding imposed by the State of California and reductions in federal and state monies for road projects.

• Taxes that are generated locally provide the Board of Supervisors (Board) with most of its discretionary spending power.

However, since formation of County government in the 1850’s, these resources are generally consumed by basic public safety services like sheriff, fire and district attorney. Total general revenues decreased by $7,277. The major factor in the decline of general revenues was the transfer of tax base to the new City of Goleta. o Property taxes increased 1% to $107,279. While County-wide property tax revenue grew 7.6%, the County’s

property tax revenue increased only 1% primarily because of reallocations to the City of Goleta and property tax assessment appeal refunds.

o Motor vehicle in-lieu taxes increased by $854, or 3%, to $26,932 attributable to local sales of automobiles, even though the State reduced allocations by $1,000 in the final year-end distribution.

o Sales taxes decreased by $5,540, or 26%, to $16,134 due to a reallocation of a portion of the 1% local sales tax generated in the City of Goleta and the reallocation of a portion of the Road Measure D ½ cent sales tax to the City of Goleta.

o Transient occupancy taxes decreased by $1,454, or 25%, to $4,423 due to the incorporation of the City of Goleta. o Unrestricted investment earnings decreased by $1,250, or 27%, to $3,420 as the annual pool investment rate

declined from 4.35% in the prior year to 3.27% in the current year. • A requirement of the incorporation of the City of Goleta (City) in February 2002 was a revenue neutrality agreement

between the City and the County. A major component of the agreement requires the City to contract for a five-year period with the County for municipal services the County had previously provided to that geographical area. The purpose of this contracting provision was to offset the effect to the County for the loss of tax revenues transferred to the City. In an effort to make the City financially feasible, the County provided contract services to the City for five months in FY 01-02 without reimbursement (at no charge-n/c in table below) and transferred $2,935 tax revenues to the City for the same period. In FY 02-03, the County transferred tax revenues of $11,671 to the City for the full year. However, the contracted services provided during FY 02-03 was less than budget. The following charts display the major revenue transfers to the City and the contracted service revenues for FY 01-02 and FY 02-03. The net revenue impact to the County for FY 02-03 was less than 1% of total County revenues.

2001-02 2002-03

Property taxes 650$ 1,700$ Property transfer tax - 130$ 1% retail sales tax 1,200 4,000 Transient occupancy tax 985 2,900 Franchise fees 100 400 Road sales tax Measure D - 1,370 Road sales tax Local

Transportation Fund - 18 County Service Area #3 Lighting - 86 County Service Area #3 Library - 173 Redevelopment Agency property tax - 675 Redevelopment Agency housing - 219 Total revenue transfers 2,935$ 11,671$

Fiscal Year

County Revenue Transfersto the City of Goleta

2001-02Budget Actual

Sheriff n/c 4,673$ 4,503$ Road maintenance n/c 2,130 538 Parks & open space maintenance n/c 552 552 Redevelopment planning n/c 455 342 Energy Division n/c 198 77 Animal control n/c 138 138 Water agency n/c 134 134 Surveyor n/c 52 - Development permitting n/c - - Public works engineering n/c - - Building inspection n/c - - Santa Barbara Shores payment 411 411 411 Total contract service revenue 411$ 8,743$ 6,695$

2002-03Fiscal Year

County Contract Service Revenuefrom the City of Goleta

15

Total expenses for governmental activities were $520,744, an increase of 2%, or $12,000, from the prior year. As a service delivery entity, the County’s major cost component is salaries and benefits, which accounted for approximately 54% of total County expenses. The average full time equivalent (FTE) employee count for the County (including business-type activities) decreased from 4,347 as of the prior year to 4,295 as of June 30, 2003. Total salaries and benefits expense increased by $18,000 or 6% from the prior year.

• The total increase in expenses is attributed generally to the following factors: o Policy and executive expenses increased $275, or 4%, due to increased salaries and benefits expenses. o Law and justice expenses increased by $7 due to salaries and benefits expense increases of $1,100 which were offset

by decreases in contract service costs. A transfer of 21 FTE positions, or $1,400, to the State funded Courts Collections program was negated by an equal amount for contract services expenses to the Courts for the transferred program.

o Public safety expenses increased $6,584, or 5%, mainly attributable to salaries and benefits expense increases of $7,200. These increases were offset by a reduction of 15 FTE positions in the Probation Department.

o Health and public assistance expenses increased by $6,806, or 3%, primarily due to salaries and benefits expense increases of $7,700. There was a decline in average FTEs of 40 positions or $2,600 attributable to State program reductions, however other costs increased approximately $1,700.

o Community resources and public facilities expenses decreased by $3,260, or 5%, generally due to reduced funding for road maintenance projects of $3,500, an 11 FTE position reduction in the Planning and Development Department of $700, while salaries and benefits increased $1,100.

o General government and support services expenses decreased $2,916, or 10%, due to the reduction of the Housing and Community Development Department expenses of $1,500 and a reduction of Redevelopment Agency expenses of $300, offset by a $1,100 increase in salaries and benefits. The remainder of the decrease of $2,200 is mainly due to the change in indirect expense allocation to other departments compared to the prior year.

o General County programs expenses increased $4,403, or 39%, due to a $3,400 increase in the litigation liability expense, $2,000 increase in Housing and Community Development expense, a $1,000 increase in salaries and benefits expense, a $300 increase in Redevelopment Agency expense and a $200 increase in Public Education and Access expense. These increases were offset by a $2,000 decrease in Children and Families Commission expenses and a $600 decrease in amortization expense on debt issuance costs.

• The County recorded additional net revenue of $5,433 for the fiscal year ended June 30, 2003 for extraordinary and special items. The extraordinary item represents a net expense of $2,253, comprised of $782 in Redevelopment Agency net assets transferred to the City of Goleta on July 1, 2002 in accordance with the applicable government code sections and $1,471 in completed infrastructure assets transferred to the City of Goleta during the year. The special item represents a donation of land to the County at the Betteravia government center valued at $7,686.

Business-type activities. Business-type activities net assets increased by 4%, or $1,515, indicating that these funds generated revenues sufficient to cover the costs of operations.

Ex pe nse s a nd P r ogr a m Re v e nue s - Gov e r nme nt a l Ac t i v i t i e s

$0

$50,000

$100,000

$150,000

$200,000

$250,000

Pol icy &Executive

Law & Justice Publ ic Saf ety Heal th & Publ icAssist.

Comm. Res. &Publ ic Facl .

Gener al Gov't &Suppor t

Ser vices

Gener alCounty

Inter est onlong-ter m debt

Expenses Pr ogr am Revenues

Expenses and Program Revenues - Business Activities

$0

$5,000

$10,000

$15,000

$20,000

$25,000

Solid Waste Laguna Sanitation Transit

Expenses Program Revenues

Revenues by Source - Governmental Activities

Sales taxes3%

Motor vehicle in-lieu tax

5%

Investment earnings

1%

Transient occupancy tax

1%Operating grants and contributions

42%

Other4%

Property taxes19%

Charges for services

25%

Re v e nue s by S our c e - Busi ne ss Ac t i v i t i e s

Oper at i ng gr ants

and cont r i but i ons

6%


90%

Investment ear ni ngs

4%

16

FINANCIAL ANALYSIS OF THE COUNTY’S FUNDS As noted earlier, the County uses fund accounting to demonstrate compliance with finance-related legal requirements.

Governmental funds. The focus of the County’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the County’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.

At June 30, 2003, the County’s governmental funds reported total fund balances of $203,650, a 4% decrease, or $8,779 in comparison with the prior year. Approximately 91%, $186,095, of the total fund balances constitutes unreserved fund balance, which is available to meet the County’s current and future needs. The remainder of fund balance is reserved to indicate that it is not available for new spending because it has been reserved for: 1) debt service, $8,251; 2) amounts due from other funds that are long-term in nature and thus do not represent available spendable resources, $3,860; 3) property tax losses, $3,845; 4) property tax impounds receivable, $1,508; and 5) and various other restricted purposes, $91.

The General Fund is the main operating fund of the County. At June 30, 2003, unreserved fund balance of the General Fund was $40,773, an increase of $6,840 from $33,933 as of the prior year-end. The General Fund’s total fund balance was $49,674 as of June 30, 2003, an increase of 1%, or $703, over the prior year. As a measure of the General Fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 17% of total General Fund expenditures, while total fund balance represents 21% of total General Fund expenditures. Standard and Poor’s in their most recent rating of the County consider these ratios adequate.

The County’s management also designates (earmarks) unreserved fund balance to a particular function, project or activity. Fund balance may also be designated for purposes beyond the current year. However, designated fund balance is available for appropriation at any time. Of the $40,773 General Fund unreserved fund balance, 70% is designated. The most significant designations are a $10,000 strategic reserve and a $2,068 litigation reserve, earmarked for settlements of adverse litigation without other coverage. Unreserved, undesignated fund balance at year-end was $12,050, a 60% or $4,504 increase over the prior year due to a $6,108 net decrease of property tax impounds receivable from reserved fund balance.

The remaining governmental funds’ fund balances decreased 6%, or $9,482, to $153,976.

• The Road Fund fund balance decreased $6,475 as a result using fund equity to finance multiple year projects.

• The Capital Projects Fund fund balance decreased $5,685 as a result of using fund equity to finance multiple year projects.

• The Public Health Fund fund balance increased $2,121 primarily due to steady intergovernmental revenue growth over the prior year and cost savings from staffing vacancies.

• The Social Services Fund fund balance increased $973 primarily due to incentive revenue in the temporary assistance to needy families program.

• The Flood Control District Fund fund balance increase of $135 resulted from ongoing revenues exceeding ongoing expenditures.

• Other Governmental Funds’ fund balance decreased by $551 primarily due to the following:

o The Fire Protection District fund balance decreased $1,321 as salary expenditures increases are beginning to outpace revenue growth, requiring the need to draw down on fund balance.

o The Children and Families Commission fund balance decreased $1,255 because revenues generated from tobacco taxes declined from the previous year and contract commitments were maintained at levels greater than revenues.

o The Santa Barbara Finance Corporation Debt Service Fund fund balance decreased by $768 due to the use of designated fund balance to make capitalized interest payments on 2001 Certificate of Participation projects.

o The Alcohol, Drug, and Mental Health Services (ADMHS) Fund fund balance increase of $1,552 resulted from increases in Medi-Cal revenue reimbursements over the prior year.

o The Affordable Housing Fund fund balance increased $1,246 because Home Project funding revenues were set aside for future years.

17

Proprietary funds. The County’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.

The total increase in net assets of the enterprise funds was $1,719 for the year. The net assets of the Solid Waste Fund increased by $2,032 while the Laguna Sanitation Fund decreased by $316. Revenues for the Solid Waste Fund increased by 11%, or $1,782, primarily due to fee rate increases which was partially offset by a $157 decrease in operating costs resulting in the increase in net assets.

Total net assets of the internal service funds decreased by $2,886. Net losses of $4,086 occurred in the Risk Management and Insurance Fund, while the Information Technology Services, Vehicle Operations and Maintenance Fund, and the Communications Fund had net asset increases of $299, $678 and $223, respectively. The Risk Management and Insurance Fund has incurred a net loss in seven of the last eight years and has an accumulated deficit of $15,094 as of June 30, 2003 primarily due to continued adverse development in the workers’ compensation program. The further increase in the deficit this year was attributed to net losses in the general and workers’ compensation programs of $3,246 and $605, respectively. The general liability program experienced adverse development due to major civil lawsuit settlements. The workers’ compensation program’s net loss of $605 was attributable to increased medical expenses. While the County has a ten-year amortization plan to eliminate the fund deficit via rates charged to departments, the costs in these programs continue to rise.

GENERAL FUND BUDGETARY HIGHLIGHTS

The County’s final budget differs from the original budget by 3%. Supplemental appropriations of $6,327 were approved during the fiscal year. Approximately 50% of the additional appropriations were in the Sheriff’s Department related to increased salary costs due to equity adjustments, higher overtime cost due to staffing vacancies, increased jail medical expenditures and the purchase of equipment with grant funds. The remainder of the appropriation increase was related to the other eighteen departments as follows: the Fire Department received grant funds for the purchase of equipment, the Public Health Department appropriated funds for the community housing assistance programs, departments upgraded various computer software and equipment with releases of designations, and various appropriation adjustments for professional service contracts.

During the year, General Fund revenues exceeded the total budget estimate by $827. Tax revenue exceeded the budget estimate by $4,244 primarily due to a higher rate of growth for property taxes than estimated in the budget, supplemental property tax billings and collections, and transient occupancy taxes were higher than budget estimates. Some of the positive property tax variance is also related to the settlement of property tax assessment appeals that also had associated penalty revenue. This penalty revenue accounts for the majority of the $3,445 positive variance in fines, forfeitures and penalties revenues. Interest earnings were less than the budget estimate by $1,368 due to a decline in the interest rates during the year. Licenses, permits and franchises, intergovernmental, charges for services, and other revenues were less than budget estimates by $606, $2,914, $1,651 and $323, respectively. These revenues were less than the budget estimate by a total of $5,494, but were generally offset by expenditure savings.

The difference between the final budget appropriations and actual expenditures resulted in $8,973 of unspent appropriations. Salary and benefit savings of approximately $3,000 resulted from unfilled positions across all functions and $5,900 resulted from unspent appropriations from program services in community resources and public facilities, public safety, and general County programs.

Greater than anticipated property tax revenue and appropriation savings eliminated the need to draw upon fund balance. The equity position of the General Fund grew by $703 as opposed to the budget plan to draw on fund equity by $8,626.

The General Fund budget to actual statement can be found on page 25 of this report.

Budget to Actual Comparison

$200,000

$225,000

$250,000

$275,000

$300,000

$325,000

$350,000

Original Budget Final Budget Actual

Revenue Expenditure

Effect on Fund Balance

$(10,000)

$(8,000)

$(6,000)

$(4,000)

$(2,000)

$-

$2,000

Original Budget Final Budget Actual

18

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital assets. The County’s investment in capital assets as of June 30, 2003, amounted to $306,810 (net of accumulated depreciation). This investment in a broad range of capital assets includes land, infrastructure, structures and improvements, equipment, and construction in progress.


Land $ 31,163 $ 38,308 $ 12,529 $ 11,803 $ 43,692 $ 50,111 $ 6,419 15%Structures and improvements 94,336 93,458 5,829 6,051 100,165 99,509 (656) (1%)Equipment 31,021 36,634 7,243 6,887 38,264 43,521 5,257 14%Infrastructure 15,940 51,079 3,131 5,842 19,071 56,921 37,850 198%Construction in progress (CIP) 47,513 37,091 16,211 19,657 63,724 56,748 (6,976) (11%)Total $ 219,973 $ 256,570 $ 44,943 $ 50,240 $ 264,916 $ 306,810 $ 41,894 16%

TABLE 3 - The County’s Capital Assets (net of depreciation, in thousands)


Total

The County’s capital assets increased 16%, or $41,894, during the fiscal year. Components of the change in capital assets are as follows (in thousands):

The County’s major capital asset events in the current fiscal year included the following: • The General Fund purchased $806 of specialized Fire and Sheriff equipment, computer hardware and software, and

office furniture. Capital project completions of $4,200 included the Sheriff’s Computer Aided Dispatch system ($2,700) and 3 other major Sheriff equipment projects (totaling $1,000). Construction in Progress (CIP) at year-end included 45 projects with a total value of $22,090.

• The Health and Public Assistance funds (Public Health Fund, Social Service Fund, and Alcohol, Drug, and Mental

Health Services Fund) received a land donation located next to the County’s Betteravia Government Center valued at $7,686 on which the County paid $314 in closing costs, purchased a Mental Health clinic for $732, completed two Public Health lab remodels for $487, and purchased $352 of office and health lab/medical equipment led by Public Health ($277). Social Services’ computer system CIP project had a year end value of $392.

• The Road Fund purchased $781 of equipment and had 32 projects in construction involving pavement, bridges, traffic

signals, bike lanes, and hardscape at year-end valued at $9,363. Twenty-one infrastructure projects valued at $25,400 were completed during the fiscal year. The main completed project types included pavement replacement ($18,300), concrete curb / gutter / sidewalk replacement ($3,900), and a major bridge replacement ($1,600). Two CIP projects with a value of $1,471 were transferred to the City of Goleta.

• The Flood Control District Fund and Water Agency Fund completed 5 CIP projects valued at $10,200. The largest

completions were the Montecito Creek Debris Basin ($4,800) and Green Canyon Improvements in the North County ($3,300). Twenty-one flood control channel, storm drain, and debris basin CIP projects with a value of $5,246 were underway at year-end.

Contributionsto Other Net

Additions Agencies Retirements Depreciation Change

General Fund 4,401$ (859)$ (200)$ (3,187)$ 155$ Capital Projects Fund 7,265 -- (76) -- 7,189 Health & Public Assistance funds 10,899 -- -- (1,332) 9,567 Road Fund 15,378 (1,461) (267) (1,101) 12,549 Flood Control District Fund 4,256 -- (14) (170) 4,072 Internal Service Funds 6,903 -- (90) (3,671) 3,142 Enterprise Funds 7,518 -- (770) (1,451) 5,297 Other Governmental Funds 699 -- -- (776) (77) Total 57,319$ (2,320)$ (1,417)$ (11,688)$ 41,894$

19

• The Solid Waste Enterprise Fund purchased $148 of equipment and sold a North County land parcel valued at $726. Six CIP projects were completed for $800 including the Tajiguas sediment basin control structure ($424). The fund also ended the year with $2,714 of CIP in 13 projects.

• The Laguna Sanitation Enterprise Fund completed a wastewater trunkline expansion project at $2,800 and has 2

wastewater treatment projects in CIP valued at $16,943.

As a result of the implementation of Government Accounting Standards Board Statement No. 34 (GASB 34), the accompanying government-wide financial statements include those infrastructure assets that were either completed during the fiscal year or considered construction in progress at year-end. However, the accompanying government-wide financial statements do not reflect those infrastructure assets completed prior to July 1, 2000. From this point forward, new infrastructure will be added to the records while the retroactive historical value of the County’s infrastructure assets will be added prior to June 30, 2006 in accordance with GASB 34.

Additional information on the County’s capital assets can be found in Note 8 on pages 52-55 of this report.

Long-term debt. At June 30, 2003, the County had total long-term debt outstanding of $80,847. This amount was comprised of $67,860 of certificates of participation that are secured by the County’s lease rental payments with a covenant to budget and appropriate lease payments, $1,355 of long-term settlement obligations, capital lease obligations of $2,161, the state sponsored a construction loan for the Laguna Wastewater Treatment Plant of $9,388, and $83 of loans which are secured solely by governmental revenue sources.


Certificates of Participation $ 65,935 $ 61,635 $ 6,955 $ 6,225 $ 72,890 $ 67,860 $ (5,030) (7%)Long-term Settlement Obligations 1,438 1,025 - 330 1,438 1,355 (83) (6%)Capital Lease Obligations 567 1,753 839 408 1,406 2,161 755 54%Laguna Wastewater Treatment

Plant Loan - - 4,933 9,388 4,933 9,388 4,455 90%Other Loans 104 83 - - 104 83 (21) (20%)Total $ 68,044 $ 64,496 $ 12,727 $ 16,351 $ 80,771 $ 80,847 $ 76 0%

TABLE 4 - The County’s Outstanding Debt (in thousands)


Total

The County’s total long-term debt increased by $76, or 0%, during the fiscal year. Decreases were due to $5,030 in certificate of participation payments, a reduction of $83 in long-term settlement obligations, and a reduction of $21 in other loan payments. These were offset by increases of $755 in new capital lease obligations and an increase of $4,455 in a state sponsored construction loan for a Laguna Wastewater Treatment Plant expansion. The current debt schedule results in 68% of the balance being paid down in the next ten years.

Long-term settlement obligations are primarily related to an agreement with an oil facility for the County Fire Department to pay back overcharges related to fire station mitigation payments made in previous years by the oil facility. This settlement obligation of $1,025 is scheduled to be satisfied in FY 2006-07. The County maintains a Standard & Poor’s “SP-1+” rating for short-term notes and both a Standard & Poor’s “AA-” and a Moody’s “A1” for its long-term certificates of participation. Standard & Poor’s, in their June 2003 rating on the County’s Tax and Revenue Anticipation Notes states: • “The ‘SP-1+’ rating on Santa Barbara County, Calif.’s TRANS reflects the County’s favorable credit characteristics, … • …unreserved fund balances for the county are adequate at $33.9 million or 14 % of expenditures. • …the budget is pending board approval and does not assume any loss in motor vehicle license fee backfill funds, …” Standard & Poor’s in their November 2001 credit profile, stated that “the County’s underlying credit characteristics include: • A growing, moderately diverse economy, • Above-average wealth and income indicators, • Good financial position, and • Very low debt level.” Additional information on the County’s long-term debt can be found in Note 11 on pages 58-61 of this report.

20

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES

The following factors were considered in preparing the County’s budget for fiscal year 2003-2004:

• The budget for fiscal year 03-04 relies on a year of slow paced growth. • The relatively slow national and state economic growth rates are expected to slow the economic growth of the County. • The unemployment rate for the County increased to 4.1% comparing favorably to the State of California rate of 6.7%

and the U.S. rate of 6.0%. • Four major sources of revenue generated from the performance of the local economy are:

− Property assessed values grew 6.6% for the FY 03-04 due to appreciation in the real estate markets, home sales and the 2% Prop 13 inflation adjustment. The fiscal year 03-04 budget assumes a 6.2% increase in property tax revenue.

− Retail sales increased to $5.2 billion, a growth rate of 1% in FY 02-03. For FY 03-04, the budget includes a growth rate of 1%.

− Hotel room sales fell County-wide by 10% in FY 02-03, with occupancy rates at 71%. For FY 03-04 the budget includes a growth rate of 5% for transient occupancy tax revenue.

− Motor vehicle in-lieu tax revenue increased by 3% in FY 02-03. For FY 03-04, the budget includes an increase of 2%.

• The budget includes increases in salaries and benefits of 3.5% per negotiated long-term salary agreements. It also includes an increase in retirement rates and increase in workers’ compensation rates.

• The State has proposed various budget cuts that would directly affect the County’s General Fund discretionary revenues as well as funding to Social Services, Mental Health and a variety of other programs. The County may have to amend the FY 03-04 budget depending on State actions that have not been completed as of the issue date of this report.

• On July 9, 2003, the State Controller notified counties that effective June 19, 2003 he has stopped distributing the part of the motor vehicle license (MVIL) fee apportionment that the state had previously funded for the Car Tax Reduction at 67.5%. On that date the MVIL was raised to the full rate. Based on the State Controller’s new distribution schedule for the month of June, the County recorded accrued revenues of $1,400 of the total expected $2,400 MVIL distribution. Therefore, the County absorbed the first $1,000 of this reduction in FY 02-03. Additional losses are estimated at approximately $1,500 monthly until restoration of the full fee schedule is implemented. This could take up to 90 days and additional MVIL revenue reductions of $4,500 could occur during the first quarter of FY 03-04. This could also affect MVIL realignment revenues for ADMHS, Social Services, and Public Health Funds for FY 03-04. The FY 03-04 budget assumed full apportionment of MVIL revenues.

• For FY 03-04 the County has adopted a balanced budget without decreasing overall reserves and assuming the use of $7,355 in General Fund unreserved fund balance. The actual General Fund undesignated fund balance was $12,050 as of June 30, 2003, an increase of $4,695 over the amount necessary to balance the FY 03-04 adopted budget. The Board in the final budget resolution directed any excess above the required amount to balance be distributed as follows: first $1,000 to the General Fund salary and benefit designation, second $1,000 to the strategic designation and the balance of $2,695 to the contingency designation.

• Operating reserve designations and the strategic reserve designations are part of the financial resources that are available to address unanticipated revenue shortfalls or unforeseen expenditures. These designations provide a primary defense against deficit spending and help maintain liquidity when budgeted drawdowns become necessary.

As of June 30, 2003, unreserved fund balance in the General Fund was $40,773. Of this amount, $28,723 is designated but available for appropriation. The County has appropriated $12,050 of unreserved, undesignated fund balance in the General Fund for FY 2003-04 expenditures ($7,355) and increases to designations ($4,695) as outlined in the final budget resolution for the adopted FY 2003-04 budget. The proposed and final budgets are adopted prior to July 1 of the new fiscal year.

The County’s performance-based proposed budget and the County’s Five Year Capital Improvement Program can be found on the internet at www.countyofsb.org/cao/default.htm. REQUESTS FOR INFORMATION The financial report is designed to provide a general overview of the County’s finances for all interested parties. Questions concerning any of the information provided in this report or requests for additional information should be addressed to Santa Barbara County Auditor-Controller, PO Box 39, Santa Barbara, CA 93102-0039. The County’s Comprehensive Annual Financial Report and Financial Highlights publications can be found on the internet at www.countyofsb.org/auditor/publi-cations.asp.

BASIC FINANCIAL STATEMENTS

COUNTY OF SANTA BARBARA, CALIFORNIASTATEMENT OF NET ASSETS

AS OF June 30, 2003 (in thousands)

Governmental Business-typeActivities Activities Totals

ASSETSCash and investments (Note 5) 206,977$ 13,011$ 219,988$ Accounts receivable, net:

Taxes 15,653 -- 15,653 Licenses, permits, and franchises 494 158 652 Fines, forfeitures, and penalties 403 -- 403 Use of money and property 2,138 183 2,321 Intergovernmental 32,892 127 33,019 Charges for services 14,246 1,607 15,853 Other 578 629 1,207

Impounds receivable (Note 18) 1,508 -- 1,508 Internal balances 2,991 (2,991) -- Inventories 244 350 594 Prepaid items 140 256 396 Other receivables 5,254 20 5,274 Deferred charges 540 95 635 Restricted cash and investments (Notes 5 & 6) 63,493 15,732 79,225 Capital assets (Note 8)

Land and improvements 38,308 11,803 50,111 Buildings and improvements 145,389 11,192 156,581 Equipment 75,123 15,343 90,466 Infrastructure 51,843 8,053 59,896 Construction in progress 37,091 19,657 56,748 Less accumulated depreciation (91,184) (15,808) (106,992)

Total capital assets 256,570 50,240 306,810 Total assets 604,121 79,417 683,538

LIABILITIESAccounts payable 16,515 900 17,415 Salaries and benefits payable 18,117 405 18,522 Other liabilities 331 -- 331 Interest payable 2,109 120 2,229 Other payables 305 -- 305 Deferred revenue (Note 7) 17,522 -- 17,522 Customer deposits payable 5,038 -- 5,038 Notes payable (Note 9) 45,000 -- 45,000 Long-term liabilities (Note 11):

Portion due or payable in one year:Capital lease obligations (Note 10) 392 198 590 Certificates of participation payable (Note 11) 4,470 765 5,235 Other long-term obligations (Notes 9 & 11) 291 -- 291 Compensated absences 732 7 739 Liability for self-insurance claims (Note 19) 10,209 -- 10,209

Portion due or payable after one year:Capital lease obligations (Note 10) 1,361 210 1,571 Certificates of participation payable (Note 11) 57,165 5,460 62,625 Unamortized premium on certificates of participation 1,472 -- 1,472 Other long-term obligations (Notes 9 & 11) 817 -- 817 Note Payable (Note 9 & 11) -- 9,388 9,388 Compensated absences 22,252 440 22,692 Liability for self-insurance claims (Note 19) 23,657 -- 23,657 Landfill litigation settlement (Note 18) -- 330 330 Estimated litigation liability (Note 18) 2,130 -- 2,130 Accrued landfill closure costs (Note 12) -- 21,189 21,189 Rebatable arbitrage earnings 302 29 331

Total liabilities 230,187 39,441 269,628

NET ASSETSInvested in capital assets, net of related debt (Notes 8 & 11) 209,452 34,219 243,671 Restricted (Note 15) 112,919 933 113,852 Unrestricted 51,563 4,824 56,387 Total net assets 373,934$ 39,976$ 413,910$

The notes to the basic financial statements are an integral part of this statement.

