Daly City City Council
January 22, 2024

AVAILABILITY OF PUBLIC RECORDS:

All public record to an open session item on this agenda, which are not exempt from disclosure pursuant to the California Public Records Act, that are distributed to a majority of the legislative body will be available for public inspection at the City Clerk’s Office, City Hall located at 333 90th Street, Daly City, CA during normal business hours, at the same time that the public records are distributed or made available to the legislative body.

CITY OF DALY CITY
Regular Meeting - CITY COUNCIL
AGENDA
Monday, January 22, 2024 - 7:00 PM

City Hall Council Chambers – 2nd Floor
City Hall 333 – 90th Street
Daly City, CA 94015
To watch the live telecast:
https://www.youtube.com/DalyCityVideoMeetings, https://www.dalycity.org/agendas, or Comcast Channel 27
Public Participation:

There are three ways to submit public comments: (1) submit written comments by meeting day, (2) submit written comments during the meeting, and (3) attend the meeting in person.

1. To submit written comments by meeting day, please email [email protected] and include “Public Comment” in the subject line. All written comments received by 4:00 pm on meeting day will be provided to the City Council prior to the meeting.

Please note: Any emailed comments received after 4:00 p.m. on the meeting date are not guaranteed to be received by the City Council prior to the meeting. Comments are not read aloud into the record.

2. During the meeting, you may visit www.dalycity.org/agendas to submit comments using the Public Comment form to address the City Council on a specific item, or during the public comment period, and such comments are delivered to the City Council and City Staff during the meeting, and may be read into the record at the time they are received.

3. To speak at the meeting in person, please complete a Speaker Card located at the entrance to the Council Chamber and submit it to a Staff Member as early in the meeting as possible.

Persons with disabilities who require auxiliary aids or services in attending or participating in this meeting should call the office of the City Clerk at (650) 991-8078 as soon as possible.

CALL TO ORDER:

PLEDGE TO THE FLAG:

ROLL CALL:

Agenda – City Council
Monday, January 22, 2024

PRESENTATIONS:

1. Commendation - Pacific Islands Together (P.I.T.) Christmas Giveaway, Reyna Meafua

2. Proclamation - National Gun Violence Survivors Week
APPROVAL OF MINUTES:

3. Regular Meeting of January 8, 2024
APPROVAL OF AGENDA:

PUBLIC APPEARANCES/ORAL COMMUNICATIONS:

NOTE: Speakers are limited to two minutes, unless modified by the Mayor. The Council cannot take action on any matter raised under this item.

CONSENT AGENDA
All items listed on the Consent Agenda are considered to be routine and may be approved by one roll call vote of the City Council. There shall be no separate discussion of the matters on the Consent Agenda unless requested by a member of the City Council. If discussion is required, that item will be removed from the Consent Agenda and will be considered separately at the end of the Agenda.

Communications:

4. Accept the Fiscal Year 2023 Annual Comprehensive Financial Report Resolutions:

5. Authorize the City Manager to Execute an Addendum Agreement with the South San Francisco Unified School District

6. Approve Recommended Position Changes in the Library Department and the Department of Recreation Services

7. Approve Salary Reassignments for Specific Executive Management Positions

8. Adopt Resolution Authorizing Execution of Amendment to the Employment Agreement of the City Manager

Agenda – City Council
Monday, January 22, 2024

9. Acceptance of Public Access Easement from Giuseppe Ruggiero, Trustee of the Ruggiero Family Revocable Trust, Subject to Exception No. 5, at 400 Castle Street

10. Approve the Use of Federal Asset Forfeiture Funds to Purchase an Unmanned Ground Vehicle for the Police Department

11. Authorize the City Manager to Approve a Purchase Agreement for a 2024 TYMCO Model 600 Street Sweeper
Check Registers:

12. Check Registers for the Month of December 2023

END OF CONSENT AGENDA
COMMUNICATIONS:

13. Resolution Admonishing Councilmember DiGiovanni
STAFF: Rose Zimmerman
RECOMMENDATION: Council Determination
Adopt Resolution by Roll Call Vote

14. Finding of Public Convenience and Necessity PCN-2-23-16098 to Sell Alcoholic Beverages for Off-Site Consumption at Seafood City at 1420 Southgate Avenue STAFF: Brian Paland
RECOMMENDATION: Council Determination
Adopt Resolution by Roll Call Vote
PUBLIC HEARINGS:

15. General Plan Amendment GPA-04-21-14998, Planned Development PD-04-21-14997, Major Subdivision SUB-04-21-14999, Design Review DR-04-21-15000, and Development Agreement – Serramonte Del Rey Campus Redevelopment
STAFF: Michael Van Lonkhuysen
RECOMMENDATION: Open/Close Hearing
Adopt Ordinance by Roll Call Vote
Adopt Resolution by Roll Call Vote

Agenda – City Council
Monday, January 22, 2024

16. Introduction of Ordinance Amending Title 6 of the Daly City Municipal Code re: Animal Control STAFF: Rose Zimmerman
RECOMMENDATION: Open/Close Hearing
Motion for City Attorney to Read by Title Only
Councilmember Introduce Ordinance
APPOINTMENTS: Board/Commission Membership Committee Appointments REPORTS:

17. Council Committee

18. City Council

19. Staff
ADJOURNMENT:

Commendation
Pacific Islanders Together
WHEREAS, The Mission of the Pacific Islanders Together (P.I.T) is to provide and serve the Pacific Islanders and the broader Bay Area community with arts, cultural preservation, and raising awareness in health and wellness; and WHEREAS, the Pacific Islander’s Together is a non-profit organization founded in 2012 by President Rowena (Reyna) Poti-Meafua. The organization emphasizes bringing the community together. P.I.T. delivers support through existing and influential programs, and to serve those in need of help in our community; and
WHEREAS, Pacific Islander’s Together’ s purpose is to value diversity in arts and culture while enjoying good health and engaging in wellness; and WHEREAS, Pacific Islander’s Together seeks to enrich the Polynesian Islanders community by developing programs that will promote pride, visibility, and unity within the community. P.I.T. is dedicated to combining education and advocacy to expand opportunities for children and families, while strengthening the voice of the Polynesian community; and WHEREAS, their goal is to develop and provide After-School Programs, Sports Camp Programs, Academic Enrichment Programs, Holiday Outreach Programs, and Financial Support, Programs for Battered Women & Children, Outreach Programs for Homeless, and Management Programs. These programs will strengthen relationships, while establishing an environment that provides opportunity and growth within the Polynesian community; and
WHEREAS, Pacific Islander’s Together has continuously participated in Christmas in the Park’s Annual Christmas Toys Giveaway, serving youth and families in need for six years; and
WHEREAS, a warm thank you to all the sponsors who dedicated their time to make the 2023 Christmas in the Park’ Annual Christmas Toys Giveaway a huge success. The event served over 1,800 children!
NOW, THEREFORE, I, Juslyn C, Manalo, Mayor, and members of the City Council of the City of Daly City, do hereby commend Pacific Islanders Together for their legacy and commitment in bringing the community together through their influential programs and celebrations.

Signed and sealed by the Mayor and City Council
of the City of Daly City this 22nd day of January 2024.

Juslyn C. Manalo, Mayor
Roderick Daus-Magbual, Vice Mayor
Raymond A, Buenaventura, Councilmember
Pamela DiGiovanni, Councilmember
Glenn R. Sylvester, Councilmember

Proclamation
National Gun Violence Survivors Week, January 22-26, 2024 WHEREAS, January 22 – 26, 2024 will mark the sixth annual National Gun Violence Survivors Week, a time when we come together to share and amplify the stories and voices of gun violence survivors who live with the impact of gun violence every day of the year; and
WHEREAS, every day in America, at least 120 people are shot and killed, more than 200 are shot and wounded, and countless others experience the collective trauma of gun violence; and
WHEREAS, gun violence in any form can leave a lasting impact whether someone has witnessed an act of gun violence, been threatened, or wounded with a gun, or had someone they cared for wounded or killed with a gun including but is not limited to gun homicides, police violence, gun suicides, intimate partner violence involving a gun, mass shootings, and unintentional shootings; and
WHEREAS, the trauma from gun violence ripples farther than we can imagine, impacting people across generations and geography, beyond those shot and wounded or killed, families, friends, neighbors, and extended communities that share the same identities as victims of gun violence feel the hurt when gun violence occurs; and
WHEREAS, behind every gun violence statistic are countless stories of parents who never got to kiss their kids goodbye, gunshot victims living with physical and emotional wounds, entire families heartbroken by gun suicide, or witnesses of gun crimes living with trauma; and
WHEREAS, during National Gun Violence Survivors Week, we take stock of the terrible human toll of America’s gun violence crisis and recommit ourselves to honoring survivors with action; and
NOW, THEREFORE, I, JUSLYN C. MANALO, Mayor, and members of the City Council, hereby proclaim January 22-26, 2024, as “NATIONAL GUN VIOLENCE SURVIVORS WEEK” in the City of Daly City and encourage the Daly City community to recognize the lasting impact gun violence has on individuals and communities, honor the survivors with support and stand together against gun violence.

Signed and sealed by the Mayor and City Council
of the City of Daly City this 22nd day of January
2024.

Juslyn C. Manalo, Mayor
Dr. Roderick Daus-Magbual, Vice Mayor
Raymond A. Buenaventura, Councilmember
Pamela DiGiovanni, Councilmember
Glenn R. Sylvester, Councilmember

CITY OF DALY CITY
MINUTES – REGULAR MEETING – CITY COUNCIL
JANUARY 8, 2024
--------------------------------
Note on Public Comments:

To provide public comments, members of the public have the option to- 1) attend in person, 2) email the City Clerk, or 3) submit comments through the public comment portal on the City’s website. Persons with disabilities who require auxiliary aids or services in attending or participating in this meeting are instructed to call the office of the City Clerk at 991-8078 prior to the meeting.

Visit https://www.youtube.com/@DalyCityVideoMeetings/streams to view the City Council meetings The regular meeting was called to order by Mayor Manalo at 7:03 P.M.; she wished everyone a Happy New Year.

ROLL CALL: Councilmembers Present:

Juslyn C. Manalo, Mayor
Roderick Daus-Magbual, Vice Mayor
Pamela DiGiovanni
Glenn R. Sylvester
Councilmember Absent:

Raymond A. Buenaventura
Staff Present:

Thomas J. Piccolotti, City Manager
Rose L. Zimmerman, City Attorney
K. Annette Hipona, City Clerk
PRESENTATIONS:

Proclamation - National Human Trafficking Prevention Month (Ruth Robinson, San Mateo County Human Trafficking Initiative) HIP Housing's 2024 Calendar Contest Winner
(Sienna Seegmiller, First Grade Winner; Kate Comfort Harr, HIP Housing Executive Director) Pension Presentation
(Ira Summer, GovInvest Senior Consultant)
APPROVAL OF MINUTES:

Special Meeting of December 11, 2023, and Regular Meeting of December 11, 2023 It was moved by Mayor Manalo, seconded by Vice Mayor Daus-Magbual and carried to approve the minutes of December 11, 2023, as amended.

