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CITY OF CERRITOS, CALIFORNIA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 2011

Prepared by:

Administrative Services Department

Ms. Denise D. Manoogian, Director of Administrative Services

Nita McKay, Finance Manager

City of Cerritos Comprehensive Annual Financial Report For the year ended June 30, 2011 Table of Contents

Page

INTRODUCTORY SECTION City Manager and Director of Administrative Services Letter of Transmittal ................................................. i Principal Officials ...................................................................................................................................................... vi Organization Chart.................................................................................................................................................... vii GFOA Certificate of Achievement for Excellence in Financial Reporting ........................................................ viii FINANCIAL SECTION Independent Auditors’ Report ............................................................................................................................... 1 Management’s Discussion and Analysis (Unaudited) ...................................................................................... 3 Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Assets ............................................................................................................................... 17 Statement of Activities ................................................................................................................................. 18

Fund Financial Statements:

Governmental Fund Financial Statements: Balance Sheet .......................................................................................................................................... 22 Reconciliation of the Governmental Funds Balance Sheet

to the Government-Wide Statement of Net Assets ..................................................................... 23 Statement of Revenues, Expenditures and

Changes in Fund Balances ............................................................................................................. 24 Reconciliation of the Governmental Funds Statement of Revenues,

Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Assets ................................................................... 25

Proprietary Fund Financial Statements:

Statement of Net Assets ........................................................................................................................ 28 Statement of Revenues, Expenses and Changes in Net Assets ....................................................... 29 Statement of Cash Flows ....................................................................................................................... 30

Notes to Basic Financial Statements ............................................................................................................... 33

City of Cerritos Comprehensive Annual Financial Report For the year ended June 30, 2011 Table of Contents, Continued

Page FINANCIAL SECTION, Continued Required Supplementary Information (Unaudited) ........................................................................................ 81

Notes to Required Supplementary Information ............................................................................................. 82 Budgetary Comparison Schedule:

General Fund ................................................................................................................................................. 83 Schedule of Funding Progress:

Defined Pension Plan ................................................................................................................................... 84 Other Post Employment Benefits ............................................................................................................... 84

Supplementary Information:

Non-Major Governmental Funds: Combining Balance Sheet ............................................................................................................................ 88 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................... 92 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual:

Street Improvements Special Revenue Fund ..................................................................................... 95 Traffic Congestion Special Revenue Fund ......................................................................................... 96 Drainage Special Revenue Fund .......................................................................................................... 97 Proposition “A” Special Revenue Fund ............................................................................................. 98 Proposition “C” Special Revenue Fund .............................................................................................. 99 Assessment District #6 Special Revenue Fund .................................................................................. 100 Los Coyotes Lighting District Special Revenue Fund ...................................................................... 101 Local Law Enforcement Grants Special Revenue Fund ................................................................... 102 COPS Grants Special Revenue Fund .................................................................................................. 103 Library Grants Special Revenue Fund ................................................................................................ 104 Environmental Grant Special Revenue Fund .................................................................................... 105 AQMD Special Revenue Fund ............................................................................................................. 106 Measure “R” Special Revenue Fund ................................................................................................... 107

Non-Major Enterprise Funds:

Combining Statement of Net Assets .......................................................................................................... 110 Combining Statement of Revenues, Expenses and Changes in Net Assets ......................................... 111 Combining Statement of Cash Flows ........................................................................................................ 112

Internal Service Funds:

Statement of Net Assets ............................................................................................................................... 114 Statement of Revenues, Expenses and Changes in Net Assets .............................................................. 115 Statement of Cash Flows ............................................................................................................................. 116

City of Cerritos Comprehensive Annual Financial Report For the year ended June 30, 2011 Table of Contents, Continued

Page Independent Auditors’ Report on Internal Control over Financial

Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................................................................................................... 117

STATISTICAL SECTION (Unaudited) Description of Statistical Section Contents ............................................................................................................ 119 Financial Trends:

Net Assets by Component – Last Eight Fiscal Years ..................................................................................... 120 Changes in Net Assets – Expenses and Program Revenues - Last Eight Fiscal Years .............................. 122 Changes in Net Assets – General Revenues - Last Eight Fiscal Years ......................................................... 124 Fund Balances of Governmental Funds - Last Eight Fiscal Years ................................................................ 126 Changes in Fund Balances of Governmental Funds - Last Eight Fiscal Years ........................................... 128 Governmental Activities Revenues by Sources - Last Ten Fiscal Years ...................................................... 130

Revenue Capacity: Assessed Value of Taxable Property - Last Ten Fiscal Years ........................................................................ 132 Property Tax Rates – All Direct and Overlapping Governments – Last Ten Fiscal Years ....................... 134 Ten Largest Secured Taxpayers – Current Year and Nine Years Ago ........................................................ 135 Property Tax Levies and Collections - Last Ten Fiscal Years ....................................................................... 136

Debt Capacity: Ratios of Outstanding Debt by Type - Last Eight Fiscal Years ..................................................................... 138 Schedule of Direct and Overlapping Bonded Debt ........................................................................................ 140 Legal Debt Margin Information- Last Eight Fiscal Years .............................................................................. 142

Demographic and Economic Information: Demographic and Economic Statistics - Last Eight Fiscal Years .................................................................. 144 Principal Employers – Current Year and Eight Years Ago ........................................................................... 145

Operating Information: Full-Time and Part-Time City Employees by Function - Last Eight Fiscal Years ...................................... 146 Operating Indicators by Function - Last Eight Fiscal Years .......................................................................... 147 Capital Asset Statistics by Function - Last Eight Fiscal Years ...................................................................... 148

Cerritos

ITY 0 F E R9k1 PSM

CIVIC CENTER• 18125 BLOOMFIELDAVENUEP.O. BOX 3130 CERRITOS, CALIFORNIA 90703-3 130

PHONE: (562) 860-0311 • WWW.CERRITOS.US

JIM EDWARDSMAYOR PRO TEM

BRUCE W. BARROWSCOUNCILMEMBER

JOSEPH CHO, Ph.D.COUNCILMEMBER

MARK E. PULIDOCOUNCILMEMBER

2008

CAROL CHENMAYOR

December 1, 2011 Honorable Mayor, Members of the City Council, and Citizens of the City of Cerritos It is our pleasure to present the Comprehensive Annual Financial Report (CAFR) of the City of Cerritos (the City) for the fiscal year ended June 30, 2011. This report consists of management’s representations concerning the finances of the City of Cerritos. Management assumes the responsibility for the accuracy of the presented data, the completeness and fairness of the presentation and all disclosures. To provide a reasonable basis for making these representations, management has established a comprehensive internal control framework that is designed both to protect the City’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with generally accepted accounting principles (GAAP). Because the costs of internal controls should not outweigh their benefits, internal controls have been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatements. The City’s financial statements have been audited by Caporicci & Larson, Inc., a subsidiary of Marcum, LLP, a firm of certified public accountants. The auditors have issued an unqualified opinion on these financial statements. Such an opinion states that the auditors feel the City followed all accounting rules appropriately and that the financial reports are an accurate representation of the City’s financial condition. Their report is located at the front of the financial section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. Profile of the City of Cerritos The City of Cerritos is located approximately 20 miles southeast of Los Angeles along the border of Orange County. Beginning as an unincorporated area known for its strawberry farms and dairy operations, the City experienced a major transformation into a more urban environment beginning in the late 1960s. In 1973, a unique and innovative General Plan was adopted, which has guided development in a master planned fashion to create a park-like community with balanced development. Today the City is a progressive, affluent community with a highly educated and ethnically diverse population. The City is home to near 50,000 residents and several large business organizations. Cerritos enjoys the distinction of being a large sales tax generator, resulting in significant revenues to support City operations.

ii

The City, incorporated in 1956 as a charter city under the laws of the State of California, encompasses an area of 8.9 square miles. Under the City’s Council-Manager form of government, the Council members are elected at large for four-year staggered terms, and the Mayor is chosen among the elected council members to serve a one-year term. Members of the City Council also act as the governing body of the Cerritos Redevelopment Agency, which includes the Los Cerritos and Los Coyotes Project Areas. The City Council appoints the City Manager, who is responsible for the day-to-day administration and management of City business within all City departments. Strategic planning and hard work have brought Cerritos to its current position as a community with financial strength, excellent municipal services, and a reputation as a great place to live, work and do business. However, the City is aware that its enviable fiscal position can be maintained only by managing its available resources wisely and monitoring its operating expenditures carefully. The City continues to protect its financial resources tenaciously through appropriate involvement in the legislative arena. The City provides a full range of municipal services, including community development, public works, recreational activities, state of the art library services, a performing arts center, water, sewer, and electric utility services, and general administrative and support services. The City provides police and fire services through contracts with the County of Los Angeles. The City’s Sheriff Station serves as the operational headquarters for all County Sheriff’s Department personnel assigned to Cerritos, and the Station acts as a stand-alone full-service safety facility for the community. The building’s status as an “independent station” has enabled the Sheriff’s Department to achieve progressively lower response times in Cerritos, thereby creating an atmosphere of enhanced safety and security for the community. The annual budget serves as the foundation for the City’s financial planning and control. The City Council holds public hearings and adopts an annual budget resolution for all funds. Adoption of the annual budget must occur prior to the conclusion of the prior fiscal year. The City Manager is authorized to make changes in departmental operating budget totals as he may from time to time deem necessary in order to meet the City’s needs. In past years, resources have been allocated to departments based on their work program objectives. Continuing allocations are justified by measurable outputs and the ongoing need for the services provided. Economic Outlook and Major Initiatives Regarded by many as the pre-eminent commercial center of southeast Los Angeles County, the City continually strives to maintain an exemplary business climate. Though not immune to the challenging financial and economic environment, Cerritos has significant economic stability resulting from the automotive sector at the Cerritos Auto Square, the retail presence at the Los Cerritos Center, and continuing business stability at the Cerritos Towne Center. Since its inception sixteen years ago, the Cerritos Towne Center has established itself as one of Southern California’s most successful centers of commercial, recreational and business activity. The ongoing success of such strong retailers as Kohl’s, Wal-Mart, Ross, Office Max and Best Buy has been enhanced by the Edwards Cinemas and various dining establishments like Macaroni Grill, Arté Café, Wood Ranch, Mimi’s Cafe and TGI Friday’s. These establishments consistently attract consumers to the area, and will enable the Towne Center to maintain its status as one of the premier economic engines in the region.

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Despite the challenging economic environment, the Cerritos Center for the Performing Arts (CCPA) enjoyed another successful year with an impressive array of performances. The CCPA has become a destination point within the Towne Center, and intentional marketing efforts will help to ensure the success of the Towne Center in future years. Additionally, the City is home to one of Southern California’s largest retail centers, the Los Cerritos Center. As one of the nation’s elite shopping destinations, the Los Cerritos Center has responded successfully to changing economic cycles many times since its opening in 1971. The mall’s ownership group, the Macerich Corporation, has demonstrated its ongoing stewardship of the mall through an unwavering commitment to maintaining the mall’s economic vitality. Addressing the use of vacant space, the mall established an exciting restaurant, Lazy Dog Café, increasing the dining options for shopping center customers. The Los Cerritos Center also was expanded with a new 138,000 square-foot flagship-quality Nordstrom as well as 36,500 square feet of new in-line shops. These additional retailers included a new Apple store, True Religion Brand Jeans, Love Culture, MAC Cosmetics, Foreign Exchange and Carlton Hair International. The new development at the Los Cerritos Center is projected to generate additional sales tax revenues as well as increased property tax increment for the City’s Redevelopment Agency. Despite the recent prolonged period of bleak economic news for the automotive sector, the Cerritos Auto Square continues its status as the world’s largest auto center. For more than three decades, the Cerritos Auto Square has served as a cornerstone of the City’s economic stability. It has defined the concept of the “one-stop” auto mall, and it is still recognized as the world’s prototypical auto center. The Cerritos Auto Square gained a new Kia dealership at the beginning of the fiscal year. Additionally, upgrades and new construction were completed in July 2010 at the “Landmark Square,” which is adjacent to the Los Cerritos Mall. The shopping center was renovated and features the new restaurants Ajito Japanese Grill & Yakitori, Gatten Sushi, Chronic Tacos, Blizz Frozen Yogurt and Panera Bread. Key Capital Projects completed during the current fiscal year included the installation of solar panels at the City’s Corporate Yard and resurfacing of major traffic arteries, including portions of South Street and Norwalk Boulevard. Fiscal Year 2010-11 marks the sixth year of the Electric Utility in supplying energy to retail consumers in Cerritos. The Electric Utility now serves approximately 238 accounts and during the last fiscal year supplied almost 41.3 million kilowatt-hours to the retail customers. This is in contrast to the first year of operations (2005), when select City accounts and six ABC Unified School District accounts served as the Utility’s contracted customers. The challenging State budget crisis and the continuing instability in the global financial world have added additional review and analysis to the City’s fiscal evaluation. The State’s budget deficit continues to create uncertainty for all governmental agencies in California. Although it appears that there may be hopeful signs of growth and recovery on the horizon, the current economic downturn appears to be “the downturn without an end”, affecting virtually every aspect of commercial activity, including housing, retail, credit and employment. The latest plan to balance the State of California budget includes the passage of Assembly Bills (AB) 26 and AB 27. This new legislation proposes to abolish California Redevelopment Agencies as they currently exist. AB 27 creates the option for redevelopment agencies to

iv

continue to exist and operate by means of an Alternative Voluntary Redevelopment Program, which would require an annual subsidy to the State of California. As of the writing of this report, this new legislation is being litigated in the courts. A ruling by the California Supreme Court is expected by January 15, 2012. More detail regarding this legislation is described in the notes to basic financial statements later in this report. As the State budget process continues to evolve, the City will continue to monitor the situation to determine any additional impacts that may affect the City of Cerritos. Despite the challenging economic climate, our long term economic outlook should be sustained through careful planning and with the outstanding relationships we have built with business leaders and residents in the City. Indeed, much of the City’s recent success has been attributed to bold and innovative economic decisions which were made early in our history, and which have secured the community’s viable fiscal position. The challenging economy has created opportunities for the business environment to continually reinvent itself for the benefit of the City and its local surroundings. The City of Cerritos will continue to work to preserve its resources while seeking to maintain and provide the highest level of service to its residents. In fulfilling this mission, compliance with new rules, regulations and procedures has always been the highest priority in the past, and will continue to be in the future. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Cerritos for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2010. The Certificate is a prestigious national award that recognizes conformance with the highest standards for preparation of state and local government financial reports. To be awarded a Certificate of Achievement, the City published an easily readable and efficiently organized CAFR. The report satisfied both generally accepted accounting principles and applicable legal requirements. The Certificate of Achievement from the GFOA is valid for a period of one year. We believe that this 2010-11 CAFR continues to conform to the Certificate of Achievement program requirements, and it will be submitted to GFOA for award consideration. The preparation and publication of this report would not have been possible without the dedication, professionalism, and teamwork of the entire staff of the Finance Division within the Administrative Services Department and the City’s independent auditors, Caporicci & Larson, Certified Public Accountants. We would like to express our appreciation to all staff members who assisted and contributed to its preparation.

The City Council has continued to extend their support to the Administrative ServicesDepartment in the planning of responsible and progressive financial operations. We wouldlike to thank the Mayor and City Council for their continued support for maintaining thehighest standards of professionalism in the management of the City’s finances.

Respectfully submitted,

Art GallucciCity Manager

//

Di1e’iD. k’noogianDirector of Administrative Services

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vii

Certificate of

Presented to

City of Cerritos

For its Comprehensive Annual

June 30, 2010

President

Executive Director

Financial Report

for the Fiscal Year Ended

Reportingin Financial

for ExcellenceAchievement

Text38: California

A Certificate of Achievement for Excellence in FinancialReporting is presented by the Government Finance Officers

Association of the United States and Canada togovernment units and public employee retirement

systems whose comprehensive annual financialreports (CAFRs) achieve the higheststandards in government accounting

and financial reporting.

viii

C&LCaporicci & Larson, Inc.A Subsidiary of Marcum LLPCertifi ed Public Accountants

www.c-lcpa.com

INDEPENDENT AUDITORS’ REPORT Honorable Mayor and

Members of the City Council City of Cerritos Cerritos, California We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Cerritos, California (the “City”), as of and for the year ended June 30, 2011, which collectively comprise the City’s basic financial statements as listed in the foregoing table of contents. These basic financial statements are the responsibility of the City’s management. Our responsibility is to express an opinion on these basic financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2011, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As explained further in Note 17 to the basic financial statements, the California State Legislature has enacted legislation that is intended to provide for the dissolution of redevelopment agencies in the State of California. The effects of this legislation are uncertain pending the result of certain lawsuits that have been initiated to challenge the constitutionality of this legislation. The City adopted the provisions of Governmental Accounting Standards Board (“GASB”) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, as of July1, 2010.

2

Honorable Mayor and Members of the City Council

City of Cerritos Cerritos, California Page 2 In accordance with Government Auditing Standards, we have also issued our report dated December 1, 2011 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, General Fund budgetary comparison schedule, and schedules of funding progress be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s financial statements as a whole. The accompanying supplementary information, as listed in the table of contents, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and is derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The Introductory and Statistical Sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.

Caporicci & Larson, Inc. A Subsidiary of Marcum LLP Certified Public Accountants Irvine, California December 1, 2011

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CITY OF CERRITOS, CALIFORNIA

Management’s Discussion and Analysis

Year Ended June 30, 2011 As Management of the City of Cerritos, California (City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2011. We encourage readers to consider the information presented here in conjunction with the accompanying letter of transmittal at the front of this report, and the basic financial statements, which follow this section. FINANCIAL HIGHLIGHTS

The City’s assets exceeded its liabilities at June 30, 2011 by $334.8 million. This amount is referred to as the net assets of the City. Of this amount, $173.3 million is invested in capital assets net of related debt, $45.5 million is restricted and $116.0 million is unrestricted. The unrestricted amount may be used to meet the City’s ongoing obligations to citizens and creditors.

The City’s net assets decreased $3.4 million, expenses exceeding revenues by this amount. This decrease is mainly attributable to the mandatory payment of $2.4 million to the State of California for the City’s share of the Supplemental Educational Revenue Augmentation Fund (SERAF).

Governmental funds for the City reported combined fund balances of $146.4 million. Of this

amount, $102.0 million is nonspendable, $35.1 million is restricted by external parties, $14.2 million has been assigned by City management and negative $4.9 million unassigned further reduces the City’s governmental funds combined fund balance.

As of June 30, 2011, the unassigned fund balance of the General Fund, the City’s chief

operating fund, was $71.1 million, or 103.1% of General Fund expenditures. This unassigned fund balance is available for future appropriation.

OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements, which consist of three components: 1) government-wide financial statements, 2) fund financial statements and 3) notes to the basic financial statements. This report also contains supplementary information in addition 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 City’s finances, in a manner similar to a private-sector business. The Statement of Net Assets presents information on all of the City’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 City is improving or deteriorating.

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OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Government-wide Financial Statements (Continued) The Statement of Activities presents information on how the City’s net assets changed during the 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 the related cash flows. Therefore, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (for example, uncollected taxes and earned but unused employee leaves). Both of the government-wide financial statements distinguish functions of the City 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 City of Cerritos include legislative and administration, community development, public works, water and power, community and safety services, administrative services and the theater (Cerritos Center for the Performing Arts). The business-type activities of the City include water operations, reclaimed water, sewer operations, and electric utility. The government-wide financial statements include not only the City of Cerritos itself (known as the primary government), but also the activities of the Cerritos Redevelopment Agency (Agency) and the Cerritos Public Financing Authority (Authority), a joint powers authority formed by the City and the Agency to issue bonds for the construction of major capital facilities. The City is financially accountable for both of these legally separate entities, which are referred to as blended component units. The Agency and Authority function for all practical purposes as departments of the City, and therefore, these blended component units have been included in these financial statements as an integral part of the primary government. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Cerritos, 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 City can be divided into two categories: governmental funds and proprietary 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 City’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 City’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

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OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Fund Financial Statements (Continued)

Governmental Funds (Continued) The City of Cerritos maintains seventeen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General Fund, Redevelopment Agency Debt Service Fund and Redevelopment Agency Capital Projects Fund, each of which are considered to be major funds. Data from the other fourteen 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 elsewhere in this report. The City of Cerritos adopts an annual appropriated budget for the General Fund and all Special Revenue Funds. A budgetary comparison statement has been provided for each of these funds to demonstrate compliance with these budgets.

Proprietary Funds

The City of Cerritos 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 City uses enterprise funds to account for its water, reclaimed water, sewer, and electric utility activities. Internal service funds are accounting devices used to accumulate and allocate costs internally among the City’s various functions. The City uses an internal service fund to account for its equipment maintenance and replacement activities. Because the internal service fund provides services that predominantly benefit governmental rather than business-type functions, it has 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, only in more detail. The proprietary fund financial statements provide separate information for the Water Fund and Electric Utility Fund, which are considered major funds of the City. The other two enterprise funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor enterprise funds is provided in the form of combining statements elsewhere in this report. Conversely, the internal service fund is shown as a separate reporting category on the Proprietary Funds reports and in the Supplementary Information section 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. Other Information The combining statements, referred to earlier in connection with other governmental funds and the internal service fund, are presented in Supplementary Information.

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GOVERNMENT-WIDE FINANCIAL ANALYSIS The following table summarizes the Statement of Net Assets for fiscal years ending June 30, 2011 and June 30, 2010.

2011 2010 2011 2010 2011 2010

Cash and investments 155.0$ 154.0$ 5.1$ 7.3$ 160.1$ 161.3$ Other Assets 33.9 29.5 (10.1) (4.1) 23.8 25.4 Capital Assets 289.2 292.2 45.0 46.3 334.2 338.5

Total Assets 478.1 475.7 40.0 49.5 518.1 525.2

Other liabilities 14.5 11.5 2.5 1.1 17.0 12.6 Long-term liabilities outstanding 166.1 174.2 0.2 0.2 166.3 174.4

Total Liabilities 180.6 185.7 2.7 1.3 183.3 187.0

Net AssetsInvested in capital assets,

net of related debt 128.3 123.4 45.0 46.3 173.3 169.7 Restricted 45.5 42.3 - - 45.5 42.3 Unrestricted 123.7 124.3 (7.7) 1.9 116.0 126.2

Total net assets 297.5$ 290.0$ 37.3$ 48.2$ 334.8$ 338.2$

City of Cerritos Net Assets

TotalBusiness-Type ActivitiesGovernmental Activities

(in millions)

As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City of Cerritos, net assets were $334.8 million as of June 30, 2011. Net assets decreased $3.4 million, or 1.0%, during fiscal year 2010-11. Assets decreased 1.4% and liabilities decreased 2.0% when compared to June 30, 2010. The largest portion of the City’s net assets at June 30, 2011 ($173.3 million, or 51.8% of total net assets) reflects its investment in capital assets (e.g., land, infrastructure, buildings, machinery and equipment) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’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. The increase in governmental activities investment in capital assets is attributable to the completion of various building improvement and street resurfacing projects. The decrease in business-type activities was due to normal depreciation of existing capital assets with no significant purchases. The restricted portion of the City’s net assets (13.6%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets of $116.0 million may be used to meet the government’s ongoing obligations to citizens and creditors. Cash and investments decreased 0.7%, or $1.2 million when compared to the previous fiscal year. This decrease is directly linked to the State of California mandated payment of $2.4 million for the City’s share of the Supplemental Educational Revenue Augmentation Fund (SERAF).

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GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED) As noted in the following table, the City’s net assets decreased by $3.4 million during the current fiscal year. The fiscal year 2010-11 decrease in net assets compares to the fiscal year 2009-10 decrease of $16.1 million.

2011 2010 2011 2010 2011 2010

RevenuesProgram revenues:

Charges for services 11.6$ 12.1$ 13.2$ 12.4$ 24.8$ 24.5$ Operating grants and contributions 8.7 11.3 - - 8.7 11.3 Capital grants and contributions - 0.6 0.1 0.1 0.1 0.7

General revenues:Taxes 62.1 58.5 - - 62.1 58.5 Investment income 19.5 20.5 0.1 0.2 19.6 20.7 Miscellaneous 0.6 1.1 - - 0.6 1.1

Total revenues 102.5 104.1 13.4 12.7 115.9 116.8

Expenses:Legislative and administration 11.9 24.0 - - 11.9 24.0 Community development 6.0 9.6 - - 6.0 9.6 Public works 14.2 17.5 - - 14.2 17.5 Water and power 0.2 0.5 - - 0.2 0.5 Community and safety services 22.6 23.2 - - 22.6 23.2 Administrative services 13.0 12.3 - - 13.0 12.3 Cerritos Center for the performing Arts 9.7 10.8 - - 9.7 10.8 Unallocated infrastructure depreciation 0.9 1.1 - - 0.9 1.1 Interest expense 16.7 16.1 - - 16.7 16.1 Water and power - - 9.8 9.7 9.8 9.7 Reclaimed water - - 1.1 1.4 1.1 1.4 Electric utility - - 11.4 6.5 11.4 6.5 Sewer - - 1.8 0.2 1.8 0.2

Total expenses 95.2 115.1 24.1 17.8 119.3 132.9

Change in net assetsbefore transfers 7.3 (11.0) (10.7) (5.1) (3.4) (16.1)

Transfers 0.2 2.0 (0.2) (2.0) - -

Change in net assets 7.5 (9.0) (10.9) (7.1) (3.4) (16.1)

Net assets, beginning of year 290.0 299.0 48.2 55.3 338.2 354.3

Net assets, end of year 297.5$ 290.0$ 37.3$ 48.2$ 334.8$ 338.2$

City of Cerritos Change in Net Assets(in millions)

Governmental Activities Business-Type Activities Total

The City’s total revenues were $115.9 million in fiscal year 2010-11, while the total cost of all programs and services was $119.3 million. Revenues decreased by $0.9 million, or 0.8%, from the prior year levels and expenses decreased $13.6 million, or 10.2% when compared to fiscal year 2009-10. Approximately 53.6% of all revenues this past year came from some form of tax (an increase from 50.1% in fiscal year 2009-10).

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Functional ExpensesFiscal Year Ended June 30, 2011

Legislative and Administrative

13%

Community Development

8%

Public Works13%

Water and Power<1%

Community and Safety Services

24%

Administrative Services

14%

Cerritos Center for the Performing Arts

10%

Unallocated infrastructure depreciation

1%

Interest and fiscal charges

17%

Functional Expenses Fiscal Year Ended June 30, 2011

Sewer7%

Water41%

Reclaimed Water5% Electric Utility

47%

Revenue SourcesFiscal Year Ended June 30, 2011

Investment and rental income

1%

Charges for services-sewer<1%Charges for services-

electric utility34%

Capital grants and contributions

1%

Charges for services-reclaimed water

6%

Charges for services-water58%

Revenue Sources Fiscal Year Ended June 30, 2011

Charges for services11%

Transient occupancy taxes<1%


19%

Other taxes<1%

Operating grants and contributions

9%

Miscellaneous1%

Property taxes35%

Franchise taxes1%

Motor vehicle taxes4%

Sales taxes20%

GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED) Governmental Activities Revenues associated with governmental activities decreased $1.6 million compared to fiscal year 2009-10 primarily due to the economic recession. Although tax revenues increased, specifically in the areas of sales taxes and tax increment revenues ($3.5 million), other revenue sources declined when compared to one year ago. Decreases in operating grants and contributions amounted to $2.6 million, while capital grants declined $0.6 million when compared to the prior year. These declines in revenues relate to grant monies for street improvement projects, as well as technology upgrades to the Sheriff’s station, completed in the prior fiscal year. Additionally, investment and rental income declined $1.0 million because of the decline in the overall investment market. Expenses associated with governmental activities decreased $19.9 million compared to one year earlier. With the economic downturn and declines in the City’s core revenue sources, all City departments were charged with reducing operating expenses to maintain a balanced budget. The largest decrease in expenses relates to the decrease in the mandated SERAF payment to the State of California from $11.8 million in the prior fiscal year to the current year’s payment of $2.4 million.