21

COUNTY OF SANTA BARBARA, CALIFORNIASTATEMENT OF ACTIVITIES

FOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)

Operating CapitalIndirect Charges for Grants and Grants and Governmental Business-Type

Functions/Programs Expenses Expenses Services Contributions Contributions Activities Activities TotalGovernmental activities:

Policy & executive 10,576$ (3,341)$ 2,820$ 35$ --$ (4,380)$ --$ (4,380)$ Law & justice 36,174 676 12,582 7,256 -- (17,012) -- (17,012) Public safety 134,703 7,487 27,134 34,145 -- (80,911) -- (80,911) Health & public

assistance 216,326 5,662 55,539 155,235 -- (11,214) -- (11,214) Community resources &

public facilities 61,889 3,379 21,382 24,436 96 (19,354) -- (19,354) General government &

support services 41,239 (14,312) 13,392 6,419 35 (7,081) -- (7,081) General County programs 15,562 82 7,934 8,865 -- 1,155 -- 1,155 Interest on long-term debt 4,610 -- -- -- -- (4,610) -- (4,610)

Total governmental activities 521,079 (367) 140,783 236,391 131 (143,407) -- (143,407)

Business-type activities:Solid waste 18,009 286 18,170 1,244 -- -- 1,119 1,119 Laguna sanitation 3,744 81 3,463 78 -- -- (284) (284) Transit 27 -- 8 22 -- -- 3 3

Total business-type activities 21,780 367 21,641 1,344 -- -- 838 838 Total primary government 542,859$ --$ 162,424$ 237,735$ 131$ (143,407) 838 (142,569)

General Revenues:Taxes:

Property 80,126 -- 80,126 Sales 8,896 -- 8,896 Transient occupancy 4,423 -- 4,423

Payments in lieu of taxes:Motor vehicle in lieu 26,932 -- 26,932 Other payments in lieu 1,705 -- 1,705

Franchise fees 2,187 -- 2,187 Other general revenues 401 -- 401 Restricted for community resources and public facilities:

Sales tax, allocated to roads 7,238 -- 7,238 Property tax, levied for flood control districts 5,264 -- 5,264 Property tax, levied for County service areas 804 -- 804 Property tax, levied for water agency 1,374 -- 1,374 Property tax, levied for lighting districts 283 -- 283 Tax increment, allocated to redevelopment agency 1,678 -- 1,678

Restricted for public safety:Property tax, levied for fire district 17,750 -- 17,750

Unrestricted investment earnings 3,420 971 4,391 Loss on sale of capital assets (32) (277) (309)

Extraordinary item - transfer of net assets to the City of Goleta (Note 17) (2,253) -- (2,253) Special item - donation of land to County (Note 17) 7,686 -- 7,686 Transfers 17 (17) --

Total general revenues, special item, extraordinary item, and transfers 167,899 677 168,576 Change in net assets 24,492 1,515 26,007

Net assets - beginning (Note 4) 349,442 38,461 387,903 Net assets - ending 373,934$ 39,976$ 413,910$


Program RevenuesNet (Expense) Revenue and

Changes in Net Assets

22

COUNTY OF SANTA BARBARA, CALIFORNIABALANCE SHEETGOVERNMENTAL FUNDSAS OF June 30, 2003 (in thousands)

Flood Other TotalPublic Social Control Capital Governmental Governmental

General Road Health Services District Projects Funds FundsASSETSCash and investments (Note 5) 22,739$ 8,808$ 28,068$ 6,507$ 36,002$ 30,501$ 39,687$ 172,312$ Accounts receivable:

Taxes 15,653 -- -- -- -- -- -- 15,653 Licenses, permits, and franchises 494 -- -- -- -- -- -- 494 Fines, forfeitures, and penalties 24 -- -- -- -- -- 379 403

697 68 203 42 231 220 441 1,902 Intergovernmental 9,564 3,109 5,684 8,787 178 1,432 4,138 32,892 Charges for services 3,939 259 211 118 -- -- 9,717 14,244 Other 359 -- 2 204 -- -- 13 578

Due from other funds (Note 14) 2,813 -- -- -- -- -- -- 2,813 Prepaid items 136 -- -- -- -- -- -- 136 Impounds receivable (Note 18) 1,129 -- -- -- 51 -- 328 1,508 Other receivables 1,802 309 -- -- -- -- 1,151 3,262 Advances to other funds (Note 14) 1,914 -- -- -- -- -- -- 1,914 Restricted cash and investments (Notes 5 & 6) 55,371 -- -- -- -- -- 8,112 63,483

Total assets 116,634$ 12,553$ 34,168$ 15,658$ 36,462$ 32,153$ 63,966$ 311,594$

LIABILITIES AND FUND BALANCESLiabilities:

Accounts payable 3,080$ 1,953$ 2,583$ 1,030$ 184$ 543$ 7,598$ 16,971$ Salaries and benefits payable 10,797 704 2,221 1,986 157 -- 1,817 17,682 Other liabilities 331 -- -- -- -- -- -- 331 Due to other funds (Note 14) -- -- -- -- -- -- 2,813 2,813 Other payables 39 54 -- -- 36 -- 97 226 Notes payable (Note 9) 45,000 -- -- -- -- -- -- 45,000 Interest payable 1,436 -- -- -- -- -- 19 1,455 Advances payable (Note 14) -- -- -- -- -- -- 155 155 Deposits payable 5,025 13 -- -- -- -- -- 5,038 Deferred revenue (Note 7) 1,252 2,458 -- 10,872 52 2,268 1,371 18,273

Total liabilities 66,960 5,182 4,804 13,888 429 2,811 13,870 107,944

Fund balances:Reserved for (Note 16):

Receivables 5,039 -- -- -- 51 -- 328 5,418 Imprest cash 17 1 4 15 -- -- 4 41 Debt service -- -- -- -- -- -- 8,251 8,251 Property tax loss reserve 3,845 -- -- -- -- -- -- 3,845

Unreserved (Note 16):Designated 28,723 3,306 24,206 2 14,706 22,019 18,044 111,006 Undesignated, reported in:

General fund 12,050 -- -- 12,050 Special revenue funds -- 4,064 5,154 1,753 21,276 -- 23,469 55,716 Capital projects fund -- -- -- -- -- 7,323 -- 7,323

Total fund balances 49,674 7,371 29,364 1,770 36,033 29,342 50,096 203,650 Total liabilities and fund balances 116,634$ 12,553$ 34,168$ 15,658$ 36,462$ 32,153$ 63,966$ 311,594$

Amounts reported for governmental activities in the Statement of Net Assets are different because (Note 3):

Fund balances - total governmental funds 203,650$

(1) Capital assets used in governmental activities are not current financial resources and, therefore, are not reported in the balance sheet. 237,325 Long-term liabilities are not due and payable in the current period and therefore are not reported in the balance sheet. (91,436) Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in the funds and 751

recognized as revenue in the statement of activities.Issuance costs on certificates of participation are capitalized and amortized over the life of the related debt issue. 540 Receivable from the City of Goleta for 1994 Certificates of Participation 1,930

(2) Internal Service Funds are used by management to charge the costs of fleet management, information technology, riskmanagement, and communications services to individual funds. The assets and liabilities of the Internal Service Fundsare included in the governmental activities in the statement of net assets. 19,942

(3) Adjustment for Internal Service Funds are necessary to "close" those funds by charging additional amounts to participating business-typeactivities to completely cover the Internal Service Funds' costs for the year. 1,232

Net assets of governmental activities 373,934$


Use of money and property

23

COUNTY OF SANTA BARBARA, CALIFORNIASTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDSFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)

Flood Other TotalPublic Social Control Capital Governmental Governmental

General Road Health Services District Projects Funds FundsRevenuesTaxes 92,567$ 7,238$ --$ --$ 5,198$ --$ 21,633$ 126,636$ Licenses, permits, and franchises 11,859 121 278 -- -- -- -- 12,258 Fines, forfeitures, and penalties 6,978 -- -- -- -- -- 5,184 12,162 Use of money and property 4,249 356 952 281 1,189 1,357 2,351 10,735 Intergovernmental 74,918 15,784 29,867 90,907 3,914 2,477 42,912 260,779 Charges for services 58,988 918 22,826 7 2,305 186 31,831 117,061 Other 1,726 142 6,061 956 41 203 4,350 13,479

Total revenues 251,285 24,559 59,984 92,151 12,647 4,223 108,261 553,110

ExpendituresCurrent:

Policy & executive 10,334 -- -- -- -- -- -- 10,334 Law & justice 21,093 -- -- -- -- 40 14,367 35,500 Public safety 129,684 -- -- -- -- 2 1,310 130,996 Health & public assistance 2,322 -- 62,506 99,501 -- -- 59,584 223,913 Community resources & facilities 30,433 18,264 -- -- 8,317 761 6,329 64,104 General government & support services 37,284 -- -- -- -- 765 -- 38,049 General County programs 6,549 -- -- -- -- -- 8,675 15,224

Debt service:Principal 510 -- -- 33 -- -- 4,461 5,004 Interest 1,487 -- -- 3 -- -- 3,138 4,628

Capital outlay 1,002 15,369 1,071 417 4,257 11,900 1,388 35,404 Total expenditures 240,698 33,633 63,577 99,954 12,574 13,468 99,252 563,156

Excess (deficiency) of revenues over (under) expenditures 10,587 (9,074) (3,593) (7,803) 73 (9,245) 9,009 (10,046)

Other Financing Sources (Uses)Transfers in (Note 14) 39,044 2,750 7,842 8,453 56 5,683 30,949 94,777 Transfers out (Note 14) (49,036) (171) (2,128) (333) (3) (2,123) (41,317) (95,111) Proceeds from sale of capital assets 108 20 -- -- 9 -- 8 145 Proceeds from long-term debt -- -- -- 656 -- -- 800 1,456

Total other financing sources (uses) (9,884) 2,599 5,714 8,776 62 3,560 (9,560) 1,267

Net change in fund balances 703 (6,475) 2,121 973 135 (5,685) (551) (8,779)

Fund balances - beginning (Note 4) 48,971 13,846 27,243 797 35,898 35,027 50,647 212,429 Fund balances - ending 49,674$ 7,371$ 29,364$ 1,770$ 36,033$ 29,342$ 50,096$ 203,650$

Amounts reported for governmental activities in the Statement of Activities are different because:Net change in fund balances - total governmental funds (8,779)$ Capital assets

1) The acquisition of capital assets uses current financial resources but has no effect on net assets. 35,404 2) The cost of capital assets is allocated over their estimated useful lives and reported as depreciation expense in the statement of activities. (6,566) 3) The proceeds from the sale of capital assets provide current financial resources but have no effect on net assets. (145) 4) The loss on the disposal of capital assets does not use current financial resources but decreases net assets. (607) 5) Contributions of capital assets to other agencies do not use current financial resources but decrease the value of net assets. (2,320) 6) Donations of land to the County do not provide current financial resources but increase the value of net assets. 7,693

Measurement focus7 Revenues that do not provide current financial resources are not reported as revenues in the funds but are recognized in the statement of activities . 710 7) The issuance of long-term debt provides current financial resources to the funds but has no effect on net assets. (1,456) 8) Principal payments on long-term debt use current financial resources but have no effect on net assets. 5,004 9) Bond premiums were recorded as interest revenue in the fund statements but are amortized in the statement of activities. 122 10) Costs of issuance were recorded as an expenditure in the fund statements but are amortized in the statement of activities. (69) 11) Contributions from other governments to pay their portion of long-term debt are recorded as revenue in the fund statements but have no effect on net (350)

assets.12) The decrease in the interest payable liability does not increase current financial resources but is recorded as a decrease in expense in the statement 18

of activities.13) The increase in rebatable arbitrage earnings does not use of current financial resources but is reported as an expense in the statement of activities. (28) 14) The increase in the compensated absences liability does not use current financial resources but is recorded as an expense in the statement of activities. (980) 15) The increase in the estimated liability for litigation does not provide current financial resources but increases expenses in the statement of activities. (477)

Internal service funds16) Internal service funds are used by management to charge the costs of fleet management, information technology, risk management, and communications

services to individual funds. The net expense of internal service funds is reported within governmental activities. (2,682) Change in net assets (Statement of activities, Governmental activities) 24,492$


24

COUNTY OF SANTA BARBARA, CALIFORNIAGENERAL FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)

VarianceFinal Budget -

Actual PositiveOriginal Final Amounts (Negative)

RevenuesTaxes 91,577$ 88,323$ 92,567$ 4,244$ Licenses, permits and franchises 12,550 12,465 11,859 (606) Fines, forfeitures, and penalties 2,948 3,533 6,978 3,445 Use of money and property 5,480 5,617 4,249 (1,368) Intergovernmental 75,106 77,832 74,918 (2,914) Charges for services 58,812 60,639 58,988 (1,651) Other 1,749 2,049 1,726 (323)

Total revenues 248,222 250,458 251,285 827


Policy & executive 10,631 10,657 10,334 323 Law & justice 20,521 21,093 21,093 -- Public safety 128,322 131,513 129,684 1,829 Health & public sssistance 2,015 2,323 2,322 1 Community resources & public facilities 34,412 34,954 30,433 4,521 General government & support services 37,696 38,238 37,284 954 General County programs 7,330 7,476 6,549 927

Debt service:Principal 198 510 510 -- Interest 1,533 1,538 1,487 51

Capital outlay 686 1,369 1,002 367 Total expenditures 243,344 249,671 240,698 8,973

Excess of revenues over expenditures 4,878 787 10,587 9,800

Other Financing Sources (Uses)Transfers in 39,442 40,275 39,044 (1,231) Transfers out (47,907) (49,695) (49,036) 659 Proceeds from sales of capital assets 7 7 108 101

Total other financing uses (8,458) (9,413) (9,884) (471)

Net change in fund balances (3,580) (8,626) 703 9,329

Fund balances - beginning 48,971 48,971 48,971 -- Fund balances - ending 45,391$ 40,345$ 49,674$ 9,329$


Budgeted Amounts

25

COUNTY OF SANTA BARBARA, CALIFORNIAROAD SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesTaxes 7,675$ 7,675$ 7,238$ (437)$ Licenses, permits and franchises 99 99 121 22 Use of money and property 185 207 356 149 Intergovernmental 19,606 19,606 15,784 (3,822) Charges for services 6,195 6,195 918 (5,277) Other 97 97 142 45

Total revenues 33,857 33,879 24,559 (9,320)


Community resources & public facilities 34,133 19,622 18,264 1,358 Debt service:Capital outlay 1,135 15,719 15,369 350

Total expenditures 35,268 35,341 33,633 1,708

Excess (deficiency) of revenues over (under) expenditures (1,411) (1,462) (9,074) (7,612)

Other Financing Sources (Uses)Transfers in 1,484 2,780 2,750 (30) Transfers out (211) (211) (171) 40 Proceeds from sales of capital assets -- -- 20 20

Total other financing sources (uses) 1,273 2,569 2,599 30

Net change in fund balances (138) 1,107 (6,475) (7,582)

Fund balances - beginning 13,846 13,846 13,846 -- Fund balances - ending 13,708$ 14,953$ 7,371$ (7,582)$


Budgeted Amounts

26

COUNTY OF SANTA BARBARA, CALIFORNIAPUBLIC HEALTH SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesLicenses, permits and franchises 331$ 331$ 278$ (53)$ Use of money and property 791 844 952 108 Intergovernmental 27,137 29,116 29,867 751 Charges for services 22,358 22,530 22,826 296 Other 5,886 6,184 6,061 (123)

Total revenues 56,503 59,005 59,984 979


Health & public sssistance 62,673 64,637 62,506 2,131 Debt service:Capital outlay 771 1,238 1,071 167


Excess (deficiency) of revenues over (under) expenditures (6,941) (6,870) (3,593) 3,277

Other Financing Sources (Uses)Transfers in 10,213 7,892 7,842 (50) Transfers out (5,019) (4,088) (2,128) 1,960

Total other financing sources 5,194 3,804 5,714 1,910

Net change in fund balances (1,747) (3,066) 2,121 5,187



Budgeted Amounts

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COUNTY OF SANTA BARBARA, CALIFORNIASOCIAL SERVICES SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesUse of money and property 336$ 338$ 281$ (57)$ Intergovernmental 96,266 95,667 90,907 (4,760) Charges for services -- -- 7 7 Other 3,916 494 956 462

Total revenues 100,518 96,499 92,151 (4,348)


Health & public sssistance 107,534 104,359 99,501 4,858 Debt service:

Principal -- 33 33 -- Interest -- 3 3 --

Capital outlay 1,267 1,107 417 690 Total expenditures 108,801 105,502 99,954 5,548


Other Financing Sources (Uses)Transfers in 8,571 8,901 8,453 (448) Transfers out (288) (553) (333) 220 Proceeds of long term debt -- 656 656 --

Total other financing sources (uses) 8,283 9,004 8,776 (228)

Net change in fund balances -- 1 973 972

Fund balances - beginning 797 797 797 -- Fund balances - ending 797$ 798$ 1,770$ 972$


Budgeted Amounts

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COUNTY OF SANTA BARBARA, CALIFORNIAFLOOD CONTROL DISTRICT SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesTaxes 5,468$ 5,270$ 5,198$ (72)$ Use of money and property 1,277 1,315 1,189 (126) Intergovernmental 4,157 4,009 3,914 (95) Charges for services 2,219 2,219 2,305 86 Other 22 22 41 19

Total revenues 13,143 12,835 12,647 (188)


Community resources & public facilities 9,407 10,187 8,317 1,870 Debt service:Capital outlay 2,403 4,887 4,257 630


Excess (deficiency) of revenues over (under) expenditures 1,333 (2,239) 73 2,312

Other Financing Sources (Uses)Transfers in -- 56 56 -- Transfers out (5) (5) (3) 2 Proceeds from sales of capital assets -- -- 9 9

Total other financing sources (uses) (5) 51 62 11

Net change in fund balances 1,328 (2,188) 135 2,323



Budgeted Amounts

29

COUNTY OF SANTA BARBARA, CALIFORNIASTATEMENT OF NET ASSETSPROPRIETARY FUNDSAS OF June 30, 2003 (in thousands)

Nonmajor -Solid Laguna TransitWaste Sanitation Operations Totals

ASSETSCurrent assets:

Cash and investments (Note 5) 11,881$ 1,122$ 8$ 13,011$ 34,665$ Accounts receivable:

Licenses, permits, and franchises 158 -- -- 158 -- Use of money and property 175 8 -- 183 236 Intergovernmental 127 -- -- 127 -- Charges for services 1,083 524 -- 1,607 2 Other 629 -- -- 629 --

Inventories 139 211 -- 350 244 Prepaid items 256 -- -- 256 4 Other receivables -- 20 -- 20 840

Total current assets 14,448 1,885 8 16,341 35,991

Noncurrent assets:Restricted cash and investments (Notes 5 & 6) 15,454 278 -- 15,732 10 Deferred charges 95 -- -- 95 -- Capital assets (Note 8):

Land and improvements 9,134 2,669 -- 11,803 -- Buildings and improvements 8,046 3,146 -- 11,192 1,672 Equipment 12,658 2,685 -- 15,343 41,154 Sewer systems -- 8,053 -- 8,053 -- Construction in progress 2,714 16,943 -- 19,657 -- Less accumulated depreciation (11,614) (4,194) -- (15,808) (23,581)

Total capital assets 20,938 29,302 -- 50,240 19,245 Total noncurrent assets 36,487 29,580 -- 66,067 19,255

Total Assets 50,935 31,465 8 82,408 55,246

LIABILITIESCurrent liabilities:

Accounts payable 766 134 -- 900 401 Salaries and benefits payable, current portion 342 63 -- 405 435 Compensated absences (Note 11) 5 2 -- 7 23 Interest payable 115 5 -- 120 -- Capital lease obligations, current portion (Note 10 & 11) 198 -- -- 198 -- Liability for self-insurance claims, current portion (Note 11 & 19) -- -- -- -- 10,209 Certificates of participation payable, current portion (Note 11) 565 200 -- 765 --

Total current liabilities 1,991 404 -- 2,395 11,068

Noncurrent liabilities:Compensated absences (Note 11) 351 89 -- 440 579 Bonds and notes payable, net of current portion (Notes 9 & 11) -- 9,388 -- 9,388 -- Capital lease obligations, net of current portion (Notes 10 & 11) 210 -- -- 210 -- Liability for self-insurance claims, net of current portion (Notes 11 & 19) -- 23,657 Certificates of participation payable, net of current portion (Note 11) 4,735 725 -- 5,460 -- Landfill litigation settlement (Note 18) 330 -- -- 330 -- Accrued landfill closure costs (Note 12) 21,189 -- -- 21,189 -- Rebatable arbitrage earnings (Note 11) 29 -- -- 29 -- Advances payable (Note 14) 1,759 -- -- 1,759 --

Total noncurrent liabilities 28,603 10,202 -- 38,805 24,236 Total liabilities 30,594 10,606 -- 41,200 35,304

NET ASSETSInvested in capital assets, net of related debt (Notes 8 & 11) 15,230 18,989 -- 34,219 19,245 Restricted for debt service (Note 15) 655 278 -- 933 -- Unrestricted 4,456 1,592 8 6,056 697

Total Net Assets 20,341$ 20,859$ 8$ 41,208 19,942$

Adjustment to reflect the allocation of the internal service funds' net loss (1,232) Net assets of business-type activities 39,976$


Internal

FundsService

Business-Type Activities -Enterprise Funds

GovernmentalActivities-

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COUNTY OF SANTA BARBARA, CALIFORNIASTATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSPROPRIETARY FUNDSFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)

Solid Laguna TransitWaste Sanitation Operations Totals

Operating revenues:Charges for services 12,995$ 3,404$ 4$ 16,403$ 36,112$ Sale of scrap and recyclables 2,904 -- -- 2,904 -- Franchise fees 382 -- -- 382 -- Other operating revenues 1,889 59 4 1,952 500

Total operating revenues 18,170 3,463 8 21,641 36,612

Operating expenses:Salaries and benefits 5,914 976 -- 6,890$ 7,037 Services and supplies 3,377 1,716 5 5,098 7,869 Self-insurance claims -- -- -- -- 20,972 Contractual services 5,496 432 22 5,950 892 Depreciation and amortization 1,130 321 -- 1,451 3,671 County overhead allocation 286 81 -- 367 640 Closure/postclosure costs 1,522 -- -- 1,522 -- Other charges -- -- -- -- 29

Total operating expenses 17,725 3,526 27 21,278 41,110

Operating Income (loss) 445 (63) (19) 363 (4,498)

Non-operating revenues (expenses):Use of money and property 869 166 -- 1,035 1,237 Interest expense (321) (287) -- (608) -- Gain (loss) on sale of capital assets (277) -- -- (277) 19 Arbitrage expense (52) (5) -- (57) -- State reimbursements 664 -- -- 664 -- Other 594 -- 22 616 5

Total non-operating revenues, net 1,477 (126) 22 1,373 1,261

Income (loss) before transfers 1,922 (189) 3 1,736 (3,237)

Transfers in (Note 14) 113 -- -- 113 797 Transfers out (Note 14) (3) (127) -- (130) (446)

Transfers in (out), net 110 (127) -- (17) 351

Change in net assets 2,032 (316) 3 1,719 (2,886)

Total net assets - beginning (Note 4) 18,309 21,175 5 39,489 22,828 Total net assets - ending 20,341$ 20,859$ 8$ 41,208$ 19,942$

Change in net assets - total enterprise funds 1,719$ Adjustment to reflect the consolidation of internal service fund activities

related to enterprise funds (204) Change in net assets of business-type activities 1,515$


InternalServiceFunds

Business-Type Activities - GovernmentalEnterprise Funds Activities -

Nonmajor -

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COUNTY OF SANTA BARBARA, CALIFORNIASTATEMENT OF CASH FLOWSPROPRIETARY FUNDSFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)

Nonmajor - Solid Laguna TransitWaste Sanitation Operations Totals

CASH FLOWS FROM OPERATING ACTIVITIESReceipts from customers and users 18,011$ 2,992$ 8$ 21,011$ 36,689$ Payments to employees (5,870) (999) -- (6,869) (6,994) Payments to suppliers (8,930) (2,238) (27) (11,195) (9,371) Payments for self-insurance claims -- -- -- -- (18,435) County overhead allocation payments to the general fund (286) (81) -- (367) (640) Other -- -- -- -- (29)

Net cash provided (used) by operating activities 2,925 (326) (19) 2,580 1,220

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIESPayment on landfill litigation settlement (55) -- -- (55) -- State reimbursements 664 -- -- 664 -- Other 594 -- 22 616 58

Net cash provided by noncapital and related financing activities 1,203 -- 22 1,225 58

CASH FLOWS FROM CAPITAL AND RELATEDFINANCING ACTIVITIESPurchase of capital assets (2,045) (5,473) -- (7,518) (6,903) Proceeds from sale of capital assets 491 -- -- 491 112 Principal paid on capital lease obligations (432) -- -- (432) -- Interest paid on capital lease obligations (48) -- -- (48) -- Principal paid on certificates of participation (540) (190) -- (730) -- Interest paid on certificates of participation (252) (46) -- (298) -- Arbitrage payments (52) (10) -- (62) -- Proceeds of long-term debt -- 4,217 -- 4,217 -- Transfers in 113 -- -- 113 797 Transfers out (3) (127) -- (130) (446)

Net cash used by capital and related financing activities (2,768) (1,629) -- (4,397) (6,440)

CASH FLOWS FROM INVESTING ACTIVITIESUse of money and property received 922 167 -- 1,089 1,349

Net cash provided by investing activities 922 167 -- 1,089 1,349

Net increase (decrease) in cash and cash equivalents 2,282 (1,788) 3 497 (3,813)

Cash and cash equivalents - beginning 25,053 3,188 5 28,246 38,488 Cash and cash equivalents - ending 27,335$ 1,400$ 8$ 28,743$ 34,675$

Reconciliation of cash and cash equivalents to the Statement of Net AssetsCash and investments per Statement of Net Assets 11,881$ 1,122$ 8$ 13,011$ 34,665$ Restricted cash and investments per Statement of Net Assets 15,454 278 -- 15,732 10 Total cash and cash equivalents per Statement of Net Assets 27,335$ 1,400$ 8$ 28,743$ 34,675$

Reconciliation of operating income (loss) to net cash provided (used)by operating activities:Operating income (loss) 445$ (63)$ (19)$ 363$ (4,498)$ Adjustments to reconcile operating income (loss) to net cash provided (used) by

operating activities:Depreciation and amortization 1,130 321 -- 1,451 3,671 Changes in assets and liabilities:

Accounts receivable (159) (471) -- (630) 77 Prepaid items -- -- -- -- (4) Inventories 3 (15) -- (12) (36) Accounts payable (72) (75) -- (147) (570) Salaries and benefits payable 44 (23) -- 21 43 Self-insurance claims -- -- -- -- 2,537 Landfill closure cost liability 1,522 -- -- 1,522 -- Deferred revenue 12 -- -- 12 --

Net cash provided (used) by operating activities 2,925$ (326)$ (19)$ 2,580$ 1,220$

The notes to the financial statements are an integral part of this statement.

InternalServiceFunds

Business-Type Activities - GovernmentalEnterprise Funds Activities -

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COUNTY OF SANTA BARBARA, CALIFORNIASTATEMENT OF FIDUCIARY NET ASSETS - FIDUCIARY FUNDSAS OF June 30, 2003 (in thousands)

Investment AgencyTrust Fund Funds

AssetsCash and investments 465,740$ 54,505$ Interest receivable - 292

Total assets 465,740 54,797$

LiabilitiesAccounts payable -- 28,936 Funds held as agent for others -- 25,861

Total liabilities -- 54,797$

Net AssetsHeld in trust for pool participants 465,740$


33

COUNTY OF SANTA BARBARA, CALIFORNIASTATEMENT OF CHANGES IN FIDUCIARY NET ASSETS - FIDUCIARY FUNDSFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)

InvestmentTrust Fund

Additions:Contributions to pooled investments 2,293,486$ Interest and investment income 12,881

Total additions 2,306,367

Deductions:Distributions from pooled investments 2,173,002

Total deductions 2,173,002

Net increase 133,365

Net assets held in trust for pool participants - beginning 332,375 Net assets held in trust for pool participants- ending 465,740$


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NOTES TO THE BASIC FINANCIAL STATEMENTS

COUNTY OF SANTA BARBARA, CALIFORNIA NOTES TO THE BASIC FINANCIAL STATEMENTS June 30, 2003 (in thousands)

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Reporting Entity The County of Santa Barbara (the “County”), which was established by an act of the Legislature on February 18, 1850, is a legal subdivision of the State of California charged with governmental powers. The County’s powers are exercised through a five member Board of Supervisors (the “Board”) which, as the governing body of the County, is responsible for the legislative and executive control of the County. As required by accounting principles generally accepted in the United States of America (“GAAP”), the accompanying basic financial statements present the activities of the County (the primary government) and its component units. The component units discussed below are included in the County’s reporting entity because of the significance of their operational or financial relationships with the County. The County's component units include the Redevelopment Agency of the County of Santa Barbara, the Santa Barbara County Finance Corporation, the Water Agency, as well as various service areas and districts which provide specific services County-wide or to distinct geographic areas within the County. While each of these component units is legally separate from the County, the County is financially accountable for these entities. Financial accountability is demonstrated by the County Board of Supervisors acting as the governing board for each of the component units. Because of their relationship with the County and the nature of their operations, each of the component units are, in substance, part of the County's operations and, accordingly, the activities of these component units are combined (blended) with the activities of the County for purposes of reporting in the accompanying basic financial statements. The basis for blending the component units are that the governing bodies are substantially the same as the County Board of Supervisors. Additional detailed information and/or separately issued financial statements of the County's component units can be obtained from the Auditor-Controller's Office of the County located at 105 East Anapamu Street, Santa Barbara, California 93101. Blended Component Units Descriptions of the County's blended component units are as follows: Children and Families Commission has been established for the purpose to promote, support, and improve the early development of children from prenatal stage to five years of age. Revenues consist primarily of funds generated by a tax increase on cigarettes and tobacco products as mandated by Proposition 10. County Service Areas have been established for the purpose of providing specific services to distinct geographical areas within the County. These services include street lighting, open space maintenance, library, community sewer sanitation and maintenance, sheriff patrol, and road maintenance in various unincorporated areas of the County. Revenues consist primarily of property taxes and benefit assessments. The Santa Barbara County Fire Protection District covers most of the unincorporated territory of Santa Barbara County, the City of Buellton, and private lands within the National Forest. The district provides a full range of fire services funded principally from property taxes. Other fire districts, cities, the Channel Islands, National Forest land, and military installations provide their own fire protection. The function of the Flood Control and Water Conservation Districts is to control flood and storm waters and to conserve such waters for beneficial public use. Revenues consist primarily of property taxes and aid from other governmental units. Lighting Districts provide for the operation and maintenance of streetlights in certain areas of the County and are financed by property taxes and benefit assessments.


