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HomeMy WebLinkAboutSouth Coast Air Quality Management District - Public Financial ReportSouth Coast Air Quality Management District Diamond Bar, California Popular Annual Financial Report Year Ended June 30, 2021 SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT Popular Annual Financial Report Year Ended June 30, 2021 Table of Contents PAGE INTRODUCTORY SECTION Governing Board 1 Organizational Chart A Note From The Chief Financial Officer 2 3 SUMMARY Demographic and Miscellaneous Statistics 4 60 Years of Progress in Reducing Ozone Levels 5 Goals and Priority Projects 6 Financial Performance 7 Where the Money Came From Our Revenues & Resources 8 Where the Money Went Our Expenses & Services 9 Financial Summary 10 Awards 12 Air Quality Historical Timeline 13 1 SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT GOVERNING BOARD June 30, 2021 BEN BENOIT Chair Cities of Riverside County Representative VANESSA DELGADO Vice-Chair Senate Rules Committee Appointee LISA BARTLETT County of Orange Representative JOE BUSCAINO City of Los Angeles Representative MICHAEL A. CACCIOTTI Cities of Los Angeles County Eastern Region Representative GIDEON KRACOV Governor’s Appointee SHEILA KUEHL County of Los Angeles Representative LARRY McCALLON Cities of San Bernardino County Representative VERONICA PADILLA-CAMPOS Speaker of the Assembly Appointee V. MANUEL PEREZ County of Riverside Representative REX RICHARDSON Cities of Los Angeles County Western Region Representative CARLOS RODRIGUEZ Cities of Orange County Representative JANICE RUTHERFORD County of San Bernardino Representative WAYNE NASTRI Executive Officer 2 South Coast Air Quality Management District, California Organizational Chart June 30, 2021 GOVERNING BOARD EXECUTIVE OFFICE Wayne Nastri, Executive Officer Jill Whynot, Chief Operating Officer CLERK OF THE BOARDS Faye Thomas, Clerk of the Boards LEGAL Bayron Gilchrist, General Counsel Barbara Baird, Chief Deputy Counsel Nicholas Sanchez, Asst. Chief Deputy Counsel ADMINISTRATIVE & HUMAN RESOURCES John Olvera, Deputy Executive Officer COMPLIANCE & ENFORCEMENT Terrence Mann, Deputy Executive Officer Victor Yip, Asst. Deputy Executive Officer FINANCE Sujata Jain, Chief Financial Officer INFORMATION MANAGEMENT Ron Moskowitz, Chief Information Officer LEGISLATIVE & PUBLIC AFFAIRS/MEDIA OFFICE Derrick Alatorre, Deputy Executive Officer Lisa Tanaka O'Malley, Asst. Deputy Executive Officer SCIENCE & TECHNOLOGY ADVANCEMENT Matt Miyasato, Deputy Executive Officer Aaron Katzenstein, Asst. Deputy Executive Officer Jason Low, Asst. Deputy Executive Officer ENGINEERING & PERMITTING Jason Aspell, Deputy Executive Officer Jillian Wong, Asst. Deputy Executive Officer PLANNING, RULE DEVELOPMENT & AREA SOURCES Sarah Rees, Deputy Executive Officer Susan Nakamura, Asst. Deputy Executive Officer Ian MacMillan, Asst. Deputy Executive Officer 3 SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT A Note From The Chief Financial Officer June 30, 2021 We are pleased to present the South Coast Air Quality Management District's (South Coast AQMD) Popular Annual Financial Report for the fiscal year ending June 30, 2021. This report makes our South Coast AQMD’s finances easier to understand, and is intended to communicate our financial situation in an open and accountable manner. The Popular Annual Financial Report is intended to summarize the financial activities of South Coast AQMD and was drawn from the financial information appearing in the 2021 Comprehensive Annual Financial Report. The Popular Annual Financial Report is unaudited; however, the financial data presented in the Popular Annual Financial Report is derived from the Comprehensive Annual Financial Report and is consistent with generally accepted accounting principles. The Popular Annual Financial Report is also available on the South Coast AQMD's website at www.aqmd.gov/home/about/finance. For more detailed financial information, or information on the South Coast AQMD’s component unit (South Coast AQMD Building Corporation is not included in this document), a copy of the Comprehensive Annual Financial Report is available for interested users from our Finance office at 21865 Copley Drive, Diamond Bar, CA 91765. It is also available on the South Coast AQMD’s website at