APPROVAL OF AGENDA:

It was moved by Mayor Manalo, seconded by Vice Mayor Daus-Magbual and carried to approve the agenda.

CONSENT AGENDA:

It was moved by Mayor Manalo, seconded by Vice Mayor Daus-Magbual and carried to approve the consent agenda with the exception of item #5.

CITY OF DALY CITY
MINUTES – REGULAR MEETING – CITY COUNCIL
JANUARY 8, 2024
2 Resolutions:

Approve Time Extension for Use Permit UPR-6-19-14076 and Design Review DR-6-19-14077 — Mixed-Use Apartment Building at 493 Eastmoor Avenue
Nels Delander, 217 Carpenters Union, commented on the development’s potential, supported responsible contractors that pay area standard wages, provide health care benefits, and promote apprenticeship programs, and stated irresponsible contractors who mistreat workers should not be tolerated.

Planning Manager Michael Van Lonkhuysen provided the staff report for the developer’s request for a time extension of the project which was approved in 2020. Van Lonkhuysen addressed questions on the reason for the extension, anticipated timeline for the project and state funding, and the number of affordable housing units in the development. A representative from CORE addressed questions on whether they are willing to meet with local unions, whether they will be paying workers a prevailing wage, when the state funding is anticipated, how much funding has been allocated to the project, and the reason for the long project timeline.

It was moved by Mayor Manalo, seconded by Vice Mayor Daus-Magbual and carried to approve the following resolution:

Resolution 24-1, Approving Extension Of Use Permit UPR-6-19-14076 And Design Review DR-6-19-14077 Mixed-Use Apartment Building At 493 Eastmoor Avenue Approve Memorandum of Understanding with County of San Mateo to Implement SB 1383 Regulations
Resolution 24-2, Authorizing Execution Of Memorandum Of Understanding With The County Of San Mateo To Implement SB 1383 Regulations
Amend Traffic Regulations to: (1) Extend the existing 36-ft No Parking (red) zone in at 198 Alta Vista Way an additional 7; (2) Install 7-ft red zone in front of 398 Ardendale Drive; (3) Install 5-ft red zone along the south side of Bepler Street, and (4) Convert two (2) existing two-hour to 30-minute limited time in front of 5997 Mission Street
Resolution 24-3, Establishing Traffic Regulations
Authorize the filing of the Notice of Completion and accept improvements for the CDBG ADA/Sidewalk Improvements Project
Resolution 24-4, Accepting Completion Of Certain Project In The Department Of Public Works (Community Development Block Grant (CDBG) ADA/Sidewalk Improvements Project) Authorize City Manager to Execute the Funding Agreement with the City/County Association of Governments of San Mateo County for the Construction Phase of the Smart Corridor Project Resolution 24-5, Authorizing A Funding Agreement With The City/County Association Of Governments Of San Mateo County For The Construction Phase Of The Smart Corridor Project

CITY OF DALY CITY
MINUTES – REGULAR MEETING – CITY COUNCIL
JANUARY 8, 2024
3 Setting Time and Place for Public Hearing - Proposed Amendment to the Daly City Municipal Code Section 6.04 Re: Animal Control (Set Hearing: 1/22/24)
Resolution 24-6, Setting Time And Place Of Public Hearing For Proposed Ordinance Amending Title 6 Of The Daly City Municipal Code Re: Animal Control (Hearing Date: January 22, 2024) Authorize Execution for the StarChase Pursuit Management System for Use by the Police Department Utilizing Approved BSCC Retail Theft Grant Funds Resolution 24-7, Authorizing Execution Of Agreement With StarChase Pursuit Management System For The Police Department Utilizing Approved BSCC Retail Theft Grant Funds Authorize Execution of Professional Services Agreement with RDA Consulting for Evaluation Services Utilizing Approved BSCC Retail Theft Grant Funds Resolution 24-8, Authorizing Execution Of Professional Services Agreement With RDA Consulting For Evaluation Services Utilizing BSCC Retail Theft Grant Funds Check Registers
Approve Check Registers for the Month of November 2023

END OF CONSENT AGENDA
COMMUNICATIONS:

Nomination of Auto Sound Performance as a Legacy Business Economic Development Specialist Maybelle Manio provided background for the Legacy Business Registry Ordinance that was adopted by the Council last year and summarized the eligibility criteria. All the following nominations were reviewed by the Small Business Commission who discussed the relevance and contributions of each nominated business. Manio provided information for the first Legacy Business nominee, Auto Sound Performance, established in 1993.

It was moved by Mayor Manalo, seconded by Vice Mayor Daus-Magbual and carried by unanimous roll call vote to adopt the following resolution:

Resolution 24-9, Approving Nomination Of Auto Sound Performance To Be Part Of The Inaugural Legacy Business Program And That They Be Awarded And Recognized As A Legacy Business Nomination of Fil-Am Cuisine as a Legacy Business
Economic Development Specialist Manio provided information for the Small Business Commission’s second Legacy Business nominee, Fil-Am Cuisine, which started in 1995.

It was moved by Mayor Manalo, seconded by Vice Mayor Daus-Magbual and carried by unanimous roll call vote to adopt the following resolution:

CITY OF DALY CITY
MINUTES – REGULAR MEETING – CITY COUNCIL
JANUARY 8, 2024
4 Resolution 24-10, Approving Nomination Of Fil-Am Cuisine To Be Part Of The Inaugural Legacy Business Program And That They Be Awarded And Recognized As A Legacy Business Nomination of Westlake Performing Arts School as a Legacy Business Economic Development Specialist Manio provided information on the Small Business Commission’s third Legacy Business nominee, Westlake Performing Arts, which was founded in 1991.

It was moved by Vice Mayor Daus-Magbual, seconded by Mayor Manalo and carried by unanimous roll call vote to adopt the following resolution:

Resolution 24-11, Approving Nomination Of Westlake School Of Performing Arts To Be Part Of The Inaugural Legacy Business Program And That They Be Awarded And Recognized As A Legacy Business
Resolution of Finding of Public Convenience and Necessity PCN-11-23-16429 to Sell Alcoholic Beverages for Off-Site Consumption at Vira Market at 6189 Mission Street Planning Manager Van Lonkhuysen provided the staff report for the item which was continued from the regular meeting of December 12th during which the Council requested additional information on existing alcoholic licenses in the census tract. Van Lonkhuysen presented this information along with staff’s findings from visiting the stores including the nature of alcohol sales in the area. Van Lonkhuysen addressed questions on the percentage of floor space containing alcoholic beverages, whether a requirement can be added to the approval, and clarification on the PCN for the Type 21 license. Applicant Vikas Saxena addressed questions from the Council.

It was moved by Vice Mayor Daus-Magbual, seconded by Mayor Manalo and carried by the following roll call vote to adopt the resolution:

Ayes: Daus-Magbual, Sylvester, Manalo
Noes: DiGiovanni

Absent: Buenaventura
Resolution 24-12, Adopting Findings In Response To An Application For A Type 21 Liquor License – Vira Market – 6189 Mission Street
AWARD OF BIDS/CONTRACTS:

Award of Construction Contract for the Mussel Rock Landfill Upper Disposal Area Pull-Back Project
Director of Public Works Richard Chiu provided the staff report recommending awarding a construction contract to ETIC of Pleasant Hill in the amount of $1,033,482.57 for the subject project.

Chiu addressed questions on the scope of work that will be done with this initial project.

It was moved by Mayor Manalo, seconded by Councilmember DiGiovanni and carried by unanimous roll call vote to adopt the following resolution:

Resolution 24-13, Authorizing Execution Of Construction Contract For The Mussel Rock Landfill Upper Disposal Area Pull-Back Project

CITY OF DALY CITY
MINUTES – REGULAR MEETING – CITY COUNCIL
JANUARY 8, 2024
5 REPORTS:

City Council
Councilmember Sylvester referred to a letter he received from group Thursday Dance Group with concerns regarding where the group will be placed and/or moved, and requested an update regarding this matter from City Manager Piccolotti.

Councilmember DiGiovanni supported Councilmember Sylvester’s request and stated she received the same letter. DiGiovanni requested the Council to work together on an ordinance and/or LOI involving the NorCal Carpenters which they can subsequently submit to Planning Manager Van Lonkhuysen.

Mayor Manalo reported attendance at the following events: the Daly City Host Lions Club’s Breakfast With Santa Event in Serramonte; the Commissioners’ Dinner to honor and thank all the commissioners who volunteer their time with Daly City; the grand opening of community bookstore Peninsula Books at 441 Westlake Center; the Crocker-Masonic Lodge Induction with Mr. Acevedo and his fellow officers; South San Francisco’s Reorganization for Mayor Coleman and Vice Mayor Flores; Colma’s Reorganization for Mayor Goodwin and Vice Mayor Gonzalez; the Northern Carpenters event to honor Supervisor Canepa for his work around housing; Immigrant Resource Night hosted by JUHSD and JESD and participants Bayshore School, Mental Health Initiative and CORA; the Daly City-Colma Chamber of Commerce Business Achievement Gala wherein City of Daly City was an award-recipient; the 2023 Holiday Toy Drive and Tree-lighting event with Daly City employees, thanking Human Resources Director Sakkal; the Age-Friendly Townhall at City Hall, also attended by Marian Mann and Recreation staff; a meeting with California Nurses Association and NUHW regarding updates to Seton Hospital; the C/CAG regular board meeting in San Carlos; a special screening of The Race Epidemic at Century 21 with Assemblymember Ting, former Assemblymember Chiu, Vice Mayor Daus-Magbual and APALF; the Winter Wonderland Event, acknowledging the work of the Recreation staff and Director Brown; and the Christmas musical at the Crossroads Christian Center. Manalo will invite Pacific Islands Together (PIT) and all their supporters at the next Council meeting in order to honor them for their work including the Bayshore Toy Giveaway holiday event which had over 2,000 recipients. Manalo welcomed new business La Belle Rose Medspa, located in Serramonte. Manalo reported San Mateo County will be providing support to Daly City via a pilot program addressing domestic violence a, acknowledging the San Mateo County Sheriff and Acting Police Chief Christensen. Manalo was optimistic for a productive year ahead with the support of City Manager Piccolotti, Executive Management and her colleagues in the Council.

ADJOURNMENT:

Mayor Manalo adjourned the meeting at 10:33 PM in memory of Peter Graves, Purita Bulos Quema, Tuan Le, Robert M. Brizuela, Andre Pontevedra Belarmino, Terry Sedik, Janet Finney, Qu Yuz Zhao Wu, Robert Alfredo Salinas, and Martin Luther King Jr.

Approved as submitted, this 22nd
City Clerk
day of January , 2024.