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

Sanitation and Sewer Maintenance Districts provide water and sewage treatment to users. The costs of operating these units are charged to the users in the form of water charges and sewer fees. The Sandyland Seawall Maintenance District provides for the maintenance of a seawall constructed in the Sandyland Cove area, and is financed through benefit assessments levied against those properties adjacent to that beachfront area. The Water Agency prepares investigations and reports on the County's water requirements, project development, and importation of water from the State Water Project. The agency provides technical assistance to County departments, water districts, and the public relative to ground water availability and water well locations and design. The agency also administers the Cachuma Project and Twitchell Project contracts with the U.S. Bureau of Reclamation. The Redevelopment Agency of the County of Santa Barbara (Redevelopment Agency) was established on September 12, 1989, pursuant to Section 33200 of the State of California Health and Safety Code. The first redevelopment plan (the Isla Vista Redevelopment Project Area) was adopted by ordinance on November 27, 1990. A second redevelopment plan (the Goleta Old Town Redevelopment Project Area) was adopted by ordinance on July 7, 1998. The agency is broadly empowered to engage in the general economic revitalization and redevelopment of property in those areas of the project area that are determined to be in declining condition. The Santa Barbara County Finance Corporation was established on July 28, 1983. This corporation is a nonprofit public benefit corporation, and in general its purpose is to: purchase, lease or otherwise acquire real property; construct, install or acquire public improvements; operate, maintain, repair or improve real or personal property; and borrow money and become indebted for the purpose of acquiring and improving such property. The corporation facilitates financing for the County and other public entities. Also included in the accompanying basic financial statements as an investment trust fund are assets of numerous self-governed school and special districts for which the County Treasurer acts as custodian of those assets. The financial reporting for these governmental entities, which are independent of the County, is limited to the total amount of cash and investments and other assets, and the related fiduciary responsibility of the County for disbursement of these assets. Activities of the school districts and special districts are administered by separate boards and are independent of the County Board of Supervisors. The County Auditor-Controller makes disbursements upon the request of the responsible school or self-governed district officers. The County Board of Supervisors has no effective authority to govern, manage, approve budgets, assume financial accountability, establish revenue limits, nor to appropriate surplus funds available in these entities. Eight cities and numerous self-governed special districts provide services to the residents of the County. The operations of these entities have been excluded from the basic financial statements as each entity conducts its own day-to-day operations and answers to its own governing board. Basic Financial Statements

In accordance with Governmental Accounting Standards Board Statement (GASB) No. 34 (GASB 34), the basic financial statements consist of the following:

• Government-wide financial statements, • Fund financial statements and • Notes to the basic financial statements.


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED The government-wide financial statements consist of the statement of net assets and the statement of activities and report information on all of the nonfiduciary activities of the primary government and its component units. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. All internal balances in the statement of net assets have been eliminated, with the exception of those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total government column. In the statement of activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. Exceptions to this general rule are charges between the County’s Solid Waste, Laguna Sanitation, and Transit Funds 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. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The government-wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (governmental 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 County include policy and executive, law and justice, public safety, health and public assistance, community resources and public facilities, general government and support services, and general County programs. The business-type activities of the County include solid waste, sanitation, and transit operations. The statement of activities demonstrates the degree to which the direct and indirect 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. Indirect expenses are allocated based on the annual County-wide Cost Allocation Plan. 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, including special assessments, that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate fund financial statements are provided for governmental funds, proprietary 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. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary funds and fiduciary funds financial 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 have been met. Governmental funds 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. The County in general considers revenues available if they are collected within 180 days after year-end, except for property taxes, which the County considers available if they are collected within 60 days after year-end. Grants and similar items are recognized as revenue as soon as all eligibility requirements have been met. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences and claims and judgments which are recognized when payment is due.


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED For the governmental funds financial statements, the County considers all revenues susceptible to accrual and recognizes revenue if the accrual criteria are met. Specifically, sales taxes, franchise taxes, licenses, interest, special assessments, charges for services and other miscellaneous revenue are all considered to be susceptible to accrual and have been recognized as revenue in the current fiscal period. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been met and are recorded at the time of receipt or earlier, if the susceptible to accrual criteria are met.

The accounts of the County are organized on the basis of funds. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements.

The County reports the following major governmental funds:

The General Fund is the County's primary operating fund. It accounts for all the financial resources and the legally authorized activities of the County except those required to be accounted for in other specialized funds. The Road Fund is used to account for the planning, design, construction, maintenance and administration of County roads. It is also used to account for traffic safety and other transportation planning activities. The Public Health Fund accounts for a variety of preventative health programs, outpatient services and inmate health programs. The fund is also used to account for Environmental Health, Animal Health and Regulation, and Emergency Medical Services. The Social Services Fund accounts for a variety of public assistance and social service programs. The Flood Control District Fund is used to account for the provision of flood protection activities. The Capital Projects Fund accounts for financial resources used in constructing major facilities.

The County reports the following major proprietary funds: The Solid Waste Fund accounts for the activities of refuse collection, disposal, landfill operations, and recycling programs. The Laguna Sanitation District Fund accounts for the activities of sewer collection and sewage treatment in the Orcutt area.

Additionally, the County reports the following fund types:

Internal Service Funds account for vehicle operations, risk management, information technology and communications operations that provide services to other departments or agencies of the County, or to other governments, on a cost reimbursement basis. The Investment Trust Fund accounts for the external portion of the County Treasurer’s investment pool, which commingles resources of legally separate local governments within the County in an investment portfolio for the benefit of all participants. Agency Funds are custodial in nature and do not involve measurement of results of operations. Such funds have no equity accounts since all assets are due to individuals or entities at some future time. These funds account for assets held by the County in an agency capacity for individuals or other government units.


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Proprietary funds have elected not to apply Financial Accounting Standards Board (FASB) Statements and Interpretations issued after November 30, 1989. The proprietary funds apply all applicable GASB pronouncements as well as statements and interpretations of FASB, the Accounting Principles Board Opinions and Accounting Research Bulletins of the Committee on Accounting Procedure issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Solid Waste and Laguna Sanitation enterprise funds and of the County’s internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the County’s policy to use restricted resources first, then unrestricted resources as they are needed. Fiduciary funds include all Trust and Agency funds, which account for assets held by the County as a trustee or as an agent for individuals or other government units. Cash and Investments The County's cash and cash equivalents for statement of cash flow purposes are considered to be cash on hand, demand deposits, restricted cash, and investments held by the County Treasurer in a cash management investment pool (the “pool”). The pool is not registered as an investment company with the Securities and Exchange Commission (SEC) nor is it an SEC Rule 2a7-like pool. California Government Code statutes and the County Treasury Oversight Committee set forth the various investment policies that the County Treasurer must follow. State statutes and the County's investment policy authorize the County Treasurer to invest in U.S. Government Treasury and Agency Securities, bankers' acceptances, commercial paper, corporate bonds and notes, repurchase agreements and the State Treasurer's Local Agency Investment Fund (LAIF). In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and External Investment Pools, investments held by the County Treasurer are stated at fair value. The fair value of pooled investments is determined annually and is based on current market prices received from the securities custodian. The fair value of participants’ position in the pool is the same as the value of the pool shares. The method used to determine the value of participants’ equity withdrawn is based on the book value of the participants’ percentage participation at the date of such withdrawal. LAIF is required to invest in accordance with State statutes. The Local Investment Advisory Board (Board) has oversight responsibility for LAIF. The Board consists of five members as designated by State Statute. The Air Pollution Control District (APCD) and the Santa Barbara County Association of Governments, as well as the public school districts, cemetery districts, fire protection districts, pest control districts, recreation and park districts, and resource conservation districts within the County are required by legal provisions to participate in the County’s investment pool. The total percentage share of the County’s investment pool that relates to these involuntary participants is 55% (as of June 30, 2003). The deposits held for these districts are included in an investment trust fund.


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Receivables and Payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Advances between funds are offset by a corresponding reservation of fund balance to indicate that they are not available for appropriation and are not expendable available financial resources. The County only accrues revenues at fiscal year-end and accrues only those revenues it deems collectible; as such the County has no allowance for uncollectible accounts. All accounts receivable are expected to be collected within one year. At June 30, 2003, the County’s governmental activities had approximately $32,892 of intergovernmental accounts receivable. These primarily consisted of approximately $4,219 in State Aid for Public Safety (Proposition 172 proceeds), $1,440 in Motor Vehicle In-Lieu taxes, and $1,198 in federal revenue for Medi-Cal Administration. The remaining $26,035 consisted primarily of federal and state grants for Public Assistance, Health and Sanitation, and Public Protection programs. The County levies, collects, and apportions property taxes for all taxing jurisdictions within the County including school and special districts. Article XIIIB of the State of California Constitution limits the property tax levy to support general government services of the various taxing jurisdictions to $1 per $100 of full cash value. Taxes levied to service voter-approved debt prior to June 30, 1978 are excluded from this limitation. Secured property taxes are levied in September of each year based upon the assessed valuation as of the previous January 1 (lien date). They are payable in two equal installments due on November 1 and February 1 and are considered delinquent with penalties after December 10 and April 10, respectively. Unsecured property taxes are due on the January 1 lien date and become delinquent with penalties after August 31. During the 1993-94 fiscal year, the County authorized an alternative property tax distribution method referred to as the “Teeter Plan.” This method allows for a 100% distribution of the current tax levy to entities electing the alternative method, as compared to the previous method where only the current levy less any delinquent taxes was distributed. This results in the General Fund receiving distributions of approximately 50-55% in December, 40-45% in April and the remaining 5% in June of each year. This method also provides that all of the delinquent penalties and redemption penalties of the participating entity flow to the County’s General fund. All County entities receiving property taxes were required by statute to participate. All delinquent taxes are recorded as accounts receivable in the General Fund. At June 30, 2003, property taxes receivable of $13,536 were recorded in the General Fund. In addition, the Teeter Plan requires that a property tax loss reserve be maintained in an amount equal to 1% of the current year’s secured tax levy, which is shown as a reservation of fund balance in the General Fund (see note 16). Inventories and Prepaid Items Inventories for both governmental and proprietary funds, consisting principally of materials and supplies held for consumption, are valued at cost, approximating market value, using the first-in, first-out (FIFO) method. The costs of governmental funds inventories are recorded as expenditures when consumed, rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. The inventories and prepaid items recorded in the governmental funds do not reflect current appropriable resources and thus, an equivalent portion of fund balance is reserved.


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Restricted Cash and Investments Debt covenants require resources to be set aside to repay tax and revenue anticipation notes and interest thereon as restricted assets. Additionally, cash set aside to meet the property tax loss reserve funding requirements are legally restricted to cover losses due to bankruptcies or inadequate proceeds on the sale of defaulted properties. The “customer deposits” account reflects cash from deposits held for services that are restricted in the County’s General Fund and special revenue funds that may be eventually returned to the customer. Certificates of participation covenants require reserves to be set aside for debt service. These amounts are included in restricted cash and investments in various governmental funds and in the major enterprise funds. Capital Assets Capital assets, which include property (e.g. land), plant (e.g. buildings, improvements), equipment (e.g. vehicles, computers, office equipment) and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at the estimated fair market 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 asset lives are not capitalized. The capitalization thresholds are $5 for equipment, with the exception of two internal service funds: Communications, $.5, and Information Technology, $3. The capitalization threshold for buildings, improvements and infrastructure is $100. Capital assets are depreciated or amortized using the straight-line method over the following estimated useful lives:

Infrastructure: Pavement and traffic signals 15 to 30 years Bridges 35 to 75 years Hardscape (curbs, gutter, sidewalks) 20 years Constructed flood control assets 50 years Sewer and sanitation 20 to 50 years Structures and Improvements: Office buildings 40 to 100 years Building improvements 5 to 75 years Equipment: Automobiles and light trucks 5 to 10 years Construction and maintenance vehicles 5 to 20 years General machinery and office equipment 3 to 25 years

Expenditures for capital assets and improvements are capitalized as projects are constructed in accordance with the County’s capitalization policy. Interest and other overhead costs incurred during the construction phase of capital assets of business-type activities are reflected in the capitalized value of the asset constructed. Depreciation expense is allocated to the functions/programs in the statement of activities.


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Pursuant to GASB 34, an extended period of deferral (fiscal year beginning July 1, 2005) is available before the requirement to record and depreciate infrastructure assets acquired prior to July 1, 2000 is effective. As a result, the governmental activities column in the accompanying government-wide financial statements as of June 30, 2003 does not reflect those infrastructure assets completed prior to July 1, 2000. However, the accompanying government-wide financial statements do include those assets that were either completed since July 1, 2001 or considered construction in progress at year-end. All capitalized infrastructure assets are currently being depreciated.

Lease Obligations The County leases various assets under both operating and capital lease agreements. In the government-wide and proprietary funds financial statements, capital leases and the related lease obligations are reported as liabilities in the applicable governmental activities or proprietary funds statement of net assets. Long-term Debt In the government-wide financial statements, and proprietary funds financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities or proprietary funds statement of net assets. Bond premiums and discounts, as well as issuance costs, 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. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental funds recognize bond premiums and discounts, as well as issuance costs, in the period issued. Bond proceeds are reported as other financing sources net of the applicable premium or discount. Issuance costs, even if withheld from the actual net proceeds received, are reported as debt service expenditures. Interest is reported as an expenditure in the period in which the related payment is made. Employee Compensated Absences County policy permits employees to accumulate earned but unused vacation, holiday and sick pay benefits. There is no liability for unpaid accumulated sick leave since the County does not have a policy to pay any amounts when employees separate from service with the County. However, employees eligible for full retirement benefits may apply their unused sick leave toward determining their length of service for purposes of determining their retirement benefits. All vacation pay is accrued when incurred in the government-wide and proprietary funds financial statements. In accordance with GASB Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in Government Fund Financial Statements, a liability for these amounts is reported in the governmental funds financial statements only if they have matured, for example, as a result of employee resignations and retirements prior to year-end and are paid by the County subsequent to year-end.

Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not appropriable or are legally restricted for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change.


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Use of Estimates The preparation of the basic financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates.

2. BUDGETARY AND LEGAL COMPLIANCE

The County is legally required to adopt an annual budget and adheres to the provisions of the California Government Code (Sections 29000 – 30200), commonly known as the County Budget Act. Budgets are adopted for the General Fund, special revenue funds, debt service funds and capital projects funds. Budgets are prepared on the modified accrual basis of accounting consistent with GAAP. Annually, the Board conducts a public hearing for the discussion of a proposed budget. At the conclusion of the hearings, and generally no later than September 30, the Board adopts the final budget including revisions by resolution. The Board also adopts subsequent revisions, which may occur during the year. All annual appropriations lapse at year-end. The legal level of budgetary control (the level at which expenditures may not legally exceed appropriations) is maintained at the fund, department, and object level. Presentation of the basic financial statements at the legal level is not feasible due to excessive length. Because of the large volume of detail, the budget and actual statements contained in the Comprehensive Annual Financial Report have been aggregated by function. The County does prepare a separate Final Budget document demonstrating legal compliance with budgetary control and is made available to the public by the Office of the Auditor-Controller. For fiscal year 2002-03, there were no instances in which expenditures exceeded appropriations.

The Board must approve amendments or transfers of appropriations between funds or departments. Supplemental appropriations necessary and normally financed by unanticipated revenues during the year must also be approved by the Board. The Board must approve amendments or transfers of appropriations between object levels within the same department. Any deficiency caused by expenditures and other financing uses being greater than revenues and other financing sources is financed by beginning available fund balances as provided for in the County Budget Act.


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3. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Amounts reported for governmental activities in the statement of net assets are different from those reported for governmental funds in the balance sheet. The following provides a reconciliation of those differences:

Total InternalGovernmental Long-term Service Net Assets

Funds Assets and Funds (2) Elimina- Totals(Page 23) Liabilities (1) (Page 30) tions (3) (Page 21)

Assets:Cash and cash equivalents 172,312$ $ -- 34,665$ $ -- 206,977$ Receivables: Taxes 15,653 -- -- -- 15,653 Licenses, permits, and franchises 494 -- -- -- 494 Fines, forfeitures, and penalties 403 -- -- -- 403 Revenue from use of money and property 1,902 -- 236 -- 2,138 Intergovernmental revenues 32,892 -- -- -- 32,892 Charges for services 14,244 -- 2 -- 14,246 Other 578 -- -- -- 578 Due from other funds 2,813 -- -- (2,813) --Internal balances -- -- -- 2,991 2,991 Inventories -- -- 244 -- 244 Prepaid items 136 -- 4 -- 140 Unamortized issuance costs -- 540 -- -- 540 Impounds receivables 1,508 -- -- -- 1,508 Other receivables 3,262 1,930 840 (778) 5,254 Advances to other funds 1,914 -- -- (1,914) --Restricted cash and investments 63,483 -- 10 -- 63,493 Capital assets -- 237,325 19,245 -- 256,570

Total Assets 311,594$ 239,795$ 55,246$ (2,514)$ 604,121$

Liabilities: Accounts payables 16,971$ $ -- 401$ (857)$ 16,515$ Salaries and benefits payable 17,682 -- 435 -- 18,117 Other Liabilities 331 -- -- -- 331 Due to other funds 2,813 -- -- (2,813) --Other payables 226 -- -- 79 305 Notes payable 45,000 -- -- -- 45,000 Interest payable 1,455 654 -- -- 2,109 Rebatable arbitrage earnings -- 302 -- -- 302 Advances payable 155 -- -- (155) --Deposits payable 5,038 -- -- -- 5,038 Deferred revenue 18,273 (751) -- -- 17,522 Employee compensated absences -- 22,382 602 -- 22,984 Capital lease obligations -- 1,753 -- -- 1,753 Liability for self-insurance claims -- -- 33,866 -- 33,866 Estimated liability for litigation -- 2,130 -- -- 2,130 Certificates of participation -- 61,635 -- -- 61,635 Unamortized premium on certificates of participation -- 1,472 -- -- 1,472 Other long-term liabilities -- 1,108 -- -- 1,108

Total Liabilities 107,944 90,685 35,304 (3,746) 230,187

Fund Balance/Net Assets: Total Fund Balance/Net Assets 203,650 149,110 19,942 1,232 373,934

Total Liabilities & Fund Balance/Net Assets 311,594$ 239,795$ 55,246$ (2,514)$ 604,121$


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3. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS – CONTINUED

(1) Capital assets used in governmental activities are not current financial resources and, therefore,

are not reported in the balance sheet. 237,325$ Long-term liabilities are not due and payable in the current period and, therefore, are not reported

in the balance sheet:Certificates of participation (61,635)$ Other long-term debt (1,108) Accrued interest on long-term debt (654) Capital leases payable (1,753) Estimated liability for litigation (2,130) Employee compensated absences (excluding Internal Service funds) (22,382) Rebatable arbitrage earnings (302) Unamortized premium on certificates of participation (1,472)

Total long-term liabilities (91,436) Other long-term assets are not available to pay for current period expenditures and, therefore,

are deferred in the funds and recognized as revenue in the statement of activities. (Note 7) 751 Issuance costs on certificates of participation are capitalized and amortized over the life of the 540

related debt issue.Receivable from the City of Goleta for 1994 Certificates of Participation (Note 11) 1,930

149,110$

(2) Internal Service Funds are used by management to charge the costs of information technology, vehicle operations and maintenance, risk management and insurance, and communicationsservices to individual funds. The assets and liabilities of the Internal Service Funds areincluded in the governmental activities in the statement of net assets. 19,942$

(3) Adjustment for Internal Service Funds are necessary to "close" those funds by charging additional amounts to participating business-type activities to completely cover the Internal Service Funds' costs for the year. 1,232$


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4. RECONCILIATION OF BEGINNING FUND BALANCES/NET ASSETS

The County’s beginning fund balances/net assets have been reclassified to reflect the change of the Inmate Welfare Fund from an agency fund to a special revenue fund in accordance with GASB 34 as follows:

TotalGovernmental Fiduciary

Funds FundsFund balances/net assets

as of June 30, 2002, as previously reported 210,794$ 88,309$

Reclassifications of Inmate Welfare Fundfrom a fiduciary to special revenue fund:Reclassification of 6/30/02 fund balance 1,635 (1,635)

Fund balances/net assets as of June 30, 2002 212,429$ 86,674$

GovernmentalActivities

Net Assets as of June 30, 2002, as previously reported 347,643$

Inmate Welfare Fund 6/30/2002 fund balance 1,635 Inmate Welfare Fund capital assets, net of depreciation 164

Net Assets as of June 30, 2002 349,442$


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5. CASH AND INVESTMENTS Cash and investments include the cash balances of substantially all funds, which are pooled and invested by the County Treasurer for the purpose of increasing interest earnings through investment activities. Interest earned on pooled investments is apportioned quarterly to certain participating funds based upon each fund’s average daily deposit balance with all remaining interest deposited in the General Fund. Deposits At June 30, 2003, the carrying amount of the County’s deposits was $31,935 and the corresponding bank balance was $35,262. The difference of $3,327 was principally due to uncleared outgoing electronic funds transfers. Of the total bank balance, $100 was insured by Federal depository insurance and $35,162 was collateralized in accordance with Section 53652 of the California Government Code with securities held by the pledging financial institutions in the County’s name, which have a market value of at least 110% of the County’s deposits. Investments

In accordance with GAAP, the County’s investments at June 30, 2003 are categorized separately to give an indication of the level of custodial risk assumed by the County. The County’s investments are categorized in the following manner: Category 1 - Includes investments that are insured or registered or for which the securities are held by

the County or its agent in the County’s name. Category 2 - Includes uninsured and unregistered investments for which the securities are held by the

counterparty’s trust department or agent in the County’s name. Category 3 - Includes uninsured and unregistered investments for which the securities are held by the

counterparty, or by its trust department or agent but not in the County’s name. Not Required To Be Categorized - Includes investments made directly with another party, real estate, direct investments in

mortgages and other loans, open-end mutual funds, pools managed by other governments, annuity contracts and guaranteed investment contracts.


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5. CASH AND INVESTMENTS – CONTINUED The County’s investments by category as of June 30, 2003 are as follows: Not Carrying Required Amount Category To Be At Fair 1 2 3 Categorized Value Amounts Invested in Pooled

Treasury Fund: Corporate Bonds $ 74,805 $ -- $ -- $ -- $ 74,805Commercial Paper 134,460 -- -- -- 134,460Government Agency Bonds 506,538 -- -- -- 506,538Local Agency Investment Fund -- -- -- 40,000 40,000

Total Investments Controlled

by County Treasurer 715,803 -- -- 40,000 755,803 Investments Controlled by

Fiscal Agents: U.S. Government securities -- 31,501 -- -- 31,501

Total Investments Controlled

by Fiscal Agents -- 31,501 -- -- 31,501

Total Investments $ 715,803 $ 31,501 $ -- $ 40,000 787,304 Total Deposits at Carrying Amount 31,935Other Cash Funds (imprest, revolving) 219

Total Cash and Investments $ 819,458 Total Cash and Investments $ 740,233 Total Restricted Cash and Investments (Note 6) 79,225

Total Cash and Investments $ 819,458

Total Cash and Investments Summary: Total Governmental Activities $ 270,470Total Business-Type Activities 28,743Total Fiduciary Funds 520,245

Total Cash and Investments $ 819,458


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5. CASH AND INVESTMENTS – CONTINUED The County has not provided nor obtained any legally binding guarantees during the fiscal year ended June 30, 2003 to support the value of shares in the Treasurer’s investment pool. The unrealized gain on investments held in the County Treasurer’s pool at June 30, 2003 for both internal and external pool participants was $5,225. The unrealized gain has been included as a component of designated fund balance at June 30, 2003. The net realized gain on investments sold or matured during the year was $1,179. The calculation of realized gains and losses is independent of a calculation of the net change in the fair value of investments. Realized gains and losses on investments that had been held in more than one fiscal year and sold in the current year were included as a change in the fair value of investments reported in the prior year(s) and the current year. The net increase in the fair value of investments was $980. This amount takes into account all changes in fair value (including purchases and sales) that occurred during the year. A summary of the investments held by the County Treasurer’s investment pool as of June 30, 2003 is as follows:

Interest Fair Rate Maturity

Investment Value Cost % Range Range Corporate Bonds $ 74,805 $ 72,650 2.63 – 7.50 09/2003 – 05/2006 Commercial Paper 134,460 134,325 1.20 – 1.41 07/2003 – 08/2003 Government Agency Bonds 503,222 500,287 1.75 – 6.40 06/2004 – 06/2008 Government Agency Bonds – Directed 3,316 3,185 5.01 – 7.13 06/2010 – 04/2014 Local Agency Investment Fund 40,000 40,000 1.77 -- $ 755,803 $ 750,447

The following represents a condensed statement of net assets and changes in net assets for the Treasurer’s investment pool as of June 30, 2003:

Statement of Net Assets Net Assets held for pool participants $ 755,803 Equity of internal pool participants $ 290,063 Equity of external pool participants (voluntary and involuntary) 465,740 Total Equity $ 755,803

Statement of Changes in Net Assets Net Assets held for pool participants at July 1, 2002 $ 622,578 Net change in investments by pool participants 133,225 Net Assets held for pool participants at June 30, 2003 $ 755,803


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6. RESTRICTED CASH AND INVESTMENTS Cash and investments at June 30, 2003 that are restricted by legal or contractual requirements are comprised of the following: General Fund

Funds set aside for repayment of tax and revenue anticipation notes ("TRANS") including interest $ 46,436

Deposits by various developers 5,107 Property tax loss reserve 3,828

Total General Fund 55,371 Nonmajor Governmental Funds

Reserved for debt service 8,112 Total Nonmajor Governmental Funds 8,112

Solid Waste Enterprise Fund

Funds set aside for landfill site closure and maintenance costs (see Note 12) 14,799 Reserved for debt service 655

Total Solid Waste Enterprise Fund 15,454 Laguna Sanitation Enterprise Fund

Reserved for debt service 278 Total Laguna Sanitation Enterprise Fund 278

Internal Service Funds

Vehicle Operations and Maintenance - set aside for underground tank clean-up 10 Total Internal Service Funds 10

Total restricted cash and investments $ 79,225


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7. DEFERRED REVENUE

Governmental funds report deferred revenues in connection with receivables for revenues not considered available to liquidate liabilities of the current period. Governmental and enterprise funds also defer revenue recognition in connection with resources that have been received as of year-end, but not yet earned. At June 30, 2003, the various components of deferred revenue and unearned revenue reported were as follows:

Unearned Unavailable TotalGovernmental funds:

General Fund:Property taxes receivable 670$ --$ 670$ Other receivables -- 582 582

Total General Fund 670 582 1,252

Road Fund:Developer mitigation fees 1,296 -- 1,296 Advances 1,162 -- 1,162

Total Road Fund 2,458 -- 2,458

Social Services Fund:Grant drawdowns prior to meeting all eligibility requirements 10,872 -- 10,872

Flood Control District Fund:Developer mitigation fees 52 -- 52

Capital Projects Fund:Developer mitigation fees 2,203 -- 2,203 Other receivables - 65 65

2,203 65 2,268 Nonmajor governmental funds:

Advances 1,043 -- 1,043 Grant drawdowns prior to meeting all eligibility requirements 159 -- 159 Other receivables -- 104 104 Developer mitigation fees 65 -- 65

Total nonmajor governmental funds 1,267 104 1,371

Total governmental funds 17,522$ 751$ 18,273$


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8. CAPITAL ASSETS Capital assets activity for the year ended June 30, 2003 are as follows: Balance Balance July 1, 2002 Additions Deletions June 30, 2003

Governmental activities: Capital assets, not being depreciated: Land $ 31,163 $ 8,005 $ 860 $ 38,308 Construction in Progress 47,513 33,023 43,445 37,091 Total capital assets, not being depreciated 78,676 41,028 44,305 75,399

