Finance, Economic Development and Jobs Committee
March 25, 2024

BUDGET, FINANCE AND ECONOMIC DEVELOPMENT

POST-MEETING AGENDA

REGULAR MEETING

March 25, 2024, 12:00 p.m.

City Hall North Conference Room A
1600 Truxtun Avenue
Members
Andrae Gonzales
Eric Arias
Ken Weir

1. ROLL CALL

2. PUBLIC STATEMENTS
a. Agenda Item Public Statements
b. Non-Agenda Item Public Statements

3. ADOPTION OF MINUTES
a. Adoption of the February 26, 2024 regular meeting minutes Staff recommends adoption of minutes

4. STAFF REPORT
a. 2022 Audit Reports to be referred to the Budget Finance and Economic Development Committee
Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2022.

1. Agreed Upon Conditions Report for the fiscal year ended June 30, 2022.2.

Auditor Communication with Those Charged with Governance (SAS 114 Letter) for fiscal year ended June 30, 2022.

3. Independent Auditors Report – Compliance with Contractual Requirements relative to the Bakersfield Subregional Wastewater Management Plan for the year ended June 30, 2022.

4. Independent Auditors Report on Appropriations Limit Worksheet (GANN Limit) of the City of Bakersfield for the fiscal year ended June 30, 2022.

5. Independent Auditors Report – Mechanics Bank Arena, Theater, Convention Center, Dignity Health Amphitheatre & Valley Children’s Ice Center for the fiscal year ended June 30, 2022.

6. Agreed Upon Procedures Report (Public Safety and Vital Services) for the fiscal year ended June 30, 2022.

7. Single Audit Report for the fiscal year ended June 30, 20228.

Staff recommends the Budget, Finance and Economic Development Committee accept the annual financial reports and refer them back to the City Council for final approval.
b. 2023 CalPERS Pension and 2022 OPEB Trust Updates
Staff Recommends receive and file presentation.
*1. PowerPoint Presentation

5. NEW BUSINESS

6. COMMITTEE COMMENTS

7. ADJOURNMENT

ADMINISTRATIVE REPORT

MEETING DATE: March 25, 2024 AGENDA CATEGORY: Adoption of minutes TO: Budget, Finance and Economic Development Committee
FROM: Julie Drimakis, City Clerk
DATE: March 8, 2024
SUBJECT: Adoption of the February 26, 2024 regular meeting minutes

[Document Description]

RECOMMENDATION:

Staff recommends adoption of minutes

BACKGROUND:

FISCAL IMPACT:

COUNCIL GOAL:

Choose an item.

ATTACHMENTS:

Minutes

1 BUDGET, FINANCE AND ECONOMIC DEVELOPMENT

MINUTES

REGULAR MEETING

February 26, 2024, 12:00 p.m.

City Hall North Conference Room A
1600 Truxtun Avenue

Members Present: Andrae Gonzales, Chair
Eric Arias
Ken Weir

City Staff Present: Christian Clegg, City Manager
Josh Rudnick, Deputy City Attorney II
Jenni Byers, Acting Economic Development Director
Mario Orosco, Budget Officer
Joe Conroy, Public Information Officer
Sara Ortega, Deputy City Clerk
Misty Eaton, ECD Principal Planner
Anthony Valdez, Assistant to the City Manager
Michelle Cruz, Management Assistant
Jason Cater, Economic & Community Development Manager
Gary Hallen, Assistant City Manager

_____________________________________________________________________

1. ROLL CALL

2. PUBLIC STATEMENTS
a. Agenda Item Public Statements
None.
b. Non-Agenda Item Public Statements
None.

2 3. STAFF REPORT
None.

4. ADOPTION OF MINUTES
a. Adoption of the January 29, 2024, regular meeting minutes Moved by: Eric Arias
Staff recommends adoption of minutes
Approved

5. NEW BUSINESS
a. Presentation on HOME -ARP - Notice of Funding Availability Award Recommendations
Jenni Byers, Acting Economic and Community Development Director gave a presentation.

The committee discussed recommended substantial amendment to allocate funding for non-profit capacity building.

Chair Gonzales asked if the City of Bakersfield can use the capacity building dollars. He also discussed training and workshops and workforce development with non-profits.

Councilmember Arias requested the importance of the city reaching out to Kern Health Systems to discuss the non-profits who are interested in the program.

Moved by: Eric Arias
Staff recommends receive and file presentation.

Approved

1. PowePoint presentation provided by Economic and Community Developmenton Home-ARP
b. Annual Action Plan Process for FY 2024-25 HUD Applications (CDBG,

ESG, HOME, HOPWA)
Jenni Byers, Acting Economic and Community Development Director gave a presentation.

Overview of Fiscal Year 2024-25 HUD budget and action plan was discussed.

3 Councilmember Arias recommended identifying who is interested in receiving funding on the front end and deciding what percentage will go to each applicant.

Chair Gonzales asked what other sources of funding we are providing to flood ministry; he also requested a total be provided back to him.

Chair Gonzales commented on ESG applications how there is a delta between funding requests and proposed budget.

The committee discussed how shelter providers and homeless providers are finding resources to fill the gaps.

Moved by: Eric Arias
Staff recommends that the item be referred to the full Council.

Approved

6. COMMITTEE COMMENTS

7. ADJOURNMENT
Meeting was adjourned at 12:41 p.m.

_________________________

ANDRAE GONZALES, CHAIR

BUDGET, FINANCE AND ECONOMIC DEVELOPMENT COMMITTEE

ATTEST:

_________________________

JULIE DRIMAKIS, CITY CLERK
CITY CLERK and Ex Officio Clerk of
the Council of the City of Bakersfield

ADMINISTRATIVE REPORT

MEETING DATE: March 25, 2024 AGENDA CATEGORY: Staff Report TO: Budget, Finance and Economic Development Committee
FROM: Randy McKeegan, Finance Director
DATE: March 19, 2024
SUBJECT: Audit Reports to be Referred to Budget and Finance Committee

1. Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2022.

2. Agreed Upon Conditions Report for the fiscal year ended June 30, 2022.

3. Auditor Communication with Those Charged with Governance (SAS 114 Letter) for fiscal year ended June 30, 2022.

4. Independent Auditors Report – Compliance with Contractual Requirements relative to the Bakersfield Subregional Wastewater Management Plan for the year ended June 30, 2022.

5. Independent Auditors Report on Appropriations Limit Worksheet (GANN Limit) of the City of Bakersfield for the fiscal year ended June 30, 2022.

6. Independent Auditors Report – Mechanics Bank Arena, Theater, Convention Center, Dignity Health Amphitheatre & Valley Children’s Ice Center for the fiscal year ended June 30, 2022.

7. Agreed Upon Procedures Report (Public Safety and Vital Services) for the fiscal year ended June 30, 2022.

8. Single Audit Report for the fiscal year ended June 30, 2022

RECOMMENDATION:

Staff recommends the Budget, Finance and Economic Development Committee accept the annual financial reports and refer them back to the City Council for final approval.

BACKGROUND:

These reports are the required documents for the City’s annual audit . Financial reports like these are traditionally presented to the Committee for discussion and review and then referred back to the full Council for approval. The reports are as follows:

1. The City’s Annual Comprehensive Financial Report (ACFR), commonly referred to as the Annual Audit Report, for the fiscal year ended June 30, 2022 will be provided to the City Council as part of the packet prior to this meeting. A copy of the report will also be on file in the City Clerk’s office for public review. The ACFR represents the City’s financial statements as of June 30, 2022, which are audited by the accounting firm of Brown Armstrong Accountancy Corporation. The current year audit opinion issued by the outside auditors was “unqualified,” which indicates that the City complied, in all material respects, with accounting principles generally accepted in the United States of America.

2. The Agreed Upon Conditions Report is designed to increase efficiency, internal controls and/or financial reporting and includes any reportable conditions noted during the Audit. A summary of reported conditions are included in the report. The report also addresses conditions identified in the prior year which have all been resolved to the auditors’ satisfaction.

3. The SAS 114 Letter provides information about our auditors’ responsibilities under auditing standards generally accepted in the United States of America, Government Auditing Standards, and the Uniform Guidance, as well as certain information related to the planned scope and timing of the audit.

4. Contract requirements contained in City of Bakersfield Agreement 76 -153 as amended by Agreements 76 -153(5), 76 -153(4), 77 -44, 85 -197 and 92 -106 apply to operations of the Bakersfield Subregional Wastewater Management Plan. The City’s compliance with contract requirements is audited on an annual basis. The current compliance report, issued by the outside auditors, is attached for your review and indicates that there were no audit findings.

5. Attached is a letter from the City’s independent auditors Brown Armstrong Accountancy Corporation indicating they have completed their annual review of the Appropriati ons Limit Worksheet prepared by the City in accordance with Section 1.5 of Article XIIIB of the California Constitution (GANN Limit). This annual review is performed by the auditors as part of their contract to provide auditing services to the City of Bak ersfield. The agreed upon review procedures are substantially less in scope than an audit and therefore no audit opinion is expressed regarding the calculation.

6. Attached is the independent audit report for the Mechanics Bank Arena, Theater, Convention Center, Dignity Health Amphitheatre & Valley Children’s Ice Center, for the fiscal year ended June 30, 2022. This audit report presents the financial statements for this operational unit as of June 30, 2022. The management company (AEG) is required to submit an independent audit report of their operations to the City after the end of each fiscal year. This audit report was prepared by the accounting firm of Barbich, Hooper, King, Dill & Hoffman.

7. The Agreed Upon Procedures Report for the Public Safety and Vital Services measure is designed to increase efficiency, internal controls and/or financial reporting and includes any reportable conditions noted during the Audit. This report is a requirement per the guidelines stated in the Resolution No. 089 -18 rega rding the Public Safety and Vital Services measure. A summary of reported conditions is included in the report.

8. Attached is the Single Audit Report for the fiscal year ended June 30, 2022. This audit report tests the City’s compliance for each major program and on internal control over compliance and report on the schedule of expenditures of federal awards required by the uniform guidance. The current audit report, issued by outside auditors, finds that the City has complied, in all material respects, with the compliance requirements that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2022.

FISCAL IMPACT:

There is no fiscal impact with this action
COUNCIL GOAL:

Innovative and Efficient City Government
ATTACHMENTS:

1. ACFR 2022 – Financial statements Final

2. AUC Report Final

3. SAS 114 Letter Final

4. Wastewater AUP Report Final

5. GANN Report 2022 final

6. Mechanics Bank Arena Financials 6-30-22 Final

7. AUP Report Final

8. Final 2022 Single Audit Report

A n n u a l C o m p r e h e n s i v e F i n a n c i a l R e p o r t

CITY OF BAKERSFIELD

CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT
For the Fiscal Year Ended June 30, 2022
Prepared by the Department of Finance
Randy McKeegan, Finance Director

On the Cover
World War II Memorial
Jastro Park
Photo by Gilbert Vega

CITY OF BAKERSFIELD
Annual Comprehensive Financial Report
Year Ended June 30, 2022
Table of Contents

INTRODUCTORY SECTION PAGE
Table of Contents................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

Letter of Transmittal................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................iv GFOA Certificate of Achievement................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ix Organizational Chart................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................x Elected and Administrative Officers................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................xi

FINANCIAL SECTION
Independent Auditor's Report................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................1 Management Discussion and Analysis................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................5 Basic Financial Statements
Statement of Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................22 Statement of Activities................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................24 Governmental Funds:

Balance Sheet................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................28 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................30 Statement of Revenues, Expenditures and Changes in Fund Balances................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................32 Reconciliation of the Governmental Funds Statement
of Revenues, Expenditures and Changes in Fund Balances
to the Government-Wide Statement of Activities................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................34 Proprietary Funds:

Statement of Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................36 Statement of Revenues, Expenses and Changes in Fund Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................38 Statements of Cash Flows................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................40 Fiduciary Funds:

Statement of Fiduciary Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................46 Statement of Changes in Fiduciary Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................47 Notes to the Financial Statements................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................49 Required Supplementary Information:

Budgetary Information................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

Budgetary Comparison Schedule for the General Fund................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

Budgetary Comparison Schedule for the Transient Occupancy Taxes Fund................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

Budgetary Comparison Schedule for the Community Development Block Grant Fund................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

Budgetary Comparison Schedule for the Gas Tax & Road Fund................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

Budgetary Comparison Schedule for the Redevelopment Successor Agency - Housing Fund................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

Defined Pension Plan - Schedules of Changes in Net Pension Liability and Related Ratios & Schedules of Plan Contributions................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

Other Post-Employment Benefits (OPEB) Plan - Schedule of Changes in City's Net OPEB Liability and Related Ratios and Schedule of OPEB Contributions................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ iPage 12 of 568

CITY OF BAKERSFIELD
Annual Comprehensive Financial Report
Year Ended June 30, 2022
Table of Contents
PAGE
Supplementary Information:

Balance Sheet - General Fund................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................126 Schedule of Revenues by Function - General Fund - Budget & Actual................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................127 Schedule of Expenditures by Division - General Fund - Budget & Actual................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................128 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Public Safety and Vital Services Fund................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................129 Special Revenue Funds:

Combining Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget & Actual................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

Debt Service Fund:

Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget & Actual................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................138 Capital Projects Funds:

Combining Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget & Actual................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................140 Non-Major Governmental Funds
Combining Balance Sheet................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................142 Combining Statement of Revenues, Expenditures and Changes in Fund Balances................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................144 Internal Service Funds:

Combining Statement of Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................147 Combining Statement of Activities and Changes in Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................148 Combining Statement of Cash Flows................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................149 Fiduciary Funds:

Combining Statement of Fiduciary Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................150 Combining Statement of Fiduciary Net Position
-Private Purpose Trust Funds................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................151 Combining Statement of Fiduciary Net Position
-Pension & Other Employee Benefit Trust Funds................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................152 Combining Statement of Changes in Fiduciary Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................153 Combining Statement of Changes in Fiduciary Net Position -Private Purpose Trust Funds................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................154 Combining Statement of Changes in Fiduciary Net Position -Pension & Other Employee Benefit Trust Funds................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................155 Long-term Debt Recorded in Private Purpose Trust Fund................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................156 ii

CITY OF BAKERSFIELD
Annual Comprehensive Financial Report
Year Ended June 30, 2022
Table of Contents
PAGE

STATISTICAL SECTION
Net Position by Component - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................159 Changes in Net Position - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................161 Fund Balances of Governmental Funds - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................165 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................167 Governmental Activities Tax Revenues By Source - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................169 Principal Property Taxpayers - Current Year and Nine Years Ago................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................170 Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................171 Property Tax Rates/Direct and Overlapping Governments - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................173 Property Taxes Levies and Collections - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................175 Direct and Overlapping Sales Tax Rates - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................176 Taxable Sales By Category Market Groups - Last Ten Calendar Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................177 Ratio of General Bonded Debt Outstanding - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................179 Ratio of Outstanding Debt by Type - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................181 Direct and Overlapping Debt as of June 30, 2022................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................183 Computation of Legal Debt Margin................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................184 Pledged - Revenue Coverage - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................185 Demographic and Economic Statistics - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................186 Principal Employers - Current Year and Nine Years Ago................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................187 Full-time Equivalent City Government Employees by Function - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................189 Property Value, Construction and Bank Deposits - Last Ten Calendar Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................191 Operating Indicators by Function - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................193 Capital Asset Statistics by Function - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................195 Schedule of Insurance in Force................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................197 iii

October 31, 2023
Honorable Mayor, City Council, City Manager and Citizens of Bakersfield:

I am once again pleased to present the City of Bakersfield's ( the “City”) Annual Comprehensive Financial Report (ACFR) for the year ended June 30, 2022 as required by City’s Municipal Code which states that a complete financial statement and report be prepared at the end of each fiscal year (Section 2.08.020F).

Bakersfield’s Finance Department prepared the report and assumed responsibility for both the accuracy of the data, its completeness and the fairness of the presentation which includes all disclosures. Because the cost of fiscal internal controls should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute assurance that the financial statements are free of any material misstatements. To the best my knowledge and belief, the enclosed data is accurate in all material aspects and is reported in a manner that presents fairly the financial position and results of operations of the City.

The accompanying financial statements of the City have been prepared in conformity with U.S. generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB).

Brown Armstrong Accountancy Corporation, a firm of licensed certified public accountants, performed the annual independent audit. The goal of the audit was to provide reasonable assurance that the basic financial statements of the City are free of material misstatement. The independent auditor concluded, based upon the audit, that the City’s financial statements for the fiscal year ended June 30, 2022, are fairly stated in conformity with GAAP.

The independent audit of the financial statements of the City is part of a broader financial review that is supplemented by the federally mandated “Single Audit.” This separate review is designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair representation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards.

These reports are available in the City’s separately issued Single Audit Report and may be obtained from the City’s website.

GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and A nalysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City of Bakersfield’s MD&A c an be found immediately following the report of the independent auditors, beginning on page 4 of the financial section.
iv

GENERAL BACKGROUND
The City is located approximately one hundred miles north of Los Angeles in the southern San Joaquin Valley. The City is the County seat for the County of Kern and maintains an incorporated area of 151 square miles with an estimated population of 407,491 as of January 1, 2022. Bakersfield operates under the Council-Manager form of government. Policymaking and legislative authority are vested in the City Council, which consists of a Mayor and a seven-member Council. The City Council is responsible for passing the ordinances and operating resolutions, passing the annual budget, appointing commissions and committees, and hiring the City Manager, and City Attorney, as well as many other related duties.

The City of Bakersfield is a Charter City founded in 1898 that offers a full range of services including:
• Fire and Police Protection
• Streets and Infrastructure Maintenance
• Planning and Building Services
• Economic and Community Development Services
• Parks and Recreation Services
• River & Agricultural Water and Domestic Water Services • Municipal Airpark - General Aviation
• Refuse Collection
• Wastewater Treatment
This report includes the financial activities of the City and the Bakersfield Successor Agency. A more detailed discussion of the reporting entity is provided in the notes to the financial statements.

MAJOR INITIATIVES
The Thomas Roads Improvement Program (TRIP) is nearing its final phases of the major construction projects funded though there are additional projects designed but are waiting for new funding for construction. The TRIP program uses a combination of local funds, Transportation Impact Fees, and State and Federal road grants, which includes approximately $570 million of Federal earmark funds approved by Congress in 2005. As o f June 30, 2022, the City had two remaining major TRIP projects under construction during the fiscal year including the Centennial Corridor Mainline Freeway ($59.5) Million Budget) and the Centennial Corridor Freeway Connector ($13.2 Million Budget). In addition to current projects under construction, property acquisition and design has begun on the Hageman Flyover segment of the TRIP projects. Supplemental grant awards at both the State and Federal level have resulted in these major projects under construction in the TRIP program to be fully funded, requiring no additional financing or borrowing.

The City of Bakersfield recognized the severe impact of homelessness on the community and undertook several programs and projects designed to address the issues it creates. The landmark homeless project undertaken by the City is the Brundage Lane Navigation Center which opened early in October 2020 and is now providing bridge housing for over 250 unhoused individuals in the area. Last year the facility served more than 780 individuals and found permanent housing for 99 people. Since it opened more than 1,161 unduplicated clients have stayed there and over 140 of those individuals have moved to permanent housing. In addition to this endeavor, the City has established rapid response teams in both the Development Services and Recreations and Parks departments to clean up homeless encampments and address other negative impacts caused by that population. The number of employees assigned to these important teams has increased each year since being established in 2019. The City also continues to fund private clean-up services in the Downtown and Old Town Kern areas of the City.

The City continues to move forward with initiatives to improve financial infrastructure and long-term planning. In the current year, the City began the implementation phase to replace the current Enterprise v

Resource Planning (ERP) software. The existing legacy system was implemented in the mid-1990’s and has passed its useful life. Modern systems would build more efficient operations across all City departments.

The City Council has approved the funding for this project which is expected to be complete in the next 12 months.

FACTORS AFFECTING FINANCIAL CONDITION
Local Economy and Local Budget Issues – The City of Bakersfield is glad to see the impacts of COVID-19 begin to fade in the rearview mirror but with that said, the American Rescue Plan Act (ARPA) funds awarded to the City in 2021 continue to provide benefits to the community. These funds have allowed local governments like Bakersfield to assist the community negatively impacted by the pandemic, fund economic redevelopment, and supplement City operations. The period of availability for ARPA d ollars continues into fiscal year 2024-25 so that stimulus has the potential to backfill some revenues for the City over the next three years.

Property tax revenues grew by 4% in fiscal year 2021-22 and are estimated to increase by an additional

6.6% in fiscal year 2022-23. These tax revenues face some uncertainty as higher interest rates over the last year and next slowing growth in the local housing market. In addition, the State and Federal government’s desire to reduce the economy’s reliance on fossil fuels can negatively impact the local job and housing markets. In 2018, the citizens of Bakersfield approved a new 1% transaction and use tax called the Public Safety and Vital Services ( PSVS) and this newer tax revenue stream has had tremendous positive impacts to the community by adding as estimated $100 million each year. The PSVS funds are budgeted and accounted for separately within a sub-fund of the General Fund and have a special oversight committee made up of nine City residents. It should be noted that the PSVS revenue stream is primarily earmarked for the fulfilling the thirteen established priorities mentioned previously but the City Council can use portions of that sales tax revenue to address economic instability. Like the PSVS tax, the standard Bradley-Burns 1% sales tax has been a steady revenue source for the City but like the PSVS funds, with double digit growth over the last two years. That growth is expected to level off in the upcoming year though and both sales tax sources are expected to be basic flat, with little growth from the prior year.

The City Council adopted Resolution 91-19 on June 28, 2019 to create a more substantial reserve to help mitigate potential financial downturns as well as create potential avenues to address the increasing concern regarding the growing unfunded pension liabilities. This resolution created a five-year plan that would increase the General Fund reserve equal to two months of operational costs, increase the facility replacement reserve, and begin to fund a Section 115 Pension Rate Stabilization Fund. The positive sales tax revenue receipts from the last three years allowed the City to meet that planned two-month operational reserve, establishing the rainy-day reserve balance at the end of the 2020-21 fiscal year and currently sits at over $52 million. The Council continued to fund the City’s Other Post-Employment Benefits (OPEB) costs for retiree medical benefits, maintaining the City of Bakersfield’s position as one of the few entities in California that are making serious progress toward fully funding this long-term obligation.

Retirement costs will continue to escalate for all employee groups and over the next several years are expected to increase by a total of over $30 million by fiscal year 2027-28. Actual CalPERS earnings over the past five years have been 8.6%, 6.7%, 4.7% and 21.3% (-6.1%) respectively. The 21.3% earnings experienced in 2020-21 (14% over the discount rate) prompted CalPERS to reduce the discount rate to

6.8%. This action was required by the State system’s policy that is meant to smooth out the positive effects of the plan’s performance over the subsequent years without which participants would see significant swings in contribution rates. CalPERS estimates the impact of the changes will still create some positive impacts on City pension costs. The loss experienced the very next year will actually generate more of a negative impact on pension costs than the prior year gain positively impacted costs, Analysis shows that the combined effect is an over $52 million net funding loss. vi

Accounting System and Internal Controls - The City's accounting system is organized and operated on a fund basis with each fund treated as a distinct self-balancing accounting entity. Various funds utilized by the City of Bakersfield are fully described in Note 1 of Notes to the Financial Statements. T he City's accounting records for general governmental operations are maintained on a modified accrual basis of accounting, whereby revenues are recognized when measurable and available and expenditures are recognized when materials and services are received. Accounting records for the enterprise and internal service funds are recorded on an accrual basis of accounting, whereby revenues are recognized when earned and expenses are recognized when incurred.