Business-Type Activities Business-type activities decreased the City’s net assets by $10.9 million when compared to fiscal year 2009-10. Charges for services increased by $0.8 million, or 6.5%, when compared to the prior fiscal year. The increase in revenues is mainly attributable to reimbursement payments from other cities related to a joint water-related project. Expenses increased $6.3 million. The main factor contributing to this increase is the Electric Utility Fund, which includes a one-time impairment loss of $2.1 million. This impairment loss is the result of prior contributions to the joint powers authority for the City’s share of fuel reserves, capital reserves and debt service reserves. Operational expenses increased in the Electric Utility Fund for additional expenses for the City’s share of the Magnolia Power Plant operating expenses. Water operations showed small increases in costs associated with purchased water and other operational expenses related to water pumping.

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FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City of Cerritos uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental Funds

The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’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 the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $146.4 million, an increase of $1.0 million from the prior fiscal year. Nonspendable fund balances total $102.0 million for such items as long-term receivables ($101.9 million) from the Cerritos Redevelopment Agency and the Electric Utility Fund and inventories and prepaid expenses ($0.1 million). Restricted fund balances, legally restricted by external parties, total $35.1 million. An additional $14.2 million in fund balances have been assigned by City management for such items as art center programs, asset replacement, and self insurance. The remaining negative fund balances are categorized as unassigned.

The General Fund is the main operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the General Fund was $71.1 million, which represents 103.1% of General Fund expenditures, excluding transfers. The remaining fund balance includes nonspendable of $90.1 million (long-term receivables), $0.1 million (inventories/prepaid expenses) and $14.2 million assigned.

The City’s General Fund balance decreased $7.8 million during the fiscal year compared to a budgeted increase of $2.7 million. Revenues (including transfers in and contribution from the Cerritos Redevelopment Agency) completed the fiscal year $0.3 million over the adjusted budget, departmental expenditures (including transfers out) were over budget $10.8 million, because of the capital outlay expenditures related to the sale of assets from the Cerritos Redevelopment Agency to the City. This increase in expenditures resulted in a $10.5 million variance from budgeted to actual fund balance.

The City of Cerritos has two other governmental funds that qualify as major funds. The Redevelopment Agency Debt Service Fund ended the fiscal year with a deficit fund balance of $57.6 million. The deficit fund balance decreased $8.4 million during the fiscal year due to the sale of assets to the City, resulting in revenue from the sale of assets in the amount of $11.0 million. The Redevelopment Agency Capital Projects Fund completed fiscal year 2010-11 with an ending fund balance of $27.2 million. Of this ending fund balance, $11.9 million is considered nonspendable and $17.0 million is considered to be restricted for low and moderate income housing expenditures. The remaining fund balance is a deficit of $1.7 million which is unassigned.

Proprietary Funds

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

The City’s major proprietary funds are the Water and Electric Utility Funds. Net assets of these funds at the end of the fiscal year amounted to $24.5 million and a deficit of $0.7 million, respectively. The total changes in net assets of these funds were a deficit of $0.9 million and a deficit of $6.9 million, respectively. In total, net assets for the major funds decreased $7.8 million from the previous fiscal year.

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FINANCIAL ANALYSIS OF THE CITY’S FUNDS (CONTINUED) Proprietary Funds (Continued) Operating expenses exceeded operating revenues in each of the major proprietary funds resulting in a decline in net assets. The City has not implemented a rate increase in the past five years, calling upon existing net assets to subsidize operations. GENERAL FUND BUDGETARY HIGHLIGHTS During the fiscal year, there was a $0.9 million decrease in appropriations between the original and final amended budget. City management mandated budget reductions within all departmental budgets due to the effects of the economic recession on the City’s major revenue streams. For the second consecutive year, all line items were reviewed with special emphasis on necessary expenditures, while items such as travel, training, and supplies were reduced. The sale of assets from the Cerritos Redevelopment Agency to the City created a variance in capital outlay expenditures, when compared to appropriations, of $13.3 million. As stated above, the decrease in appropriations was necessary because General Fund revenues have declined over the past few years, and though the City’s revenue base has begun a slow rebounding, the reduced revenue base continues to require reductions in departmental expenditures. General Fund revenues declined $0.7 million, or 1.1% from fiscal year 2009-10. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The City of Cerritos’ investment in capital assets for its governmental and business-type activities as of June 30, 2011, amounts to $334.2 million (net of accumulated depreciation), a decrease of $4.3 million from the prior fiscal year. This investment in capital assets includes land, streets, water, sewer and storm drain systems, buildings and improvements, machinery and equipment, vehicles, public works of art, parking structures, water rights and electric rights. The following table presents the capital assets of the City of Cerritos at June 30, 2011.

City of Cerritos Capital Assets(in millions)

Governmental activities Business-type activities Total 2011 2010 2011 2010 2011 2010

Land $ 85.8 $ 84.0 $ - $ - $ 85.8 $ 84.0Parking structure rights 3.8 3.8 - - 3.8 3.8Right-of-way 49.2 49.2 - - 49.2 49.2Public art 4.4 4.4 - - 4.4 4.4Trees 1.3 1.4 - - 1.3 1.4Construction in progress 0.2 0.2 - - 0.2 0.2Buildings and structures 121.2 126.0 3.1 3.2 124.3 129.2Improvements other than buildings

4.7 4.3 - -

4.7 4.3

Infrastructure/water mains and lines/sewer mains

15.7 15.8 27.4 28.2

43.1 44.0

Water rights - - 1.7 1.8 1.7 1.8Electric Rights - - 11.3 11.8 11.3 11.8Furniture and equipment 2.9 3.1 1.5 1.3 4.4 4.4 Total $ 289.2 $ 292.2 $ 45.0 $ 46.3 $ 334.2 $ 338.5

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CAPITAL ASSET AND DEBT ADMINISTRATION (CONTINUED) Capital Assets (Continued) Major capital asset events during the fiscal year included the following:

Installation of solar panels at the corporate yard in the amount of $0.5 million. Street resurfacing on Norwalk Boulevard and South Street of $0.6 million.

Detailed information relating to capital assets can be found in Note 6 to the basic financial statements. Long-term debt At the end of the current fiscal year, the City had total debt outstanding of $166.3 million. The majority of this debt is Redevelopment Agency revenue bonds ($160.9 million).

City of Cerritos Long-Term Debt (in millions)

2011 2010 Los Cerritos-Revenue Bonds $ 37.1 $ 39.8 Los Coyotes-Revenue Bonds 122.3 127.4 Add Deferred Amounts 1.5 1.6 Subtotal – Revenue Bonds 160.9 168.8 Note Payable 1.0 1.0 Compensated Absences 2.7 2.7 Claims Payable-General Liability 1.7 1.9 Total Long-Term Debt $ 166.3 $ 174.4

Detailed information relating to long-term debt can be found in Note 8 to the basic financial statements. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET The current economic situation has appeared to be “the downturn without an end”, affecting virtually every aspect of commercial activity, including housing, retail, credit and employment. The State of California’s budget deficit, estimated in the billions, continues to create uncertainty for all governmental agencies in California. The City of Cerritos is not immune to this uncertainty. Despite the continuation of the most sweeping nationwide economic downturn in eighty years and the effects of the State of California’s budgetary crises, the City of Cerritos has been able to maintain its vibrant business community, and as a result, the community has enjoyed a high level of fiscal stability due to the success and visibility of its commercial sector. The City has been able to maintain its levels of service to the community by positioning itself to withstand fluctuations in the economic environment. The combined tax revenues, particularly sales tax and income from investments and ground leases have made it possible to progress with the planned level of development while maintaining a high degree of financial stability.

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ECONOMIC FACTORS AND NEXT YEAR’S BUDGET (CONTINUED) The City’s ability to maintain a positive business climate was evidenced with the completion of the new Landmark Square and the Lazy Dog Cafe adjacent to the Los Cerritos Center. These accomplishments are strong examples of the City’s continued ability to generate significant ground rent, sales tax and tax increment revenues. Despite the challenging economic environment, careful management of expenditures will enable the City to maintain its ability to fund current levels of services to its residents without the need to use large amounts of its fund balances. The City has, in the past, used unassigned fund balance for specific capital projects, but continues to take a cautious approach to spending in light of the ongoing national and state-wide economic crises. Management is confident that the City can sustain its current level of services while satisfying the funding needs of future capital projects. Future planned capital projects include the installation of photovoltaic solar panels at the corporate yard and ongoing street improvement projects. The recent fluctuations in revenues, continuing demand for the City’s service levels, and potential revenue reductions from the State’s actions to eliminate the State budget deficit continue to be taken into account by the City when budgeting its expenses for the upcoming year. The City of Cerritos continues to adopt a budget that not only serves as a financial plan, but also a communication device, policy tool and operations guide for the City Council and the citizens of Cerritos. REQUESTS FOR INFORMATION This financial report is designed to provide the City of Cerritos citizens, taxpayers, customers, investors, and creditors with a general overview of the City’s finances and to illustrate the City’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City’s Administrative Services Department at the City of Cerritos, 18125 Bloomfield Avenue, Cerritos, CA 90703, or call (562) 860-0311 or visit our website at www.cerritos.us.

BASIC FINANCIAL STATEMENTS

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GOVERNMENT-WIDE FINANCIAL STATEMENTS

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City of CerritosStatement of Net AssetsJune 30, 2011

Governmental Business-Type

Activities Activities Total

ASSETS

Cash and investments 128,203,122$ 5,106,150$ 133,309,272$

Restricted assets:

Cash 10,226,660 - 10,226,660

Investments with fiscal agents 16,598,679 - 16,598,679

Accounts receivable 9,655,935 2,012,529 11,668,464

Interest receivable 315,680 11,929 327,609

Internal balances 12,078,953 (12,078,953) -

Other receivables 3,728 - 3,728

Prepaid expenses 62,864 - 62,864

Inventories 15,259 - 15,259

Other post employment benefit assets 10,441,444 - 10,441,444

Unamortized bond issue costs 1,307,364 - 1,307,364

Capital assets:

Nondepreciable 144,736,130 - 144,736,130

Depreciable, net 144,477,097 44,962,820 189,439,917

Total Assets 478,122,915 40,014,475 518,137,390

LIABILITIES

Accounts payable and accrued liabilities 5,741,264 2,325,218 8,066,482

Accrued salaries and benefits 3,550,734 111,984 3,662,718

Interest payable 1,638,902 - 1,638,902

Unearned revenue 3,273,702 - 3,273,702

Deposits payable 317,393 34,269 351,662

Noncurrent liabilities:

Due within one year 9,900,784 67,700 9,968,484

Due in more than one year 156,195,436 203,100 156,398,536

Total Liabilities 180,618,215 2,742,271 183,360,486

NET ASSETS

Invested in capital assets, net of related debt 128,288,812 44,962,820 173,251,632

Restricted for:

Debt services 16,598,679 - 16,598,679

Low and moderate housing 17,012,352 - 17,012,352

Special revenues 1,473,481 - 1,473,481

Other post employment benefits 10,441,444 - 10,441,444

Unrestricted 123,689,932 (7,690,616) 115,999,316

Total Net Assets 297,504,700$ 37,272,204$ 334,776,904$

See accompanying Notes to Basic Financial Statements.

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City of CerritosStatement of ActivitiesFor the Year Ended June 30, 2011

Operating Capital

Charges for Grants and Grants and

Functions/Programs Expenses Services Contributions Contributions

Governmental Activities:

Legislative and Administration 11,895,682$ 7,623$ 3,879,914$ -$

Community Development 5,995,050 1,055,373 1,984,647 -

Public Works 14,271,031 767,444 2,586,567 -

Water and Power 180,845 66,788 - -

Community and Safety Services 22,595,702 3,864,946 240,163 -

Administrative Services 13,033,543 1,237,313 20,173 -

Cerritos Center for the Performing Arts 9,697,750 4,558,285 - -

Unallocated infrastructure depreciation 908,341 - - -

Interest and fiscal charges 16,654,681 - - -

Total Governmental Activities 95,232,625 11,557,772 8,711,464 -

Business-Type Activities:

Water 9,787,697 7,763,664 - 95,360

Reclaimed Water 1,086,647 838,548 - -

Electric Utility 11,428,662 4,556,861 - -

Sewer 1,787,455 65,095 - -

Total Business-Type Activities 24,090,461 13,224,168 - 95,360

Total 119,323,086$ 24,781,940$ 8,711,464$ 95,360$

General Revenues:

Taxes:

Sales taxes

Property taxes

Motor vehicle taxes

Franchise taxes

Transient occupancy taxes

Other taxes


Miscellaneous

Transfers

Total General Revenues

Changes in Net Assets

Net Assets - Beginning of Year, as restated (Note 16)

Net Assets - End of Year


Program Revenues

18



(8,008,145)$ -$ (8,008,145)$

(2,955,030) - (2,955,030)

(10,917,020) - (10,917,020)

(114,057) - (114,057)

(18,490,593) - (18,490,593)

(11,776,057) - (11,776,057)

(5,139,465) - (5,139,465)

(908,341) - (908,341)

(16,654,681) - (16,654,681)

(74,963,389) - (74,963,389)

- (1,928,673) (1,928,673)

- (248,099) (248,099)

- (6,871,801) (6,871,801)

- (1,722,360) (1,722,360)

- (10,770,933) (10,770,933)

(74,963,389)$ (10,770,933)$ (85,734,322)$

20,486,099 - 20,486,099

35,034,773 - 35,034,773

4,451,226 - 4,451,226

1,487,320 - 1,487,320

398,620 - 398,620

262,970 - 262,970

19,458,284 71,130 19,529,414

621,736 - 621,736

242,091 (242,091) -

82,443,119 (170,961) 82,272,158

7,479,730 (10,941,894) (3,462,164)

290,024,970 48,214,098 338,239,068

297,504,700$ 37,272,204$ 334,776,904$

Net (Expense) Revenue and

Changes in Net Assets

19


20

FUND FINANCIAL STATEMENTS

21

City of CerritosBalance SheetGovernmental FundsJune 30, 2011

Redevelopment Redevelopment

Agency Agency Nonmajor Total

Debt Service Capital Projects Governmental Governmental

General Fund Fund Funds Funds

ASSETS

Cash and investments 94,093,699$ 660,970$ 16,350,599$ 1,728,062$ 112,833,330$

Restricted assets:

Cash 10,226,660 - - - 10,226,660

Investments with fiscal agents - 16,598,679 - - 16,598,679

Receivables:

Accounts 6,922,611 2,086,259 226,601 420,464 9,655,935

Notes, net of allowance for uncollectible - - - - -

Interest 163,188 100,868 19,289 4,468 287,813

Other 1,688 - - 2,040 3,728

Due from other funds 3,253,440 16,066,000 470,040 - 19,789,480

Prepaid expenses 62,864 - - - 62,864

Inventories 15,259 - - - 15,259

Advances to other funds 90,057,072 - 11,881,487 - 101,938,559

Total Assets 204,796,481$ 35,512,776$ 28,948,016$ 2,155,034$ 271,412,307$

LIABILITIES AND

FUND BALANCES

Liabilities:

Accounts payable and accrued liabilities 4,459,694$ 925,000$ 120,169$ 233,434$ 5,738,297$

Accrued salaries and benefits 3,483,451 - - 67,283 3,550,734

Deposits payable 276,560 - 40,833 - 317,393

Due to other funds 16,091,549 2,302,314 1,332,379 15,357 19,741,599

Deferred revenue 5,143,920 - 255,836 365,479 5,765,235

Advances from other funds - 89,907,487 - - 89,907,487

Total Liabilities 29,455,174 93,134,801 1,749,217 681,553 125,020,745

Fund Balances:

Nonspendable 90,135,195 - 11,881,487 - 102,016,682

Restricted - 16,598,679 17,012,352 1,473,481 35,084,512

Assigned 14,150,052 - - - 14,150,052

Unassigned 71,056,060 (74,220,704) (1,695,040) - (4,859,684)

Total Fund Balances 175,341,307 (57,622,025) 27,198,799 1,473,481 146,391,562

Total Liabilities and Fund Balances 204,796,481$ 35,512,776$ 28,948,016$ 2,155,034$ 271,412,307$


Major Funds

22

City of CerritosReconciliation of the Governmental Funds Balance Sheet

to the Government-Wide Statement of Net AssetsJune 30, 2011

Total Fund Balances - Total Governmental Funds 146,391,562$

Amounts reported for governmental activities in the statement of net assets are different because:

Cost 396,859,339$

Less: Accumulated depreciation (107,646,112)

289,213,227

2,491,533

15,394,692

Tax allocation bonds payable (159,440,000)$ Note payable (1,025,000) Compensated absences payable (2,476,008) Claims payable (1,670,797) Unamortized bond premium (3,987,076) Unamortized deferred charge on refunding of bonds 1,701,411 Unamortized bond discount 801,250 Unamortized issuance cost 1,307,364

(164,788,856)

10,441,444

(1,638,902)

Net Assets of Governmental Activities 297,504,700$


Capital assets used in governmental activities are not financial resources and therefore are notreported in governmental funds.

Long-term liabilities applicable to the City governmental activities are not due and payable inthe current period and accordingly are not reported as fund liabilities. All liabilities, bothcurrent and long-term, are reported in the Statement of Net Assets:

Internal service funds are used by management to charge the costs of various city activities toindividual government. The assets and liabilities of the internal service funds are included inthe statement of net assets.

Accrued interest payable for the interest due on long-term liabilities has not been reported in thegovernmental funds.

Revenue earned but not available to pay for current period expenditures for governmental fundsis deferred.

Net other post employment benefit asset is not available to pay for current period expendituresand therefore is not reported in the governmental funds.

23

City of CerritosStatement of Revenues, Expenditures and Changes in Fund BalancesGovernmental FundsFor the Year Ended June 30, 2011

Redevelopment Redevelopment

Agency Agency Nonmajor Total

Debt Service Capital Projects Governmental Governmental

General Fund Fund Funds Funds

REVENUES:

Property, sales, and other taxes 23,635,540$ 25,876,994$ 6,469,248$ -$ 55,981,782$

Franchises 1,487,320 - - 79,355 1,566,675

Licenses and permits 1,869,739 - - - 1,869,739

Fines and forfeitures 1,305,871 - - - 1,305,871

Investment and rental income 15,757,260 567,385 2,270,617 30,339 18,625,601

Revenues from other agencies 8,741,938 - - 5,174,136 13,916,074

Current fees and services 6,886,623 - - 103,088 6,989,711

Other revenues 747,669 - 41,833 - 789,502

Total Revenues 60,431,960 26,444,379 8,781,698 5,386,918 101,044,955

EXPENDITURES:

Current:

Legislative and Administration 2,515,105 4,736,812 3,968,040 128,405 11,348,362

Community Development 3,000,786 - 895,956 2,034,643 5,931,385

Public Works 10,246,568 - - 3,865,379 14,111,947

Water and Power 175,593 - - - 175,593

Community and Safety Services 20,909,182 - - 248,257 21,157,439

Administrative Services 10,747,581 - - 552,621 11,300,202

Cerritos Center for the Performing Arts 8,054,469 - - - 8,054,469

Capital outlay 13,300,639 - 28,470 1,388,064 14,717,173

Debt service:

Principal retirement - 7,712,500 - - 7,712,500

Interest - 16,563,936 173,020 - 16,736,956

Total Expenditures 68,949,923 29,013,248 5,065,486 8,217,369 111,246,026

REVENUES OVER

(UNDER) EXPENDITURES (8,517,963) (2,568,869) 3,716,212 (2,830,451) (10,201,071)

OTHER FINANCING SOURCES (USES):

Transfers in 1,200,000 - - 2,007,464 3,207,464

Transfers out (2,233,414) - - (731,959) (2,965,373)

Proceeds from sale of assets - 11,000,000 - - 11,000,000

Contribution from Cerritos

Redevelopment Agency 1,792,610 - - - 1,792,610

Contribution to City of Cerritos - - (1,792,610) - (1,792,610)

Total Other Financing Sources (Uses) 759,196 11,000,000 (1,792,610) 1,275,505 11,242,091

Net Change in Fund Balances (7,758,767) 8,431,131 1,923,602 (1,554,946) 1,041,020

FUND BALANCES:

Beginning of Year, as restated (Note 16) 183,100,074 (66,053,156) 25,275,197 3,028,427 145,350,542

End of Year 175,341,307$ (57,622,025)$ 27,198,799$ 1,473,481$ 146,391,562$


Major Funds

24

City of CerritosReconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes

in Fund Balances to the Government-Wide Statement of ActivitiesFor the Year Ended June 30, 2011

Net Change in Fund Balance - Total Governmental Funds: 1,041,020$

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

Capital outlays 3,717,173$ Depreciation expense (6,640,753) (2,923,580)

(42,362)

(306,182)

(98,623)

1,731,491

Debt issued or incurred:Principal payments 7,712,500$

Change in compensated absences payable 36,427 Change in claim payable 246,764 7,995,691

Accrued interest 79,563 Amortization of bond premium 306,699

Amortization of deferred charge on refunding (141,785)

Amortization of bond discount (61,635)

Amortization of issuance costs (100,567) 82,275

Change in Net Assets of Governmental Activities 7,479,730$


Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the costof these assets is allocated over their estimated useful lives and reported as depreciation expense.

Internal service funds are used by management to charge the costs of certain activities, such as equipmentreplacement and inventory usage fees to individual funds. The change in net assets of internal service fundsis reported within governmental activities.

The issuance of long-term liabilities provides current financial resources to governmental funds, while therepayment of the principal of long-term liabilities consumes the current financial resources of governmentalfunds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effectof issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amountsare deferred and amortized in the statement of activities. This amount is the net effect of these differences inthe treatment of long-term liabilities and related items.

Some expenses reported in the Statement of Activities do not require the use of current financial resourcesand therefore are not reported as expenditures in the governmental funds.

Revenue in the Statement of Activities that does not provide current financial resources is not reported asrevenue in governmental funds.

The net effect of adjustment involving disposal of capital assets

Change in net other post employment benefit asset reported in the statements of activities does not providecurrent financial resources and, therefore, is not reported as an revenue in governmental funds

25


26

PROPRIETARY FUND FINANCIAL STATEMENTS

27

City of CerritosStatement of Net AssetsProprietary FundsJune 30, 2011

Governmental

Nonmajor Activities -

Water Electric Enterprise Total Enterprise Internal

Fund Utility Funds Funds Service Funds

ASSETS

Current Assets:

Cash and investments 3,503,900$ 1,089,405$ 512,845$ 5,106,150$ 15,369,792$

Accounts receivable 1,092,734 755,002 164,793 2,012,529 -

Interest receivable 7,977 - 3,952 11,929 27,867

Due from other funds - 30,178 - 30,178 -

Total Current Assets 4,604,611 1,874,585 681,590 7,160,786 15,397,659

Noncurrent Assets:

Capital assets:

Building and structures 4,947,697 - 1,315,000 6,262,697 -

Water mains and lines 27,882,460 - 13,068,932 40,951,392 -

Equipment 4,343,651 - 120,278 4,463,929 -

Water rights acquired 2,259,378 - - 2,259,378 -

Electric utility rights acquired - 14,105,000 - 14,105,000 -

Sewer mains - - 11,760,205 11,760,205 -

Accumulated depreciation (18,721,678) (2,821,000) (13,297,103) (34,839,781) -

Total Noncurrent Assets 20,711,508 11,284,000 12,967,312 44,962,820 -

Total Assets 25,316,119 13,158,585 13,648,902 52,123,606 15,397,659

LIABILITIES

Current Liabilities:

Accounts payable 441,784 1,860,097 23,337 2,325,218 2,967

Accrued salaries and benefits 84,314 14,488 13,182 111,984 -

Deposits payable 34,269 - - 34,269 -

Due to other funds - - 78,059 78,059 -

Compensated absences 67,700 - - 67,700 -

Total Current Liabilities 628,067 1,874,585 114,578 2,617,230 2,967

Noncurrent Liabilities:

Advance from other funds - 12,031,072 - 12,031,072 -

Compensated absences 203,100 - - 203,100 -

Total Noncurrent Liabilities 203,100 12,031,072 - 12,234,172 -

Total Liabilities 831,167 13,905,657 114,578 14,851,402 2,967

NET ASSETS

Invested in capital assets 20,711,508 11,284,000 12,967,312 44,962,820 -

Unrestricted 3,773,444 (12,031,072) 567,012 (7,690,616) 15,394,692

Total Net Assets 24,484,952$ (747,072)$ 13,534,324$ 37,272,204$ 15,394,692$


Business-Type Activities - Enterprise Funds

Major Funds

28

City of CerritosStatement of Revenues, Expenses and Changes in Net AssetsProprietary FundsFor the Year Ended June 30, 2011

GovernmentalNonmajor Activities -

Water Electric Enterprise Total Enterprise InternalFund Utility Funds Funds Service Funds

OPERATING REVENUES:

Sales of water:Regular 5,659,090$ -$ 838,548$ 6,497,638$ -$ Wholesale 977,673 - - 977,673 -

Sales of electricity:Regular - 3,678,805 - 3,678,805 - Resale - 137 - 137 -

Fire lines 260,388 - - 260,388 - Charges for services 40,658 - 65,095 105,753 - Other agency contribution 825,855 860,403 - 1,686,258 - Other revenues - 17,516 - 17,516 -

Total Operating Revenues 7,763,664 4,556,861 903,643 13,224,168 -

OPERATING EXPENSES:

Management 3,729,215 832,170 460,607 5,021,992 - Production and distribution 3,662,347 - 176,019 3,838,366 - Operations 1,140,212 6,979,650 1,708,286 9,828,148 - Inspections 406,017 - 57,596 463,613 - Billings and collection 36,348 21,238 5,144 62,730 - Administrative costs - - - - 272,247 Depreciation 813,558 470,167 466,450 1,750,175 - Impairment loss - 2,143,267 - 2,143,267 -

Total Operating Expenses 9,787,697 10,446,492 2,874,102 23,108,291 272,247

OPERATING LOSS (2,024,033) (5,889,631) (1,970,459) (9,884,123) (272,247)

NONOPERATING REVENUES (EXPENSES):

Investment income/(loss) 41,954 - 29,176 71,130 173,624 Interest expense - (982,170) - (982,170) -

Total Nonoperating Revenues (Expenses) 41,954 (982,170) 29,176 (911,040) 173,624

INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS (1,982,079) (6,871,801) (1,941,283) (10,795,163) (98,623)

CAPITAL CONTRIBUTIONS AND TRANSFERS:

Capital contributions 95,360 - - 95,360 - Transfers in 957,909 - - 957,909 - Transfers out - - (1,200,000) (1,200,000) -