www.aqmd.gov/home/about/finance. Questions, comments and feedback regarding this report are encouraged, so please do not hesitate to contact the Chief Financial Officer at (909) 396-2804 or at sjain@aqmd.gov. Respectfully submitted, Sujata Jain, CPA Chief Financial Officer, Finance ABOUT THE SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT The South Coast Air Quality Management District began operation on February 1, 1977 as a regional governmental agency established by the California Legislature pursuant to the Lewis Air Quality Management Act. South Coast AQMD encompasses all of Orange County and parts of Los Angeles, San Bernardino and Riverside Counties, representing approximately over 17 million residents. It succeeded the Southern California Air Pollution Control District and its predecessor four county air pollution control districts, of which the Los Angeles County Air Pollution Control District was the oldest in the nation, having been formed in 1947. South Coast AQMD’s Governing Board is composed of 13 members. Ten are elected officials. Of these, four are county supervisors representing Los Angeles, Orange, Riverside, and San Bernardino counties, elected to South Coast AQMD’s Board by their Boards of Supervisors. Six are City Council members representing the cities in each county (because of its size, Los Angeles County has two representatives, elected by respective city selection committees, and the City of Los Angeles has one representative, selected by the Mayor of Los Angeles). The remaining three Board members are appointed by state elected officials; one by the Governor of California, one by the Speaker of the State Assembly and one by the State Senate Rules Committee. 4 SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT Demographic and Miscellaneous Statistics June 30, 2021 Established: February 1, 1977 Area Covered: 10,743 Square Miles Counties Included in District: All of Orange County and parts of Los Angeles, Riverside, and San Bernardino Counties Population: 17,031,233 (In 2020); 17,150,993 (In 2019); 17,127,040 (In 2018) Transportation: Two transcontinental railroads – Burlington Northern Santa Fe and the Union Pacific Six Commercial Airports – Los Angeles International, Burbank, Long Beach, Ontario International, Orange County, and Palm Springs Freeways – Three major interstate freeways including four bypass routes, U.S. 101, and nine State freeway routes Two major adjoining ports – Port of Long Beach and Port of Los Angeles Visitor Destinations: Disneyland, Knott’s Berry Farm, Magic Mountain, Motion Picture and Television Studios and the Rose Bowl Number of Registered Vehicles 13,774,023 (In 2020); 14,078,942 (In 2019); 13,828,182 (In 2018) Within South Coast AQMD Jurisdiction: Average Daily Miles Traveled Per Vehicle: 27 (CY 2020 data) Examples of Stationary Sources of Oil Refineries, power plants, paint spray booths, incinerators, Air Pollution Regulated: manufacturing facilities, dry cleaners, and service stations. Number of Sources: 25,004 operating locations with 66,652 permits. Number of Air Monitoring Stations: 42 Full-time Authorized Positions: 949 Key Federal, State, and Local EPA Region IX (Environmental Protection Agency), CARB Air Agencies: (California Air Resources Board), CAPCOA (California Air Pollution Control Officer’s Association), NACAA (National Association of Clean Air Agencies), ALAPCO (Association of Local Air Pollution Control Officials). There are 35 local air pollution control districts in California. 5 SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT 70 Years of Progress In Reducing Ozone Levels June 30, 2021 Since the late 1940s when the war on smog began to 2020, the region’s population has more than tripled from 4.8 million to 17.2 million; the number of motor vehicles has increased over six-fold from 2.3 million to over 14.1 million; and the area has grown into one of the most prosperous regions of the world. This phenomenal economic growth illustrates that pollution control and strong economic growth can coincide. 