Juslyn C. Manalo
Mayor

City Council Meeting Agenda Report Item #
Meeting Date: January 22, 2024
Subject: Accept the Fiscal Year 2023 Annual Comprehensive Financial Report Recommended Action
Staff recommends the City Council accept by motion the Fiscal Year 2023 Annual Comprehensive Financial Report.

Background
The financial records of the City of Daly City are subject to an annual independent audit, which is performed by Maze & Associates. The audit is performed in conformance with generally accepted auditing standards in the United States and includes a comprehensive review of the financial records and the internal control procedures in place which safeguard the City’sassets.

Discussion
The Independent Auditor’s Report contained in the Annual Comprehensive Financial Report (ACFR) indicates that the financial statements present fairly, in all material respects, the financial position of the City as of June 30, 2023. This opinion is considered “clean” or “unmodified”, which means that the financial records reflect appropriately the financial activity of fiscal year 2023.

The ACFR contains the financial activity of all of the City’s funds and account groups. It is presented in a manner designed to fairly set forth the financial position and results of operations of the City as measured by the financial activity of various funds. All disclosures necessary to enable the reader to gain maximum understanding of the City's financial activities are included.

Each year the ACFR is submitted to the Government Finance Officers Association award program for the Certificate of Achievement for Excellence in Financial Reporting. Daly City received the award for the prior fiscal year, 2022, and staff anticipates that the City will be successful in attaining the award for fiscal year 2023.

Summary/Conclusion
Staff recommends acceptance of the fiscal year 2023 Annual Comprehensive Financial Report. Staff is available to provide any additional information desired by the Mayor or Councilmembers.

Respectfully submitted,
Timothy J. Nevin
Director of Finance and
Administrative Services
Attachment: Fiscal Year 2023 Annual Comprehensive Financial Report

City of Daly City,
California
Annual Comprehensive Financial Report
For the Fiscal Year Ended June 30, 2023

CITY OF DALY CITY, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT

FOR THE FISCAL YEAR ENDED
JUNE 30, 2023
Prepared by

DEPARTMENT OF FINANCE
AND

ADMINISTRATIVE SERVICES
Tim Nevin
Director

CITY OF DALY CITY

ANNUAL COMPREHENSIVE FINANCIAL REPORT

TABLE OF CONTENTS

I INTRODUCTORY SECTION
Page
Letter of Transmittal ................................................................................................................................. v Organization Structure .............................................................................................................................. xv City Council and Administration and Department Heads ....................................................................... xvi Certificate of Achievement for Excellence in Financial Reporting ........................................................ xvii

II FINANCIAL SECTION
Independent Auditor’s Report .................................................................................................................. 1 Management’s Discussion and Analysis ................................................................................................. 5 Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Position ........................................................................................................ 20 Statement of Activities ............................................................................................................. 21 Fund Financial Statements:

Governmental Funds:

Balance Sheet ........................................................................................................................ 24 Reconciliation of the Governmental Funds Balance Sheet with the Statement of Net Position ................................................................................................ 25 Statement of Revenues, Expenditures, and Changes in Fund Balances .............................. 26 Reconciliation of the Net Change in Fund Balances - Total Governmental Funds with the Statement of Activities ........................................................................... 27 i

CITY OF DALY CITY

ANNUAL COMPREHENSIVE FINANCIAL REPORT

TABLE OF CONTENTS
Page
Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual:

General Fund ............................................................................................................................ 28 Gas Tax Special Revenue Fund ......................................................................................... 30 Grants Special Revenue Fund ............................................................................................ 31 Measures A and W Special Revenue Fund ....................................................................... 32 Proprietary Funds:

Statement of Net Position ................................................................................................. 33 Statement of Revenues, Expenses and Changes in Fund Net Position ............................ 34 Statement of Cash Flows .................................................................................................. 35 Fiduciary Funds:

Statement of Fiduciary Net Position ..................................................................................38 Statement of Changes in Fiduciary Net Position ...............................................................39 Notes to Basic Financial Statements .......................................................................................... 41 Required Supplementary Information:

Schedule of Changes in the Net Pension Liability and Related Ratios – Pension Plans ........... 90 Schedule of Contributions - Pension Plans ................................................................................ 92 Schedule of Changes in the Net OPEB Liability and Related Ratios ........................................ 93 Schedule of Contributions – Other Post-Employment Benefits Plan. ....................................... 94 ii

CITY OF DALY CITY

ANNUAL COMPREHENSIVE FINANCIAL REPORT

TABLE OF CONTENTS
Page
Supplemental Information:

General Fund:

Combining Fund Balance Sheet .......................................................................................... 96 Combining Fund Schedule of Revenues, Expenditures and Changes in Fund Balance ..... 97 Major Governmental Funds Other than General Fund and Special Revenue Funds:

Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual:

Capital Projects Fund ..................................................................................................... 100 Nonmajor Governmental Funds:

Combining Balance Sheet ................................................................................................. 102 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ........................................................................................................... 103 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual ......................................................................... 104 Internal Service Funds:

Combining Statement of Net Position ............................................................................... 108 Combining Statement of Revenues, Expenses and Changes in Fund Net Position .......... 110 Combining Statement of Cash Flows ................................................................................ 112 Custodial Funds:

Combining Statement of Net Position .............................................................................. 116 Combining Statement of Changes in Net Position ........................................................... 117 iii

CITY OF DALY CITY

ANNUAL COMPREHENSIVE FINANCIAL REPORT

TABLE OF CONTENTS
Page

III STATISTICAL SECTION
Net Position by Component - Last Ten Fiscal Years .......................................................................... 121 Changes in Net Position - Last Ten Fiscal Years ................................................................................ 122 Fund Balances of Governmental Funds - Last Ten Fiscal Years ........................................................ 126 Changes in Fund Balance of Governmental Funds – Last Ten Fiscal Years ..................................... 128 Assessed Value of Taxable Real Property - Last Ten Fiscal Years .................................................... 130 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years ................................................. 131 Principal Property Tax Payers – Ten Year History ............................................................................. 132 Property Tax Levies and Collections – Last Ten Fiscal Years ........................................................... 133 Ratio of Outstanding Debt by Type – Last Ten Fiscal Years ............................................................. 134 Ratio of General Bonded Debt by Type – Last Ten Fiscal Years ....................................................... 135 Computation of Direct and Overlapping Debt .................................................................................... 136 Computation of Legal Bonded Debt Margin ....................................................................................... 137 Water Utility Fund - Number of Connections by Users as of June 30, 2023 .................................... 138 Water Utility Fund - Certificates of Participation Historical Revenues, Expenditures and Bond Coverage – Last Ten Fiscal Years .................................................................................................... 138 Demographic and Economic Statistics - Last Ten Fiscal Years ......................................................... 140 Principal Employers – Ten Year History ............................................................................................ 141 Full-Time City Government Employees by Function – Last Ten Fiscal Years ................................. 142 Operating Indicators by Function/Program – Last Ten Fiscal Years .................................................. 144 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years .............................................. 146 iv

City of Daly City
333 – 90TH STREET
DALY CITY, CALIFORNIA 94015-1895
v
December 21, 2023
Honorable Mayor
Members of the City Council
Citizens of Daly City
We are pleased to present the Annual Comprehensive Financial Report (ACFR) of the City of Daly City for the Fiscal Year (FY) ended June 30, 2023. The goal of the independent audit is to provide reasonable assurance that the financial statements are free of material misstatements and presented in conformity with generally accepted accounting principles (GAAP).

The City has contracted with Maze and Associates, independent Certified Public Accountants (CPAs), to perform the audit of these financial statements. The auditors have issued an “unmodified” opinion on the City of Daly City’s financial statements. This is the most favorable conclusion and is commonly known as an “unmodified” or “clean” opinion.

The auditor’s report is located at the front of the financial section of this report.

This letter of transmittal is designed to complement the Management’s Discussion and Analysis (MD&A) and should be read in conjunction with it. The MD&A can be found immediately following the report of the independent auditors.

Management assumes full responsibility for the completeness and reliability of the information contained in this report, based on a comprehensive framework of internal controls that are established for this purpose. Since the cost of 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.

The independent audit is part of a broader federally mandated Single Audit, designed to meet the requirements of federal grantor agencies. The standards governing Single Audits require the independent auditor to report on the fair presentation of the financial statements as in the normal audit, but also require the independent auditor to report on the City’s internal controls and compliance with legal requirements specific to the federal grants. These reports are part of the separately issued Single Audit Report that is provided to the appropriate federal agencies.

vi

PROFILE OF THE CITY
The City of Daly City is one of the largest cities in San Mateo County with an estimated population of 101,471. Daly City is an urbanized, coastal community located at the northern edge of San Mateo County, comprising approximately 7.66 square miles of substantially developed area. The City is known as the "Gateway to the Peninsula", and its area extends to the Pacific Ocean on the west, and nearly to San Francisco Bay on the East. Daly City abuts San Bruno Mountain, a State and County Park, which features the highest peak in the area’s hilly terrain. It is strategically located and is central to major growth areas of San Francisco and San Mateo counties.

Daly City was incorporated on March 22, 1911, as a General Law City. It is governed by a Council-Manager form of government. There are five council members who serve overlapping terms of four years, and the City Council, in turn, elects one of the council members to serve as Mayor each year. The City Council appoints the City Manager and the City Attorney. The City Manager is the chief executive officer. It is the City Manager's responsibility to hire department heads for each of the City functions, to propose the annual budget, to coordinate and oversee all activities of the organization, and to implement the laws, policies, and budgets adopted by the City Council.

The City of Daly City is a full-service city providing a complete range of municipal services.

These services include police, fire, library, recreation, street construction and maintenance, traffic signalization and control, engineering, code enforcement, parks operations and maintenance, general administration, planning, and community development. The City also operates a water utility and a sanitary sewer district. Operating and capital costs for these services are maintained in enterprise funds and are funded by user rates or debt proceeds.

The ACFR includes all funds and accounts of the City of Daly City and its blended component units. The financial statements include the financial activities of the City, the North San Mateo County Sanitation District, the Daly City Public Facilities Financing Corporation, the Daly City Housing Development Finance Agency, and the Daly City Joint Powers Financing Authority. The financial operations of the City and the other entities included in this financial report are closely related. City Council members serve as the governing board of the District, Corporation, Agency, and Authority. The City Manager also serves as the General Manager of the Sanitation District, which is included in the proprietary fund types as an enterprise fund.

The budget serves as the foundation for the City’s financial planning and control. Using the Guiding Principles and Priorities established by the City Council, departments submit budget proposals to the City Manager for review. The City Manager’s Proposed Budget is presented to the City Council during public budget meetings. Changes as directed by the City Council are made and the budget is submitted for final adoption before July 1, the beginning of the next budget cycle. Departments are responsible for managing within the

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City Council appropriated budget. Budget amendments are often necessary due to changes in economic conditions and other circumstances occurring during the fiscal year.