Total Capital Contributions and Transfers 1,053,269 - (1,200,000) (146,731) -

Change in Net Assets (928,810) (6,871,801) (3,141,283) (10,941,894) (98,623)

NET ASSETS:

Beginning of the Year, as restated (Note 16) 25,413,762 6,124,729 16,675,607 48,214,098 15,493,315

End of the Year 24,484,952$ (747,072)$ 13,534,324$ 37,272,204$ 15,394,692$


Business-Type Activities - Enterprise FundsMajor Funds

29

City of CerritosStatement of Cash FlowsProprietary FundsFor the Year Ended June 30, 2011

Governmental




CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers 7,663,823$ 4,283,127$ 890,419$ 12,837,369$ -$

Cash paid to other suppliers of goods or services (5,238,330) (5,266,631) (1,988,314) (12,493,275) (236,715)

Cash paid to employees (3,698,328) (817,682) (454,575) (4,970,585) (76,635)

Net Cash Used for Operating Activities (1,272,835) (1,801,186) (1,552,470) (4,626,491) (313,350)

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES:

Transfers from other funds 957,909 - - 957,909 -

Cash advances from other funds - 2,864,150 - 2,864,150 -

Net Cash Provided by (Used for)

Noncapital Financing Activities 957,909 2,864,150 - 3,822,059 -

CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES:

Acquisition of capital assets (447,775) - - (447,775) -

Proceeds from sale of capital assets 20,711 - - 20,711 -

Transfers to other funds - - (1,200,000) (1,200,000) -

Receipt of capital contribution 95,360 - - 95,360 -


Capital and Related Financing Activities (331,704) - (1,200,000) (1,531,704) -

CASH FLOWS FROM INVESTING ACTIVITIES:

Interest income received 43,509 61 32,727 76,297 181,735


Investing Activities 43,509 61 32,727 76,297 181,735

Net Increase (Decrease) in

Cash and Cash Equivalents (603,121) 1,063,025 (2,719,743) (2,259,839) (131,615)

CASH AND CASH EQUIVALENTS:

Beginning of Year 4,107,021 26,380 3,232,588 7,365,989 15,501,407

End of Year 3,503,900$ 1,089,405$ 512,845$ 5,106,150$ 15,369,792$



Major Funds

30

Governmental




RECONCILIATION OF OPERATING

LOSS TO NET CASH PROVIDED BY

(USED FOR) OPERATING ACTIVITIES:

Operating loss (2,024,033)$ (5,889,631)$ (1,970,459)$ (9,884,123)$ (272,247)$

Adjustments to reconcile operating income to net cash

provided by (used for) operating activities:

Depreciation expense 813,558 470,167 466,450 1,750,175 -

Impairment loss - 2,143,267 - 2,143,267 -

Change in assets and liabilities:

(Increase) decrease in accounts receivable (77,478) (273,734) (13,224) (364,436) -

(Increases) decrease in due from other funds - (30,186) - (30,186) -

(Increase) decrease in prepaid expenses 38,580 395,497 3,930 438,007 -

Increase (decrease) in accounts payable (31,986) 1,368,938 8,357 1,345,309 (41,103)

Increase (decrease) in accrued salaries and benefits 18,024 14,488 6,032 38,544 -

Increase (decrease) in deposits payable (22,363) - - (22,363) -

Increase (decrease) in due to other funds - 8 (53,556) (53,548) -

Increase (decrease) in compensated absences 12,863 - - 12,863 -

Net Cash Used for Operating Activities (1,272,835)$ (1,801,186)$ (1,552,470)$ (4,626,491)$ (313,350)$


31


32

City of Cerritos Index to Notes to Basic Financial Statements For the year ended June 30, 2011

33

Page 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ·················································· 35

A. Financial Reporting Entity ···························································································· 35 B. Basis of Accounting and Measurement Focus ··································································· 36 C. Cash and Cash Equivalents ·························································································· 39 D. Investments ··············································································································· 39 E. Inventories ················································································································ 39 F. Capital Assets ············································································································ 39 G. Compensated Absences Payable ···················································································· 40 H. Claims and Judgments ································································································· 41 I. Property Taxes ··········································································································· 41 J. Fund Balances and Net Assets ······················································································· 41 K. Estimates ·················································································································· 42

2. CASH AND INVESTMENTS ··························································································· 42

A. Deposits ··················································································································· 43 B. Investments ··············································································································· 44 C. Investments Authorized by Debt Agreements ·································································· 44 D. Risk Disclosures ········································································································· 45 E. Investments in State Investment Pool ·············································································· 47

3. PREPAID EXPENSES ······································································································ 47 4. NOTES RECEIVABLE ····································································································· 47 5. INTERFUND TRANSACTIONS ······················································································· 48

A. Government-Wide Financial Statements ·········································································· 48 B. Fund Financial Statements ···························································································· 48

6. CAPITAL ASSETS ·········································································································· 51 7. DEFERRED/UNEARNED REVENUE ················································································· 53 8. LONG TERM DEBT ········································································································ 54

A. Los Cerritos Redevelopment Project 1993 Revenue Bonds, Series B ······································· 55 B. Los Cerritos Redevelopment Project 2002 Tax Allocation Revenue Bonds, Series A ·················· 55 C. Los Cerritos Redevelopment Project 2002 Tax Allocation Revenue Bonds, Series B ··················· 56 D. Los Cerritos and Los Coyotes Redevelopment Project-Magnolia Power Project B,

Series 2003 Revenue Bonds ··························································································· 57 E. Los Coyotes Redevelopment Project 1993 Revenue Bonds, Series A ······································ 58 F. Los Coyotes Redevelopment Project 1993 Revenue Bonds, Series B ······································· 59 G. Los Coyotes Redevelopment Project 1998 Tax Allocation Bonds, Series A ······························· 60 H. Los Coyotes Redevelopment Project 2002 Tax Allocation Revenue Bonds, Series A ·················· 61 I. Los Coyotes Redevelopment Project 2002 Tax Allocation Revenue Bonds, Series B ··················· 62 J. Los Cerritos and Los Coyotes Redevelopment Project-Magnolia Power Project B,

Series 2003 Revenue Bonds ·························································································· 62

City of Cerritos Index to Notes to Basic Financial Statements, Continued For the year ended June 30, 2011

34

Page

8. LONG TERM DEBT, Continued K. Los Cerritos Redevelopment Project-Note Payable ···························································· 64 L. Compensated Absences ······························································································· 64 M. Claims Payable – General Liability ················································································· 64

9. FUND BALANCES CLASSIFICATIONS ············································································ 65

10. RETIREMENT PLAN ······································································································ 66 A. Defined Benefit Pension Plan ························································································ 66 B. Post-Retirement Health Care Benefits ············································································· 67 C. Other Defined Contribution Plans ·················································································· 70

11. LIABILITY, PROPERTY AND WORKERS’ COMPENSATION PROTECTION ························ 70 A. Description of Self-Insurance Pool Pursuant to Joint Powers Agreement ································ 70 B. Self-Insurance Programs of the CJPIA ············································································· 71 C. Purchased Insurance ··································································································· 72 D. Adequacy of Protection ······························································································· 73 E. Retroactive Deposit ····································································································· 73

12. OTHER REQUIRED DISCLOSURES ················································································· 74 A. Deficit Fund Balances ·································································································· 74 B. Excess Expenditures over Appropriations ········································································ 74

13. COMMITMENTS AND CONTINGENCIES ······································································· 75 A. Lawsuits ··················································································································· 75 B. Contract with Los Angeles County Sheriff’s Department ···················································· 75 C. $5,640,000 Tax Allocation Bonds arrangement with Commonwealth Cousins I, LLC ················· 75 D. Electric Utility ··········································································································· 75 E. Grants ······················································································································ 76

14. LEASE INCOME UNDER OPERATING LEASES ································································ 76

15. TRANSFER OF ASSETS ·································································································· 76 16. PRIOR PERIOD ADJUSTMENTS ····················································································· 77

17. RECENT CHANGES IN LEGISLATION AFFECTING CALIFORNIA REDEVELOPMENT AGENCIES ···················································································································· 78

City of Cerritos Notes to Basic Financial Statements For the year ended June 30, 2011

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the City of Cerritos, California, (the “City”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as applied to governmental agencies. The Governmental Accounting Standards Boards (“GASB”) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the significant policies: A. Financial Reporting Entity The City was incorporated on April 26, 1956 as a charter city under the laws of the State of California and enjoys all the rights and privileges allowed by its charter. The City is governed by an elected five-member council. As required by GAAP, the accompanying financial statements present the City and its component units. GASB Statement No. 14, The Financial Reporting Entity, defines component units as legally separate entities that meet any one of the following tests:

The City appoints the voting majority of the board of the potential component unit and:

o is able to impose its will on the component unit and/or

o is in a relationship of financial benefit or burden with the potential component unit.

The potential component unit is fiscally dependent upon the City.

The financial statements of the City would be misleading if data from the potential component units were omitted.

Management determined that the following blended component units based on the criteria above:

Cerritos Redevelopment Agency - The Cerritos Redevelopment Agency (the “Agency”) was activated in November, 1969 pursuant to the State of California Health and Safety Code, Section 33000 entitled “Community Development Law”. The primary purpose of the Agency is to eliminate physically and economically blighted areas by encouraging the development of residential, commercial, industrial, recreational and public facilities. The Agency has undertaken the Los Cerritos Redevelopment Project, encompassing approximately 940 acres, and the Los Coyotes Redevelopment Project that covers 1,615 acres in the eastern section of the City. The Agency, through the two project areas, has constructed various facilities that are being utilized by the City. Cerritos Public Financing Authority - The Cerritos Public Financing Authority (the “Authority”) was formed pursuant to a Joint Exercise of Powers Agreement, dated May 18, 1993 by and between the City and the Agency. The purpose of the Authority is to provide financing for public improvements and capital expenditures and for the repayment of existing debt.

These component units are included in the primary government because of the significance of their financial or operational relationship and due to the same governing body as the City. The Agency issues separate component unit financial statements and these can be obtained from the City’s Administrative Services Department located at 18125 Bloomfield Avenue, Cerritos, California 90703. Separate financial statements are not prepared for the Authority.

City of Cerritos Notes to Basic Financial Statements, Continued For the year ended June 30, 2011

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for in a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. City resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. Government-Wide Financial Statements The City’s Government-Wide Financial Statements include a Statement of Net Assets and a Statement of Activities. These statements present summaries of Governmental and Business-Type Activities for the City accompanied by a total column. The Government-Wide Financial Statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Assets. The Statement of Activities presents changes in net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. The types of transactions reported as program revenues for the City are reported in three categories: 1) charges for services, 2) operating grants and contributions, and 3) capital grants and contributions. Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables and receivables including the corresponding deferred revenues. All internal balances in the Statement of Net Assets have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated. However, transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated:

Due to and from other funds Advances to and from other funds Transfers in and out

Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. The City also has the option of following subsequent private-section guidance for their business-type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance.


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Governmental Fund Financial Statements Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balance for all major governmental funds and nonmajor funds in aggregate. An accompanying schedule is presented to reconcile and explain the differences in net assets as presented in these statements to the net assets presented in the Government-Wide financial statements. The City has presented all major funds that met the qualifications for major fund reporting. All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheets. The Statement of Revenues, Expenditures and Changes in Fund Balance presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are property taxes, sales taxes, taxpayer-assessed tax revenues (transient occupancy taxes, franchise taxes, etc.), certain grant revenues and earnings on investments. Expenditures are recorded in the accounting period in which the related fund liability is incurred. Deferred revenues arise when potential revenues do not meet both the “measurable” and “available” criteria for recognition in the current period. Deferred revenues also arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods when both revenue recognition criteria are met or when the government has a legal claim to the resources, the deferred revenue is removed from the balance sheet and revenue is recognized. Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34. Proprietary Fund Financial Statements Proprietary Fund Financial Statements include a Statement of Net Assets, a Statement of Revenues, Expenses and Changes in Net Assets, and a Statement of Cash Flows for each major proprietary fund. Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Assets. The Statement of Revenues, Expenses and Changes in Net Assets presents increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. In these funds, receivables have been recorded as revenue and provisions have been made for uncollectible amounts.


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Proprietary Fund Financial Statements, Continued Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the proprietary funds are charges to customers for sales and services. Operating expenses for the proprietary 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 nonoperating revenues and expenses. The City reports the following major governmental funds:

The General Fund is the general operating fund of the City. All general tax revenues and other receipts not allocated by law or contractual agreement to other funds are accounted for in this fund. Expenditures of this fund include general operating costs not paid through other funds. The Redevelopment Agency Debt Service Fund is used to account for tax increment revenue and related interest income. Tax increment is property tax revenue based on the increase in valuation of the project areas over the “frozen” base year. This fund is used for the repayment of principal and interest on the indebtedness of the Agency. The Redevelopment Agency Capital Projects Fund is used to account for advances from the City of Cerritos, bond proceeds available for project improvements, a portion of tax increment revenues set aside for low/moderate income housing projects, interest income on invested funds and certain miscellaneous income. The funds are expended primarily for administrative expenses and redevelopment project costs.

The City reports the following major proprietary funds:

The Water Fund is used to account for the provision of water to the residents and businesses of the City. All activities necessary to provide such services are accounted for in this fund including, but not limited to, administration, operations, maintenance, construction, and financing. The Electric Utility Fund is used to account for provided retail electricity provided by the City. Initially, major accounts for both the City and the ABC Unified School District were served. Additional accounts have been added since inception to utilize the full output of the Magnolia plant allocated to Cerritos. All activities necessary to provide such services are accounted for in this fund including, but not limited to, administration, operations, maintenance, construction financing and related debt service.


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Additionally, the City reports the following fund types:

The Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. The Capital Projects Fund is used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays including the acquisition or construction of capital facilities and other capital assets. The Reclaimed Water Fund and Sewer Fund, Nonmajor Enterprise Funds, are used to account for the construction, operation, and maintenance of the city owned reclaimed water system and sewer system and to account for monies received from sewer connection and maintenance fees. The Equipment Replacement Fund, an Internal Service Fund, is used to account for the regular maintenance and replacement of the City’s capital equipment and office equipment inventory.

C. Cash and Cash Equivalents A substantial portion of the City’s investments are in short-term liquid instruments, with original maturities of three months or less (excluding fiscal agent investments). The Enterprise and Internal Service Funds participate in the pooling of City-wide cash and investments. Amounts from the pool are available to these funds on demand. As a result, the cash and investments of the Enterprise and Internal Service Funds are considered to be cash and cash equivalents for Statement of Cash Flow purposes. The Statement of Cash Flows is presented using the direct method. D. Investments Investments are stated at fair value (quoted market price or best available estimate thereof). E. Inventories Inventories are valued at average cost. Inventories in the General Fund are recorded based on the consumption (capitalization) method and are offset by a nonspendable fund balance. F. Capital Assets Capital assets (including infrastructure) are recorded at cost where historical records are available and at an estimated original cost where no historical records exist. Contributed capital assets are valued at their estimated fair market value at the date of contribution. Generally, capital asset purchases in excess of $2,500 are capitalized if they have an expected useful life of 1 year or more.


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued F. Capital Assets, Continued Capital assets include additions to public domain (infrastructure), certain improvements including pavement, curb and gutter, sidewalks, traffic control devices, street lights, sewers, water lines, bridges and right-of-way corridors within the City. The City has valued and recorded all infrastructure asset data as of June 30, 2011. In June 1999, the Governmental Accounting Standards Board (GASB) issued Statement No. 34 which requires the inclusion of infrastructure capital assets in local governments’ basic financial statements. For infrastructure systems, the City elected to use the “Basic Approach” as defined by GASB Statement No. 34 for infrastructure reporting. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of the capital assets of business-type activities is included as part of the capitalized value of the assets constructed. Capital assets used in operations are depreciated over their estimated useful lives using the straight-line method. The lives used for depreciation purposes of each capital asset class are:

Buildings 40 yearsImprovements other than buildings 10 to 40 yearsWater mains and lines 65 yearsWater rights 40 yearsVehicles 5 to 15 yearsMachinery and equipment 5 to 15 yearsOffice furniture, computers and equipment 3 to 15 yearsLeased property 5 to 10 yearsInfrastructure 20 to 75 years

G. Compensated Absences Payable In governmental funds vacation and sick leave are recorded as expenditures in the year paid. Accordingly, the entire unpaid liability for the governmental funds is recorded as a long-term obligation in the government-wide financial statements only. Unpaid compensated absences in proprietary funds are recorded as a liability in those funds as the vested benefits accrue to the employees.


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued H. Claims and Judgments When it is probable that a claim or judgment liability has been incurred at year end, and the amount of the loss can be reasonably estimated, the City records the estimated loss, net of any insurance coverage. The City is a member of the California Joint Powers Insurance Authority (CJPIA). The City believes that its deposits with the CJPIA are adequate to cover all claims, including claims incurred but not reported. I. Property Taxes Under California law, property taxes are assessed and collected by the counties up to 1% of assessed value, plus other increases approved by the voters. The property taxes go into a pool, with the County, and are then allocated to the cities based on complex formulas. The following are annual dates pertaining to property taxes:

Lien Date January 1Levy Date June 30Due Dates November 1 and February 1Delinquency Dates December 10 and April 10

J. Fund Balances and Net Assets In the governmental fund financial statements, fund balances are classified as follows:

Nonspendable Fund Balance – This amount indicates the portion of funds balances which cannot be spent because they are either not in spendable form, such as prepaid items, inventories or loans receivable, or legally or contractually required to be maintained intact, such as the principal portion of an endowment.

Restricted Fund Balance – This amount indicates the portion of fund balances which has been restricted 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.

Committed Fund Balance – This amount indicates the portion of fund balances which can only be used for specific purposes pursuant to formal resolution or ordinance of the City Council.

Assigned Fund Balance – This amount indicates the portion of fund balances which is constrained by the City’s intent to be used for specific purpose, but is neither restricted nor committed. The City Manager is authorized to determine and define the amount of assigned fund balances.

Unassigned Fund Balance – Unassigned fund balance represents fund balance that has not been assigned to other funds and that has not been restricted, committed or designated as nonspendable.

When expenses are incurred for purposes for which both restricted and unrestricted fund balances are available, the City’s policy is to apply restricted fund balances first, then unrestricted fund balances as they are needed.


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued J. Fund Balances and Net Assets, Continued When expenditures are incurred for purposes where only unrestricted fund balances are available, the City uses the unrestricted resources in the following order: committed, assigned, and unassigned. In the governmental-wide financial statements and proprietary fund financial statements, net assets are classified as follows:

Invested in Capital Assets, Net of Related Debt – This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that attributed to the acquisition, construction, or improvement of the assets. Restricted Net Assets – This amount is restricted by external creditors, grantors, contributors, or laws or regulations of other governments. Unrestricted Net Assets – This amount is all net assets that do not meet the definition of “invested in capital assets, net of related debt” or “restricted net assets.”

When expenses are incurred for purposes for which both restricted and unrestricted net assets are available, the City’s policy is to apply restricted net assets first, then unrestricted net assets as they are needed. K. Estimates The preparation of the basic financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 2. CASH AND INVESTMENTS The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds. The City has the following cash and investments at June 30:



Cash and investments 128,203,122$ 5,106,150$ 133,309,272$ Restricted Cash and Investments:

Cash 10,226,660 - 10,226,660 Investments with fiscal agent 16,598,679 - 16,598,679

Total cash and investments 155,028,461$ 5,106,150$ 160,134,611$

Statement of Net AssetsGovernment-Wide


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2. CASH AND INVESTMENTS, Continued The City’s Cash and Investments at June 30 in more detail:

Cash and cash equivalents:Petty cash 11,285$ Demand deposits 22,794,402

Total cash and cash equivalents 22,805,687

Investments:Local Agency Investment Fund 58,321,311 U.S. Government Sponsored Enterprise Securities 70,897,160 Corporate Obligations 3,196,380 Certificates of Deposits 200,000 Investment Contracts 3,206,533 Money Market Mutual Funds 1,507,540

Total investments 137,328,924

Total cash and investments 160,134,611$

A. Deposits The carrying amounts of the City’s demand deposits were $22,794,402 at June 30, 2011. Bank balances were $24,367,761 at that date, the total amount of which was collateralized or insured with securities held by the pledging financial institutions in the City’s name as discussed below. The California Government Code requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name. The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure city deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits; however, the City has not waived the collateralization requirements. Beginning December 31, 2010 through July 20, 2011, noninterest-bearing transaction accounts have unlimited coverage by Federal Depository Insurance Corporation (“FDIC”). As a result, the City’s cash deposits at June 30, 2011 were fully insured by FDIC.


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2. CASH AND INVESTMENTS, Continued B. Investments The table below identifies the investment types that are authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.

Maximum MaximumMaximum Percentage Investment

Authorized Investment Type Maturity of Portfolio * in One Issuer

United States Treasury Obligations 5 years No Limit No LimitU.S. Government Sponsored

Enterprise Securities 5 years No Limit No LimitBanker's Acceptances 180 days 40% 10%Commercial Paper 270 days 40% 10%Negotiable Certificates of Deposit 5 years 30% 10%Repurchase Agreements 1 year No Limit No LimitMoney Market Mutual Funds N/A 20% No LimitLocal Agency Investment Fund (LAIF) N/A No Limit 50,000,000$

N/A - Not Applicable

* Excluding amounts held by bond trustees that are not subject to California Government Code restrictions.

C. Investments Authorized by Debt Agreements Investment of debt proceeds held by a bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy. Investments authorized for funds held by the bond trustee include U.S. Treasury Obligations, U.S. Government Sponsored Enterprise Securities, Money Market Mutual Funds and Investment Contracts. There are no limitations on the maximum amount that can be invested in one issuer, maximum percentage allowed or the maximum maturity of an investment.


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2. CASH AND INVESTMENTS, Continued D. Risk Disclosures Interest Rate Risk – The City’s investment policy manages exposure to interest rate risk by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. The policy limits investment maturities as a means of managing its exposure to fair value losses arising from fluctuating interest rates. Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments at maturity:

12 Months 13 - 24 25 - 60Investment Type or Less Months Months Total

Local Agency Investment Fund (LAIF) 58,321,311$ -$ -$ 58,321,311$ Federal Home Loan bank (FHLB) - - 15,076,310 15,076,310 Federal National Mortgage Association (FNMA) - - 12,913,610 12,913,610 Federal Home Loan Mortgage Corporation (FHLMC) - - 5,977,312 5,977,312 Federal Farm Credit Bank (FFCB) - - 36,928,847 36,928,847 Government Nat'l Mortgage Association (GNMA) - - 1,081 1,081 Long Term Corporate Note (LTN) - 25,000 - 25,000 Medium Term Corporate Note (MTN) - 3,171,380 - 3,171,380 Certificates of Deposits 200,000 - - 200,000 Investment Contracts - - 3,206,533 3,206,533 Money Market (MMkt) Mutual Funds 1,507,540 - - 1,507,540

Total 60,028,851$ 3,196,380$ 74,103,693$ 137,328,924$

Remaining Maturity ( in Months)


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2. CASH AND INVESTMENTS, Continued D. Risk Disclosures, Continued

Credit Risk – Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual rating at time of purchase for each investment type:

Total Minimum Notas of Legal Required

Investment Type June 30, 2011 Rating AAA Other Unrated to be Rated

LAIF 58,321,311$ N/A -$ -$ -$ 58,321,311$ FHLB 15,076,310 N/A 15,076,310 - - - FNMA 12,913,610 N/A 12,913,610 - - - FHLMC 5,977,312 N/A 5,977,312 - - - FFCB 36,928,847 N/A 36,928,847 - - - GNMA 1,081 N/A 1,081 - - - LTN 25,000 N/A - - 25,000 - MTN 3,171,380 A - 3,171,380 - - Certificates of Deposits 200,000 A-1/P-1 - - 200,000 - Investment Contracts 3,206,533 N/A 3,206,533 - - - MMkt Mutual Funds 1,507,540 N/A - - 1,507,540 -

Total 137,328,924$ 74,103,693$ 3,171,380$ 1,732,540$ 58,321,311$

N/A - Not Applicable

The actual ratings at time of purchase for the Medium Term Corporate Notes (MTN) are as follows:

Other:A+ 2,111,380$ A 1,060,000

Total Other 3,171,380$

Custodial Credit Risk – For deposits, custodial credit risk is the risk that, in the event of the failure of a deposit financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City’s investment policy does not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the provision for deposits stated in Note 2A. At June 30, 2011, City’s deposits with financial institutions are fully insured by FDIC.


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2. CASH AND INVESTMENTS, Continued

E. Investments in State Investment Pool

The City is a participant in LAIF which is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City’s investments with LAIF at June 30, 2011, included a portion of pool funds invested in Structured Notes and Asset-Backed Securities:

Structured Notes: debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options.

Asset-Backed Securities: generally mortgage-backed securities that entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (for example, Collateralized Mortgage Obligations) or credit card receivables.

As of June 30, 2011, the City had $58,321,311 invested in LAIF, which had invested 5.01% of the pool investment funds in Structured Notes and Asset-Backed securities as compared to 5.42% in the previous year.

3. PREPAID EXPENSES

The City had prepaid expenses in the amount of $62,864 for governmental activities at June 30, 2011. During the year ended June 30, 2011, the City determined that the prepaid expenses representing payments for the City’s share of fuel reserves, capital reserves and debt service reserves relating to the operations of the Magnolia Power Plant in the amount of $2,143,267 were impaired. This impairment was determined based on the fact that the City made the required payments for its share of fuel, capital and debt service, but had no control over when the monies were actually expended. As a result, the Electric Utility Fund recognized an impairment loss in the amount of $2,143,267 for the year ended June 30, 2011.

4. NOTES RECEIVABLE

Notes receivable in the Redevelopment Agency Capital Project Fund consisted of the following at June 30, 2011:

Balance BalanceJuly 1, 2010 Additions Deletions June 30, 2011

Residential Assistance Program 2,040,000$ -$ -$ 2,040,000$ Residental Loan Program 355,506 - (41,817) 313,689

Subtotal 2,395,506 -$ (41,817)$ 2,353,689

Less: Allowance for uncollectible (2,395,506) (2,353,689)

Total -$ -$

The Redevelopment Agency Capital Project Fund provides funding for residential assistance and residential loan programs.


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5. INTERFUND TRANSACTIONS A. Governmental-Wide Financial Statements At June 30, 2011, the City had the following internal receivable and payable:

Internal Receivable

GovernmentalInternal Payable Activities

Business-Type Activities 12,078,953$

B. Fund Financial Statements Due To and Due From Other Funds - At June 30, 2011, the City had the following due to/from other funds:

Enterprise Fund

Redevelopment RedevelopmentAgency Debt Agency Capital Electric

Due to Other Funds General Service Fund Projects Fund Utility Total

Governmental Funds:

General Fund -$ 16,066,000$ 25,549$ -$ 16,091,549$ Redevelopment Agency Debt Service Fund 1,857,823 - 444,491 - 2,302,314 Redevelopment Agency Capital Projects Fund 1,302,201 - - 30,178 1,332,379 Nonmajor Governmental Funds 15,357 - - - 15,357

Enterprise Funds:

Nonmajor Enterprise Funds 78,059 - - - 78,059

Total 3,253,440$ 16,066,000$ 470,040$ 30,178$ 19,819,658$

Governmental Funds

Due from Other Funds

The interfund amounts due to the General Fund from the Redevelopment Agency Funds, Nonmajor Governmental Funds, and Nonmajor Enterprise Funds are for administrative expenditures paid by the General Fund on behalf of the other funds. All amounts were repaid to the General Fund by August 31, 2011. The interfund amount due to Redevelopment Agency Funds from General Fund in amount of $16,091,549 is for interfund loans not yet received by the Redevelopment Agency Funds but approved by the Council on June 23, 2011. The interfund amount between the Redevelopment Agency Capital Project Fund and Redevelopment Agency Debt Service Fund in amount of $444,491 is for the 20% set-aside for low and moderate income housing and the interest accrued at June 30, 2011.