Capital assets, being depreciated: Structures and Improvements 142,796 2,593 -- 145,389 Equipment 65,237 14,058 4,172 75,123 Infrastructure 16,030 35,813 -- 51,843 Total capital assets, being depreciated 224,063 52,464 4,172 272,355 Less accumulated depreciation for: Structures and Improvements (48,460) (3,471) -- (51,931) Equipment (34,216) (6,092) (1,819) (38,489) Infrastructure (90) (674) -- (764) Total accumulated depreciation (82,766) (10,237) (1,819) (91,184) Total capital assets, being depreciated, net 141,297 42,227 2,353 181,171 Sub-total governmental activities 219,973 83,255 46,658 256,570 Business-type activities: Capital assets, not being depreciated: Land 12,529 -- 726 11,803 Construction in Progress 16,211 8,037 4,591 19,657 Total capital assets, not being depreciated 28,740 8,037 5,317 31,460 Capital assets, being depreciated: Structures and Improvements 10,917 658 383 11,192 Equipment 14,770 585 12 15,343 Infrastructure 5,236 2,817 -- 8,053 Total capital assets, being depreciated 30,923 4,060 395 34,588 Less accumulated depreciation for: Structures and Improvements (5,088) (366) (313) (5,141) Equipment (7,527) (979) (50) (8,456) Infrastructure (2,105) (106) -- (2,211) Total accumulated depreciation (14,720) (1,451) (363) (15,808) Total capital assets, being depreciated, net 16,203 2,609 32 18,780 Sub-total business-type activities 44,943 10,646 5,349 50,240 Total $ 264,916 $ 93,901 $ 52,007 $ 306,810


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8. CAPITAL ASSETS – CONTINUED

Capital assets activity for each major enterprise funds for the year ended June 30, 2003 are as follows: Balance Balance July 1, 2002 Additions Deletions June 30, 2003

Solid Waste: Capital assets, not being depreciated: Land $ 9,860 $ -- $ 726 $ 9,134 Construction in Progress 1,636 1,889 811 2,714 Total capital assets, not being depreciated 11,496 1,889 1,537 11,848 Capital assets, being depreciated: Structures and Improvements 7,771 658 383 8,046 Equipment 12,373 297 12 12,658 Total capital assets, being depreciated 20,144 955 395 20,704 Less accumulated depreciation for: Structures and Improvements (3,613) (289) (313) (3,589) Equipment (7,234) (841) (50) (8,025) Total accumulated depreciation (10,847) (1,130) (363) (11,614) Total capital assets, being depreciated, net 9,297 (175) 32 9,090 Total $ 20,793 $ 1,714 $ 1,569 $ 20,938

Laguna Sanitation: Capital assets, not being depreciated: Land $ 2,669 $ -- $ -- $ 2,669 Construction in Progress 14,575 6,148 3,780 16,943 Total capital assets, not being depreciated 17,244 6,148 3,780 19,612 Capital assets, being depreciated: Structures and Improvements 3,146 -- -- 3,146 Equipment 2,397 288 -- 2,685 Infrastructure 5,236 2,817 -- 8,053 Total capital assets, being depreciated 10,779 3,105 -- 13,884 Less accumulated depreciation for: Structures and Improvements (1,475) (77) -- (1,552) Equipment (293) (138) -- (431) Infrastructure (2,105) (106) -- (2,211) Total accumulated depreciation (3,873) (321) -- (4,194) Total capital assets, being depreciated, net 6,906 2,784 -- 9,690 Total $ 24,150 $ 8,932 $ 3,780 $ 29,302


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8. CAPITAL ASSETS – CONTINUED Internal service funds (ISF) predominantly serve the governmental funds. Accordingly, their capital assets are included within governmental activities in the above table. Capital assets activity for Internal Service Funds for the year ended June 30, 2003 are as follows: Balance Balance July 1, 2002 Additions Deletions June 30, 2003

Capital assets, not being depreciated: Construction in progress $ 131 $ -- $ 131 $ --

Capital assets, being depreciated: Structures and Improvements 918 754 -- 1,672 Equipment 35,667 6,280 793 41,154 Total capital assets, being depreciated 36,585 7,034 793 42,826 Less accumulated depreciation for: Structures and Improvements (131) (46) -- (177) Equipment (20,481) (3,625) (702) (23,404) Total accumulated depreciation (20,612) (3,671) (702) (23,581) Total capital assets, being depreciated, net 15,973 3,363 91 19,245 Total $ 16,104 $ 3,363 $ 222 $ 19,245

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

Expense ISF Deprecation

Expense

Governmental Activities (excluding ISF) Allocation (1) Total Policy & executive $ 113 $ 32 $ 145 Law & justice 618 94 712 Public safety 1,852 1,678 3,530 Health & public assistance 1,568 837 2,405 Community resources & public facilities 1,695 560 2,255 General government & support services 590 341 931 General County programs 130 18 148 Total depreciation expense-governmental activities 6,566 3,560 10,126 Business-type activities Solid waste 1,130 105 1,235 Laguna sanitation 321 6 327 Total depreciation expense-business-type activities 1,451 111 1,562 Grand Total $ 8,017 $ 3,671 $ 11,688 (1) Capital assets held by the County’s internal service funds are charged to the various functions based on their usage of the assets.


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8. CAPITAL ASSETS – CONTINUED Construction in progress at June 30, 2003 consists of the following projects for the primary government:

Governmental activities:

5,602 3,689 3,054 2,261 1,136 738 611 498 4,501

22,090

$ 3,201 1,643 855 667 488 306 2,203

9,363

1,064 798 607 597 454 1,139

4,659 587

392 37,091

Business-type activities:Laguna Sanitation Projects:

Wastewater Treatment Expansion 16,604 Wastewater Disposal System 339

16,943 Solid Waste Projects:

Ballard Canyon Closure 963 Ballard Canyon Landfill Gas System 475 Foxen Canyon Transfer Station 364 Tajiguas 48' Storm Drain Replacement 312 Dewatering System 211 Other Projects (individually less than $200) 389

2,714 Sub-total business-type activities 19,657 Total construction in progress 56,748$

Carpinteria Watershed/Salt Marsh

North Jameson Lane Modifications2001-02 Tea 21 Recycle and Reconstruction

Capital Outlay Projects:

Blosser Channel Repair

Casa Nueva Santa Maria Juvenile Hall

North County JailCounty Clerk Recorder Building

Other Projects (individually less than $300)

Mission Creek Project

Santa Barbara District Attorney Building

Flood Control Projects:


Bell Street BridgeOld Coast Bridge Replacement

Ocean Meadows Storm Drain


Santa Maria Juvenile Court

Sub-total governmental activities

Santa Barbara Bowl Improvements - Phase IASheriff's Indoor Range

Social Services Projects: CalWin Computer System

Road Projects:Major County-wide Pavement Projects

Water Agency Projects: Surface Water Controls

Las Vegas Creek/Encina Drain

Gaviota Beach Road Bridge


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9. NOTES PAYABLE

Governmental Activities Notes payable at June 30, 2003 consists of tax and revenue anticipation notes (“TRANS”) payable of $45,000 bearing interest at 3.00% and are due in full on July 25, 2003. Proceeds from the notes were used to meet fiscal year 2002-2003 cash flow requirements. The following is a summary of changes in notes payable for the year ended June 30, 2003: Balance Balance July 1, 2002 Additions Deletions June 30, 2003

2001-2002 TRANS $ 37,000 $ -- $ 37,000 $ -- 2002-2003 TRANS -- 45,000 -- 45,000

Total $ 37,000 $ 45,000 $ 37,000 $ 45,000 Business-Type Activities Laguna Wastewater Treatment Plant Loan On August 16, 2001, the Laguna Sanitation District (District) entered into a contract with the State for the construction of a Total Dissolved Solids and Recycled Water Treatment Plant. Under the contract, the State made fifteen disbursements to the District during the period February 2002 through June 2003, totaling $9,150. As note proceeds are received by the District, a corresponding note payable is recorded. Repayment of the note is scheduled to commence one year after project completion (July 2003) and will continue through July 2023. The interest rate on the note is 2.6 percent per annum. Interest accrues beginning on the date of each disbursement from the State. The note payable outstanding at June 30, 2003 is $9,388. The following repayment schedule is based on the note proceeds received as of June 30, 2003:

Year Ending June 30, Principal Interest 2005 $ 364 $ 244 2006 373 235 2007 383 225 2008 393 215 2009 403 205

2010-2014 2,179 861 2015-2019 2,477 562 2020-2024 2,816 223

Total $ 9,388 $ 2,770


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10. LEASE OBLIGATIONS Operating Leases The following is a schedule of future minimum rental payments, principally for the General Fund, required under operating leases entered into by the County that have initial or remaining noncancelable lease terms in excess of one year as of June 30, 2003:

Year Ending June 30, Amount 2004 $ 2,619 2005 2,125 2006 1,633 2007 1,443 2008 1,187 2009-2011 1,049 Total Minimum Payments Required $ 10,056

The total rental expenditure/expense for the year ended June 30, 2003 was $3,698 of which $720 was in the General Fund.

Capital Leases The County has entered into certain capital lease arrangements under which the related structures and equipment will become the property of the County when all terms of the lease agreements are met. The following is a schedule of future minimum lease payments, payable from the General Fund, certain special revenue funds, and enterprise funds under capital leases as of June 30, 2003: Governmental Business-type

Year Ending June 30, Activities Activities 2004 $ 470 $ 220 2005 339 90 2006 221 90 2007 221 50 2008 186 -- 2009-2013 396 -- 2014-2018 357 -- Total Minimum Lease Payments 2,190 450 Less: Amount Representing Interest (437) (42) Total Present Value of

Minimum Lease Payments $ 1,753 $ 408 The following is a schedule of capital assets under capital leases by major classes at June 30, 2003: Governmental Business-type

Activities Activities Equipment $ 2,027 $ 1,070 Structures and Improvements 732 -- Less: Accumulated amortization (384) (585) Total $ 2,375 $ 485

Amortization expense related to capital assets under capital leases for the governmental and business-type activities was $126 and $263 respectively, for the year ended June 30, 2003.


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11. LONG-TERM DEBT Certificates of Participation Certificates of participation are secured by annual lease payments payable by the County for use of the facilities constructed or acquired from the bond proceeds. The Santa Barbara County Finance Corporation, a public benefit corporation, was created to issue the certificates. The County leases various projects from the Santa Barbara County Finance Corporation. The lease payments are used by the Santa Barbara County Finance Corporation to pay interest and principal of the bonds. The certificates of participation contain certain bond covenants, which are deemed by the County to be duties imposed by law. The County must include the applicable lease-purchase payments due each year in its annual budget and make the necessary appropriations. The County is also required to maintain certain levels of liability, property damage, casualty, rental interruption and earthquake insurance in connection with each lease-purchase agreement. The County is in compliance with all significant financial restrictions and requirements as set forth in its various bond covenants. A summary of certificates of participation outstanding at year-end is as follows: Amount of Outstanding Interest Date of Original as of

Rate % Issue Maturity Issue June 30, 2003 Governmental activities: 1994 Land and Improvements 3.30-5.70 03-15-94 03-01-11 $ 45,680 $ 20,940 1997 Capital Improvements 5.39-7.11 06-24-97 12-01-06 5,395 1,390 1998 Capital Improvements 3.80-4.60 02-10-98 02-01-11 11,720 8,185 2001 Capital Improvements 2.00-5.25 12-01-01 12-01-21 31,425 31,120 Sub-total governmental activities 94,220 61,635 Business-type activities: 1997 Laguna Sanitation Refinance 5.39-7.11 06-24-97 12-01-06 1,915 925 1998 Baron Ranch 3.80-4.60 02-10-98 02-01-11 7,760 5,300 Subtotal business-type activities 9,675 6,225 Total $ 103,895 $ 67,860 As of June 30, 2003, the County has an outstanding receivable in the amount of $1,930 from the City of Goleta related to the remaining outstanding balance on the 1994 Certificates of Participation used to finance the purchase of land that the County transferred to the city at incorporation on February 1, 2002. The County remains legally liable for this debt. The following is a schedule of total debt service requirements to maturity as of June 30, 2003 for certificates of participation:

Governmental Activities Business-type Activities Year Ending June 30, Principal Interest Principal Interest

2004 $ 4,470 $ 2,974 $ 765 $ 259 2005 4,965 2,761 795 226 2006 4,780 2,547 840 190 2007 4,980 2,331 935 150 2008 4,905 2,098 665 115

2009-2013 18,785 7,041 2,225 157 2014-2018 10,320 3,421 -- -- 2019-2022 8,430 911 -- --

Total $ 61,635 $ 24,084 $ 6,225 $ 1,097


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11. LONG-TERM DEBT - CONTINUED

Other Long-Term Debt A schedule of other long-term debt outstanding as of June 30, 2003, recorded within governmental activities and payable from governmental funds, is as follows:

Year EndingCachuma Sanitation

Loan Fire Station Settlement

June 30, Principal Interest Principal 2004 $ 16 $ 6 $ 2752005 17 5 2752006 19 3 2752007 20 2 2002008 11 -- --Total $ 83 $ 16 $ 1,025

The Fire Station Settlement has no interest payments associated with the long-term debt. Rebatable Arbitrage Earnings The Tax Reform Act of 1986 instituted certain arbitrage restrictions with respect to the issuance of tax-exempt bonds after August 31, 1986. Arbitrage regulations deal with the investment of all tax-exempt bond proceeds at an interest yield greater than the interest yield paid to bondholders. Generally, all interest paid to bondholders can be retroactively rendered taxable if applicable rebates are not reported and paid to the Internal Revenue Service at least every five years. During the current year, the County performed calculations of excess investment earnings on various bonds and financings and recorded a rebatable arbitrage liability of $331 at June 30, 2003, of which $302 is recorded within the governmental activities and $29 is recorded within the business-type activities. Governmental Activities – Conduit Debt Special Assessment Debt The County acts as an agent for the property owners, who may benefit by the projects financed from special assessment bond proceeds, in collecting the assessments, forwarding the collections to bondholders and initiating foreclosure proceedings, if appropriate. Special assessment bonds do not represent a liability of the County, as the County is not obligated in any manner for the debt. Accordingly, such obligations do not appear in the accompanying basic financial statements. The amount of special assessment debt outstanding at June 30, 2003 is $823.


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11. LONG-TERM DEBT - CONTINUED Changes in Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2003 was as follows: Balance Balance Due Within July 1, 2002 Additions Deletions June 30, 2003 One Year Governmental activities: Certificates of participation $ 65,935 $ -- $ 4,300 $ 61,635 $ 4,470 Other long-term obligations:

Cachuma Sanitation Loan 99 -- 16 83 16 Fire Station #18 Settlement 1,300 -- 275 1,025 275 Mental Health Cost/Audit Settlements 138 138 -- -- Santa Ynez Airport Loans 5 -- 5 -- --

Liability for self-insurance claims 31,329 20,972 18,435 33,866 10,209 Estimated liability for litigation 1,653 477 -- 2,130 -- Employee compensated absences 22,007 1,709 732 22,984 732 Capital lease obligations 567 1,456 270 1,753 392 Rebatable arbitrage earnings 274 28 -- 302 -- Unamortized premium on

certificates of participation 1,594 -- 122 1,472 -- Sub-total governmental activities 124,901 24,642 24,293 125,250 16,094 Business-type activities: Certificates of participation 6,955 -- 730 6,225 765 Landfill litigation settlement 385 -- 55 330 -- Employee compensated absences 421 33 7 447 7 Capital lease obligations 839 1 432 408 198 Laguna wastewater treatment plant loan 4,933 4,455 -- 9,388 -- Landfill closure costs 19,667 1,522 -- 21,189 -- Rebatable arbitrage earnings 34 57 62 29 -- Sub-total business-type activities 33,234 6,068 1,286 38,016 970 Total $ 158,135 $ 30,710 $ 25,579 $ 163,266 $ 17,064 The long-term liability activity for each major enterprise fund for the year ended June 30, 2003 was as follows: Solid Waste: Certificates of participation $ 5,840 $ -- $ 540 $ 5,300 $ 565 Landfill litigation settlement 385 -- 55 330 -- Employee compensated absences 345 16 5 356 5 Capital lease obligations 839 1 432 408 198 Landfill closure costs 19,667 1,522 -- 21,189 -- Rebatable arbitrage earnings 29 52 52 29 -- Total $ 27,105 $ 1,591 $ 1,084 $ 27,612 $ 768 Laguna Sanitation: Certificates of participation $ 1,115 $ -- $ 190 $ 925 $ 200 Laguna wastewater treatment plant loan 4,933 4,455 -- 9,388 -- Employee compensated absences 76 17 2 91 2 Rebatable arbitrage earnings 5 5 10 -- -- Total $ 6,124 $ 4,477 $ 202 $ 10,404 $ 202


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11. LONG-TERM DEBT - CONTINUED In the governmental activities, the liability for litigation and the majority of employee compensated absences are generally liquidated by the General Fund. Internal service funds predominantly serve the governmental funds. Accordingly, their long-term liabilities are included as part of the above totals for governmental activities. The long-term liability activity for the Internal Service Funds for the year ended June 30, 2003 is as follows: Balance Balance Due Within July 1, 2002 Additions Deletions June 30, 2003 One Year Liability for self-insurance claims $ 31,329 $ 20,972 $ 18,435 $ 33,866 $ 10,209 Employee compensated absences 605 20 23 602 23 Total $ 31,934 $ 20,992 $ 18,458 $ 34,468 $ 10,232

12. LANDFILL CLOSURE COSTS

The County owns and operates four landfill sites including Tajiguas, Foxen Canyon, Ventucopa and New Cuyama Landfills. Two County landfills, New Cuyama and Ventucopa were closed during the 1995-96 fiscal year. The Foxen Canyon Landfill will be converted to a transfer station in fiscal year 2003-04. State and Federal laws require the County to close the landfills once their capacities are reached and to monitor and maintain the sites for thirty subsequent years. The County recognizes a portion of the closure and postclosure care costs in each operating period until the landfills are closed. The amount recognized each year to date is based on the landfill capacities used as of the balance sheet date. As of June 30, 2003, the County had incurred a liability of $21,189, which represents the amount of costs reported to date based on the percentages of landfill capacities used to date. The remaining estimated liability for such costs is $9,894, which will be recognized as the remaining capacities are used. The estimated total costs of closure and postclosure care totaling $31,083 are subject to changes such as the effects of inflation, revisions of laws and other variables. The estimated percentages of landfill capacity used are as follows:

Capacity Years Landfill Used Remaining Tajiguas 59% 20 Foxen Canyon 99% .7 Ventucopa 100% closed New Cuyama 100% closed

On August 3, 1999, the Board approved a 15 year expansion of the Tajiguas landfill for purposes of an environmental review, and on April 4, 2003 a revised permit was issued that increased the landfill’s permitted capacity. The estimated costs for the capacity expansion is $25 to $50 million, which will be funded by the Solid Waste enterprise fund tipping fees. The County is required by State and Federal laws and regulations to make annual contributions and/or provide an alternative funding mechanism to finance closure and postclosure care costs. The County funds closure and postclosure costs with a combination of pledge of revenue agreements and restricted cash. The County has pledged revenues from future tipping fees generated at the Santa Barbara South Coast Transfer Station to fund 67 percent of all postclosure maintenance costs. Restricted cash and investments are expected to fund the remaining 33 percent of postclosure costs and all closure costs at Foxen Canyon and New Cuyama. The amount of $14,799 is currently reported as a portion of restricted cash and investments in the Solid Waste enterprise fund on the balance sheet (see Note 6). Restricted cash for closure and postclosure costs at June 30, 2003 is comprised of the following:


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12. LANDFILL CLOSURE COSTS - CONTINUED Total Closure Postclosure Restricted

Landfill Cost Cost Cash Tajiguas $ 9,497 $ -- $ 9,497 Foxen Canyon 2,354 896 3,250 Ventucopa -- 431 431 New Cuyama -- 1,621 1,621

Total $ 11,851 $ 2,948 $ 14,799

13. RETAINED DEFICIT

Internal Service Fund – The County’s Risk Management and Insurance Fund has experienced significant increases in workers’ compensation claims liabilities due primarily to adverse case development. During the current fiscal year, the County has continued to experience an increase in risk management and insurance fund claims liabilities due to continued adverse case development and civil liability exposures. The retained deficit as of June 30, 2003 is $15,094, which is an increase of $4,086 over the retained deficit of $11,008 at June 30, 2002. The County has developed a ten-year payback plan in an effort to eliminate the deficit through future premium rate increases charged to the various departments. The County has continued to concentrate its efforts on efficient and focused review and implementation of loss prevention and control measures to minimize costs, as well as to make necessary adjustments to the future premium rate structure in order to eliminate the retained deficit in the future.

14. INTERFUND TRANSACTIONS Interfund Receivables / Payables Amounts due to/from other funds at June 30, 2003 are as follows:

Receivable Fund Payable Fund Amount General Fund Nonmajor Governmental Funds $ 2,813 Total due to/from $ 2,813

Amounts due to the General Fund are the result of temporary cash flow loans to cover temporary cash deficits in the Alcohol, Drug and Mental Health Services (ADMHS) fund and is scheduled to be collected at the beginning of the next fiscal year. Advances to/from other funds at June 30, 2003 are as follows:

Receivable Fund Payable Fund Amount General Fund Solid Waste $ 1,759 Nonmajor Governmental Funds 155 Total advances to/from $ 1,914

The $1,759 advanced to the Solid Waste enterprise fund represents the balance of $2,994 that provided financing resources for a landfill litigation settlement and will be repaid within the next five years through increases in fees. The General Fund also advanced $155 to the Special Aviation special revenue fund for underground storage tank remediation, which will be repaid within the next five years.


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14. INTERFUND TRANSACTIONS – CONTINUED Transfers Transfers to/from other funds at June 30, 2003 are as follows:

Transfer From Transfer To Amount

General Fund Road $ 2,262 Public Health 7,260 Social Services 8,036 Capital Projects 2,754 Nonmajor Governmental Funds 27,831 Solid Waste 113 Internal Service Funds 780 49,036

Road Capital Projects 171

Public Health General Fund 202 Social Services 77 Capital Projects 906 Nonmajor Governmental Funds 926 Internal Service Funds 17 2,128

Social Services General Fund 8 Public Health 275 Nonmajor Governmental Funds 50 333

Flood Capital Projects 3

Capital Projects General Fund 1,709 Nonmajor Governmental Funds 414 2,123

Nonmajor Governmental Funds General Fund 37,019 Road 488 Public Health 307 Social Services 340 Capital Projects 1,435 Nonmajor Governmental Funds 1,728 41,317

Solid Waste Capital Projects 3

Laguna Sanitation Capital Projects 127 Internal Service Funds General Fund 106 Flood Control District 56 Capital Projects 284 446

Total transfers $ 95,687


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14. INTERFUND TRANSACTIONS – CONTINUED

Transfers are used to (1) move revenues from the fund required by statute or budget to collect them to the fund required by statute or budget to expend them, (2) move receipts identified for debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, and (3) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. During the fiscal year ended June 30, 2003, the Capital Projects Fund returned $1,709 in unspent resources that were intended for capital outlay to the General Fund.

15. RESTRICTED NET ASSETS Restricted net assets are net assets whose use is subject to constraints that are either (1) externally imposed by creditors (such as debt covenants), grantors, contributors, or laws or regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation. Restricted net assets at June 30, 2003 for governmental activities are as follows:

$ 4,554 3,208 1,837

9,599$

15,069 5,110 412 4

20,595

7,371 36,033 1,730 1,915 2,041 774

49,864

4,541 5,827

10,368

1,129 7,730 3,089 436 838

13,222 9,271

9,271 112,919$

Restricted for General County Programs:

Restricted for Debt Service

Public & Educational Access

Total Restricted Net Assets

Property Tax ImpoundsChildren & Families First

Criminal Justice & Courthouse ConstructionOther

Restricted for Community Resources & Public Facilities:

Restricted for General Government & Support Services:

Redevelopment AgenciesOther

Affordable Housing

RoadsFlood Control DistrictsCounty Service AreasWater Agency

Clerk-Recorder-Assessor

Other

Public HealthAlcohol, Drug & Mental Health Services

Restricted for Public Safety:

Restricted for Health & Public Assistance:

Fire Protection DistrictSheriffProbation

Child Support Services

For business-type activities, restricted net assets at June 30, 2003 of $933 are for debt service.


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16. RESERVED AND DESIGNATED FUND BALANCES Fund balances, which are not available for appropriation or are not considered “expendable available financial resources”, are reserved. Unreserved fund balances that have been earmarked by the Board for specified purposes are considered designated. Such reserved and designated fund balances at June 30, 2003 are as follows:

General Road Public Health

Social Services

Flood ControlDistrict

Capital Projects

Other Govern-mental Funds

Total Govern-mental Funds

Reserved for: Debt Service $ -- $ -- $ -- $ -- $ -- $ -- $ 8,251 $ 8,251Property Tax Loss 3,845 -- -- -- -- -- -- 3,845Other Receivables 1,860 -- -- -- -- -- -- 1,946Advances 1,914 -- -- -- -- -- -- 1,914Impounds Receivables 1,129 -- -- -- 51 -- 328 1,508Prepaid Items 136 -- -- -- -- -- -- 50Imprest Cash 17 1 4 15 -- -- 4 41Total Reserved Fund Balance 8,901 1 4 15 51 -- 8,583 17,555 Designated for: Capital Outlay 356 -- 4,471 -- 12,563 17,742 2,244 37,376Health Care Services -- -- 15,002 -- -- -- -- 15,002Endowments -- -- 4,130 -- -- -- 8,627 12,757Strategic Reserve 10,000 -- -- -- -- -- -- 10,000Various 5,161 150 325 -- -- -- 534 6,170Contingencies -- 2,984 -- -- 864 239 177 4,264Recorder Automation 2,349 -- -- -- -- -- -- 2,349Sheriff Dispatch System -- -- -- -- -- 2,159 -- 2,159Litigation 2,068 -- -- -- -- -- -- 2,068Fire Protection Projects -- -- -- -- -- -- 2,034 2,034Unrealized Gains 969 172 278 2 294 47 208 1,970Mental Health -- -- -- -- -- 1,086 874 1,960Salary and Retirement Offset 1,795 -- -- -- -- -- -- 1,795Probation 1,468 -- -- -- -- -- -- 1,468Alcohol & Drug Programs -- -- -- -- -- -- 1,420 1,420General Projects -- -- -- -- 985 -- 298 1,283Proposition 36 -- -- -- -- -- -- 1,086 1,086Assessor AB818 1,084 -- -- -- -- -- -- 1,084Public Safety 1,037 -- -- -- -- -- -- 1,037Planning & Development 941 -- -- -- -- -- -- 941Elections Proposition 41 898 -- -- -- -- -- -- 898Park Projects -- -- -- -- -- 746 -- 746Capital Contribution 597 -- -- -- -- -- -- 597Alcoholism Programs -- -- -- -- -- -- 542 542Total Designated Fund

Balances

28,723 3,306 24,206 2 14,706 22,019 18,044 111,006

Total Unreserved-Undesignated Fund Balances

12,050 4,064 5,154 1,753 21,276 7,323 23,469 75,089

Total Fund Balances $49,674 $ 7,371 $ 29,364 $ 1,770 $36,033 $29,342 $ 50,096 $ 203,650


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17. EXTRAORDINARY AND SPECIAL ITEMS Extraordinary Item In November 2001, voters approved ballot Measure H to incorporate a portion of the Goleta Valley into the City of Goleta (City) effective February 1, 2002. The Measure contained a Revenue Neutrality Agreement entered into by the County and the City whose terms include the sharing of the new City’s property, retail sales, and transient occupancy taxes with the County. As a result, the County transferred certain land, buildings and improvements to the city at net book value on February 2, 2001. Under the applicable government code sections, the County was required to transfer the Redevelopment Agency Goleta Project Area to the City on July 1, 2002. Accordingly, the County transferred the following assets and liabilities to the City of Goleta on July 1, 2002:

Assets: Cash and investments $ 764 Receivables 18 Liabilities: Loans payable to the County 300 Net assets transferred $ 482

Additionally, the County recorded a receivable of $300 due from the city for start-up loans made to the Redevelopment Agency Goleta Project Area from the General Fund in prior years. During the fiscal year ending June 30, 2003, the County also transferred $1,471 in completed infrastructure to the city. As a result of the above transactions, the County recorded a net expense of $2,253 for the fiscal year ended June 30, 2003, which has been recorded as an extraordinary item in the accompanying statement of activities. Special Item In fiscal year ending June 30, 2003, the County received a land donation with a fair value of $8,000 for a Public Health facility. The County paid $314 in closing costs. The County recorded a donation of $7,686 which is shown as a special item in the accompanying statement of activities.