6 SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT Goals and Priority Projects June 30, 2021 South Coast AQMD goals have many important objectives, but South Coast AQMD highlighted the following three priority projects which are identified as being critical to meeting South Coast AQMD’s mission and goals in fiscal year 2020-2021: GOAL PERFORMANCE MEASUREMENT Achieve Clean Air Standards 1.Adherence to development and implementation of Air Quality Management Plans (AQMP) by completing 6 rule adoptions and/or actions that result in achievements towards 2016 AQMP emissions reductions. Hold at least 4 AQMP advisory group meetings. 2.Secure $250 Million of new funding sources for pollution reduction projects. 3.Conduct air monitoring and implement emission reduction plans for each of the three Year 1 AB617 communities and develop air monitoring and emission reduction plans for the 2 new communities. 4.Ensure efficient air monitoring and laboratory operations by achieving acceptable valid data completion submitted to U.S. EPA before deadline. 5.Complete 100% Title V Inspections. 6.Maintain pending permit applications inventory excluding Permits to Construct issued and RECLAIM transition applications at or near 3,000. 7.Support development of cleaner advanced technology by funding $10 Million of Clean Fuels program projects with a 1:4 leveraging ratio. 8.Contract 50% of grant money within six months after receipt of funds. 9.Complete written report for fixed-site monitoring data, emission inventory and health risk modeling for the fifth Multiple Air Toxics Exposure Study. Enhance Public Education and Equitable Treatment for All Communities 1.Evaluate and post results of 75% of low-cost air quality sensors that have reached the market. 2.Conduct/participate 1 large community outreach events, including 1 in each County. Develop and implement SOPs to provide information to the public as quickly and accurately as possible. 3.Timely investigation of community complaints by contacting 90% of complainants within 2 hours of complaint receipt during business hours. 4.Increase social media followers by 15%-20%. Increase impressions and engagement by posting on Instagram, Facebook, and Twitter. 5.Outreach and conduct air quality education program in 100 high schools throughout the 4 Counties in environmental justice communities. Operate Efficiently and Transparently 1.Ensure transparent governance by posting 100% of Committee and Board meeting agendas with materials which made available to the public one week prior to the meeting. 2.Posting 100% of Stakeholder and Working Group meeting agendas with materials made available to the public three days prior to the meeting. 3.Offer and conduct 10 information sessions/training for all staff. 4.Partner with Public agencies, stakeholder groups, and business by conducting 2 meetings of the Permit Streamlining Task Force subcommittee and stakeholders and 1 meeting in regional public health task force. 5.Submit quarterly budgetary financial reports to the Governing Board within 6 working days of the end of the quarter. 7 SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT Financial Performance June 30, 2021 Budget Surplus/Deficit – 5-Year History Non-GAAP Budgetary Basis (General Fund) General Fund revenues decreased as compared to the prior fiscal year, primarily due to decrease in permit fees, low interest revenue, and one-time large penalties & settlements revenue paid by non-complaint entities. The decrease in General Fund expenditures from prior fiscal year is mainly due to postponing the purchase of capital assets. $0 $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 $140,000,000 $160,000,000 $180,000,000 $200,000,000 FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 Expenditures General Revenue Penalties/Settlements 8 SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT Where the Money Came From Our Revenues & Resources South Coast AQMD is a fee-supported agency and does not receive sales or property tax support. South Coast AQMD General Fund is the primary operating fund and is used to record transactions relating to its general business operations. It is also used to account for all revenues and expenditures that are not required to be accounted for in another fund. On a government-wide basis (including all funds), approximately 32% revenues of this fiscal year are derived from permit evaluation fees, annual permit operating fees, emission fees, Hearing Board fees, penalties and settlements, interest earnings, and other revenues. The remaining 68% of its revenue is