FACTORS AFFECTING FINANCIAL CONDITION
Economic Indicators
According to the Federal Open Market Committee, United States GDP in 2023 is expected to grow 2.1% while the GDP increased in 2022 by 0.9%, compared to -5.7% in 2021 and -1.5% in 2020. Although the increased growth rate is an improvement over the negative growth rates resulting from the COVID-19 pandemic, the lower growth rates still reflect a possible future recession. Also due to the pandemic, California unemployment hit a record high of 16.4% in May 2020 and then reached a new low of 3.4% in May of 2022 as the State recovered. However, the return to low unemployment may not last as the Federal Reserve increases interest rates in response to rising inflation. As of October 2023, the unemployment rate has remained steady at 3.9%. The greatest risks to the forecast of the U.S. economy stem from concerns over inflation, rising interest rates, and supply concerns for both labor and housing. The current tightening of monetary policies affecting financial and credit conditions will also weigh on economic activity, hiring, and inflation.

In California, especially in the San Francisco Bay Area, housing prices continue to be increasingly expensive and unaffordable, particularly for first time homebuyers, given the limited availability. The U.S. Home Price Growth on a year-over–year basis as measured by the Case-Shiller 20-City Composite Home Price Index increased slightly with .97% increase in July 2023, compared with a 15.7% increase in July 2022. The housing market continues to be equally challenging for California renters, many of whom need to spend more than half of their income on rent. Housing market research suggests that continued limited supply compared to demand is one of the major causes of high housing costs in the coastal California region.

Local Economy and Fiscal Challenges
General Fund revenues for FY 2023 increased by $6.1 million to $118.8 million. The revenue increase is made up of some revenue increases and some decreases among the various General Fund sources. The City saw revenue increases in property tax and sales tax revenues of about $4.9 million, in the utility users tax; due to rising energy costs in FY 2023, and through the recognition of $6.2 in one-time American Rescue Plan Act (ARPA) funds. General Fund expenditures increased by $4.1 million to $110.8 million in FY 2023, the majority of which was due to salary and benefit increases resulting from cost of living raises. Although the City budgeted at a deficit for FY 2023, the General Fund resulted in a surplus because of savings from a large number of vacant staff positions.

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Enterprise Funds
Two of the City’s major enterprise funds, the Water Utility Fund and Sanitation District Fund, derive revenue from water usage.

Revenues for the Water Utility Fund increased by $2.2 million to $28.4 million in FY 2023 mainly due to an annual water rate increase of 9.5%. Expenses increased $4 million to $19.2 million in FY 2023 reflecting an increase in the net pension and OPEB liabilities for the Water Utility Fund and cost of living salary increases for employees.

The Sanitation District Fund operating revenues increased by $1.5 million to $25.2 million in FY 2023 due to an annual 9% increase in sewer rates. Operating expenses increased by $9.7 million to $30.6 million in FY 2023 also reflecting an increase in the net pension and OPEB liabilities for the Sewer Enterprise Fund and cost of living salary increase for employees.

LONG RANGE FINANCIAL PLANNING
The City employs a ten-year financial forecasting model to ensure accountability of service levels and to plan for future challenges. Long-range financial planning enables the City to foresee potential budget issues, giving the City sufficient time to respond to and analyze the long-term financial impact, as well as to take appropriate action before a problem develops. In addition, the long-range financial planning serves as a key planning tool for future budgets and decision-making.

Many of the fiscal drivers within the ten-year forecast are outside the City’s control. This includes changes in the national and local economy; federal and state legislation; and CalPERS actuarial assumptions, investment returns, and the resulting impact on employer contribution rates. Due to the passage of Propositions 13, 218, and 26 in California, the City has no ability to institute taxes and assessments without voter approvals. For a ballot measure to be successful, there must be broad community support for the use of the tax and an outside group who will champion the tax or assessment increase.

Given the current and forecast budget challenges, the City has implemented a multipronged approach to address long-term fiscal challenges and to ensure the sustainability of the City’s finances into the future.

1. Evaluate General Fund and other reserves. The City’s Reserve policy is to maintain General Fund unassigned fund balance equal to 17% of annual operating expenditures.

Maintaining the reserve target of 17% requires closely monitoring the balance between revenues and expenses on an ongoing basis. The General Fund reserve provides a buffer to the City in the event of unexpected reductions in revenues or increases in costs.

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2. Identify other potential sources of revenues. Over the next ten years, General Fund expenses will continue to increase beyond the City’s ability to fund with current revenue sources. The City was successful with ballot measures on a cannabis business license tax and increases for transient occupancy tax and business license tax in the November 2018 General Election. In addition, the Daly City voters approved Measure Q – the Daly City Local Recovery and Relief Measure – in November 2020, which added a transaction and use tax of one-half cent to the total sales tax rate as of April 2021. The City will continue to identify other potential sources of new revenue and evaluate City fees to ensure cost recovery of services provided.

3. Promote economic development and business expansion. While Daly City is largely built out, there are still some development opportunities, including one on a former Daly City Redevelopment Agency parcel. If realized, these new developments will generate new sales, property, business license, and transient occupancy taxes. Additionally, the City plans to update its economic development strategy to identify new opportunities for expanding and diversifying the economic base to ensure long-term fiscal sustainability.

4. Pre-fund Pension and Other Post-Employment Benefits (OPEB). In April 2017, the City Council authorized participation in the Section 115 Trust Program which allowed the City to set aside funds towards OPEB costs and help reduce the unfunded liability.

The City continued to contribute to this Program in FY 2023.

In May 2017, the City Council also authorized participation in a Section 115 Trust to prefund pension costs and prepare for pension increases due to changes in CalPERS actuarial assumptions and discount rates. The Section 115 Trust Program will provide the City with an alternative to sending funds to CalPERS that will allow for greater control of the assets held in the trust and risk tolerance level for the investment. Other potential benefits include pension rate stabilization. Assets in the Trust Program can be transferred to CalPERS at the City’s discretion, which could reduce large fluctuations in employer contributions to CalPERS.

5. Complete comprehensive asset condition assessment and capital improvement plan. In 2017, the Public Works Department started the process by completing the Facilities Condition Assessment. The project included development of an automated inventory of City facilities, evaluation of existing conditions of facilities, prioritization of deficient conditions, and development of short- and long-range maintenance needs.

Since then, the Public Works Department has completed the ADA Self Evaluation and Transition Plan, the Parks and Open Space Master Plan, the update to the City’s Pavement Management System Report, and the Pedestrian and Bicycle Master Plan. The findings from the above planning documents will be incorporated into a future Capital Improvement Plan for budgeting purposes. Future planning studies to be performed include a Storm Drain Master Plan, Water Master Plan, Sanitary Sewer Master Plan, and Seismic Evaluation of Critical Facilities. Results of these studies will identify needed

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work to properly maintain the City’s infrastructure. It is imperative to have a comprehensive understanding of the infrastructure needs of the City, so that resources can be identified, and a long-term budget plan developed.

MAJOR INITIATIVES
During FY 2023, under the leadership of the City Council, several outstanding key programs and projects were successfully undertaken by the City.

Economic and Community Development
The Economic and Community Development Department has continued to provide its regular services while implementing a variety of new programs and policies. Aside from the typical permit issuance and building inspections, the Building Division improved customer service by creating a new online permitting portal for “quick” permits and permits for photovoltaic installations. The Planning Division worked on the preparation of the Housing Element, which is a plan to build over 4,200 housing units to meet the region’s housing needs. A new zoning district for the Mission Street and Geneva Avenue corridors was created to encourage higher density housing and economic development along those important corridors. Economic Development staff have implemented a Legacy Business Program to celebrate local businesses that have local relevance to the community. Additionally, the Economic Development staff worked towards renewing a partnership with the Daly City Chamber of Commerce. The Housing Division continued to administer the federal funding that was provided to help households that were affected by COVID-19 through rental assistance, food distribution, and mental health services. The Housing Division has also confirmed funding and secured a site to establish a low-income daycare facility on City property. Many significant construction projects initiated and/or continued construction, including a redevelopment of the Saint Francis Square Shopping Center, faculty housing at M. Pauline Brown Elementary School, and affordable housing at Midway Village.

Library and Recreation Services
The Department of Library and Recreation Services continued to move forward with their “new normal”.

The Recreation Division offered rental facilities so the Daly City community could reserve spaces for personal gatherings and events and were able to secure 569 rentals.

The Afterschool Youth Recreation Program served 1,338 participants at five school locations, while the Summer Youth Recreation Program served over 1,178 youth at four recreation locations. The senior lunch program continued providing five (5) home-cooked meals with all the components to qualify for the San Mateo County Congregate Meal Program. Through the Second Course, and in-person programs at three locations, the senior services unit was able to serve over 46,336 meals to those in need. Our athletic leagues and programs, such as Youth Basketball, Mini Hoops and Youth Clinics, were

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modified to serve our participants in a safe and meaningful way and served over 1,537 participants. We were able to provide our city-wide events, both cultural and specialized “in-person” to the community, including Latino Heritage Month, Kasayahan Sa Daly City, Trunk or Treat, Frosty Fest, Black History Celebration and Spring Fun Day events, sharing happiness with over 7,607 youth and their families. Our contract instructors provided in-person, fitness-focused enrichment classes to our Daly City community, serving over 16,107 participants. Over 194 volunteers and volunteens were welcomed back as well and accumulated over 26,752 hours of volunteer/volunteen service.

With all four facilities open to the public in FY 2023, the Library Division counted 177,401 visits to our Libraries, an increase of over 30% from the previous year. Improved open hours introduced last year no doubt contributed to this increase. Circulation of physical materials was 354,227, higher than the prior year but lower than before the pandemic. Circulation of electronic materials continued to increase with a total of 84,821. State-wide initiatives such as the Palace Project eBook collection, Brainfuse Live Homework Help, and Career Pathways workforce development platforms greatly expanded the online resources the Library was able to make available to the community. Having transitioned from virtual programs back to in-person programs in May 2022, the Library provided 564 in-person programs during the year with a total attendance of 17,420.

North County Fire Authority
The North County Fire Authority (NCFA) achieved an overall “Customer Satisfaction” rating of 98% in the delivery of emergency and non-emergency services. NCFA provided high quality Basic Life Support and Advanced Life Support assessment and treatment interventions to emergency medical incidents utilizing our paramedic fire engines and truck companies, in which over half of total EMS calls benefited and served senior citizens. NCFA achieved an average response time of 5 minutes and 36 seconds for on scene arrival of a first due fire company at all emergency incidents.

Fire Prevention Services completed pre-fire engineering and plan check reviews and inspections for new construction projects, tenant improvements, alarm installations and suppression systems, additionally completed a fire “cause and origin” analysis and investigation for all fire incidents. Further, NCFA completed annual mandated and required fire and life safety code compliance inspections covering all business, multifamily and permitted occupancies. NCFA presented throughout the year Emergency Preparedness, Individual and Family Preparedness seminars, as well as Community Emergency Response Team (CERT) classes. Additionally, “Hands Only CPR”, “Stop the Bleed and Choking” was presented to the public through numerous events and venues.