In developing and evaluating the City's accounting system, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition and (2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that: (a) the cost of a control should not exceed the benefits likely to be derived and (b) the evaluation of costs and benefits requires estimates and judgments by management.

All internal control evaluations occur within the framework described previously. The City's Finance department believes that these internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. However, the City recognizes that even sound internal controls have inherent limitations. Internal controls must be reviewed to ensure that the City’s operating policies and procedures are being adhered to and that the controls are adequate to assure accurate and reliable financial reporting and to safeguard the City’s assets.

Budgetary Controls - T he objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Project length financial plans are adopted for the capital projects funds. The level of budgetary control is established at the fund level. The City also maintains an encumbrance accounting system as one technique of accomplishing budgetary control. Unencumbered amounts lapse at year-end. However, encumbrances and certain capital projects are re-appropriated as part of the following year's budget. The 2019-20 City of Bakersfield appropriation limit established as required by state statute was $429,959,287.

Cash Management - The City maintains a cash and investment pool that is available for use by all funds, except the Fire Pension Trust Fund. Each fund type's portion of this pool is displayed on the combined balance sheet as cash and short-term investments. The deposits and investments of the Fire Pension Trust Fund are held separately from other City funds.

The City Council has adopted an investment policy in accordance with California Government Code Sections 53607 and 53646, with a goal to minimize credit and market risks while maintaining a competitive yield on its portfolio. The City is also governed by State statutes authorizing the City to invest in bonds or other evidences of indebtedness of the U.S. Government or any of its agencies and instrumentalities, repurchase agreements and bankers’ acceptances. The pension trust investments are administered separately under Municipal Code Section 2.92, which is within state guidelines.

OTHER INFORMATION
Independent Audit - T he City Charter requires an annual audit by independent certified public accountants. The accounting firm of Brown Armstrong Accountancy Corporation was selected by the City Council in 2022 to perform the audit for a single year with the intent of issuing a multi-year award for the 2022-23 audit.

Awards - T he Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Bakersfield for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2021, marking the 41st vii

consecutive year Bakersfield has received the GFOA c ertificate. T he Certificate of Achievement is a national award recognizing conformance with the highest standards for preparation of state and local government financial reports.

A Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to Certificate of Achievement Program requirements and we are submitting it to GFOA to determine its eligibility for another certificate.

Additionally, the City received the Distinguished Budget Presentation Award for the fiscal year beginning July 1, 2022 from the GFOA. The Distinguished Budget Presentation Award judges a government's budget document for compliance with the guidelines established by the National Advisory Council on State and Local Budgeting and best practices of the GFOA.

Acknowledgments - T he preparation of this report in a timely manner could not have been accomplished without the excellent work performed by the entire staff of the Finance Department. I should like to express my appreciation to the members of this Department who assisted and contributed to its preparation. I would also like to thank the Mayor, City Council, and the City Manager for their continued support in planning and conducting the financial operations of the City in a professional and insightful manner.

Respectfully,
Randy McKeegan
Finance Director
viii

ix

x

CITY OF BAKERSFIELD
June 30, 2022
City Council
Karen K. Goh ......................................................................................................................Mayor Eric Arias ........................................................................................................Member/Ward 1 Andrae Gonzales ...................................................................................................Member/Ward 2 Ken Weir ............................................................................................................Member/Ward 3 Bob Smith .....................................................................................................Vice Mayor/Ward 4 Bruce Freeman ...................................................................................................Member/Ward 5 Patty Gray ..........................................................................................................Member/Ward 6 Chris Parlier ..........................................................................................................Member/Ward 7 Administrative Personnel
Christian Clegg........................................................................................................City Manager Virginia Gennaro ....................................................................................................City Attorney Christopher Boyle....................................................................... Development Services Director Paul Saldana......................................................Economic & Community Development Director Randy McKeegan .............................................................................................Finance Director Anthony Galagaza........................................................................................................Fire Chief Christi Tenter ....................................................................................Human Resources Director Greg Terry ..............................................................................................................Police Chief Stuart Patteson...............................................................................Acting Public Works Director Rick Anthony .................................................................................Recreation & Parks Director Greg Pronovost.............................................................................Technology Services Director Art Chianello ......................................................................................Water Resources Manager xi


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4

CITY OF BAKERSFIELD
Management's Discussion and Analysis
This discussion and analysis of the City of Bakersfield’s (City) financial performance provides an overview of the City’s financial activities for the fiscal year ended June 30, 2022. We encourage readers to consider the information presented here in conjunction with the accompanying letter of transmittal, the basic financial statements, and the accompanying notes to those financial statements.

FINANCIAL HIGHLIGHTS
 The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $2.2 billion (net position).  The City’s total net position increased by $80.9 million over the prior fiscal year. This increase is broken down with changes to the following components of net position; a $6.3 m illion increase i n restricted net position, a $13.2 million increase i n unrestricted net position, and a $24.6 million decrease in capital assets investment. Prior year information presented in this section does not take into account restatements made to fiscal year 2020-21 balances for prior period adjustments (see Note 23).
 As of the close of the current fiscal year, the City's Governmental Funds reported combined ending fund balances of $345.4 million, an increase o f $25.9 million in comparison with the prior year. Amounts available for spending include restricted, committed, assigned and unassigned fund balances. Of this amount, $26.8 million is restricted by law or externally imposed requirements, $184.4 million is committed for specific purposes, $126.2 million assigned and $7.2 is unassigned and available for appropriations.  Available fund balance for the General Fund increased $2.4 million to $128.4 million, which equates to 44.5% of total General Fund expenditures for the year.
 The City's long-term debt showed a decrease of $13.0 million during the current fiscal year.

Note: Further analysis of the changes and balances highlighted can be found in detail provided in this section. 5

CITY OF BAKERSFIELD
Management's Discussion and Analysis

OVERVIEW OF THE FINANCIAL STATEMENTS
The City's basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. T his report also contains other supplementary information in addition to the basic financial statements themselves.

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. T he statements present the financial picture of the City from the economic resources measurement focus using the accrual basis of accounting. They present governmental activities and business-type activities separately. Additionally, certain eliminations have occurred as prescribed by the Governmental Accounting Standards Board (GASB) statements in regards to interfund activity, payables and receivables.

The Statement of Net Position and the Statement of Activities provide information about the City as a whole and its activities through the fiscal year. These statements include all assets, deferred outflows of resources, liabilities, and deferred inflows of resources of the City using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year's revenues and expenses are taken into account, regardless of when cash is received or paid.

These two statements report the City's net position and changes in it. Net position is the difference between assets, deferred outflows of resources, liabilities, and deferred inflows of resources providing a measurement of the City's financial health. Over time, increases or decreases in the City's net position can be an indicator of whether its overall financial health is improving or deteriorating. Other factors to consider are changes in the City's property tax base and sales tax base. The government-wide financial statements do not include the fiduciary funds, which comprise the private purpose trust funds, pension trust funds, and agency funds. Resources in the fiduciary funds are generally not available to support the City’s own programs.

In the Statement of Net Position and the Statement of Activities, the City's activities are separated as follows:

Governmental activities - T he majority of the City's basic services are reported in this category, including the General Government, Police, Fire, Public Works, Recreation & Parks and Development Services. These activities are generally financed by property and sales taxes, user fees, interest income, franchise fees, and state and federal shared revenues and grants.

Business-Type activities - The City charges a fee to customers to cover all or most of the cost of certain services it provides.

The City's Water, Wastewater, and Refuse Collection systems along with the Municipal Airport and Offstreet Parking activities are reported in this category.

FUND FINANCIAL STATEMENTS
A fund is a specific grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities and objectives. Like other state and local government, the fund financial statements provide detailed information about the most significant funds, not the City as a whole. Some funds are required to be established by State law and by bond covenants. Management establishes many other funds to help control and manage financial resources for particular purposes, or to show that the City is meeting legal responsibilities when using certain taxes, grants, and other revenue.

These financial statements include statements for each of three categories of activities – governmental, proprietary and fiduciary. T he governmental activities are prepared using the current financial resources measurement focus and modified accrual basis of accounting. The proprietary activities are prepared using the economic resources measurement focus and the accrual basis of accounting. The fiduciary activities are agency funds that also use the economic resources measurement focus but only report a balance sheet. R econciliation of the Governmental Fund Financial Statements to the Government-Wide 6

CITY OF BAKERSFIELD
Management's Discussion and Analysis
Financial Statements are provided to explain the differences created by the integrated approach.

Governmental Funds - M ost of the City's basic services are reported in governmental funds, which focus on the flow of resources into and out of those funds with the balances remaining at year-end available for appropriation. These funds are reported using the modified accrual basis of accounting, which measures cash and all other financial assets that can readily be converted to cash. The Governmental Fund financial statements focus on near-term inflow and outflow 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 a government’s near-term financial requirements. The differences of results in the Governmental Fund financial statements to those in the Government-Wide financial statements are explained in a reconciliation schedule following the Governmental Fund financial statement in order to facilitate comparison.

Proprietary Funds - Proprietary Funds are used to report services the City charges to all of its customers, which may include units within the City. Proprietary Funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. The City's Enterprise Funds report the same functions as the business-type activities reported in the Government-Wide financial statements, but provide more detail and additional information, such as cash flows.

The City uses Internal Service Funds (the second component of Proprietary Funds) to report activities that provide supplies and services for the City's other programs and activities. This includes the City's Self-Insurance and Equipment Management Funds.

These services primarily benefit governmental rather that business-type functions so a majority of the related operation costs are included with the governmental activities in the Government-Wide financial statements.

Fiduciary Funds - T he City is the trustee, or fiduciary, for certain funds held on behalf of various third parties. The City's fiduciary activities are reported in separate Statements of Fiduciary Net Position. These resources are not available to support the City's programs or operations activities and are thereby excluded from the City's other financial statements. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes.

NOTES TO THE FINANCIAL STATEMENTS
The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the Government-Wide and Fund financial statements. The notes can be found starting on page 49 of this report.

OTHER INFORMATION
In addition to the basic financial statements and accompanying notes, this report also presents certain “Required Supplementary Information” concerning the City's progress in funding its obligation to provide pension benefits and other post-employment benefits (OPEB) to its employees and budgetary comparison schedules for the General Fund and Special Revenue Major Funds.

This information can be found starting on page 109 of this report. 7

CITY OF BAKERSFIELD
Management's Discussion and Analysis

GOVERNMENT-WIDE FINANCIAL ANALYSIS
As previously noted, net position may serve over time as a useful indicator of a government’s financial position. In the current year, the City's assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $2.2 billion at the close of the reporting period, which is a $80.9 million increase in comparison with the prior year (after restatements).

The largest portion of the City’s net position relates to its net investment in capital assets of $2.1 billion (e.g., land, buildings, machinery, infrastructure and equipment), less any related debt used to acquire those assets that is still outstanding. T hese capital assets are used to provide services to citizens; as such, the assets are not available for future expenditures. The City’s investment in capital assets is reported net of related debt, though it should be noted that the resources needed to repay this debt must be provided from other sources as the capital assets themselves cannot be used to service this debt.

A small portion of the City’s net position, $41.7 million (1.9% of the total), represents resources that are subject to external restrictions on how they may be used.

As in the prior year, the City is able to report positive balances in both categories of net position, whether for the City as a whole or for its separate Governmental and Business-type activities.

The following table presents the components of the government-wide Statement of Net Position at the end of the fiscal year for both 2021 a nd 2022. The governmental and business-type activities columns reflect amounts that have been restated in this financial report. Note 23 explains any prior period adjustments that changed net position.

City of Bakersfield - Net Position
(in thousands)
Governmental Activities Business-Type Activities Total
2021 2022 2021 2022 2021 2022
Assets
Current and other assets $ 496,872 $ 532,091 $ 202,421 $ 191,309 $ 699,293 $ 723,400 Capital assets (net) 1,360,457 1,374,428 884,159 882,926 2,244,616 2,257,354 Total assets 1,857,329 1,906,519 1,086,580 1,074,235 2,943,909 2,980,754 Deferred Outflows of Resources 82,233 74,610 14,775 13,356 97,008 87,966 Liabilities
Long-term liabilities
outstanding 524,369 382,487 185,995 158,372 710,364 540,859 Other liabilities 74,546 115,480 31,825 29,149 106,371 144,629 Total liabilities 598,915 497,967 217,820 187,521 816,735 685,488 Deferred Inflows of Resources 31,185 131,434 3,860 18,737 35,045 150,171 Net Position
Net investment in capital assets 1,353,462 1,369,954 746,197 754,164 2,099,659 2,124,118 Restricted 15,276 21,536 20,200 20,200 35,476 41,736
Unrestricted (59,276) (39,763) 113,279 106,969 54,003 67,206 Total Net Position $1,309,462 $1,351,727 $ 879,676 $ 881,333 $ 2,189,138 $ 2,233,060 Governmental Activities – Total assets for governmental activities increased by $49.2 million, with current and other assets in governmental activities increasing by $35.2 million and a capital assets increase of $14.0 million. Total liabilities decreased by $100.9 m illion, with other liabilities increasing b y $40.9 m illion and long-term liabilities decreasing b y $141.9 m illion.

Changes to the balance sheet account, specifically in capital assets and long-term liabilities are explained further in the applicable Note Disclosures of that accompanying this document. These changes are not related to any significant events that are consider notable or outside the normal operations of a municipal government.

Of the $42.3 million increase in governmental activities total net position, unrestricted net position increased by $19.5 million, 8

CITY OF BAKERSFIELD
Management's Discussion and Analysis
net investment in capital assets increased by $16.5 million and restricted net position increased by $6.3 million. Net investment in capital assets increased due to continued development throughout the City increasing the value of overall infrastructure. The increase in unrestricted net position stems from continued decreases in the other post-employment benefit liability along with a decrease in pension liabilities this year as a result of improved investment performance of the City's pension plan.. There were also increases in revenues, in relation to much smaller levels of increases in expenses across most departments, resulted in an increase in net position.

Business-Type Activities – Total assets for business-type activities decreased by $12.3 million, with current and other assets decreasing b y $11.1 million and a $1.2 million decrease in capital assets. T otal liabilities decreased by $30.3 million, with other liabilities decreasing by $2.7 million and long-term liabilities also decreasing by $27.6 million. T otal net position for business-type activities increased by $1.7 million. Of that amount, net investment in capital assets increased by $8.0 million.

Restricted net position remained constant and unrestricted net position decreased by $6.3 million. The overall increase in net position is the result of operations, specifically in Wastewater activities, and completed improvement projects in the Wastewater and, Refuse funds. As with governmental activities, there was a decrease in the net other post-employment benefit liability and the pension related liabilities that also played a part in the increased net position.

Change in Net Position of the City
The following table presents the government-wide changes in net position for both 2021 and 2022. The City’s total revenues of $685.0 million were more than expenses of $597.4 million for an increase in net position before transfers & other items of $87.6 million. The governmental and business-type activities columns reflect amounts that have been restated in this financial report. Note 23 explains any prior period adjustments that changed net position.

City of Bakersfield - Changes in Net Position
(in thousands)
Governmental Activities Business-Type Activities Total
2021 2022 2021 2022 2021 2022
Revenues:

Program revenues:

Charges for services $ 70,277 $ 67,803 $ 130,088 $ 137,668 $ 200,365 $ 205,471 Operating grants and
contributions 104,734 43,350 12,106 9,583 116,840 52,933 Capital grants and
contributions 92,038 90,120 13,829 11,758 105,867 101,878 Total program revenues 267,049 201,273 156,023 159,009 423,072 360,282 General revenues:

Taxes:

Property taxes 92,615 96,169 - - 92,615 96,169
Sales taxes 180,299 201,047 - - 180,299 201,047
Other taxes 1,722 2,053 - - 1,722 2,053
Intergovernmental:

Intergovt, unrestricted 288 459 - - 288 459
Grants and contributions not
restricted to specific programs 25,713 28,518 - - 25,713 28,518 Investment earnings 53 (5,253) 650 (1,925) 703 (7,178)
Miscellaneous 3,642 3,627 - - 3,642 3,627
Gain on sale of property 11 9 35 (9) 46 -
Total Revenues 571,392 527,902 156,708 157,075 728,100 684,977 9

CITY OF BAKERSFIELD
Management's Discussion and Analysis
City of Bakersfield - Changes in Net Position
(in thousands)
Governmental Activities Business-Type Activities Total
2021 2022 2021 2022 2021 2022
Expenses:

Governmental:

General government 59,796 42,512 - - 59,796 42,512
Public safety - Police 122,380 129,729 - - 122,380 129,729 Public safety - Fire 50,310 45,765 - - 50,310 45,765
Public works 145,039 150,281 - - 145,039 150,281
Recreation and parks 25,111 26,119 - - 25,111 26,119
Development services 10,230 6,956 - - 10,230 6,956
Economic/Community dev. 8,793 50,041 - - 8,793 50,041
Interest on long-term debt (5) 18 - - (5) 18
Subtotal - Governmental 421,654 451,421 - - 421,654 451,421 Business-Type:

Wastewater treatment - - 41,038 41,499 41,038 41,499
Refuse collection - - 50,804 58,507 50,804 58,507
Agricultural water - - 5,099 7,096 5,099 7,096
Domestic water - - 35,477 38,098 35,477 38,098
General aviation - - 549 430 549 430
Offstreet parking - - 309 342 309 342
Subtotal - Business-Type - - 133,276 145,972 133,276 145,972 Total expenses 421,654 451,421 133,276 145,972 554,930 597,393 Change in net position before
transfers & other items 149,738 76,481 23,432 11,103 173,170 87,584 Transfers (11,841) (3,720) (4,073) (2,924) (15,914) (6,644) Changes in net position 137,897 72,761 19,359 8,179 157,256 80,940 Net Position - Beginning of
Year (as restated) 1,171,565 1,278,965 860,317 873,155 2,031,882 2,152,120 Net Position - End of Year $ 1,309,462 $ 1,351,726 $ 879,676 $ 881,334 $ 2,189,138 $ 2,233,060 Governmental Activities – The results in governmental activities caused an increase in the City’s net position by $72.8 million during the year. The following graph displays the difference between the program revenue and expenses by activity to illustrate the amount each respective activity is supported by program revenues versus general revenue, which is almost exclusively taxes. The majority of the governmental activities of the City do not receive sufficient program revenues to cover their costs.

The activities that have the largest portion of their activities covered by tax revenue are Public Safety and Public Works whose service delivery costs exceeded program revenues by $159.7 million and $47.4 million, respectively. 10

CITY OF BAKERSFIELD
Management's Discussion and Analysis
Total expenses in Governmental Activities had a net increase of just $29.8 million from the previous fiscal year for an overall

7.1% increase. That increase is primarily due to increases in program activity for the Economic & Community Development department totaling $41.2 million. These programs utilized began in the prior year but have increases significantly with more funds being directed to fund affordable housing and encourage economic growth. There were increases other areas were Public Safety-Police which increased by $7.3 million and Public Works which increased by $5.2 million. These increases are primarily connected to the more programs initiated to meet the goals of the Public Safety and Vital Services (PSVS) district tax measure.

The funds were to be directed toward increases in staffing and services for police and fire, addressing homelessness in the community, increases in and increasing opportunities for economic development. A portion of these cost increases also related to increases to California Public Employees' Retirement System (CalPERS) rates in the current year. These increases were offset in part by a decrease in General Government costs totaling $17.3 million. That decrease is connected to the increase in the Economic & Community Development increase where portions of service programs were shifted to that department. 11

CITY OF BAKERSFIELD
Management's Discussion and Analysis
Taxes are the largest revenue source for governmental activities, which is the case for most municipal governments, amounting to $299.3 million or 56.5% of total revenues. Capital grants and contributions is also a significant revenue source for the City’s governmental activities, amounting to $90.1 million or 17.0% of total revenues. Grant revenue can be dependent on programs operations and reimbursable activities. The third largest source of revenue is charges for services which amounts to $67.8 million or 12.8% of total revenues.

Governmental Activities Revenues decreased $ 43.5 million which is a 7.6% decrease c ompared to the previous fiscal year.

This decrease is due primarily to a 58.6%, or $61.4 million, decrease in operating grant revenue related to the American Rescue Plan Act (ARPA) recognized as revenue in the prior year that were not received in the current year.

General Revenues - Sales tax revenues increased by 11.5%, or $20.7 million, while property taxes increased by 3.8%, or $3.6 million. The primary reason for this increase is from continued growth in sales taxes, in particular as consumer spending ramped up significantly after the recent pandemic. The increase in sales tax also was driven by historical levels of inflation which drove up prices during the fiscal year. Property tax increases are fairly stable with property values increasing .

Program Revenues - Capital Grants and Contributions decreased b y $1.9 m illion due to a fewer special projects funded in Public Works compared to the prior year. The most significant reduction is related to the Thomas Roads Improvement Program (TRIP) projects which included increases in activity related to construction and property acquisition when compared to the previous year. Operating Grants and Contributions decreased $ 61.4 m illion, which, as noted above related to the ARPA revenue recorded in the prior year for the negative impacts of the COVID-19 pandemic. 12

CITY OF BAKERSFIELD
Management's Discussion and Analysis
Business-Type Activities – T he City operates six Enterprise Funds that offer wastewater services, refuse collection, river & agricultural water, domestic water to City residents, downtown parking and a municipal airport.

Business-type activities increased the City’s net position by $8.2 million during the current year. The chart above compares total program revenues and expenses. As the graphic show, program revenues exceeded program expenses in Wastewater Treatment by $6.8 million and Refuse Collection by $8.1 million. While the Airpark and Offstreet Parking program revenues exceeded program expenses by a combined $216 thousand. These increases were offset slightly by program expenses exceeding program revenues in and Domestic Water by $1.5 million and River & Agricultural Water by $578 thousand. Total business- type expenses increased by $12.7 million (9.5%) over the prior year. That increase is not unexpected as inflationary pressures in the economy have resulted in increases of both materials, supplies and equipment, but has also increased labor costs and the related costs or employee benefits
The following chart illustrates the distribution of business-type revenues by category. The City’s business-type activities rely heavily on charges for services to fund their operations, making up 87.6% of total revenues. Capital grants and contributions is the second largest revenue source at 7.5% of total revenues. 13

CITY OF BAKERSFIELD
Management's Discussion and Analysis
Business-Type activities program revenues increased by $3.0 million, 1.9%, over the prior year. The increase relates back to the increases in operational costs noted previously which requires comparable increases to rates charged to customers. The increase can also be attributed to capital improvement projects in the Wastewater and Domestic Water funds in the amount of $5.6 million and $2.6 million, respectively. There was an increase in Refuse Collection service revenue of $3.7 million due to rate increases and additional residential service customers and decreases of $3.2 million in River & Agricultural Water revenue due to a large, one-time sale of water made in the prior year.

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

A fund is created and segregated for the purpose of carrying out specific activities or attaining specific objectives in accordance with special regulations, restrictions, or limitations. Activity not required to be reported in a separate fund is included in the General Fund.

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, unassigned fund balance may serve as a useful measure of the City’s available resources as it represents the portion of fund balance which is not limited to use for a particular purpose by an external party, City management or City Council.