derived from federal grants, state grants, California Air Resources Board (CARB) subvention funds, and motor vehicle fees. Government-wide revenues during this fiscal year were approximately 2% lower as compared to the prior fiscal year primarily due to general revenues, which decreased by 43% as compared to the prior fiscal year. The decrease is primarily due to one-time large penalties and settlements paid by non-compliant entities in prior fiscal year. Changes in government-wide revenue are highly dependent on the timing of receipts and continuation of state and federal grant funding, while General Fund revenues are expected to continue to remain generally stable. FY 2020-2021 Revenues by Major Source – Governmental Activities *Stationary sources consist of refineries, power plants, manufacturing facilities and small businesses. **Mobile sources are motorized vehicles that typically include automobiles, trucks, aircraft, ships, trains, and self-propelled construction equipment. ***General revenues include penalties/settlements, interest, and dollars that are not restricted to specific stationary source programs. Source: FY 2020-2021 Comprehensive Annual Financial Report Statement of Activities Stationary sources* -fees & charges 24% Mobile sources** -fees & charges 6% Operating grants and subventions 68% General revenues*** 2% Stationary sources* - fees & chargesMobile sources** - fees & chargesOperating grants and subventionsGeneral revenues*** Source FY 20-21 FY 19-20 FY 18-19 FY 17-18 FY 16-17 FY 15-16 Stationary sources* - fees & charges 106,917,251$ 106,450,095$ 101,804,325$ 100,354,910$ 94,279,518$ 89,264,511$ Mobile sources** - fees & charges 26,995,162 29,214,922 26,106,160 26,026,673 28,087,131 25,743,988 Operating grants and subventions 304,766,572 303,621,322 295,516,665 185,367,622 222,070,040 122,424,397 General revenues***10,336,674 18,272,157 13,460,793 20,644,444 16,664,195 10,148,573 Total 449,015,659$ 457,558,496$ 436,887,943$ 332,393,649$ 361,100,884$ 247,581,469$ 9 SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT Where the Money Went Our Expenses & Services Excluding the long-term emission reduction project expenses, which are restricted in their use, the three major expense functions for Governmental Activities are Compliance, Permitting, and Air Monitoring. Combined, these account for 69% of the South Coast AQMD’s total General Fund Expenses for the year ended June 30, 2021. On a government-wide basis (including all funds), expenses increased approximately 12% as compared to the prior fiscal year primarily due to higher amount paid for long-term emission reduction project expenses and increases in retirement plan contributions. FY 2020-2021 Expenses by Program Category – Governmental Activities Source: FY 2020-2021 Comprehensive Annual Financial Report Statement of Activities Advance clean air technology 3%Ensure compliance with clean air rules 14%Customer service and business assistance 3% Develop programs to achieve clean air 4% Develop rules to achieve clean air 4% Monitoring air quality 8%Timely review of permits 9%Policy support 1% Interest on long-term debt 1% Long-term emission reduction projects 53% Advance clean air technology Ensure compliance with clean air rules Customer service and business assistance Develop programs to achieve clean air Develop rules to achieve clean air Monitoring air quality Timely review of permits Policy support Activity FY 20-21 FY 19-20 FY 18-19 FY 17-18 FY 16-17 FY 15-16 Advance clean air technology 14,560,468$ 12,827,393$ 11,520,547$ 9,271,026$ 7,825,599$ 7,119,417$ Ensure compliance with clean air rules 59,823,114 55,167,960 52,353,479 50,528,522 49,316,129 45,622,680 Customer service and business assistance 14,979,824 13,032,003 11,637,664 9,743,294 9,260,504 8,337,319 Develop programs to achieve clean air 15,522,501 12,471,639 9,407,869 8,636,784 11,335,498 10,444,147 Develop rules to achieve clean air 17,228,755 14,131,578 14,275,590 10,013,098 7,604,041 7,566,089 Monitoring air quality 36,114,354 31,910,536 26,547,245 20,822,380 17,856,869 16,028,394 Timely review of permits 38,832,790 35,511,594 33,951,378 33,301,565 31,520,083 27,891,070 Policy support 1,773,352 1,945,852 1,028,495 667,046 885,773 511,705 Interest on long-term debt 3,302,637 3,463,254 3,605,251 3,731,589 3,906,955 