NCFA provided fire engine companies and chief officers to multiple major wildfire incidents throughout the State of California.

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Police Department
The Daly City Police Department maintains our commitment towards service-based policing, often leading the industry in community engagement, policing tactics, and policy adaptation. We continue to participate in local and regional task forces focused on drug, vehicle theft, and gang prevention. We are partnered with local agencies in a Multidisciplinary Accident Investigation Team (MAIT), sharing resources during complex collision investigations. We remain committed to our supportive partnerships with the Community Overcoming Relationship Abuse (CORA), the Homeless Outreach Team (HOT), and other County entities providing invaluable services to our community.

We continue to support community trust through transparency by equipping officers with body and vehicle cameras, and by ensuring progressive policy adaptation. We are compliant with the Racial and Identity Profiling Act (RIPA – AB953, 2015), a requirement for our agency which began in 2022, and we are successfully uploading new reporting requirements through the California Based Incident Reporting System (CIBRS). We have further prioritized community engagement by increasing our community team, our social media presence, and our event participation.

The Daly City Police Department was the first agency in the region to train all sworn staff in Active Bystandership for Law Enforcement (ABLE), a Georgetown Law program geared towards preventing mistakes, misconduct and promoting officer health and wellbeing for improved community relationships. Our Mental Health Clinician continues to be a vital asset to the community and the department alike. This relationship has ensured a well-versed response to community needs, and it has developed the abilities of officers towards a compassionate approach to those experiencing a mental health crisis.

This co-response model has supported de-escalation and a more holistic outcome.

Public Works Department
The Public Works Department completed several capital improvement projects and continued to provide routine services to the public such as street sweeping, traffic signal and street light maintenance, equipment and vehicle maintenance, facility maintenance, park maintenance and litter and debris removal. The Department continues to focus on preventative measures to maintain and maximize the useful lifespan of City owned assets such as City vehicles, equipment, facilities, and infrastructure.

Some completed projects by the Public Works Department include: the Outdoor Fitness Courts at Westlake Park and Lincoln Park, Mission Street Streetscape Project, 2019 Mussel Rock Gabion Wall and Stormwater Project, 2019 Daly City Street Resurfacing and Slurry Seal Project, Central Corridor Project, Civic Center South Roof Rehabilitation Project, Polaris Park Rehabilitation Project, and Community Development Block Grant ADA/Sidewalk Improvements Project. Construction also began on DC the ADA, Sidewalk, and Parking Lot Improvements Project, 2021-22 and 2022-23 Street

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Resurfacing Project, Southgate Avenue and School Street Safety Improvements Project, 2020-21 Street Resurfacing Project, Fire Station 91 Roof Replacement Project, and Bayshore Community Center Generator Project.

The Public Works Department also continues to seek grant funds for the City and was successful in securing additional funds for the Westmoor Ave and Westridge Ave Intersections Quick Build Projects, Mussel Rock Upper Disposal Area Waste Pullback Project, Southgate Avenue and School Street Safety Improvements Project, Lake Merced Boulevard Lane Reconfiguration and Bicycle Projection Project, Vision Zero design standards project, Safe Route to School Project, and Daly City Bayshore Shuttle.

Department of Water and Wastewater Resources
The Department of Water and Wastewater Resources (DWWR) continued to meet all public health and regulatory requirements associated with the production, treatment, and distribution of high-quality drinking water, along with the collection, treatment, re-use, and disposal of wastewater on behalf of the citizens of Daly City and the North San Mateo County Sanitation District. The Department continued to manage the critically important regional drinking water, wastewater, and stormwater project, the Vista Grande Drainage Basin Improvement Project. DWWR is working diligently with our project partners, the San Francisco Public Utilities Commission (SFPUC), the County of San Mateo, Caltrans, the Olympic Club, and many others to secure funding contributions in anticipation of a bid date in 2024 and construction start date in 2025.

A significant initiative this last year was the development of Master Plans for the Water Distribution System, Wastewater Collection System, and the Wastewater Treatment Facility. These plans will guide the Capital Program over the next 10 years and direct the investment of millions of dollars in critical new infrastructure. Drinking water projects continued to be of the highest priority and groundwater pumping projects were a large part of the Capital Program this year. Treatment modifications to the Westlake Pump Station to accommodate additional groundwater from new wells in Daly City was substantially completed while a new drinking water well located at Margate Street was approved, designed, and initiated. At two other groundwater wells the pumps, motors, casings, and associated equipment were replaced providing greater reliability of our water resources. Additionally, significant capital improvements were made at the North San Mateo County Sanitation District Wastewater Treatment and Collection Facilities such as rehabilitation of the Primary Clarifiers, replacement of carbon media in the plant air scrubbers, upgrades to the electrical and control systems, and replacement of a chemical tank. Lastly, the City Council initiated and authorized the creation of a Water Rate Assistance Program to offer financial help to low-income ratepayers in managing their water bills.

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AWARDS
The 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 Daly City for its Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2022. This was the 36th consecutive year that the City of Daly City has received this prestigious award.

To be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized annual comprehensive financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current ACFR continues to meet the Certificate of Achievement Program’s requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate.

In addition, the City also received the GFOA’s Award for Distinguished Budget Presentation for its Comprehensive Operating and Capital Budget for FY 2023. To qualify for the Distinguished Budget Presentation Award, the City’s budget document was judged to be proficient in several categories including policy documentation, financial planning and organization.

ACKNOWLEGEMENTS
The preparation of the Annual Comprehensive Financial Report on a timely basis was made possible by the dedicated efforts of the Accounting Division of the Department of Finance and Administrative Services. Each individual has our sincere appreciation for the professionalism, dedication and contributions made in the preparation of this report.

Credit must also be given to the Mayor, City Council members and City Department Directors for their support in maintaining the highest standards of professionalism in the management of the City of Daly City’s finances.

Respectfully submitted,

Thomas J. Piccolotti Timothy J. Nevin
City Manager Director of Finance and
Administrative Services

CITIZENS OF

DALY CITY

CITY CLERK MAYOR &

COUNCIL
CITY

TREASURER

CITY ATTORNEY

PLANNING

COMMISSION

RECREATION

COMMISSION

PERSONNEL
BOARD
SMALL

BUSINESS

COMMISSION

LIBRARY BOARD OF

TRUSTEES
ARTS &

CULTURE

COMMISSION

BICYCLE & PEDESTRIAN

ADVISORY COMMITTEE
YOUTH

ADVISORY

COMMITTEE

MOBILE HOME

RENT REVIEW

COMMISSION

CITY MANAGER

ECONOMIC &

COMMUNITY

DEVELOPMENT

FINANCE &

ADMINISTRATIVE

SERVICES

FIRE HUMAN

RESOURCES

LIBRARY &

RECREATION

SERVICES

POLICE PUBLIC WORKS

WATER &

WASTEWATER

RESOURCES

CITY OF DALY CITY

ORGANIZATONAL STRUCTURE
FISCAL YEAR 2023
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CITY OF DALY CITY

CITY COUNCIL
JUNE 30, 2023
Raymond A. Buenaventura, Mayor
Juslyn C. Manalo, Vice Mayor
Glenn R. Sylvester
Pamela DiGiovanni
Dr. Rod Daus-Magbual
K. Annette Hipona
City Clerk
Daneca Halvorson
City Treasurer

ADMINISTRATION AND DEPARTMENT HEADS
Thomas J. Piccolotti
Rose Zimmerman
Richard Chiu Jr.

Cameron Christensen
Timothy Nevin
Tatum Mothershead
Ron Myers
Joshua A. Cosgrove
Natalie Sakkal
City Manager
City Attorney
Director of Public Works
Acting Police Chief
Director of Finance and Administrative Services
Director of Economic & Community Development
Fire Chief
Director of Water & Wastewater Resources
Director of Human Resources
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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Daly City
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2022
Executive Director/CEO
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INDEPENDENT AUDITOR’S REPORT
Honorable Mayor and Members of the
City Council of the City of Daly City, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Daly City, California, as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the Table of Contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparisons listed in the Table of Contents as part of the basic financial statements for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirement relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
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In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

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Change in Accounting Principles
Management adopted the provisions of the following Governmental Accounting Standards Board Statement No. 96 – Subscription-Based Information Technology Arrangements, which became effective during the year ended June 30, 2023 and required the restatement of certain balances as discussed in Note 12E to the financial statements.

The emphasis of this matter does not constitute a modification to our opinions.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that Management’s Discussion and Analysis and other Required Supplementary Information as listed in the Table of Contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying Supplementary Information, as listed in the Table of Contents, is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Supplementary Information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
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Other Information
Management is responsible for the other information included in the annual report. The other information comprises the Introductory Section and Statistical Section listed in the Table of Contents, but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exits, we are required to describe it in our report.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 20, 2023 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Pleasant Hill, California
December 20, 2023
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MANAGEMENT’S DISCUSSION AND ANALYSIS
This narrative overview and analysis of the City of Daly City’s financial results provides an overview of the City’s financial activities for the year ended June 30, 2023.

FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS
• As of June 30, 2023, net position totaled $200.3 million, an increase of $24.7 million from the prior year total of $175.6 million for both Governmental and Business-Type activities. • Net Position of governmental activities in Fiscal Year (FY) 2023 was $78.2 million compared to $63.1 million in FY 2022, an increase of $15.1 million. • Net Pension and OPEB Liabilities of governmental activities increased by $91.5 million to $234.4 million in FY 2023 from $142.8 million in FY 2022. • Net Position of business-type activities in FY 2023 was $122.1 million compared to $112.5 million in FY 2022, an increase of $9.6 million.
• Net Pension and OPEB Liabilities of business-type activities increased by $7.3 million to $18 million in FY 2023 from $10.7 million in FY 2022.
• In FY 2023, total City revenues, including program and general revenues, were $199.7 million, while total expenses were $175 million.
• Governmental activities program revenues were $37.9 million in FY 2023 compared with $41.7 million in FY 2022. Business-type activities program revenues were $56.4 million in FY 2023 compared with $53.1 million in FY 2022.
• Governmental activities general revenues were $100.9 million in FY 2023 compared with $85.8 million in FY 2022, an increase of $15.1 million over the prior year. Part of this is $4.9 million in additional revenues from property taxes and sales taxes, showing a return to more normal growth rates for these revenues following the COVID-19 pandemic. In addition, there was an increase in the utility users tax due to increasing energy costs in FY 2023, and an improvement in investment income of almost $8.1 million. Business-type activities general revenues were $4.5 million in FY 2023, an increase of $2.9 million over the prior year primarily due to an improvement in investment income.
• Unrestricted net position of governmental funds changed from negative ($74.5) million in FY 2022 to negative ($64) million in FY 2023, primarily due to an increase in total assets of $15.6 million, made up of increases in cash and investments and capital assets. 5

OVERVIEW OF THE ANNUAL COMPREHENSIVE FINANCIAL REPORT
This Annual Comprehensive Financial Report (ACFR) is in three sections:
1) Introductory Section containing the Transmittal Letter and miscellaneous other information
2) Financial Section containing the Independent Auditor’s Report, this Management’s Discussion and Analysis, the Basic Financial Statements, which include the Governmentwide and the Fund Financial Statements, along with the Notes to these financial statements, Required Supplementary Information, and Combining Statements for Non-major Governmental Funds and Fiduciary Funds
3) Statistical Section containing financial trend data and general statistical information about the City
The Basic Financial Statements
The Basic Financial Statements are comprised of the City-wide Financial Statements and the Fund Financial Statements, including the Notes thereto. These two sets of financial statements provide two different views of the City’s financial activities and financial position.