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5. INTERFUND TRANSACTIONS, Continued B. Fund Financial Statements, Continued Advances To/From Other Funds - At June 30, 2011, the City had the following advances to/from other funds:

RedevelopmentAgency

General Capital ProjectsAdvances from Other Funds Fund Fund Total

Governmental Fund:

Redevelopment Agency Debt Service Fund 78,026,000$ 11,881,487$ 89,907,487$ Enterprise Fund:

Electric Utility Enterprise Fund 12,031,072 - 12,031,072

Total 90,057,072$ 11,881,487$ 101,938,559$

Governmental Funds

Advances to Other Funds

Advances from the General Fund to the Redevelopment Agency were provided to fund capital improvement projects in both the Los Cerritos and Los Coyotes projects areas. Interest on the outstanding balance on advances payable of $78,026,000 is charged at an annual rate of 8% to the Agency. The Agency remits the interest payment to the City on a quarterly basis. All payments to the City for the interest on advances payable were paid by August 31, 2011. Advances made to the Electric Utility Enterprise Fund in the amount of $12,031,072 from the General Fund were used for initial working capital. Interest on the outstanding balance on advances payable is charged at an annual rate of 12% to the Electric Utility Enterprise Fund. As of June 30, 2011, interest in the amount of $982,170 was incurred and added to the outstanding loan balance. Advances from the Low and Moderate Income Housing Capital Project Fund to the Los Cerritos and Los Coyotes Redevelopment Agency Debt Service Funds were used to make the payment for the Agency’s share of the Supplemental Educational Revenue Augmentation Fund (the “SERAF”) due to the State of California. No interest is charged on the outstanding balance on advances payable of $11,881,487. The Debt Service Funds remit the principal payments to the Low and Moderate Income Housing Fund on a quarterly basis.


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5. INTERFUND TRANSACTIONS, Continued B. Fund Financial Statements, Continued Transfers - At June 30, 2011, the City had the following transfers in/out:

Enterprise Fund

NonmajorGeneral Governmental Water

Transfers Out Fund Funds Enterprise Total

Governmental Funds:

General Fund -$ 1,275,505$ 957,909$ 2,233,414$ Nonmajor Governmental Funds - 731,959 - 731,959

Enterprise Funds:

Nonmajor Enterprise Funds 1,200,000 - - 1,200,000

Total 1,200,000$ 2,007,464$ 957,909$ 4,165,373$

Governmental Funds

Transfers In

During the year, the General Fund transferred $1,275,505 to the Nonmajor Governmental Funds related to certain capital projects costs and administrative costs within the funds. Transfer in the amount of $1,200,000 was transferred from the Nonmajor Enterprise Funds to the General Fund for the maintenance and reconstruction of the sewer systems. In addition, the transfer of $731,959 between the Nonmajor Governmental Funds relates to the funding of transportation related costs between the Proposition “A” and Proposition “C” funds. Transfer from the General Fund to Water Enterprise Fund in amount of $957,909 is to reimburse for legal costs.


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6. CAPITAL ASSETS The following is a summary of capital assets for the governmental activities:

BalanceJuly 1, 2010 BalanceAs Restated Additions Deletions June 30, 2011

Capital assets, not being depreciated:Land 83,963,207$ 1,792,610$ -$ 85,755,817$ Parking structure rights 3,760,000 - - 3,760,000 Right-of-way 49,184,582 - - 49,184,582 Public art 4,428,314 - - 4,428,314 Trees 1,370,017 10,800 (11,916) 1,368,901 Construction in progress 238,516 - - 238,516

Total capital assets, not being depreciated 142,944,636 1,803,410 (11,916) 144,736,130

Capital assets, being depreciated:Buildings 190,085,558 28,470 - 190,114,028 Improvements other than buildings 5,056,878 640,556 (40,500) 5,656,934 Furniture and equipment 22,779,159 508,587 (126,105) 23,161,641 Infrastructure 32,459,758 736,150 (5,302) 33,190,606

Total Capital Assets, Being Depreciated 250,381,353 1,913,763 (171,907) 252,123,209

Less accumulated depreciation for:Buildings (64,097,843) (4,842,106) - (68,939,949) Improvements other than buildings (766,340) (170,491) 10,779 (926,052) Furniture and equipment (19,658,876) (719,815) 126,106 (20,252,585) Infrastructure (16,623,761) (908,341) 4,576 (17,527,526)

Total accumulated depreciation (101,146,820) (6,640,753) 141,461 (107,646,112)

Total capital assets, being depreciated, net 149,234,533 (4,726,990) (30,446) 144,477,097

Governmental activities capital assets, net 292,179,169$ (2,923,580)$ (42,362)$ 289,213,227$

Governmental Activities

Depreciation expense was charged to functions/programs of governmental activities for the fiscal year ended June 30, 2011 as follows:

Legislative and Administrative 553,735$ Community Development 77,517 Public Works 155,819 Water and Power 49,225 Community and Safety Services 1,474,275 Administrative Services 1,764,921 Cerritos Center for the Performing Arts 1,656,920 Unallocated infrastructure depreciation 908,341

Total depreciation expense 6,640,753$


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6. CAPITAL ASSETS, Continued The following is a summary of capital assets for the business-type activities:

BalanceJuly 1, 2010 BalanceAs Restated Additions Deletions June 30, 2011

Capital assets, being depreciated:Buildings and structures 6,262,697 - - 6,262,697 Water mains and lines 40,857,274 127,839 (33,721) 40,951,392 Equipment 4,143,993 319,936 - 4,463,929 Water rights acquired 2,259,378 - - 2,259,378 Electric utility rights acquired 14,105,000 - - 14,105,000 Sewer mains 11,760,205 - - 11,760,205

Total Capital Assets, Being Depreciated 79,388,547 447,775 (33,721) 79,802,601

Less accumulated depreciation for:Buildings and structures (3,060,272) (124,334) - (3,184,606) Water mains and lines (18,560,963) (762,296) 13,010 (19,310,249) Equipment (2,798,141) (180,128) - (2,978,269) Water rights acquired (451,875) (56,484) - (508,359) Electric utility rights acquired (2,350,833) (470,167) - (2,821,000) Sewer mains (5,880,532) (156,766) - (6,037,298)

Total accumulated depreciation (33,102,616) (1,750,175) 13,010 (34,839,781)

Total capital assets, being depreciated, net 46,285,931 (1,302,400) (20,711) 44,962,820

Business-type activities capital assets, net 46,285,931$ (1,302,400)$ (20,711)$ 44,962,820$

Business-Type Activities

Depreciation expense for business-type activities for the fiscal year ended June 30, 2011 was charged as follows:

Water and Power 813,558$ Electric Utility 470,167 Reclaimed Water 309,684 Sewer 156,766

Total depreciation expense 1,750,175$

Electric Utility Rights - Southern California Public Power Authority (“SCPPA”) The City’s Electric Utility is a member of the SCPPA, a joint powers authority. The City entered into the Magnolia Power Project, which is financed and owned by SCPPA. Member cities of the Magnolia Power Project include Anaheim, Burbank, Colton, Glendale, and Pasadena (the Project “A” Participants) and the City of Cerritos (the Project “B” Participant).


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6. CAPITAL ASSETS, Continued The Magnolia Power Project consists of a natural gas-fired generating facility with a nominally rated net base capacity of 242 Megawatts to be located on an existing generating site in the City of Burbank, California, including necessary and appurtenant facilities and equipment thereto, the applicable portion of any common facilities and interconnection facilities. The Project was being constructed for the primary purpose of providing the participants in the Project with firm capacity and energy to help meet their power and energy requirements in 2005 and thereafter. Commercial operations commenced September, 2005. The City of Cerritos has entered into a “Take or Pay” contract with SCPPA and is obligated to pay their share of the indebtedness regardless of the ability of the contracting agency to provide electricity. The City’s share of these payments are reported as long-term debt (see Notes 9D and 9J). This contract provides for generating capacity of 4.2% of the output generated from the plant. 7. DEFERRED/UNEARNED REVENUE At June 30, 2011, deferred/unearned revenue totaled $5,765,235 consisting of the following:

Unearned Revenue:

Facility booking rentals 59,464$ Advance Performing Arts Center ticket sales 2,258,573 Performing Arts Center refund clearing 4,690 Rental income 950,975

Total Unearned Revenue 3,273,702

Deferred Revenue:

Sales tax 1,261,600 Workers' compensation claims receivable 864,454 Operating Grant - Public Works 11,320 Capital Grant - community and Safety Services 354,159

Total Deferred Revenue 2,491,533

Total 5,765,235$


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8. LONG-TERM DEBT Following is a summary of long-term debt for governmental activities for the fiscal year ended June 30, 2011:

BalanceJuly 1, 2010, Balance Due within Due in moreas Restated Additions Deletions June 30, 2011 One Year than One Year

Los Cerritos Redevelopment Project Revenue Bonds:

1993 Issue, Series B,$17,525,000 2,175,000$ -$ (1,745,000)$ 430,000$ 430,000$ -$

2002, Issue, Series A,$31,550,000 29,125,000 - (485,000) 28,640,000 1,955,000 26,685,000

2002 Issue, Series B,$7,550,000 5,195,000 - (385,000) 4,810,000 400,000 4,410,000

2003 Issue, Series 2003,$3,526,250 3,268,125 - (61,875) 3,206,250 63,750 3,142,500

Los Coyotes Redevelopment Project Revenue Bonds:

1993 Issue, Series A,$42,155,000 8,000,000 - - 8,000,000 - 8,000,000

1993 Issue, Series B,$63,765,000 39,050,000 - (3,055,000) 35,995,000 3,295,000 32,700,000

1998 Issue, Series A,$3,760,000 1,660,000 - (290,000) 1,370,000 310,000 1,060,000

2002 Issue, Series A,$64,710,000 57,955,000 - (1,290,000) 56,665,000 1,325,000 55,340,000

2002 Issue, Series B,$12,225,000 10,920,000 - (215,000) 10,705,000 235,000 10,470,000

2003 Issue, Series 2003,$10,578,750 9,804,375 - (185,625) 9,618,750 191,250 9,427,500

Subtotal 167,152,500 - (7,712,500) 159,440,000 8,205,000 151,235,000

Add (less) deferred amounts:Bond premium 4,293,775 - (306,699) 3,987,076 - 3,987,076 Bond discount (862,885) - 61,635 (801,250) - (801,250) Deferred charge on refunding (1,843,196) - 141,785 (1,701,411) - (1,701,411)

Total Revenue Bonds 168,740,194 - (7,815,779) 160,924,415 8,205,000 152,719,415

Note payable 1,025,000 - - 1,025,000 200,000 825,000 Compensated absences 2,512,435 1,652,981 (1,689,408) 2,476,008 1,495,784 980,224 Claims payable - General Liability 1,917,561 - (246,764) 1,670,797 - 1,670,797

Total long-term liabilities 174,195,190$ 1,652,981$ (9,751,951)$ 166,096,220$ 9,900,784$ 156,195,436$


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8. LONG-TERM DEBT, Continued Following is a summary of long-term debt for business-type activities for the fiscal year ended June 30, 2011:

Balance Balance Due within Due in moreJuly 1, 2010, Additions Deletions June 30, 2011 One Year than One Year

Compensated absences - Water Fund 257,937 12,863 - 270,800 67,700 203,100

Total long-term liabilities 257,937$ 12,863$ -$ 270,800$ 67,700$ 203,100$

A. Los Cerritos Redevelopment Project 1993 Revenue Bonds, Series B In June, 1993, the Cerritos Public Financing Authority (the Authority) issued $17,525,000 in 1993 Revenue Bonds, Series B. $15,967,767 of the $17,525,000 issue was loaned to repay prior City loans to the Agency, $1,323,852 was used to fund a reserve fund for the loans to the Agency, and the remaining balance was used to pay the cost of issuance of the bonds. Interest rates on the bonds vary from 4.00% to 8.00% with interest payable semiannually on May 1 and November 1, and principal maturing annually on November 1. The 1993 Los Cerritos Redevelopment Project Revenue Bonds, Series B, are payable solely from and secured by tax increment revenues received by the Authority from the Agency. Annual principal and interest payments on the bonds are expected to require less than 25% of net revenues. The total remaining principal and interest to be paid on the bonds is $447,200. Principal and interest paid for the current year and total net revenues were $1,849,200 and $7,814,380, respectively. The annual requirements to amortize the outstanding bond indebtedness as of June 30, 2011, including interest, are as follows:

Year Ending

June 30, Principal Interest Total

2012 430,000$ 17,200$ 447,200$

TOTAL 430,000$ 17,200$ 447,200$

B. Los Cerritos Redevelopment Project 2002 Tax Allocation Revenue Bonds, Series A In June 1993, the Authority issued $27,555,000 in Revenue Bonds, Series A. In September 2002, the Authority issued $31,550,000 of Tax Allocation Bonds to provide funds to refund the 1993 Revenue Bonds, Series A. A portion of the proceeds from the Bonds issued in 2002 were placed in an escrow fund to provide the debt service on the 1993 Revenue Bonds, Series A. The advance refunding met the requirements of an in-substance defeasance and the bonds were removed from the Agency’s long-term debt. The 2002 bonds are broken into two segments; the Term Bonds $27,940,000 and the Special Escrow Bonds $3,610,000.


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8. LONG-TERM DEBT, Continued B. Los Cerritos Redevelopment Project 2002 Tax Allocation Revenue Bonds, Series A, Continued The Term Bonds are payable in annual installments ranging from $260,000 to $3,240,000 until maturity on November 1, 2020. Interest is payable semiannually on May 1 and November 1, with rates ranging from 2.00% to 5.00%. Bonds outstanding at June 30, 2011 were $25,995,000. The Special Escrow bonds are payable in annual installments ranging from $195,000 to $320,000 until maturity on November 1, 2020. Interest is payable semiannually on May 1 and November 1, with rates ranging from 3.40% to 4.55%. Bonds outstanding at June 30, 2011 were $2,645,000. The 2002 Los Cerritos Redevelopment Project Tax Allocation Revenue Bonds, Series A, are payable solely from and secured by tax increment revenues received by the Authority from the Agency. Annual principal and interest payments on the bonds are expected to require less than 25% of net revenues. The total remaining principal and interest to be paid on the bonds is $36,181,843. Principal and interest paid for the current year and total tax revenues were $1,803,475 and $7,814,380, respectively. Future debt service requirements on these bonds (term and special escrow) are as follows:

Year EndingJune 30, Principal Interest Total

2012 1,955,000$ 1,279,113$ 3,234,113$ 2013 2,480,000 1,204,090 3,684,090 2014 2,570,000 1,113,875 3,683,875

2015 2,660,000 1,002,318 3,662,318 2016 2,795,000 867,710 3,662,710

2017-2021 16,180,000 2,074,737 18,254,737

TOTAL 28,640,000$ 7,541,843$ 36,181,843$

C. Los Cerritos Redevelopment Project 2002 Tax Allocation Revenue Bonds, Series B In September 2002, the Authority issued $7,550,000 in 2002 Series B Tax Allocation Revenue Bonds. The proceeds were loaned to the Agency and were used to fund projects in the Los Cerritos Project Area and pay for the cost of issuance. The bonds are payable in annual installments ranging from $360,000 to $580,000 until maturity on November 1, 2020. Interest is payable semiannually on May 1 and November 1, with rates ranging from 1.85% to 4.70%. Bonds outstanding at June 30, 2011 were $4,810,000. The 2002 Los Cerritos Redevelopment Project Tax Allocation Revenue Bonds, Series B, are payable solely from and secured by tax increment revenues received by the Authority from the Agency. Annual principal and interest payments on the bonds are expected to require less than 10% of net revenues. The total remaining principal and interest to be paid on the bonds is $6,022,353. Principal and interest paid for the current year and total tax revenues were $605,271 and $7,814,380, respectively.


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8. LONG-TERM DEBT, Continued C. Los Cerritos Redevelopment Project 2002 Tax Allocation Revenue Bonds, Series B, Continued Future debt service requirements on these bonds are as follows:


2012 400,000$ 206,430$ 606,430$ 2013 415,000 191,449 606,449 2014 430,000 175,068 605,068

2015 445,000 157,345 602,345 2016 465,000 138,341 603,341

2017-2021 2,655,000 343,720 2,998,720

TOTAL 4,810,000$ 1,212,353$ 6,022,353$

D. Los Cerritos and Los Coyotes Redevelopment Project - Magnolia Power Project B, Series 2003 Revenue

Bonds The Southern California Public Power Authority (“SCPPA”) was created in 1980 under a joint exercise of powers agreement. It was formed for the acquisition and construction of facilities to supply electric energy within the boundaries of its members. Complete financial statements for SCPPA may be obtained at their administrative office located at 225 S. Lake Avenue, Suite 1250, Pasadena, CA 91101. In 2001, SCPPA entered into an agreement with the City of Anaheim, the City of Burbank, the City of Cerritos, the City of Colton, the City of Glendale, and the City of Pasadena to construct a generation facility with a capacity of 242 megawatts to be located on the existing Magnolia generating site in Burbank, California. SCPPA issued $14,105,000 of lease revenue bonds to finance a portion of the project costs for the facility that was collateralized by the parking structure at City Hall. The City has leased back the parking structure from SCPPA. SCPPA will provide for the payment of a portion of the costs of operation of the Project through the sale of a portion of the capacity and energy of the Project of the member cities pursuant to the Power Sales Agreement. On March 1, 2003, the City entered into this sales agreement with SCPPA, entitling the City to a 4.2% share of the plant output. In June 2005, the Redevelopment Agency Debt Service Fund assumed the City’s debt related to the sales agreement with SCPPA. As the energy derived from the plant serves and benefits both the Los Cerritos and Los Coyotes Capital Project Areas, it was deemed appropriate that the Agency assume the debt. Debt assumed was allocated 25%, which is $3,526,250, to the Los Cerritos Project Area and 75%, which is $10,578,750, to the Los Coyotes Project Area. The City advances debt service payments to SCPPA and is subsequently reimbursed by the Redevelopment Agency immediately after the payment due dates. The payments are due in annual installments on January 1 and July 1 of each year. The first payment was made January 2006, and the final payment is due at maturity on July 1, 2036.


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8. LONG-TERM DEBT, Continued D. Los Cerritos and Los Coyotes Redevelopment Project - Magnolia Power Project B, Series 2003 Revenue

Bonds, Continued The debt service schedule for the Los Coyotes Project Area is at Note 8J. The Los Cerritos Project Area portion is payable solely from and secured by tax increment revenues received by the Authority from the Agency. Annual principal and interest payments on the bonds are expected to require less than 10% of net revenues. The total remaining principal and interest to be paid on the bonds is $5,846,405. Principal and interest paid for the current year and total tax revenues were $215,101 and $7,814,380, respectively. Future debt service requirements on the bonds allocated to the Los Cerritos Project Area are as follows:


2012 63,750$ 151,291$ 215,041$ 2013 65,625 149,138 214,763 2014 67,500 146,800 214,300 2015 70,000 144,310 214,310 2016 73,125 141,631 214,756

2017-2021 411,875 661,357 1,073,232 2022-2026 510,625 562,596 1,073,221 2027-2031 649,375 424,220 1,073,595 2032-2036 1,014,375 244,813 1,259,188

2037 280,000 13,999 293,999

TOTAL 3,206,250$ 2,640,155$ 5,846,405$

E. Los Coyotes Redevelopment Project 1993 Revenue Bonds, Series A In June 1993, the Authority issued $42,155,000 in 1993 Revenue Bonds, Series A. $2,594,959 of the $42,155,000 issue was loaned to the Agency to advance refund the $7,500,000 Los Coyotes Redevelopment Project Tax Allocation Bonds, Series A originally issued by the Agency in 1976, $6,780,483 was loaned to the Agency to advance refund the $15,000,000 Los Coyotes Redevelopment Project Tax Allocation Bonds, Series B originally issued by the Agency in 1977, $19,669,546 was loaned to repay prior City loans to the Agency, $9,000,000 was loaned to fund additional projects in the Los Coyotes Project Area, $3,206,533 was used to fund a reserve fund for the loans to the Agency, and the remaining balance was used to pay the cost of issuance of the bonds. Interest rates on the bonds vary from 2.50% to 6.50% with interest payable semiannually on May 1 and November 1, and principal maturing annually on November 1 except for the years 2002 through 2018 in which no principal payments mature.


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8. LONG-TERM DEBT, Continued E. Los Coyotes Redevelopment Project 1993 Revenue Bonds, Series A, Continued In September 2002, the Authority issued 2002 Tax Allocation Bonds, Series A to provide funds to partially refund the 1993 Revenue Bonds ($24,510,000), Series A. A portion of the proceeds from the Bonds issued in 2002 were placed in an escrow fund to provide the debt service on the 1993 Revenue Bonds, Series A. The advance refunding met the requirements of an in-substance defeasance and the bonds were removed from the Agency’s long-term debt. The principal balance on the 1993 Revenue Bonds, Series A at June 30, 2003 paid by the trustee from the escrow fund was $24,510,000, and the balance remaining in the Agency’s long-term debt is $8,000,000, which is payable in fiscal year ended June 30, 2024. The 1993 Los Coyotes Redevelopment Project Revenue Bonds, Series A, are payable solely from and secured by tax increment revenues received by the Authority from the Agency. Annual principal and interest payments on the bonds are expected to require less than 10% of net revenues. The total remaining principal and interest to be paid on the bonds is $14,469,775. Interest paid for the current year and total tax revenues were $520,000 and $18,062,614, respectively. Future debt service requirements on these bonds are as follows:


2012 -$ 520,000$ 520,000$ 2013 - 520,000 520,000 2014 - 520,000 520,000 2015 - 520,000 520,000 2016 - 520,000 520,000

2017-2021 - 2,600,000 2,600,000 2022-2024 8,000,000 1,269,775 9,269,775

TOTAL 8,000,000$ 6,469,775$ 14,469,775$

F. Los Coyotes Redevelopment Project 1993 Revenue Bonds, Series B In June 1993, the Authority issued $63,765,000 in 1993 Revenue Bonds, Series B. $57,938,653 of the $63,765,000 issue was loaned to repay prior City loans to the Agency, $4,850,304 was used to fund a reserve fund for the loans to the Agency, and the remaining balance was used to pay the cost of issuance of the bonds. Interest rates on the bonds vary from 3.50% to 7.80% with interest payable semiannually on May 1 and November 1, and principal maturing annually on November 1. The 1993 Los Coyotes Redevelopment Project Revenue Bonds, Series B, are payable solely from and secured by tax increment revenues received by the Authority from the Agency. Annual principal and interest payments on the bonds are expected to require less than 35% of net revenues. The total remaining principal and interest to be paid on the bonds is $48,669,968. Principal and interest paid for the current year and total tax revenues were $5,975,653 and $18,062,614, respectively.


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8. LONG-TERM DEBT, Continued F. Los Coyotes Redevelopment Project 1993 Revenue Bonds, Series B, Continued Future debt service requirements on these bonds are as follows:


2012 3,295,000$ 2,674,594$ 5,969,594$ 2013 3,550,000 2,404,350 5,954,350 2014 3,825,000 2,123,569 5,948,569 2015 4,120,000 1,814,670 5,934,670 2016 4,440,000 1,460,830 5,900,830

2017-2020 16,765,000 2,196,955 18,961,955

TOTAL 35,995,000$ 12,674,968$ 48,669,968$

G. Los Coyotes Redevelopment Project 1998 Tax Allocation Bonds, Series A In January 2001, the Los Coyotes Redevelopment Project issued $3,760,000 in 1998 Tax Allocation Bonds, Series A. The proceeds were used in the construction of a shared parking structure, which serves both the retail complex and tenants within an adjacent office building. The City will retain parking rights to the structure. The interest rate on the bonds is 6.5% with principal and interest payable annually on May 1. The 1998 Los Coyotes Redevelopment Project Tax Allocation Revenue Bonds, Series A, are payable solely from and secured by tax increment revenues received by the Authority from the Agency. Annual principal and interest payments on the bonds are expected to require less than 10% of net revenues. The total remaining principal and interest to be paid on the bonds is $1,599,775. Principal and interest paid for the current year and total tax revenues were $397,900 and $18,062,614, respectively. The annual requirements to amortize the outstanding bond indebtedness as of June 30, 2011, including interest, are as follows:


2012 310,000$ 89,050$ 399,050$ 2013 330,000 68,900 398,900 2014 355,000 47,450 402,450 2015 375,000 24,375 399,375

TOTAL 1,370,000$ 229,775$ 1,599,775$


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8. LONG-TERM DEBT, Continued H. Los Coyotes Redevelopment Project 2002 Tax Allocation Revenue Bonds, Series A In June 1993, the Authority issued $42,155,000 in Revenue Bonds, Series A. In September 2002, the Authority issued $64,710,000 of Tax Allocation Bonds to provide funds to refund $24,510,000 of the remaining $32,510,000 the 1993 Revenue Bonds, Series A. A portion of the proceeds from the Bonds issued in 2002 were placed in an escrow fund to provide the debt service on the 1993 Revenue Bonds, Series A. The advance refunding met the requirements of an in-substance defeasance and the bonds were removed from the Agency’s long-term debt. The principal balance on the 1993 Revenue Bonds, Series A, at June 30, 2003 that was paid by the trustee from the escrow fund was $24,510,000. The balance remaining in the Agency’s long-term debt as of June 30, 2011 is $8,000,000 (see Note 8E). The bonds were broken into two segments; the Term Bonds $53,675,000 and the Special Escrow Bonds $11,035,000. The Term Bonds are payable in annual installments ranging from $775,000 to $9,345,000 until maturity on November 1, 2024. Interest is payable semiannually on May 1 and November 1, with rates ranging from 2.00% to 5.00%. Bonds outstanding at June 30, 2011 were $47,805,000. The Special Escrow bonds are payable in annual installments ranging from $435,000 to $830,000 until maturity on November 1, 2024. Interest is payable semiannually on May 1 and November 1, with rates ranging from 3.40% to 4.55%. Bonds outstanding at June 30, 2011 were $8,860,000. The 2002 Los Coyotes Redevelopment Project Tax Allocation Revenue Bonds, Series A, are payable solely from and secured by tax increment revenues received by the Authority from the Agency. Annual principal and interest payments on the bonds are expected to require less than 25% of net revenues. The total remaining principal and interest to be paid on the bonds is $83,280,888. Principal and interest paid for the current year and total tax revenues were $4,042,925 and $18,062,614, respectively. Future debt service requirements on these bonds (term and special escrow) are as follows:


2012 1,325,000$ 2,711,810$ 4,036,810$ 2013 1,370,000 2,667,248 4,037,248 2014 1,420,000 2,618,928 4,038,928 2015 1,460,000 2,559,016 4,019,016 2016 1,540,000 2,486,446 4,026,446

2017-2021 19,970,000 10,697,468 30,667,468 2022-2025 29,580,000 2,874,972 32,454,972

TOTAL 56,665,000$ 26,615,888$ 83,280,888$


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8. LONG-TERM DEBT, Continued

I. Los Coyotes Redevelopment Project 2002 Tax Allocation Revenue Bonds, Series B In September 2002, the Authority issued $12,225,000 in 2002 Series B Tax Allocation Revenue Bonds. The proceeds were loaned to the Agency and will be used to fund projects in the Los Coyotes Project Area and to pay for the cost of issuance. The bonds are payable in annual installments ranging from $210,000 to $1,270,000 until maturity on November 1, 2024. Interest is payable semiannually on May 1 and November 1, with rates ranging from 1.85% to 4.70%. Bonds outstanding at June 30, 2011 were $10,705,000. The 2002 Los Coyotes Redevelopment Project Tax Allocation Revenue Bonds, Series B, are payable solely from and secured by tax increment revenues received by the Authority from the Agency. Annual principal and interest payments on the bonds are expected to require less than 10% of net revenues. The total remaining principal and interest to be paid on the bonds is $15,555,492. Principal and interest paid for the current year and total tax revenues were $742,654 and $18,062,614, respectively. Future debt service requirements on these bonds are as follows:


2012 235,000$ 519,715$ 754,715$ 2013 240,000 510,985 750,985 2014 250,000 501,485 751,485 2015 260,000 491,155 751,155 2016 270,000 480,087 750,087

2017-2021 4,730,000 1,840,585 6,570,585 2022-2025 4,720,000 506,480 5,226,480

TOTAL 10,705,000$ 4,850,492$ 15,555,492$

J. Los Cerritos and Los Coyotes Redevelopment Project - Magnolia Power Project B, Series 2003 Revenue

Bonds The Southern California Public Power Authority (“SCPPA”) was created in 1980 under a joint exercise of powers agreement. It was formed for the acquisition and construction of facilities to supply electric energy to the inhabitants within the boundaries of its members. Complete financial statements for SCPPA may be obtained at their administrative office located at 225 S. Lake Avenue, Suite 1250, Pasadena, CA 91101. In 2001, SCPPA entered into an agreement with the City of Anaheim, the City of Burbank, the City of Cerritos, the City of Colton, the City of Glendale, and the City of Pasadena to construct a generation facility with a capacity of 242 megawatts to be located on the existing Magnolia generating site in Burbank, California.