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18. COMMITMENTS AND CONTINGENCIES

The County is subject to various lawsuits and claims involving public liability and other actions incidental to the ordinary course of County operations. In the aggregate, these claims seek monetary damages in significant amounts. To the extent the outcome of such litigation has been determined to result in probable financial loss to the County, a liability for litigation of $2,130, representing County Counsel's best estimate of the ultimate loss, has been accrued in the government-wide statement of net assets. The timing of the payment of these losses cannot presently be determined. A number of lawsuits and claims are pending against the County for which the financial loss to the County has been determined to be reasonably possible by County Counsel. These lawsuits include claims filed for inverse condemnation, tort liability, workers' compensation, civil rights violations, breaches of contract, land use disputes, and storm damages. These lawsuits are seeking damages in excess of $7,000. The County intends to vigorously defend itself against these lawsuits. The aggregate amount of the uninsured liabilities of the County and the timing of any anticipated payments which may result from such claims will not, in the opinion of County Counsel, significantly affect the financial condition of the County. Significant appeals of assessed values used for property tax calculations have been filed on a commercial space launch facility and one resort hotel facility in the County. The County is vigorously defending the assessed values. Additionally, the County is impounding current property tax collections. At June 30, 2003, impound receivables related to these facilities were $1,508. The final results of these actions could also affect cities, school districts, and special districts in addition to the County. On January 20, 2000, the County entered into a Settlement Agreement and Mutual Release (“Agreement”) in response to an action filed against it for damages concerning the now closed Ballard Canyon landfill. The County’s estimate of its liability under this agreement as of June 30, 2003 is $330, which is recorded in the Solid Waste enterprise fund. The County recognizes as revenue grant monies received as reimbursement for costs incurred in certain Federal and State programs it administers. Although the County's Federal grant programs have been audited through June 30, 2003 in accordance with the requirements of the Federal Single Audit Act of 1997 and the related U.S. Office of Management and Budget Circular A-133, these programs may be subject to financial and compliance audits by the reimbursing agencies. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time, although the County expects such amounts, if any, to be immaterial. The County has entered into contracts to purchase goods and services from various vendors during the period July 1, 2003 through June 30, 2008. Approximately $76,502 will be payable upon future performance under these contracts.


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19. SELF-INSURANCE The County is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; natural disasters; medical malpractice; unemployment; and providing health benefits to employees, retirees and their dependents. The County has chosen to establish risk financing internal service funds where assets are set aside for claim settlements associated with such risks of loss up to certain limits. Excess coverage is provided by the California State Association of Counties Excess Insurance Authority ("Authority"), a joint powers authority whose purpose is to develop and fund programs of excess insurance for its fifty-three member counties. A Board of Directors consisting of representatives of its member counties governs the Authority. The Authority retains responsibility for claims in excess of the County’s self-insurance retention. Self-insurance and Authority limits are as follows:

Self-Insurance Authority Type of Coverage Limit Limit General Liability $ 500 $ 25,000 Medical Malpractice 500 10,000 Workers’ Compensation 300 45,000

Property damage risks are covered on a per occurrence basis up to $271,770 for real property, with $106,642 in contents and business interruption/rental values. Coverage is provided by property insurance policies purchased through a pool comprised of a majority of California Counties from commercial insurance companies. All properties are insured at full replacement values with a $10 deductible. For the past three years, there have been no settlement amounts that have exceeded the limits of commercial or Authority insurance coverage. The County also maintains earthquake and flood insurance coverage to comply, at a minimum, with the proposed Federal Emergency Management Agency (FEMA) regulations in order to maintain eligibility to recover expenses in the event of a catastrophic loss. All other property coverages currently comply with the proposed FEMA regulations. Earthquake and flood limits are as follows:

Type of Coverage Limit Real Property $ 271,770 Personal Property 87,397 Business Interruption and Rents 19,245

Total $ 378,412

The unpaid claims liabilities included in the self-insurance internal service funds are based on the results of actuarial studies and include amounts for claims incurred but not reported and adjustment expenses. Claims liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of pay-outs, and other economic and social factors. General liability, workers’ compensation, and medical malpractice liabilities are carried at present value using a discount rate of 6%. It is the County's practice to obtain full actuarial studies annually for general liability, workers’ compensation, and medical malpractice coverages. Premiums are charged by the Risk Management and Insurance Fund using various allocation methods that include actual costs, trends in claims experience, and number of participants. Revenues of the Risk Management and Insurance Fund, together with funds to be provided in the future, are expected to provide adequate resources to meet liabilities as they come due (See Note 13).

Changes in the liability for self-insurance claims during the past two fiscal years for the Risk Management and Insurance Fund is as follows:

June 30, 2003 June 30, 2002 Unpaid Claims, Beginning of Year $ 31,329 $ 25,239 Incurred Claims 20,972 20,625 Claim Payments (18,435) (14,535) Unpaid Claims, End of Year $ 33,866 $ 31,329


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19. SELF-INSURANCE – CONTINUED

Financial information on the Authority as of and for the year ended June 30, 2003 was not available at the date of publication of this report. Summary audited financial information as of and for the year ended June 30, 2002 is as follows:

Cash and Investments $ 62,447 Other Assets 70,708

Total Assets $ 133,155 Loss Reserves $ 94,032 Other Liabilities 17,681 Fund Equity 21,442

Total Liabilities and Fund Equity $ 133,155 Total Revenues $ 112,398 Total Expenses (117,351)

Expenses in Excess of Revenues $ (4,953) The County's annual premium paid to the Authority for the year ended June 30, 2003 was $2,119.


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20. RETIREMENT PLANS Santa Barbara County Employees’ Retirement System Plan Description The Santa Barbara County Public Employees’ Retirement System (Retirement System) was organized under the provisions of the 1937 County Employees’ Retirement Act, effective on January 1, 1944. The Retirement System operates a cost sharing multiple employer defined benefit plan. Members include all permanent employees working full time or at least 50% part time for the County, Carpinteria-Summerland Fire Protection District, Santa Barbara Coastal Vector Control District, Goleta Cemetery District, Santa Maria Cemetery District, Oak Hill Cemetery District, Carpinteria Cemetery District, Summerland Sanitary District, Air Pollution Control District (APCD), and the Santa Barbara County Association of Governments. The Retirement System has eight retirement plans, five are currently available to new employees. All new General member employees (except those of APCD) are enrolled in the contributory General Plan 5b. All new Safety members are enrolled in the contributory Safety Plan 4b. All new APCD employees are enrolled in APCD Plan 2. All open plans provide benefits as defined by law upon retirement, death or disability of members based on age, years of service, final average salary (generally 12 highest consecutive months), and the benefit options selected. Cost-of-living adjustments after retirement are provided in all plans except General Plan 2. Fiduciary Responsibility The Retirement System is controlled by its own board, the Board of Retirement, which acts as a fiduciary agent for the accounting and control of member and employee contributions and investment income. The Retirement System publishes its own Comprehensive Annual Financial Report and receives its own independent audit. The Retirement System is also a legally separate entity from the County and not a component unit. Additional detailed information and separately issued financial statements of the Retirement System can be obtained from the Santa Barbara County Employees’ Retirement System located at 105 E. Anapamu Street, Santa Barbara, CA 93101.

Funding Policy Contributions are made by members and employers at rates recommended by an independent actuary, approved by the Board of Retirement, and adopted by the County Board of Supervisors. For certain budgetary units, a portion of the members contribution is paid by the County. Employee contributions are based upon each individual member’s age of entry into the system. Employee contributions cannot be withdrawn until separation from employment. Member contributions forfeit to the Retirement System after five years if the member does not request a refund and is not vested.


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20. RETIREMENT PLANS – CONTINUED Employer Contribution Employer contribution rates are as follows: Open for New Enrollment General Plan 5b County: 9.74% All new County general employees enrolled in plan. General Plan 5a Districts: 10.36% All district general employees enrolled in plan. Safety Plan 4a Districts: 19.32% All district safety employees enrolled in plan. Safety Plan 4b County: 15.41% All new County safety employees enrolled in plan. APCD Plan 2 APCD: 11.81% All new APCD employees enrolled in plan. Closed to New Enrollment: General Plan 5a County: 10.36% County employees hired before October 1994 continue in plan. General Plan 2 County: 3.01% Non-contributory; Employees hired before January 1999 may continue in plan. APCD Plan 1 APCD: 8.41% Employees hired before July 1996 may continue in plan. Annual Pension Cost The annual required contribution for the current year was determined as part of an actuarial valuation performed as of December 31, 2000. The actuarial method used was the entry age normal cost method. The significant actuarial assumptions include: (1) annual rate of return on investments of 8.16%; (2) inflation element in wage increases of 4.5%; and (3) salary merit and longevity increases of 1%. Unfunded liabilities are amortized using the level percentage of projected payroll over five years from December 31, 2000. Changes in actuarial gains and loss assumptions are spread over an open 5-year period. Three-Year Trend Information The County’s actual contributions, annual pension cost, and the percentage of annual pension cost contributed, for the current year and each of the two preceding years, are as follows:

Actuarial Annual Percentage of Annual Fiscal Year Ending Valuation Date Contributions Pension Cost Pension Cost Contribution

6/30/2001 12/31/2000 $ 29,346 $ 29,346 100% 6/30/2002 12/31/2000 31,759 31,759 100% 6/30/2003 12/31/2000 33,799 33,799 100%

21. DEFERRED COMPENSATION PLANS

Santa Barbara County Supplemental Retirement Plan Plan Description The Santa Barbara County Supplemental Retirement Plan is an employer discretionary, defined contribution plan established and governed under Internal Revenue Code Section 401(a). Employer only annual contributions are calculated based upon a percentage of employee compensation under annual agreements with employee bargaining groups and unions. This plan is administered through a third-party administrator and is available to all employee groups. The County does not perform the investing function, and has no fiduciary accountability for the plan. Thus, the plan assets and any related liability to plan participants have been excluded from the County’s financial statements.


72

21. DEFERRED COMPENSATION PLANS – CONTINUED

The County’s actual contributions for the current year and each of the two preceding years, are as follows: Fiscal Year Ending Contributions 6/30/2001 $ 82,996 6/30/2002 130,820

6/30/2003 136,176

COUNTY OF SANTA BARBARA EMPLOYEE CONTRIBUTION DEFERRED COMPENSATION PLAN

The County offers to its employees an optional deferred compensation plan created in accordance with Section 457 of the Internal Revenue Code. This plan is available to substantially all employees and allows participants to defer a portion of their current income until future years up to a maximum of $11,000 (in whole dollars), so as to shelter such funds and earnings from state and federal taxation until withdrawal. The deferred compensation is not available to participants until termination, retirement, death, or unforeseeable emergency. This plan is administered through a third-party administrator. The County does not perform the investing function, and has no fiduciary accountability for the plan. Thus, the plan assets and any related liability to plan participants have been excluded from the County’s financial statements. COUNTY OF SANTA BARBARA SOCIAL SECURITY COMPLIANCE DEFERRED COMPENSATION PLAN The Social Security Compliance Deferred Compensation Plan is a supplemental retirement program utilized by the County in lieu of payments to Social Security (FICA), governed under Internal Revenue Code Sections 3121 and 457. Enrollment in this plan is mandatory for contract, extra-help, seasonal and temporary employees. Employees enrolled in the regular retirement system are not eligible for this plan. Based upon the employee’s gross compensation, the employee’s deferral, on a before-tax basis, equals 6.0% and the County’s contribution equals 1.5% for a combined total of 7.5%. This plan is administered through a third-party administrator and is available to all employee groups. The County does not perform the investing function, and has no fiduciary accountability for the plan. Thus, the plan assets and any related liability to plan participants have been excluded from the County’s financial statements. The County’s actual contributions for the current year and each of the two preceding years are as follows:

Fiscal Year Ending Contributions

6/30/2001 $ 93,436 6/30/2002 95,424 6/30/2003 99,889

22. SUBSEQUENT EVENTS In July 2003, the County issued tax and revenue anticipation notes ("TRANS") totaling $45,000 due July 23, 2004 at a coupon rate of 2.00% and net interest cost of .8%. Proceeds from the notes will be used to meet fiscal year 2003-2004 cash flow requirements. Fiscal year 2003-2004 unrestricted revenues collateralize the notes.

NONMAJOR GOVERNMENTAL FUNDS

73

NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS Special Revenue Funds are established to finance particular governmental activities and are financed by specific taxes or other revenues. Such funds are authorized by statutory provisions to pay for certain activities of a continuing nature. Included in the Special Revenue classification are the following funds: CHILDREN AND FAMILIES FIRST The Children and Families First Fund, as required by Proposition 10, accounts for the revenues generated by a tax increase on cigarettes and tobacco products. The Proposition 10 revenues are deposited into the Children and Families First Fund, and used to promote, support and improve the early development of children from the prenatal stage to five years of age. The funds are not to be used for projects or expenditures outside the scope of Proposition 10 objectives. This fund was established during fiscal year 1998-99. These activities were not accounted for previously in another fund; Proposition 10 became effective January 1, 1999. FISH AND GAME The Fish and Game Fund is used to account for fines and forfeitures received under Section 13003 of the Fish and Game Code and for other revenue and expenditures for the propagation and conservation of fish and game. The Board of Supervisors authorizes expenditures on advice of the Fish and Game Commission. PETROLEUM The Petroleum Fund is used to account for the revenues and expenditures associated with administering the Petroleum Ordinance. The Petroleum Ordinance regulates the issuing of oil well drilling permits; regulates drilling, operating and abandoning petroleum wells, pipelines, tanks and associated petroleum equipment for prevention of erosion, pollution and fire hazards and for safety controls. This fund was established pursuant to Chapter 25 of the County Code. PUBLIC AND EDUCATIONAL ACCESS The Fund for Public and Educational Access was established in December of 2001 by the Board of Supervisors to receive grant revenue from the local cable television franchisee. The primary objectives and purposes of the fund shall be the support of education and public information through programs aimed at expanding public access and educational access to telecommunication services. SPECIAL AVIATION The Special Aviation Fund is used to account for activity related to the Santa Ynez Airport. CHILD SUPPORT SERVICES The Child Support Services Fund was established during fiscal year 2000-01 to provide separate fund accountability as a required by AB 196, AB 150 and SB 542. These legislative bills mandated that all Family Support Divisions located in the District Attorney’s Offices become separate and independent departments. Child Support Services establishes paternity, obtains and enforces court orders for child support, collects and distributes payments, and provides community outreach about those services for the benefit of minor children.

74

NONMAJOR GOVERNMENTAL FUNDS (Continued)

FISHERMEN ASSISTANCE

FISHERIES ENHANCEMENT The Fisheries Enhancement Fund (FEF) was established to mitigate impacts to the commercial fishing industry from offshore oil and gas development. Impact fees paid by offshore energy producers, pursuant to permit conditions, support FEF. In early 1993, the Planning Commission approved a supplemental needs assessment that, pursuant to Board-adopted FEF Guidelines, recommends specific projects to be pursued for FEF awards.

LOCAL FISHERMEN’S CONTINGENCY The Local Fishermen's Contingency Fund is financed by county permit conditions placed upon energy projects to mitigate impacts to the commercial fishing industry. The intent of the fund is to provide an interest-free loan program to fishermen awaiting payment of claims from the federal Fishermen's Contingency Fund for damage or loss resulting from outer continental shelf development or production, and to reimburse fishermen for damage or loss of gear, not covered under the federal fund, which occurs in state waters because of federal or state oil and gas development, or because of oil production activities such as transport.

COASTAL RESOURCES ENHANCEMENT The Coastal Resources Enhancement Fund was established on May 10, 1988 to account for revenues received from offshore oil and gas projects pursuant to permit conditions and expanded by the Board of Supervisors to projects that mitigate impacts to coastal recreation, aesthetics, tourism, and/or sensitive environmental resources. AFFORDABLE HOUSING

AFFORDABLE HOUSING The Affordable Housing Fund was established in fiscal year 1992-1993 to account for the various affordable housing programs administered by the County. HOME PROGRAM FUND The Home Program Fund was established in the fiscal year 1993-94 to account for Federal affordable housing funds for the consortium formed with cities of Carpinteria, Lompoc, Santa Maria, and Guadalupe.

COURT ACTIVITIES The Court Activities Fund was established in fiscal year 1994-95 by Assembly Bill 2544 to account for the State's portion of the Trial Court Funding. Assembly Bill 233, adopted in fiscal year 1997-98, transferred State funding out of the County entity. This fund represents the portion of Trial Court Operations under the County’s control. CRIMINAL JUSTICE CONSTRUCTION The Criminal Justice Temporary Construction Fund was established to account for State authorized surcharges on criminal fines, which are statutorily designated for the establishment of adequate criminal justice facilities in the County. COURTHOUSE CONSTRUCTION The Courthouse Temporary Construction Fund was established to account for State authorized surcharges on fines for non-parking and other criminal cases, which are statutorily designated for renovation and/or construction of courtroom facilities.

75


INMATE WELFARE The Inmate Welfare Fund was established to account for profits from the county jail store and any money attributable to the use of pay telephones. The funds are expended primarily for the benefit, education, and welfare of the inmates confined within the jail.

REDEVELOPMENT AGENCY The Santa Barbara County Redevelopment Agency was formed on September 12, 1989 under Section 33200 of the State of California Health and Safety Code. The Isla Vista Bluffs redevelopment project adopted by ordinance November 27, 1990 was aimed at preserving open space. ALCOHOL DRUG AND MENTAL HEALTH SERVICES (ADMHS) The Alcohol Drug and Mental Health Services Fund is used to account for mandated community health services under the California Mental Health Act including a mandated responsibility to “guarantee and protect public safety.” In addition to services provided directly, ADMHS also contracts with non-profit, public, and for-profit agencies for residential services, rehabilitation services, drug and alcohol services, and homeless mentally ill services. SPECIAL DISTRICTS UNDER THE BOARD OF SUPERVISORS Separate special districts have been established for the purpose of providing specific services to distinct geographical areas within the County. Those special districts that are under the jurisdiction of the Board of Supervisors are included within the Special Revenue Fund classification. These are financed principally from property taxes and benefit assessments, and are comprised of the following:

COUNTY SERVICE AREAS

COUNTY SERVICE AREA #3 This service area serves part of the Goleta Valley, providing extended park and open space maintenance, library services and street lighting. It provides 2,866 streetlights and maintains approximately 535 acres of open space and 148 acres of parks. This fund also made payments for the Goleta Valley Community Center and the Santa Barbara Shores property prior to the transfer of these assets to the City of Goleta.

COUNTY SERVICE AREA #4 This service area is located north of the City of Lompoc and serves the communities of Mission Hills and Vandenberg Village. It maintains approximately 52 acres of open space.

COUNTY SERVICE AREA #5 This service area serves the Orcutt area south of Santa Maria, providing extended park and open space activities. Extending from Waller Park on the north to just south of Rice Ranch Road, it encompasses approximately 68 acres of parkland (Waller Park) and 11 acres of open space.

COUNTY SERVICE AREA #11 This service area embraces the unincorporated urbanized area of Carpinteria Valley. The service area provides the community with 30 streetlights.

76


COUNTY SERVICE AREA #12 – MISSION CANYON SEWER SERVICE CHARGE This fund was established for the purpose of assessing property owners for the ongoing maintenance of the sewer system and septic tank inspection services for those properties in the prohibition area but not on public sewers.

COUNTY SERVICE AREA #31 This service area embraces the unincorporated community of Isla Vista, located west of the University of California at Santa Barbara, and provides 267 streetlights.

COUNTY SERVICE AREA #32 This district was established to provide financing of sheriff's patrols, from non-property tax sources, in the unincorporated areas of the County. COUNTY SERVICE AREA #41 This district was established to assess property owners of the Rancho Santa Rita Subdivision, located outside the City of Lompoc, for road repairs, maintenance and improvements.

FIRE PROTECTION DISTRICT This district finances the majority of the cost of the Santa Barbara County Fire Department utilizing property tax revenues, which are collected within the District’s boundaries. The Fire Department provides a full range of emergency services for most of the unincorporated territory of Santa Barbara County, the City of Buellton, City of Solvang, City of Goleta and private lands within the National Forest lands. The National Forest and military installations provide their own fire protection.

LIGHTING DISTRICTS

MISSION LIGHTING DISTRICT This district provides 15 streetlights in the unincorporated area of Mission Canyon, located east of the City of Santa Barbara.

NORTH COUNTY LIGHTING DISTRICT Casmalia, Los Alamos, and Orcutt Lighting Districts and the lighting function of CSA #4 and #5 were consolidated in fiscal year 94-95 to form the North County Lighting District which provides 2,501 streetlights in the north county.

SUMMERLAND LIGHTING DISTRICT This district provides 34 streetlights in the unincorporated community of Summerland, located south of Montecito.

SANDYLAND SEAWALL MAINTENANCE This district provides for the maintenance of a seawall constructed in the Sandyland Cove area, and is financed through benefit assessments levied against those properties adjacent to that beachfront area. WATER AGENCY This agency prepares investigations and reports on the County's water requirements, project development, and efficient use of water. The agency provides technical assistance to other County departments, water districts, and the public concerning water availability and water well locations and design. The agency also administers the Cachuma Project and Twitchell Dam Project contracts with the U.S. Bureau of Reclamation.

77


DEBT SERVICE FUNDS Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term debt. REDEVELOPMENT AGENCY The Redevelopment Agency Debt Service Fund accounts for the accumulation of resources for, and the payment of, general long-term debt principal and interest incurred for the purchase of real property within the area of the Redevelopment Agency. SANTA BARBARA COUNTY FINANCE CORPORATION The Santa Barbara County Finance Corporation Debt Service Fund accounts for the accumulation of resources for, and payment of, principal and interest incurred by the sale of Certificates of Participation issued to finance various County capital projects.

COUNTY OF SANTA BARBARA, CALIFORNIACOMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDSAS OF June 30, 2003 (in thousands)

Children Fish Public & Childand Families and Educational Special Support Fishermen

First Game Petroleum Access Aviation Services AssistanceASSETSCash and investments 8,381$ 56$ 172$ 3,069$ 14$ 837$ 440$ Accounts receivable (net of allowance):

Fines, forfeitures, and penalties -- -- -- -- -- -- -- 222 -- 1 20 -- 17 3

Intergovernmental 809 -- -- -- -- 14 -- Charges for services -- -- -- -- -- -- -- Other -- -- -- -- -- -- --

Other receivables 4 -- -- -- 353 -- -- Impounds receivable -- -- -- -- -- -- -- Restricted cash and investments -- -- -- -- -- -- --

Total assets 9,416$ 56$ 173$ 3,089$ 367$ 868$ 443$

LIABILITIESAccounts payable 1,586$ 2$ 1$ --$ --$ 16$ --$ Salaries and benefits payable 30 -- 12 -- -- 422 -- Interest payable -- -- -- -- 19 -- -- Due to other funds -- -- -- -- -- -- -- Other payables -- -- -- -- -- -- -- Deferred revenues 71 -- -- -- 159 18 -- Advances payable -- -- -- -- 155 -- --

Total liabilities 1,687 2 13 -- 333 456 --

FUND BALANCESReserved for:

Receivables -- -- -- -- -- -- -- Imprest cash -- -- -- -- -- 1 -- Debt service -- -- -- -- -- -- --

Unreserved:Designated 7,716 -- 1 1,406 -- 247 3 Undesignated 13 54 159 1,683 34 164 440

Total fund balances 7,729 54 160 3,089 34 412 443

Total liabilities and fund balances 9,416$ 56$ 173$ 3,089$ 367$ 868$ 443$

See accompanying independent auditors' report.


SpecialRevenue

78

Coastal Criminal CountyResources Affordable Court Justice Courthouse Inmate Service

Enhancement Housing Activities Construction Construction Welfare AreasASSETS

2,243$ 7,267$ 750$ 353$ 626$ 1,802$ 1,803$ Cash and investmentsAccounts receivable (net of allowance):

-- -- 217 81 81 -- -- Fines, forfeitures, and penalties15 46 2 3 3 12 12 Use of money and property-- 15 -- -- -- -- -- Intergovernmental-- -- 355 -- -- -- -- Charges for services-- -- 13 -- -- -- -- Other-- 794 -- -- -- -- -- Other receivables-- -- -- -- -- -- -- Impounds receivable-- -- -- -- -- -- -- Restricted cash and investments

2,258$ 8,122$ 1,337$ 437$ 710$ 1,814$ 1,815$ Total assets

LIABILITIES--$ 7$ 978$ --$ --$ 5$ 85$ Accounts payable-- -- -- -- -- -- -- Salaries and benefits payable-- -- -- -- -- -- -- Interest payable-- -- -- -- -- -- -- Due to other funds-- 89 6 1 1 -- -- Other payables-- 795 -- -- -- -- -- Deferred revenues-- -- -- -- -- -- -- Advances payable-- 891 984 1 1 5 85 Total liabilities


-- -- -- -- -- -- -- Receivables-- -- -- -- -- -- -- Imprest cash-- -- -- -- -- -- -- Debt service

Unreserved:76 34 352 2 9 17 551 Designated

2,182 7,197 1 434 700 1,792 1,179 Undesignated2,258 7,231 353 436 709 1,809 1,730 Total fund balances

2,258$ 8,122$ 1,337$ 437$ 710$ 1,814$ 1,815$ Total liabilities and fund balances

(Continued)

SpecialRevenue

79

COUNTY OF SANTA BARBARA, CALIFORNIACOMBINING BALANCE SHEET (Continued)NONMAJOR GOVERNMENTAL FUNDSAS OF June 30, 2003 (in thousands)

Fire Sandyland Redevelop-Protection Lighting Seawall Water ment

District Districts Maintenance Agency Agency ADMHS TotalASSETSCash and investments 4,274$ 215$ 148$ 1,828$ 1,982$ 1,914$ 38,174$ Accounts receivable (net of allowance):

Fines, forfeitures, and penalties -- -- -- -- -- -- 379 37 2 1 11 12 (16) 403

Intergovernmental -- -- -- 187 47 3,066 4,138 Charges for services -- -- -- 56 -- 9,306 9,717 Other -- -- -- -- -- -- 13

Other receivables -- -- -- -- -- -- 1,151 Impounds receivable 308 -- -- 20 -- -- 328 Restricted cash and investments -- -- -- -- -- -- --

Total assets 4,619$ 217$ 149$ 2,102$ 2,041$ 14,270$ 54,303$

LIABILITIESAccounts payable --$ --$ --$ 48$ 4,870$ 7,598$ Salaries and benefits payable -- -- -- 35 -- 1,318 1,817 Interest payable -- -- -- -- -- -- 19 Due to other funds -- -- -- -- -- 2,813 2,813 Other payables -- -- -- -- -- 97 Deferred revenues 65 -- -- 104 -- 159 1,371 Advances payable -- -- -- -- -- -- 155

Total liabilities 65 -- -- 187 -- 9,160 13,870


Receivables 308 -- -- 20 -- -- 328 Imprest cash -- -- -- -- -- 3 4 Debt service -- -- -- -- -- -- --

Unreserved:Designated 2,042 1 1 120 1 4,053 16,632 Undesignated 2,204 216 148 1,775 2,040 1,054 23,469

Total fund balances 4,554 217 149 1,915 2,041 5,110 40,433

Total liabilities and fund balances 4,619$ 217$ 149$ 2,102$ 2,041$ 14,270$ 54,303$



SpecialRevenue

80

Santa TotalRedevelop- Barbara Nonmajor

ment County Finance GovernmentalAgency Corporation Total Funds

ASSETS29$ 1,484$ 1,513$ 39,687$ Cash and investments

Accounts receivable (net of allowance):-- -- -- 379 Fines, forfeitures, and penalties-- 38 38 441 Use of money and property-- -- -- 4,138 Intergovernmental-- -- -- 9,717 Charges for services-- -- -- 13 Other-- -- -- 1,151 Other receivables-- -- -- 328 Impounds receivable

323 7,789 8,112 8,112 Restricted cash and investments352$ 9,311$ 9,663$ 63,966$ Total assets

LIABILITIES--$ --$ --$ 7,598$ Accounts payable-- -- -- 1,817 Salaries and benefits payable-- -- -- 19 Interest payable-- -- -- 2,813 Due to other funds-- -- -- 97 Other payables-- -- -- 1,371 Deferred revenues-- -- -- 155 Advances payable-- -- -- 13,870 Total liabilities


-- -- -- 328 Receivables-- -- -- 4 Imprest cash

344 7,907 8,251 8,251 Debt serviceUnreserved:

8 1,404 1,412 18,044 Designated-- -- -- 23,469 Undesignated

352 9,311 9,663 50,096 Total fund balances

352$ 9,311$ 9,663$ 63,966$ Total liabilities and fund balances

DebtService

81

COUNTY OF SANTA BARBARA, CALIFORNIACOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESNONMAJOR GOVERNMENTAL FUNDSFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)

Children Fish Public & Childand Families and Educational Special Support Fishermen

First Game Petroleum Access Aviation Services AssistanceRevenuesTaxes --$ --$ --$ --$ --$ --$ --$ Fines, forfeitures, and penalties -- 12 -- -- -- -- -- Use of money and property 388 -- 5 102 1 82 15 Intergovernmental 4,727 -- -- -- 69 9,532 -- Charges for services -- -- 216 -- -- 53 -- Other 392 -- -- 200 2 45 7

Total revenues 5,507 12 221 302 72 9,712 22


Law & justice -- -- -- -- -- -- -- Public safety -- -- -- -- -- -- -- Health & public assistance -- -- -- -- -- 9,649 -- Community resources & facilities -- 12 244 -- 71 -- 30 General County programs 6,810 -- -- 229 -- -- --

Debt service:Principal -- -- -- -- 6 -- -- Interest -- -- -- -- -- -- --

Capital outlay -- -- -- -- -- 32 -- Total expenditures 6,810 12 244 229 77 9,681 30

Excess (deficiency) of revenues over (under) expenditures (1,303) -- (23) 73 (5) 31 (8)

Other Financing Sources (Uses)Transfers in 50 -- -- -- -- -- -- Transfers out (2) -- -- -- -- -- -- Proceeds from sale of capital assets -- -- -- -- -- -- -- Proceeds from long-term debt -- -- -- -- -- -- --

Total other financing sources (uses) 48 -- -- -- -- -- --

Net change in fund balances (1,255) -- (23) 73 (5) 31 (8)

Fund balances - beginning 8,984 54 183 3,016 39 381 451 Fund balances - ending 7,729$ 54$ 160$ 3,089$ 34$ 412$ 443$

See accompanying independent auditor's report.