The Government-wide Financial Statements provide a longer-term view of the City’s activities as a whole and are comprised of the Statement of Net Position and the Statement of Activities. The Statement of Net Position provides information about the financial position of the City as a whole, including all its capital assets and long-term liabilities on the full accrual basis, like that used by private corporations. The Statement of Activities provides information about all the City’s revenues and all its expenses, also on the full accrual basis, with the emphasis on measuring net revenues or expenses of each of the City’s programs. The Statement of Activities explains in detail the change in net position for the year.

All the City’s activities are grouped into governmental activities and business-type activities, as explained below. All the amounts in the Statement of Net Position and the Statement of Activities are separated into governmental activities and business-type activities to provide a summary of these two types of activities of the City as a whole.

The Fund Financial Statements report the City’s operations in more detail than the governmentwide statements and focus primarily on the short-term activities of the City’s General Fund and other major funds. The Fund Financial Statements measure only current revenues and expenditures and fund balances; they exclude capital assets, long-term debt, and other long-term amounts.

Major funds account for the major financial activities of the City and are presented individually, while the activities of non-major funds are presented in summary, with subordinate schedules presenting the detail for each of these other funds.

The fiduciary statements provide financial information about the assets for which the City acts solely as custodian in its capacity as a fiscal agent.
6

The Government-Wide Financial Statements
The Statement of Net Position and the Statement of Activities present information about the following:
• Governmental activities - All the City’s basic services are governmental activities, including general government, public safety, public works, streets and infrastructure, culture and recreation, and economic and community development. These services are supported by general City revenues such as taxes, and by specific program revenues. • Business-type activities - All the City’s enterprise activities are reported here, including water, sewer, and solid waste transport. Unlike governmental services, these services are supported by charges paid by users based on the amount of the service they use.

Government-wide financial statements are prepared on the accrual basis, which means they measure the flow of all economic resources of the City as a whole.

Fund Financial Statements
The Fund Financial Statements provide detailed information about each of the City’s most significant funds, called major funds. Each major fund is presented individually, with all nonmajor funds summarized and presented only in a single column. Subordinate schedules present the detail of these non-major funds. Major funds present the major activities of the City for the year and may change from year to year because of changes in the pattern of the City’s activities.

Governmental fund financial statements are prepared on the modified accrual basis, which means they measure only current financial resources and uses. Capital assets and other long-lived assets, along with long-term liabilities, are not presented in the governmental fund financial statements.

Enterprise fund financial statements are prepared on the full accrual basis, and include all their assets and liabilities, both current and long-term.

Since the City’s internal service funds provide goods and services only to the City’s governmental and business-type activities, their activities are reported only in total at the fund level. Internal service funds cannot be major funds because their revenues are derived from other City funds.

These revenues are eliminated in the City-wide financial statements and any related profits or losses are returned to the activities which created them, along with any residual net position of the internal service funds.

Comparisons of budget and actual financial information are presented only for the General Fund and other major funds that are special revenue funds.

Fiduciary Statements – The City is the fiscal agent for a few small local agencies. Fiduciary activities are reported in the separate Statement of Fiduciary Net Position. These activities are excluded from the City’s other financial statements because the City cannot use these assets to finance its own operations.
7

FINANCIAL ACTIVITIES OF THE CITY AS A WHOLE
This analysis focuses on the net position and changes in net position of the City’s governmental activities and business-type activities (Tables 1, 2, and 3) presented in the City-wide Statement of Net Position and Statement of Activities that follow.

Table 1
Net Position at June 30
(in thousands)
Governmental Activities
The City’s net position from governmental activities increased from $63.1 million in FY 2022 to $78.2 million in FY 2023. The increase in the Net Position reflected in the Statement of Activities, is also shown in Table 1. Increases and decreases of individual assets and liabilities include:
• Governmental cash and investments increased $12.8 million from $170.3 million in FY 2022 to $183.2 million in FY 2023. The City’s net position in cash and investments increased partly because of a steady increase in governmental revenues including property taxes ($3.3 million), sales taxes ($1.6 million), and utility users taxes ($1.7 million), which increased due to rising energy costs. The other portion of that increase is due to the change in investment earnings, which went from negative ($4.6) million in FY 2022 to an increase of $3.5 million in FY 2023, as the financial markets rebounded to positive returns. 8

• Also on the asset side, capital assets increased in FY 2023 to $102.2 million from $98 million in FY 2022. This is mostly due to the implementation of GASB 96 in FY 2023.

Within the City’s governmental activities, the City estimates the value of the subscriptionbased information technology arrangement assets to be $ 4.2 million. • In FY 2023, liabilities also increased significantly by $90.8 million. This is due to an increase in the City’s net pension and OPEB liabilities, which went from $142.8 million in FY 2022, a large decrease for that year, to $234.4 million in FY 2023. For the year ending June 30, 2023, the market value for the City’s pension fund and OPEB trust account decreased significantly as they reflected the negative market returns for the year ending June 30, 2022, the year used to calculate net pension and OPEB liabilities for FY 2023. • The restricted net position increased $4.2 million, and the unrestricted net position improved by $10.5 million from negative ($74.5) million in FY 2022 to negative ($64) million in FY 2023. The City’s unrestricted net position was negatively impacted in fiscal year 2014-15 with the implementation of GASB 68, which continues to require the disclosure of the City’s unfunded pension liability. The unrestricted net position improved in FY 2023 because of the increase in cash and investments ($12.8 million) and the increase in capital assets ($4.2 million).

Business-type Activities
The net position of business-type activities increased $9.6 million to a total of $122.1 million in FY 2023 from $112.5 million in FY 2022. Increases and decreases of individual assets and liabilities are as follows:
• Cash and investments increased $8.2 million in FY 2023 due to a few different factors. The Water Utility revenues did increase $2.2 million in FY 2023 because of a 9.5% water rate increase. In addition, the Sanitation District revenues increased about $1.5 million in FY 2023 due to a 9% increase is sanitary sewer rates even as water usage decreased. Investment income also went up for both utilities adding $2.4 million to the total given the strong financial market returns in FY 2023. Finally, the Sanitation District continued to receive grant revenues in FY 2023 that added to the cash balance including revenues from the Water and Wastewater Arrearage Payment Program funded by the American Rescue Plan Act. • Liabilities also increased in FY 2023 by $5.6 million from $19 million in FY 2022 to $24.6 million in FY 2023. Similar to governmental activities, the increase is due to a $7.3 million increase in net pension and OPEB liabilities. For the year ending June 30, 2023, the market value for the City’s pension fund and OPEB trust account decreased significantly as they reflected the negative market returns for the year ending June 30, 2022, the year used to calculate net pension and OPEB liabilities for FY 2023. The increase was slightly offset by a continuing reduction in long term debt and other liabilities. 9

• Overall, the unrestricted net position improved $9.2 million ending at $54.6 million in FY 2023. The unrestricted net position increased in FY 2023 because of the increases in cash and investments resulting mostly from the rate increases approved for the year by both the Water Utility and the Sanitation District.

Changes in Net Position
Total governmental activities revenue in FY 2023 amounted to $138.8 million compared to $127.5 million in FY 2022, an increase of $11.3 million in FY 2023 due to a variety of factors. This includes increases in both property taxes and sales taxes as the City’s main revenue sources returned to more normal growth rates following the pandemic. The increase also includes an increase in the utility users tax, based on the increase in energy costs in FY 2023, and $6.3 million in American Rescue Plan Act funding that the City recognized during the fiscal year.

Governmental expenses increased by $13 million in FY 2023 mostly due to newly negotiated cost of living raises for employees that went into effect during the fiscal year.

Total business-type activities revenues increased $6.3 million in FY 2023 due to an increase in water utility rate revenues, sanitary sewer rate revenues, an increase in investment income, and operating grants and contributions. The expenses increased $12.8 million due to an increase in the net pension and OPEB liability for FY 2023 and negotiated cost of living raises for employees.

10

Table 2
Changes in Net Position
For Years Ended June 30
(in thousands)
11

Governmental Activities
Table 3 splits the revenues of the City’s governmental programs into five main areas. Table 4 splits the expenses of the governmental programs into six main areas. The distributions correspond to the programs in the Statement of Activities in which the total Change in Net Position, defined as total program cost less the revenues generated by those specific activities, is negative $(87.2) million.

Table 3
Governmental Activities - Revenues
For the Year Ended June 30, 2023
(in thousands)
Table 4
Governmental Activities - Expenses
For the Year Ended June 30, 2023
(in thousands)
General
Government,
$884
Public Safety,
$11,911
Public Works,
$16,128
Culture &
Recreation,
$3,338
Economic & Community
Development, $5,665
Governmental Activities - Revenues
General Government,
$14,303
Public Safety,
$70,765
Public Works,
$15,856
Culture &
Recreation,
$16,743
Economic & Community
Development, $6,884
Interest on long-term
debt, $579
Governmental Activities - Expenses
12

THE CITY’S FUND FINANCIAL STATEMENTS
Governmental Funds
At June 30, 2023, the City’s major governmental funds consisted of the General Fund, Gas Tax Fund, Grants Fund, Measures A and W Fund, and Capital Projects Fund. The focus of the 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 financial status.

The General Fund’s total fund balance increased $8.2 million to $78.2 million in FY 2023 compared to $70.1 million in FY 2022.

General Fund revenues for FY 2023 increased by $6.1 million to $118.8 million from $112.7 million in FY 2022 due to several factors. To begin, the City recognized $6.3 million in one-time American Rescue Plan Act funds during FY 2023 and saw an increase in its net investment income.

Additionally, property tax and sales tax revenues increased by about 7% each, with property taxes going from $45.6 million in FY 2022 to $48.9 million in FY 2023 and sales tax revenues going from $24.2 million in FY 2022 to $25.8 million in FY 2023. At the same time, decreases in some General Fund revenues offset the bigger increases. General Fund expenditures increased by $4.1 million to $110.8 million in FY 2023 reflecting additional increases in salaries and benefits in accordance with adopted memoranda of understanding. Although the General Fund showed an increase in expenditures, the expenditures were $14.4 million lower than the budget of $125.1 million. This is primarily due to salary savings within the Police Department and other General Fund departments where the City has seen a high number of vacant positions.