As of the end of the current fiscal year, the City’s Governmental Funds reported combined ending fund balances of $345.4 million, an increase of $25.9 million in comparison with the prior year. The components of total fund balance are as follows (for more information see Note 14 – Fund Balances):
 Nonspendable fund balance, $0.9 m illion, are amounts that are not spendable in form, or are legally or contractually required to be maintained intact, and are made up of prepaid expenses and deposits. 14

CITY OF BAKERSFIELD
Management's Discussion and Analysis
 Restricted fund balance, $26.8 million, consists of amounts with constraints put on their use by external creditors, grantors, contributions, laws, regulations or enabling legislation. Examples of restrictions on funds are those for (1) $14.6 million for the purpose of the fund (i.e., Gas Tax and Road projects), (2) $ 2.6 million from the Redevelopment Successor Agency Housing Fund for projects and (3) $3.3 million for traffic safety projects.  Committed fund balance, $184.4 million, are amounts for specific purposes determined by the Bakersfield City Council, such as funds collected from fees paid to mitigate the traffic impacts to the regional circulation system of $60.7 million, funds set aside for future city facilities and infrastructure project $4.0 million, funds set aside by City Council in the General Fund for cash basis/emergency reserves of $48.6 million and $31.8 million for appropriations for next year’s budget.
 Assigned fund balance, $126.2 million, for funds set aside by management for specific purposes. Amounts include $85.3 million set aside for capital projects and $ 6.5 million for the fund purposes related to transient occupancy fees, and $31.8 million for PSVS fund balance. Those available funds are set aside for future projects that will meet the intended uses of those funds in accordance with the sales tax ballot measure.  Unassigned fund balance, $7.2 million represents the residual classification for the City’s General Fund.

General Fund: The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the General Fund’s total fund balance increased by 1.9%, or $2.4 million from $126.1 million to $128.4 million. The following detail of changes from the prior year explains this change in fund balance for the year:
 Total operating revenues increased by $19.2 million (5.7%). Property Tax revenue increased by $3.6 million due to continuation of higher assessed values within the City limits. Sales Tax revenue had the most significant increase with a full fiscal year of receipts from the new PSVS district tax and improvements in the base (Bradley-Burns) portion resulting in an increase of $20.7 million. Both components of sales tax also saw an increase due to the previously mentioned increases in consumer spending, especially in the auto sales and general merchandise industries along with the Wayfair decision which added more sales tax revenue from online purchases. There was also a significant increase of charges for services related to interfund allocation of ARPA dollars to the General Fund to reimburse public safety costs. All other revenue sources within the General Fund remained fairly consistent compared to the previous fiscal year.
 Total expenditures increased b y $37.8 million (a 15.1% increase). This was due to increases in the Public Safety costs in both Police and Fire expenditures related primarily to PSVS funded hiring along w ith filling some vacancies ($19.4 million and $3.6 million, respectively). Overall personnel expenditures also increased throughout all General Fund departments due to hiring related to PSVS programs and increases in pension costs.

Other governmental funds: As compared with the prior year, the total fund balances of the remaining governmental funds increased by 12.1%, or $23.5 million, to $217.0 million with the following significant changes:
 The Gas Tax and Road Fund increased by $6.9 million from $7.7 million to $14.6 million. Amounts in this fund are restricted by state and federal statute. The increase in overall fund balance is connected to additional governmental revenue received that was not earmarked for current year project. Those funds are expected to be allocated in future years.
 The Capital Outlay Fund balance increased by $32.4 million from $90.9 million to $123.4 million. Of this amount, $35.6 million is committed for contractual obligations and $1.7 million is committed for facility replacement. The remaining amount of $85.3 m illion is assigned and available for use at management’s discretion. The resulting increase shows that expenditures were in line with projected revenues (which included significant transfers from the PSVS fund for ongoing CIP projects).
 The Park Improvement Fund increased by $1.2 million. Of this fund balance amount, the full amount of $9.2 million is committed for contractual obligations. The increase in fund balance is an accumulation of funds connected to future plans for expansion and improvement of area parks. 15

CITY OF BAKERSFIELD
Management's Discussion and Analysis
Proprietary Funds - The City’s Proprietary Funds are shown in their entirety in the government-wide financial statements. All funds are being reported as major funds, so there is no need to report additional detail elsewhere in the document.

The Wastewater Treatment Fund has total net position of $559.9 million at the end of the current year, an increase of $5.6 million over the prior year. Total net position includes $490.5 million net investment in capital assets and $20.2 million of restricted assets which are not available to cover current expenses. The remaining net position of $49.3 million is unrestricted and available to cover current operating and capital needs (including plant and equipment replacement) of the fund. The majority of the increase resulted from more development completed to infrastructure in the current year which was reflected in a $7.5 million addition in Capital Contributions. That change was offset by an operational loss brought about by inflationary drivers increasing operational costs and wages. There was also a reduction in connection fee revenue that played a factor in the overall loss. These fees are driven primarily by residential development within the City which has seen a reduction from previous years.

The Refuse Collection Fund has total net position of $5.5 million at the end of the current year, an increase of $6.2 million from the prior year. T he increase is due to more revenue collected from residential services/rates than is necessary to cover the operating costs of the division brought about by a rate increase that was approved to cover the growing cost of collection services, particularly with regards to recycling. This increase was in part related to changes in operational changes connected to losses in the prior year, which included increases in cost sharing for facilities that serve the County residences and higher collections for commercial customers.

The River and Agricultural Water Fund has total net position of $27.8 million at the end of the current year, a decrease of $1.2 million over the prior year. Total net position includes $20.2 million net investment in capital assets, which is not available to cover current expenses. The remaining net position of $7.6 million is unrestricted and available to cover current operating and capital needs of the fund. There have been larger operational losses in the prior year due to dryer years and less w ater available to sell to customers. While that revenue reduction in prior years has been rightsized, there were still inflationary driven increases to expenses that ultimately resulted in a loss in the fund.

The Domestic Water Fund has total net position of $ 271.3 million at the end of the current year, a decrease of $2.2 million over the prior year. Total net position includes $ 223.9 million net investment in capital assets, which is not available to cover current expenses. The remaining net position of $47.4 million is unrestricted and available to cover current operating and capital needs of the fund. The domestic water operations continue to operate within expected revenue but a review of rates charged to residents and businesses is needed to insure that revenues remain on track with expected escalations in costs. That increase is also related to the rise in operational costs that have affected costs throughout the City.

The General Aviation Fund has total net position of $11.5 m illion at the end of the current year, an increase o f $480,094 compared to the prior year. Total net position includes $10.6 million net investment in capital assets, which is not available to cover current expenses. The remaining net position is unrestricted and available to cover current operating and capital needs of the fund.

The Offstreet Parking Fund has total net position of $0.7 m illion at the end of the current year, a decrease o f $123,746 compared to the prior year. Total net position includes $0.7 million net investment in capital assets, which is not available to cover current expenses. The remaining net position is unrestricted and available to cover current operating and capital needs of the fund.
16

CITY OF BAKERSFIELD
Management's Discussion and Analysis

CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets - The City’s investment in capital assets for its governmental and business-type activities as of June 30 of the current fiscal year amounts to $2.3 billion (net of accumulated depreciation). This investment in capital assets includes land, buildings and systems, improvements, machinery and equipment, park facilities, roads, highways, bridges and construction in progress. T he total increase in the City’s investment in capital assets for the current fiscal year was $12.7 million. Of this amount, a $14.0 million increase relates to Governmental Activities and a $1.2 million increase that relates to Business-Type Activities. Depreciation expense of $102.5 million reduced capital assets by this amount.

These financial statements include infrastructure assets constructed or acquired through fiscal year 2021-22.

Major capital asset events during the current fiscal year included the following:
 A variety of street construction projects and rehabilitation of major arterial streets. C onstruction in progress for governmental activities as of the end of the current fiscal year is $159.8 million. This figure includes over $29.2 million towards major street construction, traffic signals, and resurfacing projects throughout the City.  The City added over $20.5 million in new streets and roads primarily due to new residential developments completed in the current year. These newly constructed right of ways are transferred over to the City by the various developers when the work is finalized.

City of Bakersfield - Capital Assets
(in thousands)
Governmental Activities Business-Type Activities Total
2021 2022 2021 2022 2021 2022
Land and water storage rights $ 449,935 $ 450,331 $ 23,987 $ 24,036 $ 473,922 $ 474,367 Depreciable buildings, property,
equipment and infrastructure, net 774,591 764,285 813,551 810,467 1,588,142 1,574,752 Construction in progress 135,931 159,812 15,144 16,947 151,075 176,759 Non-amortizable intangible assets - - 31,477 31,477 31,477 31,477 Total Capital Assets $1,360,457 $1,374,428 $ 884,159 $ 882,927 $ 2,244,616 $ 2,257,355 17

CITY OF BAKERSFIELD
Management's Discussion and Analysis
City of Bakersfield - Outstanding Debt
Balance Incurred Satisfied Balance
June 30, 2021 or Issued or Matured June 30, 2022
Governmental Activities
Notes Payable $ 3,995,063 $ 870,288 $ (1,317,681) $ 3,547,670 Certificates of Participation* 3,000,000 - (3,000,000) - Total governmental activities $ 6,995,063 $ 870,288 $ (4,317,681) $ 3,547,670 Business-Type Activities
Revenue Bonds Payable $ 129,974,556 $ - $ (9,276,778) $ 120,697,778 Notes Payable 3,000,000 - (280,303) 2,719,697
Total business-type activities $ 132,974,556 $ - $ (9,557,081) $ 123,417,475 Total Debt $ 139,969,619 $ 870,288 $(13,874,762) $ 126,965,145 * Certificates of Participation in governmental activities are debt of the former Redevelopment Agency that is now reported as City debt.
 Long-Term Debt - At the end of the current fiscal year, the City had a total debt outstanding of $ 127.0 million. The City’s total debt decreased by a net amount of $13.0 million during the current fiscal year. This amount is the result of normal debt maturities.

Certificates of Participation issued by the City via the former Redevelopment Agency in 2006 carry a Reserve Fund Surety from Ambac Assurance Company (Ambac). Moody’s Investor’s Service (Moody’s) rating on Ambac is currently “Baa1”. T he current underlying rating on the Certificates of Participation has not been revised (currently “A1”). T his rating on the Certificates of Participation reflects only the view of Moody’s, and any desired explanation of the significance of such rating should be obtained from Moody’s. There is no assurance that such rating will continue for any given period of time or that such rating will not be revised or withdrawn by Moody’s if, in the judgment of Moody’s, circumstances so warrant.

The 2015 Wastewater Revenue Bonds – Series A, i ssued by the City in 2015, which redeemed a majority of the 2007 Wastewater Revenue Bonds – Series A, has an “Aa2” rating from Moody’s and an "AA" rating from Standard & Poors. There is no assurance that such ratings will continue for any given period of time or that such ratings will not be revised or withdrawn by the rating agencies if, in their judgment, circumstances so warrant.

More detailed information regarding capital asset and long-term debt activity can be found in the related notes to the financial statements. See Note 5 for capital assets and Note 11 for long-term debt. 18

CITY OF BAKERSFIELD
Management's Discussion and Analysis

GENERAL FUND BUDGETARY HIGHLIGHTS
Differences between the original budget and the final amended budget reflect an increase in resources of $13.3 million and an increase in appropriations of $70.3 million. Significant budgetary amendments (changes) are summarized as follows:
 $5.4 million increase in various resources and appropriations due to revenues associated with open purchase orders at the end of the previous fiscal year. Also, $6.7 million increase in various resources due to revenues associated with prior year appropriations not spent and carried forward to this fiscal year.  $1.6 million was added to the budget for updated revenue estimates of PSVS district sales tax designated to address needs throughout Bakersfield including public safety, economic development and homelessness.  $28.8 million increase in appropriations for PSVS tax revenue that was determined to be available for operational programs and capital projects approved by the City Council at mid-year. T hese included programs to address homelessness, public safety and park improvements.

The final amended revenue estimate budget figures in the General Fund were lower than actual revenue by $42.2 million and appropriations were higher than actual expenditures by $27.3 m illion. Significant differences between budget and actual amounts are as follows:
 $41.6 million positive variance in tax revenue. This is the result of an increase in property tax revenue and sales and use tax revenue. Property tax revenue was initially estimated to increase while Sales tax revenue were not expected to increase at the level experienced. Projections for tax revenue were conservative in nature because of uncertainty throughout the year on the level and sustainability of economic recovery in the area.  $3.0 million less than budgeted in intergovernmental revenue which is due primarily to this source of funds being based on reimbursement of expenditures incurred. Some of the project activity for these awards had not moved forward resulting in less revenue being recognized.
 There was a $12.7 m illion variance of appropriations over actual expenditures in Economic & Community Development. The savings is due to major economic development service projects for businesses and members of the underserved community that were budgeted but not started.  The majority of the other variances of appropriations over actual expenditures across the General Fund departments was from savings brought about primarily in salary and benefits from unfilled positions or positions filled later in the year.
19

CITY OF BAKERSFIELD
Management's Discussion and Analysis

ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The key assumptions in the General Fund revenue forecast for fiscal year 2022-23 were:

1. Property tax revenue is projected to grow at 4% which is the same level as last year’s estimate as projected by Kern County.

2. Sales and use tax revenue is projected to show an increase of 3% in t he upcoming fiscal year which was a conservative estimate in light of the continued growth seen in this revenue source. The City will monitor the quarterly reports prepared by the State in conjunction with outside analysis of trends to understand if that revenue increase will be realized.

3. California Public Employees’ Retirement System (CalPERS) experienced investment returns above the plan's established discount rate which has actually created a slight reduction in the Normal rates going into the next fiscal year. The unfunded portion of the retirement contribution still saw an increase so overall contributions went up for Miscellaneous and Fire, approximately 1.5% and 2.6% respectively. B ecause of the population make-up of the Police plan, rates for this group dropped by 3.5%. While the plan performance for the applicable year reduced the expected cost escalation, larger increases are projected for future fiscal years as plan performance has not been as positive in recent investment periods.

New items specifically addressed in the 2022-23 budget include the following:

Police Department – T he Police Department’s operating budget has increased from fiscal year 2021-22 by 13.6%, totaling $18.1 million. T his increase is primarily attributable to increased costs related to the PSVS plan to increase the number of officers and support staff in the department. Fiscal year 2022-23 is the fourth year of this staffing ramp up as the City continues to work to address crime and public safety challenges.

Fire Department – The Fire Department's operating budget had and increase of just under 8.9% from fiscal year 2021-22 totaling just $4.6 million. The increase is primarily due to cost of living increases for City staff and a slight rise in CalPERS rates.

Public Works - T he Public Works Department operating budget increased by $18.1 million, or 12.1%, from fiscal year 2021-22. The increase was also due to some additional staffing covered by the PSVS funds in addition to the CalPERS rate escalations as well as an increases in salaries & benefit costs.

Development Services – T he Development Services Department’s operating budget actually decreased from fiscal year 2021-22 b y 18.5%. T his decrease is due to a reduction in contracted services needed in the upcoming year which offset increases from cost of living increases for City staff and a slight rise in CalPERS rates.

Economic & Community Development – T he Economic & Community Development Department’s operating budget has increased from fiscal year 2021-22 b y 18.5%, totaling $4.1 million. T his increase is due to added funding for various community focused programs to address economic development along with increases in salaries & benefit costs.

Recreation and Parks – The Recreation and Parks Department’s operating budget has increased from fiscal year 2021-22 by

15.4%, totaling $4.2 million. The increase was due primarily to the rise in CalPERS rates as well as an increases in salaries & benefit costs. There as also the addition of a Park Ranger program in the upcoming budget year that attributed to the increase.

CONTACTING THE CITY'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the City's finances and to show the City's accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional financial information can be sent via e-mail to:
[email protected]. Formal written requests should be addressed to: City of Bakersfield, Attn: Finance Department, 1600 Truxtun Avenue, Bakersfield, CA 93301.
20

Government-Wide Financial Statements
21

CITY OF BAKERSFIELD
Statement of Net Position
June 30, 2022
Assets Governmental
Activities
Business-Type
Activities Total
Current assets:

Cash and investments $ 402,084,467 $ 168,354,988 $ 570,439,455 Accounts receivable, net 31,345,892 8,587,191 39,933,083 Interest receivable 799,357 420,498 1,219,855
Advances to other funds - current - 284,507 284,507
Due from other governmental agencies 72,181,106 1,958,641 74,139,747 Internal balances (4,616,938) 4,616,938 -
Prepayments and inventories 2,320,500 - 2,320,500
Total current assets 504,114,384 184,222,763 688,337,147 Noncurrent assets:

Capital assets:

Land 450,330,563 24,036,130 474,366,693
Depreciable capital assets, net 764,285,184 810,466,583 1,574,751,767 Construction in progress 159,812,153 16,946,746 176,758,899 Intangible assets - 31,476,906 31,476,906
Advances to other funds - 2,435,190 2,435,190
Right to use assets, net of amortization 1,379,712 - 1,379,712 Land held for resale 1,198,744 - 1,198,744
Lease receivable 449,397 4,624,235 5,073,632
Notes/loans receivable 24,948,664 26,760 24,975,424
Total noncurrent assets 1,402,404,417 890,012,550 2,292,416,967 Total assets 1,906,518,801 1,074,235,313 2,980,754,114
Deferred Outflows of Resources:

Deferred pensions (See Note 16) 69,647,160 5,038,788 74,685,948 Deferred OPEB (See Note 17) 4,963,081 755,491 5,718,572 Debt issuance - 7,561,396 7,561,396
Total deferred outflows of resources 74,610,241 13,355,675 87,965,916 Liabilities:

Current liabilities:

Accounts payable and accrued liabilities 36,767,661 12,233,604 49,001,265 Customers' deposits - 5,354,313 5,354,313
Advances from grantors and third parties 62,032,701 123,639 62,156,340 Long-term debt 1,260,445 9,601,778 10,862,223
Advances from other funds - current - 284,507 284,507
Lease liability 479,018 712,201 1,191,219
Kern River Levee District - 326,262 326,262
Claims and judgments payable 12,273,000 - 12,273,000
Compensated absences payable 2,667,177 512,580 3,179,757 Total current liabilities 115,480,002 29,148,884 144,628,886 Noncurrent liabilities:

Long-term debt 2,287,224 111,096,000 113,383,224
Advances from other funds - 2,435,190 2,435,190
Lease liability 925,767 14,913,683 15,839,450
Claims and judgments payable 59,048,000 - 59,048,000
Net other post-employment benefits liability 13,527,617 2,059,206 15,586,823 Compensated absences payable 17,445,830 1,828,082 19,273,912 Net pension liability 289,252,477 26,040,059 315,292,536 Total noncurrent liabilities 382,486,915 158,372,220 540,859,135 Total liabilities 497,966,917 187,521,104 685,488,021
Deferred Inflows of Resources:

Deferred pensions (See Note 16) 107,202,356 10,550,455 117,752,811 Deferred OPEB (See Note 17) 23,797,395 3,622,498 27,419,893 Deferred Leases (See Note 10) 434,694 4,563,846 4,998,540 Total deferred inflows of resources 131,434,445 18,736,799 150,171,244 Net Position:

Net investment in capital assets 1,369,954,461 754,164,100 2,124,118,561 Restricted: Capital improvements 21,536,491 20,200,000 41,736,491 Unrestricted (39,763,272) 106,968,986 67,205,714
Total net position $ 1,351,727,680 $ 881,333,086 $ 2,233,060,766 The accompanying notes are an integral part of these financial statements. 22

23

CITY OF BAKERSFIELD
Statement of Activities
For the Fiscal Year Ended June 30, 2022
Program Revenues
Functions/Programs Expenses
Charges for
Services
Operating
Grants and
Contributions
Capital
Grants and
Contributions Total
Primary Government:

Governmental activities:

General government $ 42,511,573 $ 8,343,684 $ 7,763,287 $ - $ 16,106,971 Public safety - Police 129,728,794 4,098,823 2,323,244 - 6,422,067 Public safety - Fire 45,764,559 8,988,190 342,899 - 9,331,089 Public works 150,281,233 18,860,054 5,835,716 78,221,166 102,916,936 Recreation & parks 26,118,994 20,184,327 20,649 2,389,677 22,594,653 Development services 6,956,455 7,327,904 1,710,944 - 9,038,848 Economic /Community development 50,040,874 - 25,353,366 9,508,968 34,862,334 Interest on long-term debt 17,809 - - - -
Total governmental activities 451,420,291 67,802,982 43,350,105 90,119,811 201,272,898 Business-type activities:

Wastewater treatment 41,498,952 34,009,383 6,792,887 7,480,709 48,282,979 Refuse collection 58,507,299 65,874,392 730,734 - 66,605,126 River and agricultural water 7,096,442 6,432,162 - 86,105 6,518,267 Domestic water 38,097,963 30,921,823 2,054,626 3,629,894 36,606,343 General aviation 429,865 314,360 4,853 560,825 880,038
Offstreet parking 341,910 116,313 - - 116,313
Total business-type activities 145,972,431 137,668,433 9,583,100 11,757,533 159,009,066 Total primary government $ 597,392,722 $ 205,471,415 $ 52,933,205 $ 101,877,344 $ 360,281,964 General Revenues:

Taxes:

Property taxes
Sales and use tax
Other taxes
Intergovernmental, unrestricted
Unrestricted grants and contributions
Investment earnings
Miscellaneous
Gain on sale of property
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning of year, as restated
Net position - end of year
The accompanying notes are an integral part of these financial statements. 24

Net (Expenses) Revenues and
Changes in Net Position
Governmental
Activities
Business-Type
Activities Total
$ (26,404,602) $ - $ (26,404,602)
(123,306,727) - (123,306,727)
(36,433,470) - (36,433,470)
(47,364,297) - (47,364,297)
(3,524,341) - (3,524,341)
2,082,393 - 2,082,393
(15,178,540) - (15,178,540)
(17,809) - (17,809)
(250,147,393) - (250,147,393)
- 6,784,027 6,784,027
- 8,097,827 8,097,827
- (578,175) (578,175)
- (1,491,620) (1,491,620)
- 450,173 450,173
- (225,597) (225,597)
- 13,036,635 13,036,635
$ (250,147,393) $ 13,036,635 $ (237,110,758)
$ 96,169,420 $ - $ 96,169,420
201,046,660 - 201,046,660
2,053,178 - 2,053,178
459,088 - 459,088
28,518,519 - 28,518,519
(5,253,433) (1,924,718) (7,178,151)
3,627,334 - 3,627,334
9,361 (9,328) 33
(3,720,254) (2,924,103) (6,644,357)
322,909,873 (4,858,149) 318,051,724
72,762,480 8,178,486 80,940,966
1,278,965,200 873,154,600 2,152,119,800
$ 1,351,727,680 $ 881,333,086 $ 2,233,060,766
25

26

Governmental Fund Financial Statements
27

CITY OF BAKERSFIELD
Balance Sheet
Governmental Funds
June 30, 2022
General
Fund
Transient
Occupancy
Taxes
Community
Development
Block Grant
Gas Tax
& Road Fund
Assets:

Cash and investments $ 89,708,575 $ 4,708,887 $ - $ -
Accounts receivable, net 9,777,236 1,850,069 14,692,554 - Interest receivable 219,897 15,827 - 20,154
Due from other governmental agencies 39,248,667 - 2,010,306 30,393,679 Due from other funds 8,942,716 - - -
Notes/loans receivable - - 2,733,510 -
Lease receivable 449,397 - - -
Prepaid items 59,739 - - -
Total assets $ 148,406,227 $ 6,574,783 $ 19,436,370 $ 30,413,833 Liabilities, Deferred Inflows of Resources and Fund
Balances:

Liabilities:

Accounts payable $ 11,613,443 $ 63,346 $ 1,718,839 $ 7,440,024 Due to other governmental agencies 3,800,000 - - -
Due to other funds - - 612,918 8,329,798
Advances from grantors and third parties 1,906,190 - - - Total liabilities 17,319,633 63,346 2,331,757 15,769,822 Deferred Inflows of Resources:

Lease related items 434,694 - - -
Deferred revenue 2,210,600 - 17,425,534 -
Total Deferred Inflows of Resources 2,645,294 - 17,425,534 - Fund Balances:

Nonspendable 98,463 - - -
Restricted - - - 14,644,011
Committed 86,443,908 12,100 - -
Assigned 34,420,249 6,499,337 - -
Unassigned 7,478,680 - (320,921) -
Total fund balances 128,441,300 6,511,437 (320,921) 14,644,011 Total liabilities, deferred inflows of
resources, and fund balances $ 148,406,227 $ 6,574,783 $ 19,436,370 $ 30,413,833 The accompanying notes are an integral part of these financial statements. 28

Covid Relief
Capital
Outlay
Park
Improvement
Transportation
Development
Redevelopment
Successor
Agency -
Housing
Other
Governmental
Funds
Total
Governmental
Funds
$ 43,753,056 $ 125,179,977 $ 12,869,155 $ 52,844,359 $ 2,606,164 $ 3,740,370 $ 335,410,543 - 194,998 - - 216 4,828,529 31,343,602
101,468 146,317 25,395 122,826 5,407 18,229 675,520
- 275,954 - - - 152,501 72,081,107
- - - - - - 8,942,716
- - - - 22,215,154 - 24,948,664
- - - - - - 449,397
- 779,865 - - - - 839,604
$ 43,854,524 $ 126,577,111 $ 12,894,550 $ 52,967,185 $ 24,826,941 $ 8,739,629 $ 474,691,153 $ 199,015 $ 3,170,785 $ 3,738,706 $ 1,529,346 $ - $ 186,197 $ 29,659,701 - - - - - - 3,800,000
- - - - - - 8,942,716
37,679,079 - - - 22,215,154 232,278 62,032,701
37,878,094 3,170,785 3,738,706 1,529,346 22,215,154 418,475 104,435,118 - - - - - - 434,694
- 46,606 - - - 4,715,677 24,398,417
- 46,606 - - - 4,715,677 24,833,111
- 779,865 - - - - 878,328
5,976,430 - - - 2,611,787 3,605,477 26,837,705
- 37,316,888 9,155,844 51,437,839 - - 184,366,579
- 85,262,967 - - - - 126,182,553
- - - - - - 7,157,759
5,976,430 123,359,720 9,155,844 51,437,839 2,611,787 3,605,477 345,422,924 $ 43,854,524 $ 126,577,111 $ 12,894,550 $ 52,967,185 $ 24,826,941 $ 8,739,629 $ 474,691,153 29

CITY OF BAKERSFIELD
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2022
Total Fund Balances - Total Governmental Funds $ 345,422,924 Amounts reported for Governmental Activities in the Statement of Net Position are different because:

Capital assets used in governmental activities are not current financial resources and therefore are not reported in the Governmental Funds Balance Sheet. Capital assets allocated from Internal Service Funds are included in the Internal Service Funds adjustment below.