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8. LONG-TERM DEBT, Continued J. Los Cerritos and Los Coyotes Redevelopment Project - Magnolia Power Project B, Series 2003 Revenue

Bonds, Continued SCPPA issued $14,105,000 of lease revenue bonds to finance a portion of the project costs for the facility that was collateralized by the parking structure at City Hall. The City has leased back the parking structure from SCPPA. SCPPA will provide for the payment of a portion of the costs of operation of the Project through the sale of a portion of the capacity and energy of the Project of the member cities pursuant to the Power Sales Agreement. On March 1, 2003, the City entered into this sales agreement with SCPPA, entitling the City to a 4.2% share of the plant output. In June 2005, the Redevelopment Agency Debt Service Fund assumed the City’s debt related to the sales agreement with SCPPA. As the energy derived from the plant serves and benefits both the Los Cerritos and Los Coyotes Capital Project Areas, it was deemed appropriate that the Agency assume the debt. Debt assumed was allocated 25%, which is $3,526,250, to the Los Cerritos Project Area and 75%, which is $10,578,750, to the Los Coyotes Project Area. The City advances debt service payments to SCPPA and is subsequently reimbursed by the Redevelopment Agency immediately after the payment due dates. The payments are due in annual installments on January 1 and July 1 of each year. The first payment was made January 2006, and the final payment is due at maturity on July 1, 2036. The debt service schedule for the Los Cerritos Project Area is at Note 8D. The Los Coyotes Project Area portion is payable solely from and secured by tax increment revenues received by the Authority from the Agency. Annual principal and interest payments on the bonds are expected to require less than 10% of net revenues. The total remaining principal and interest to be paid on the bonds is $17,539,218. Principal and interest paid for the current year and total tax revenues were $645,302 and $18,062,614, respectively. Future debt service requirements on the bonds allocated to the Los Coyotes Project Area are as follows:


2012 191,250$ 453,874$ 645,124$ 2013 196,875 447,414 644,289 2014 202,500 440,400 642,900 2015 210,000 432,930 642,930 2016 219,375 424,894 644,269

2017-2021 1,235,625 1,984,074 3,219,699 2022-2026 1,531,875 1,687,789 3,219,664 2027-2031 1,948,125 1,272,656 3,220,781 2032-2036 3,043,125 734,437 3,777,562

2037 840,000 42,000 882,000

TOTAL 9,618,750$ 7,920,468$ 17,539,218$


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8. LONG-TERM DEBT, Continued

K. Los Cerritos Redevelopment Project - Note Payable In September 2005, the Agency entered into an agreement to purchase land owned by Southeast Regional Occupational Program within the Los Cerritos Capital Project Area for $1,205,662. In connection with the purchase, the Agency provided a note payable in the amount of $1,025,000. Interest will be charged annually at the rate equal to the annual average of the City’s investment fund return, excluding interest on outstanding loans provided by the City to the Agency and the Electric Utility Enterprise Fund. Interest only payments are due on each anniversary date through 2010. Thereafter, annual principal and interest payments will be due through the maturity date, September 26, 2015, with principal in the amount of $200,000 per year on the sixth through ninth year anniversary dates and $225,000 on the maturity date. Future debt service requirements on this note are as follows:


2012 200,000$ 15,990$ 215,990$ 2013 200,000 12,870 212,870 2014 200,000 9,750 209,750 2015 200,000 6,630 206,630 2016 225,000 3,510 228,510

TOTAL 1,025,000$ 48,750$ 1,073,750$

L. Compensated Absences This liability represents the total unpaid vacation and compensatory time earned by employees of the City. Since this amount is paid to the employee upon termination of employment, there is no fixed payment schedule for earned but unpaid compensated absences. The compensated absences are predominately associated with the General Fund and Water Fund. M. Claims Payable – General Liability The amount of claims and judgments payable at June 30, 2011 was $1,670,797. See Note 11E for details.


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9. FUND BALANCES CLASSIFICATION The City’s fund balances at June 30, 2011 are tabulated below by fund types.

Redevelopment Redevelopment Other

Agency Agency Governmental

General Debt Service Capital Projects Funds Total

Nonspendable:

Prepaid expenses 62,864$ -$ -$ -$ 62,864$ Inventories 15,259 - - - 15,259 Advances to other funds 90,057,072 - 11,881,487 - 101,938,559

Total nonspendable 90,135,195 - 11,881,487 - 102,016,682

Restricted:

Debt service - 16,598,679 - - 16,598,679 Low and moderate income housing - - 17,012,352 - 17,012,352 Traffic congestion - - - 66,251 66,251 Proposition A - - - 624,929 624,929 Assessment District #6 - - - 130,575 130,575 Local Law Enforcement Grant - - - 9,290 9,290 Environmental Grant - - - 17,468 17,468 Air Quality Management District - - - 293,568 293,568 Measure R - - - 331,400 331,400

Total restricted - 16,598,679 17,012,352 1,473,481 35,084,512

Assigned:

Asset replacement 700,000 - - - 700,000 Art Center programs 9,945,472 - - - 9,945,472 Earthquake preparedness 1,954,417 - - - 1,954,417 Art in Public Places 550,163 - - - 550,163 Self Insurance 1,000,000 - - - 1,000,000

Total assigned 14,150,052 - - - 14,150,052

Unassigned:

General Fund 71,056,060 - - - 71,056,060 Redevelopment Agency Funds - (74,220,704) (1,695,040) - (75,915,744)

Total unassigned 71,056,060 (74,220,704) (1,695,040) - (4,859,684)

Total 175,341,307$ (57,622,025)$ 27,198,799$ 1,473,481$ 146,391,562$


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10. RETIREMENT PLAN A. Defined Benefit Pension Plan Plan Description The City’s defined benefit pension plan, the Miscellaneous Plan for the City of Cerritos (Plan), provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. The Plan is part of the Public Agency portion of the California Public Employees’ Retirement System (CalPERS), an agent multiple-employer plan administered by CalPERS, which acts as a common investment and administrative agent for participating public entities within the State of California. A menu of benefit provisions as well as other requirements are established by the State statutes within the Public Employees’ Retirement Law. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through local ordinance. CalPERS issues a separate comprehensive annual financial report. Copies of CalPERS’ annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, CA 95814. Funding Policy Participants are required to contribute 8% of their annual covered salary. The City makes the contributions required of City employees on their behalf and for their account. The City is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration. The City’s required employer contribution rate for fiscal year 2010-11 was 17.297%. The contribution requirements of the plan members are established by State statute and the employer contribution rate is established and may be amended by CalPERS. Annual Pension Cost For fiscal year 2010-11 the City’s actual and contributed annual pension cost was $1,656,879. The required contribution for fiscal year 2010-11 was determined as part of an amended contract between the City of Cerritos and CalPERS which became effective September 23, 2004, which included an actuarial valuation dated June 30, 2008 using the entry age normal actuarial cost method with the contributions determined as a percentage of pay. The actuarial assumptions included (a) 7.75% investment rate of return (net of administrative expenses); (b) projected salary increases that vary by duration of service and (c) a 3.25% cost-of-living adjustment. Both (a) and (b) include an inflation component of 3.0%. The actuarial value of the Plan’s assets were determined using a technique that smoothes the effect of short-term volatility in the market value of investments over a two to five year period depending on the size of investment gains and/or losses. The Plan’s unfunded actuarial excess assets are being amortized as a level of percentage of projected payroll on a closed basis. The remaining amortization period at June 30, 2008 was 28 years.


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10. RETIREMENT PLAN, Continued A. Defined Benefit Pension Plan, Continued The following is the three-year trend information:

Percentage of

Fiscal Year Annual Pension APC Net Pension

Ending Cost (APC) Contributed Obligation

6/30/2009 1,731,902$ 100% -$ 6/30/2010 1,693,293 100% - 6/30/2011 1,656,879 100% -

Three-Year Trend Information for PERS

Funding Status and Funding Progress As of June 30, 2010, the most recent actuarial valuation date, the plan was 80% funded. The actuarial accrued liability for benefits was $154.7 million, and the actuarial value of assets was $123.7 million, resulting in an unfunded actuarial accrued liability (UAAL) of $31 million. The covered payroll (annual payroll for active employees covered by the plan) was $19.1 million, and the ratio of the UAAL to the covered payroll was 162%. B. Post-Retirement Health Care Benefits Plan Description In addition to the pension benefits described in Note 10A, the City provides other post-employment benefits (“OPEB”) through the California Employer’s Retiree Benefit Trust Fund (the “CERBT”), an agent multiple-employer defined benefit healthcare plan administered by the California Public Employees’ Retirement System (the “CalPERS”), by contributing a predetermined monthly maximum of $872.03 for each eligible retiree and spouse toward health insurance. These benefits are provided per contract between the City and the City’s management, professional and general employees. Health insurance premiums for the City Manager, City Attorney and City Council are fully covered per Council decision. As of June 30, 2011, there were 208 participants receiving these healthcare benefits. Separate financial statements for the CERBT may be obtained by writing to CalPERS at Lincoln Plaza North 400 Q Street, Sacramento, CA 95814, or by visiting the CalPERS website at www.calpers.ca.gov.


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10. RETIREMENT PLAN, Continued B. Post-Retirement Health Care Benefits, Continued Funding Policy The contribution requirements of plan members and the City are established and may be amended by the City, City Council, and/or the employee associations. Currently, contributions are not required from plan members. On November 19, 2007, the City entered into an agreement with CalPERS to create an irrevocable trust. The assets, all property and rights purchased with such amounts, and all income attributable to such amounts, property or rights are held in the trust for the exclusive benefit of the participants and their beneficiaries. These assets are no longer the property of the City, and as such, are no longer subject to the claims of the City’s general creditors. A one-time employer contribution of $14 million was made on December 28, 2007, and was included in the January 1, 2011 actuarial study. During the fiscal year ended June 30, 2011, the City did not contribute to the plan. The purpose of these contributions is to cover the annual required contribution (ARC) and to prefund benefits. As a result, the City calculated a Net OPEB Asset of $10,441,444, representing the difference between the ARC and actual contributions, as presented below:

Annual Required Contribution 1,792,058$ Interest on Beginning Net OPEB Asset (4,316,814) Adjustment to the Annual Required Contribution 793,265

Annual OPEB Cost (1,731,491) Contributions Made Outside of a Trust -

Change in Net OPEB Assets (1,731,491)

Net OPEB Asset, Beginning of Year (8,709,953)

Net OPEB Asset, End of Year (10,441,444)$

The interest earnings are based on actual amount of interest earned and the ARC of $1,792,058 is actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis is projected to cover the annual normal cost and the amortization of unfunded actuarial accrued liabilities (or funding excess) over a thirty year period.


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10. RETIREMENT PLAN, Continued B. Post-Retirement Health Care Benefits, Continued Annual OPEB Cost and Net OPEB Obligation (Asset) For fiscal year 2010-11, the City’s annual OPEB cost of $(1,731,491) was $3,523,549 lower than the ARC of $1,792,058 as a result of investment earnings. Information on the annual OPEB cost, percentage of Annual OPEB Cost contributed, and Net OPEB Asset for the 2010-11 fiscal year and preceding years are presented below:

Annual Actual Percentage of

Fiscal OPEB Contribution OPEB Cost Net OPEB

Year Cost (Net of Adjustments) Contributed Assets

6/30/2009 6,770,678$ 2,686,877$ 39.68% (9,196,291)$ 6/30/2010 486,338 - 0.00% (8,709,953) 6/30/2011 (1,731,491) - 0.00% (10,441,444)

Funded Status and Funding Progress The funded status of the plan as of January 1, 2011 is as follows:

Actuarial Actuarial Annual UAAL as a

Validation Value of Entry Age Unfunded Funded Covered % of

Date Assets Normal AAL AAL Status Payroll Payroll

1/1/2011 20,646$ 30,179$ 9,533$ 68.4% 21,305$ 44.7%

Schedule of Funding Progress for OPEB ($ Amount in Thousands)

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the City are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.


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10. RETIREMENT PLAN, Continued B. Post-Retirement Health Care Benefits, Continued Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan and include the types of benefits provided at the time of each valuation. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the January 1, 2011, actuarial valuation, the entry age normal actuarial cost method was used. The actuarial assumptions included a 7.75 percent investment rate of return (net of administrative expenses) and an initial annual healthcare cost trend rate of 9 percent, reduced by decrements to an ultimate rate of 5% after eight years. A 3.25 percent annual rate of increase in future salaries is also assumed in the valuation. The City’s unfunded actuarial accrued liability will be amortized as a level percentage of projected covered payroll on a closed basis. The amortization period at January 1, 2011 was twenty-six years. C. Other Defined Contribution Plans The City of Cerritos has adopted, through the Public Agency Retirement System (the “PARS”), tax qualified governmental defined benefit plans for the benefit of eligible City of Cerritos employees to provide supplemental retirement benefits. The plans, which include exempt employees plan, non-exempt employees plan and the defined contribution floor-offset plan, conform to the requirements of Internal Revenue Code Section 401(a) and therefore entitle each Plan to favorable tax treatment. 11. LIABILITY, PROPERTY AND WORKERS’ COMPENSATION PROTECTION A. Description of Self-Insurance Pool Pursuant to Joint Powers Agreement The City of Cerritos is a member of the California Joint Powers Insurance Authority (the “CJPIA”). The CJPIA is composed of 121 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The purpose of the CJPIA is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The CJPIA began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a nine-member Executive Committee.


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11. LIABILITY, PROPERTY AND WORKERS’ COMPENSATION PROTECTION, Continued B. Self-Insurance Programs of the CJPIA A revised cost allocation methodology was introduced in 2010-11, however it retains many elements of the previous cost allocation methodology. Each member pays an annual contribution (formerly called the primary deposit) to cover estimated losses for the coverage period. This initial funding is paid at the beginning of the coverage period. After the close of the coverage period, outstanding claims are valued. A retrospective deposit computation is then conducted annually thereafter until all claims incurred during the coverage period are closed on a pool-wide basis. This subsequent cost re-allocation among members based on actual claim development can result in adjustments of either refunds or additional deposits required. The total funding requirement for self-insurance programs is estimated using actuarial models and pre-funded through the annual contribution. Costs are allocated to individual agencies based on exposure (payroll) and experience (claims) relative to other members of the risk-sharing pool. Additional information regarding the cost allocation methodology is provided below. Liability In the liability program claims are pooled separately between police and non-police exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $30,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $30,000 to $750,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs in excess of $750,000 up to the reinsurance attachment point of $5 million are distributed based on the outcome of cost allocation within the first and second loss layers. (5) Costs of covered claims from $5 million to $10 million are paid under a reinsurance contract subject to a $2.5 million annual aggregate deductible. Costs of covered claims from $10 million to $15 million are paid under two reinsurance contracts subject to a combined $3 million annual aggregate deductible. On a cumulative basis for all 2010-11 reinsurance contracts the annual aggregate deductible is $5.5 million. (6) Costs of covered claims from $15 million up to $50 million are covered through excess insurance policies. The overall coverage limit for each member including all layers of coverage is $50 million per occurrence. Costs of covered claims for subsidence losses are paid by reinsurance and excess insurance with a pooled sub-limit of $35 million per occurrence. This $35 million subsidence sub-limit is composed of (a) $5 million retained within the pool’s SIR, (b) $10 million in reinsurance and (c) $20 million in excess insurance. The excess insurance layer has a $20 million annual aggregate.


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11. LIABILITY, PROPERTY AND WORKERS’ COMPENSATION PROTECTION, Continued B. Self-Insurance Programs of the CJPIA, Continued Workers’ Compensation In the workers’ compensation program claims are pooled separately between public safety (police and fire) and non-public safety exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $50,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $50,000 to $100,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs in excess of $100,000 up to the reinsurance attachment point of $2 million are distributed based on the outcome of cost allocation within the first and second loss layers. (5) Costs of covered claims from $2 million up to statutory limits are paid under a reinsurance policy. Protection is provided per statutory liability under California Workers’ Compensation Law. Employer’s Liability losses are pooled among members to $2 million. Coverage from $2 million to $4 million is purchased as part of a reinsurance policy, and Employer’s Liability losses from $4 million to $10 million are pooled among members. C. Purchased Insurance Pollution Legal Liability Insurance The City of Cerritos participates in the pollution legal liability insurance program (formerly called environmental insurance) which is available through the CJPIA. The policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City of Cerritos. Coverage is on a claims-made basis. There is a $50,000 deductible. The CJPIA has a limit of $50 million for the 3-year period from July 1, 2008 through July 1, 2011. Each member of the CJPIA has a $10 million sub-limit during the 3-year term of the policy. Property Insurance The City of Cerritos participates in the all-risk property protection program of the CJPIA. This insurance protection is underwritten by several insurance companies. City of Cerritos property is currently insured according to a schedule of covered property submitted by the City of Cerritos to the CJPIA. City of Cerritos property currently has all-risk property insurance protection in the amount of $252,770,335. There is a $5,000 deductible per occurrence except for non-emergency vehicle insurance which has a $1,000 deductible. Premiums for the coverage are paid annually and are not subject to retrospective adjustments.


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11. LIABILITY, PROPERTY AND WORKERS’ COMPENSATION PROTECTION, Continued C. Purchased Insurance, Continued Crime Insurance The City of Cerritos purchases crime insurance coverage in the amount of $1,000,000 with a $2,500 deductible. The fidelity coverage is provided through the CJPIA. Premiums are paid annually and are not subject to retrospective adjustments. Special Event Tenant User Liability Insurance The City of Cerritos further protects against liability damages by requiring tenant users of certain property to purchase low-cost tenant user liability insurance for certain activities on agency property. The insurance premium is paid by the tenant user and is paid to the City of Cerritos according to a schedule. The City of Cerritos then pays for the insurance. The insurance is arranged by the CJPIA. D. Adequacy of Protection During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in 2010-11. E. Retroactive Deposit Each year the City makes an annual contribution, and at the end of the year, the CJPIA retroactively reviews the loss history and issues a partial refund or requests an additional deposit based on actual claims activity. This retrospective review is conducted on an annual basis and includes all coverage years which contain open claims. For many members of the CJPIA, claims incurred in 2003-2004 and 2004-2005 have experienced significant adverse development during the past three years. Additional funding (retrospective adjustments) for these and other coverage years, was not collected in full at the time these funding short-falls were initially identified. Members of the CJPIA were allowed to make partial payments, while a portion of each retrospective adjustment was deferred. The aggregation of these deferred amounts over the course of several years is equal to the City’s current outstanding balance, which is referred to as the aggregate retrospective deposit balance. Retrospective deposits are payments required in addition to the annual contribution, which is payment for the current year’s insurance coverage. Following is a summary of retroactive deposit balances for the fiscal year ended June 30, 2011:

Balance Balance Due within Due in moreJuly 1, 2010 Addition Deletion June 30, 2011 One Year than One Year

Claims liabilities - general liabilities 1,917,561$ -$ (246,764)$ 1,670,797$ -$ 1,670,797$

Total claims liabilities 1,917,561$ -$ (246,764)$ 1,670,797$ -$ 1,670,797$


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12. OTHER REQUIRED DISCLOSURES A. Deficit Fund Balance/Net Assets At June 30, 2011, the following funds had deficit fund balances/net assets:

Fund Fund Type Deficit

Debt Service Fund:Redevelopment Agency Major Governmental Fund (57,622,025)$

Enterprise Fund:Electric Utility Fund Major Enterprise Fund (747,072)

Redevelopment Agency Debt Service Fund – The Redevelopment Agency Debt Service Fund has a deficit fund balance of $57,622,025 as a result of debt service payments exceeding revenues. The deficit is expected to be eliminated with future tax increment revenues. Electric Utility Fund – The Electric Utility Fund has deficit net assets of $747,072 as a result of the one-time impairment loss of $2,143,267. The deficit is expected to be eliminated with future sales of electricity. B. Excess of Expenditures over Appropriations Excess of expenditures over appropriations occurred in individual funds during fiscal year 2010-11 as follows:

ExessExpenditures over

Fund Expenditures Appropriations Appropriations

General Fund 68,949,923$ 57,995,410$ (10,954,513)$ Special Revenue Funds:

Street Improvements 2,974,881 2,943,990 (30,891) Drainage 13,329 12,640 (689) Local Law Enforcement Grants 127,732 107,420 (20,312) Library Grants 19,838 18,670 (1,168) AQMD 44,891 44,710 (181)

General Fund actual expenditures exceeded budgeted expenditures for the purchase of capital assets from the Agency. Special Revenue Fund actual expenditures exceeded budgeted expenditures for the Street Improvements, Drainage and AQMD relating to operational and administrative costs, and for Local Law Enforcement Grants and Library Grants to reimburse the General Fund for costs incurred relating to the grants.


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13. COMMITMENTS AND CONTINGENCIES A. Lawsuits Numerous claims and suits have been filed against the City in the normal course of conducting City business. Based upon information received from the City Attorney and the self-insurance administrator, the estimated liability under such claims would be adequately covered by the deposits paid to CJPIA for self-insurance and insurance coverage (See Note 11). B. Contract with Los Angeles County Sheriff’s Department The City contracts for policing services through the Los Angeles County Sheriff’s Department. As part of the agreement for services, the City is required to pay an additional 4% premium over the contract price to the Sheriff’s Department for liability insurance. This amount is held by the County in a Liability Trust Fund and provides for the payment of claims brought against the Sheriff’s Department. During the fiscal year ended June 30, 2011, the results of an actuarial study of both existing open claims and claims not yet reported are not able to be estimated at this time. In order to fund these past obligations of the Liability Trust Fund, the premium paid by the City may increase in future periods. The precise amount and timing of any contingencies or commitments resulting from the shortfall in the County’s Liability Trust Fund cannot be determined at this time. C. $5,640,000 Tax Allocation Bonds arrangement with Commonwealth Cousins I, LLC In October 1998, the City Council authorized the Agency to issue bonds relating to specific development within the Los Coyotes Project Area. Then, in November 1998, the Agency entered into an agreement to issue $5,640,000 of Tax Allocation Bonds to Commonwealth Cousins I, LLC, in relation to the construction of a shared parking structure in the Cerritos Towne Center. The parking structure serves both the retail complex and tenants within an adjacent office building. In 2001, $3,760,000 of the bonds were issued. The remaining balance of $1,880,000 remained unissued as of June 30, 2011. Interest will not accrue prior to the issuance date. The Agency will repay the bonds by pledging a portion of the tax increment generated from the adjacent office building. D. Electric Utility The City’s Electric Utility is a member of the Magnolia Power Project that is financed and owned by the Southern California Public Power Authority (SCPPA). Member cities of the Magnolia Power Project include Anaheim, Burbank, Colton, Glendale and Pasadena (the Project “A” Participants) and the City of Cerritos (the Project “B” Participant). All Magnolia Participants have a “Take or Pay” contract with SCPPA and are obligated to pay their share of the indebtedness regardless of the ability of the contracting agency to provide electricity. The City’s shares of these payments are reported as long-term debt (see Notes 8D and 8J). Payment for these obligations will be made from operating revenues. This contract provides for generating capacity of 4.2% of the output generated from the plant.


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13. COMMITMENTS AND CONTINGENCIES, Continued E. Grants Amounts received or receivable from federal and state granting agencies are subject to audit and adjustment by grantor agencies. While no matters of non-compliance were disclosed by the audit of the financial statements or single audit of the Federal grant programs, grantor agencies may subject grant programs to additional compliance tests, which may result in disallowed costs. In the opinion of management, future disallowances of current or prior grant expenditures, if any, would not have a material adverse effect on the financial position of the City. 14. LEASE INCOME UNDER OPERATING LEASES Land in the amount of $69,098,912 is owned by the City and Agency and is held for lease. In connection with certain ground leases of the Cerritos Towne Center property, the Lincoln Station Property, REMAX/ABC property, Lamar/Kia property and the Jaguar/Land Rover property, the Agency and City have entered into cooperation agreements. Under the terms of the cooperation agreements, 75% of the lease income is paid to the City and 25% is paid to the Agency. For the year ended June 30, 2011, the Agency’s 25% portion of the lease income was $1,928,484 while the City’s 75% portion was $4,730,575. Projected minimum lease payments to be received by the City and Agency as of June 30, 2011 are as follows:

Year EndingJune 30, City Agency Total

2012 4,344,762$ 1,791,584$ 6,136,346$ 2013 4,391,451 1,821,117 6,212,568 2014 4,400,154 1,837,658 6,237,812 2015 4,410,487 1,532,362 5,942,849 2016 4,438,619 1,479,540 5,918,159

2017-2088 272,806,037 90,935,345 363,741,382

Total 294,791,510$ 99,397,606$ 394,189,116$

15. TRANSFER OF ASSETS On March 24, 2011, the City and the Agency signed a “Transfer and Purchase Agreement and Joint Escrow Instructions” (the “Agreement”) approving the transfer to the City of ownership interest in properties recorded as capital assets on the Agency’s financial statements. These properties included (1) parcels on which public uses already exist or on which additional development for public use is contemplated, (2) parcels which are currently vacant and which are held for future redevelopment either by a public entity or through a public-private partnership , and (3) properties on which initial public-private redevelopment has occurred but which remain subject to a ground lease interest under which the Agency retains a reversionary interest in the real property following the expiration or earlier termination of that ground lease.