RevenueSpecial

82

Coastal Criminal CountyResources Affordable Court Justice Courthouse Inmate Service

Enhancement Housing Activities Construction Construction Welfare AreasRevenues

--$ --$ --$ --$ --$ --$ 796$ Taxes-- -- 2,617 1,223 1,305 -- -- Fines, forfeitures, and penalties

77 252 42 15 27 682 59 Use of money and property1 1,918 -- -- -- -- 8 Intergovernmental-- 49 4,459 -- -- -- 335 Charges for services

781 1,293 255 -- -- 505 6 Other859 3,512 7,373 1,238 1,332 1,187 1,204 Total revenues


-- -- 14,367 -- -- -- -- Law & justice-- -- -- -- -- 1,014 -- Public safety-- -- -- -- -- -- -- Health & public assistance

1,055 -- -- -- -- -- 600 Community resources & facilities-- 1,260 -- -- -- -- -- General County programs

Debt service:-- -- -- -- -- -- -- Principal-- -- -- -- -- -- 4 Interest-- -- 12 -- -- 7 -- Capital outlay

1,055 1,260 14,379 -- -- 1,021 604 Total expenditures

Excess (deficiency) of revenues(196) 2,252 (7,006) 1,238 1,332 166 600 over (under) expenditures

Other Financing Sources (Uses)-- -- 7,161 -- -- -- 14,601 Transfers in -- (1,006) -- (1,156) (1,749) -- (15,217) Transfers out -- -- -- -- -- 8 -- Proceeds from sale of capital assets-- -- -- -- -- -- -- Proceeds from long-term debt-- (1,006) 7,161 (1,156) (1,749) 8 (616) Total other financing sources (uses)

(196) 1,246 155 82 (417) 174 (16) Net change in fund balances

2,454 5,985 198 354 1,126 1,635 1,746 Fund balances - beginning 2,258$ 7,231$ 353$ 436$ 709$ 1,809$ 1,730$ Fund balances - ending

(Continued)

SpecialRevenue

83

COUNTY OF SANTA BARBARA, CALIFORNIACOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (Continued)NONMAJOR GOVERNMENTAL FUNDSFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)

Fire Sandyland Redevelop-Protection Lighting Seawall Water ment

District Districts Maintenance Agency Agency ADMHSRevenuesTaxes 17,522$ 280$ --$ 1,356$ 1,679$ --$ Fines, forfeitures, and penalties -- -- -- -- -- 27 Use of money and property 292 6 5 56 59 (78) Intergovernmental 234 3 -- 1,240 232 24,537 Charges for services 190 129 -- 147 -- 26,253 Other 55 -- -- 2 -- 807

Total revenues 18,293 418 5 2,801 1,970 51,546


Law & justice -- -- -- -- -- -- Public safety 296 -- -- -- -- -- Health & public assistance -- -- -- -- -- 49,935 Community resources & facilities -- 420 -- 2,465 1,406 -- General County programs -- -- -- -- 282 --

Debt service:Principal -- -- -- -- -- 138 Interest -- -- -- -- -- --

Capital outlay -- -- -- 587 -- 750 Total expenditures 296 420 -- 3,052 1,688 50,823

Excess (deficiency) of revenues over (under) expenditures 17,997 (2) 5 (251) 282 723

Other Financing Sources (Uses)Transfers in -- 50 -- 653 -- 2,321 Transfers out (19,318) -- -- (194) (383) (2,292) Proceeds from sale of capital assets -- -- -- -- -- -- Proceeds from long-term debt -- -- -- -- -- 800

Total other financing sources (uses) (19,318) 50 -- 459 (383) 829

Net change in fund balances (1,321) 48 5 208 (101) 1,552

Fund balances - beginning 5,875 169 144 1,707 2,142 3,558 Fund balances - ending 4,554$ 217$ 149$ 1,915$ 2,041$ 5,110$

See accompanying independent auditor's report.

RevenueSpecial

84

Santa TotalRedevelop- Barbara Nonmajor

ment County Finance GovernmentalAgency Corporation Total Funds

Revenues--$ --$ --$ 21,633$ Taxes-- -- -- 5,184 Fines, forfeitures, and penalties

10 254 264 2,351 Use of money and property-- 411 411 42,912 Intergovernmental-- -- -- 31,831 Charges for services-- -- -- 4,350 Other

10 665 675 108,261 Total revenues


-- -- -- 14,367 Law & justice-- -- -- 1,310 Public safety-- -- -- 59,584 Health & public assistance

26 -- 26 6,329 Community resources & facilities-- 94 94 8,675 General County programs

Debt service:250 4,067 4,317 4,461 Principal132 3,002 3,134 3,138 Interest

-- -- -- 1,388 Capital outlay408 7,163 7,571 99,252 Total expenditures

Excess (deficiency) of revenues(398) (6,498) (6,896) 9,009 over (under) expenditures

Other Financing Sources (Uses)383 5,730 6,113 30,949 Transfers in

-- -- -- (41,317) Transfers out -- -- -- 8 Proceeds from sale of capital assets-- -- -- 800 Proceeds from long-term debt

383 5,730 6,113 (9,560) Total other financing sources (uses)

(15) (768) (783) (551) Net change in fund balances

367 10,079 10,446 50,647 Fund balances - beginning 352$ 9,311$ 9,663$ 50,096$ Fund balances - ending

ServiceDebt

85

COUNTY OF SANTA BARBARA, CALIFORNIACHILDREN AND FAMILIES FIRST SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesUse of money and property 600$ 312$ 388$ 76$ Intergovernmental 5,580 5,001 4,727 (274) Other -- 604 392 (212)

Total revenues 6,180 5,917 5,507 (410)


General County programs 5,993 7,093 6,810 283 Total expenditures 5,993 7,093 6,810 283

Excess (deficiency) of revenues over (under) expenditures 187 (1,176) (1,303) (127)

Other Financing Sources (Uses)Transfers in 23 50 50 -- Transfers out (35) (35) (2) 33


Net change in fund balances 175 (1,161) (1,255) (94)

Fund balances - beginning 8,984 8,984 8,984 -- Fund balances - ending 9,159$ 7,823$ 7,729$ (94)$


Budgeted Amounts

86

COUNTY OF SANTA BARBARA, CALIFORNIAFISH AND GAME SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesFines, forfeitures, and penalties 15$ 15$ 12$ (3)$

Total revenues 15 15 12 (3)


Community resources & facilities 22 22 12 10 Total expenditures 22 22 12 10

Net change in fund balances (7) (7) -- 7

Fund balances - beginning 54 54 54 -- Fund balances - ending 47$ 47$ 54$ 7$


Budgeted Amounts

87

COUNTY OF SANTA BARBARA, CALIFORNIAPETROLEUM SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesUse of money and property 5$ 5$ 5$ --$ Charges for services 241 241 216 (25)




Net change in fund balances (16) (25) (23) 2



Budgeted Amounts

88

COUNTY OF SANTA BARBARA, CALIFORNIAPUBLIC AND EDUCATIONAL ACCESSSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesUse of money and property 118$ 119$ 102$ (17)$ Other -- 200 200 --



General County programs -- 232 229 3 Total expenditures -- 232 229 3

Net change in fund balances 118 87 73 (14)

Fund balances - beginning 3,016 3,016 3,016 -- Fund balances - ending 3,134$ 3,103$ 3,089$ (14)$


Budgeted Amounts

89

COUNTY OF SANTA BARBARA, CALIFORNIASPECIAL AVIATION SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesUse of money and property 2$ 2$ 1$ (1)$ Intergovernmental 360 360 69 (291) Charges for services 3 -- -- -- Other -- -- 2 2



Community resources & facilities 361 361 71 290 Debt service:

Principal 6 6 6 -- Total expenditures 367 367 77 290

Net change in fund balances (2) (5) (5) --

Fund balances - beginning 39 39 39 -- Fund balances - ending 37$ 34$ 34$ --$


Budgeted Amounts

90

COUNTY OF SANTA BARBARA, CALIFORNIACHILD SUPPORT SERVICES SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesUse of money and property 59$ 60$ 82$ 22$ Intergovernmental 9,988 9,988 9,532 (456) Charges for services 94 94 53 (41) Other 35 35 45 10

Total revenues 10,176 10,177 9,712 (465)


Health & public assistance 10,166 10,063 9,649 414 Capital outlay -- 110 32 78

Total expenditures 10,166 10,173 9,681 492

Net change in fund balances 10 4 31 27



Budgeted Amounts

91

COUNTY OF SANTA BARBARA, CALIFORNIAFISHERMEN ASSISTANCE SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesUse of money and property 20$ 20$ 15$ (5)$ Other 7 7 7 --







Budgeted Amounts

92

COUNTY OF SANTA BARBARA, CALIFORNIACOASTAL RESOURCES ENHANCEMENT SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesUse of money and property 60$ 62$ 77$ 15$ Intergovernmental -- -- 1 1 Other 665 665 781 116

Total revenues 725 727 859 132


Community resources & facilities 1,566 1,566 1,055 511 Total expenditures 1,566 1,566 1,055 511


Fund balances - beginning 2,454 2,454 2,454 -- Fund balances - ending 1,613$ 1,615$ 2,258$ 643$


Budgeted Amounts

93

COUNTY OF SANTA BARBARA, CALIFORNIAAFFORDABLE HOUSING SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesUse of money and property 235$ 299$ 252$ (47)$ Intergovernmental 2,131 2,318 1,918 (400) Charges for services 200 200 49 (151) Other 194 1,176 1,293 117

Total revenues 2,760 3,993 3,512 (481)


General County programs 1,911 1,911 1,260 651 Total expenditures 1,911 1,911 1,260 651

Excess (deficiency) of revenues over (under) expenditures 849 2,082 2,252 170

Other Financing Sources (Uses)Transfers out (912) (1,099) (1,006) 93

Total other financing sources (uses) (912) (1,099) (1,006) 93

Net change in fund balances (63) 983 1,246 263



Budgeted Amounts

94

COUNTY OF SANTA BARBARA, CALIFORNIACOURT ACTIVITIES SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesFines, forfeitures, and penalties 2,479$ 2,589$ 2,617$ 28$ Use of money and property 41 41 42 1 Intergovernmental 694 41 -- (41) Charges for services 3,750 3,860 4,459 599 Other 384 385 255 (130)

Total revenues 7,348 6,916 7,373 457


Law & justice 14,977 14,411 14,367 44 Capital outlay 156 12 12 --


Excess (deficiency) of revenues over (under) expenditures (7,785) (7,507) (7,006) 501

Other Financing Sources (Uses)Transfers in 7,695 7,610 7,161 (449)

Total other financing sources (uses) 7,695 7,610 7,161 (449)

Net change in fund balances (90) 103 155 52



Budgeted Amounts

95

COUNTY OF SANTA BARBARA, CALIFORNIACRIMINAL JUSTICE CONSTRUCTION SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesFines, forfeitures, and penalties 1,100$ 1,205$ 1,223$ 18$ Use of money and property 5 5 15 10

Total revenues 1,105 1,210 1,238 28

Excess (deficiency) of revenues over (under) expenditures 1,105 1,210 1,238 28

Other Financing Sources (Uses)Transfers out (980) (1,175) (1,156) 19

Total other financing sources (uses) (980) (1,175) (1,156) 19




Budgeted Amounts

96

COUNTY OF SANTA BARBARA, CALIFORNIACOURTHOUSE CONSTRUCTION SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesFines, forfeitures, and penalties 1,100$ 1,211$ 1,305$ 94$ Use of money and property 50 52 27 (25)

Total revenues 1,150 1,263 1,332 69


Other Financing Sources (Uses)Transfers out (1,343) (1,804) (1,749) 55

Total other financing sources (uses) (1,343) (1,804) (1,749) 55


Fund balances - beginning 1,126 1,126 1,126 -- Fund balances - ending 933$ 585$ 709$ 124$


Budgeted Amounts

97

COUNTY OF SANTA BARBARA, CALIFORNIAINMATE WELFARESTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesUse of money and property 711$ 713$ 682$ (31)$ Other 352 352 505 153

Total revenues 1,063 1,065 1,187 122


Public safety 1,483 1,483 1,014 469 Capital outlay 7 107 7 100


Excess (deficiency) of revenues over (under) expenditures (427) (525) 166 691

Other Financing Sources (Uses)Proceeds from sale of capital assets -- -- 8 8

Total other financing sources (uses) -- -- 8 8

Net change in fund balances (427) (525) 174 699



Budgeted Amounts

98

COUNTY OF SANTA BARBARA, CALIFORNIACOUNTY SERVICE AREAS SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesTaxes 772$ 774$ 796$ 22$ Use of money and property 63 64 59 (5) Intergovernmental 7 -- 8 8 Charges for services 332 332 335 3 Other -- 7 6 (1)

Total revenues 1,174 1,177 1,204 27



Interest -- 4 4 -- Total expenditures 520 617 604 13

Excess (deficiency) of revenues over (under) expenditures 654 560 600 40

Other Financing Sources (Uses)Transfers in 14,583 14,601 14,601 -- Transfers out (15,214) (15,217) (15,217) --

Total other financing sources (uses) (631) (616) (616) --

Net change in fund balances 23 (56) (16) 40



Budgeted Amounts

99

COUNTY OF SANTA BARBARA, CALIFORNIAFIRE PROTECTION DISTRICT SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesTaxes 18,609$ 17,188$ 17,522$ 334$ Use of money and property 220 214 292 78 Intergovernmental 216 216 234 18 Charges for services 263 263 190 (73) Other -- -- 55 55

Total revenues 19,308 17,881 18,293 412


Public safety 300 300 296 4 Total expenditures 300 300 296 4


Other Financing Sources (Uses)Transfers out (19,840) (20,361) (19,318) 1,043

Total other financing sources (uses) (19,840) (20,361) (19,318) 1,043

Net change in fund balances (832) (2,780) (1,321) 1,459



Budgeted Amounts

100

COUNTY OF SANTA BARBARA, CALIFORNIALIGHTING DISTRICTS SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesTaxes 270$ 270$ 280$ 10$ Use of money and property 2 2 6 4 Intergovernmental 3 3 3 -- Charges for services 127 127 129 2




Excess (deficiency) of revenues over (under) expenditures (42) (42) (2) 40

Other Financing Sources (Uses)Transfers in 50 50 50 --

Total other financing sources (uses) 50 50 50 --




Budgeted Amounts

101

COUNTY OF SANTA BARBARA, CALIFORNIASANDYLAND SEAWALL MAINTENANCE SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesUse of money and property 7$ 7$ 5$ (2)$



Community resources & facilities 75 75 -- 75 Total expenditures 75 75 -- 75

Net change in fund balances (68) (68) 5 73



Budgeted Amounts

102

COUNTY OF SANTA BARBARA, CALIFORNIAWATER AGENCY SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesTaxes 1,267$ 1,226$ 1,356$ 130$ Use of money and property 54 55 56 1 Intergovernmental 1,684 1,763 1,240 (523) Charges for services 144 144 147 3 Other -- -- 2 2

Total revenues 3,149 3,188 2,801 (387)


Community resources & facilities 2,401 2,598 2,465 133 Capital outlay 973 973 587 386


Excess (deficiency) of revenues over (under) expenditures (225) (383) (251) 132

Other Financing Sources (Uses)Transfers in 911 638 653 15 Transfers out (539) (266) (194) 72

Total other financing sources (uses) 372 372 459 87

Net change in fund balances 147 (11) 208 219



Budgeted Amounts

103

COUNTY OF SANTA BARBARA, CALIFORNIAREDEVELOPMENT AGENCY SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesTaxes 1,497$ 1,426$ 1,679$ 253$ Use of money and property 38 38 59 21 Intergovernmental -- 299 232 (67)

Total revenues 1,535 1,763 1,970 207


Community resources & facilities 890 1,409 1,406 3 General County programs 282 282 282 -- Total expenditures 1,172 1,691 1,688 3

Excess (deficiency) of revenues over (under) expenditures 363 72 282 210

Other Financing Sources (Uses)Transfers out (383) (383) (383) --

Total other financing sources (uses) (383) (383) (383) --




Budgeted Amounts

104

COUNTY OF SANTA BARBARA, CALIFORNIAALCOHOL, DRUG, AND MENTAL HEALTH SERVICES SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesFines, forfeitures, and penalties --$ 27$ 27$ --$ Use of money and property (191) (192) (78) 114 Intergovernmental 25,213 25,313 24,537 (776) Charges for services 28,128 27,950 26,253 (1,697) Other 136 136 807 671

Total revenues 53,286 53,234 51,546 (1,688)


Health & public assistance 53,075 53,198 49,935 3,263 Debt service:

Principal -- 138 138 -- Capital outlay 42 750 750 --


Excess (deficiency) of revenues over (under) expenditures 169 (852) 723 1,575

Other Financing Sources (Uses)Transfers in 3,402 2,429 2,321 (108) Transfers out (4,073) (2,601) (2,292) 309 Proceeds from long-term debt -- 800 800 --


Net change in fund balances (502) (224) 1,552 1,776



Budgeted Amounts

105

COUNTY OF SANTA BARBARA, CALIFORNIAREDEVELOPMENT AGENCY DEBT SERVICE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesUse of money and property 12$ 12$ 10$ (2)$




Principal 250 250 250 -- Interest 144 132 132 -- Total expenditures 396 410 408 2

Excess (deficiency) of revenues over (under) expenditures (384) (398) (398) --

Other Financing Sources (Uses)Transfers in 383 383 383 --

Total other financing sources (uses) 383 383 383 --

Net change in fund balances (1) (15) (15) --

Fund balances - beginning 367 367 367 -- Fund balances - ending 366$ 352$ 352$ --$


Budgeted Amounts

106

COUNTY OF SANTA BARBARA, CALIFORNIASANTA BARBARA COUNTY FINANCE CORPORATION DEBT SERVICE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesUse of money and property 967$ 85$ 254$ 169$ Intergovernmental -- 411 411 --



General County programs 21 177 94 83 Debt service:

Principal 3,700 4,067 4,067 -- Interest 2,919 3,005 3,002 3 Total expenditures 6,640 7,249 7,163 86

Excess (deficiency) of revenues over (under) expenditures (5,673) (6,753) (6,498) 255

Other Financing Sources (Uses)Transfers in 5,673 5,713 5,730 17

Total other financing sources (uses) 5,673 5,713 5,730 17

Net change in fund balances -- (1,040) (768) 272



Budgeted Amounts

107

COUNTY OF SANTA BARBARA, CALIFORNIACAPITAL PROJECTS FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUALFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)



RevenuesUse of money and property 803$ 1,830$ 1,357$ (473)$ Intergovernmental 2,847 5,773 2,477 (3,296) Charges for services -- 186 186 -- Other 903 1,200 203 (997)

Total revenues 4,553 8,989 4,223 (4,766)


Law & justice -- 40 40 -- Public safety -- 2 2 -- Health & public sssistance 680 522 -- 522 Community resources & public facilities -- 827 761 66 General government & support services 855 899 765 134

Debt service:Capital outlay 27,389 29,072 11,900 17,172



Other Financing Sources (Uses)Transfers in 5,745 7,865 5,683 (2,182) Transfers out (2,092) (2,125) (2,123) 2

Total other financing sources (uses) 3,653 5,740 3,560 (2,180)

Net change in fund balances (20,718) (16,633) (5,685) 10,948



Budgeted Amounts

108

INTERNAL SERVICE FUNDS

109

INTERNAL SERVICE FUNDS These funds are established to account for services furnished to the County and various other governmental agencies. They are exempt from legal compliance for budgetary control and follow commercial accounting principles for a determination of operating, rather than budgetary, results. Their major source of revenue consists of charges to user departments for services rendered. These charges are based upon standard rates calculated on an estimated cost recovery basis. A more detailed description of the funds established and used by the County follows: INFORMATION TECHNOLOGY SERVICES This fund provides information technology and reprographics services to County departments and various other governmental agencies. Rates charged to all users are designed to recover costs of each system and are billed from a standard price schedule which is periodically adjusted to reflect cost changes. Profits or losses are carried forward and used to adjust price schedules of subsequent billing rates. Costs of operating the fund include personnel, supplies, utilities, maintenance, and depreciation of equipment. VEHICLE OPERATIONS AND MAINTENANCE This fund provides for the maintenance, servicing and repair of County vehicles. Rental rates, which include the cost of gas, oil, maintenance, replacement of equipment and personnel costs, are charged to the user department to support the vehicle program. Vehicles are replaced based on mileage and age criteria which varies per class of vehicle; new additions to the vehicle fleet are provided by donation through the Garage Equipment and Motor Pool budgets of the General Fund and contributions from other funds. RISK MANAGEMENT AND INSURANCE This column combines the County's five self-insurance funds: Dental, Unemployment, Workers' Compensation, County Liability, and Medical Malpractice.

DENTAL SELF-INSURANCE This fund provides for the payment of dental expenses incurred by County employees, eligible dependents and retirees who are part of the self-funded plan. This fund does not account for employees or retirees on the Dental Net, Prudential or Firefighter health plans. Professional administrators process all claims and make payments to claimants based on a payment schedule of medical and dental benefits. The fund reimburses the claims administrator for the payment of claims plus a fee for administration and participation in a prescription drug program. Additionally, the County contracts with a preferred provider organization for reduced fees from member dental service providers, physicians, and other specialists. The County contributes towards the cost of employee coverage through departmental budgets; the employee pays any remaining employee or dependent coverage.

UNEMPLOYMENT SELF-INSURANCE State law requires the County to maintain unemployment insurance. The County has elected to be self-insured and has established this fund for the payment of unemployment insurance claims by County employees, which have been processed and approved by the State Employment Development Department. Each department has been charged a percentage of its gross payroll for the establishment of a general reserve for this program and to provide for claim payments.

110

INTERNAL SERVICE FUNDS (Continued)

WORKERS’ COMPENSATION SELF-INSURANCE This fund provides for investigation services, temporary disability and medical payments, excess insurance, permanent disability awards, administrative services, litigation costs, and safety services. Premiums based on employee worker classifications are charged to each department to maintain actuarially recommended reserves for claims proportionate to current industry rates applicable to job functions. GENERAL LIABILITY SELF-INSURANCE This fund provides for payment of self-insured general liability and automobile liability claims, excess insurance, claims adjusting services, litigation costs, and administrative services. Contributions are made by participating County departments and funds based on past claims experience and appropriate risk factors. MEDICAL MALPRACTICE This fund provides for the payment of self-insured medical malpractice and general liability claims, excess insurance, claim investigation services, and litigation costs. Contributions are made by covered participating County departments and are based on allocation of expenses by past claims experience and appropriate risk factor.

COMMUNICATIONS This fund was established to provide centralized coordination of all County radio and communications activity. User departments are charged a monthly fee for maintenance and engineering services on the equipment in their possession. Fees include depreciation to provide for the eventual replacement of all radio equipment. Telephone Services, formerly a general fund program, was transferred into this fund effective July 1, 1995. Rates charged users are designed to recover the cost of the program and are periodically updated to reflect cost changes. No funds are being collected for equipment replacement.

COUNTY OF SANTA BARBARA, CALIFORNIAINTERNAL SERVICE FUNDSCOMBINING STATEMENT OF NET ASSETSAS OF June 30, 2003 (in thousands)

Vehicle RiskInformation Operations ManagementTechnology and and Communi-

Services Maintenance Insurance cations TotalASSETSCurrent assets:

Cash and investments 1,980$ 10,152$ 18,896$ 3,637$ 34,665$ Accounts receivable:

Use of money and property 11 69 132 24 236 Charges for services -- -- 2 -- 2

Inventories -- 119 -- 125 244 Prepaid service contracts 4 -- -- -- 4 Other receivables 430 410 -- -- 840

Total current assets 2,425 10,750 19,030 3,786 35,991

Noncurrent assets:Restricted cash and investments -- 10 -- -- 10 Capital assets:

Buildings and improvements -- 1,672 -- -- 1,672 Equipment 3,641 26,870 146 10,497 41,154 Less accumulated depreciation (2,620) (14,951) (145) (5,865) (23,581)

Total capital assets 1,021 13,591 1 4,632 19,245 Total noncurrent assets 1,021 13,601 1 4,632 19,255

Total assets 3,446 24,351 19,031 8,418 55,246

LIABILITIESCurrent liabilities

Accounts payable 70 150 88 93 401 Salaries and benefits payable, current portion 240 74 72 49 435 Compensated absences 12 6 -- 5 23 Liability for self-insurance claims, current portion -- -- 10,209 -- 10,209

Total current liabilities 322 230 10,369 147 11,068

Noncurrent liabilitiesCompensated absences 284 115 99 81 579 Liability for self-insurance claims, net of current portion -- -- 23,657 -- 23,657

Total noncurrent liabilities 284 115 23,756 81 24,236 Total liabilities 606 345 34,125 228 35,304

NET ASSETSInvested in capital assets, net of related debt 1,021 13,591 1 4,632 19,245 Unrestricted 1,819 10,415 (15,095) 3,558 697 Total net assets 2,840$ 24,006$ (15,094)$ 8,190$ 19,942$


111

COUNTY OF SANTA BARBARA, CALIFORNIAINTERNAL SERVICE FUNDSCOMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)


Services Maintenance Insurance cations Total

Operating revenues:Charges for sales and services 7,450$ 6,165$ 19,624$ 2,873$ 36,112$ Other operating revenues -- 188 229 83 500

Total operating revenues 7,450 6,353 19,853 2,956 36,612

Operating expenses:Salaries and benefits 3,907 1,180 1,102 848 7,037 Services and supplies 2,203 2,509 1,983 1,174 7,869 Self-insurance claims -- -- 20,972 -- 20,972 Contractual services 151 11 489 241 892 Depreciation and amortization 554 2,517 31 569 3,671 County overhead allocation 369 237 9 25 640 Other charges -- 29 -- -- 29

Total operating expenses 7,184 6,483 24,586 2,857 41,110

Operating income (loss) 266 (130) (4,733) 99 (4,498)

Non-operating revenues (expenses):Use of money and property 54 376 647 160 1,237 Gain on sale of capital assets -- 19 -- -- 19 Other non-operating revenues 1 2 -- 2 5

Total non-operating revenues 55 397 647 162 1,261

Income (loss) before transfers 321 267 (4,086) 261 (3,237)

Transfers in -- 797 -- -- 797 Transfers out (22) (386) -- (38) (446)

Transfers in (out), net (22) 411 -- (38) 351

Change in net assets 299 678 (4,086) 223 (2,886)

Total net assets (liabilities) - beginning 2,541 23,328 (11,008) 7,967 22,828 Total net assets (liabilities) - ending 2,840$ 24,006$ (15,094)$ 8,190$ 19,942$


112

COUNTY OF SANTA BARBARA, CALIFORNIAINTERNAL SERVICE FUNDSCOMBINING STATEMENT OF CASH FLOWSFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)


Services Maintenance Insurance cations Total

CASH FLOWS FROM OPERATING ACTIVITIESReceipts from customers and users 7,450$ 6,431$ 19,852$ 2,956$ 36,689$ Payments to employees (3,913) (1,169) (1,079) (833) (6,994) Payments to suppliers (2,410) (2,471) (2,911) (1,579) (9,371) Payments for self-insurance claims -- -- (18,435) -- (18,435) County overhead allocation (369) (237) (9) (25) (640) Other -- (29) -- -- (29)

Net cash provided (used) by operating activities 758 2,525 (2,582) 519 1,220

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIESOther 1 2 -- 55 58

Net cash provided by noncapital and related financing activities 1 2 -- 55 58

CASH FLOWS FROM CAPITAL AND RELATEDFINANCING ACTIVITIESPurchase of capital assets (439) (4,008) -- (2,456) (6,903) Proceeds from sales of capital assets -- 112 -- -- 112 Transfers in -- 797 -- -- 797 Transfers out (22) (386) -- (38) (446)

Net cash provided (used) by capital and related financing activities (461) (3,485) -- (2,494) (6,440)

CASH FLOWS FROM INVESTING ACTIVITIESUse of money and property 56 412 695 186 1,349

Net cash provided by investing activities 56 412 695 186 1,349

Net increase (decrease) in cash and cash equivalents 354 (546) (1,887) (1,734) (3,813)

Cash and cash equivalents - beginning 1,626 10,708 20,783 5,371 38,488 Cash and cash equivalents - ending 1,980$ 10,162$ 18,896$ 3,637$ 34,675$

Reconciliation of operating income (loss) to net cash provided (used)by operating activities:Operating income (loss) 266$ (130)$ (4,733)$ 99$ (4,498)$ Adjustments to reconcile operating income (loss) to net cash provided (used) by

operating activities:Depreciation and amortization 554 2,517 31 569 3,671 Changes in assets and liabilities:

Accounts receivable -- 78 (1) -- 77 Prepaid items (4) -- -- -- (4) Inventories -- 25 -- (61) (36) Accounts payable (52) 24 (439) (103) (570) Salaries and benefits payable (6) 11 23 15 43 Self-insurance claims -- -- 2,537 -- 2,537

Net cash provided (used) by operating activities 758$ 2,525$ (2,582)$ 519$ 1,220$


113

AGENCY FUNDS

114

AGENCY FUNDS Agency funds are custodial in nature and do not involve the measurement of results of operations. Such funds have no equity accounts since all assets are due to individuals and entities at some future time. CLEARING AND REVOLVING FUNDS provide clearing facilities for items such as payroll withholdings and warrant redemption. These funds are used to temporarily accumulate and hold resources for distribution to third parties. DEPOSITS FUNDS account for deposits under the control of the County departments. Dispositions of the deposits are governed by the terms of the statutes and ordinances establishing the deposit requirement. OTHER AGENCY FUNDS account for assets held by the County in a fiduciary capacity for other entities. STATE AND CITY REVENUE FUNDS temporarily hold various fees, fines, and penalties collected by the County departments for the State of California or various cities in Santa Barbara County, which are passed through to these entities. TAX COLLECTION FUNDS account for monies received for current and delinquent taxes, which must be held pending authority for distribution. Included are prepaid taxes, disputed taxes, duplicate payment of taxes, etc. These funds also account for monies deposited by third parties pending settlement of litigation and claims. Upon final settlement, monies are dispersed as directed by the courts or by parties to the dispute.