Capital assets 2,661,374,852
Ending accumulated depreciation (1,343,469,716) 1,317,905,136 Right to use lease asset (net of amortization). 1,379,712 Land held for resale is not a current financial resource and is not reported in the Governmental Funds. 1,198,744
Deferred outflows of resources related to pensions are not a current financial resource and are not reported in the Governmental Funds. 68,165,431
Deferred outflows of resources related to other post-employment benefits are not a current financial resource and are not reported in the Governmental Funds. 4,769,586 Deferred inflows of resources related to pensions are not a current financial resource and are not reported in the Governmental Funds. (104,519,243)
Deferred inflows of resources related to other post-employment benefits are not a current financial resource and are not reported in the Governmental Funds. (22,869,611) Interest payable on long-term debt does not require current financial resources. Therefore, interest payable is not reported as a liability in the Governmental Funds Balance Sheet. (14,905) Unavailable revenue and other resources not available to liquidate liabilities of the current period are not recognized in the Governmental Funds. 24,398,417
Internal Service Funds are used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The assets and liabilities of the Internal Service Funds are included in governmental activities in the Government-Wide Statement of Net Position. 35,378,132
Long-term liabilities are not due and payable in the current period and therefore they are not reported in the Governmental Funds Balance Sheet. Noncurrent liabilities allocated from Internal Service Funds are included in the Internal Service Funds adjustment above.

Notes/Contracts/Loans payable (3,547,669)
Compensated absences payable (19,449,430)
Lease payable (1,404,785)
Unfunded post-employment benefits (13,000,218)
Unfunded pension benefits (282,084,541) (319,486,643)
Net Position of Governmental Activities $ 1,351,727,680 The accompanying notes are an integral part of these financial statements. 30

31

CITY OF BAKERSFIELD
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
For the Fiscal Year Ended June 30, 2022
General
Fund
Transient
Occupancy
Taxes
Community
Development
Block Grant
Gas Tax
& Road Fund
Revenues:

Taxes $ 309,702,545 $ 11,503,778 $ - $ -
Licenses and permits 3,043,365 - - -
Intergovernmental 7,885,516 - 10,968,982 81,218,305
Charges for services 32,912,842 10,673,248 - -
Fines, forfeitures and assessments 1,204,150 - - 71,342 Interest income (loss) (3,566,798) (189,983) 21,372 (219,528) Loan payments - - 180,319 -
Contributions and donations 446,695 1,200,000 - -
Other income 2,820,321 1,318 121,795 9,105
Total revenues 354,448,636 23,188,361 11,292,468 81,079,224 Expenditures:

Current:

General government 17,647,992 11,650,162 - -
Public safety - Police 134,522,103 - - -
Public safety - Fire 51,507,722 - - -
Public works 29,751,683 - - 3,833,831
Recreation and parks 24,969,061 - - -
Development services 11,804,870 - (1) -
Economic/Community development 6,740,709 - 8,749,079 -
Non-departmental 11,647,045 3,133,725 - -
Capital outlay - - 2,749,726 70,186,199
Debt service:

Principal retirement - - - -
Interest and fiscal charges - - - -
Total expenditures 288,591,185 14,783,887 11,498,804 74,020,030 Excess (deficiency) of revenues
over (under) expenditures 65,857,451 8,404,474 (206,336) 7,059,194 Other financing sources (uses):

Loan proceeds 870,288 - - -
Transfers in 1,100,000 - - -
Transfers out (65,456,162) (6,892,061) (517,810) (97,500) Total other financing sources (uses) (63,485,874) (6,892,061) (517,810) (97,500) Net change in fund balances 2,371,577 1,512,413 (724,146) 6,961,694 Fund balances - beginning, restated 126,069,723 4,999,024 403,225 7,682,317 Fund balances - ending $ 128,441,300 $ 6,511,437 $ (320,921) $ 14,644,011 The accompanying notes are an integral part of these financial statements. 32

Covid Relief
Capital
Outlay
Park
Improvement
Transportation
Development
Redevelopment
Successor
Agency -
Housing
Other
Governmental
Funds
Total
Governmental
Funds
$ - $ 6,306,714 $ - $ - $ - $ - $ 327,513,037
- - - - - 341,515 3,384,880
5,422,283 192,403 - - - 26,377,559 132,065,048
- 58,285 - 94,228 - 1,492,099 45,230,702
- 114,101 2,197,274 15,583,773 - 1,868,040 21,038,680
208,716 (1,743,173) (213,783) (338,245) (39,398) (61,757) (6,142,577) - - - - - 28,945 209,264
- - - - - - 1,646,695
- - - 9,799 194,217 (1) 3,156,554
5,630,999 4,928,330 1,983,491 15,349,555 154,819 30,046,400 528,102,283 - - - 112,183 - - 29,410,337
- - - - - 1,866,010 136,388,113
- - - - - 1,496,802 53,004,524
- 34,868 - 665,891 - 378,376 34,664,649
- - - - - 25,604 24,994,665
- - - - - 99,050 11,903,919
10,121,804 - - - 104,399 24,092,340 49,808,331
5,220,895 499,366 - - - - 20,501,031
- 32,680,914 822,080 23,363,273 - 385,516 130,187,708
- - - - - 1,317,651 1,317,651
- - - - - 17,809 17,809
15,342,699 33,215,148 822,080 24,141,347 104,399 29,679,158 492,198,737 (9,711,700) (28,286,818) 1,161,411 (8,791,792) 50,420 367,242 35,903,546 - - - - - - 870,288
- 66,523,381 - - - 1,335,461 68,958,842
- (5,797,000) - - - (1,118,000) (79,878,533)
- 60,726,381 - - - 217,461 (10,049,403)
(9,711,700) 32,439,563 1,161,411 (8,791,792) 50,420 584,703 25,854,143 15,688,130 90,920,157 7,994,433 60,229,631 2,561,367 3,020,774 319,568,781 $ 5,976,430 $ 123,359,720 $ 9,155,844 $ 51,437,839 $ 2,611,787 $ 3,605,477 $ 345,422,924 33

CITY OF BAKERSFIELD
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities For the Fiscal Year Ended June 30, 2022
Net Change in Fund Balances - Total Governmental Funds $ 25,854,143 Amounts reported for Governmental Activities in the Statement of Activities are different because:

Governmental Funds report capital outlay as expenditures. However, in the Government-Wide Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.

Capital Outlay eliminated $ 18,615,618
Depreciation and amortization expense is deducted from fund balance (net of Internal Service Fund depreciation of $9,604,315 which has already been allocated to serviced funds). (64,898,041) Contributions of infrastructure and improvements by developers are capitalized in the Statement of Activities, but are not recorded in the Governmental Fund Financial Statements because no cash changed hands. 55,226,792 8,944,369
Certain expenses are reported in the Government-Wide Statement of Activities, but they do not require the use of current financial resources. Therefore, these expenses are not reported as expenditures in Governmental Funds.

Net compensated absences expense (1,416,957)
Interest expense on long-term debt 69,030
Net pension expense 29,416,738
Net other post-employment benefit expense 11,466,782 39,535,593 Bond and loan proceeds provide current financial resources to Governmental Funds, but issuing debt increases long-term liabilities in the Government-Wide Statement of Net Position. Repayment of bond principal is an expenditure in Governmental Funds, but the repayment reduces long-term liabilities in the Government-Wide Statement of Net Position. 3,014,363
Unearned revenue and other resources not available to liquidate liabilities of the current period are not recognized in the Governmental Funds. Revenue in the Statement of Activities is not limited by availability, so certain revenues need to be reduced by the amounts that were unavailable at the end of the year. This adjustment records a net decrease in revenues - unavailable revenues at the beginning of the year exceed ending unavailable revenues by this amount. (1,669,079) Internal Service Funds are used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The net revenue of the Internal Service Funds is reported with Governmental Activities. (2,916,909)
Change in Net Position of Governmental Activities $ 72,762,480 The accompanying notes are an integral part of these financial statements. 34

Proprietary Fund Financial Statements
These funds account for operations (a) that are financed and operated in a m anner similar to private business enterprises where the intent of the governing body is that the costs (including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of net income is appropriate for accountability purposes.

Wastewater Treatment Fund i s used to account for the provision of sewer service to the residents of the City and some residents of Kern County. This fund also accounts for the activities related to the debt issuance which provided for the Wastewater Treatment Facilities.

Refuse Collection Fund is used to account for the collection and disposal of refuse within the City. All activities necessary to provide such services are accounted for in this fund.

River & Agricultural Water Fund is used to account for the provision of water service restricted primarily for agricultural purposes to users within the City and some users within Kern County (some Kern River water is exchanged for State Aqueduct water for domestic water purposes). All activities necessary to provide such services are accounted for in this fund.

Domestic Water Fund is used to account for the provision of water service to some residents of the City and Kern County. All activities necessary to provide such service are accounted for in this fund.

General Aviation Fund i s used to account for the acquisition and operation of the Bakersfield Airpark. The majority of acquisition and improvement financing for the airport facility was provided by a grant from the Federal Aviation Administration.

Offstreet Parking Fund i s used to account for the operations of the parking garage at 18th and Eye Streets and various offstreet surface parking lots within the City. The parking garage was financed by the former Redevelopment Agency and the related debt was retired in August 1994. Subsequently, the title was transferred to the City.

Internal Service Funds are used to provide goods and services by one department or agency to other departments or agencies of the City on a cost reimbursement basis.
35

CITY OF BAKERSFIELD
Statement of Net Position
Proprietary Funds
June 30, 2022
Wastewater
Treatment
Refuse
Collection
River &
Agricultural
Water
Current assets:

Cash and investments $ 84,103,035 $ 21,168,184 $ 10,976,636 Accounts receivable, net 1,761,168 1,754,930 922,793
Interest receivable 207,041 36,212 26,945
Advances to other funds - current 284,507 - -
Due from other governmental agencies 88,693 1,869,609 339 Prepayments and inventories - - -
Total current assets 86,444,444 24,828,935 11,926,713
Noncurrent assets:

Capital assets:

Land 10,287,000 2,958,335 2,175,944
Depreciable buildings, property,
equipment and infrastructure, net 583,191,621 3,636,144 9,793,400 Construction in progress 10,128,067 1,677,396 155,619
Intangible assets - - 8,032,678
Lease receivable 3,359,579 - -
Advances to other funds 2,435,190 - -
Other long-term receivable - - 26,760
Total noncurrent assets 609,401,457 8,271,875 20,184,401 Total assets 695,845,901 33,100,810 32,111,114
Deferred outflows of resources:

Deferred pensions 1,357,883 2,824,821 408,756
Deferred other post-employment benefits 220,609 439,985 77,643 Debt issuance 7,561,396 - -
Total deferred outflows of resources 9,139,888 3,264,806 486,399 Current liabilities:

Accounts payable and accrued liabilities 4,285,053 3,340,834 586,944 Claims payable - - -
Workers' compensation claims - - -
Compensated absences payable 155,564 239,796 24,930
Advances from other funds - current - 284,507 -
Long-term debt - due within one year 9,601,778 - -
Lease liability - due within one year - - -
Advances from grantors and third parties - 123,639 -
Total current liabilities 14,042,395 3,988,776 611,874
Noncurrent liabilities:

Long-term debt - due in more than one year 111,096,000 - - Lease liability - due in more than one year - - -
Kern River Levee District/Buena Vista - - 326,262
Customers' deposits 3,262,703 398,802 -
Workers' compensation claims - - -
Compensated absences payable 646,356 890,649 171,264
Advances from other funds - 2,435,190 -
Net pension liability 7,892,411 14,041,531 2,280,764
Net other post-employment benefits liability 601,302 1,199,244 211,631 Total noncurrent liabilities 123,498,772 18,965,416 2,989,921 Total liabilities 137,541,167 22,954,192 3,601,795
Deferred inflows of resources:

Deferred pensions 3,162,652 5,807,687 822,330
Deferred other post-employment benefits 1,057,793 2,109,676 372,296 Deferred Inflow Leases 3,300,656 - -
Total deferred inflows of resources 7,521,101 7,917,363 1,194,626 Net position:

Net investment in capital assets 490,470,307 8,271,875 20,157,642 Restricted for:

Capital improvements 20,200,000 - -
Unrestricted 49,253,214 (2,777,814) 7,643,450
Total net position (deficit) $ 559,923,521 $ 5,494,061 $ 27,801,092 Adjustments to reflect the consolidation of internal service fund activities related to proprietary funds
Net position of business-type activities
The accompanying notes are an integral part of these financial statements. 36

Domestic
Water
General
Aviation
Offstreet
Parking Totals
Governmental Activities
Internal Service Funds
$ 51,105,727 $ 935,933 $ 65,473 $ 168,354,988 $ 66,673,923 4,142,915 645 4,740 8,587,191 2,290
117,390 32,860 50 420,498 123,836
- - - 284,507 -
- - - 1,958,641 100,000
- - - - 1,480,896
55,366,032 969,438 70,263 179,605,825 68,380,945
740,597 7,464,254 410,000 24,036,130 -
211,120,925 2,448,284 276,209 810,466,583 56,522,763
4,264,587 721,077 - 16,946,746 -
23,444,228 - - 31,476,906 -
- 1,264,656 - 4,624,235 -
- - - 2,435,190 -
- - - 26,760 -
239,570,337 11,898,271 686,209 890,012,550 56,522,763
294,936,369 12,867,709 756,472 1,069,618,375 124,903,708 415,214 32,114 - 5,038,788 1,481,729
17,254 - - 755,491 193,495
- - - 7,561,396 -
432,468 32,114 - 13,355,675 1,675,224
3,969,709 15,850 35,214 12,233,604 3,293,052
- - - - 3,229,000
- - - - 9,044,000
86,924 5,366 - 512,580 205,627
- - - 284,507 -
- - - 9,601,778 -
712,201 - - 712,201 -
- - - 123,639 -
4,768,834 21,216 35,214 23,468,309 15,771,679
- - - 111,096,000 7,871,000
14,913,683 - - 14,913,683 -
- - - 326,262 -
1,692,808 - - 5,354,313 -
- - - - 51,177,000
98,917 20,896 - 1,828,082 457,950
- - - 2,435,190 -
1,774,734 50,619 - 26,040,059 7,167,936
47,029 - - 2,059,206 527,399
18,527,171 71,515 - 164,052,795 67,201,285
23,296,005 92,731 35,214 187,521,104 82,972,964
684,315 73,471 - 10,550,455 2,683,113
82,732 - - 3,622,497 -
- 1,263,190 - 4,563,846 927,785
767,047 1,336,661 - 18,736,798 3,610,898
223,944,453 10,633,614 686,209 754,164,100 48,651,763
- - - 20,200,000 -
47,361,332 836,817 35,049 102,352,048 (8,656,693)
$ 271,305,785 $ 11,470,431 $ 721,258 876,716,148 $ 39,995,070 4,616,938
$ 881,333,086
37

CITY OF BAKERSFIELD
Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds
For the Fiscal Year Ended June 30, 2022
Wastewater
Treatment
Refuse
Collection
River &
Agricultural
Water
Operating revenues:

Intergovernmental $ - $ 730,734 $ -
Charges for services 33,741,505 57,491,764 2,218,697
Cost recoveries 70,287 8,209,102 654,186
Rental income 185,809 - 14,128
Other sales or services 12,500 130,704 3,545,150
Miscellaneous (718) 42,823 -
Total operating revenues 34,009,383 66,605,127 6,432,161 Operating expenses:

General and administrative 16,261,242 57,677,504 6,023,884 Transmission and distribution 91,808 641,424 362,811
Compensated absences - 58,578 -
Total operating expenses 36,509,551 58,548,129 6,934,234 Operating income (loss) (2,500,168) 8,056,998 (502,073) Nonoperating revenues (expenses):

Interest income (loss) (911,012) (136,555) (163,726)
Connection fees 6,792,887 - -
Interest expense (4,458,627) (42,898) -
Gain on sale of capital assets - (19,805) -
Total nonoperating revenues (expenses) 1,423,248 (199,258) (163,726) Income (loss) before transfers
and capital contributions (1,076,920) 7,857,740 (665,799) Capital contributions 7,480,709 - -
Transfers in - - -
Transfers out (801,838) (1,642,000) (524,500)
Change in net position 5,601,951 6,215,740 (1,190,299)
Total Net Position (Deficit) -
Beginning of Year, as Restated 554,321,570 (721,679) 28,991,391 Total Net Position-End of Year $ 559,923,521 $ 5,494,061 $ 27,801,092 Adjustment to reflect the consolidation of internal
service activity related to proprietary funds
Change in net position of business-type activities
The accompanying notes are an integral part of these financial statements. 38

Domestic
Water
General
Aviation
Offstreet
Parking Totals
Governmental
Activities
Internal Service
Funds
$ - $ 4,853 $ - $ 735,587 $ 100,000
28,313,792 308,979 116,313 122,191,050 54,421,470
96,109 10,210 - 9,039,894 1,850,066
- - - 199,937 -
2,485,349 - - 6,173,703 -
26,573 (4,829) - 63,849 78,448
30,921,823 319,213 116,313 138,404,020 56,449,984
29,656,006 276,090 236,680 110,131,406 46,966,979
814,784 323 - 1,911,150 -
- - - 58,578 6,454
37,416,166 420,605 327,308 140,155,993 68,508,298
(6,494,343) (101,392) (210,995) (1,751,973) (12,058,314) (738,597) 24,928 247 (1,924,715) (889,143)
2,054,626 - - 8,847,513 -
(668,624) - - (5,170,149) -
10,477 - - (9,328) 289,612
657,882 24,928 247 1,743,321 (599,531)
(5,836,461) (76,464) (210,748) (8,652) (12,657,845)
3,629,894 560,825 - 11,671,428 1,981,312
- - 100,000 100,000 7,267,001
(38,500) (4,267) (12,998) (3,024,103) (67,563)
(2,245,067) 480,094 (123,746) 8,738,673 (3,477,095)
273,550,852 10,990,337 845,004 43,472,165
$ 271,305,785 $ 11,470,431 $ 721,258 $ 39,995,070
(560,186)
$ 8,178,487
39

CITY OF BAKERSFIELD
Statement of Cash Flows
Proprietary Funds
For the Fiscal Year Ended June 30, 2022
Wastewater
Treatment
Refuse
Collection
Cash flows from operating activities:

Cash received from:

Customers, including cash deposits $ 34,291,356 $ 67,047,209 Prior year reimbursements and cost recoveries 70,287 -
Cash paid to:

Suppliers (11,143,418) (51,136,216)
Employees (7,116,882) (13,401,814)
Cash deposits returned to customers - -
Net cash provided (used) by operating activities 16,101,343 2,509,179 Cash flows from noncapital financing activities:

Cash transferred from other funds - -
Cash transferred to other funds (801,838) (1,642,000)
Interfund loan receivable 280,303 -
County/developer project share - -
Connection fees 6,792,887 -
Net cash provided (used) by noncapital financing activities 6,271,352 (1,642,000) Cash flows from capital and related financing activities:

Principal payments:

Notes/Loans/Bonds (7,670,000) (280,303)
Lease payments - -
Capital contributions - -
Interest paid (5,423,250) (42,898)
Proceeds from lease activities 289,763 -
Purchase of capital assets - -
Proceeds from sale of capital assets - 35,340
Construction in progress (7,072,445) (1,145,464)
Net cash provided (used) by capital and related financing activities (19,875,932) (1,433,325) Cash flows from investing activities:

Interest received 623,981 290,448
Net increase (decrease) in the fair value of investments (1,649,398) (450,215) Net cash provided by investing activities (1,025,417) (159,767) Net increase (decrease) in cash and investments 1,471,346 (725,913) Cash and investments - Beginning of year 82,631,689 21,894,097 Cash and investments - End of year $ 84,103,035 $ 21,168,184 The accompanying notes are an integral part of these financial statements. 40

River &
Agriculture
Water
Domestic
Water
General
Aviation
Offstreet
Parking Totals
Governmental
Activities
Internal Service
Funds
$ 5,993,940 $ 30,812,206 $ 321,737 $ 113,013 $ 138,579,461 $ 54,499,516 - - 9,850 - 80,137 1,850,066
(5,705,634) (30,213,506) (493,924) (222,718) (98,915,416) (42,127,814) (1,410,992) (1,251,322) - - (23,181,010) (12,813,625)
- (328,478) - - (328,478) -
(1,122,686) (981,100) (162,337) (109,705) 16,234,694 1,408,143 - - - 100,000 100,000 7,267,001
(524,500) (38,500) (4,267) (12,998) (3,024,103) (67,563) - - - - 280,303 -
- - - - - -
- 1,947,593 - - 8,740,480 -
(524,500) 1,909,093 (4,267) 87,002 6,096,680 7,199,438
- - - - (7,950,303) -
- (678,991) - - (678,991) -
- - 560,825 - 560,825 -
- (668,624) - - (6,134,772) -
- - 171,491 - 461,254 -
- - (581,711) - (581,711) (13,645,398)
- 10,477 - - 45,817 1,421,379
(1,380,333) (5,736,116) - - (15,334,358) -
(1,380,333) (7,073,254) 150,605 - (29,612,239) (12,224,019) 36,888 158,564 10,867 104 1,120,852 173,364
(219,109) (979,969) (18,223) 146 (3,316,768) (1,143,944) (182,221) (821,405) (7,356) 250 (2,195,916) (970,580)
(3,209,740) (6,966,666) (23,355) (22,453) (9,476,781) (4,587,018) 14,186,376 58,072,393 959,288 87,926 177,831,769 71,260,941 $ 10,976,636 $ 51,105,727 $ 935,933 $ 65,473 $ 168,354,988 $ 66,673,923 The accompanying notes are an integral part of these financial statements. 41

