Association of County Auditors Property Tax Sub-Committee October 2016

1. Association of County Auditors Property Tax Sub-Committee October 2016 Property Tax Process and Update

2. Agenda • Property Tax Process • Where are we at? Where are we going? • Where to find Property Tax Report? • Questions

3. Property Tax ProcessTax Increment and AB8 Calculation (slide 1/2) • Document assessed value (AV) by tax rate area (TRA) • Confirm TRA factors remain unchanged during the audit period • Confirm TRA increment calculations • Verify TRA increments were distributed by TRA factors • Confirm each jurisdiction’s total annual tax increment (ATI) was added to prior year gross revenues

4. Property Tax ProcessTax Increment and AB8 Calculation (slide 2/2) • Verify AB8 factor calculation including any shifts (ERAF, RDA, SB85, Disaster Relief, etc) • Confirm AB8 factors were used to allocate actual revenues with journal entries

5. Property Tax ProcessJurisdictional Changes • Review LAFCO Resolutions, Memorandums of Understanding, and BOE Notices • Confirm annexation computations • Confirm any transfers of assessed value and adjustments to base revenues • Verify any calculations resulting in a change to TRA factors

6. Property Tax ProcessProperty Tax Administrative Fees (PTAF) SB2557 • Review PTAF Summaries • Review documentation of PTAF costs • Confirm PTAF allocation factors were properly developed • Verify collections of PTAF with journal vouchers

7. Property Tax ProcessEducational Revenue Augmentation Fund (ERAF), ERAF Shift, Excess ERAF, Negative ERAF, Vehicle Licensing Fee (VLF), and Sales and Use Tax (SUT) (slide 1/2) • Confirm ERAF shift growth calculations • Verify Negative ERAF calculations • Verify Excess ERAF calculations

8. Property Tax ProcessEducational Revenue Augmentation Fund (ERAF), ERAF Shift, Excess ERAF, Negative ERAF, Vehicle Licensing Fee (VLF), and Sales and Use Tax (SUT) (slide 2/2) • Confirm SUT amounts • Confirm VLF growth calculations • Verify ERAF shift revenues, VLF transfers, and SUT transfers with journal vouchers

9. Property Tax Process Tax Equity Allocations (TEA) • Verify each TEA city receives at least 7% of city-wide revenues (prior to ERAF adjustments) • Confirm any adjustments made to city revenues that affects the TEA amount • Verify TEA adjustments in the county’s property tax apportionment system

10. Property Tax Process Supplemental Apportionments (slide 1/2) • Verify supplemental factors were properly developed • Document Average Daily Attendance (ADA) statements from the Department of Education • Confirm county’s process of supplemental admin fee collections • Review supplemental admin fee documentation of costs

11. Property Tax Process Supplemental Apportionments (slide 2/2) • Verify collection of supplemental admin fees collected does not exceed 5% • Confirm allocation of supplemental revenues and admin fee collections with journal vouchers

12. Property Tax ProcessUnitary and Pipeline • Verify calculation of total unitary and pipeline revenues and growth • Confirm prior year factors were used to allocate revenues of up to 102% of prior year • Confirm revenues in excess of 102% of prior year were allocated using prior AB8 factors • Verify apportionment of unitary revenues with journal vouchers

13. Property Tax ProcessRegulated Railway • Verify calculation of total regulated railway revenues and growth • Confirm prior year factors are used to allocate revenues of up to 102% of prior year • Confirm revenues in excess of 102% of prior year are allocated using prior AB8 factors • Verify apportionment of railroad revenues with journal vouchers

14. Property Tax ProcessQualified Electric (QE) (slide 1/2) • Document QE change notices • Confirm QE base year calculations • Verify the county, cities, and school entities receive the same percent of revenues as in the prior year • Verify 90% of the remainder is allocated to the city (or county if unincorporated) • Verify 10% of the remainder is allocated to water districts (city or county if there are none) • Confirm calculations of QE factors for each applicable TRA

15. Property Tax ProcessQualified Electric (QE) (slide 2/2) • Confirm factors were used to apportion QE revenues with journal vouchers

16. Property Tax ProcessRedevelopment Areas (RDAs) New RDAs During the Audit Period • Review enabling documents, maps, and boundaries • Verify increment and pass-through calculations • Document Statements of Indebtedness • Confirm increment distribution • Verify payment of revenues to RDAs and pass-through amounts to jurisdictions on journal vouchers

17. Property Tax ProcessRedevelopment Property Tax Trust Fund (RPTTF) (slide 1/2) • Review admin cost calculations • Verify pass-through calculations • Document Recognized Obligation Payment Schedule (ROPS) statements, approved by the Department of Finance (DOF) • Confirm allocation of successor agency admin costs • Verify residual calculations and allocations

18. Property Tax ProcessRedevelopment Property Tax Trust Fund (RPTTF) (slide 2/2) • Confirm RPTTF allocations to journal vouchers • Document any obligations from the ROPS that are now paid off or retired

19. Where are we at? Where are we going next? • Final Reports Issued 13 • Audits In Process 14 • Next in the queue: As of 3/31/16, for calendar year 2016

20. Division of Audits Contact Information • Chief - Division of Audits • Jeffrey V. Brownfield, CPA, at (916) 324-1696 or jbrownfield@sco.ca.gov • Chief – Compliance Audits Bureau • Elizabeth Gonzalez, at (916) 324-0266 or egonzalez@sco.ca.gov • Audit Manager – Property Tax Program • Scott Freesmeier, at (916) 730-2793 or sfreesmeier@sco.ca.gov

21. SCO Website Information Audit-Related Sites WWW.SCO.CA.GOV Links to Audit and Oversight Reports, and More Information • Controller's Redevelopment Asset Reviews • Controller's Audits of State and Local Agencies • Controller's Revenue Audits • Controller's Oversight of Independent Auditors' Audits of Local Agencies • Search for Additional Audits • Information on Ordering Printed Copies of Controller's Audits

22. Property Tax Reports on SCO’s Website (slide 1/3)

23. Property Tax Reports on SCO’s Website (slide 2/3)

24. Property Tax Reports on SCO’s Website (slide 3/3) Click the desired year Results will show

25. Questions