COUNTY OF SANTA BARBARA, CALIFORNIACOMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES - AGENCY FUNDSFOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)

July 1, June 30,2002 ADDITIONS DEDUCTIONS 2003

CLEARING AND REVOLVING FUNDSAssets:

Cash and investments 31,779$ 1,532,173$ 1,535,064$ 28,888$ Interest receivable -- 2 3 (1)

Total assets 31,779$ 1,532,175$ 1,535,067$ 28,887$

Liabilities:Accounts payable 30,719$ 1,074,347$ 1,076,933$ 28,133$ Funds held for others 1,060 2,609,108 2,609,414 754

Total liabilities 31,779$ 3,683,455$ 3,686,347$ 28,887$

DEPOSITS FUNDSAssets:

Cash and investments 3,193$ 24,776$ 24,228$ 3,741$ Interest receivable -- 866 866 --

Total assets 3,193$ 25,642$ 25,094$ 3,741$

Liabilities:Accounts payable -$ 1,561$ 1,561$ -$ Funds held for others 3,193 27,203 26,655 3,741

Total liabilities 3,193$ 28,764$ 28,216$ 3,741$

OTHER AGENCY FUNDSAssets:

Cash and investments 5,649$ 127,716$ 127,340$ 6,025$ Interest receivable 32 126 132 26

Total assets 5,681$ 127,842$ 127,472$ 6,051$

Liabilities:Accounts payable 751$ 29,852$ 29,874$ 729$ Funds held for others 4,930 157,716 157,324 5,322


STATE AND CITY REVENUE FUNDSAssets:

Cash and investments 2,751$ 80,093$ 79,374$ 3,470$ Interest receivable 12 69 69 12

Total assets 2,763$ 80,162$ 79,443$ 3,482$

Liabilities:Accounts payable 24$ 57,371$ 57,322$ 73$ Funds held for others 2,739 137,480 136,810 3,409


TAX COLLECTION FUNDSAssets:

Cash and investments 42,692$ 926,462$ 956,773$ 12,381$ Interest receivable 566 1,543 1,854 255

Total assets 43,258$ 928,005$ 958,627$ 12,636$

Liabilities:Accounts payable -$ 18,864$ 18,863$ 1$ Funds held for others 43,258 946,867 977,490 12,635


TOTAL - ALL AGENCY FUNDSAssets:

Cash and investments 86,064$ 2,691,220$ 2,722,779$ 54,505$ Interest receivable 610 2,606 2,924 292

Total assets 86,674$ 2,693,826$ 2,725,703$ 54,797$

Liabilities:Accounts payable 31,494$ 1,181,995$ 1,184,553$ 28,936$ Funds held for others 55,180 3,878,374 3,907,693 25,861

Total liabilities 86,674$ 5,060,369$ 5,092,246$ 54,797$


115

CAPITAL ASSETS USED IN THE OPERATION OF

GOVERNMENTAL FUNDS

COUNTY OF SANTA BARBARA, CALIFORNIACAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDSSCHEDULE BY SOURCE1


Total

Governmental Funds Capital AssetsLand and improvements to land 38,308$ Buildings and improvements 143,717 Machinery and equipment 33,969 Infrastructure 51,843 Construction in progress 37,091

Total governmental funds capital assets 304,928$

Investments in governmental funds capital assets by sourceGeneral Fund 172,053$ Special revenue funds 99,698 Grants 20,834 Donations 12,343

Total governmental funds capital assets 304,928$

1 This schedule presents only the capital assets balances related to governmental funds.Accordingly, the capital assets reported in internal service funds are excluded from theabove amounts. The capital assets of internal service funds are included withingovernmental activities in the statement of net assets.

116

COUNTY OF SANTA BARBARA, CALIFORNIACAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDSSCHEDULE BY FUNCTION1


Infra- ConstructionLand Buildings Equipment Structure in Progress Total

Function:Policy & executive 648$ 2,969$ 217$ --$ --$ 3,834$ Law & justice 1,566 24,399 190 -- 2,492 28,647 Public safety 2,376 51,475 12,544 -- 6,771 73,166 Health & public assistance 13,156 44,985 4,754 -- 7,276 70,171 Community rescoures & public facilities 18,122 7,708 11,549 51,843 19,750 108,972 General government & support services 1,508 7,250 4,604 -- 802 14,164 General County programs 932 4,931 111 -- -- 5,974

Total governmental funds capital assets 38,308$ 143,717$ 33,969$ 51,843$ 37,091$ 304,928$


117

COUNTY OF SANTA BARBARA, CALIFORNIACAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDSSCHEDULE OF CHANGES BY FUNCTION1

FOR THE FISCAL YEAR ENDED June 30, 2003 (in thousands)

Balance BalanceJuly 1, 2002 Additions Deductions June 30 ,2003

Function:Policy & executive 3,131$ 703$ --$ 3,834$ Law & justice 25,931 3,000 284 28,647 Public safety 69,497 10,778 7,109 73,166 Health & public sssistance 51,520 19,533 882 70,171 Community resources & public facilities 90,141 57,910 39,079 108,972 General government & support services 14,584 1,408 1,828 14,164 General County programs 11,219 5 5,250 5,974

Total governmental funds capital assets 266,023$ 93,337$ 54,432$ 304,928$


118

STATISTICAL SECTION

119

STATISTICAL SECTION The information in this section is not covered by the Independent Auditors' Report, but is presented as supplemental data for the benefit of the readers of the comprehensive annual financial report.

COUNTY OF SANTA BARBARA, CALIFORNIAMISCELLANEOUS STATISTICAL DATA (UNAUDITED)JUNE 30, 2003

GEOGRAPHICAL LOCATION:

ALTITUDE: Elevation ranges from sea level to 6,828 feet above sea level.

AREA OF COUNTY: 2,744 square miles, of which one third is located in the Los Padres National Forest.

COUNTY SEAT: Santa Barbara, California

DATE OF INCORPORATION: February 18, 1850

FORM OF GOVERNMENT: General Law County, governed by a five member Board of Supervisors.

FISCAL YEAR: July 1 - June 30

REGISTERED VOTERS: 185,232 (approx.) as of June 30, 2003

ESTIMATED POPULATION, AS OF JANUARY 1, 2003 (1):

Incorporated Cities:Buellton 4,210Carpinteria 14,400Guadalupe 6,275Lompoc 41,850Santa Barbara 90,500Santa Maria 82,100Solvang 5,450

Total of Incorporated: 244,785Total of Unincorporated Areas: 165,515

Total Population: 410,300

Note: Goleta incorporated February 1, 2002 with an approximate population of 28,400. A formal census has not been completed.

COUNTY EMPLOYEES(2):

Employees Paid

Full-Time Equivalents

1993 - 1994 4,028 3,8211994 - 1995 (3) 4,028 3,8081995 - 1996 4,077 3,8531996 - 1997 4,148 3,9121997 - 1998 4,465 4,1921998 - 1999 4,507 4,2651999 - 2000 4,746 4,3862000 - 2001 (4) 4,652 4,2392001 - 2002 4,582 4,3472002 - 2003 4,539 4,295

Sources:(1) California Department of Finance.(2) Santa Barbara County payroll records as of June 30.(3) APCD removed from entity - employee counts reduced by 83 and 81, respectively.(4) Superior Court and Employee Retirement removed from entity - employee counts reduced by 270 and 259, respectively for Superior Court and by 9 and 9, respectively for Employee Retirement.

The County of Santa Barbara is located in the south central coast region of California and is bordered on the east by Ventura County and on the north by San Luis Obispo County.

Fiscal Year

120

COUNTY OF SANTA BARBARA, CALIFORNIAMISCELLANEOUS STATISTICAL DATA (UNAUDITED)JUNE 30, 2003

EMPLOYMENT IN SANTA BARBARA COUNTY:

Industry

Agriculture 12,708 7.1% 13,500 7.5%Oil and Gas Extraction 800 0.4% 800 0.4%Construction 8,642 4.8% 8,408 4.7%Durable Manufacturing 12,092 6.7% 12,850 7.1%Non-Durable Manufacturing 3,642 2.0% 3,767 2.1%Transportation, Communication and Utilities 4,992 2.8% 5,067 2.8%Wholesale Trade 5,825 3.3% 6,125 3.4%Retail Trade 33,967 19.0% 33,725 18.8%Finance, Insurance, and Real Estate 8,217 4.6% 8,250 4.6%Services 52,767 29.5% 52,942 29.5%Government 35,500 19.8% 34,408 19.1%

Total 179,152 100.0% 179,842 100.0%

Source:State Employment Development Department and University of California, Santa Barbara Economic Forecast Project

MAJOR EMPLOYERS IN SANTA BARBARA COUNTYAPRIL, 2003

Company or Organization JobsUniversity of California at Santa Barbara 9,528Vandenberg Air Force Base 5,300County of Santa Barbara 4,141Raytheon / E-Systems 1,939Santa Barbara Cottage Hospital 1,927Santa Maria-Bonita Schools 1,725Santa Barbara School District Admin. 1,708Santa Barbara City College 1,700Lompoc Unified School District 1,690Marian Medical Center 1,304

Source:State Employment Development Department, Labor Market Information Division andUniversity of California, Santa Barbara Economic Forecast Project

The preceding table details certain employment characteristics of jobs in the County for 2002 and 2001 on the basis of employment and wages covered by unemployment insurance, without regard to residence of employees and excluding agricultural self-employed individuals, unpaid family workers and domestics.

Monthly Average 2001Monthly Average 2002Number of Jobs

Number of Jobs

Percent of Total Jobs

Percent of Total Jobs

121

COUNTY OF SANTA BARBARA, CALIFORNIAMISCELLANEOUS STATISTICAL DATA (UNAUDITED)JUNE 30, 2003 (in thousands)

PRINCIPAL TAXPAYERS

Type of Business

(1) Assessed

Property Value

Percentage of Total Assessed

Value

(2) Total Tax Levy

Fiscal Year 2002-2003

Percentage of Total Tax Levy

Fiscal Year 2002-2003

Exxon Corporation Oil 493,512$ 1.29% 4,936,253$ 1.27%

Verizon California Inc. Utility 227,625 0.60% 2,408,483 0.62%

Bacara Resort & Spa Hotel 218,442 0.57% 1,668,376 0.43%

Biltmore Hotel 152,691 0.00% 1,598,684 0.41%

Southern California Gas Company Utility 151,948 0.40% 1,532,763 0.39%

Pacific Offshore Pipeline Co. Oil 108,214 0.28% 1,082,136 0.28%

Girsh Family Trustees Retail Stores 72,122 0.19% 780,177 0.20%

Fess Parker Doubletree Hotel Hotel 71,207 0.19% 733,214 0.19%Pacific Gas & Electric Utility 66,437 0.17% 702,899 0.18%

Southern California Edison Company Utility 65,292 0.17% 690,506 0.18%

1,627,490$ 3.87% 16,133,492$ 4.16%

Note:(1) Secured amounts only(2) Includes 1%, bonds, fixed charges, late penalties and costs

Source:County of Santa Barbara Treasurer / Tax Collector

DEMOGRAPHICS

(3) Santa Barbara

County Population

(3) State of

California Population

(4) United States

Population

(5) School

Enrollment

(6) Santa Barbara

County Unemployment

Rate1993 - 1994 392 31,961 258,897 57 8.1%

1994 - 1995 397 32,344 262,176 58 7.3%

1995 - 1996 395 32,231 264,349 60 6.7%

1996 - 1997 397 32,380 266,789 62 5.8%

1997 - 1998 405 33,252 268,922 63 3.7%

1998 - 1999 409 33,773 271,883 65 3.5%

1999 - 2000 414 34,336 274,024 65 3.9%

2000 - 2001 409 34,818 281,422 66 3.7%

2001 - 2002 408 35,037 284,797 67 3.7%

2002 - 2003 410 35,591 288,369 67 3.4%

Sources:(3) California Department of Finance(4) United States Department of Commerce, Bureau of the Census(5) Santa Barbara County Schools Administrative Office(6) Employment Development Department Research Center

Taxpayers

Fiscal Year

122

COUNTY OF SANTA BARBARA, CALIFORNIAASSESSED PROPERTY AND NEW CONSTRUCTION VALUES (UNAUDITED)LAST TEN FISCAL YEARS (in thousands)

Residential and Non-

Residential Exempt TotalSingle Family

Multiple Family

Residential Alterations

and Additions

Non-Residential Total

1993 - 1994 22,737,184 (712,564) 22,024,620 97,950 20,361 41,709 67,983 228,003

1994 - 1995 23,203,212 (761,291) 22,441,921 82,269 3,776 39,141 61,371 186,557

1995 - 1996 23,838,336 (750,221) 23,088,115 99,653 10,040 36,814 57,747 204,254

1996 - 1997 24,633,028 (862,484) 23,770,544 106,975 16,862 39,364 52,003 215,204

1997 - 1998 25,527,262 (919,658) 24,607,604 121,438 7,059 34,329 73,111 235,937

1998 - 1999 27,046,286 (967,844) 26,078,442 103,987 28,324 41,041 96,643 269,995

1999 - 2000 28,767,002 (1,016,269) 27,750,733 156,812 17,016 43,489 129,904 347,221

2000 - 2001 31,368,402 (1,021,757) 30,346,645 154,993 20,035 58,754 133,246 367,028

2001 - 2002 34,127,745 (1,100,743) 33,027,002 207,765 32,634 60,438 138,115 438,952

2002 - 2003 36,623,758 (1,146,395) 35,477,363 212,732 71,635 83,867 139,413 507,647

Sources:(1) County of Santa Barbara Assessor's Office (excludes State Board Roll)(2) Construction Industry Research Board

Assessed Property Valuation (1) New Construction Valuation (2)

Fiscal Year

123

COUNTY OF SANTA BARBARA, CALIFORNIA

REVENUES AND EXPENSES - GOVERNMENT-WIDE (UNAUDITED)

LAST TEN FISCAL YEARS (in thousands)

1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 19999-00 2000-01 2001-02 2002-03Revenues (by source):Program revenues:Charges for services -$ -$ -$ -$ -$ -$ -$ -$ 156,604$ 162,424$ Operating grants and contributions - - - - - - - - 254,145 237,735 Capital grants and contributions - - - - - - - - 272 131

General revenues:Property taxes - - - - - - - - 105,922 107,279 Motor vehicle in-lieu tax - - - - - - - - 26,078 26,932 Sales taxes - - - - - - - - 21,674 16,134 Transient occupancy tax - - - - - - - - 5,877 4,423 Unrestricted investment earnings - - - - - - - - 6,084 4,391 Other - - - - - - - - 5,633 3,984

Total Revenues -$ -$ -$ -$ -$ -$ -$ -$ 582,289$ 563,433$

Expenses (by function):Policy & executive -$ -$ -$ -$ -$ -$ -$ -$ 6,960$ 7,235$ Law & justice - - - - - - - - 36,843 36,850 Public safety - - - - - - - - 135,606 142,190 Health & public assistance - - - - - - - - 215,182 221,988

- - - - - - - - 68,528 65,268

- - - - - - - - 29,843 26,927 General County programs - - - - - - - - 11,241 15,644 Interest on long-term debt - - - - - - - - 4,541 4,610 Solid Waste - - - - - - - - 20,265 18,295 Laguna Sanitation - - - - - - - - 2,043 3,825 Transit - - - - - - - - 36 27

Total Expenses -$ -$ -$ -$ -$ -$ -$ -$ 531,088$ 542,859$

Trend data is only available for the the last two fiscal years due to the implementation of GASB 34.

For Fiscal Year 2002-2003

Revenues by Source Expenses by Function

Community resources & public facilitiesGeneral government & support services


29%

Unrestricted investment earnings

1%

Property taxes19%

Sales taxes3%

Transient occupancy

tax1%

Motor vehicle in-lieu tax

5%

Other1%

Operating grants and

contributions41%

Interest1%

Health & public

assistance41%

Policy & executive

1%

Gen govt & support svcs

5%

Comm res & public fac

12%

Laguna Sanitation

1%

Solid Waste3%

General County

programs3%

Law & justice7%

Public safety26%

124

COUNTY OF SANTA BARBARA, CALIFORNIA

REVENUES AND EXPENDITURES - GOVERNMENTAL FUNDS (UNAUDITED)

LAST TEN FISCAL YEARS (in thousands)

1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03Revenues (by source):Taxes 100,553$ 87,235$ 87,164$ 89,616$ 97,029$ 103,513$ 113,627$ 125,573$ 132,298$ 126,636$ Licenses, permits, and franchises 8,733 7,009 7,345 7,946 8,883 10,098 10,303 12,422 13,521 12,258 Fines, forfeitures, and penalties 4,324 3,511 7,125 6,331 7,949 9,129 8,328 8,105 10,809 12,162 Use of money and property 6,622 8,135 10,783 10,775 13,032 10,405 10,330 18,485 14,013 10,735 Intergovernmental 171,168 180,796 199,654 193,507 194,238 220,989 233,490 252,685 270,384 260,779 Charges for service 57,985 52,444 66,461 71,836 77,185 85,838 95,867 101,926 117,468 117,061 Other 13,375 13,270 11,567 11,987 11,752 11,717 17,804 11,158 16,830 13,479

Total Revenues 362,760$ 352,400$ 390,099$ 391,998$ 410,068$ 451,689$ 489,749$ 530,354$ 575,323$ 553,110$

Expenditures (by function): *Policy & executive - - - - - - - - 9,925 10,334 Law & justice - - - - - - - - 34,970 35,500 Public safety - - - - - - - - 122,754 130,996 Health & public assistance - - - - - - - - 215,452 223,913 Community resources & public facilities - - - - - - - - 68,271 64,104 General government & support services - - - - - - - - 39,390 38,049 General County programs - - - - - - - - 14,781 15,224 Debt service - - - - - - - - 10,864 9,632 Capital outlay - - - - - - - - 40,164 35,404

-$ -$ -$ -$ -$ -$ -$ -$ 556,571$ 563,156$

Expenditures (by State Controller function):General government 29,882 31,050 30,927 34,183 35,892 39,373 43,254 47,090 59,857 58,434 Public protection 123,326 138,560 146,638 145,877 157,961 165,757 176,075 186,132 200,927 210,021 Public ways and facilities 15,222 15,465 17,447 21,351 26,616 29,081 27,232 30,794 43,801 36,702 Health and sanitation 63,820 59,060 64,764 72,069 75,445 81,229 87,286 103,760 106,767 110,424 Public assistance 84,707 92,745 89,841 85,548 84,217 94,675 94,921 99,982 104,726 105,933 Education 1,986 2,107 1,902 2,296 2,146 2,232 2,386 2,518 2,691 2,645 Rec. and cultural services 6,141 6,091 5,876 5,622 6,491 6,708 7,562 7,907 8,947 8,959 Debt service 11,104 14,272 13,509 10,680 10,667 9,973 9,391 9,474 8,680 9,218 Capital outlay 8,373 13,080 12,075 11,525 9,280 14,518 16,814 14,075 20,175 20,820

Total Expenditures 344,561$ 372,430$ 382,979$ 389,151$ 408,715$ 443,546$ 464,921$ 501,732$ 556,571$ 563,156$

* Expenditure trend data is only available for the the last two fiscal years due to the change in the County's functions as a result of the implementation of GASB 34.

For Fiscal Year 2002-2003

Revenues by Source Expenditures by Function

Use of Money & Property

3%

Other2%

Licenses. Permits, & Franchises

2%

Taxes 24%

Charges for Services

19%

Fines, Forfeitures, &

Penalties2%

Intergovern-mental48%

Public safety23%

Health & public

assistance40%

Gen county progs3%

Gen gov & support

7%

Debtservice

2%

Capital outlay6%

Comm rcs & pub fac

11%

Law & justice6%

Policy & executive

2%

125

COUNTY OF SANTA BARBARAREVENUES BY SOURCE - GOVERNMENTAL FUNDS (UNAUDITED)LAST TEN FISCAL YEARS (in thousands)

Licenses, Permits, and Franchises

0

3,500

7,000

10,500

14,000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

Fiscal Year

Thousands

Fines, Forfeitures, and Penalties

0

3,500

7,000

10,500

14,000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

Fiscal Year

Thousands

Use of Money and Property

0

5,000

10,000

15,000

20,000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

Fiscal Year

Thousands

Intergovernmental

0

70,000

140,000

210,000

280,000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

Fiscal Year

Thousands

Other

0

5,000

10,000

15,000

20,000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

Fiscal Year

Thousands

Charges for Services

0

30,000

60,000

90,000

120,000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

Fiscal Year

Thousands

0

35,000

70,000

105,000

140,000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

Fiscal Year

Thousands

Revenues and Expenditures

0

150,000

300,000

450,000

600,000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

Fiscal Year

Thousands

Revenue ExpenditureTaxes

126

COUNTY OF SANTA BARBARAEXPENDITURES BY FUNCTION - GOVERNMENTAL FUNDS (UNAUDITED)LAST TEN FISCAL YEARS (in thousands)

Expenditure trend data is only available for the the last two fiscal years due to the change in the County's functions as a result of the implementation of GASB 34.

Law & Justice

0

10,000

20,000

30,000

40,000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

Fiscal Year

Thousands

Public Safety

0

35,000

70,000

105,000

140,000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

Fiscal Year

Thousands

Health and Public Assistance

0

60,000

120,000

180,000

240,000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

Fiscal Year

Thousands

Community Resources and Public Facilities

0

20,000

40,000

60,000

80,000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

Fiscal Year

Thousands

General Government & Support Services and General County Programs

0

20,000

40,000

60,000

80,000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

Fiscal Year

Thousands

Debt Service

0

4,000

8,000

12,000

16,000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

Fiscal Year

Thousands

Capital Outlay

0

15,000

30,000

45,000

60,000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

Fiscal Year

Thousands

Policy and Executive

0

3,000

6,000

9,000

12,000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

Fiscal Year

Thousands

127

COUNTY OF SANTA BARBARA, CALIFORNIACOMPUTATION OF LEGAL DEBT MARGIN (UNAUDITED)LAST TEN FISCAL YEARS (in thousands)

(1) Population

(2) Assessed Value

(3) Legal Limit

Debt(4)

Bonded DebtLegal Limit

Margin

Ratio of Bonded Debt to Assessed

ValueBonded Debt

Per Capita1993 - 1994 392 24,512,344 306,404 -- 306,404 0.00% 0.00%

1994 - 1995 397 24,794,983 309,937 -- 309,937 0.00% 0.00%

1995 - 1996 395 25,319,741 316,497 -- 316,497 0.00% 0.00%

1996 - 1997 394 26,039,149 325,489 -- 325,489 0.00% 0.00%

1997 - 1998 405 27,065,925 338,324 -- 338,324 0.00% 0.00%

1998 - 1999 409 28,701,222 358,766 -- 358,766 0.00% 0.00%

1999 - 2000 414 30,434,037 380,425 -- 380,425 0.00% 0.00%

2000 - 2001 409 33,004,362 412,555 -- 412,555 0.00% 0.00%

2001 - 2002 408 35,871,577 448,395 -- 448,395 0.00% 0.00%

2002 - 2003 410 38,601,452 482,518 -- 482,518 0.00% 0.00%

Note: (2) Assessed Value does not include tax exempt property.(3) The Legal Debt Limit is 1.25% of Full Cash Value.(4) Bonded debt applicable to limitation includes only general obligation bonds.

Source:(1) California Department of Finance

Fiscal Year

128

COUNTY OF SANTA BARBARA, CALIFORNIAASSESSED VALUE OF TAXABLE PROPERTY (UNAUDITED)LAST TEN FISCAL YEARS (in thousands)

(1)Secured Unsecured Unitary Exempt Total

1993 - 1994 22,737,184 1,773,792 713,932 (712,564) 24,512,344

1994 - 1995 23,203,212 1,636,913 716,149 (761,291) 24,794,983

1995 - 1996 23,838,336 1,525,974 705,652 (750,221) 25,319,741

1996 - 1997 24,633,028 1,571,143 697,462 (862,484) 26,039,149

1997 - 1998 25,527,262 1,747,751 710,570 (919,658) 27,065,925

1998 - 1999 27,046,286 1,919,184 703,596 (967,844) 28,701,222

1999 - 2000 28,767,002 1,972,146 711,158 (1,016,269) 30,434,037

2000 - 2001 31,368,402 1,933,553 724,164 (1,021,757) 33,004,362

2001 - 2002 34,127,745 2,070,319 774,256 (1,100,743) 35,871,577

2002 - 2003 36,623,758 2,360,050 825,982 (1,208,338) 38,601,452

Note:(1) Valuations include State reimbursement exemption, but exclude redevelopment tax allocations.

Source:Auditor-Controller, County of Santa Barbara

Fiscal Year

129

COUNTY OF SANTA BARBARA, CALIFORNIAPROPERTY TAX LEVIES, COLLECTIONS, AND DELINQUENCIES (UNAUDITED)LAST TEN FISCAL YEARS (in thousands)

(1)Tax Levy Amount Percent Amount Percent

1993 - 1994 65,765 63,232 96.1% 2,533 3.9%

1994 - 1995 67,220 65,520 97.5% 1,700 2.5%

1995 - 1996 68,507 67,172 98.1% 1,335 1.9%

1996 - 1997 70,833 69,720 98.4% 1,113 1.6%

1997 - 1998 73,832 72,852 98.7% 980 1.3%

1998 - 1999 78,471 77,501 98.8% 970 1.2%

1999 - 2000 83,555 81,996 98.1% 1,559 1.9%

2000 - 2001 90,288 88,663 98.2% 1,625 1.8%

2001 - 2002 97,739 96,319 98.5% 1,420 1.5%

2002 - 2003 103,239 101,695 98.5% 1,544 1.5%

Note:


Collections Delinquency

Fiscal Year

(1) Included are amounts collected for the General Fund and dependent special districts governed by the County Board of Supervisors.

130

COUNTY OF SANTA BARBARA, CALIFORNIAPROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS (UNAUDITED)($1 PER $100 OF ASSESSED VALUE)LAST TEN FISCAL YEARS

Cities Schools Total1993 - 1994 1.00000 0.00098 0.00395 1.00493

1994 - 1995 1.00000 0.00096 0.00356 1.00452

1995 - 1996 1.00000 0.00093 0.00451 1.00544

1996 - 1997 1.00000 0.00094 0.00728 1.00822

1997 - 1998 1.00000 0.00088 0.00664 1.00752

1998 - 1999 1.00000 0.00085 0.01180 1.01265

1999 - 2000 1.00000 0.00047 0.01082 1.01129

2000 - 2001 1.00000 0.00006 0.00706 1.00712

2001 - 2002 1.00000 0.00021 0.00968 1.00989

2002 - 2003 1.00000 0.00017 0.00914 1.00931

Note: (1) Rates shown represent a weighted average of the 8 incorporated cities within the County of Santa Barbara for 2002-03 due to the incorporation of the City of Goleta. Prior years rates represent a weighted average of 7 incorporated cities.(2) Rates shown represent a weighted average of the various school district tax rate areas within the County of Santa Barbara.