CITY OF BAKERSFIELD
Statement of Cash Flows (concluded)
Proprietary Funds
For the Fiscal Year Ended June 30, 2022
Wastewater
Treatment
Refuse
Collection
Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities:

Operating income (loss) $ (2,500,168) $ 8,056,998
Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation expense 20,156,501 170,623
(Increase) decrease in accounts receivable (64,603) 470,697 (Increase) decrease in inventories - -
(Increase) decrease in prepaid items - -
Increase (decrease) in accounts payable 269,647 (2,669,301) Increase in workers' compensation claims - -
Increase (decrease) in unearned revenue - (1,764)
Increase (decrease) in customers' deposits 416,863 (26,851) Increase (decrease) in compensated absences 16,397 7,920 Increase (decrease) in net pension liability (4,375,771) (7,800,709) Increase (decrease) in deferred outflows/inflows of resources for pensions 3,234,520 5,700,164 Increase (decrease) in net other post-employment benefits liability (815,995) (1,683,303) Increase (decrease) in deferred outflows/inflows of resources for OPEB 156,212 284,705 Increase (decrease) in deferred inflow of resources for leases (392,260) - Net cash provided (used) by operating activities $ 16,101,343 $ 2,509,179 Noncash investing capital and financing activities:

Contribution of equipment from other departments $ - $ - Contributions of infrastructure and improvements
by developers $ 7,480,709 $ -
42

River &
Agriculture
Water
Domestic
Water
General
Aviation
Offstreet
Parking Totals
Governmental
Activities
Internal Service
Funds
$ (502,073) $ (6,494,343) $ (101,392) $ (210,995) $ (1,751,973) $ (12,058,314) 547,539 6,945,376 144,192 90,628 28,054,859 9,604,315
(411,514) (684,401) 12,374 (3,300) (680,747) (100,402)
- - - - - (222,779)
- - - - - (836)
(170,330) (636,803) (15,443) 13,962 (3,208,268) (940,840) - - - - - 6,769,000
- - - - (1,764) -
(26,707) 246,306 - - 609,611 -
(10,250) (77,311) 921 - (62,323) (39,973)
(1,089,604) (900,223) (106,189) - (14,272,496) (3,511,348) 799,129 665,556 76,158 - 10,475,527 2,556,585
(305,203) (59,534) - - (2,864,035) (762,022)
46,327 14,277 - - 501,521 114,757
- - (172,958) - (565,218) -
$ (1,122,686) $ (981,100) $ (162,337) $ (109,705) $ 16,234,694 $ 1,408,143 $ - $ - $ - $ - $ - $ 1,981,312
$ - $ 3,629,894 $ - $ - $ 11,110,603 $ -
43

44

Fiduciary Fund Financial Statements
Fiduciary funds account for assets held by the City in a trustee capacity or as an agent for individual private organizations, other governmental units and/or other funds. Detailed combining statements for Fiduciary Funds are located in the Supplementary Information section. Below are descriptions of the generic fund types within this category and specific funds within each fund type.

Private Purpose Trust Funds
Redevelopment Successor Agency - T he Bakersfield Redevelopment Agency ceased activities in February 2012. All non- housing related assets, liabilities and activities have been transferred to the City and are accounted for in a trust fund.

Planning Habitat Trust Fund - This fund is used to account for monies collected from developers to be used to purchase suitable land to provide habitat for endangered species. After the land is purchased, it is transferred to the State Fish and Game Department for maintenance.

Bakersfield Affordable Housing Trust Fund - This fund will assist in the creation and preservation of affordable housing in the City of Bakersfield for the benefit of very low, low and moderate-income households as well as address the housing needs of the homeless population.

Pension and Other Employee Benefit Trust Funds
Fire Relief and Pension Trust Fund - This fund is used to account for the accumulation of resources to be used for retirement annuity payments at appropriate amounts and times in the future for Fire Department personnel who retired prior to June 2, 1972.

Other Post-Employment Benefits (OPEB) Irrevocable Trust Fund - This fund is used to account for the City's post-retirement medical benefit plan. The City provides medical insurance coverage through contributions to eligible retirees' insurance premiums.

Custodial Funds
Special Deposits Fund - This fund is used to account for the collection by the City as agent for organizations operated under the auspices of the Recreation Division, security deposits for utility franchises, temporary deposits for construction permits, deposits for affordable housing programs and bid deposits. This fund is also used for the collection of police seized property, local Law Enforcement Block Grants, and other revenues held in trust pending disposition of contingencies.

Improvement Districts Fund - T his fund is used to account for the collection of liens for improvements benefiting private properties and payments to the holders of bonds issued pursuant to the Improvement Act of 1913 and the Improvement Bond Act of 1915. The City is in no way liable for the payment of bonded indebtedness, but the City serves as agent to collect the principal and interest installments from the owners of the benefited properties. A trustee administers the periodic payment to the bondholders. In addition, Community Service Districts created for the West Ming and Old River Ranch developments are accounted for in this section. These funds are collected to be used to pay for public safety costs in the applicable communities. 45

CITY OF BAKERSFIELD
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2022
Private Purpose
Trust Funds
Pension and Other
Employee Benefit
Trust Funds
Custodial
Funds
Assets:

Cash $ 26,546,902 $ 6,883,930 $ 32,754,025
Accounts receivable - - 500
Interest receivable 52,330 - 13,911
Due from other governmental agencies - - 48,287
Investments
Domestic equities - 23,086,958 -
Fixed income - 57,882,200 -
Total investments - 80,969,158 -
Land held for resale 60,895 - -
Total assets 26,660,127 87,853,088 32,816,723
Liabilities:

Payables:

Accounts payable 9,800 - -
Advances from grantors and third parties 2,596,376 - -
Deposits - - 29,674,795
Accrued bond interest - - 268,456
Bonds 1,915,000 - 2,873,472
Notes 9,017,606 - -
Total liabilities 13,538,782 - 32,816,723
Net Position:

Restricted for:

Individuals, organizations and other governments 13,121,345 - - Other post-employment benefits - 87,853,088 -
$ 13,121,345 $ 87,853,088 $ -
The accompanying notes are an integral part of these financial statements. 46

CITY OF BAKERSFIELD
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Fiscal Year Ended June 30, 2022
Private Purpose
Trust Funds
Pension and Other
Employee Benefit
Trust Funds Custodial Funds
Additions
Contributions to pooled investments $ - $ 8,640,002 $ - Developer fees 963,809 - -
Successor agency property tax deposits 2,613,738 - -
Charges for services 3,133,725 - -
Assessment District Contributions - - 3,859,150
Special Deposit Contribution - - 122,424,259
Other Contributions - - 3,259,850
Other income / (loss) (8,839) - 471,128
Interest income (loss) 98,710 (10,148,301) (44,632)
Investment expenses - (242,216) -
Net investment income 98,710 (10,390,517) (44,632)
Total additions 6,801,143 (1,750,515) 129,969,755
Deductions:

Benefits - 3,161,526 -
Purchase of uninhabited land 210,870 - -
Obligation retirement 3,662,531 - 4,007,062
Bond - Interest - - 606,593
Other Distributions - - 125,356,100
Total deductions 3,873,401 3,161,526 129,969,755
Transfers in 6,644,357 - -
Change in net position 9,572,099 (4,912,041) -
Net position - beginning of year 3,549,246 92,765,129 - Net position - end of year $ 13,121,345 $ 87,853,088 $ - The accompanying notes are an integral part of these financial statements. 47

48

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of the City of Bakersfield (the “City”) have been prepared in conformity with generally accepted accounting principles in the United States of America (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). The follow ing summary of the City’s significant accounting policies is presented to assist the reader in interpreting the basic financial statements and other data in this report. These policies should be viewed as an integral part of the accompanying basic financial statements.

A. Description of Reporting Entity
The City of Bakersfield, California, is a California Charter City, incorporated on January 11, 1898, and serves as the county seat of the County of Kern, California (the “County”). The City is a full-service city and operates under a Council - Manager form of government, providing the following services as authorized by its Charter: General government; public safety; public works; and development and conservation.

As required by GAAP, these basic financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government's operations and so data from these units are combined with data of the primary government.

B. Basis of Presentation
Government-Wide Financial Statements
The Government-Wide financial statements (the statement of net position and the statement of activities) report information of all of the non-fiduciary activities of the primary government and its component units. For the most part, eliminations have been made to minimize the double counting on internal activities. I nternal activities for services provided and used that are not eliminated include water, solid waste and sewer services provided to various other functions of the government. These statements distinguish between the governmental and business-type activities o f the City. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees charged to external parties.

The statement of activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Some functions include expenses that are, in essence, indirect expenses of other functions resulting from charges among funds or programs for centralized services. Program revenues include: 1) charges paid by the recipients of goods or services offered by the programs and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented instead as general revenues.

Net position is restricted when constraints placed on it are either externally imposed or are imposed by constitutional provisions or enabling legislation. Internally imposed designations of resources are not presented as restricted net position. When both restricted and unrestricted resources are available for use, generally it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed.
49

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. Basis of Presentation (continued)
Fund Financial Statements
The fund financial statements provide information about the City’s funds, including fiduciary funds and the blended component units. Separate statements for each fund category - governmental, proprietary and fiduciary - are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are separately aggregated and reported as non-major funds.

Proprietary fund operating r evenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. E xchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. Operating expenses for enterprise funds and internal service funds include cost of sales and services, administrative expenses, and depreciation of capital assets. A s used in this section, the term depreciation can include amortization of intangible assets. All expenses not meeting this definition are reported as nonoperating expenses.

The City reports the following major governmental funds:

General Fund - The General Fund is the principal operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. F or the City, the General Fund includes basic governmental activities, such as general government, public safety, public works, and community services.

Transient Occupancy Taxes Fund - T he Transient Occupancy Taxes Fund is used to account for transient occupancy tax revenues (hotel tax) and expenditures funded by this revenue source. T he Rabobank Arena and Convention Center and the Bakersfield Ice Sports Center operating revenues and expenditures are recorded in this fund. This fund is also used to account for the operations of the Visit Bakersfield division of the City.

Community Development Block Grant Fund – The Community Development Block Grant Fund is used to account for resources provided by the Federal Housing and Community Development Act of 1974 for the elimination of slums and blight, housing conservation and improvements of community services.

Gas Tax & Road Fund - The Gas Tax & Road Fund is used to account for the City’s share, based upon population, of state gasoline taxes. State law requires these gasoline taxes to be used to maintain streets or for major street construction. This fund also accounts for other State and Federal grant revenues related to street maintenance or construction, including the Federal earmark Thomas Roads funds.

Capital Outlay Fund - The Capital Outlay Fund is used to account for the cost of capital projects financed by local revenues and various grant/loan proceeds for capital expenditures. This fund also accounts for the special Utility Franchise/Surcharge Fund created by the City Council to account for the specified local road project costs funded by the selected electricity and gas franchise surcharge fees. In addition, funds contributed by the County to be used to cover a portion of the costs of the local match needed for the Thomas Roads projects are accounted for in this fund.

Park Improvement Fund - The Park Improvement Fund is used to account for funds collected for residential park development (Ordinance No. 3646). F ees are collected based on the development’s share of the cost to develop, improve, construct, or enhance a neighborhood park (Ordinance No. 3327).

Transportation Development Fund - T he Transportation Development Fund is used to account for funds collected from fees paid to mitigate the traffic impacts to the regional circulation system caused by a development project. The fees are paid w hen a building permit for the development project is obtained, and are based upon the amount of traffic the development will generate. The fee schedule was adopted with Ordinance No. 3513 and will be periodically evaluated by the City Council and revised to reflect updated costs and growth projections. 50

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. Basis of Presentation (continued)
Redevelopment Successor Agency - Housing Fund - T he Redevelopment Successor Agency - Housing Fund was created on February 1, 2012, pursuant to the provisions of the Redevelopment Restructuring Act. The City has chosen to assume the housing functions and take over the housing assets of the former Redevelopment Agency.

The City reports the following major proprietary (enterprise) funds:

Wastewater Treatment Fund - T he Wastewater Treatment Fund is used to account for the provision of sewer service to the residents of the City and some residents of the County. This fund also accounts for the activities related to the debt issuance, which provided for the Wastewater Treatment Facilities.

Refuse Collection Fund - The Refuse Collection Fund is used to account for the collection and disposal of refuse within the City. All activities necessary to provide such services are accounted for in this fund.

River & Agricultural Water Fund - The River & Agricultural Water Fund is used to account for the provision of water service restricted primarily for agricultural purposes to users within the City and some users within the County (some Kern River water is exchanged for State Aqueduct water for domestic water purposes). A ll activities necessary to provide such services are accounted for in this fund.

Domestic Water Fund - The Domestic Water Fund is used to account for the provision of water service to residents of the City and County connected to the City's system. All activities necessary to provide such services are accounted for in this fund.

General Aviation Fund - T he General Aviation Fund is used to account for the acquisition and operation of the Bakersfield Municipal Airpark located on Union Avenue. The majority of acquisition and improvement financing for the airport facility was provided by a grant from the Federal Aviation Administration.

Offstreet Parking Fund - The Offstreet Parking Fund is used to account for the operations of the parking garage at 18th and Eye Streets and various offstreet surface parking lots within the City. The parking garage was financed by the former Redevelopment Agency and the related debt was retired in August 1994, and subsequently, the title was transferred to the City.

Internal Service Funds - T he Internal Service Funds are used to account for the cost of goods or services provided by one department or agency to other departments or agencies of the governmental unit on a reimbursement basis. The City accounts for its self-insurance and equipment management activities as internal service funds.

The City reports the following additional fund types:

Private Purpose Trust Funds - The Planning Habitat Trust Fund is used to account for monies collected from developers to be used to purchase suitable land to provide habitat for endangered species. After the land is purchased, it is transferred to the State Fish and Game Department for maintenance. The Bakersfield Affordable Housing Trust Fund will assist in the creation and preservation of affordable housing in the City for the benefit of very low, low and moderate-income households, as well as address the housing need of the homeless population. The City also records the assets, liabilities, and activities of the Redevelopment Successor Agency in a separate trust fund.

Pension and Other Employee Benefit Trust Funds - The Fire Relief and Pension Trust Fund is used to account for the annuity payments at appropriate amounts and times in the future for Fire Department personnel who retired prior to June 26, 1972. The Other Post-Employment Benefits (OPEB) Irrevocable Trust Fund is used to account for the City’s postretirement medical benefit plan in which the City provides medical insurance coverage through contributions to eligible retirees’ insurance premiums.

Custodial Funds - The Custodial Funds account for assets held by the City as an agent for various local governments or other entities. The Special Deposits Fund is used to account for the collection by the City as agent for organizations operated under the auspices of the Recreation Division, security deposits for utility franchises, temporary deposits for construction permits and 51

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. Basis of Presentation (continued)
bid deposits. This fund is also used for the collection of police seized property, local Law Enforcement Block Grants and other revenues held in trust pending disposition of contingencies. T he Improvement Districts Fund i s used to account for the collection of liens for improvements benefiting private properties and payments to the holders of bonds issued pursuant to the Improvement Bond Act of 1913 and the Improvement Bond Act of 1915. The City is in no way liable for the payment of bonded indebtedness, but the City serves as agent to collect the principal and interest installments from the owners of the benefited properties. A t rustee provides the periodic payment to the bondholders. This fund also accounts for the special assessments and taxes collected within the boundaries of Community Service Districts within the City.

C. Measurement Focus and Basis of Accounting
The government-wide, proprietary, private purpose trust, and pension and other employee benefit trust funds are reported using the economic resources measurement focus and the accrual basis of accounting. R evenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property and sales taxes, grants, entitlements, and donations. On an accrual basis of accounting, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. R evenues from sales tax are recognized when the underlying transactions take place. Revenues from grants, entitlements and donations are recognized in the fiscal year in which all eligible requirements have been satisfied. The custodial funds utilize the accrual basis of accounting to report assets and liabilities but technically have no measurement focus.

Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Property and sales taxes, interest, certain State and Federal grants and charges for services are accrued w hen their receipt occurs within sixty days after the end of the accounting period so as to be both measurable and available. E xpenditures are generally recorded when a liability is incurred, as under the accrual basis of accounting. H owever, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. General capital assets acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and capital leases are reported as other financing sources.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. O perating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary funds' principal ongoing operations. Revenues and expenses not meeting this definition are reported as nonoperating.

D. Assets, Liabilities, Net Position or Fund Balances, and Other Financial Statement Items Cash and Investments
Cash balances of each of the City's funds, except for certain Trust and Custodial Funds, are pooled and invested by the City.

Income earned from pooled investments is allocated to each of the funds based on average pooled cash balances during the year. Deficit cash balances are classified as due to other funds and funded by the General Fund or related operating fund.

The City applies GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. This statement adheres to GASB reporting guidelines which generally requires that investments be reported at their fair value and that all changes in fair value be reflected as income of the period in which they occur.

Statutes authorize the City to invest in obligations of the United States Treasury, agencies and instrumentalities, commercial 52

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) D. Assets, Liabilities, Net Position or Fund Balances, and Other Financial Statement Items (continued) paper, bankers' acceptances, repurchase agreements, money market funds, and the State Treasurer's investment pool. The City's Pension Trust Fund is also authorized to invest in corporate bonds rated A or better by a national rating system generally recognized and used by banks and investment brokers in the United States.

Investments are comprised of obligations of the United States Treasury, agencies and instrumentalities, cash, time certificates of deposit, mutual funds, bankers' acceptances, money market accounts, deposits in the State of California Local Agency Investment Fund (LAIF), and California Asset Management Program (CAMP). Investments are stated at fair value.

Interfund Transactions
Interfund transactions are reflected as either loans, services provided, reimbursements or transfers. L oans are reported as receivables and payables as appropriate, are subject to elimination upon consolidation and are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the noncurrent portion of interfund loans). Any residual balances outstanding between the governmental activities and the business-type activities are reported in the government-wide financial statement as “internal balances.” Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not available financial resources.

Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses.

Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund, and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide presentation.

Receivables
All trade and property tax receivables are shown net of an allowance for uncollectible accounts. Trade accounts receivable in excess of 180 days comprise the trade accounts receivable allowance for uncollectible accounts.

Inventory and Prepaid Items
Inventory is valued at average cost applied on a first-in, first-out (FIFO) basis. The reserve for prepaid expenses relates to certain payments to vendors for costs applicable to future accounting periods. The cost of both inventories and prepaid items are recorded as expenditures/expenses when consumed rather than when purchased.

Capital Assets
Capital outlays are recorded as expenditures of the General, Special Revenue, and Capital Projects Funds and as assets in the government-wide financial statements to the extent the City’s capitalization thresholds are met.

Capital assets, which include property, plant, equipment, infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), and intangible water rights are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an estimated useful life in excess of one year and an initial individual cost of more than $50,000 for infrastructure and $5,000 for all other capital assets.

Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation in the majority of instances. When assets are donated in relation to a service concession arrangement, they are reported at acquisition cost.

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. Betterments and major improvements which significantly increase values, change capacities or extend useful lives are capitalized. Upon sale or retirement of capital assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations. 53

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) D. Assets, Liabilities, Net Position or Fund Balances, and Other Financial Statement Items (continued) Major outlays for capital assets and improvements are capitalized as projects are constructed. I nterest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed.

Property, plant, and equipment of the primary government, as well as the component units, are depreciated using the straight- line method over the following estimated useful lives:

Infrastructure 10 to 70 years
Buildings, structures and improvements 5 to 40 years
Transmission and distribution equipment 5 to 50 years
Rolling equipment 2 to 30 years
Office equipment 3 to 10 years
Long-Term Obligations
In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type Statement of Net Position. Debt principal payments of both governmental and business-type activities are reported as decreases in the balance of the liability on the Statement of Net Position. B ond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method.

In the fund financial statements, however, debt principal payments of governmental funds are recognized as expenditures when paid. Governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. T he face amount of debt issued is reported as other financing sources. P remiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. I ssuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

Deferred Outflows and Inflows of Resources
The City records deferred outflows and inflows of resources in the government-wide, governmental, and proprietary fund type financial statements.

The Statements of Net Position and Balance Sheets will sometimes report a separate section for deferred outflow s of resources, defined as representing a consumption of net assets that applies to future periods, or deferred inflows of resources, defined as representing an acquisition of net assets that applies to future periods. The City has items that qualify for reporting in these categories and are detailed in a separate note disclosure. 54

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) D. Assets, Liabilities, Net Position or Fund Balances, and Other Financial Statement Items (continued) Net Position/Fund Balance
The government-wide and proprietary fund financial statements utilize a net position presentation. Net position is categorized as net investment in capital assets, restricted and unrestricted.  Net Investment in Capital Assets - This category groups all capital assets, including infrastructure, into one component of net position. A ccumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance in this category.  Restricted Net Position - This category presents external restrictions imposed by creditors, grantors, contributors, laws, or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation.  Unrestricted Net Position - T his category represents net position of the City, not restricted for any project or other purpose.

As of June 30, 2022, net position is as follows:

Governmental
Activities
Business-Type
Activities Total
Net investment in capital assets $ 1,369,954,461 $ 754,164,100 $ 2,124,118,561 Restricted 21,536,491 20,200,000 41,736,491
Unrestricted (39,763,272) 106,968,986 67,205,714
Total net position $ 1,351,727,680 $ 881,333,086 $ 2,233,060,766 Fund balances of the governmental funds are report using a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported. Fund balances for governmental funds are segregated as follows:
 Nonspendable Fund Balance – includes net resources that cannot be spent because of their form or because of legal or contractual limitations, and therefore must remain intact.  Restricted Fund Balance – i ncludes net resources that have externally enforceable limitations on their use. T hese limitations can be established by creditors, grantors, or by laws and regulations.  Committed Fund Balance – includes amounts with self-imposed limitations and are set in place prior to the end of the fiscal year. Commitments are set forth by the formal action of the City’s highest level of decision-making authority, the City Council (via resolutions or ordinances), and the limitations require that same level of authority to be removed.  Assigned Fund Balance – i ncludes amounts for which the intended use results in limitations but do not meet the requirements for either the “Restricted” or “Committed” classifications. I ntended use can be established by the City Council, a governing committee or board, or by a City official designated as having that authority as provided by the Fund Balance Policy.
 Unassigned Fund Balance – is the residual balance of the General Fund not included in the other classifications. 55

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) D. Assets, Liabilities, Net Position or Fund Balances, and Other Financial Statement Items (continued) The City Council establishes, modifies or rescinds fund balance commitments though approval of contracts for services and supplies that require City Council authorization through resolution. Fund balance assignments are made by agreements entered into by department heads, and their designees, for specific purposes. The City Council also establishes fund balance assignments through the adoption of the budget and subsequent budget amendments. Assignments are generally temporary and as such, additional action is not usually needed for assignments to be removed. The City Council approved, through resolution, a Fund Balance policy that established these rules for fund balance commitments and assignments in the General Fund. It was not deemed necessary to include a policy to achieve and maintain a specific level of unrestricted fund balance in the General Fund.

