Title
Adopt a Resolution to Accept the Audited Financial Statements for the City of San Leandro for the Fiscal Year Ending June 30, 2024
Staffreport
CITY COUNCIL PRIORITY
• Fiscal Sustainability and Transparency
SUMMARY
Resolution accepting the Audited Financial Statements for the City of San Leandro for the fiscal year ending June 30, 2024.
RECOMMENDATION
Staff recommends that the City Council adopt a resolution accepting the audited financial statements, including the Annual Comprehensive Financial Report, for the City of San Leandro for the fiscal year ended June 30, 2024.
BACKGROUND
The City's independent auditor, Maze & Associates, completed the audit of the City's financial statements and provided the auditor's reports for the fiscal year ended June 30, 2024. The Finance Department prepares the City's financial statements in the form required for the Annual Comprehensive Financial Report (ACFR). The Government Accounting Standards Board recommends elements for the ACFR format. The ACFR and the related financial statements fully disclose the financial condition of the City and its other reporting units.
The ACFR and other compliance reports prepared for the year ended June 30, 2024 include:
1. Annual Comprehensive Financial Report
2. Single Audit Report
3. Measure B Program Financial Statements
4. Measure BB Program Financial Statements
5. Alameda County VRF Measure F Program Financial Statements
6. Memorandum on Internal Control
In an effort to bring the ACFR to Council as expediently as possible, the Single Audit Report and Memorandum on Internal Control will be presented to Council at a later date.
The ACFR details the total of all financial accounting for the fiscal year. The financial reporting provided in the ACFR is in greater detail than the basic financial statements and is made up of three primary sections:
• Introductory Section: Provides general information about the City including the letter of transmittal, list of principal officers, and an organizational chart.
• Financial Section: Provides the overall financial information for the City including the report of the independent auditor, Management’s Discussion & Analysis (MD&A), the basic financial statements, notes to the basic financial statements, required supplementary information, and other supplementary statements and schedules.
• Statistical Section: Provides a broad range of operational, economic, and historical data providing context for assessing the City’s fiscal condition. This section provides information about general financial trends, revenue and debt capacities, economic and demographic trends, and operating information.
The format of the ACFR is designed to serve the needs of three primary users: the City Council along with other governmental oversight bodies, the public, and agencies assessing the City's creditworthiness.
Analysis
Financial Highlights
Maze & Associates completed audits of the City’s financial statements, Measures B and BB special sales tax revenues, Measure F vehicle license registration fees, and the Transportation Development Act. Maze found the basic financial statements present fairly, in all material ways, the City’s financial position as of June 30, 2024 (Independent Auditor’s Report, Opinions). The audited financial statements include the statement of net position, statement of activities and changes in net position, balance sheets, statements of revenues, expenditures, and changes in fund balance, and statements of cash flows.
Please refer to the MD&A section in the ACFR for detailed discussion regarding the City’s financial performance and position. Key financial highlights for the year ended June 30, 2024, are as follows:
• City’s Assets and Deferred Outflows of Resources exceeded its Liabilities and Deferred Inflows of Resources by $290.3 million (Net Position), a $32.7 million increase from the prior year. Of total net position, $193 million was invested in capital assets, $114.9 million was restricted for other purposes, and ($17.8) million was unrestricted. Net Investment in Capital Assets and Restricted Net Position saw an increase of $10.4 million and $36.3 million respectively while Unrestricted Net Position saw a decrease of $14 million.
• Assets and Deferred Outflows of Resources increased by $32.9 million and Liabilities and Deferred Inflows of Resources increased by $0.2 million from the prior fiscal year. The increase was primarily due to a $26 million loan receivable for the sale of Shoreline property for development, which includes $2 million in accrued interest.
• City-wide Net Pension Liability to CalPERS for 2023-24 increased by $11.4 million, or 5% from $224.3 million in the prior year to $235.7 million. This increase in liability was driven by revised actuarial valuations from CalPERS which kept the discount rate the same as prior years at 6.9% but realized a 6.1% loss. In addition, the City contributed $14.2 million into the Section 115 irrevocable trust with the Public Agency Retirement Services (PARS).
• The City’s total net position increase of $32.7 million is comprised of a $1.8 million increase in governmental activities and a $30.9 million increase in Business-Type activities.
• In response to the COVID-19 pandemic, the Federal government passed the American Rescue Plan Act (ARPA) in March 2021, including financial aid to cities. The City was awarded $18.6 million in ARPA funds, received in two equal tranches in 2020-21 and 2021-22. During 2023-24, $6.2 million was spent on eligible programs.
• In accordance with GASB Statement No. 54, governments are obligated to enhance the financial reporting of the fund balance categories. Fund balances reported in Note 11 detail the classifications of the City’s fund balance categories. The City’s governmental fund balance, which includes the General, Special Revenue, Debt Service, and Capital Projects funds, increased by $10 million for an ending fund balance of $184.3 million. Ending fund balance classifications include:
o Nonspendable: $6.3 million of these funds are not available or spendable due to advances and loans to other funds.
o Restricted: $108.3 million based on constraints on the use of resources or imposed by law through constitutional provisions or enabling legislation. These include capital projects and debt service payments.
o Assigned: $1.2 million including General Fund encumbrances.
o Unassigned: $68.5 million. Unassigned is further categorized by Compensated Absences, Major Emergencies, Economic Uncertainties, and offsets from other fund deficits.
Conclusion
In summary, Maze found the basic financial statements present fairly the City’s financial position as of June 30, 2024. This is the highest-level opinion that can be rendered by the auditors. This opinion assures that the City's financial statements are in conformity with generally accepted accounting principles in the United States, an opinion rendered on all the City's funds. Other statements such as the Measures B/BB/F and TDA reports also meet the compliance requirements.
The City was awarded the Certificate of Achievement for Excellence in Financial Reporting for the Fiscal Year ended June 30, 2023, by the Government Finance Officers Association of the United States and Canada (GFOA). The City will apply for the award for the 2023-2024 ACFR, and staff believes it continues to meet the stringent standards of the GFOA Awards program.
REVIEW BY FINANCE COMMITTEE
The audited financial statements, including the Annual Comprehensive Financial Report were reviewed by the City Council Finance Committee on January 22, 2025. The Finance Committee unanimously recommended the financial statements be moved to the City Council for acceptance.
ATTACHMENTS
A: Draft Resolution 2025-XX Accepting the Audited Financial Statements for the City of San Leandro for Fiscal Year Ending June 30, 2024
B: Annual Comprehensive Financial Report
C: Measure B Program Financial Statements
D: Measure BB Program Financial Statements
E: Alameda County VRF Measure F Program Financial Statements
F: TDA Article III Fund Financial Statements
G: Presentation - ACFR for FY24
PREPARED BY:
Heather Rowden, Financial Consultant