Fiscal YearSanta Barbara

County General

131

COUNTY OF SANTA BARBARA, CALIFORNIARATIO OF ANNUAL DEBT SERVICE EXPENDITURESTO TOTAL GOVERNMENTAL EXPENDITURES (UNAUDITED)LAST TEN FISCAL YEARS (in thousands)

Principal Interest OtherTotal Debt

Service

Total Governmental Expenditures

Ratio of Debt Service to Total Governmental Expenditures

1993 - 1994 6,427 4,677 -- 11,104 344,561 3.22%

1994 - 1995 7,907 6,365 -- 14,272 372,430 3.83%

1995 - 1996 7,116 6,393 -- 13,509 382,979 3.53%

1996 - 1997 4,090 6,590 -- 10,680 389,151 2.74%

1997 - 1998 3,832 6,835 -- 10,667 408,715 2.61%

1998 - 1999 3,839 6,134 -- 9,973 443,546 2.25%

1999 - 2000 3,870 5,521 -- 9,391 464,921 2.02%

2000 - 2001 4,117 5,357 -- 9,474 501,312 1.89%

2001 - 2002 6,323 4,541 -- 10,864 556,571 1.95%

2002 - 2003 5,003 4,628 -- 9,631 563,156 1.71%


Fiscal Year

132

COUNTY OF SANTA BARBARA, CALIFORNIADIRECT AND OVERLAPPING BONDED DEBT (UNAUDITED)JUNE 30, 2003 (in thousands)

Overlapping Bonded DebtPercent

Applicable Debt

Jurisdiction

County:Santa Barbara County General Fund Obligations 100% 67,860$ (1)

67,860

Cities:City of Carpinteria Certificates of Participation 100% 1,865City of Guadalupe 100% 41City of Santa Barbara Certificates of Participation 100% 5,955City of Santa Maria Building Authorities and Certificates of Participation 100% 23,460City of Solvang General Fund Obligations 100% 1,585

32,906

Special Districts:Isla Vista Recreation/Park District and Certificates of Participation 100% 20Carpinteria Sanitary District, I.D. #1 100% 75Carpinteria Sanitary District, General Fund Obligation 100% 17,520Santa Barbara County Assessment District #1984-1 100% 270Santa Maria Cemetary District Certificates of Participation 100% 1,640Santa Ynez River Water Conservation District, I.D. #1 100% 1,390Solvang Assessment District #90-1 100% 169Special District 1915 Act Bonds 100% 1,820

22,904

School Districts:Buellton School District Certificates of Participation 100% 4,180Community College Districts and Certificates of Participation 100% 5,566Goleta Union School District 100% 24,255Orcutt School District 100% 14,555Santa Barbara School District 100% 19,625Santa Maria Joint Union High School District Certificate of Participation 100% 2,600Santa Maria-Bonita School District Certificates of Participation 100% 14,709High School Districts 100% 42,604Unified School Districts 100% 33,945Other School Districts 100% 20,045Other School Districts Certificates of Participation 100% 2,878

184,962

308,632$ (2)(17,520) 291,112$

Ratios to Assessed Valuation:

Combined Direct Debt 0.18%Total Overlapping Tax and Assessment Debt 0.41%Combined Total Debt 0.84%Net Combined Total Debt 0.79%

Note:(1) Excludes issue to be sold(2)

Source:California Municipal Statistics, Incorporated

Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds, non-bonded capital lease

Total Direct and Overlapping Bonded Debt - County

Gross Total Direct and Overlapping Bonded Debt

Total Direct and Overlapping Bonded Debt - Cities

Total Direct and Overlapping Bonded Debt - Special Districts

Total Direct and Overlapping Bonded Debt-School Districts

Less: Carpinteria Sanitary District (100% self-supporting)Net Total Direct and Overlapping Bonded Debt

133

COUNTY OF SANTA BARBARA, CALIFORNIASCHEDULE OF INSURANCE IN FORCE (UNAUDITED)JUNE 30, 2003

Coverage Insured

General and Automobile Liability (1) 25,000,000$ Self-insured first $500,000. Excess coverage through California State Association of Counties (CSAC) Excess Insurance Authority

5,000,000$ Employers' Liability45,000,000$ Workers' Compensation

Medical Malpractice (1) 10,000,000$ Self-insured first $500,000. Excess coverage through California State Association of Counties (CSAC) Excess Insurance Authority and Lexington Insurance Company

Aircraft Liability (1) 5,000,000$ (Deductable varies by Aircraft) Westchester Fire Insurance Companyto 10,000,000

General Liability for Shelter Care Homes (1)

1,000,000$ First National Insurance Company of America

271,769,798$ Real Property87,396,956$ Personal Property19,244,635$ Business Interruptions/Rents

(Deductable varies by propertycovered and by peril)

Boiler & Machinery (1) 100,000,000$ ($5,000 deductible). CNA Insurance / Continental Casualty

Crime Bond Blanket Program: Faithful Performance Bond including Employee Dishonesty; Forgery/Alteration; Theft, Disappearance, Destruction; Robbery, Safe Burglary; Computer Fraud; Counterfeit Paper Currency/Money Orders; Credit, Debit or Charge Card Forgery (1)

10,000,000$ ($25,000 deductible) National Union Fire Insurance Company

Pollution … Landfills (1) 10,000,000$ ($100,000 deductable) Gulf Underwriters Insurance Company

Pollution … Non-Landfills (1) 10,000,000$ ($100,000 deductable) Gulf Underwriters Insurance Company

Health (2) Limited according to selected plan. Blue Cross HMO, Health Net HMO or Health Select

Dental (2) Limited according to selected plan. County Self-Insured Dental Plan or Golden West Pacesetter Dental HMO

Life (2) ING ReliaStar…various; BCS…$500,000 ING ReliaStar Life Insurance Company or Allianz Life Insurance company of North America

Personal Accident Insurance (2) AIG Life Insurance…$500,000 American International Group

Long-Term Disability (2) Various. ING ReliaStar Life Insurance Company

State Disability Insurance (2) Various. State of California

Unemployment (2) County pays all claims. County is completely self-insured

Source:(1) Risk Management, County of Santa Barbara(2) Personnel, County of Santa Barbara

Limit

All-Risk Property/Flood, Earthquake, Licensed Vehicles, Mobile Equipment, and Fine Art (1)

Workers' Compensation (1) Self-insured first $300,000. Excess coverage through California State Association of Counties (CSAC) Excess Insurance Authority

California State Association of Counties (CSAC) Excess Insurance Authority and various insurance companies

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COUNTY OF SANTA BARBARA, CALIFORNIAPUBLIC OFFICIAL BLANKET BOND (1) (UNAUDITED)JUNE 30, 2003

Faithful Performance

Destruction, Disappearance,

or BurglaryAuditor-Controller $10,000,000 $10,000,000

Board of Supervisors 10,000,000 10,000,000

County Clerk-Recorder-Assessor 10,000,000 10,000,000

District Attorney 10,000,000 10,000,000

Sheriff-Coroner 10,000,000 10,000,000

Treasurer/Tax Collector/Public Administrator 10,000,000 10,000,000

Public Guardian 10,000,000 10,000,000

Note:(1) Per occurrence

Source:Risk Management, County of Santa Barbara

The policy is carried with National Union Fire Insurance Company

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GLOSSARY

COUNTY OF SANTA BARBARA, CALIFORNIA GLOSSARY FOR THE COMPREHENSIVE ANNUAL FINANCIAL REPORT

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ACCOUNTS PAYABLE. A short-term liability account reflecting amounts owed to private persons or organizations for goods and services received by a government. ACCOUNTS RECEIVABLE. An asset account reflecting amounts due from private persons or organizations for goods and services furnished by a government (but not including amounts due from other funds or other governments). ACCRUAL BASIS. The recording of the financial effects on a government of transactions and other events and circumstances that have cash consequences for the government in the periods in which those transactions, events and circumstances occur, rather than only in the periods in which cash is received or paid by the government. ACCUMULATED DEPRECIATION. A contra-asset account used to report the accumulation of periodic credits to reflect the expiration of the estimated service life of capital assets. ADVANCE FROM OTHER FUNDS. A liability account used to record noncurrent portions of a long-term debt owed by one fund to another fund within the same reporting entity. See DUE TO OTHER FUNDS and INTERFUND RECEIVABLE/PAYABLE. ADVANCE TO OTHER FUNDS. An asset account used to record noncurrent portions of a long-term loan from one fund to another fund within the same reporting entity. See DUE FROM OTHER FUNDS. AGENCY FUND. A fund normally used to account for assets held by a government as an agent for individuals, private organizations or other governments and/or other funds AMORTIZATION. (1) The portion of the cost of a limited-life or intangible asset charged as an expense during a particular period. (2) The reduction of debt by regular payments of principal and interest sufficient to retire the debt by maturity. APPROPRIATION. A legal authorization granted by a legislative body to make expenditures and to incur obligations for specific purposes. An appropriation usually is limited in amount and time it may be expended. ASSESSED VALUATION. A valuation set upon real estate or other property by a government as a basis for levying taxes. AUDITOR’S REPORT. In the context of a financial audit, a statement by the auditor describing the scope of the audit and the auditing standards applied in the examination, and setting forth the auditor's opinion on the fairness of presentation of the financial information in conformity with GAAP or some other comprehensive basis of accounting. BALANCE SHEET. The financial statement disclosing the assets, liabilities and equity of an entity at a specified date in conformity with GAAP. BASIC FINANCIAL STATEMENTS (BFS). The minimum combination of financial statements and note disclosures required for fair presentation in conformity with GAAP. Basic financial statements have three components: government-wide financial statements, fund financial statements and notes to the financial statements. BASIS OF ACCOUNTING. A term used to refer to when revenues, expenditures, expenses, and transfers - and the related assets and liabilities are recognized in the accounts and reported in the financial statements. Specifically, it relates to the timing of the measurements made, regardless of the nature of the measurement, on either the cash or the accrual method.

BUDGET. A plan of financial operation embodying an estimate of proposed expenditures for a given period and the proposed means of financing them. Used without any modifier, the term usually indicates a financial plan for a single fiscal year. The term "budget" is used in two senses in practice. Sometimes it designates the financial plan presented to the appropriating governing body for adoption, and sometimes, the plan finally approved by that body. BUDGETARY CONTROL. The control or management of a government or enterprise in accordance with an approved budget to keep expenditures within the limitations of available appropriations and available revenues. CAPITAL ASSETS. Long-lived tangible assets obtained or controlled as a result of past transactions, events or circumstances. Capital assets include buildings, equipment, improvements other than buildings, land and infrastructure. In the private sector, these assets are referred to most often as property, plant and equipment. CAPITAL EXPENDITURES. Expenditures resulting in the acquisition of or addition to the government's general capital assets. CAPITALIZATION POLICY. The criteria used by a government to determine which outlays should be reported as capital assets. CAPITAL LEASE. An agreement that conveys the right to use property, plant or equipment, usually for a stated period of time. See LEASE-PURCHASE AGREEMENTS. CAPITAL PROJECTS FUND. A fund created to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds and trust funds). CASH BASIS. A basis of accounting under which transactions are recognized only when cash is received or disbursed. CASH WITH FISCAL AGENT. An asset account reflecting deposits with fiscal agents, such as commercial banks, for the payment of bond principal and interest. CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING PROGRAM. A voluntary program administered by the GFOA to encourage governments to publish efficiently organized and easily readable CAFRs/CUFRs and to provide technical assistance and peer recognition to the finance officers preparing them. CHANGE IN THE FAIR VALUE OF INVESTMENTS. The difference between the fair value of investments at the beginning of the year and at the end of the year, taking into consideration investment purchases, sales, and redemptions. COMPENSATED ABSENCES. Absences, such as vacation, illness and holidays, for which it is expected employees will be paid. The term does not encompass severance or termination pay, postretirement benefits, deferred compensation or other long-term fringe benefits, such as group insurance and long-term disability pay. COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR). A financial report that encompasses all funds and component units of the government. The CAFR should contain (a) the basic financial statements and required supplementary information, (b) combining statements to support columns in the basic financial statements that aggregate information from more than one fund or component unit, and (c) individual fund statements as needed. The CAFR is the governmental unit’s official annual report and also should contain introductory information, schedules necessary to demonstrate compliance with finance-related legal and contractual provisions, and statistical data.


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CONTINGENT LIABILITY. Items that may become liabilities as a result of conditions undetermined at a given date, such as guarantees, pending lawsuits, judgments under appeal, unsettled disputed claims, unfilled purchase orders and uncompleted contracts. Contingent liabilities should be disclosed within the financial statements (including the notes) when there is a reasonable possibility a loss may have been incurred. Guarantees, however, should be disclosed even though the possibility of loss may be remote. COST –SHARING MULTIPLE-EMPLOYER PLAN. A single plan with pooling (cost-sharing) arrangements for the participating employers. All risks, rewards, and costs, including benefit costs, are shared and are not attributed individually to the employers. A single actuarial valuation covers all plan members and the same contribution rate(s) applies for each employer. CURRENT FINANCIAL RESOURCES MEASUREMENT FOCUS. Measurement focus according to which the aim of a set of financial statements is to report the near-term (current) inflows, outflows, and balances of expendable (spendable) financial resources. The current financial resources measurement focus is unique to accounting and financial reporting for state and local governments and is used solely for reporting the financial position and results of operations of governmental funds. DEBT. An obligation resulting from the borrowing of money or from the purchase of goods and services. Debts of governments include bonds, time warrants and notes. DEBT SERVICE FUND. A fund established to account for the accumulation of resources for, and the payment of, general long-term debt principal and interest. DEFERRED CHARGES. Expenditures that are not chargeable to the fiscal period in which they were made but that are carried as an asset on the balance sheet, pending amortization or other disposition (e.g. bond issuance costs). Deferred charges differ from prepaid items in that they usually extend over a long period of time (more than five years) and are not regularly recurring costs of operation. DEFERRED REVENUE. Resource inflows that do not yet meet the criteria for revenue recognition. Unearned amounts are always reported as deferred revenue. In governmental funds, earned amounts also are reported as deferred revenue until they are available to liquidate liabilities of the current period. DEFICIT. (1) The excess of the liabilities of a fund over its assets. (2) The excess of expenditures over revenues during an accounting period or, in the case of proprietary funds, the excess of expenses over revenues during an accounting period. DEFINED BENEFIT PENSION PLAN. A pension plan having terms that specify the amount of pension benefits to be provided at a future date or after a certain period of time; the amount specified usually is a function of one or more factors such as age, years of service, and compensation. DEFINED CONTRIBUTION PENSION PLAN. A pension plan having terms that specify how contributions to a plan member’s account are to be determined, rather than the amount of retirement income the member is to receive. The amounts received by a member will depend only on the amount contributed to the member’s account, earnings on investments of those contributions, and forfeitures of contributions made for other members that may be allocated to the member’s account. DEPRECIATION. (1) Expiration in the service life of capital assets, other than wasting assets, attributable to wear and tear, deterioration, action of the physical elements, inadequacy and obsolescence. (2) The portion of the cost of a capital asset, other than a wasting asset, charged as an expense during a particular period. In accounting for depreciation, the cost of a capital asset, less any salvage value, is prorated over the estimated service life of such an asset, and each period is charged with a portion of such cost. Through this process, the entire cost of the asset is ultimately charged off as an expense.

DESIGNATED FUND BALANCE. A portion of an unreserved fund balance that has been "earmarked" by the chief executive officer or the legislative body for specified purposes. DUE FROM OTHER FUNDS. An asset account used to indicate amounts owed to a particular fund by another fund for goods sold or services rendered. This account includes only short-term obligations on open account, not interfund loans. DUE TO OTHER FUNDS. A liability account reflecting amounts owed by a particular fund to another fund for goods sold or services rendered. These amounts include only short-term obligations on open account, not interfund loans. ECONOMIC RESOURCES MEASUREMENT FOCUS. Measurement focus under which the aim of a set of financial statements is to report all inflows, outflows, and balances affecting or reflecting an entity’s net assets. The economic resources measurement focus is used for proprietary and fiduciary funds, as well as for government-wide financial reporting. It is also used by business enterprises in the private sector. ENCUMBRANCES. Commitments related to unperformed (executory) contracts for goods or services. Used in budgeting, encumbrances are not GAAP expenditures or liabilities, but represent the estimated amount of expenditures ultimately to result if unperformed contracts in process are completed. ENTERPRISE FUND. Proprietary fund type used to report an activity for which a fee is charged to external users for goods and services. EXPENDITURE-DRIVEN GRANTS. Government-mandated or voluntary nonexchange transactions in which expenditure is the prime factor for determining eligibility. Also referred to as reimbursement grants. EXCHANGE-LIKE TRANSACTION. Transaction in which there is an identifiable exchange between the reporting government and another party, but the values exchanged may not be quite equal or the direct benefits of the exchange may not be exclusively for the parties to the exchange. EXPENDITURES. Decreases in net financial resources. Expenditures include current operating expenses requiring the present or future use of net current assets, debt service and capital outlays, and intergovernmental grants, entitlement and shared revenues. EXPENSES. Outflows or other using up of assets or incurrences of liabilities (or a combination of both) from delivering or producing goods, rendering services or carrying out other activities that constitute the entity's ongoing major or central operations. EXTERNAL AUDITORS. Independent auditors typically engaged to conduct an audit of a government’s financial statements. EXTERNAL INVESTMENT POOL. An arrangement that commingles (pools) the moneys of more than one legally separate entity and invests, on the participants’ behalf, in an investment portfolio; one or more of the participants is not part of the sponsors reporting entity. An external investment pool can be sponsored by an individual government, jointly by more than one government, or by a nongovernmental entity. An investment pool that is sponsored by an individual state or local government is an external investment pool if it includes participation by a legally separate entity that is not part of the same reporting entity as the sponsoring government. If a government-sponsored pool includes only the primary government and its component units, it is an internal investment pool and not an external investment pool. FAIR VALUE. The amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. FIDUCIARY FUNDS. The trust and agency funds used to account for assets held by a government unit in a trustee capacity or as an agent for individuals, private organizations, other government units and/or other funds.


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FINANCIAL RESOURCES. Resources that are or will become available for spending. Financial resources include cash and resources ordinarily expected to be converted to cash (e.g. receivables, investments). Financial resources may also include inventories and prepaids (because they obviate the need to expend current available resources). FISCAL AGENT. A fiduciary agent, usually a bank or county treasurer, who performs the function of paying debt principal and interest when due. FUND. A fiscal and accounting entity with a self-balancing set of accounts in which cash and other financial resources, all related liabilities and residual equities, or balances, and changes therein, are recorded and segregated to carry on specific activities or attain certain objectives in accordance with special regulations, restrictions or limitations. FUND BALANCE. The difference between fund assets and fund liabilities of governmental and similar trust funds. FUND FINANCIAL STATEMENTS. Basic financial statements presented on the basis of funds. Term used in contrast with government-wide financial statements. FUND TYPE. Any one of seven categories into which all funds are classified in governmental accounting. The seven fund types are: general, special revenue, debt service, capital projects, enterprise, internal service, and trust and agency. GENERAL REVENUES. All revenues that are not required to be reported as program revenues. All taxes, even those that are levied for a specific purpose, are general revenues and should be reported by type of tax - for example, property tax, sales tax, transient occupancy tax. All other nontax revenues (including interest, grants and contributions) that do not meet the criteria to be reported as program revenues should also be reported as general revenues. GENERAL FUND. The general fund is one of five governmental fund types and typically serves as the chief operating fund of the government. The general fund is used to account for all financial resources except those required to be accounted for in another fund. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP). The conventions, rules, and procedures that serve as the norm for the fair presentation of financial statements. The various sources of GAAP for state and local governments are set forth by SAS No. 69, The Meaning of “Present Fairly in Conformity with Generally Accepted Accounting Principles” in the Independent Auditor’s Report. GOVERNMENTAL ACCOUNTING. The composite activity of analyzing, recording, summarizing, reporting and interpreting the financial transactions of governments. GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB). The ultimate authoritative accounting and financial reporting standard-setting body for state and local governments. The GASB was established in June 1984 to replace the National Council on Governmental Accounting (NCGA). GOVERNMENTAL FUNDS. Funds generally used to account for tax-supported activities. There are five different types of governmental funds: the general fund, special revenue funds, debt service funds, capital projects funds and permanent funds. GOVERNMENT-WIDE FINANCIAL STATEMENTS. Financial statements that incorporate all of a government’s governmental and business-type activities, as well as its nonfiduciary component units. There are two basic government-wide financial statements: the statement of net assets and the statement of net activities. Both basic governmental financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. INFRASTRUCTURE. Long-lived capital assets that normally are stationary in nature and normally can be preserved for a significantly greater

number of years than most capital assets. Examples of infrastructure assets include roads, bridges, tunnels, drainage systems, water and sewer systems, dams and lighting systems. INTERFUND RECEIVABLE/PAYABLE. Short-term loans made by one fund to another, or the current portion of an advance to or from another fund. INTERFUND TRANSFERS. Flow of assets (such as cash or goods) between funds and blended component units of the primary government without equivalent flows of assets in return and without a requirement for payment. INTERNAL SERVICE FUND. A fund used to account for the financing of goods or services provided by one department or agency to other departments or agencies of a government, or to other governments, on a cost-reimbursement basis. JOINT VENTURE. A legal entity or other contractual arrangement in which a government participates as a separate and specific activity for the benefit of the public or service recipients and in which the government retains an ongoing financial interest. LAPSE. As applied to appropriations, the automatic termination of an appropriation. Except for indeterminate appropriations and continuing appropriations, an appropriation is made for a certain period of time. At the end of this period, any unexpended or unencumbered balance thereof lapses, unless otherwise provided by law. LEASE-PURCHASE AGREEMENTS. Contractual agreements that are termed leases, but that in substance are purchase contracts. LEGAL LEVEL OF BUDGETARY CONTROL. The level at which spending in excess of budgeted amounts would be a violation of law. LEVEL OF BUDGETARY CONTROL. The level at which a government’s management may not reallocate resources without special approval from the legislative body. LIABILITIES. Probable future sacrifices of economic benefits, arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events. LOANS RECEIVABLE. An asset account reflecting amounts loaned to individuals or organizations external to a government, including notes taken as security for such loans. Loans to other funds and governments should be recorded and reported separately. MAJOR FUND. A governmental fund or enterprise fund reported as a separate column in the basic fund financial statements. The general fund is always a major fund. Otherwise, major funds are funds whose revenues/expenditures, assets or liabilities are at least 10 percent of corresponding totals for all government or enterprise funds and at least 5 percent of the aggregate amount for all governmental and enterprise funds for the same item. Any other government or enterprise fund may be reported as a major fund if the government’s officials believe that fund is particularly important to financial statement users. MANAGEMENT’S DISCUSSION AND ANALYSIS. A component of required supplementary information used to introduce the basic financial statements and to provide an analytical overview of the government’s financial activities. MEASUREMENT FOCUS. A way of presenting an entity’s financial performance and position by considering which resources are measured (financial or economic) and when the effects of transactions or events involving those resources are recognized (the basis of accounting). The


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measurement focus of government-wide financial statements, proprietary fund financial statements and fiduciary fund financial statements is economic resources. The measurement focus of governmental fund financial statements is current financial resources. MODIFIED ACCRUAL BASIS. The accrual basis of accounting adapted to the governmental fund-type measurement focus. Under it, revenues and other financial resource increments (e.g. bond issue proceeds) are recognized when they become susceptible to accrual, that is when they become both "measurable" and "available to finance expenditures of the current period." "Available" means collectible in the current period or soon enough thereafter to be used to pay liabilities of the current period. Generally, expenditures are recognized when the fund liability is incurred. All governmental funds, expendable trust funds and agency funds are accounted for using the modified accrual basis of accounting. OTHER FINANCING SOURCES. An increase in current financial resources that is reported separately from revenues to avoid distorting revenue trends. The use of the other financing sources category is limited to items so classified by GAAP. OTHER FINANCING USES. A decrease in current financial resources that is reported separately from expenditures to avoid distorting expenditure trends. The use of other financing uses category is limited to items so classified by GAAP. OVERLAPPING DEBT. The proportionate share property within each government must bear of the debts of all local governments located wholly or in part within the geographic boundaries of the reporting government. Except for special assessment debt, the amount of debt of each unit applicable to the reporting unit is arrived at by (1) determining what percentage of the total assessed value of the overlapping jurisdiction lies within the limits of the reporting unit, and (2) applying this percentage to the total debt of the overlapping jurisdiction. Special assessment debt is allocated on the basis of the ratio of assessment receivable in each jurisdiction, which will be used wholly or in part to pay off the debt, to total assessments receivable, which will be used wholly or in part for this purpose. PROGRAM REVENUES. Term used in connection with the government-wide statement of activities. Revenues that derive directly from the program itself or from parties outside the reporting government’s taxpayers or citizenry, as a whole; they reduce the net cost of the function to be financed from the government’s general revenues. PROPRIETARY FUNDS. Funds that focus on the determination of operating income, changes in net assets (or cost recovery), financial position, and cash flows. There are two different types of proprietary funds: enterprise funds and internal service funds. REBATABLE ARBITRAGE. A term used in connection with the reinvestment of the proceeds of tax-exempt debt. A requirement to remit to the federal government interest revenue in excess of interest costs when the proceeds from the sale of tax-exempt securities are reinvested in a taxable money market instrument with a materially higher yield. REPORTING ENTITY. The oversight unit and all of its component units, if any, that are combined in the CAFR/BFS. REQUIRED SUPPLEMENTARY INFORMATION. Consists of statements, schedules, statistical data or other information which, according to the GASB, is necessary to supplement, although not required to be a part of the basic financial statements. RESERVED FUND BALANCE. The portion of a governmental fund’s net assets that is not available for appropriation. RESTRICTED ASSETS. Assets whose use is subject to constraints that are either (a) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other

governments or (b) imposed by law through constitutional provisions or enabling legislation. RESTRICTED NET ASSETS. A component of net assets calculated by reducing the carrying value of restricted assets by the amount of any related debt outstanding. RETAINED EARNINGS. An equity account reflecting the accumulated earnings of an enterprise or internal service fund. REVENUE BONDS. Bonds whose principal and interest are payable exclusively from earnings of an enterprise fund. In addition to a pledge of revenues, such bonds sometimes contain a mortgage on the enterprise fund's property. RISK MANAGEMENT. All the ways and means used to avoid accidental loss or to reduce its consequences if it does occur. SELF-INSURANCE. A term often used to describe the retention by an entity of a risk of loss arising out of the ownership of property or from some other cause, instead of transferring that risk to an independent third party through the purchase of an insurance policy. It is sometimes accompanied by the setting aside of assets to fund any related losses. Because no insurance is involved, the term self-insurance is a misnomer. SINGLE AUDIT. An audit performed in accordance with the Single Audit Act of 1997 and Office of Management and Budget’s (OMB) Circular A-133, Audits of State and Local Governments and Non-Profit Organizations. The Single Audit Act allows or requires governments (depending on the amount of federal assistance received) to have one audit performed to meet the needs of all federal agencies. SPECIAL DISTRICT. An independent unit of local government organized to perform a single government function or a restricted number of related functions. Special districts usually have the power to incur debt and levy taxes; however, certain types of special districts are entirely dependent upon enterprise earnings and cannot impose taxes. Examples of special districts are water districts, drainage districts, flood control districts, hospital districts, fire protection districts, transit authorities, port authorities and electric power authorities. SPECIAL REVENUE FUND. A fund used to account for the proceeds of specific revenue sources (other than expendable trusts or major capital projects) that are legally restricted to expenditure for specified purposes. TAX AND REVENUE ANTICIPATION NOTES (TRANS). Notes issued in anticipation of the collection of taxes and revenues, usually retirable only from tax collections, and frequently only from the proceeds of the tax and revenues levy whose collection they anticipate. TRUST FUNDS. Funds used to account for assets held by a government in a trustee capacity for individuals, private organizations, other governments and/or other funds. UNDESIGNATED UNRESERVED FUND BALANCE. That portion of a fund balance that is available for spending or appropriation and has not been "earmarked" for specified purposes by the chief executive officer or the legislative body. UNQUALIFIED OPINION. An opinion rendered without reservation by the independent auditor that financial statements are fairly presented. UNRESERVED FUND BALANCE. That portion of a fund balance available for spending or appropriation in the future. UNRESTRICTED NET ASSETS. That portion of net assets that is neither restricted not invested in capital assets (net of related debt).

comprehensive a financial r - santa barbara county · is designed to complement md&a and should...

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