3,884,990 Long-term emission reduction projects 231,305,871 206,806,917 163,187,839 101,304,229 101,008,426 87,079,799 Total 433,443,666$ 387,268,726$ 327,515,357$ 248,019,533$ 240,519,877$ 214,485,610$ 10 SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT Financial Summary As of June 30, 2021, 2020 and 2019 FINANCIAL POSITION STATEMENT FOR THE YEARS ENDED JUNE 30, 2021, 2020, AND 2019 (In Thousands) FY 2020-21 FY 2019-20 FY 2018-19 ASSETS: Current and other assets $ 1,064,125 $ 1,024,870 $ 932,368 Capital assets 37,259 38,515 35,502 Total Assets 1,101,384 1,063,385 967,870 Deferred outflows (DO) of resources 151,191 79,618 88,783 Total Assets and DO of resources 1,252,575 1,143,003 1,056,653 LIABILITIES: Long-term liabilities 363,413 263,850 250,373 Short-term liabilities 89,284 97,696 83,446 Total Liabilities 452,697 361,546 333,819 Deferred inflows (DI) of resources 21,731 18,882 30,548 Total Liabilities and DI of resources 474,428 380,428 364,367 ASSETS AND DO OF RESOURCES OVER LIABILITIES AND DI OF RESOURCES $ 778,147 $ 762,575 $ 692,286 The Financial Position Statement, known in Accounting terms as the "Balance Sheet," provides the financial benefits (assets) available to the South Coast AQMD to provide services, while liabilities describe the amount the South Coast AQMD owes in providing those services. Current and other assets: Highly liquid assets such as cash and other assets that are expected to be received within a year. Capital assets: Items such as buildings, equipment, vehicles that have a useful life of more than a year and cost more than $5,000. Total assets: Assets owned by the South Coast AQMD that has an economic value whose benefits can be derived in the future. Deferred outflows of resources: Represent a consumption of net position that applies to a future period(s). Long-term liabilities: Debt owed by the South Coast AQMD to others such as net pension liability, net OPEB liability, and bonds that are expected to be paid over a period of greater than one year. Short-term liabilities: Amounts owed by the South Coast AQMD to vendors that are expected to be paid within a year. Total liabilities: Combined debts and obligations that South Coast AQMD owes to outside parties. Deferred inflows of resources: Represent an acquisition of net position that applies to a future period(s). Assets and deferred outflow of resources over liabilities and deferred inflow of resources: Provides the difference between financial benefits and liabilities, ultimately showing the net worth of the South Coast AQMD. The assets and deferred outflow of resources exceeded the liabilities and deferred inflows of resources by 2% as compared to the prior fiscal year. The increase was mainly due to deferred outflows of resources related to pension. 11 SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT Financial Summary As of June 30, 2021, 2020 and 2019 FINANCIAL ACTIVITY STATEMENT FOR THE YEARS ENDED JUNE 30, 2021, 2020, AND 2019 (In Thousands) FY 2020-21 FY 2019-20 FY 2018-19 RESOURCES: Fees and Charges – Stationary Sources $ 106,917 $ 106,450 $ 101,804 Fees and Charges – Mobile Sources 26,995 29,215 26,106 Operating Grants and Subventions 304,767 303,621 295,517 Grants and Subventions not Restricted for Specific Programs 2,885 2,880 2,865 Penalties and Settlements 4,715 12,178 7,197 Interest 597 1,791 1,977 Other Revenues 2,140 1,422 1,422 Total Resources 449,016 457,557 436,888 USES: Advance Clean Air Technology 14,560 12,827 11,521 Ensure Compliance with Clean Air Rules 59,823 55,168 52,353 Customer Service 14,980 13,032 11,638 Develop Programs to Achieve Clean Air 15,523 12,472 9,408 Develop Rules to Achieve Clean Air 17,229 14,131 14,276 Monitoring Air Quality 36,114 31,911 26,547 Timely Review of Permits 38,833 35,512 33,951 Policy Support 1,773 1,946 1,028 Interest on Long-Term Debt 3,303 3,463 3,605 Long-Term Emission Reduction Projects 231,306 206,807 163,188 Total Uses 433,444 387,269 327,515 RESOURCES OVER USES $ 15,572 $ 70,288 $ 109,373 The Financial Activity Statement, known in Accounting terms as the "Income Statement," provides the sources (revenues) and uses (expenses) of providing services for the South Coast Air Quality Management District. Resources over uses decreased by 78%, as compared to the prior fiscal year, primarily due to