Fund Balance Flow Assumptions
The City will sometimes fund outlays for a specific purpose from restricted and unrestricted resources (committed, assigned, and unassigned fund balance). A flow assumption must be made about the order of how these resources will be applied to properly calculate the amounts reported as restricted, committed, assigned, and unassigned. It is the City’s policy to consider restricted fund balance to be used completely before any components of unrestricted fund balance. When the components of unrestricted fund balance are used for the same purpose, the amount classified as committed is used first, followed by assigned, and unassigned is applied last.

Property Taxes
In 1978, a state constitutional amendment (Proposition 13) provided that the property tax rate is lim ited to 1% of market value.

This property tax rate limitation may only be increased through voter approval. The County is the sole agency responsible for levying and collecting the property taxes and distributing them to taxing jurisdictions. T axes are allocated and distributed based upon each taxing jurisdiction's assessed valuations and upon any voter-approved debt override on the tax rate.

The property tax calendar for the City is as follows:

Valuation date January 1
Lien date March 1
Levy dates July 1 through June 30
Due dates November 1; February 1
Collection dates December 10; April 10
56

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) D. Assets, Liabilities, Net Position or Fund Balances, and Other Financial Statement Items (continued) Pension Plan
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City's California Public Employee's Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

Other Post-Employment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City's OPEB Plan (OPEB Plan) and additions to/deductions from the OPEB Plan's fiduciary net position have been determined on the same basis. For this purpose, the OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments and participating interest-earning investment contracts that have a maturity at the time of purchase of one year or less, are reported at cost.

Cash Flow Statements
For purposes of reporting cash flows, cash and cash equivalents include cash on hand, deposits, short-term investments and cash and investments with fiscal agents. Cash equivalents are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less meet this definition.

Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates.

E. Stewardship, Compliance, and Accountability
Budgets and Budgetary Accounting
The procedures established by the City Council in adopting the budgetary data reflected in the financial statements are as follows:

1. Prior to June 1, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them.

2. Public hearings are conducted to obtain taxpayer comments.

3. The City Council legally enacts the budget by resolution before July 1.

The City Manager is authorized to transfer budgeted amounts between departments within any fund and approve reductions of budgeted amounts. Since expenditures may not exceed budgeted appropriations at the fund level, any revisions that alter the total appropriations of any fund are to be approved by the City Council. Projects budgeted w ithin the current fiscal year but not yet completed can be re-appropriated the following fiscal year with City Manager approval. A ll other unencumbered appropriations lapse at year-end. Encumbered amounts are re-appropriated in the ensuing fiscal year budget.

Budgets are adopted for all governmental fund types and are prepared on a basis consistent w ith GAAP. Budgeted amounts are 57

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) E. Stewardship, Compliance, and Accountability (continued) as originally adopted, or as amended by the City Council. D uring the fiscal year ended June 30, 2022, the City Council approved $201,311,908 of increases to the originally adopted budget, excluding carryovers of prior year encumbered balances and selected capital appropriations.

Deficit Net Position
The Self-Insurance Internal Service Fund reported a deficit in net position of $57,008,096 at the close of the fiscal year. The continued deficit is the result of a significant increase in the workers' compensation and general liability calculated in the City’s most recent actuarial study. Workers' compensation charges can fluctuate significantly from year to year and staff will continue to adjust departmental rates accordingly to maintain sufficient funding levels.

The Community Development Block Grant Fund reported a deficit in net position of $320,921 at the close of the fiscal year.

The deficit is caused development activity funded by this activity that will have supplemental resources added to to the fund in the subsequent year.

Reclassification and Eliminations
Interfund balances must generally be eliminated in the government-wide financial statements, except for net residual amounts due between governmental activities. A mounts involving fiduciary funds should be reported as external transactions. Any allocations must reduce the expenses of the function from which the expenses are being allocated, so that expenses are reported only once, in the function in which they are allocated.

F. New Accounting Pronouncements
During the fiscal year ending June 30, 2022, the City implemented the following standards:

GASB issued Statement No. 87, Leases. T he objective of this statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financing of the right to use an underlying asset. Upon implementation, there was a significant effect on the City's financial statements for the Fiscal Year 2021-22.

GASB issued Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period. The objective of this statement are to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and to simplify accounting for interest cost incurred before the end of a construction period. Upon implementation, there was no effect on the City's accounting or financial reporting.

GASB issued Statement No. 92, Omnibus 2020. The objectives of this statement are to enhance comparability in accounting and financial reporting to improve consistency of authoritative literature by addressing practice issues that have been identified during implementation and application of certain GASB statements. Upon implementation, there was no effect on the City's accounting or financial reporting.

GASB issued Statement No. 93, Replacement of Interbank Offered Rates. The objective of this statement is to address those and other accounting and financial reporting implications that result from the replacement of an interbank offered rate (IBOR).

Upon implementation, there was no effect on the City's accounting or financial reporting. 58

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) F. New Accounting Pronouncements (continued)
GASB issued Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans - an amendment of GASB Statement No. 14 and No. 84, and a supersession of GASB Statement No. 32. The objectives of this statement are to (1) increase consistency and comparability related to the reporting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that a governing board typically would perform; (2) mitigate costs associated with the reporting of certain defined contribution pension plans; and (3) enhance the relevance, consistency, and comparability of the accounting and financial reporting for the Internal Revenue Code Section 457 deferred compensation plans that meet the definition of a pension plan and for benefits provided through those plans. Upon implementation, there was no effect on the City's accounting or financial reporting.

Recently released standards by GASB affecting future years are as follows:

In May 2019, GASB issued Statement No. 91, Conduit Debt Obligations. The objectives of this statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with commitments extended by issuers, arrangements associated with conduit debt obligations, and related to note disclosures. The City has elected not to early implement GASB Statement No. 91 and has not determined its effects on the City's financial statements.

The requirements of this Statement are effective for reporting periods beginning after December 15, 2021 (Fiscal Year 2022- 23).

In March 2020, GASB issued Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The objective of this statement is to improve financial reporting by addressing issues related to public-private and public-public partnership arrangements (PPPs). The City has elected not to early implement GASB Statement No. 94 and has not determined its effects on the City's financial statements. The requirements of this Statement are effective for reporting periods beginning after June 15, 2022 (Fiscal Year 2022-23).

In May 2020, GASB issued Statement No. 96, Subscription-Based Information Technology Arrangements. The objective of this statement is to provide guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users. The City has elected not to early implement GASB Statement No. 96 and has not determined its effects on the City's financial statements. The City has elected not to early implement GASB Statement No. 96 and has not determ ined its effects on the City's financial statements. The requirements of this Statement are effective for reporting periods beginning after June 15, 2022 (Fiscal Year 2022-23).

In April 2022, GASB issued Statement No. 99, Omnibus 2022. The objectives of this statement are to enhance comparability in accounting and financial reporting to improve the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB Statements and (2) accounting and financial reporting for financial guarantees. The City has elected not to early implement GASB Statement No. 99 and has not determined its effects on the City's financial statements. The requirements of this Statement are effective for reporting periods beginning after June 15, 2023 (Fiscal Year 2023-24).

In June 2022, GASB issued Statement No. 100, Accounting Changes and Error Corrections . The objective of this Statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. The City has elected not to early implement GASB Statement No. 100 and has not determined its effects on the City's financial statements. The requirements of this Statement are effective for reporting periods beginning after June 15, 2023 (Fiscal Year 2023-24).

In June 2022, GASB issued Statement No. 101, Compensated Absences. The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition measurement guidance for compensate absences.

The City has elected not to early implement GASB Statement No. 101 and has not determ ined its effects on the City's financial 59

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) F. New Accounting Pronouncements (continued)
statements. The requirements of this Statement are effective for reporting periods beginning after December 15, 2023 (Fiscal Year 2024-25).

NOTE 2 - CASH AND INVESTMENTS
Cash and investments as of June 30, 2022, are classified in the accompanying financial statements as follows:

Statement of net position:

Cash and investments $ 570,439,455
Fiduciary funds:

Cash and investments 147,154,015
$ 717,593,470
Cash and investments as of June 30, 2022, consist of the following:

Cash on hand $ 1,830,924
Deposits with financial institutions 32,641,979
Investments 696,271,860
GASB Stmt. No. 31 Fair Value Adjustment (13,151,293)
$ 717,593,470
Investment Authorized by the California Government Code and the City’s Investment Policy The table below i dentifies 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 the more restrictive provision of the California Government Code or the City’s investment policy that address interest rate risk, credit risk, and concentration of credit risk.

This table does not address investment of any debt proceeds held by bond trustees that are governed by the provisions of the City’s debt agreements, rather than the general provisions of either the California Government Code or the City’s investment policy.

Maximum
Percentage Maximum
Authorized Investment Types of Portfolio Maturity
U.S. Treasury Bills, Notes and Bonds 0 to 100% 5 Years
U.S. Government Agency Obligations 20% per agency 5 Years Bankers' Acceptances 40% 180 Days
Commercial Paper 25% 270 Days
Repurchase Agreements 30% 90 Days
Local Agency Investment Fund 40% N/A
Time Certificates of Deposit 40% 5 Years
Public Agency Demand Accounts 30% N/A
Mutual Funds 20% N/A
60

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 2 - CASH AND INVESTMENTS (continued)
Investments Authorized by Debt Agreements
The City and its component units have $371,610 in investments held by bond trustees pledged to the payment or security of certain debt issues. These investments are held in direct obligations of, or obligations that are fully guaranteed as to principal and interest by, the United States Government or an agency thereof. The California Government Code provides that monies held by a bond trustee pledged to the payment or security of debt issues, in absence of specific statutory provisions governing the issuance of the debt, may be invested in accordance with the ordinances, resolutions, or indentures specifying the types of investments the respective bond issue’s trustee may make. The obligations described above are authorized per the investment agreements with the bond trustees and include, but are not limited to, Federal Land Bank Bonds, Federal Home Loan Bank notes and bonds, Export-Import Bank notes and guaranteed participation certificates, obligations of or fully guaranteed by the Government National Mortgage Association, Federal National Mortgage Association notes, debentures and guaranteed certificates of participation, obligations of the International Bank of Reconstruction and Development and Federal Home Loan Mortgage Corporation notes.

Interest Rate Risk
Interest rate risk is the risk that changes in the market interest rates will adversely affect the fair value of an investment.

Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. As part of the City’s investment policy, one of the ways that the City manages its exposure to interest rate risk is 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 maturing evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Information about the sensitivity of the fair values of the City’s investments to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:

Remaining Maturity (In Months)
Investment Type
Fair
Value Cost
12 Months
Or Less
13 - 24
Months
25-60
Months
More Than
60 Months
U.S. Government Agency Obligations:

Federal Farm Credit Bank $ 81,716,576 $ 86,518,390 $ 4,000,000 $ 9,997,500 $ 72,520,890 $ - Federal Home Loan Bank 85,300,150 90,481,000 - 8,990,250 81,490,750 - Federal Home Loan Mortgage Corp. 40,597,657 42,333,747 307,224 13,000,000 29,026,523 - Federal National Mortgage Assn. 20,050,642 21,483,182 - 3,000,000 18,483,182 - Local Agency Investment Fund 150,416,142 150,416,142 150,416,142 - - - CAMP 215,721,927 215,721,927 215,721,927 - - -
Mutual Funds (1) 88,945,862 88,945,862 88,945,862 - - - Investment Contracts 371,610 371,610 - - - 371,610
Total $683,120,566 $696,271,860 $459,391,155 $ 34,987,750 $201,521,345 $ 371,610 (1) See Note 17 for Other Post-Employment Benefits.
61

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 2 - CASH AND INVESTMENTS (continued)
Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations Except as inherent by their nature as disclosed above, the City’s investments (including those held by a bond trustee) are not highly sensitive to interest rate fluctuations.

Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligations 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 the California Government Code, the City’s investment policy, or debt agreements, and the actual rating as of year end for each investment type. On August 5, 2011, the rating agency of Standard & Poors (S&P) assigned a negative outlook to the credit rating of the United States government. On August 8, 2011, S&P then downgraded that credit rating to AA+ from AAA.

Remaining as of the Year-End
Investment Type
Minimum
Legal
Rating AAA AA+
Not
Rated
U.S. Government Agency Obligations:

Federal Farm Credit Bank $ 86,518,390 $ - $ 86,518,390 $ - Federal Home Loan Bank 90,481,000 - 90,481,000 -
Federal Home Loan Mortgage Corp. 42,333,747 - 42,333,747 - Federal National Mortgage Assn. 21,483,182 - 21,483,182 - Local Agency Investment Fund 150,416,142 - - 150,416,142 CAMP 215,721,927 - - 215,721,927
Mutual Funds (1) 88,945,862 88,945,862 - -
Investment Contracts 371,610 - - 371,610
Total $696,271,860 $ 88,945,862 $240,816,319 $366,509,679 (1) See Note 17 for Other Post-Employment Benefits
Concentration of Credit Risk
The City’s investment policy does not limit the amount that can be invested in any one issuer beyond the limitations stipulated by the California Government Code. Investments in any one issuer (other than United States Treasury securities, mutual funds and external investment pools) that represent 5% or more of the City’s total investments are as follows.

Issuer Investment Type Reported Amount Percentage
Federal Farm Credit Bank Federal Agency Securities $ 86,518,390 12% Federal Home Loan Bank Federal Agency Securities $ 90,481,000 13% Custodial Credit Risk
Custodial credit risk for deposits is the risk that the City will not be able to recover its deposits or will not be able to recover collateral securities in the possession of an outside party if a depository institution fails. T he custodial credit risk for investments is the risk that the City will not be able to recover the value of its investment or collateral securities held by another party if the counterparty (e.g., broker-dealer) to a transaction fails. T he California Government Code and City’s investment 62

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 2 - CASH AND INVESTMENTS (continued)
policy do not contain legal or policy requirements that w ould limit exposure to custodial credit risk for deposits or investments, other than the following provision applicable to deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. C alifornia law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

As of June 30, 2022, all of the City’s deposits with financial institutions in excess of federal depository insurance limits were held in fully collateralized accounts, as permitted by the California Government Code. As of June 30, 2022, all of the City’s investments were held by the City itself or by a broker-dealer (counterparty) other than the broker-dealer used by the City to purchase the securities in the City’s name.

Investment in State Investment Pools
Investments are stated at fair value. Fair value is established quarterly based on quoted market prices received from the securities custodian. Fair value of investments held fluctuates with interest rates. The fair value of participants’ position in the pool is the same as the value of the pool shares. The value of participants’ equity withdrawn is based on the book value of the participants’ percentage participation at the date of such withdrawal.

The California State Treasurer’s Office operates the Local Agency Investment Fund (LAIF). The LAIF is available for investment of funds administered by California local governments and special districts and is not registered with the Securities and Exchange Commission (SEC) as an investment company. The enabling legislation for the LAIF is Section 16429.1 et seq. of the California Government Code. California Asset Management Program (CAMP) is a California Joint Powers Authority established in 1989 to provide California public agencies w ith professional investment services. The CAMP Pool is a permitted investment for all local agencies under California Government Code Section 53601(p).

The LAIF and CAMP operate and report to participants on an amortized cost basis. For both the LAIF and CAMP, the income, gains, and losses, net of administration fees, are allocated based upon the participant’s average daily balance. Deposits in the LAIF and CAMP are not insured or otherwise guaranteed by the State of California, and participants share proportionally in any realized gains or losses on investments. The fair value of the LAIF and CAMP investment pools are approximately equal to the value of the pool shares.

Fair Value Measurement
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy used to measure the fair value of the asset is based on the following:

Level 1 - unadjusted price quotations in active markets/exchanges for identical assets or liabilities, that each fund has the ability to access.

Level 2 - other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, loss severities, credit risks and default rates) or other market-corroborated inputs).

Level 3 - unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including each fund's own assumptions used in determining the fair value of investments).

The City has a reported fair value of investments of $683,120,566, of which $227,665,025 are valued using Level 1 inputs.

These include all of the U.S Government Agency Obligations and Time Certificates of Deposit. The remaining investments are valued using Level 2 inputs.
63

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 3 - COMPOSITION OF ACCOUNTS RECEIVABLE AND PAYABLE BALANCES Accounts receivable at June 30, 2022 o f the City's major individual funds and non-major and internal service funds in the aggregate, including the applicable allowance for uncollectible accounts, are as follows:

Accounts Receivable -
Governmental Funds:

General
Fund
Transient
Occupancy
Taxes
Fund
Community
Development
Block Grant
Fund
Capital
Outlay
Fund
Redevelopment
Successor
Agency -
Housing Fund
Non-Major
Governmental
Funds
Internal
Service
Funds
Total
Governmental
Activities
Taxes $ - $1,850,069 $ - $ - $ - $ - $ - $ 1,850,069
Accounts 9,777,236 - 14,692,554 194,998 216 4,828,529 180,280 29,673,813 Gross Receivables 9,777,236 1,850,069 14,692,554 194,998 216 4,828,529 180,280 31,523,882 Less: Allowance
for Uncollectible - - - - - - (177,990) (177,990)
Total Accounts Receivable -
Net $ 9,777,236 $1,850,069 $ 14,692,554 $ 194,998 $ 216 $ 4,828,529 $ 2,290 $ 31,345,892 Accounts Receivable -
Proprietary Funds:

Wastewater
Treatment
Fund
Refuse
Collection
Fund
Agricultural
Water
Fund
Domestic
Water
Fund
General
Aviation
Fund
Offstreet
Parking
Fund
Total
Business-Type
Activities
Accounts $ 1,761,168 $ 1,754,930 $ 922,793 $ 4,142,915 $ 645 $ 4,740 $ 8,587,191 Gross Receivables 1,761,168 1,754,930 922,793 4,142,915 645 4,740 8,587,191 Less: Allowances for
Uncollectible - - - - - - -
Total Accounts Receivable - Net $ 1,761,168 $ 1,754,930 $ 922,793 $ 4,142,915 $ 645 $ 4,740 $ 8,587,191 64

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 3 - COMPOSITION OF ACCOUNTS RECEIVABLE AND PAYABLE BALANCES (continued) Accounts payable and accrued liabilities at June 30, 2022, are composed of the following:

Accounts Payable and
Accrued Liabilities General
Transient
Occupancy
Taxes
Community
Development
Block Grant
Gas Tax
& Road Covid Relief
Capital
Outlay
Park
Improvement
Governmental Activities: Fund Fund Fund Fund Fund Fund Fund Accounts payable $ 11,613,443 $ 63,346 $ 1,718,839 $ 7,440,024 $ 199,015 $ 3,170,785 $ 3,738,706 Due to other governments 3,800,000 - - - - - -
Total Accounts Payable
and Accrued Liabilities $ 15,413,443 $ 63,346 $ 1,718,839 $ 7,440,024 $ 199,015 $ 3,170,785 $ 3,738,706 Accounts Payable and
Accrued Liabilities
Transportation
Development
Non-Major
Governmental
Internal
Service
Total
Governmental
Governmental Activities: Fund Funds Funds Activities
Accounts payable $ 1,529,346 $ 186,197 $ 3,293,052 $ 32,952,753 Due to other governments - - - 3,800,000
Total Accounts Payable
and Accrued Liabilities $ 1,529,346 $ 186,197 $ 3,293,052 $ 36,752,753 Accounts Payable and
Accrued Liabilities -
Wastewater
Treatment
Refuse
Collection
River and
Agricultural
Water
Domestic
Water
General
Aviation
Offstreet
Parking
Total
Business-Type
Business-Type Activities: Fund Fund Fund Fund Fund Fund Activities Accounts payable $ 2,730,134 $ 3,340,834 $ 586,944 $ 3,969,709 $ 15,850 $ 35,214 $ 10,678,685 Accrued interest 1,554,919 - - - - - 1,554,919
Total Accounts Payable
and Accrued Liabilities $ 4,285,053 $ 3,340,834 $ 586,944 $ 3,969,709 $ 15,850 $ 35,214 $ 12,233,604 NOTE 4 - DUE FROM OTHER GOVERNMENTS
Amounts due from other governments at June 30, 2022 are comprised of the following:

Federal
Government
State of
California
County/City
Agencies
Total
Governmental
Activities
Business-Type
Activities
Total
Reporting
Entity
Senate Bill (SB) 90 Claims $ - $ 2,067,056 $ - $ 2,067,056 $ - $ 2,067,056 Sales Tax - 36,644,547 - 36,644,547 - 36,644,547
Property Tax - - 537,065 537,065 169,487 706,552
Caltrans - 28,287,178 - 28,287,178 72,604 28,359,782
SB 1 - Road Maintenance & Rehabilitation - 2,136,285 - 2,136,285 - 2,136,285 Proposition 68 - 192,403 - 192,403 - 192,403
Department of Fish & Game - 1 - 1 - 1
Economic/Community Development 2,109,355 - - 2,109,355 - 2,109,355 Department of Natural Resources - 83,550 23,666 107,216 - 107,216 Kern County Waste Management - - 100,000 100,000 1,716,551 1,816,551 Totals $ 2,109,355 $ 69,411,020 $ 660,731 $ 72,181,106 $ 1,958,642 $ 74,139,748 65

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 5 - CAPITAL ASSETS
Capital asset activities for the year ended June 30, 2022, were as follows:

Balance Balance
June 30, 2021 Adjustments Additions Retirements June 30, 2022 Governmental Activities
Capital assets, not being depreciated
Land $ 449,935,266 $ - $ 395,296 $ - $ 450,330,562
Construction in progress 135,930,685 - 33,781,297 9,899,830 159,812,152 Total capital assets, not being depreciated 585,865,951 - 34,176,593 9,899,830 610,142,714 Capital assets, being depreciated
Buildings, structures and improvements 162,302,405 - 2,404,376 - 164,706,781 Infrastructure 1,825,180,288 - 47,086,238 - 1,872,266,526 Rolling equipment 108,236,497 - 13,788,495 6,496,932 115,528,060 Furniture and other equipment 20,077,033 (231,228) 1,966,293 17,202 21,794,896 Total capital assets, being depreciated 2,115,796,223 (231,228) 65,245,402 6,514,134 2,174,296,263 Less accumulated depreciation for
Buildings, structures and improvements (88,239,086) - (4,529,373) - (92,768,459) Infrastructure (1,180,249,693) - (59,775,315) - (1,240,025,008) Rolling equipment (58,810,957) - (9,073,456) (5,369,089) (62,515,324) Furniture and other equipment (13,905,634) 280,651 (1,094,507) (17,202) (14,702,288) Total accumulated depreciation (1,341,205,370) 280,651 (74,472,651) (5,386,291) (1,410,011,079) Total capital assets, being depreciated, net 774,590,853 49,423 (9,227,249) 1,127,843 764,285,184 Governmental activities capital assets, net $ 1,360,456,804 $ 49,423 $ 24,949,344 $ 11,027,673 $ 1,374,427,898 Business-Type Activities
Capital assets, not being depreciated
Land $ 23,987,225 $ - $ 48,908 $ - $ 24,036,133
Water rights 31,476,906 - - - 31,476,906
Construction in progress 15,144,382 - 9,719,435 7,917,071 16,946,746 Total capital assets, not being depreciated 70,608,513 - 9,768,343 7,917,071 72,459,785 Capital assets, being depreciated
Buildings, structures and improvements 334,045,347 - 2,000,642 59,606 335,986,383 Infrastructure 910,451,413 - 15,306,823 - 925,758,236
Equipment 84,524,291 - 7,718,556 126,755 92,116,092
Total capital assets being depreciated 1,329,021,051 - 25,026,021 186,361 1,353,860,711 Less accumulated depreciation for
Buildings, structures and improvements (146,425,085) - (7,902,246) (45,036) (154,282,295) Infrastructure (319,995,297) - (15,328,535) - (335,323,832) Equipment (49,050,101) - (4,824,079) (86,179) (53,788,001) Total accumulated depreciation (515,470,483) - (28,054,860) (131,215) (543,394,128) Total capital assets, being depreciated, net 813,550,568 - (3,028,839) 55,146 810,466,583 Business-type activities capital assets, net $ 884,159,081 $ - $ 6,739,504 $ 7,972,217 $ 882,926,368 66

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 5 - CAPITAL ASSETS (continued)
Depreciation and amortization expense was charged in the following functions in the Statement of Activities:

Governmental functions: Depreciation
General government $ 1,625,230
Public safety - Police 202,423
Public safety - Fire 752,630
Public works 68,026,950
Recreation and parks 3,216,266
Development services 649,152
Total $ 74,472,651
Business-type functions:

Wastewater treatment $ 20,156,505
Refuse collection 170,623
River & agricultural water 547,537
Domestic water 6,945,376
General aviation 144,192
Offstreet parking 90,627
Total $ 28,054,860
NOTE 6 - LAND HELD FOR RESALE
The City, as the Redevelopment Successor Agency, has been transferred real property to be held for a limited period that will be used for future development. The inventory for land held for resale is presented at the lower of cost or net realizable value though it is initially recorded at historical costs. Subsequently, the land could be adjusted to net realizable value if and w hen the City enters into agreements for development or sale of the property for less than its historical cost, w hen a property is impaired or when property value decreases due to market conditions.