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15. TRANSFER OF ASSETS, Continued The capital assets were transferred on March 31, 2011 as a result of the Agreement, from the Agency to the City. The transfer included land ($59.1 million), construction in progress ($0.2 million), and buildings ($59.7 million, net of accumulated depreciation of $37.7 million). The $119.0 million in capital assets at June 30, 2011 are included in note 6 in the notes to the basic financial statements of the City of Cerritos. In addition, land held for resale or lease in the amount of $1,792,610 was transferred to the City’s capital assets as part of the Agreement. 16. PRIOR PERIOD ADJUSTMENTS Government-Wide Financial Statements

Governmental Activities Business-Type ActivitiesNet Assets at July 1, 2010 288,426,820$ 39,086,520$

(1) Sewer Fund Reclassification (3,247,905) 3,247,905 (2) Capital Assets

Infrastructure (11,760,205) 11,760,205 Accumulated Depreciation 5,880,532 (5,880,532)

(3) Other Post-Employment Benefit Asset 10,725,728 -

Net Assets at July 1, 2010, as Restated 290,024,970$ 48,214,098$

Fund Financial Statements

Governmental Fund Proprietary FundNonmajor Governmental Nonmajor Enterprise

Funds FundsFund Balance at July 1, 2010 6,276,332$ 7,548,029$

(1) Sewer Fund Reclassification (3,247,905) 3,247,905 (2) Capital Assets

Infrastructure - 11,760,205 Accumulated Depreciation - (5,880,532)

Fund Balance at July 1, 2010, as Restated 3,028,427$ 16,675,607$

(1) Sewer Fund reported as part of Nonmajor Governmental Funds and Governmental Activities as of June

30, 2010 was reclassified to Nonmajor Enterprise Funds and Business-Type Activities at July 1, 2010 due to implementation of GASB 54.

(2) Capital assets funded by the Sewer Fund and related accumulated depreciation were reclassified from Governmental Activities to Business-Type Activities due to implementation of GASB 54.

(3) Other Post-Employment Benefit was restated from an obligation in the amount of $2,015,775 to an asset

in the amount of $8,709,953. The net effect was an increase to net assets in the amount of $10,725,728 at July 1, 2010.


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17. RECENT CHANGES IN LEGISLATION AFFECTING CALIFORNIA REDEVELOPMENT AGENCIES

On June 29, 2011, the Governor of the State of California signed Assembly Bills X1 26 and 27 as part of the State’s budget package. Assembly Bill X1 26 requires each California redevelopment agency to suspend nearly all activities except to implement existing contracts, meet already-incurred obligations, preserve its assets and prepare for the impending dissolution of the agency. Assembly Bill X1 27 provides a means for redevelopment agencies to continue to exist and operate by means of a Alternative Voluntary Redevelopment Program. Under this program, each city would adopt an ordinance agreeing to make certain payments to the County Auditor Controller in fiscal year 2011-12 and annual payments each fiscal year thereafter. Assembly Bill X1 26 indicates that the city “may use any available funds not otherwise obligated for other uses” to make this payment. The City of Cerritos intends to use available monies of its redevelopment agency for this purpose and the City and Agency have approved a reimbursement agreement to accomplish that objective. The amounts to be paid after fiscal year 2012-13 have yet to be determined by the state legislature. Assembly Bill X1 26 directs the State Controller of the State of California to review the propriety of any transfers of assets between redevelopment agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the expenditure or encumbrance of those assets, the State Controller is required to order the available assets to be transferred to the public body designated as the successor agency by Assembly Bill X1 26. In the event that Assembly Bill X1 26 is upheld, the interagency receivable recognized by funds of the City that had previously loaned or advanced funds to the redevelopment agency may become uncollectible resulting in a loss recognized by such funds. The City might additionally be impacted if reimbursements previously paid by the redevelopment agency to the City for shared administrative services are reduced or eliminated. The League of California Cities and the California Redevelopment Association (the “CRA”) filed a lawsuit on July 18, 2011 on behalf of cities, counties and redevelopment agencies petitioning the California Supreme Court to overturn Assembly Bills X1 26 and 27 on the grounds that these bills violate the California Constitution. On August 11, 2011, the California Supreme Court issued a stay of all of Assembly Bill X1 27 and most of Assembly Bill X1 26. The California Supreme Court stated in its order that “the briefing schedule is designed to facilitate oral argument as early as possible in 2011, and a decision before January 15, 2012.” A second order issued by the California Supreme Court on August 17, 2011 indicated that certain provisions of Assembly Bills X1 26 and 27 were still in effect and not affected by its previous stay, including requirements to file an appeal of the determination of the community remittance payment by August 15, 2011, the requirement to adopt an Enforceable Obligations Payment Schedule (“EOPS”) by August 29, 2011, and the requirement to prepare a preliminary draft of the initial Recognized Obligation Payment Schedule (“ROPS”) by September 30, 2011.


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17. RECENT CHANGES IN LEGISLATION AFFECTING CALIFORNIA REDEVELOPMENT AGENCIES, Continued

Because the stay provided by Assembly Bill X1 26 only affects enforcement, each agency must adopt an Enforceable Obligation Payment Schedule and draft Recognized Obligation Payment Schedule prior to September 30, 2011, as required by the statute. Enforceable obligations include bonds, loans and payments required by the federal or State government; legally enforceable payments required in connection with agency employees such as pension payments and unemployment payments, judgments or settlements; legally binding and enforceable agreements or contracts; and contracts or agreements necessary for the continued administration or operation of the agency that are permitted for purposes set forth in AB1X 26. On August 11, 2011, City Ordinance No. 962 was adopted, indicating that the City will comply with the Alternative Voluntary Redevelopment Program in order to permit the continued existence and operation of the agency, in the event Assembly Bills X1 26 and/or 27 are upheld as constitutional. The initial payment by the City is estimated to be $9,339,030 for the year ended June 30, 2012. Thereafter, an estimated $2,300,000 will be due annually. The amounts to be paid after fiscal year 2012-13 have yet to be determined by the State Legislature. The semi-annual payments will be due on January 15 and May 15 of each year and would increase or decrease with changes in tax increment. Additionally, an increased amount would be due to schools if any "new debt" is incurred. Assembly Bill X1 27 allows a one-year reprieve on the agency’s obligation to contribute 20% of tax increment to the low-and-moderate-income housing fund so as to permit the Agency to assemble sufficient funds to make its initial payments. Failure to make these payments would require agencies to be terminated under the provisions of ABX1 26. Management believes that the Agency will have sufficient funds to pay its obligations as they become due during the fiscal year ending June 30, 2012. The nature and extent of the operation of redevelopment agencies in the State of California beyond that time frame are dependent upon the outcome of litigation surrounding the actions of the State. In the event that Assembly Bills X1 26 and/or 27 are specifically found by the courts to be unconstitutional, there is a possibility that future legislative acts may create new challenges to the ability of redevelopment agencies in the State of California to continue in view of the California State Legislature’s stated intent to eliminate California redevelopment agencies and to reduce their funding.

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REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

CITY OF CERRITOS Required Supplementary Information (Unaudited) For the year ended June 30, 2011

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1. BUDGET AND BUDGETARY ACCOUNTING The annual budget adopted by the City Council provides for the general operation of the City. It includes proposed expenditures and the means of financing them. The City Council approves total budgeted appropriations and any amendments to appropriations throughout the year. This “appropriated budget” covers substantially all City expenditures, with the exception of debt service on bond issues and capital improvement projects carried forward from prior years, which expenditures constitute legally-authorized “non-appropriated budget.” There were no significant non-budgeted financial activities. Actual expenditures may not exceed budgeted appropriations at the fund level. However, the City Manager is authorized to transfer budgeted amounts between funds. There were no significant supplementary budget appropriations during the year ended June 30, 2011. Formal budgetary integration is employed as a management control. Commitments for materials and services, such as purchase orders and contracts, are recorded during the year as encumbrances to assist in controlling expenditures. Encumbrances at year end lapse, unless appropriations are made for certain capital projects in the subsequent fiscal year. Annual budgets for the General and Special Revenue Funds are adopted on a basis substantially consistent with accounting principles generally accepted in the United States of America. Accordingly, actual revenues and expenditures can be compared with related budgeted amounts without any significant reconciling items. Budgets for the Capital Projects and Debt Service Funds are long-term in nature. Accordingly, no budgetary comparisons are reflected for these funds in the accompanying financial statements. No budgetary comparisons are presented for Proprietary Funds, as the City is not legally required to adopt a budget for these types of funds. Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), the City is restricted as to the amount of annual appropriations from the proceeds of taxes, and if proceeds of taxes exceed allowed appropriations, the excess must either be refunded to the State Controller, returned to the taxpayers through revised tax rates or revised fee schedules, or an excess in one year may be offset against a deficit in the following year. For the fiscal year ended June 30, 2011, based on calculations by City Management, proceeds of taxes did not exceed appropriations. Further, Section 5 of Article XIIIB allows the City to designate a portion of fund balance for general contingencies, to be used for any purpose.

CITY OF CERRITOS Required Supplementary Information (Unaudited), Continued For the year ended June 30, 2011

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1. BUDGET AND BUDGETARY ACCOUNTING, Continued

Variance withFinal Budget

PositiveOriginal Final Actual (Negative)

REVENUES:Taxes 23,941,000$ 23,040,000$ 23,635,540$ 595,540$ Franchises 1,012,500 1,913,500 1,487,320 (426,180) Licenses and permits 930,000 930,000 1,869,739 939,739 Fines and forfeitures 15,599,890 15,640,090 1,305,871 (14,334,219) Investment and rental income 10,921,000 10,921,000 15,757,260 4,836,260 Revenues from other agencies 7,387,050 7,437,580 8,741,938 1,304,358 Current fees and services 1,505,000 1,505,000 6,886,623 5,381,623 Other revenue 589,880 499,150 747,669 248,519

TOTAL REVENUES 61,886,320 61,886,320 60,431,960 (1,454,360)

EXPENDITURES:Current:

Legislative and Administrative 1,879,400 2,534,990 2,515,105 19,885 Community Development 2,472,780 2,403,590 3,000,786 (597,196) Public Works 11,340,300 10,261,810 10,246,568 15,242 Water and Power 144,010 819,460 175,593 643,867 Community and Safety Services 22,499,620 21,973,410 20,909,182 1,064,228 Administrative Services 11,762,820 11,723,280 10,747,581 975,699 Cerritos Center for the Performing Arts 8,765,580 8,278,870 8,054,469 224,401

Capital outlay - - 13,300,639 (13,300,639) TOTAL EXPENDITURES 58,864,510 57,995,410 68,949,923 (10,954,513)

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES 3,021,810 3,890,910 (8,517,963) (12,408,873)

OTHER FINANCING SOURCES (USES):Transfers in - 1,200,000 1,200,000 - Transfers out (2,381,090) (2,381,090) (2,233,414) 147,676 Contribution from

Cerritos Redevelopment Agency - - 1,792,610 1,792,610 TOTAL OTHER FINANCING

SOURCES (USES) (2,381,090) (1,181,090) 759,196 1,940,286

NET CHANGE IN FUND BALANCE 640,720 2,709,820 (7,758,767) (10,468,587)

FUND BALANCES - BEGINNING OF YEAR 183,100,074 183,100,074 183,100,074 -

FUND BALANCES - END OF YEAR 183,740,794$ 185,809,894$ 175,341,307$ (10,468,587)$

Budgeted Amounts

BUDGETARY COMPARISON SCHEDULE

GENERAL FUND

For the Year Ended June 30, 2011

CITY OF CERRITOS Required Supplementary Information (Unaudited), Continued For the year ended June 30, 2011

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2. DEFINED PENSION PLAN

PUBLIC EMPLOYEE RETIREMENT SYSTEMS (PERS) SCHEDULE OF FUNDING PROGRESS

Miscellaneous Employees

Valuation Actuarial Value Entry Age Normal Unfunded/Liability Funded Annual Covered UAAL as a %

Date of Assets Accrued Liability (Excess Assets) Status Payroll of Payroll

6/30/2008 109,425$ 132,565$ 23,140$ 82.5% 19,718$ 117.4%6/30/2009 116,451 146,971 30,520 79.2% 19,394 157.4%6/30/2010 123,723 154,697 30,974 80.0% 19,126 161.9%

Schedule of Funding Progress for PERS ($ Amount in Thousands)

* Based on the latest actuarial valuation available. 3. OTHER POST EMPLOYMENT BENEFITS

SCHEDULE OF FUNDING PROGRESS

Actuarial Actuarial Annual UAAL as a

Validation Value of Entry Age Unfunded Funded Covered % of

Date Assets Normal AAL AAL Status Payroll Payroll

1/1/2007 -$ 25,769$ 25,769$ 0.0% 19,306$ 133.5%1/1/2009 11,825 27,855 16,030 42.5% 21,648 74.0%1/1/2011 20,646 30,179 9,533 68.4% 21,305 44.7%

Schedule of Funding Progress for OPEB ($ Amount in Thousands)

* Based on the latest actuarial valuation available.

SUPPLEMENTARY INFORMATION

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The Capital Projects Fund is used to account for resources used for the construction and acquisition of capitalfacilities.

Municipal Improvement Fund - to account for the monies received from General Fund and other grant monies forthe construction of major capital facilities, which generally require more than one budgetary cycle to complete.

Street Improvements Fund - to account for allocation of state gasoline taxes received by the City. These fundsmay be used for street maintenance, right-of-way acquisition and street construction.

Traffic Congestion Fund - to account for allocated funds from the state for street or road maintenance orreconstruction during the fiscal year 2010-2011.

Measure "R" Fund - to account for a Los Angeles County 1/2-cent sales tax which was approved by voters inNovember 2008 for transportation purposes.

Air Quality Management District (AQMD) Fund - to account for monies received from the South Coast AirQuality Management District. These funds are used for the City’s rideshare program.

Drainage Fund - to account for monies received from development fees. The funds are used for the maintenanceof the drainage system.

Proposition “A” Fund - to account for Los Angeles County special 1/2 cent transportation sales tax, whichbecame effective July 1 , 1982. These funds may be used only for certain transportation purposes.

COPS Grants Fund - to account for non-recurring grant monies received from the State of California under thefollowing laws: COPS SB3229 and COPS Ahead. These funds are used for public safety programs.

NONMAJOR GOVERNMENTAL FUNDS

Special Revenue Funds account for taxes and other revenues set aside in accordance with law or administrativeregulations for a specific purpose.

Library Grants Fund - to account for non-recurring grant monies received from the State of California fortechnology improvements in library services.

Environmental Grant Fund - to account for non-recurring grant monies received from the State of California forincreased recycling efforts within the City of Cerritos.

Proposition “C” Fund - to account for a Los Angeles County Special 1/2 cent transit sales tax, which wasapproved by the voters in November 1990. These funds may be used only for public transit projects.

Assessment District #6 Fund - to account for monies received from special assessment tax levied from the areasbenefited. These funds are used to cover the expenses of maintaining the improvements in the area.

Los Coyotes Lighting District Fund - to account for monies secured from the State of California under theprovision of Division 14, Part 1, Street and Highways Code, State of California as amended, referred to as the“Street Lighting Act of 1919”. These funds are used for the installation, maintenance of, and furnishing ofelectrical current for the lighting of a street lighting system on certain public streets within the City.

Local Law Enforcement Grants Fund - to account for non-recurring grant monies received from the State ofCalifornia for “Local Law Enforcement Block Grant”. These funds are used for public safety programs.

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City of CerritosCombining Balance SheetNon-Major Governmental FundsJune 30, 2011

Street Traffic Proposition

Improvements Congestion Drainage "A"

ASSETS

Cash and investments 160,079$ 106,456$ 86$ 620,840$

Receivable:

Accounts 14,579 - - -

Interest - 644 - 2,049

Other - - - 2,040

Total Assets 174,658$ 107,100$ 86$ 624,929$

LIABILITIES AND

FUND BALANCES

Liabilities:

Accounts payable and accrued liabilities 113,750$ 38,866$ 86$ -$

Accrued salaries and benefits 60,908 1,983 - -

Due to other funds - - - -

Deferred revenue - - - -

Total Liabilities 174,658 40,849 86 -

Fund Balances:

Restricted - 66,251 - 624,929

Total Fund Balances (Deficit) - 66,251 - 624,929

Total Liabilities and Fund Balances 174,658$ 107,100$ 86$ 624,929$

Special Revenue Funds

88

Local Law

Proposition Assessment Los Coyotes Enforcement COPS Library Environmental

"C" District #6 Lighting District Grant Grant Grant Grant AQMD

-$ 130,389$ 6,507$ -$ -$ -$ 17,468$ 277,361$

- - - 16,404 12,706 - 11,320 15,700

- 231 - - - - - 507

- - - - - - - -

-$ 130,620$ 6,507$ 16,404$ 12,706$ -$ 28,788$ 293,568$

-$ 45$ 5,798$ 59$ -$ -$ -$ -$

- - 709 - - - - -

- - - 2,651 12,706 - - -

- - - 4,404 - - 11,320 -

- 45 6,507 7,114 12,706 - 11,320 -

- 130,575 9,290 - 17,468 293,568

- 130,575 - 9,290 - - 17,468 293,568

-$ 130,620$ 6,507$ 16,404$ 12,706$ -$ 28,788$ 293,568$

Public Safety Grants Fund


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City of CerritosCombining Balance SheetNon-Major Governmental FundsJune 30, 2011

Capital

Projects Fund

Total

Total Special Nonmajor

Measure Revenue Municipal Governmental

"R" Funds Improvement Funds

ASSETS

Cash and investments 372,903$ 1,692,089$ 35,973$ 1,728,062$

Receivable:

Accounts - 70,709 349,755 420,464

Interest 1,037 4,468 - 4,468

Other - 2,040 - 2,040

Total Assets 373,940$ 1,769,306$ 385,728$ 2,155,034$

LIABILITIES AND

FUND BALANCES

Liabilities:

Accounts payable and accrued liabilities 38,857$ 197,461$ 35,973$ 233,434$

Accrued salaries and benefits 3,683 67,283 - 67,283

Due to other funds - 15,357 - 15,357

Deferred revenue - 15,724 349,755 365,479

Total Liabilities 42,540 295,825 385,728 681,553

Fund Balances:

Restricted 331,400 1,473,481 - 1,473,481

Total Fund Balances (Deficit) 331,400 1,473,481 - 1,473,481

Total Liabilities and Fund Balances 373,940$ 1,769,306$ 385,728$ 2,155,034$

Special Revenue Fund

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91

City of CerritosCombining Statement of Revenues, Expenditures and Changes in Fund BalancesNon-Major Governmental FundsFor the Year Ended June 30, 2011

Street Traffic Proposition

Improvements Congestion Drainage "A"

REVENUES:

Investment and rental income/(loss) (1,323)$ 4,226$ -$ 14,456$

Revenues from other agencies 1,485,527 - - 927,241

Current fees and services - - 570 11,994

Franchise 79,355 - - -

Total Revenues 1,563,559 4,226 570 953,691

EXPENDITURES:

Current:

Legislative and Administration 128,405 - - -

Community Development - - - 550,527

Public Works 1,956,076 224,803 12,133 -

Community and Safety Services - - - -

Administrative Services 371,723 - 1,196 -

Capital outlay 518,677 181,436 - -

Total Expenditures 2,974,881 406,239 13,329 550,527

REVENUES OVER

(UNDER) EXPENDITURES (1,411,322) (402,013) (12,759) 403,164


Transfers in 704,349 - 12,759 -

Transfers out - - - (731,959)

Total Other Financing Sources (Uses) 704,349 - 12,759 (731,959)

NET CHANGE IN FUND BALANCES (706,973) (402,013) - (328,795)

FUND BALANCE (DEFICIT):

Beginning of Year, as restated (Note 16) 706,973 468,264 - 953,724

End of Year -$ 66,251$ -$ 624,929$


92

Local Law

Proposition Assessment Los Coyotes Enforcement COPS Library Environmental

"C" District #6 Lighting District Grant Grant Grant Grant AQMD

93$ 1,411$ -$ 661$ 406$ 19$ 772$ 3,088$

616,649 20,594 884,416 31,156 100,000 19,654 31,837 79,528

90,524 - - - - - - -

- - - - - - - -

707,266 22,005 884,416 31,817 100,406 19,673 32,609 82,616

- - - - - - - -

1,439,225 - - - - - - 44,891

- - 1,070,455 - - - 126,283 -

- - - 127,732 120,525 - - -

- 2,072 157,792 - - 19,838 - -

- - - - - - - -

1,439,225 2,072 1,228,247 127,732 120,525 19,838 126,283 44,891

(731,959) 19,933 (343,831) (95,915) (20,119) (165) (93,674) 37,725

731,959 - 348,811 - - - - -

- - - - - - - -

731,959 - 348,811 - - - - -

- 19,933 4,980 (95,915) (20,119) (165) (93,674) 37,725

- 110,642 (4,980) 105,205 20,119 165 111,142 255,843

-$ 130,575$ -$ 9,290$ -$ -$ 17,468$ 293,568$

Public Safety Grants Fund


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City of CerritosCombining Statement of Revenues, Expenditures and Changes in Fund BalancesNon-Major Governmental FundsFor the Year Ended June 30, 2011

Capital

Projects Fund

Total

Total Special Nonmajor

Measure Revenue Municipal Governmental

"R" Funds Improvement Funds

REVENUES:

Investment and rental income/(loss) 6,745$ 30,554$ (215)$ 30,339$

Revenues from other agencies 459,983 4,656,585 517,551 5,174,136

Current fees and services - 103,088 - 103,088

Franchise - 79,355 - 79,355

Total Revenues 466,728 4,869,582 517,336 5,386,918

EXPENDITURES:

Current:

Legislative and Administration - 128,405 - 128,405

Community Development - 2,034,643 - 2,034,643

Public Works 435,687 3,825,437 39,942 3,865,379

Community and Safety Services - 248,257 - 248,257

Administrative Services - 552,621 - 552,621

Capital outlay - 700,113 687,951 1,388,064

Total Expenditures 435,687 7,489,476 727,893 8,217,369

REVENUES OVER

(UNDER) EXPENDITURES 31,041 (2,619,894) (210,557) (2,830,451)


Transfers in - 1,797,878 209,586 2,007,464

Transfers out - (731,959) - (731,959)

Total Other Financing Sources (Uses) - 1,065,919 209,586 1,275,505

NET CHANGE IN FUND BALANCES 31,041 (1,553,975) (971) (1,554,946)


Beginning of Year, as restated (Note 16) 300,359 3,027,456 971 3,028,427

End of Year 331,400$ 1,473,481$ -$ 1,473,481$

Special Revenue Fund

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City of CerritosSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualStreet Improvements Special Revenue FundFor the Year Ended June 30, 2011

VarianceOriginal Final PositiveBudget Budget Actual (Negative)

REVENUES:

Investment and rental income -$ -$ (1,323)$ (1,323)$ Revenues from other agencies 889,260 1,608,280 1,485,527 (122,753) Franchise - 102,200 79,355 (22,845)

Total Revenues 889,260 1,710,480 1,563,559 (146,921)

EXPENDITURES:

Current:Legislative and Administrative 10,230 130,790 128,405 2,385 Public Works 2,570,080 1,785,220 1,956,076 (170,856) Administrative Services 96,790 524,210 371,723 152,487

Capital outlay 397,030 503,770 518,677 (14,907)

Total Expenditures 3,074,130 2,943,990 2,974,881 (30,891)

REVENUES OVER (UNDER) EXPENDITURES (2,184,870) (1,233,510) (1,411,322) (177,812)


Transfers in 1,865,840 966,580 704,349 (262,231)

Total Other Financing Sources (Uses) 1,865,840 966,580 704,349 (262,231)

NET CHANGE IN FUND BALANCE (319,030) (266,930) (706,973) (440,043)

FUND BALANCE:

Beginning of Year 706,973 706,973 706,973 -

End of Year 387,943$ 440,043$ -$ (440,043)$

95

City of CerritosSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualTraffic Congestion Special Revenue FundFor the Year Ended June 30, 2011


REVENUES:

Investment and rental income -$ -$ 4,226$ 4,226$ Revenues from other agencies 548,400 17,200 - (17,200)

Total Revenues 548,400 17,200 4,226 (12,974)

EXPENDITURES:

Current:Public works - 289,230 224,803 64,427

Capital outlay - 196,230 181,436 14,794

Total expenditures - 485,460 406,239 79,221

REVENUES OVER (UNDER) EXPENDITURES 548,400 (468,260) (402,013) 66,247

FUND BALANCE:


End of Year 1,016,664$ 4$ 66,251$ 66,247$

96

City of CerritosSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualDrainage Special Revenue FundFor the Year Ended June 30, 2011


REVENUES:

Current fees and services 1,500$ 500$ 570$ 70$

Total Revenues 1,500 500 570 70

EXPENDITURES:

Current:Legislative and Administrative - 620 - 620 Public Works 8,520 9,460 12,133 (2,673) Administrative Services 12,800 2,560 1,196 1,364

Total Expenditures 21,320 12,640 13,329 (689)

REVENUES OVER (UNDER) EXPENDITURES (19,820) (12,140) (12,759) (619)


Transfers in 19,820 12,140 12,759 619

Total Other Financing Sources (Uses) 19,820 12,140 12,759 619

NET CHANGE IN FUND BALANCE - - - -

FUND BALANCE:

Beginning of Year - - - -

End of Year -$ -$ -$ -$

97

City of CerritosSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualProposition "A" Special Revenue FundFor the Year Ended June 30, 2011


REVENUES:

Investment and rental income 27,340$ 27,340$ 14,456$ (12,884)$ Revenues from other agencies 979,330 899,590 927,241 27,651 Current fees and services 15,000 12,000 11,994 (6)

Total Revenues 1,021,670 938,930 953,691 14,761

EXPENDITURES:

Current:Community development 725,000 649,190 550,527 98,663

Total Expenditures 725,000 649,190 550,527 98,663

REVENUES OVER (UNDER) EXPENDITURES 296,670 289,740 403,164 113,424


Transfers out (836,745) (771,180) (731,959) 39,221

Total Other Financing Sources (Uses) (836,745) (771,180) (731,959) 39,221

NET CHANGE IN FUND BALANCE (540,075) (481,440) (328,795) 152,645

FUND BALANCE:


End of Year 413,649$ 472,284$ 624,929$ 152,645$

98

City of CerritosSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualProposition "C" Special Revenue FundFor the Year Ended June 30, 2011


REVENUES:

Investment and rental income -$ -$ 93$ 93$ Revenue from other agencies 613,255 613,260 616,649 3,389 Current fees and services 100,000 80,000 90,524 10,524

Total Revenues 713,255 693,260 707,266 14,006

EXPENDITURES:

Current:Community development 1,550,000 1,464,440 1,439,225 25,215

Total Expenditures 1,550,000 1,464,440 1,439,225 25,215

REVENUES OVER (UNDER) EXPENDITURES (836,745) (771,180) (731,959) 39,221


Transfers in 836,745 771,180 731,959 (39,221)

Total Other Financing Sources (Uses) 836,745 771,180 731,959 (39,221)

NET CHANGE IN FUND BALANCE - - - -

FUND BALANCE:

Beginning of Year - - - -

End of Year -$ -$ -$ -$

99

City of CerritosSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualAssessment District #6 Special Revenue FundFor the Year Ended June 30, 2011


REVENUES:

Investment and rental income 800$ 2,000$ 1,411$ (589)$ Revenues from other agencies 31,000 28,020 20,594 (7,426)

Total Revenues 31,800 30,020 22,005 (8,015)

EXPENDITURES:

Current:Legislative and Administrative - 310 - 310 Public Works - 520 - 520 Administrative Services 12,800 1,340 2,072 (732)

Total Expenditures 12,800 2,170 2,072 98

REVENUES OVER (UNDER) EXPENDITURES 19,000 27,850 19,933 (7,917)

FUND BALANCE:


End of Year 129,642$ 138,492$ 130,575$ (7,917)$

100

City of CerritosSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualLos Coyotes Lighting District Special Revenue FundFor the Year Ended June 30, 2011


REVENUES:

Revenues from other agencies 869,000$ 865,030$ 884,416$ 19,386$

Total Revenues 869,000 865,030 884,416 19,386

EXPENDITURES:

Current:Legislative and Administrative - 42,660 - 42,660 Public Works 954,590 1,024,460 1,070,455 (45,995) Administrative Services 125,410 171,060 157,792 13,268

Total Expenditures 1,080,000 1,238,180 1,228,247 9,933



101

( )

Transfers in 211,000 378,130 348,811 (29,319)

Total Other Financing Sources (Uses) 211,000 378,130 348,811 (29,319)

NET CHANGE IN FUND BALANCE - 4,980 4,980 -


Beginning of Year (4,980) (4,980) (4,980) -

End of Year (4,980)$ -$ -$ -$

101

City of CerritosSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualLocal Law Enforcement Grants Special Revenue FundFor the Year Ended June 30, 2011


REVENUES:

Investment and rental income 1,800$ -$ 661$ 661$ Revenue from other agencies - 2,210 31,156 28,946

Total Revenues 1,800 2,210 31,817 29,607

EXPENDITURES:

Current:Community and Safety Services 1,800 107,420 127,732 (20,312)

Total Expenditures 1,800 107,420 127,732 (20,312)

REVENUES OVER (UNDER) EXPENDITURES - (105,210) (95,915) 9,295

FUND BALANCE:


End of Year 105,205$ (5)$ 9,290$ 9,295$

102

City of CerritosSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualCOPS Grants Special Revenue FundFor the Year Ended June 30, 2011


REVENUES:

Investment and rental income 1,800$ 2,200$ 406$ (1,794)$ Revenues from other agencies 100,000 100,000 100,000 -

Total Revenues 101,800 102,200 100,406 (1,794)

EXPENDITURES:

Current:Community and Safety Services 100,000 122,320 120,525 1,795


REVENUES OVER (UNDER) EXPENDITURES 1,800 (20,120) (20,119) 1

FUND BALANCE:


End of Year 21,919$ (1)$ -$ 1$

103

City of CerritosSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualLibrary Grants Special Revenue FundFor the Year Ended June 30, 2011


REVENUES:

Investment and rental income -$ -$ 19$ 19$ Revenues from other agencies 20,000 18,500 19,654 1,154

Total Revenues 20,000 18,500 19,673 1,173

EXPENDITURES:

Current:Administrative Services 20,000 18,670 19,838 (1,168)

Total Expenditures 20,000 18,670 19,838 (1,168)

REVENUES OVER (UNDER) EXPENDITURES - (170) (165) 5

FUND BALANCE:

Beginning of Year 165 165 165 -

End of Year 165$ (5)$ -$ 5$

104

City of CerritosSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualEnvironmental Grants Special Revenue FundFor the Year Ended June 30, 2011

Variance fromFinal Budget

Original Final PositiveBudget Budget Actual (Negative)

REVENUES:

Investment and rental income 2,100$ 1,100$ 772$ (328)$ Revenues from other agencies 9,000 14,370 31,837 17,467

Total Revenues 11,100 15,470 32,609 17,139

EXPENDITURES:

Current:Public Works 31,770 126,610 126,283 327

Total Expenditures 31,770 126,610 126,283 327


FUND BALANCE:


End of Year 90,472$ 2$ 17,468$ 17,466$

105

City of CerritosSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualAQMD Special Revenue FundFor the Year Ended June 30, 2011


REVENUES:

Investment and rental income 4,850$ 4,100$ 3,088$ (1,012)$ Revenues from other agencies 50,000 50,000 79,528 29,528

Total Revenues 54,850 54,100 82,616 28,516

EXPENDITURES:

Current:Community Development 51,490 44,710 44,891 (181) Administrative Services 3,200 - - -

Total Expenditures 54,690 44,710 44,891 (181)

REVENUES OVER (UNDER) EXPENDITURES 160 9,390 37,725 28,335

FUND BALANCE:


End of Year 256,003$ 265,233$ 293,568$ 28,335$

106

City of CerritosSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualMeasure "R" Special Revenue FundFor the Year Ended June 30, 2011


REVENUES:

Investment and rental income -$ 9,000$ 6,745$ (2,255)$ Revenues from other agencies 459,940 459,940 459,983 43

Total Revenues 459,940 468,940 466,728 (2,212)

EXPENDITURES:

Current:Public Works - 538,100 435,687 102,413

Capital outlay 180,970 - - -


REVENUES OVER (UNDER) EXPENDITURES 278,970 (69,160) 31,041 100,201

FUND BALANCE:


End of Year 579,329$ 231,199$ 331,400$ 100,201$

107


108

NON-MAJOR ENTERPRISE FUNDS

Reclaimed Water Fund - to account for the construction, operation, and maintenance of the City owned reclaimedwastewater system.

Sewer Fund - to account for construction, operation, and maintenance of the City owned sewer system and to account for monies received from sewer connection and maintenance fees.

109

City of CerritosCombining Statement of Net AssetsNonmajor Enterprise FundsJune 30, 2011

TotalNonmajor

Reclaimed EnterpriseWater Sewer Funds

ASSETS

Current Assets:Cash and investments -$ 512,845$ 512,845$ Accounts receivable 156,398 8,395 164,793 Interest receivable - 3,952 3,952

Total Current Assets 156,398 525,192 681,590

Noncurrent Assets:Capital assets:

Building and structures 1,315,000 - 1,315,000 Water mains and lines 13,068,932 - 13,068,932 Equipment 120,278 - 120,278 Sewer mains - 11,760,205 11,760,205

Accumulated depreciation (7,259,805) (6,037,298) (13,297,103)

Total Noncurrent Assets 7,244,405 5,722,907 12,967,312

Total Assets 7,400,803 6,248,099 13,648,902

LIABILITIES

Current Liabilities:Accounts payable 16,535 6,802 23,337 Accrued salaries and benefits 6,258 6,924 13,182 Due to other funds 78,059 - 78,059

Total Current Liabilities 100,852 13,726 114,578

Total Liabilities 100,852 13,726 114,578

NET ASSETS

Invested in capital assets 7,244,405 5,722,907 12,967,312 Unrestricted 55,546 511,466 567,012

Total Net Assets 7,299,951$ 6,234,373$ 13,534,324$

110

City of CerritosCombining Statement of Revenues, Expenses and Changes in Net AssetsNonmajor Enterprise FundsFor the Year Ended June 30, 2011

TotalNonmajor


OPERATING REVENUES:

Sales of water:Regular 838,548$ -$ 838,548$

Charges for services - 65,095 65,095

Total Operating Revenues 838,548 65,095 903,643

OPERATING EXPENSES:

Management 329,385 131,222 460,607 Production and distribution 42,157 133,862 176,019 Operations 353,154 1,355,132 1,708,286 Inspections 47,997 9,599 57,596 Billings and collection 4,270 874 5,144 Depreciation 309,684 156,766 466,450

Total Operating Expenses 1,086,647 1,787,455 2,874,102

OPERATING LOSS (248,099) (1,722,360) (1,970,459)

NONOPERATING REVENUES (EXPENSES):

Investment income 21 29,155 29,176

Total Nonoperating Revenues (Expenses) 21 29,155 29,176

INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS (248,078) (1,693,205) (1,941,283)

TRANSFERS:

Transfers out - (1,200,000) (1,200,000)

Change in Net Assets (248,078) (2,893,205) (3,141,283)

NET ASSETS:

Beginning of the Year, as restated (Note 16) 7,548,029 9,127,578 16,675,607

End of the Year 7,299,951$ 6,234,373$ 13,534,324$

111

City of CerritosCombining Statement of Cash FlowsNonmajor Enterprise FundsFor the Year Ended June 30, 2011

TotalNonmajor



Cash received from customers 825,905$ 64,514$ 890,419$ Cash paid to other suppliers of goods or services (495,649) (1,492,665) (1,988,314) Cash paid to employees (330,277) (124,298) (454,575)

Net Cash Provided by (Used for) Operating Activities (21) (1,552,449) (1,552,470)

CASH FLOWS CAPITAL ANDFINANCING RELATED ACTIVITIES:

Transfers from/(to) other funds - (1,200,000) (1,200,000)

Net Cash Provided by (Used for)Capital and Related Financing Activities - (1,200,000) (1,200,000)


Interest income received 21 32,706 32,727

Net Cash Provided by (Used for) Investing Activities 21 32,706 32,727

Net Increase (Decrease) inCash and Cash Equivalents - (2,719,743) (2,719,743)


Beginning of Year - 3,232,588 3,232,588

End of Year -$ 512,845$ 512,845$

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY(USED FOR) OPERATING ACTIVITIES:

Operating loss (248,099)$ (1,722,360)$ (1,970,459)$ Adjustments to reconcile operating income to net cash

provided by (used for) operating activities:Depreciation expense 309,684 156,766 466,450 Change in assets and liabilities:

(Increase) decrease in accounts receivable (12,643) (581) (13,224) (Increase) decrease in prepaid expenses 3,930 - 3,930 Increase (decrease) in accounts payable 1,555 6,802 8,357 Increase (decrease) in accrued salaries and benefits (892) 6,924 6,032 Increase (decrease) in deposits payable - - - Increase (decrease) in due to other funds (53,556) - (53,556)

Net Cash Provided by (Used for) Operating Activities (21)$ (1,552,449)$ (1,552,470)$

112

INTERNAL SERVICE FUNDS

Equipment Replacement Fund - to account for the regular maintenance and replacement of the City’s capitalequipment and office equipment inventory and to accumulate funds necessary for equipment replacement.

113

City of CerritosStatement of Net AssetsInternal Service FundsJune 30, 2011

EquipmentReplacement

ASSETS

Current assets:Cash and investments 15,369,792Interest receivables 27,867

Total Assets 15,397,659

LIABILITIES

Current Liabilities:Accounts payable 2,967

Total Liabilities 2,967

NET ASSETS

Unrestricted 15,394,692

Total Net Assets 15,394,692$

114

City of CerritosStatement of Revenues, Expenses and Changes in Net Assets Internal Service FundsFor the Year Ended June 30, 2011


OPERATING EXPENSES:

Administrative costs 272,247

Total Operating Expenses 272,247

OPERATING LOSS (272,247)

NONOPERATING REVENUES:

Interest income 173,624

Total Nonoperating Revenues 173,624

CHANGE IN NET ASSETS (98,623)

NET ASSETS:

Beginning of Year 15,493,315

End of Year 15,394,692$

115

City of CerritosStatement of Cash FlowsInternal Service FundsFor the Year Ended June 30, 2011



Cash paid to other suppliers of goods or services (236,715)$ Cash paid to employees (76,635)

Net Cash Used for Operating Activities (313,350)


Interest income received 181,735

Net Cash Provided by Investing Activities 181,735

Net Increase in Cash and Cash Equivalents (131,615)


Beginning of Year 15,501,407

End of Year 15,369,792$

RECONCILIATION OF OPERATING LOSS TO NET

CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES:

Operating loss (272,247)$ Adjustments to reconcile operating income to net cash

used for operating activities:Change in assets and liabilities:

Decrease in accounts payable (41,103)

Total Adjustments (41,103)

Net Cash Provided by (Used for) Operating Activities (313,350)$

116

C&LCaporicci & Larson, Inc.A Subsidiary of Marcum LLPCertifi ed Public Accountants

www.c-lcpa.com

INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN

AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Honorable Mayor and

Members of the City Council City of Cerritos Cerritos, California We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Cerritos, California (the “City”), as of and for the year ended June 30, 2011, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated December 1, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weakness, as defined above.

118

Honorable Mayor and Members of the City Council

City of Cerritos Cerritos, California Page 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly we do not express such an opinion. The results of our tests disclosed no instance of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of management, the City Council, others within the City, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

Caporicci & Larson, Inc. A Subsidiary of Marcum LLP Certified Public Accountants Irvine, California December 1, 2011

Contents Page

Financial Trends 120

Revenue Capacity 132

Debt Capacity 138

Demographic and Economic Information 144

Operating Information 146

These tables offer demographic and economic indicators to help the reader understand theenvironment within which the City's financial activities take place.

These tables contain service and infrastructure data to help the reader understand how theinformation in the City's financial report relates to the services the City provides and theactivities it performs.

Sources: Unless otherwise noted, the information in these tables is derived from the comprehensive annual financial reports for the relevant year.

STATISTICAL SECTION(Unaudited)

This part of the City of Cerritos's comprehensive annual financial report presents detailed information as a context forunderstanding what the information in the financial statements, note disclosures, and required supplementaryinformation says about the City's overall financial health.

These tables contain trend information to help the reader understand how the City's financialperformance and well-being have changed over time.

These tables contain information to help the reader assess the City's most significant localrevenue source, the property tax.

These tables present information to help the reader assess the affordability of the City's currentlevels of outstanding debt and the City's ability to issue additional debt in the future.

119

City of CerritosNet Assets By ComponentLast Nine Fiscal Years(accrual basis of accounting)

2002-03 2003-04 2004-05 2005-06


Invested in capital assets, net of related debt 83,888,493$ 121,366,767$ 128,354,981$ 124,591,591$

Restricted For:

Special revenue 8,063,081 6,245,154 6,587,749 7,143,179

Street and sewer related purposes - - - -

Transportation related purposes - - - -

Assessment districts - - - -

Miscellaneous grants - - - -

Asset replacement - 14,308,312 15,072,026 14,900,417

Other post employment benefits - - - -

Debt Service - - - -

Low and moderate income housing - - - -

Unrestricted 215,788,662 156,663,276 152,914,279 144,717,403

Total governmental activities net assets 307,740,236 298,583,509 302,929,035 291,352,590

Business-type Activities:

Invested in capital assets, net of related debt 29,922,954 29,578,894 31,835,092 42,440,170

Unrestricted 20,818,339 19,195,242 18,232,852 15,685,283

Total business-type activities net assets 50,741,293 48,774,136 50,067,944 58,125,453

Primary Government:

Invested in capital assets, net of related debt 113,811,447 150,945,661 160,190,073 167,031,761

Restricted For:

Special revenue 8,063,081 6,245,154 6,587,749 7,143,179

Street and sewer related purposes - - - -

Transportation related purposes - - - -

Assessment districts - - - -

Miscellaneous grants - - - -

Asset replacement - 14,308,312 15,072,026 14,900,417

Other post employment benefits - - - -

Debt Service

Low and moderate income housing

Unrestricted 236,607,001 175,858,518 171,147,131 160,402,686

Total primary government net assets 358,481,529$ 347,357,645$ 352,996,979$ 349,478,043$

The City has elected to show only nine years of data for this schedule coinciding with the implementation of GASB 34 in fiscal year 2002-2003.

Information prior to implementation of GASB 34 is not available.

Source: Finance Division, City of Cerritos

Fiscal Year

120

Fiscal Year

2006-07 2007-08 2008-09 2009-10 2010-11

123,877,356$ 112,701,038$ 108,311,131$ 129,318,648$ 128,288,812$

6,663,515 - - - 1,473,481

- 6,498,583 6,271,895 4,423,142 -

- 1,368,331 1,065,555 1,254,083 -

- 77,532 126,594 105,662 -

- 239,106 484,163 492,474 -

13,595,796 28,582,731 24,966,400 25,275,197 -

- 14,000,000 - - 10,441,444

- - - - 16,598,679

- - - - 17,012,352

156,184,426 143,862,339 158,317,863 127,557,614 123,689,932

300,321,093 307,329,660 299,543,601 288,426,820 297,504,700

28,761,072 30,454,814 41,912,421 40,406,258 44,962,820

13,011,620 9,099,926 2,164,728 (1,319,738) (7,690,616)

41,772,692 39,554,740 44,077,149 39,086,520 37,272,204

152,638,428 143,155,852 150,223,552 169,724,906 173,251,632

6,663,515 - - - 1,473,481

- 6,498,583 6,271,895 4,423,142 -

- 1,368,331 1,065,555 1,254,083 -

- 77,532 126,594 105,662 -

- 239,106 484,163 492,474 -

13,595,796 28,582,731 24,966,400 25,275,197 -

- 14,000,000 - - 10,441,444

16,598,679

17,012,352

169,196,046 152,962,265 160,482,591 126,237,876 115,999,316

342,093,785$ 346,884,400$ 343,620,750$ 327,513,340$ 334,776,904$

121

City of CerritosChanges In Net AssetsLast Nine Fiscal Years(accrual basis of accounting)

2002-03 2003-04 2004-05 2005-06Expenses:

Governmental activities: GLegislative and administrative 9,612,757$ 10,849,842$ 12,317,585$ 5,137,856$ LCommunity development 6,411,921 3,594,264 4,696,912 3,461,730 TPublic works 23,421,916 20,268,011 19,420,947 17,574,984

Water and power - - - - PCommunity and safety services 18,281,998 22,430,205 18,769,565 20,107,426 DAdministrative services 14,664,165 13,789,588 13,570,397 25,390,327 ECerritos Center for the Performing Arts 14,526,215 14,021,467 12,661,796 13,166,416 HUnallocated infrastructure depreciation 870,960 924,241 913,887 1,017,027

Land transferred to developer - - - 1,752,597 IInterest expense 16,784,520 16,187,807 15,952,869 16,189,176

Total governmental activities expenses 104,574,452 102,065,425 98,303,958 103,797,539

Business-type activities:Water 8,461,281 8,120,758 8,369,176 9,153,710 Reclaimed water 1,007,903 1,434,632 796,974 1,541,594

WElectric utility - 54,352 227,238 7,076,232 Sewer - - - -

Total business-type activities net assets 9,469,184 9,609,742 9,393,388 17,771,536

Total primary government expenses 114,043,636$ 111,675,167$ 107,697,346$ 121,569,075$

Program revenues:Governmental activities:

Charges for services:Legislative and administrative 3,113$ 15,290$ 145$ 1,536$ Community development 1,608,929 1,685,361 1,849,001 1,861,055 Public works 555,720 649,676 725,501 759,197 Water and power - - - - Community and safety services 2,359,547 2,759,291 2,855,197 2,943,514 Administrative services 2,744,760 2,917,003 3,248,205 3,059,380 Cerritos Center for the Performing Arts 6,502,960 5,172,658 5,532,468 5,683,029

Operating grants and contributions 8,642,059 7,805,246 7,474,648 8,324,225 Capital grants and contributions - 106,620 82,317 352,285

Total governmental activities program revenues 22,417,088 21,111,145 21,767,482 22,984,221

Business-type activities:Charges for services:

Water 5,796,613 6,199,207 6,855,422 7,832,449 Reclaimed water 580,307 484,908 748,555 540,922 Electric utility - - - 5,171,744 Sewer - - - -

Capital grants and contributions 341,898 253,637 2,479,163 36,978 Total business-type activities program revenues 6,718,818 6,937,752 10,083,140 13,582,093

Total primary government program revenues 29,135,906$ 28,048,897$ 31,850,622$ 36,566,314$

Net revenue (expense):Governmental activities (82,157,364)$ (80,954,280)$ (76,536,476)$ (80,813,318)$ Business-type activities (2,750,366) (2,671,990) 689,752 (4,189,443)

Total primary government net expense (84,907,730)$ (83,626,270)$ (75,846,724)$ (85,002,761)$

The City has elected to show only nine years of data for this schedule coinciding with the implementation of GASB 34 in fiscal year 2002-2003.Information prior to implementation of GASB 34 is not available.


Fiscal Year

122

Fiscal Year2006-07 2007-08 2008-09 2009-10 2010-11

9,586,244$ 10,763,138$ 12,202,801$ 24,016,676$ 11,895,682$ 7,974,456 7,944,431 7,512,609 9,634,162 5,995,050

21,644,742 21,251,184 23,981,467 17,574,871 14,271,031 183,723 166,380 1,456,670 503,095 180,845

21,788,095 21,553,201 24,661,818 23,219,777 22,595,702 14,898,470 13,740,128 16,536,088 12,431,539 13,033,543 12,309,527 12,950,937 12,613,288 10,795,353 9,697,750

977,568 1,010,465 994,414 1,058,317 908,341 - - - - -

16,857,542 16,686,433 16,811,036 16,114,428 16,654,681

106,220,367 106,066,297 116,770,191 115,348,218 95,232,625

9,633,874 10,249,111 9,034,371 9,690,959 9,787,697 1,163,206 1,384,725 1,338,743 1,351,283 1,086,647 8,390,869 9,064,917 9,189,345 6,524,284 11,428,662

- - - - 1,787,455

19,187,949 20,698,753 19,562,459 17,566,526 24,090,461

125,408,316$ 126,765,050$ 136,332,650$ 132,914,744$ 119,323,086$

5,401$ 7,975$ 24,123$ 8,990$ 7,623$ 2,059,152 2,530,848 1,151,681 1,472,210 1,055,373

776,251 809,946 974,575 924,062 767,444 - - - 8,200 66,788

2,926,171 3,069,657 3,693,983 3,724,638 3,864,946 3,078,915 1,949,196 1,421,710 1,313,723 1,237,313 6,269,387 6,249,316 5,267,804 4,620,793 4,558,285 9,247,019 8,954,724 9,954,624 11,297,870 8,711,464

101,281 472,220 176,995 613,790 -

24,463,577 24,043,882 22,665,495 23,984,276 20,269,236

8,577,571 8,766,259 7,371,339 7,032,634 7,763,664 852,558 886,454 902,348 698,021 838,548

7,068,193 7,517,818 7,040,943 4,637,710 4,556,861 - - - - 65,095

125,020 888,011 135,613 109,677 95,360 16,623,342 18,058,542 15,450,243 12,478,042 13,319,528

41,086,919$ 42,102,424$ 38,115,738$ 36,462,318$ 33,588,764$

(81,756,790)$ (82,022,415)$ (94,104,696)$ (91,363,942)$ (74,963,389)$ (2,564,607) (2,640,211) (4,112,216) (5,088,484) (10,770,933)

(84,321,397)$ (84,662,626)$ (98,216,912)$ (96,452,426)$ (85,734,322)$

123

City of CerritosChange in Net AssetsLast Nine Fiscal Years(accrual basis of accounting)(Continued)

2002-03 2003-04 2004-05 2005-06General revenues and other changes in net assets:


Taxes:

Sales taxes 26,279,631$ 26,540,867$ 27,288,347$ 26,136,953$

Property taxes in lieu of sales taxes 27,469,285 27,036,204 28,931,093 32,938,305

Motor vehicle taxes 3,291,867 3,732,692 3,570,211 4,026,334

Franchise taxes 1,011,506 1,123,865 1,072,893 1,146,323

Transient occupancy taxes 294,792 312,177 423,239 443,467

Other taxes 188,127 284,405 249,160 272,498

Investment and rental income 19,600,776 12,685,570 17,236,176 18,353,462

Miscellaneous 588,745 175,006 104,209 24,664

Transfers (128,299) (93,233) - (133)

Total governmental activities 78,596,430 71,797,553 78,875,328 83,341,873

Business-type activities:

Investment and rental income 1,110,441 611,600 604,056 529,425

Gain (loss) on sale of assets (81,045) - - -

Miscellaneous 2,387,606 - - -

Fiscal Year

Transfers 128,299 93,233 - 133

Total business-type activities 3,545,301 704,833 604,056 529,558

Total primary government 82,141,731$ 72,502,386$ 79,479,384$ 83,871,431$

Changes in net assets:

Governmental activities (3,560,934)$ (9,156,727)$ 2,338,852$ 2,528,555$

Business-type activities 794,935 (1,967,157) 1,293,808 (3,659,885)

Total primary government (2,765,999)$ (11,123,884)$ 3,632,660$ (1,131,330)$

The City has elected to show only Nine years of data for this schedule coinciding with the implementation of GASB 34

in fiscal year 2002-2003. Information prior to implementation of GASB 34 is not available.


124

Fiscal Year

2006-07 2007-08 2008-09 2009-10 2010-11

26,680,643$ 25,083,985$ 20,602,899$ 17,166,138$ 20,486,099$

32,293,806 35,005,279 36,392,537 34,842,837 35,034,773

4,146,681 4,210,900 4,446,679 4,382,067 4,451,226

1,341,635 1,418,403 1,507,105 1,498,545 1,487,320

474,297 481,880 394,290 356,119 398,620

403,210 240,331 258,898 286,895 262,970

25,200,318 22,483,705 18,318,651 20,581,624 19,458,284

79,703 106,499 195,668 1,132,936 621,736

105,000 - 4,201,910 - 242,091

90,725,293 89,030,982 86,318,637 80,247,161 82,443,119

546,768 422,259 142,035 97,855 71,130

- - - - -

- - - - -

(105,000) - (4,201,910) - (242,091)

441,768 422,259 (4,059,875) 97,855 (170,961)

91,167,061$ 89,453,241$ 82,258,762$ 80,345,016$ 82,272,158$

8,968,503$ 7,008,567$ (7,786,059)$ (11,116,781)$ 7,479,730$

(2,122,839) (2,217,952) (8,172,091) (4,990,629) (10,941,894)

6,845,664$ 4,790,615$ (15,958,150)$ (16,107,410)$ (3,462,164)$

125

City of CerritosFund Balances of Governmental FundsLast Nine Fiscal Years(modified accrual basis of accounting)

2002-03 2003-04 2004-05 2005-06

General fund:

Reserved 8,033,673$ 76,071,914$ 76,993,950$ 91,500,873$

Unreserved 182,507,752 111,105,238 113,993,942 97,162,922

Nonspendable - - - -

Restricted - - - -

Committed - - - -

Assigned - - - -

Unassigned - - - -

Total general fund 190,541,425$ 187,177,152$ 190,987,892$ 188,663,795$

All other governmental funds:

Reserved 4,020,515$ 3,865,603$ 3,967,607$ 4,999,544$

Unreserved, reported in:

Special revenue funds 8,063,081 6,245,154 6,587,749 7,143,179

Debt service funds (23,317,416) (23,790,958) (25,644,125) (31,728,190)

Capital projects funds 30,200,811 26,022,565 21,623,936 20,171,114

Nonspendable - - - -

Restricted - - - -

Committed - - - -

Assigned - - - -

Unassigned - - - -

Total all other governmental funds 18,966,991$ 12,342,364$ 6,535,167$ 585,647$

The City has elected to show only Nine years of data for this schedule coinciding with the implementation of GASB 34 in fiscal

year 2002-2003.


