COMPREHENSIVE ANNUAL FINANCIAL REPORT

1 BEN LAMERADIRECTOR OF FINANCECOMPREHENSIVE ANNUALFINANCIAL REPORTFOR THE FISCAL YEAR ENDED JUNE 30, 2017 Photo Credit: Ana Ramos, Sr. Office Assistant Department of Health and Human Services Photography is one of my favorite hobbies. The evening of March 14, 2017, my photography class took a field trip to view the downtown Sacramento area and the Tower Bridge. After taking several pictures of the bridge from many different angles, I fell in love with this particular photo as I like how it captures the bridge, Sacramento River, and part of downtown Sacramento. The Tower Bridge is used for pedestrian and vehicle traffic and is an iconic landmark of Sacramento. Cover Design: Chris Baker, Geographic Information Systems Analyst II Department of Technology COUNTY OF SACRAMENTOCOMPREHENSIVE ANNUAL FINANCIAL REPORTFOR THE FISCAL YEAR ENDED JUNE 30, 2017 Table of Contents TABLE OF the Citizens of Sacramento of Achievement for Excellence in FINANCIAL of Public SECTIONI ndependent Auditors' 's Discussion and Analysis (Required Supplementary Information).

2 5 Basic FINANCIAL Statements:Government-Wide FINANCIAL Statements:Statement of Net of FINANCIAL Statements:Balance Sheet - Governmental of the Governmental Funds Balance Sheet to the Statement of Net of Revenues, Expenditures and Changes in Fund Balances - Governmental OF SACRAMENTOCOMPREHENSIVE ANNUAL FINANCIAL REPORTFOR THE FISCAL YEAR ENDED JUNE 30, 2017 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances ofGovernmental Funds of the Statement of of Revenues and Expenditures - Budget and Actual - General of Net Position - Proprietary of Revenues, Expenses and Changes in Fund Net Position - Proprietary of Cash Flows - Proprietary of Fiduciary Net Position - Fiduciary of Changes in Fiduciary Net Position - Fiduciary to Basic FINANCIAL Supplementary Information (Unaudited):Retirement Plan - Schedule of Proportionate Share of the Net Pension Plan - Schedule of Post Employment Benefits (OPEB) - Schedule of Funding and Individual Fund Statement and Schedules:Non-major Governmental Funds:Combining Balance Statement of Revenues, Expenditures and Changes in Fund Revenue Funds:Combining Balance Statement of Revenues, Expenditures and Changes in Fund OF SACRAMENTOCOMPREHENSIVE ANNUAL FINANCIAL REPORTFOR THE FISCAL YEAR ENDED JUNE 30, 2017 Individual Funds:Schedules of Revenues and Expenditures - Budget and Service Funds:Combining Balance Statement of Revenues, Expenditures and Changes in Fund Funds:Schedules of Revenues and Expenditures - Budget and Projects Fund:Combining Balance Statement of Revenues, Expenditures and Changes in Fund Funds:Schedule of Revenues and Expenditures - Budget and Enterprise Funds.

3 Combining Statement of Net Statement of Revenues, Expenses and Changes in Fund Net Statement of Cash Service Funds:Combining Statement of Net Statement of Revenues, Expenses and Changes in Fund Net Statement of Cash OF SACRAMENTOCOMPREHENSIVE ANNUAL FINANCIAL REPORTFOR THE FISCAL YEAR ENDED JUNE 30, 2017 Agency Funds:Combining Balance Statement of Changes in Assets and Funds:Combining Statement of Fiduciary Net Statement of Changes in Fiduciary Net SECTIONNet Position by in Net Balances of Governmental in Fund Balances of Governmental Governmental Tax Revenues by Value and Estimated Actual Value of Taxable Property Tax Rates - All Direct and Overlapping Property Wide 1 Percent - Secured and Unitary Property Tax Levies and of Outstanding Debt by Debt Margin and Economic OF SACRAMENTOCOMPREHENSIVE ANNUAL FINANCIAL REPORTFOR THE FISCAL YEAR ENDED JUNE 30, 2017 Full-Time Equivalent County Government Employees by Indicators by Asset Statistics by DISCLOSURESC ounty of Sacramento ANNUAL Continuing of Sacramento Investment of Sacramento General Fund Adopted of Gross Assessed Secured Tax Levies, Delinquencies and Secured Taxpayers FY General Fund Revenues.

4 Expenditures and Changes in Fund Balance 2012-13 Through Obligation County General Fund Debt Service, Current Outstanding Debt-Certificates of Participation Debt Service, Current Outstanding Debt-POB and Certificates of Rate Debt/Interest Rate of Enplaned Aircraft Landed ' Market Shares of Enplaned OF SACRAMENTOCOMPREHENSIVE ANNUAL FINANCIAL REPORTFOR THE FISCAL YEAR ENDED JUNE 30, 2017 Statement of Revenues, Expenses and Changes in Net and Nonairline of Historical Revenue, Expenses and Debt Service Agency Enterprise the Citizens of Sacramento CountyNovember 30, 2017 Department of Finance Ben Lamera Director AdministrationAuditor-ControllerConsolid ated Utility Billing & ServicesInvestmentsTax Collection & Business LicensingTreasuryCounty of SacramentoNovember 30, 2017To the Citizens of Sacramento CountySacramento, CaliforniaDear Citizens:The COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) of the County of Sacramento (County) for the fiscal year ended June 30, 2017, is herebysubmitted in compliance with Sections 25250 and 25253 of the Government Code of the State of California.