Balance at Balance at
Redevelopment Successor Agency - Housing June 30, 2021 Additions Deletions June 30, 2022 Land Held for Resale $ 1,198,744 $ - $ - $ 1,198,744
$ 1,198,744 $ - $ - $ 1,198,744
67

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 7 - OTHER LONG-TERM RECEIVABLES
Other long-term receivables consist of the following:

Governmental Activities
Deferred loans receivable associated with the low and moderate income housing project. These loans bear 0-3% interest and are not due until ten years after the loan agreement date (also see deferred revenue at Note 9). $ 2,733,510
Mercy Housing, Madison Place Apartments, 55 year loan term, with 1/55 to be forgiven each year of compliance to agreement. 247,405
Amcal Santa Fe Apartments, 55 year loan term, repayment begins from residual receipts following the date that the housing project is put in service. 134,691 Down payment assistance loans. 1,587,718
19th Street Senior Plaza, LLC, a 55 year loan term upon recordation of Certificate of Completion. 1,688,375
Park 20th Apartments, a 55 year loan term beginning upon recordation of the Certificate of Completion with an interest rate of 3.0%. 2,720,055
Chelsea Investment Corp. - Mill Creek Village. 19th Street Senior Housing and Parking Structure. A 55 year loan term beginning upon recordation of the Certificate of Completion with an interest rate of 3.0%. 9,023,333
Chelsea Investment Corp. - Mill Creek Village. 19th Street Senior Housing and Parking Structure. A 55 year loan term beginning upon recordation of the Certificate of Completion with an interest rate of 2.0%. 1,962,792
CalHOME Downpayment Assistance for a grant from the State which provided downpayment and closing cost assistance to seventeen (17) families within the Metropolitan Bakersfield area. The assistance was provided to those families whose incomes were at or below 120% of area median income. The loans of up to $40,000 are forgiven at 1/15th per year. 223,430
Golden Empire Housing, Park Place Apartments, 55 year loan term beginning July 12, 1999, ending on July 12, 2054, with the interest payment being deferred for first ten years, until year 2010, with an interest rate of 1.5%. 807,355 Capital Vision Equities, City Center Senior Housing, 35 year loan term beginning on March 28, 2001, ending March 28, 2036, with an interest rate of 5.85%. 990,000 Canyon Hills Assembly of God, Senior Housing Project 30 year loan term beginning July 30, 2001 ending July 30, 2031, with an interest rate of 0%. 310,000 Mill Creek Courtyard CIC - SEPA - Senior Housing Project. A 55 year loan term beginning from the date of execution by the developer. 2,520,000 Face value of loans $ 24,948,664
68

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 7 - OTHER LONG-TERM RECEIVABLES (continued)
Current portion $ -
Long-term portion 24,948,664
Business-Type Activities
Notes receivable in the River & Agricultural Water Fund are for the amounts due from various customers/vendors.

These loans are non-interest bearing. $ 26,760
Total business-type noncurrent receivables $ 26,760
69

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 8 - INTERFUND TRANSACTIONS
Interfund transactions are comprised of loans, services provided, reimbursements, or transfers. Loans are reported as amounts “due to/due from” other funds or as “advances,” as appropriate, and are subject to elimination upon consolidation. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements occur when one fund incurs a cost, charges the appropriate benefiting fund, and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental activities and business-type activities are netted as part of the consolidation required to produce the government-wide financial statements.

Interfund receivable and payable balances at June 30, 2022 were:

Fund
Due from
Other Funds
Due to
Other Funds
Governmental Funds:

Major Funds:

General Fund $ 8,942,715 $ -
Community Development Block Grant Fund - 612,918
Gas Tax & Road Fund - 8,329,797
$ 8,942,715 $ 8,942,715
These balances are a result of expenditures incurred prior to the receipt of the related special revenue source.

Fund
Advances from
Other Funds
Advances to
Other Funds
Business Type Funds
Wastewater Fund - 2,719,697
Refuse Fund 2,719,697 -
$ 2,719,697 $ 2,719,697
This balance is a result in an advance from the Wastewater Fund to the Refuse Fund in order to purchase a recycling center and has nine years remaining on the repayment schedule.

Interfund transfers at June 30, 2022 consisted of the following:

Transfers In Transfers Out
Governmental Funds:

Major Funds:

General Fund $ 1,100,000 $ 65,456,162
Gas Tax & Road Fund - 97,500
Transient Occupancy Taxes Fund - 6,892,061
Community Development Block Grant Fund - 517,810
Capital Outlay Fund 66,523,381 5,797,000
Non-Major Funds:

State Safety Fund - 1,118,000
General Obligation Debt Fund 1,335,461 -
Subtotal 68,958,842 79,878,533
Private Purpose Trust Funds:
70

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 8 - INTERFUND TRANSACTIONS (continued)
Transfers In Transfers Out
Affordable Housing Fund 6,644,357 -
Proprietary Funds:

Major Funds:

Wastewater Treatment Fund - 801,838
Refuse Collection Fund - 1,642,000
River & Agricultural Water Fund - 524,500
Domestic Water Fund - 38,500
General Aviation Fund - 4,267
Offstreet Parking Fund 100,000 12,998
Internal Service Funds:

Self-Insurance Fund - 67,563
Equipment Management Fund 7,267,001 -
$ 82,970,200 $ 82,970,199
Additional details regarding transfers in and out of various funds are provided below:
 The $1,100,000 transfer in to the General Fund is from the State Safety Fund that subsidized the cost of the traffic division of the police department for parking fine violations.
 The $65,456,162 transfer from the General Fund includes a transfer to the Capital Outlay Fund of $18,290,000 for various capital improvement projects, $772,324 to the General Obligation Debt Fund for the repayment of loans from PG&E for energy efficient retro fit projects, $100,000 to the Offstreet Parking Fund for security, $500,000 to the Facility Reserve Fund to replenish reserves, $1,644,357 to the Affordable Housing Fund to aid in the housing crisis, as well as $81,000 to the Equipment Fund for operating activity.
 The $6,892,061 transfers from the Transient Occupancy Taxes Fund include $6,814,000 transferred to the Capital Outlay Fund to fund a number of capital projects, $28,061 to the General Obligation Debt Fund for the repayment of a loan from PG&E for an energy efficiency retrofit at Rabobank Arena, and $50,000 to the Equipment Fund for additional funding to replace equipment.
 The $517,810 t ransfer from the Community Development Block Grant (CDBG) Fund to the General Obligation Debt Fund is for the repayment of a Section 108 loan.
 There were additional transfers to the Equipment Management Fund to purchase additional equipment for operations which include: the General Fund ($3,946,100), the State Safety Fund ($18,000), the Gas & Tax & Road Fund ($97,500), the Sewer Fund ($801,838), the Refuse Fund ($1,642,000), the River & Agricultural Water Fund ($524,500), the Domestic Water Fund ($38,500) and the Self-Insurance Fund ($67,563). 71

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 9 - ADVANCES FROM GRANTORS AND THIRD PARTIES
The government-wide Statement of Net Position as well as governmental and enterprise funds defer revenue recognition in connection with resources that have been received as of year-end but not yet earned because under both the accrual and modified accrual basis of accounting revenue may be recognized only when earned. Assets recognized in connection with a transaction before the earnings process is complete are offset by a corresponding liability for advances from grantors and third parties.

The following table summarizes Advances from Grantors and third parties for the City at June 30, 2022:

Balance at
June 30, 2022
Governmental Activities:

General Fund
Dog License $ 69,019
Business License 1,837,171
COVID Relief 37,679,079
General Fund Total 39,585,269
Redevelopment Successor Agency - Housing 22,215,154
Non-Major Funds:

State TDA - Grants Advanced 232,278
Total Governmental Activities $ 62,032,701
Business-Type Activities:

Refuse Collection $ 123,639
Total Business-Type Activities $ 123,639
NOTE 10 - LEASES
A lease is defined as a contractual agreement that conveys control of the right to use another entity’s nonfinancial asset, for a minimum contractual period of greater than one year, in an exchange-like transaction.

A. Leases of Tangible Items
In fiscal year 2022, the City adopted Statement No. 87, Leases, i ssued by the Governmental Accounting Standards Board (GASB). This statement establishes a single model for lease accounting based on the principle that leases are financing of the right to use an underlying asset. In accordance with the statement, parties to a lease agreement, the lessee and lessor, are required to recognize a lease liability and an intangible right-to-use lease asset, and a lease receivable and deferred inflow of resources, respectively.

City as Lessor
The City is a lessor of land and building nonfinancial assets. The City recognizes a lease receivable and a deferred inflow of resources in the government-wide and governmental fund financial statements.

At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources in initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. 72

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 10 - LEASES (continued)
The following are key estimates and judgments how the City determines the discount rate on the expected lease receipts to present value, lease term, and lease receipts:
 The City uses its estimated incremental borrowing rate as the discount rate for leases.  The lease term includes the noncancellable period of the lease. Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee.

As lessor, the City recognized twelve lease agreements subject to GASB Statement No. 87, Leases, at the beginning of the fiscal year. The lease terms range from 48 to 994 months for the right to use land, land improvements, buildings, and infrastructure. Most of these leases include periodic adjustments to the lease amounts at determined intervals. The fixed lease payment ranges from $1 to $195,696 per year, with the incremental borrowing rate of 1.5%. For the year ended June 30, 2022 the City received an immaterial amount of variable and other payments from these lease arrangements.

The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.

Changes in lease receivable for the year ended June 20, 2022 are as follows:

Restated (1)
Balance at
June 30, 2021 Additions
Principal
Retirement
Balance at
June 30, 2022
Governmental Activities
Lease Receivable $ 489,200 $ - $ 39,803 $ 449,397
Defered inflow of resources $ 489,200 $ - $ 54,506 $ 434,694 Balance at
June 30, 2021 Additions
Principal
Retirement
Balance at
June 30, 2022
Business-Type Activities
Lease Receivable $ 5,129,064 $ - $ 504,829 $ 4,624,235
Deffered inflow of resources $ 5,129,064 $ - $ 565,218 $ 4,563,846 (1) The beginning balance was restated to add the lease receivable due to the implementation of GASB Statement No. 87, Leases.

City as a Lessee
The City is a lessee of nonfinancial assets such as land, buildings, and equipment. The City recognizes a lease liability and intangible right-to-use lease assets in the government-wide financial statements. The City recognizes lease liabilities with an initial, individual value of $5,000 or more.

At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight-line basis over its useful life, which is the shorter of the leased asset’s useful life or the lease term.

The following are key estimates and judgments on how the City determines its discount rate on the expected lease payments to 73

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 10 - LEASES (continued)
present value, lease term, and lease payments:
 The City uses its estimated incremental borrowing rate as the discount rate for leases.  The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payment and purchase option price that the City is reasonably certain to exercise.

As lessee, the City recognized six lease agreements subject to GASB Statement No. 87, Leases, at the beginning of the fiscal year. During the fiscal year, the City entered into one lease agreement. The lease terms range from 36-204 months for the right to use buildings and equipment. Most of these leases include periodic adjustments to the lease amounts at determined intervals.

The fixed lease payment ranges from $680 to $695,722 per year with the incremental borrowing rate ranging from 3% to 5%.

For the year ended June 30, 2022, the City paid an immaterial amount of variable and other payments from these lease arrangements.

The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability.

Changes in lease asset and lease liability for the year ended June 30, 2022 are as follows:

Restated (1)
Balance at
June 30, 2021 Additions
Principal
Retirement
Balance at
June 30, 2022
Governmental Activities:

Lease assets
Right-to-use land $ 67,010 $ - $ - $ 67,010
Right-to-use-buildings 34,978 1,474,971 - 1,509,949
Right-to-use equipment 34,947 - - 34,947
Total lease assets 136,935 1,474,971 - 1,611,906
Accumulated amortization - (232,194) - (232,194)
Total lease assets, net $ 136,935 $ 1,242,777 $ - $ 1,379,712 Lease liability $ 136,935 $ 1,474,971 $ (207,121) $ 1,404,785 (1) The beginning balance was restated to add the lease receivable due to the implementation of GASB Statement No. 87, Leases.

During the year ended June 30, 2022, the City recognized lease expenses and interest expenses as follows:

Business-Type
Activities
Governmental
Activities
Other lease (non-GASB 87) expenses $ 2,786,692 $ 232,194 Total lease expenses 2,786,692 232,194
Other lease (non-GASB 87) interest
expenses 668,624 15,540
Total lease interest expenses $ 668,624 $ 15,540
As of June 30, 2022, the City had a minimum principal and interest payment requirement for its lease activities with a remaining term in excess of one year, as follows:
74

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 10 - LEASES (continued)
Governmental Activities
Year ending Lease Interest Total
2023 $ 479,018 $ 36,013 $ 515,031
2024 543,889 20,783 564,672
2025 340,692 4,819 345,511
2026 16,111 1,069 17,180
2027 9,958 590 10,548
2028-2032 12,006 1,295 13,301
2033-2037 3,111 289 3,400
Totals $ 1,404,785 $ 64,858 $ 1,469,643
B. Leases of Intangible Items
GASB Statement No. 87 for leases specifically excludes inclusion of intangible assets. As such, there is a separate tracking of those leases for items identified under GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets .

The City entered into a long-term lease agreement in September 2005 for the acquisition of water rights with the Kern County Water Agency (KCWA). The agreement entitles the City to receive 6,500 acre feet of water per year in exchange for an annual payment tied to KCWA's water revenue certificates of participation from 2006 and 2008, which were used for the expansion of the water treatment facility. On March 1, 2016, KCWA issued a refunding bond that refunded the previous debt that the City's lease payments were based upon. The City's lease payments coincide with the amortization schedule for the related KCWA dept wit the value of the water rights at $15,625,884. The total lease obligations for the term of the agreement are as follows:

Business-Type Activities
Year ending Lease Interest Total
2023 $ 712,201 $ 636,691 $ 1,348,892
2024 747,648 602,990 1,350,638
2025 782,515 566,907 1,349,422
2026 819,559 529,057 1,348,616
2027 860,240 488,979 1,349,219
2028-2032 4,961,800 1,786,433 6,748,233
2033-2037 5,684,148 813,402 6,497,550
2038-2042 1,057,773 42,311 1,100,084
Totals $ 15,625,884 $ 5,466,770 $ 21,092,654
75

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 11 - LONG-TERM DEBT
Long-term debt transactions for the fiscal year ending June 30, 2022 are summarized below:

Business-Type Activities
Governmental
Activities
General
Obligations
Revenue
Obligations Total
Total
Government
Payable at June 30, 2021:

Bonds $ - $ - $ 129,974,556 $129,974,556 $129,974,556
Certificates of Participation 3,000,000 - - - 3,000,000 Notes 3,995,063 3,000,000 - 3,000,000 6,995,063
Contracts/Loans - 352,970 - 352,970 352,970
Claims and Judgments Payable 64,552,000 - - - 64,552,000 Compensated Absences 18,736,022 2,402,985 - 2,402,985 21,139,007 Subtotal 90,283,085 5,755,955 129,974,556 135,730,511 226,013,596 New debt incurred:

Bonds - - - - -
Notes/Advances 870,288 - - - 870,288
Claims and Judgments Payable 6,769,000 - - - 6,769,000
Compensated Absences 12,645,570 1,249,064 - 1,249,064 13,894,634 Subtotal 20,284,858 1,249,064 - 1,249,064 21,533,922
Principal reductions:

Bonds - - 9,276,778 9,276,778 9,276,778
Certificates of Participation 3,000,000 - - - 3,000,000 Notes 1,317,681 280,303 - 280,303 1,597,984
Contracts/Loans - 26,708 - 26,708 26,708
Compensated Absences 11,268,586 1,311,386 - 1,311,386 12,579,972 Subtotal 15,586,267 1,618,397 9,276,778 10,895,175 26,481,442 Payable at June 30, 2022:

Bonds - - 120,697,778 120,697,778 120,697,778
Notes 3,547,669 2,719,697 - 2,719,697 6,267,366
Contracts/Loans - 326,262 - 326,262 326,262
Claims and Judgments Payable 71,321,000 - - - 71,321,000 Compensated Absences 20,113,006 2,340,663 - 2,340,663 22,453,669 Total Payables $ 94,981,675 $ 5,386,622 $ 120,697,778 $126,084,400 $221,066,075 76

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 11 - LONG-TERM DEBT (continued)
Business-Type Activities
Governmental
Activities
General
Obligations
Revenue
Obligations Total
Total
Government
Due Within One Year:

Bonds $ - $ - $ 9,601,778 $ 9,601,778 $ 9,601,778
Certificates of Participation - - - - -
Notes 1,260,445 284,507 - 284,507 1,544,952
Total Long-Term Debt 1,260,445 284,507 9,601,778 9,886,285 11,146,730 Contracts/Loans - 326,262 - 326,262 326,262
Claims and Judgments Payable 12,273,000 - - - 12,273,000 Compensated Absences 2,667,177 512,580 - 512,580 3,179,757 Total Due Within One Year $ 16,200,622 $ 1,123,349 $ 9,601,778 $ 10,725,127 $ 26,925,749 Due in More Than One Year:

Bonds $ - $ - $ 111,096,000 $111,096,000 $111,096,000
Notes 2,287,224 2,435,190 - 2,435,190 4,722,414
Total Long-Term Debt 2,287,224 2,435,190 111,096,000 113,531,190 115,818,414 Claims and Judgments Payable 59,048,000 - - - 59,048,000 Compensated Absences 17,445,834 1,828,082 - 1,828,082 19,273,916 Total Due in More Than One Year $ 78,781,058 $ 4,263,272 $ 111,096,000 $115,359,272 $194,140,330 The liability for pension-related debt, OPEB debt, and compensated absences for governmental activities is primarily liquidated by the General Fund with smaller portions charged to other funds in an amount proportional to the personnel costs incurred.

The pension related debt and compensated absences for business-type activities will be paid by the respective proprietary funds.

Long-term debt payable at June 30, 2022, was comprised of the following individual issues:

Bonds
General obligation bonds serviced by business-type activities:
$10,525,000 Wastewater Revenue Bonds 2020 Series A bonds - The proceeds from the sale of the Series 2020A Bonds, along with certain available moneys of the Enterprise, were to be used to redeem and decrease a portion of the outstanding 2015A Refunded Bonds. The original series from 2007 was refunded with these 2015 bonds, a portion of which remains outstanding. The financing was used to fund the costs of certain capital improvements at the City's wastewater and sewer collection, treatment and disposal system (specifically Treatment Plant #3) (This issue is serviced by the Wastewater Treatment Fund). $ 10,525,000 $145,500,000 Wastewater Revenue Bonds 2015 Series A - The 2007 Series A bonds were refunded in 2015 with a partial call of the outstanding principal amount of $156,750,000 as well as payment of the issuance costs. The proceeds of the original Series 2007A refunded bonds were used to finance a portion of certain capital improvements at the City's wastewater and sewage collection treatment and disposal system; interest rate of 5.00%. (This issue is serviced by the Wastewater Treatment Fund.) $ 94,105,000 Unamortized Bond Premium on Wastewater Revenue Bonds 16,067,778 Total Bonds $120,697,778
77

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 11 - LONG-TERM DEBT (continued)
Notes/Loans:

General obligation note serviced by Community Development Block Grant Fund (via the Municipal Debt Service Fund with Community Development Block Grant Entitlement): $4,100,000 Housing & Urban Development (HUD) Section 108 Loan 2003 - Due in annual principal installments of $137,000 to $320,000 commencing August 1, 2004 through August 2022; interest ranging from 1.75% to 4.76%. $ 320,000 General obligation note serviced by Community Development Block Grant Fund (via the Municipal Debt Service Fund with Community Development Block Grant Entitlement): $800,000 HUD Section 108 Loan 2003 - due in annual principal installments of $24,000 to $61,000 commencing August 1, 2005 through August 2023; interest ranging from 1.61% to 4.76%. 119,000
General obligation loan serviced by General Fund (via the Municipal Debt Service Fund ):
$75,960 PG&E loan used for an energy efficient lighting upgrade at the City's Municipal Airport. The payment will be made in 89 monthly payments of $853.49 This loan contains no interest charges. 71,694
General obligation loan serviced by General Fund (via the Municipal Debt Service Fund); $743,215 PG&E loan used for an energy efficient lighting upgrades to various City of Bakersfield Parks. The payment will be made in 100 monthly payments of $7,362.33. This loan contains no interest charges. 743,153
General obligation loan serviced by General Fund (via the Municipal Debt Service Fund):
$126,274 PG&E loan used for an energy efficient lighting upgrade at Rabobank Theater. The payments will be made starting March 12, 2018 in 54 monthly payments of $2,338. This loan contains no interest charges.
4,676
General obligation loan serviced by General Fund (via the Municipal Debt Service Fund):
$1,420,717 PG&E loan used for an energy efficient lighting upgrade throughout the City. The payments will be made in 80 monthly payments of $17,759. This loan contain no interest charges.
745,878
General obligation loan serviced by General Fund (via the Municipal Debt Service Fund):
$1,979,307 PG&E loan used for an energy efficient lighting upgrade throughout the City. The payments will be made in 80 monthly payments of $24,138. This loan contain no interest charges.
1,086,206
General obligation loan serviced by General Fund (via the Municipal Debt Service Fund):
$736,517 PG&E loan used for an energy efficient lighting upgrade throughout the City. The payments will be made in 46 monthly payments of $16,011. This loan contain no interest charges.
176,123
General obligation loan serviced by General Fund (via the Municipal Debt Service Fund); $126,730 PG&E loan used for an energy efficient lighting upgrade for the Parking Garage.

The payment will be made in 117 monthly payments of $1,083. This loan contains no interest charges.
110,483
78

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 11 - LONG-TERM DEBT (continued)
General obligation loan serviced by General Fund (via the Municipal Debt Service Fund); $32,285 PG&E loan used for an energy efficient lighting upgrade for the City Hall North.