Fiscal Year

126

Fiscal Year

2006-07 2007-08 2008-09 2009-10 2010-11

92,579,824$ 98,193,022$ 99,903,724$ 102,622,950$ -$

101,236,061 81,992,326 81,541,328 80,477,124 -

- - - - 90,135,195

- - - - -

- - - - -

- - - - 14,150,052

- - - - 71,056,060

193,815,885$ 180,185,348$ 181,445,052$ 183,100,074$ 175,341,307$

4,095,975$ 2,837,221$ 5,851,972$ 1,953,330$ -$

-

6,663,515 8,183,552 7,849,641 6,275,361 -

(47,251,487) (45,566,239) (43,171,702) (66,053,156) -

34,522,333 21,762,988 19,212,994 23,322,838 -

- - - - 11,881,487

- - - - 35,084,512

- - - - -

- - - - -

- - - - (75,915,744)

(1,969,664)$ (12,782,478)$ (10,257,095)$ (34,501,627)$ (28,949,745)$

127

City of CerritosChanges in Fund Balances of Governmental FundsLast Nine Fiscal Years(modified accrual basis of accounting)

2002-03 2003-04 2004-05 2005-06Revenues:

Taxes 54,231,835$ 54,173,653$ 56,891,838$ 58,539,846$ Licenses and permits 1,582,962 1,620,309 1,673,017 1,844,753 Fines and forfeitures 780,388 1,154,385 1,224,282 1,207,626 Investment and rental income 18,862,717 12,260,022 16,749,519 17,847,889 Market value investment fluctuation - - - - Revenues from other agencies 12,253,101 11,102,756 11,948,199 14,104,013 Current fees and services 10,648,407 9,549,672 10,197,847 10,333,249 Franchises 1,011,506 1,123,865 1,072,893 1,146,324 Other revenue 949,829 636,494 1,269,811 748,401

Total revenues 100,320,745 91,621,156 101,027,406 105,772,101

Expenditures:Current:

Legislative and administrative 8,575,389 10,333,065 11,657,197 4,098,818 Community development 4,033,261 3,316,869 4,122,251 4,607,205 Public works 17,727,961 17,492,649 18,056,952 19,659,561 Water and power - - - - Community and safety services 15,989,974 18,074,542 17,877,074 18,740,162 Administrative services 10,457,027 10,691,994 10,520,783 20,349,051 Cerritos Center for the Performing Arts 12,130,813 12,326,532 10,966,179 10,331,228 Land transferred to developer - - - -

Capital outlay 17,259,976 8,581,890 8,661,850 15,495,350

Fiscal Years

128

Capital outlay 17,259,976 8,581,890 8,661,850 15,495,350 Prefund other post employment benefits obligation - - - - Debt service:

Principal retirement 2,855,000 4,200,000 4,725,000 5,105,000 Interest 15,021,364 16,404,229 16,099,412 16,341,796 Bond issuance costs 2,212,463 - - -

Total expenditures 106,263,228 101,421,770 102,686,698 114,728,171

Excess of revenues over (under) expenditures (5,942,483) (9,800,614) (1,659,292) (8,956,070)

Other Financing Sources (Uses):Transfers in 54,542,346 12,234,072 10,558,209 19,901,653 Transfers out (54,753,609) (12,422,358) (10,895,374) (20,244,200) Issuance of debt 121,426,395 - - 1,025,000 Payment to refunding bond escrow agent (53,478,228) - - - Proceeds from sale of assets - - - - Contribution from Cerritos Redevelopment Agency - - - - Contribution to City of Cerritos - - - -

Total other financing sources (uses) 67,736,904 (188,286) (337,165) 682,453

Net change in fund balances 61,794,421 (9,988,900) (1,996,457) (8,273,617)

Fund balances - July 1 147,713,995 209,508,416 199,519,516 197,523,059

Fund balances - June 30 209,508,416$ 199,519,516$ 197,523,059$ 189,249,442$

Debt service as a percentageof noncapital expenditures 22.57% 22.19% 22.15% 21.61%

The City has elected to show only Nine years of data for this schedule coinciding with the implementation of GASB 34 in fiscal year 2002-2003.


128

Fiscal Years2006-07 2007-08 2008-09 2009-10 2010-11

59,211,957$ 61,019,400$ 58,009,779$ 52,651,959$ 55,981,782$ 2,026,677 2,425,107 2,037,294 1,913,968 1,869,739 1,178,472 1,162,016 1,146,489 1,103,441 1,305,871

24,607,789 21,889,177 18,358,111 19,768,319 18,625,601 - - - - -

13,904,277 13,907,020 15,161,460 16,614,010 13,916,074 10,888,836 9,699,277 7,783,043 7,090,018 6,989,711

1,341,635 1,418,403 1,507,105 1,504,852 1,566,675 644,735 1,103,420 1,140,096 1,848,075 789,502

113,804,378 112,623,820 105,143,377 102,494,642 101,044,955

9,983,075 10,148,023 10,943,195 21,357,884 11,348,362 5,992,210 4,851,226 5,042,844 4,657,802 5,931,385

20,146,511 19,926,345 17,288,857 16,127,237 14,111,947 143,296 164,016 299,790 105,823 175,593

19,985,188 19,904,050 20,894,079 21,351,962 21,157,439 11,719,308 12,322,795 11,495,344 10,646,488 11,300,202 10,508,816 11,083,634 9,528,923 8,781,832 8,054,469

- - - - - 8,457,564 21,081,472 6,695,801 18,533,849 14,717,173

129

8,457,564 21,081,472 6,695,801 18,533,849 14,717,173 - 14,000,000 - - -

6,092,500 6,467,500 6,862,500 7,260,000 7,712,500 17,018,816 16,851,905 16,508,867 16,261,275 16,736,956

- - - - - 110,047,284 136,800,966 105,560,200 125,084,152 111,246,026

3,757,094 (24,177,146) (416,823) (22,589,510) (10,201,071)

30,324,598 14,025,441 15,856,712 25,559,016 3,207,464 (30,494,913) (14,291,646) (11,654,802) (25,559,016) (2,965,373)

- - - - - - - - - - - - - - 11,000,000 - - - - 1,792,610 - - - - (1,792,610)

(170,315) (266,205) 4,201,910 - 11,242,091

3,586,779 (24,443,351) 3,785,087 (22,589,510) 1,041,020

188,259,442 191,846,221 167,402,870 171,187,957 145,350,542

191,846,221$ 167,402,870$ 171,187,957$ 148,598,447$ 146,391,562$

22.75% 20.15% 23.64% 22.08% 25.33%

129

City of CerritosGovernmental Activities (1) Revenues by SourcesLast Ten Fiscal Years

Other

Licenses

Fiscal Sales Other Business Building and

Year Tax Franchise Taxes Licenses Permits Permits

2001-02 24,381,406$ 1,147,739$ 24,552,345$ 722,909$ 600,465$ 1,275$

2002-03 26,279,631 1,011,506 27,952,204 726,350 832,532 24,080

2003-04 26,540,866 1,123,865 27,632,787 761,667 856,912 1,730

2004-05 27,288,347 1,072,893 29,603,491 796,205 871,787 5,025

2005-06 26,095,745 1,146,324 32,444,100 839,060 1,000,338 5,355

2006-07 26,040,643 1,341,635 33,856,356 908,258 1,110,529 7,890

2007-08 25,291,910 1,418,403 35,727,490 963,775 1,455,121 6,211

2008-09 20,964,054 1,507,105 37,045,725 888,701 1,137,133 11,460

130

2009-10 17,166,108 1,504,852 35,485,851 882,434 1,024,714 6,820

2010-11 20,285,419 1,566,675 35,696,363 902,240 950,874 16,625

(1) Includes General, Special Revenue, Debt Service, and Capital Projects funds.


130

Fines Investment Charges From

and and Rental For Other

Forfeitures Income Services Agencies Other Totals

791,270$ 20,771,225$ 10,802,271$ 11,564,242$ 668,114$ 96,003,261$

780,388 18,862,717 10,648,407 12,253,101 949,829 100,320,745

1,154,385 12,260,022 9,549,672 11,102,756 636,494 91,621,156

1,224,282 16,749,519 10,197,847 11,948,199 1,269,811 101,027,406

1,207,626 17,847,889 10,333,249 14,104,013 748,402 105,772,101

1,178,472 24,607,789 8,862,159 13,904,277 1,986,370 113,804,378

1,162,016 21,889,177 9,699,277 13,907,020 1,103,420 112,623,820

1,146,489 18,358,111 7,783,043 15,161,460 1,140,096 105,143,377

131

1,103,441 19,768,319 7,090,018 16,614,010 1,848,075 102,494,642

1,305,871 18,625,600 6,989,712 13,810,180 895,396 101,044,955

131

City of CerritosAssessed Value of Taxable PropertyLast Ten Fiscal Years

Category 2001-2002 2002-2003 2003-2004 2004-2005

Residential 3,004,053,067$ 3,194,101,239$ 3,417,442,052$ 3,652,684,822$

Commercial 734,796,343 779,666,425 941,597,239 974,952,423

Industrial 569,466,932 596,087,183 624,825,548 654,396,867

Government - - - -

Institutional 12,520,302 8,535,262 8,681,377 9,451,184

Irrigated - - 306 -

Miscellaneous 296 300 - -

Recreational - 366,228 4,922,132 5,014,027

Vacant land 39,367,468 27,410,710 12,789,464 9,366,646

SBE i 1 590 716 1 614 284 1 853 601 2 035 367

Fiscal Year

132

SBE nonunitary 1,590,716 1,614,284 1,853,601 2,035,367

Possessory

interest 2,442,550 2,993,961 4,919,537 4,678,298

Unsecured 281,489,877 275,661,875 255,457,453 272,282,747

Exempt (32,010,938) (32,899,559) (29,673,960) (28,510,172)

Unknown 1,897,237 1,936,549 1,986,321 2,023,708

Subtotal 4,615,613,850 4,855,474,457 5,244,801,070 5,558,375,917

Add back

exempt 32,010,938 32,899,559 29,673,960 28,510,172

Grand Total 4,647,624,788$ 4,888,374,016$ 5,274,475,030$ 5,586,886,089$

Total

Direct Rate 0.59331% 0.59209% 0.60187% 0.56813%

Source: HdL Coren & Cone

132

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

3,925,932,025$ 4,236,487,296$ 4,492,069,661$ 4,672,038,063$ 4,539,269,735$ 4,580,132,941$

1,057,807,314 1,160,350,438 1,228,751,400 1,343,951,315 1,366,103,446 1,323,612,342

685,464,066 708,718,893 757,782,869 908,573,269 952,870,116 948,998,591

- 2,750,027 - - - -

21,702,864 27,537,449 26,101,211 19,811,379 20,572,239 19,001,598

- - 328 334 340 338

- - - - - -

5,114,306 5,216,591 6,523,402 6,653,868 6,786,944 6,770,857

10,224,697 8,462,513 9,684,651 8,777,294 5,495,684 3,313,710

1 309 388 1 237 559 2 737 670 2 597 624 2 597 624 2 597 624

Fiscal Year

133

1,309,388 1,237,559 2,737,670 2,597,624 2,597,624 2,597,624

4,717,568 6,518,019 5,849,466 14,163,200 13,854,359 11,602,663

275,010,910 290,016,895 294,796,408 306,757,198 309,113,020 283,995,026

(29,083,529) (29,016,454) (30,799,948) (28,844,386) (39,947,438) (32,985,082)

2,064,175 2,105,454 - - - -

5,960,263,784 6,420,384,680 6,793,497,118 7,254,479,158 7,176,716,069 7,147,040,608

29,083,529 29,016,454 30,799,948 28,844,386 39,947,438 32,985,082

5,989,347,313$ 6,449,401,134$ 6,824,297,066$ 7,283,323,544$ 7,216,663,507$ 7,180,025,690$

0.58997% 0.59562% 0.59608% 0.59547% 0.48569% 0.48117%

133

City of Cerritos Direct and Overlapping Property Tax Rates(Per $100 of Taxable Value)Last Ten Fiscal Years

Los Sanitation/

Fiscal Basic Tax Angeles School Flood Water

Year Levy County District Control District Totals

2002 1.0000 .0011 .0250 .0005 .0077 1.0343

2003 1.0000 .0010 .0278 .0009 .0067 1.0364

2004 1.0000 .0010 .0249 .0005 .0067 1.0331

2005 1.0000 .0010 .0457 .0002 .0058 1.0527

2006 1.0000 .0010 .0517 .0001 .0052 1.0580

2007 1.0000 .0010 .0482 .0001 .0047 1.0540

2008 1.0000 .0000 .0351 .0000 .0045 1.0396

2009 1.0000 .0000 .0338 .0000 .0043 1.0381

2010 1 0000 0000 0455 0000 0043 1 0498

134

2010 1.0000 .0000 .0455 .0000 .0043 1.0498

2011 1.0000 .0000 .0560 .0000 .0037 1.0597

Source: HdL Coren & Cone, Los Angeles County Auditor-Controller

134

City of CerritosTen Largest Secured TaxpayersCurrent Year and Nine Years Ago

Percentage Percentage

Property Property Assessed of Assessed of

Owner Description Valuations Total (1) Valuations Total (1)

Macerich Cerritos LLC Commercial 254,693,952$ 3.69% -$ 0.00%

City of Cerritos Commercial 159,587,132 2.31% - 0.00%

Walton CWCA O'Donnell Cerritos Industrial 131,817,639 1.91% - 0.00%

Cerritos Office Center I LLC Commercial 91,519,076 1.33% - 0.00%

TA Western LLC Industrial 60,042,428 0.87% 58,837,755 1.35%

Cerritos Best Plaza, LLC Commercial 55,000,000 0.80% - 0.00%

Cerritos Towne Center LLC Commercial 47,358,643 0.69% - 0.00%

Cerritos Corporate Tower LLP Commercial 37,060,000 0.54% - 0.00%

Cerritos Promenade LLC Commercial 36,800,000 0.53% - 0.00%

2010-11 2001-02

135

Cerritos Promenade LLC Commercial 36,800,000 0.53% 0.00%

Realty Associates Fund VIII LP Industrial 32,023,923 0.46% - 0.00%

Macerich Cerritos Commercial - 0.00% 96,431,596 2.21%

Calwest Industries Properties Industrial - 0.00% 66,853,896 1.53%

Commonwealth Cousins I LLC Office Building - 0.00% 61,942,672 1.42%

Equity Office Properties Trust Office Building - 0.00% 50,518,523 1.16%

Krausz Enterprises Office Building - 0.00% 50,082,555 1.15%

Vestar Development Company Office Building - 0.00% 43,543,832 1.00%

TIAA Realty Inc. Warehouse/Distributions - 0.00% 24,797,023 0.57%

Cerritos Office Center V, LLC Office Building - 0.00% 22,316,829 0.51%

CWIP Corp Industrial - 0.00% 21,151,169 0.48%

905,902,793$ 13.14% 496,475,850$ 11.37%

(1) 2010-11 and 2001-02 total secured assessed valuation is 6,896,030,664$ 4,366,134,911$

Source: HdL Coren & Cone

135

City of CerritosProperty Tax Levies and CollectionsLast Ten Fiscal Years

Property

Fiscal Tax

Year Collections

2001-02 22,400,298$

2002-03 25,875,620

2003-04 25,106,032

2004-05 26,620,835

2005-06 29,163,729

2006-07 29,860,652

2007-08 32,454,062

2008-09 33,711,139

2009-10 32,144,708

136

2010-11 32,346,242

Note: This table represents tax increment revenues received by the Cerritos Redevelopment Agency,

representing the increase in valuation of the redevelopment project areas over the base year,

1969-70. The City of Cerritos does not levy a direct property tax.


136


137

City of CerritosRatios of Outstanding Debt by TypeLast Nine Fiscal Years

Los Los Los

Cerritos Coyotes Cerritos

Redevelopment Redevelopment Redevelopment

Project Project Project Deferred

Fiscal Revenue Revenue Note Bond Bond Charge on

Year Bonds Bonds Payable Premium Discount Refunding

2002-03 50,380,000$ 143,380,000$ -$ 6,440,668$ (1,294,336)$ (2,835,691)$

2003-04 48,900,000 140,660,000 - 6,133,969 (1,232,700) (2,693,906)

2004-05 47,240,000 137,595,000 - 5,827,270 (1,171,064) (2,552,121)

2005-06 48,978,750 144,856,250 1,025,000 5,520,571 (1,109,428) (2,410,336)

2006-07 46,883,125 140,859,375 1,025,000 5,213,872 (1,047,792) (2,268,551)

2007-08 44,651,250 136,623,750 1,025,000 4,907,173 (986,156) (2,126,766)

2008-09 42,278,125 132,134,375 1,025,000 4,600,474 (924,520) (1,984,981)

Add (Less) Deferred Amounts

Governmental Activities

138

2009-10 39,763,125 127,389,375 1,025,000 4,293,775 (862,885) (1,843,196)

2010-11 37,086,250 122,353,750 1,025,000 3,987,076 (801,256) (1,701,411)

Note: Details regarding the outstanding debt can be found

in the notes to basic financial statements.

(a) Not available.

The City has elected to show only nine years of data for this

schedule coinciding with the implementation of GASB 34 in

fiscal year 2002-2003.


138

Total % of

Primary Total Debt Personal

Government Population per Capita Income

196,070,771$ 51,716 3,791$ 12.054%

191,767,363 51,748 3,706 11.169%

186,939,085 51,792 3,609 10.485%

196,860,807 51,944 3,790 10.144%

190,665,029 52,020 3,665 9.210%

184,094,395 52,096 3,534 8.361%

177,128,473 52,172 3,395 8.308%

139

169,765,194 52,249 3,249 (a)

161,949,409 49,041 3,302 (a)

139

City of CerritosSchedule of Direct and Overlapping Bonded DebtJune 30, 2011

Percent

Debt Balance Applicable City's Share

Outstanding to City of Debt

*Metropolitan Water District 107,259,876$ 0.471 % 505,614$

Cerritos CC DS 2004 Series 2004A 2,930,000 20.557 % 602,320

Cerritos CC DS 2005 Refunding Bonds 22,358,702 20.557 % 4,596,280

Cerritos CCD DS 2004 Series 2006 30,645,000 20.557 % 6,299,694

Cerritos CCD DS 2004 Series 2009C 53,635,000 20.557 % 11,025,750

ABC USD 2003 Refunding Bond Series A 15,530,000 60.075 % 9,329,595

ABC Unified SD DS 1997 Series B 29,626,700 60.075 % 17,798,139

ABC Unified SD DS 2010 Refunding Bonds 10,670,000 60.075 % 6,409,966

Total Overlapping Debt: 56,567,358$

2010/11 Assessed Valuation: $4,003,285,201 After Deducting $3,176,740,489 Redevelopment Increment.

Debt To Assessed Valuation Ratios: Direct Debt 0.00 %

Overlapping Debt 1.41 %

Total Debt 1.41 %

Note: Prepared for the City of Cerritos by HdL Coren & Cone.

140


141

City of CerritosLegal Debt Margin InformationLast Nine Fiscal Years

2002-03 2003-04 2004-05 2005-06

Debt Limit 738,016,496$ 795,621,570$ 842,826,108$ 901,944,542$

Total net debt applicable to limit - - - -

Legal debt margin 738,016,496$ 795,621,570$ 842,826,108$ 901,944,542$

Total net debt applicable to the limit as a

percent of debt limit 0.00% 0.00% 0.00% 0.00%

Legal Debt Margin Calculation for Fiscal Year 2010-2011:

Assessed value

Add back: exempt real property

Total assessed value

Debt limit (15% of total assessed value)

Debt applicable to limit

Legal debt margin

Note: Section 43605 of the Government Code of the State of California limits the amount of indebtedness for public

improvements to 15% of the assessed valuation of all real and personal property of the City.

The City has elected to show only nine years of data for this schedule coinciding with the implementation of GASB 34 in fiscal year

year 2002-2003.

Source: HdL Coren & Cone, Los Angeles County Assessors Office

Finance Division, City of Cerritos

Fiscal Year

142

2006-07 2007-08 2008-09 2009-10 2010-11

971,890,907$ 1,028,776,348$ 1,098,825,713$ 1,089,326,156$ 1,084,570,960$

- - - - -

971,890,907$ 1,028,776,348$ 1,098,825,713$ 1,089,326,156$ 1,084,570,960$

0.00% 0.00% 0.00% 0.00% 0.00%

7,180,025,690$

50,447,376

7,230,473,066$

1,084,570,960$

-

1,084,570,960$

Fiscal Year

143

City of CerritosDemographic and Economic StatisticsLast Nine Fiscal Years

Per Capita

Personal City

Fiscal Income Personal Unemployment

Year Population (1) (in thousands) Income (2) * Rate (3)

2002-03 51,716 31,452 1,626,572 3.50%

2003-04 51,748 33,179 1,716,947 3.30%

2004-05 51,792 34,426 1,782,991 2.60%

2005-06 51,944 37,362 1,940,732 2.50%

2006-07 52,020 39,794 2,070,084 2.60%

2007-08 52,096 42,265 2,201,837 3.80%

2008-09 52,172 40,867 2,132,113 6.20%

2009-10 52,249 (a) (a) 6.70%

144

2010-11 49,041 (a) (a) 6.80%

*Based on Los Angeles County personal income data

(a) Not Available

The City has elected to show only nine years of data for this schedule coinciding with the

implementation of GASB 34 in fiscal year 2002-2003.

Sources: (1) City of Cerritos

(2) Bureau of Economic Analysis

(3) State of California, Labor Market Information, Data Library

144

City of CerritosPrincipal EmployersCurrent Year and Nine Years Ago

2011 2002**

Percent of Percent of

Number of Total Number of Total

Employer Employees Employment* Employees Employment

ABC Unified School District 1,899 6.66%

United Parcel Service 1,761 6.18%

Cingular 994 3.49%

Southern Wine & Spirits of Southern California 979 3.44%

City of Cerritos 667 2.34%

College Hospital, Inc 523 1.84%

S&J Chevrolet 415 1.46%

Nordstrom Inc 364 1.28%

145

Deltal Dental of California 353 1.24%

Norm Reeves Honda of Cerritos 286 1.00%

Total 8,241 28.93%

*Based upon California Employment Development Department data of 28,500 total employment of all employers located

within City limits.

**Information not available

Source: Gateway Cities Council of Governments

145

City of CerritosFull-Time and Part-Time City EmployeesBy FunctionLast Nine Fiscal Years

Department 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Legislative and administrative 10 8 9 9 9 9 9 9 9

Community Development 20 19 20 20 21 20 20 20 20

Public Works 137 138 128 130 113 114 111 96 90

Water and Power - - - - 19 19 18 17 17

Community and cultural services 176 177 237 239 251 255 292 298 296

Administrative services 142 134 146 147 148 155 155 153 150

Cerritos Center for the Performing Arts 173 173 222 221 203 201 190 200 200

Total 658 649 762 766 764 773 795 793 782

Full-Time employees 250 248 241 241 241 241 235 239 230

Part-Time employees 408 401 521 525 523 532 560 554 552

Total 658 649 762 766 764 773 795 793 782

The City has elected to show only nine years of data for this schedule coinciding with the implementation

of GASB 34 in fiscal year 2002-2003.

Fiscal Year

146


146

City of CerritosOperating Indicators By FunctionLast Nine Fiscal Years

Function 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Public Works

Maintenance:

Graffiti removal (average incidence) 7,900 7,900 8,000 8,000 7,800 8,000 7,800 7,800 7,000

Streetsweeping miles 7,100 7,100 7,100 7,100 7,100 7,100 7,100 7,100 7,100

Trees maintained 28,000 28,000 28,000 28,000 28,000 29,450 29,450 29,500 28,500

Trees trimmed 12,000 12,000 12,000 12,000 11,500 12,000 12,000 12,000 4,000

Water and Power

Water:

Number of customer accounts 15,060 15,622 15,636 15,647 15,647 15,482 15,159 15,668 15,668

Average daily consumption (millions of gallons) 8.68 9.02 8.15 8.18 8.80 10.13 9.75 8.57 8.16

Water samples taken (annual) 2,272 2,272 2,800 2,272 2,104 2,128 2,038 2,039 2,076


Police (1):

Number of sworn officers 64 58 59 58 54 56 59 60 63

Fiscal Year

147

Community Service officers (non-sworn) 25 5 17 17 16 16 14 19 17

Calls dispatched 18,536 18,680 17,945 17,447 17,286 16,931 16,830 16,745 14,738

Crime reports 6,765 6,672 6,321 5,650 5,991 5,946 5,843 5,511 4,900

Moving citations 8,287 7,622 6,680 6,740 5,615 4,920 6,395 5,868 6,376

Parking citations 1,259 719 722 936 825 1,152 1,116 1,089 1,923

Culture and Recreation:

Leisure classes attendance 56,786 53,023 53,520 58,346 60,947 47,135 48,360 53,360 51,423

Indoor park reservation attendance 145,799 150,676 169,635 177,712 152,561 121,777 99,119 101,237 91,813

Picnic shelter attendance 54,096 65,795 59,267 56,091 61,658 44,716 53,880 57,903 77,475

Swim lessons attendance 118,504 133,477 131,644 181,996 298,131 288,504 292,674 284,994 265,800

Recreational swim attendance 58,217 62,082 54,549 51,009 55,587 55,021 51,594 48,784 49,182

Volunteer hours 8,876 16,528 19,558 20,954 16,097 16,027 11,974 12,550 13,158


Library:

Number of patrons 1,173,171 1,057,044 1,089,527 1,172,500 1,173,000 1,042,445 1,064,875 1,128,990 1,066,492

(1) Services are contracted with the County of Los Angeles

The City has elected to show only nine years of data for this schedule coinciding with the implementation of

GASB 34 in fiscal year 2002-2003.


147

City of CerritosCapital Assets By FunctionLast Nine Fiscal Years

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Public Works

Sewers:

Miles of sanitary sewers 124 124 124 124 124 124 124 124 124

Sewer lines (miles) 109.18 109.32 109.32 109.32 109.32 109.32 109.32 109.32 109.32

Streets and Highways:

Streets (miles) 136.33 136.33 136.33 136.33 136.33 136.33 136.33 136.33 136.33

Sidewalks (miles) 242.16 242.16 242.16 242.16 242.16 242.16 242.16 242.16 242.16

Curb & gutter (miles) 255.75 255.75 255.75 255.75 255.75 255.75 255.75 255.75 255.75

Traffic signals (intersections) 87 87 89 89 90 90 90 90 90


Number of Sheriff Stations 1 1 1 1 1 1 1 1 1

Number of parks 24 24 24 24 24 24 24 24 24

Number of swimming pool 2 2 2 2 2 2 2 2 2


Number of libraries 1 1 1 1 1 1 1 1 1

Number of volumes 224,822 238,243 242,167 238,860 241,942 241,607 247,405 258,349 245,942

Function

Fiscal Year

148

The City has elected to show only nine years of data for this schedule coinciding with the

implementation of GASB 34 in fiscal year 2002-2003.


148

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