5 Responsibility for both the accuracy of thedata and the completeness and fairness of the presentation, including all disclosures, rests with the County. To the best of our knowledge and belief, theenclosed data is accurate in all material respects and present fairly the respective FINANCIAL position of the governmental activities, business-typeactivities, discretely presented component unit, each major fund and the aggregate remaining fund information and related budgetary schedules for theGeneral Fund and other funds, of the County, as of June 30, 2017, and the respective changes in FINANCIAL position and cash flows, where applicable,thereof for the year then ended. All disclosures necessary to enable the reader to gain an understanding of the County s FINANCIAL activities have CAFR is presented in four sections: introductory, FINANCIAL , statistical, and bond disclosures. The introductory section includes this transmittalletter, a copy of the 2013-16 Certificate of Achievement for Excellence in FINANCIAL Reporting awarded by the Government Finance OfficersAssociation of the United States and Canada, the County s organizational chart, and a list of public officials.

6 The FINANCIAL section includes theindependent auditor s REPORT on the basic FINANCIAL statements, the Management s Discussion and Analysis (MD&A) of the County s overall changes infinancial position, the audited basic FINANCIAL statements, note disclosures, and combining and non-major fund FINANCIAL statements to provide readerswith a COMPREHENSIVE understanding of the County s FINANCIAL activities of the past fiscal year. This letter is designed to complement the MD&A andshould be read in conjunction with it. The County s MD&A, which is unaudited, can be found on pages 5 through 21 of this REPORT . The statisticalsection, also unaudited, includes selected FINANCIAL and demographic information, generally presented on a multi-year OF SACRAMENTO COUNTYS acramento County was incorporated in 1850 as one of the original 27 counties of the State of California. The County's largest city, the City ofSacramento, is the seat of government for the State of California and also serves as the County seat.

7 Sacramento became the State Capital in 1854. The County encompasses approximately 994 square miles in the middle of the 400-mile long Central Valley, which is California's prime agriculturalregion. The County is bordered by Contra Costa and San Joaquin Counties on the south, Amador and El Dorado Counties on the east, Placer and SutterviiTo the Citizens of Sacramento CountyNovember 30, 2017 Counties on the north, and Yolo and Solano Counties on the west. The County extends from the low delta lands between the Sacramento andSan Joaquin Rivers north to about ten miles beyond the State Capitol and east to the foothills of the Sierra Nevada Mountains. The southernmostportion of Sacramento County has direct access to the San Francisco Bay. The geographic boundaries of the County include seven incorporated cities, Sacramento, Folsom, Galt, Isleton, Citrus Heights, Elk Grove and RanchoCordova.

8 Each of these cities contributes a rich and unique dimension to the Sacramento County region. The County has a charter form of government. It is governed by a five-member Board of Supervisors, who are elected on a non-partisan basis to servefour-year terms. Each is elected from one of the five supervisorial districts of the County. Supervisors from District 1, District 2, and District 5 areelected in gubernatorial election years (2018, 2022, etc.), while supervisors from District 3 and District 4 are elected in presidential election years (2020,2024, etc.). District boundaries are adjusted after every federal census to equalize district population. Other elected officials include the Assessor, District Attorney and Sheriff. A C ounty Executive appointed by the Board of Supervisors runs the day-to-day business of the County. The County provides a full range of services including public protection, construction and maintenance of all public facilities, waste management,water, parks maintenance and operations, health and human services, human assistance, planning, tax collection, elections, airports and many the delivery of County-wide services are several Departments and Agencies.

9 The FINANCIAL reporting entity of the County includes all thefunds of the primary government ( , Sacramento County as legally defined), as well as all of its component units, if applicable. Component units arelegally separate entities for which the primary government is financially accountable. Blended component units, although legally separate entities, are, in substance, part of the primary government s operations and are included as part ofthe primary government. Accordingly, certain districts and agencies accounted for in the Special Revenue, Debt Service, Capital Projects, Proprietaryand Trust and Agency Fund Types are reported as part of the primary government. ECONOMIC CONDITION AND OUTLOOKThe County continues the recovery from the Great Recession that began in late 2007. During the Great Recession and its aftermath, foreclosures ofproperties in the County significantly increased, and assessed values declined.

10 County revenues, including property taxes and sales taxes, declinedsignificantly while certain expenditures of the County (including pension-related costs and the cost of entitlement programs) increased. The Countyaddressed these challenges by making significant program and staffing reductions, as well as the use of one-time local economy continues its improvement with gross assessed valuations expected to increase in Fiscal Year (FY) 2017-18 by approximately , following a percent increase in FY 2016-17. These increases follow two consecutive years of increases giving the County the highest totalgross assessed valuations in the County s history. The Sacramento Metropolitan Statistical Area (including Sacramento, Yolo, El Dorado and Placercounties) unemployment rate (not seasonally adjusted) decreased to percent in July 2017 from percent in July counties are closely linked to the FINANCIAL condition of the State of California (the State ), and are responsible for delivering health andwelfare services on behalf of the State.