The payment will be made in 110 monthly payments of $294. This loan contains no interest charges.
28,470
General obligation loan serviced by General Fund (via the Municipal Debt Service Fund); $140,477 PG&E loan used for an energy efficient lighting upgrade for the Amphitheater.

The payment will be made in 107 monthly payments of $1,313. This loan contains no interest charges.
122,101
General obligation loan serviced by General Fund (via the Municipal Debt Service Fund); $28,073 PG&E loan used for an energy efficient lighting upgrade for Grissom Park. The payment will be made in 48 monthly payments of $585. This loan contains no interest charges.
19,885
Total general obligation notes/loans payable $ 3,547,669 79

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 11 - LONG-TERM DEBT (continued)
Compensated Absences:

Governmental Activities $ 20,113,007
Business-Type Activities 2,340,663
Total Compensated Absences $ 22,453,670
A summary of the City's debt service requirements outstanding at June 30, 2022, is as follows:

Total
Government
Principal:

Governmental Activities $ 94,981,676
Business-Type Activities:

General Obligations 5,386,622
Revenue Obligations 120,697,781
Subtotal - Principal 221,066,079
Less: Claims and Judgments Payable included
above that bear no interest and have
no schedule of repayment terms 71,321,000
Less: Kern River Levee District Payable
included above that bears no interest and
has no schedule of repayment terms 326,263
Less: Unamortized premium for Wastewater
revenue bond 16,067,778
Less: Compensated Absences included above that bear
no interest and have no schedule of repayment terms 22,453,674 Total Principal with Scheduled
Repayment Terms 110,897,364
Interest on Obligations 29,350,132
Total Debt Service Requirements $140,247,496
80

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 11 - LONG-TERM DEBT (continued)
The annual requirement to amortize the principal and interest on long-term debt at June 30, 2022 is as follows:

Government-Type Activities
Year ending Principal Interest
Bonds/COP Notes/Loans Total Bonds Notes/Loans Total
2023 $ - $ 1,260,445 $ 1,260,445 $ - $ 17,811 $ 17,811
2024 - 640,646 640,646 - 7,193 7,193
2025 - 639,477 639,477 - - -
2026 - 454,659 454,659 - - -
2027 - 130,865 130,865 - - -
2028-2032 - 421,577 421,577 - - -
Totals $ - $ 3,547,669 $ 3,547,669 $ - $ 25,004 $ 25,004 Business-Type Activities
Year ending Principal Interest
Bonds/COP Notes/Loans Total Bonds Notes/Loans Total
2023 $ 7,995,000 $ 284,507 $ 8,279,507 $ 5,031,625 $ 38,662 $ 5,070,287 2024 8,450,000 288,775 8,738,775 4,620,500 34,362 4,654,862 2025 8,920,000 293,106 9,213,106 4,186,250 29,998 4,216,248 2026 9,365,000 297,503 9,662,503 3,729,125 25,568 3,754,693 2027 9,885,000 301,965 10,186,965 3,247,875 21,072 3,268,947 2028-2032 53,545,000 1,253,841 54,798,841 8,160,375 37,966 8,198,341 2033-2037 6,470,000 - 6,470,000 161,750 - 161,750
Totals $ 104,630,000 $ 2,719,697 $107,349,697 $ 29,137,500 $ 187,628 $ 29,325,128 Total Reporting Entity
Year Ending Principal Interest
Bonds/COP Notes/Loans Total Bonds/COP Notes/Loans Total 2023 $ 7,995,000 $ 1,544,952 $ 9,539,952 $ 5,031,625 $ 56,473 $ 5,088,098 2024 8,450,000 929,421 9,379,421 4,620,500 41,555 4,662,055 2025 8,920,000 932,583 9,852,583 4,186,250 29,998 4,216,248 2026 9,365,000 752,162 10,117,162 3,729,125 25,568 3,754,693 2027 9,885,000 432,830 10,317,830 3,247,875 21,072 3,268,947 2028-2032 53,545,000 1,675,418 55,220,418 8,160,375 37,966 8,198,341 2033-2037 6,470,000 - 6,470,000 161,750 - 161,750
Totals $ 104,630,000 $ 6,267,366 $110,897,366 $ 29,137,500 $ 212,632 $ 29,350,132 81

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 12 - PLEDGED REVENUES
The City has pledged net revenues generated by the Wastewater Enterprise Fund to repay a total of $151.5 m illion in wastewater revenue bonds series 2015A issued to finance a portion of the expansion and improvement of the City's wastewater and sewage collection and disposal system.

Each fiscal year, net revenues means all revenues of the enterprise fund received during the fiscal year less operation and maintenance costs for that fiscal year. T he pledge of net revenues does not constitute a lien upon any property of the City.

Proceeds of the bonds provided financing for expansion and upgrade of Wastewater Treatment Plant #3, and improvements to Wastewater Treatment Plant #2. T he bonds are payable through 2034 for 2015A bonds. T he covenants of the ordinances authorizing the bonds include, among other things, an obligation of the City to fix, prescribe, revise, and collect rates, fees, and charges for the services and facilities of the system and revise the same whenever necessary, which will provide gross revenues in each fiscal year sufficient to pay the cost of operation and maintenance of the system; one hundred twenty five percent (125%) of the bond service requirement becoming due in such fiscal year on the outstanding bonds; plus one hundred percent (100%) of all reserve and other payments required to be made pursuant to the ordinances authorizing the bonds.

NOTE 13 - DEFERRED INFLOWS OF RESOURCES
Pursuant to GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, the City recognized deferred inflows of resources in the governmental fund financial statements. These items are an acquisition of net fund balance by the City that is applicable to a future reporting period. Previous financial reporting standards do not include guidance for reporting those financial statement elements, which are distinct from assets and liabilities. Under the modified accrual basis of accounting, it is not enough that revenue has been earned if it is to be recognized in the current period. Revenue must also be susceptible to accrual (i.e., measurable and available to finance expenditures of the current period). Governmental funds report deferred revenues in connection with receivables for revenues not susceptible to accrual, as deferred inflows of resources.

Deferred inflows of resources balances (non-lease related) for the year ended June 30, 2022 were as follows:

Balance at
June 30, 2022
General Fund
California Water Receivable $ 120,316
Code Enforcement Receivable 23,228
State Agencies (SB90) 2,067,056
General Fund Total 2,210,600
CDBG - Deferred Loans 17,425,534
Capital Outlay Fund 46,606
Non-Major Funds
Neighborhood Stabilization 4,715,677
Total Governmental Funds $ 24,398,417
82

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 14 - FUND BALANCES
Fund balances for all major and non-major governmental funds as of June 30, 2022 are as follows (see Note 1 for description of the categories used):

General
Fund
Transient
Occupancy
Taxes Fund
Community
Development
Block Grant
Fund
Gas Tax
& Road
Fund
Covid Relief
Fund
Capital
Outlay
Fund
Nonspendable
Prepaids/Deposits $ 98,463 $ - $ - $ - $ - $ 779,865
Subtotal 98,463 - - - - 779,865
Restricted
Development services grants - - - - - -
Development Services projects - - - - - -
Police services grants - - - - - -
Fire services grants - - - - - -
Covid relief - - - - 5,976,430 -
Public works grants - - - 14,644,011 - -
Subtotal - - - 14,644,011 5,976,430 -
Committed
Legal & Professional services 238,141 - - - - 110,476
City facility construction & refurbishment projects - - - - - 3,970,665 Police service contracts 544,578 - - - - 621,710
Fire service contracts - - - - - 2,946,963
Public works
improvement contracts - - - - - 9,220,747
Park improvement contracts 217,131 - - - - 150,379
Tourism and promotional contracts - 12,100 - - - -
Development Services contracts 736,859 - - - - 13,887,806 Cash basis reserve 48,586,675 - - - - -
Facility replacement reserve - - - - - 1,716,246
Economic/Community development projects 4,288,097 - - - - 4,691,896 Appropriation for next
year's budget 31,832,427 - - - - -
Subtotal 86,443,908 12,100 - - - 37,316,888
Assigned
Legal & Professional services 53,111 - - - - -
Police operations 419,235 - - - - -
Fire operations 232,018 - - - - -
Public works - General
Services department 115,918 - - - - -
Highway and road projects - - - - - 20,711,952
Rolling equipment - - - - - 64,551,015
Tourism and promotional contracts 200,899 6,499,337 - - - - Park development projects 114,613 - - - - -
Economic/Community development projects 58,209 - - - - - Other miscellaneous agreements 104,142 - - - - -
Petty Cash accounts 29,170 - - - - -
Compensated absences 2,367,135 - - - - -
Public Safety and Vital Services 30,725,799 - - - - -
Subtotal 34,420,249 6,499,337 - - - 85,262,967
Unassigned 7,478,680 - (320,921) - - -
Total $ 128,441,300 $ 6,511,437 $ (320,921)$ 14,644,011 $ 5,976,430 $ 123,359,720 83

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 14 - FUND BALANCES (continued)
Park
Improvement
Fund
Transportation
Development
Fund
Redevelopment
Successor
Agency -
Housing
Fund
Non-Major
Governmental
Funds Total
Nonspendable
Prepaids/Deposits $ - $ - $ - $ - $ 878,328
Subtotal - - - - 878,328
Restricted
Development services grants - - - 310,499 310,499
Development Services projects - - 2,611,787 - 2,611,787 Police services grants - - - 2,484,958 2,484,958
Fire services grants - - - 810,021 810,021
Covid relief - - - - 5,976,430
Public works grants - - - - 14,644,011
Subtotal - - 2,611,787 3,605,478 26,837,706
Committed
Legal & Professional services - - - - 348,617
City facility construction & refurbishment projects - - - - 3,970,665 Police service contracts - - - - 1,166,288
Fire service contracts - - - - 2,946,963
Public works
improvement contracts - 51,437,839 - - 60,658,586
Park improvement contracts 9,155,844 - - - 9,523,354
Tourism and promotional contracts - - - - 12,100
Development Services contracts - - - - 14,624,665
Cash basis reserve - - - - 48,586,675
Facility replacement reserve - - - - 1,716,246
Economic/Community development projects - - - - 8,979,993 Appropriation for next
year's budget - - - - 31,832,427
Subtotal 9,155,844 51,437,839 - - 184,366,579
Assigned
Legal & Professional services - - - - 53,111
Police operations - - - - 419,235
Fire operations - - - - 232,018
Public works - General
Services department - - - - 115,918
Highway and road projects - - - - 20,711,952
Rolling equipment - - - - 64,551,015
Tourism and promotional contracts - - - - 6,700,236
Park development projects - - - - 114,613
Economic/Community development projects - - - - 58,209
Other miscellaneous agreements - - - - 104,142
Petty Cash accounts - - - - 29,170
Compensated absences - - - - 2,367,135
Public Safety and Vital Services - - - - 30,725,799
Subtotal - - - - 126,182,553
Unassigned - - - - 7,157,759
Total $ 9,155,844 $ 51,437,839 $ 2,611,787 $ 3,605,478 $ 345,422,925 NOTE 15 - REIMBURSABLE DEVELOPER COSTS
Reimbursable developer costs of $1,572,018 at June 30, 2022 are included in customer deposits in the Domestic Water Fund which represent amounts due to developers for construction of water mainline extensions and certain other water facilities. For mainline extensions transferred to the City after June 30, 1982, the developers are to be reimbursed based on revenues generated from the water sales associated with these mainline extensions. The City is required to reimburse 2.5% of the cost of the extension on a yearly basis with the total amount to be reimbursed within 40 years. 84

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 16 - EMPLOYEE RETIREMENT BENEFITS
General
The City of Bakersfield provides pension benefits to eligible full-time employees in three separate plans: the Miscellaneous Plan, the Safety Fire Plan, and the Safety Police Plan, all of which are included in the Public Agency portion of the California Public Employees’ Retirement System (CalPERS).

Miscellaneous Plan
Plan Description
The City’s Miscellaneous Plan is a defined benefit pension plan that provides retirement and disability benefits, annual cost-of- living adjustments (COLA), and death benefits to plan members and beneficiaries. T he Miscellaneous Plan is an agent multiple-employer plan administered by CalPERS, which acts as a common investment and administrative agent for participating public employers within the State of California. A menu of benefit provisions, as well as other requirements, is established by 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. C alPERS issues a separate annual comprehensive financial report. Copies of the CalPERS' annual financial report may be obtained from their Executive Office - 400 P Street – Sacramento, CA 95814.

Benefits Provided
The benefits provided through the CalPERS Miscellaneous Plan include retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. The City has three tiers through CalPERS under the Miscellaneous employee plan. Tier I is applicable to all employees hired before August 20, 2008 with a formula of 3% at age

60. Earliest retirement age is 50 with final compensation based on 12 months at the highest rate of pay received. Tier II is applicable to employees hired after August 20, 2008 and before January 1, 2013 with a formula of 2.7% at age 55. Earliest retirement age is 50 with final compensation based on 36 months at the highest rate of pay received. Tier III is applicable to employees hired after January 1, 2013 with a formula of 2% at age 62, which is a result of the Public Employees' Pension Reform Act of 2013 (PEPRA). PEPRA also lowered the final compensation and contribution requirements. Earliest retirement age is 52 with final compensation, subject to the PEPRA limit of $161,969, based on 36 months at the highest rate of pay received.

Contributions and Employees Covered
Active plan members in the CalPERS Miscellaneous Plan may be required to contribute a particular percent of their annual pay depending on the applicable plan they fall under. Tier I and Tier II employees will pay 8% of their salary while those employees under PEPRA (Tier III) will pay 6.25% of their salary. In addition, employees in Tier I and Tier II have 7.5% of their contribution picked-up by the City after five years of service.

Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. It is the responsibility of the employer to make necessary accounting adjustments to reflect the impact due to any Employer Paid Member Contributions or situations where members are paying a portion of the employer contribution.

As of June 30, 2021 (the measurement date), there are 1,064 active employees and 1,031 inactive employees or beneficiaries receiving benefits. For the fiscal year ended June 30, 2022, the employee contribution rate was 7.460 percent of annual pay, and the employer’s minimum contribution rate was 35.040 percent of annual payroll. Employer contribution rates may change if plan contracts are amended.
85

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 16 - EMPLOYEE RETIREMENT BENEFITS (continued)
Actuarial Methods and Assumptions
For the measurement period ended June 30, 2021 (the measurement date), the total pension liability was determined by rolling forward the June 30, 2020 total pension liability. The June 30, 2020 and the June 30, 2021 total pension liabilities were based on the following actuarial methods and assumptions:

Actuarial Cost Method Entry Age Normal
Asset Valuation Method
Fair Value of Assets. For details, see
June 30, 2018 Funding Valuation
Report.

Inflation Rate 2.50%
Salary Increases Varies by Entry Age and Service
Payroll Growth 2.75%
Investment Rate of Return 7.00% [a]
Mortality [b]
[a] Net of Pension Plan Investment and Administrative Expenses; includes inflation. [b] Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvements using Society of Actuaries 90% of scale MP-2016. For more details on this table, please refer to the December 2017 experience study report.

All other actuarial assumptions used in the June 30, 2021 valuation were based on the results of an actuarial experience study dated 2017 which was derived from data collected for the period from 1997 to 2015, including updates to salary increases, mortality and retirement rates. The 2017 Experience Study report can be obtained at CalPERS’ website under Forms and Publications.

Discount Rate
The discount rate used to measure the total pension liability was 7.15 percent. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that w ould most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.15 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long-term expected discount rate of 7.15 percent is applied to all plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained at CalPERS’ website under the GASB Statement No. 68 section.

The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
86

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 16 - EMPLOYEE RETIREMENT BENEFITS (continued)
The table below reflects long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. The target allocation shown was adopted by the CalPERS' Board effective on July 1, 2016.

Asset Class
Assumed Asset
Allocation
Real Return
Years 1-10 [a]
Real Return
Years 11+ [b]
Global Equity 50.0% 4.80% 5.98%
Fixed Income 28.0% 1.00% 2.62%
Inflation Assets 0% 0.77% 1.81%
Private Equity 8.0% 6.30% 7.23%
Real Assets 13.0% 3.75% 4.93%
Liquidity 1.0% 0% (0.92%)
[a] An expected inflation of 2.0% used for this period. [b] An expected inflation of 2.92% used for this period.

Changes in Net Pension Liability
The change in the Net Pension Liability recognized over the measurement period is as follows:

Increase (Decrease)

MISCELLANEOUS PLAN
Total Pension
Liability
[1]
Plan Fiduciary
Net Position
[2]
Net Pension
Liability
[3]=[1] - [2]
Balance at June 30, 2020 [a] $ 610,478,118 $ 435,360,737 $ 175,117,381 Changes Recognized for the
Measurement Period:
- Service Cost 10,008,798 - 10,008,798
- Interest on the Total
Pension Liability 43,128,230 - 43,128,230
- Changes of Benefit Terms - - -
- Differences between Expected
and Actual Experience 3,580,266 - 3,580,266
- Changes of Assumptions - - -
- Plan to Plan Movement - - -
- Contributions - Employer - 19,503,572 (19,503,572)
- Contributions - Employees - 4,617,600 (4,617,600)
- Net Investment Income - 98,463,929 (98,463,929)
- Benefit Payments Including
Refund of Employee Contributions (31,741,505) (31,741,505) - - Administrative Expenses - (434,899) 434,899
- Other Misc Income/(Expense) [b] - - -
Net Changes during 2020-21 24,975,789 90,408,697 (65,432,908) Balance at June 30, 2021 [a] $ 635,453,907 $ 525,769,434 $ 109,684,473 [a] The plan fiduciary net position includes receivables for employee service buybacks, deficiency reserves, fiduciary, self-insurance and OPEB expense. This may be different from the plan assets reported in the funding actuarial valuation report. 87

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 16 - EMPLOYEE RETIREMENT BENEFITS (continued)
Sensitivity of the Net Pension Liability to Changes in the Discount Rate

MISCELLANEOUS PLAN
Discount Rate - 1%
(6.15%)
Current Discount
Rate (7.15 %)
Discount Rate +
1%
(8.15%)
Plan Net Pension
Liability $ 192,280,767 $ 109,684,473 $ 41,199,067
Recognition of Gains and Losses
Under GASB Statement No. 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time.

The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense.

The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is a five year straight-line amortization. All other amounts are amortized using straight-line amortization over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period.

The expected average remaining service lifetime (EARSL) for the plan for the June 30, 2021 measurement date is 3.6 years, which is obtained by dividing the total service years of 10,930 (the sum of remaining lifetimes of active employees) by 3,047 (the total number of participants: active, inactive, and retired). Note that inactive employees and retirees have remaining service lifetimes equal to 0. Also note that total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund.

Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions As of the start of the measurement period (July 1, 2021), the net pension liability/(asset) is $175,117,381. For the measurement period ending June 30, 2021 (the measurement date), the City incurred a pension expense/(income) of $2,542,046 for the plan.

Note that no adjustments have been made for contributions subsequent to the measurement date. Adequate treatment of any contributions made after the measurement date is the responsibility of the employer.

As of June 30, 2022, the City had deferred outflows of resources related to pensions of $23,570,997 for contributions made subsequent to the measurement date (which will be recognized as a reduction of the net pension liability as of June 30, 2023), $0 for changes of assumptions, and $2,903,956 for the differences between expected and actual experience, and $0 for the net difference between projected and actual earning on pension plan investments. Deferred inflow s of resources related to pensions were $0 f or changes in assumptions and $ (674,039) f or differences between expected and actual experiences, and $(48,905,459) for the net difference between projected and actual earnings on pension plan investments.

Amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in future pension revenue and expense amortized annually as follows:

Measurement Periods
Ended June 30:

Deferred Outflows/(Inflows)
of Resources
2022 $(11,390,373)
2023 $(10,587,465)
2024 $(11,163,293)
2025 $(13,534,411)
2026 $0
Remaining $0
88

CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 16 - EMPLOYEE RETIREMENT BENEFITS (continued)
Safety Fire Plan
Plan Description
The City’s Safety Fire Plan is a defined benefit pension plan that provides retirement and disability benefits, annual cost-of- living adjustments, and death benefits to plan members and beneficiaries. The Safety Fire Plan is an agent multiple-employer plan administered by CalPERS, which acts as a common investment and administrative agent for participating public employers within the State of California. A menu of benefit provisions, as well as other requirements, is established by 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 annual comprehensive financial report. C opies of the CalPERS' annual financial report may be obtained from their Executive Office - 400 P Street – Sacramento, CA 95814.

Benefits Provided
The benefits provided through the CalPERS Safety Fire Plan include retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. The City has three tiers through CalPERS under the Safety Fire employee plan. Tier I is applicable to all employees hired before January 1, 2011 with a formula of 3% at age 50. Earliest retirement age is 50 with final compensation based on 12 months at the highest rate of pay received. Tier II is applicable to employees hired after January 1, 2011 and before January 1, 2013 with a formula of 2.0% at age 50. Earliest retirem ent age is 50 with final compensation based on 36 months at the highest rate of pay received. Tier III is applicable to employees hired after January 1, 2013 with a formula of 2% at age 57, which is a result of PEPRA. PEPRA also lowered the final compensation and contribution requirements. Earliest retirement age is 50 with final compensation, subject to the PEPRA limit of $161,969, based on 36 months at the highest rate of pay received.

Contributions and Employees Covered
Active plan members in the CalPERS Safety Fire Plan may be required to contribute a particular percent of their annual pay depending on the applicable plan they fall under. Tier I and Tier II employees will pay 9% of their salary while those employees under PEPRA (Tier III) will pay 11.75% o f their salary. I n addition, employees in Tier I have 8% of their contribution picked-up by the City after five years of service.

Section 20814(c) of the California PERL requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. It is the responsibility of the employer to make necessary accounting adjustments to reflect the impact due to any Employer Paid Member Contributions or situations where members are paying a portion of the employer contribution.

As of June 30, 2021 ( the measurement date), there are 175 a ctive employees and 224 i nactive employees or beneficiaries receiving benefits. For the fiscal year ended June 30, 2022, the employee contribution rate was 9.70 percent of annual pay, and the employer’s minimum contribution rate was 55.62 percent of annual payroll. Employer contribution rates may change if plan contracts are amended.
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CITY OF BAKERSFIELD
Notes to the Financial Statements
NOTE 16 - EMPLOYEE RETIREMENT BENEFITS (continued)
Actuarial Methods and Assumptions
For the measurement period ended June 30, 2021 (the measurement date), the total pension liability was determined by rolling forward the June 30, 2020 total pension liability. The June 30, 2020 and the June 30, 2021 total pension liabilities were based on the following actuarial methods and assumptions:

Actuarial Cost Method Entry Age Normal
Asset Valuation Method
Fair Value of Assets. For details, see
June 30, 2018 Funding Valuation
Report.

Salary Increases 2.50%
Salary Increases Varies by Entry Age and Service
Payroll Growth 2.75%
Investment Rate of Return 7.00% [a]
[a] Net of Pension Plan Investment and Administrative Expenses; includes inflation. [b]Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvements using Society of Actuaries 90% of scale MP-2016. For more details on this table, please refer to the December 2017 experience study report.

All other actuarial assumptions used in the June 30, 2021 valuation were based on the results of an actuarial experience study dated 2017 which was derived from data collected for the period from 1997 to 2015, including updates to salary increases, mortality and retirement rates. The 2017 Experience Study report can be obtained at CalPERS’ website under Forms and Publications.

Discount Rate
The discount rate used to measure the total pension liability was 7.15 percent. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that w ould most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.15 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long-term expected discount rate of 7.15 percent is applied to all plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained at CalPERS’ website under the GASB Statement No. 68 section.

The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
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