increase in pension expense and expenses related to the long-term emission reduction projects. Many of the contracts for long-term emissions reduction projects are multi-year and dependent on the timing of receipts of grant funding. Expenses can vary significantly from year to year. 12 SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT Awards The Government Finance Officers Association of the United States and Canada (GFOA) has given an Award for Outstanding Achievement in Popular Annual Financial Reporting to South Coast Air Quality Management District (South Coast AQMD) for its Popular Annual Financial Report for the fiscal year ended June 30, 2020. The Award for Outstanding Achievement in Popular Annual Financial Reporting is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government popular reports. In order to receive an Award for Outstanding Achievement in Popular Annual Financial Reporting, a government unit must publish a Popular Annual Financial Report, whose contents conform to program standards of creativity, presentation, understandability and reader appeal. An Award for Outstanding Achievement in Popular Annual Financial Reporting is valid for a period of one year only. South Coast AQMD has received a Popular Award for the fiscal year ended June 30, 2020. We believe our current report continues to conform to the Popular Annual Financial Reporting requirements, and we are submitting it to GFOA to determine its eligibility for another Award. Further, South Coast AQMD's Comprehensive Annual Financial Report for the year ended June 30, 2020, from which information on pages 9 through 11 have been drawn, was awarded the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association of the United States and Canada (GFOA). The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. 1947 1943 Los Angeles County Air Pollution Control District (APCD) established–the first of its kind in the nation Orange CountyAPCD established 1950 1966 1968 1957 First recognized episodes of smog occur in Los Angeles in summer 1943 1970 1971 1975 San Bernardino and Riverside County APCDs formed California adopts first automobiletailpipe emission standards in the nation California Air Resources Board (CARB) holds its first meeting with Dr. Arie J. Haagen-Smit as its first chairman U.S. EPA adopts first national air quality standards Catalytic converters required for most gasoline-powered vehicles Federal Clean Air Act enacted, establishing the basic U.S. program for controlling air pollution California legislature merges air pollution control districts of LA, Orange, Riverside and San Bernardino counties forming the South Coast Air Quality Management District Vapor recovery “boots” required on gas station nozzles Photo courtesy ofLos Angeles Times Collection, Department of Special Collections, UCLA Library T H E P A T H T O C L E A N A I R A T T A I N M E N T S T R A T E G I E S 1986 1987 2006 1990 2011 South Coast AQMD adopts first Air Quality Management Plan to show attainment of clean air standards Federal Clean Air Act Amendments of 1990 enacted establishing new programs to reduce ozone, toxic emissions and vehicle emissions California Global Warming Solutions Act of 2006 (AB 32) enacted to reduce greenhouse gases Federal agencies and the State of California establish single time frame for corporate average fuel economy (CAFE) and greenhouse gas standards for the next generation of cars and light-duty trucks Carl Moyer Program established to reduce mobile source emissions Air Quality Historical Timeline 1978 Created a program to assess and reduce health risks from air toxic emissions under the Air Toxics “Hot Spots” Information and Assessment Act (AB 2588) 1998 1989 2013 Attained the 1997 24 hour and annual National Ambient Air Quality Standards for fine particulate matter two years ahead of schedule 2017 AB 617 enacted to develop community plans and implement new technologies addressing the disproportionate impacts of air pollution sources in Environmental Justice communities 1977 South Coast AQMD launches first Multiple Air Toxics Exposure Study (MATES) to understand air toxics health impacts. Additional MATES studies conducted in 1999, 2006, 2013 and 2018MATES 21865 Copley Drive Diamond Bar, CA 91765-4178 www.aqmd.gov South Coast Air Quality Management District