In FY 2023, the Gas Tax Special Revenue Fund total fund balance decreased slightly to $8.7 million as revenues closely matched expenses. The balance in this fund represents funds that are legally required to be spent on local roadway projects. All such amounts are budgeted for future expenditures as laid out in the multi-year capital improvement plan. However, the fund balance in the Measures A and W Fund did increase from $9.1 million in FY 2022 to $11.4 million in FY 2023 as both funds brought in healthy revenues this fiscal year.

The Capital Projects Fund total fund balance increased $1.9 million in FY 2023 to $29 million compared to $27.1 million in FY 2022. This fund is designated for specific capital projects that will benefit the community. Capital Projects Fund revenues increased $2.6 million in FY 2023 to $4.4 million due to a one-time settlement check to be designated for specific capital projects and an increase in net investment income. Capital Projects Fund expenditures also increased slightly in FY 2023 to $1.2 million.
13

Enterprise Funds
The City has three major enterprise funds: the Water Utility Fund, the Sanitation District Fund and the Civic Center Fund.

Water Utility operating revenues in FY 2023 increased $2.2 million to $28.4 million compared to $26.2 million in FY 2022 due to an increase in revenues related to another 9.5% water rate increase.

Operating expenses increased $4 million, or 27%, in FY 2023 to $19.2 million because of an increase in net pension and OPEB liabilities and cost of living increases.

Sanitation District operating revenues increased $1.5 million to $25.2 million in FY 2023 because sanitary sewer rates increased by 9% although the increase was offset by reduced water usage.

Operating expenses increased by $9.7 million, or 48%, to $30.6 million in FY 2023 because of the increase in net pension and OPEB liabilities and cost of living increases.

The Civic Center Fund became a major fund in FY 2022 due to the implementation of GASB 87 and the addition of leases receivables for building leases within the Fund. The Civic Center Fund remained a major fund in FY 2023 with an ending net position of $5.4 million, a small increase from its $5 million net position in FY 2022.

General Fund Budgetary Highlights
The City typically uses a biennial budgeting process. Two individual budget years are proposed to the City Council at the same time, with mid-budget adjustments at the end of the first of the two years. This process provides more opportunity for long-term planning but does require adjustments based on changing economic conditions. However, due to continuing economic uncertainties, the City again completed a one-year budget process for FY 2023. Revenues were better than the budget in FY 2023 as some, like utility users tax and rents and interest, came in higher than expected. The City also recognized $1.2 million more in American Rescue Plan Act funds than budgeted.

Expenditures were below final budgeted amounts by $14.4 million, mostly because of staffing vacancies in the Police Department and other General Fund funded departments. 14

Table 5
General Fund
Statements of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual
For the Year Ended June 30, 2023
(in thousands)
15

CAPITAL ASSETS
At the end of FY 2023 the City had $168.4 million, net of accumulated depreciation, invested in a broad range of capital assets, as shown in Table 6 below (further detail may be found in Note 4 to the financial statements):

Table 6
Capital Assets Net of Depreciation at June 30
(in thousands)
16

DEBT ADMINISTRATION
Each of the City’s debt issues is discussed in detail in Note 5 to the financial statements. At June 30, the City’s debt was comprised of:

Table 7
Outstanding Debt
(in thousands)
17

ECONOMIC FACTORS
During fiscal year (FY) 2022-23, the City continued to see growth in its main revenue sources, property taxes and sales taxes. Although some had predicted a recession might come in FY 2023 given the rising inflation and the increases in interest rates by the Federal Open Market Committee, the City did not experience any recessionary impacts. In fact, revenues seemed to return to more traditional growth rates as experienced by the City before the pandemic.

At the same time, though, expenditures continued to rise for the City as inflation and other supply and demand factors affected the cost of labor as well as services and supplies. The City had budgeted at a deficit for FY 2023, but ended the year with a surplus since revenues were better than budgeted and expenses were significantly down due to staff vacancies. The City also continued to use its portion of the American Rescue Plan Act funds to help partially offset the budgeted deficit in FY 2023.

ADDITIONAL INFORMATION
This Annual Comprehensive Financial Report is intended to provide citizens, taxpayers, investors, and creditors with a general overview of the City’s finances. Questions about this Report should be directed to the Department of Finance and Administrative Services, 333 90th Street, Daly City California, 94015. Additional information about the City of Daly City, including our budget documents, can be found at www.dalycity.org.

18

STATEMENT OF NET POSITION AND

STATEMENT OF ACTIVITIES
The Statement of Net Position and the Statement of Activities summarize the entire City’s financial activities and financial position. They are prepared on the same basis as is used by most businesses, which means they include all the City’s assets and deferred outflows of resources and all its liabilities and deferred inflows of resources, as well as all its revenues and expenses. This is known as the full accrual basis—the effect of all the City’s transactions is taken into account, regardless of whether or when cash changes hands, but all material internal transactions between City funds have been eliminated.

The Statement of Net Position reports the difference between the City’s total assets and deferred outflows of resources and the City’s total liabilities and deferred inflows of resources, including all the City’s capital assets and all its long-term debt. The Statement of Net Position focuses the reader on the composition of the City’s Net Position, by subtracting total liabilities from total assets.

The Statement of Net Position summarizes the financial position of all of the City’s Governmental Activities in a single column. The City’s Governmental Activities include the activities of its General Fund, along with all its Special Revenue, Capital Projects and Debt Service Funds.

The Statement of Activities reports increases and decreases in the City’s Net Position. It is also prepared on the full accrual basis, which means it includes all the City’s revenues and all its expenses, regardless of when cash changes hands. This differs from the “modified accrual” basis used in the Fund financial statements, which reflect only current assets, current liabilities, available revenues and measurable expenditures.

The Statement of Activities presents the City’s expenses first, listed by program. Program revenues—that is, revenues which are generated directly by these programs—are then deducted from program expenses to arrive at the net expense of each governmental program. The City’s general revenues are then listed in the Governmental Activities and the Change in Net Position is computed and reconciled with the Statement of Net Position. 19

CITY OF DALY CITY

STATEMENT OF NET POSITION
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments (Note 2G) $183,170,436 $63,371,814 $246,542,250 Cash with fiscal agent (Note 2G) 118,160 11,326 129,486 Restricted cash (Note 2G) 4,477,007 4,477,007
Accounts receivable, net 11,795,948 7,671,987 19,467,935 Inventories (Note 2H) 239,490 1,981,446 2,220,936
Prepaids (Note 2H) 2,082,512 550 2,083,062
Internal balances (Note 6) (2,008,339) 2,008,339
Notes receivable (Note 13) 1,390,489 1,390,489
Loan receivable from Successor Agency (Note 15C) 10,907,153 10,907,153 Leases receivable (Note 7) 8,948,142 8,926,241 17,874,383 Property held for development (Note 2C) 3,366,888 3,366,888 Capital assets (Note 4):

Nondepreciable capital assets 39,324,136 14,615,475 53,939,611 Depreciable capital assets, net 62,823,573 51,650,477 114,474,050 Total Assets 326,635,595 150,237,655 476,873,250

DEFERRED OUTFLOWS OF RESOURCES
Related to pension (Note 8D) 60,381,989 4,307,650 64,689,639 Related to OPEB (Note 9E) 5,597,288 865,218 6,462,506
Total Deferred Outflows of Resources 65,979,277 5,172,868 71,152,145

LIABILITIES
Accounts payable 9,615,853 2,557,365 12,173,218
Accrued payroll 1,168,554 187,535 1,356,089
Deposits payable 6,589,212 32,200 6,621,412
Unearned revenue 11,127,417 11,127,417
Interest payable 78,042 9,187 87,229
Compensated absences (Note 2K):

Due within one year 5,897,667 882,612 6,780,279
Due in more than one year 11,946,473 1,746,320 13,692,793 Accrued claims payable (Note 11):

Due within one year 2,622,041 2,622,041
Due in more than one year 7,450,959 7,450,959
Net OPEB liability, due in more than one year (Note 9C) 34,085,280 5,268,831 39,354,111 Net pension liability, due in more than one year (Note 8C) 200,283,505 12,761,384 213,044,889 Lease payable (Note 7)
Due within one year 78,888 78,888
Due in more than one year 34,463 34,463
Subscription liabilities (Note 14):

Due within one year 761,625 761,625
Due in more than one year 3,521,797 3,521,797
Long-term debt (Note 5):

Due within one year 4,746,769 914,959 5,661,728
Due in more than one year 2,495,543 281,832 2,777,375
Total Liabilities 302,504,088 24,642,225 327,146,313

DEFERRED INFLOWS OF RESOURCES
Related to pension (Note 8D) 130,948 23,729 154,677
Related to OPEB (Note 9E) 3,117,646 481,920 3,599,566
Related to leases (Note 7) 8,679,820 8,165,964 16,845,784 Total Deferred Inflows of Resources 11,928,414 8,671,613 20,600,027 NET POSITION (Note 12)
Net investment in capital assets 96,664,081 65,069,161 161,733,242 Restricted for:

Debt service 118,160 11,326 129,486
Streets and roads 20,081,167 20,081,167
Infrastructure 13,318,328 13,318,328
Qualified capital outlay 2,431,413 2,431,413
Affordable housing 9,367,960 9,367,960
Other 2,651,331 2,651,331
Total Restricted Net Position 45,536,946 2,442,739 47,979,685 Unrestricted (64,018,657) 54,584,785 (9,433,872)
Total Net Position $78,182,370 $122,096,685 $200,279,055 See accompanying notes to financial statements
JUNE 30, 2023
20

CITY OF DALY CITY
FOR THE YEAR ENDED JUNE 30, 2023
Net (Expense) Revenue and
Changes in Net Position
Operating Capital
Charges for Grants and Grants and Governmental Business-type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental Activities:

General government $14,303,115 $625,126 $81,939 $177,397 ($13,418,653) ($13,418,653) Public safety 70,765,037 5,273,795 6,636,684 (58,854,558) (58,854,558) Public works 15,855,694 3,559,037 5,793,984 6,775,309 272,636 272,636 Culture and recreation 16,742,550 2,127,987 1,209,780 (13,404,783) (13,404,783) Economic and community development 6,884,119 3,287,643 2,376,673 (1,219,803) (1,219,803) Interest on long-term debt 578,865 (578,865) (578,865)
Total Governmental Activities 125,129,380 14,873,588 16,099,060 6,952,706 (87,204,026) (87,204,026) Business-type Activities:

Water Utility 18,874,866 27,892,142 141,008 $9,158,284 9,158,284 Civic Center 997,790 1,318,174 320,384 320,384
Transfer Station
Sanitation District 30,021,570 25,132,013 1,921,579 (2,967,978) (2,967,978) Total Business-type Activities 49,894,226 54,342,329 2,062,587 6,510,690 6,510,690 Total $175,023,606 $69,215,917 $18,161,647 $6,952,706 (87,204,026) 6,510,690 (80,693,336) General revenues:

Taxes:

Property tax 48,895,101 2,620,296 51,515,397
Sales tax 25,774,755 25,774,755
Utility users tax 6,934,379 6,934,379
Franchise fees 5,016,118 5,016,118
Other taxes 8,268,611 8,268,611
Investment earnings 3,529,876 1,067,422 4,597,298
Gain from sale of capital assets 2,199 2,199
Miscellaneous 2,454,244 815,175 3,269,419
Transfers (Note 6) 1,393,960 (1,393,960)
Total general revenues and transfers 102,267,044 3,111,132 105,378,176 Change in Net Position 15,063,018 9,621,822 24,684,840
Net Position-Beginning 63,119,352 112,474,863 175,594,215 Net Position-Ending $78,182,370 $122,096,685 $200,279,055 See accompanying notes to financial statements

STATEMENT OF ACTIVITIES
Program Revenues
21

FUND FINANCIAL STATEMENTS
Major funds are defined generally as having significant activities or balances in the current year. 23

CITY OF DALY CITY

GOVERNMENTAL FUNDS

BALANCE SHEET
JUNE 30, 2023
Other Total
Measures Capital Governmental Governmental
General Gas Tax Grants A and W Projects Funds Funds
ASSETS
Cash and investments (Note 2G) $78,069,008 $8,322,485 $335,143 $11,262,750 $30,677,404 $6,705,569 $135,372,359 Restricted cash and investments (Note 2G) 4,477,007 4,477,007 Accounts receivable, net 8,436,524 1,856,886 321,128 200,509 340,281 533,125 11,688,453 Due from other funds (Note 6) 360,842 360,842
Prepaids (Note 2H) 252,055 252,055
Inventories (Note 2H) 16,554 28,151 44,705
Notes receivable (Note 13) 469,012 921,477 1,390,489
Loan receivable from Successor Agency (Note 15C) 10,907,153 10,907,153 Leases receivable (Note 7) 8,948,142 8,948,142
Property held for development (Note 2C) 3,366,888 3,366,888 Total Assets $111,467,285 $10,207,522 $1,125,283 $11,463,259 $31,017,685 $11,527,059 $176,808,093

LIABILITIES
Accounts payable $7,520,809 $805,686 $92,267 $68,760 $305,133 $168,073 $8,960,728 Accrued payroll 1,049,321 29,976 1,802 6,066 1,087,165
Due to other funds (Note 6) 360,842 360,842
Deposits payable 6,585,211 4,001 6,589,212
Unearned revenue 9,398,182 1,729,235 11,127,417
Total Liabilities 24,553,523 835,662 94,069 68,760 2,034,368 538,982 28,125,364

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - accounts receivable 685,192 108,324 793,516 Unavailable revenue - loans 469,012 921,477 1,390,489
Related to leases 8,679,820 8,679,820
Total Deferred Inflows of Resources 8,679,820 685,192 577,336 921,477 10,863,825

FUND BALANCES
Fund Balance (Note 12)
Nonspendable 11,451,441 28,151 11,479,592
Restricted 5,477,007 8,658,517 453,878 11,394,499 13,318,328 10,066,600 49,368,829 Assigned 754,432 15,664,989 16,419,421
Unassigned 60,551,062 60,551,062
Total Fund Balances 78,233,942 8,686,668 453,878 11,394,499 28,983,317 10,066,600 137,818,904 Total Liabilities, Deferred Inflows of
Resources and Fund Balances $111,467,285 $10,207,522 $1,125,283 $11,463,259 $31,017,685 $11,527,059 $176,808,093 See accompanying notes to financial statements
24

CITY OF DALY CITY
Reconciliation of the

GOVERNMENTAL FUNDS - BALANCE SHEET
with the

STATEMENT OF NET POSITION
JUNE 30, 2023
Total fund balances reported on the Governmental Funds Balance Sheet $137,818,904 Amounts reported for Governmental Activities in the Statement of Net Position are different from those reported in the Governmental Funds above because of the following:

CAPITAL ASSETS
Capital assets used in Governmental Activities are not current assets or financial resources and therefore are not reported in the Governmental Funds. 91,157,302

ALLOCATION OF INTERNAL SERVICE FUND NET POSITION
Internal service funds are not governmental funds. However, they are used by management to charge the costs of certain activities, such as insurance, central services and maintenance to individual governmental funds. The net current assets of the internal service funds are therefore included in Governmental Activities in the following line items in the Statement of Net Position.

Cash and investments 47,916,237
Accounts receivable 107,495
Prepaids 1,830,457
Deferred outflows 479,209
Inventories 194,785
Internal balances (2,008,339)
Capital assets 10,990,407
Accounts payable (655,125)
Accrued payroll (81,389)
Interest payable (78,042)
Accrued claims payable (10,073,000)
Compensated absences (1,511,171)
Net OPEB liability (2,918,121)
Deferred inflows (266,909)
Subscription liabilities - due within one year (489,837) Subscription liabilities - due in more than one year (1,450,871) Long-term debt - due within one year (4,746,769)
Long-term debt - due in more than one year (2,495,543)

ACCRUAL OF NONCURRENT REVENUES AND EXPENSES
Revenues which are deferred on the Fund Balance Sheets because they are not available currently are taken into revenue in the Statement of Activities. 2,184,005

DEFERRED INFLOWS AND OUTFLOWS
The deferred outflows below are not current assets or financial resources; and the deferred inflows are not due and payable in the current period and therefore are not reported in the Governmental Funds.

Deferred outflows 65,500,068
Deferred inflows (2,981,685)

LONG TERM ASSETS AND LIABILITIES
The liabilities below are not due and payable in the current period and therefore are not reported in the funds:

Long-term debt
Leases payable (113,351)
Subscription liabilities (2,342,714)
Net OPEB liability (31,167,159)
Net pension liability (200,283,505)
Compensated absences (16,332,969)
NET POSITION OF GOVERNMENTAL ACTIVITIES $78,182,370
See accompanying notes to financial statements
25

CITY OF DALY CITY

GOVERNMENTAL FUNDS

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2023
Other Total
Measures Capital Governmental Governmental
General Gas Tax Grants A and W Projects Funds Funds

REVENUES
Property tax $48,895,101 $48,895,101
Gas tax $4,968,756 4,968,756
Sales tax 25,774,755 $3,906,134 29,680,889
Utility users tax 6,934,379 6,934,379
Franchise fees 5,016,118 5,016,118
Other taxes 8,268,611 8,268,611
Licenses and permits 2,672,412 2,672,412
Fines and forfeitures 2,628,742 2,628,742
Rents and interest 3,066,973 142,110 $12,710 204,942 $555,266 $118,402 4,100,403 Federal programs and grants 6,263,152 117,442 69,124 239,807 1,860,695 8,550,220 Receipts from other agencies 1,099,328 637,603 836,241 432,324 3,005,496 Charges and fees 6,529,787 1,157,262 1,681,511 77,738 9,446,298 Miscellaneous 1,654,471 61,252 1,536,169 175,077 3,426,969 Total Revenues 118,803,829 7,084,425 918,075 4,111,076 4,445,077 2,231,912 137,594,394

EXPENDITURES
Current:

General government 14,186,436 83,488 4,930 14,274,854
Public safety 70,309,622 265,937 17,967 70,593,526
Public works 6,222,955 4,715,517 24,401 10,962,873
Culture and recreation 14,871,322 428,851 15,300,173
Economic and community development 4,809,084 205,466 1,763,119 6,777,669 Capital projects 5,773,916 298,172 2,501,363 8,573,451
Debt service:

Principal 333,164 418,000 751,164
Interest 26,870 5,121 31,991
Total Expenditures 110,759,453 10,489,433 1,281,914 4,930 2,501,363 2,228,608 127,265,701

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 8,044,376 (3,405,008) (363,839) 4,106,146 1,943,714 3,304 10,328,693

OTHER FINANCING SOURCES (USES)
Transfers in (Note 6) 3,484,848 3,628,964 77,369 301,873 247,126 7,740,180 Transfers (out) (Note 6) (3,340,398) (370,598) (366,933) (1,854,795) (360,579) (6,293,303) Total Other Financing Sources (Uses) 144,450 3,258,366 (366,933) (1,777,426) (58,706) 247,126 1,446,877 NET CHANGES IN FUND BALANCES 8,188,826 (146,642) (730,772) 2,328,720 1,885,008 250,430 11,775,570 BEGINNING FUND BALANCES 70,045,116 8,833,310 1,184,650 9,065,779 27,098,309 9,816,170 126,043,334 ENDING FUND BALANCES $78,233,942 $8,686,668 $453,878 $11,394,499 $28,983,317 $10,066,600 $137,818,904 See accompanying notes to financial statements
26

CITY OF DALY CITY
Reconciliation of the

NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS
with the

STATEMENT OF ACTIVITIES
The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance, which measures only changes in current assets and current liabilities on the modified accrual basis, with the Change in Net Position of Governmental Activities reported in the Statement of Activities, which is prepared on the full accrual basis.

NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $11,775,570 Amounts reported for governmental activities in the Statement of Activities are different because of the following:

CAPITAL ASSETS TRANSACTIONS
Governmental Funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense.

The capital outlay expenditures are therefore added back to fund balance. 4,061,944 Depreciation expense is deducted from fund balance
(Depreciation expense is net of internal service fund depreciation of $2,436,842 which has already been allocated to serviced funds). (4,747,627) Retirements are deducted from fund balance (3,566)

LONG TERM DEBT PROCEEDS AND PAYMENTS
Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position.

Repayment of bond principal is an expenditure in the governmental funds, but in the Statement of Net Position the repayment reduces long-term liabilities.

Repayment of debt principal is added back to fund balance 418,000 Repayment of lease principal is added back to fund balance 62,619 Remeasurement of lease liability is deducted from fund balance (146,267) Repayment of subscription liability principal is added back to fund balance 270,545 Interest accrued is deducted from fund balance 4,270

ACCRUAL OF NONCURRENT ITEMS
The amounts below included in the Statement of Activities do not provide or (require) the use of current financial resources and therefore are not reported as revenue or expenditures in governmental funds:

Unavailable revenue 760,533
Compensated absences (4,279,392)
OPEB expense 1,564,929
Pension expense (3,223,441)

ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY
Internal service funds are used to charge the costs of certain activities, such as equipment acquisition, maintenance, and insurance to individual funds.

The portion of the net revenue (expense) of these internal service funds arising out of their transactions with governmental funds is reported with governmental activities, because they service those activities.

Change in net position of all internal service funds 8,544,901 CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $15,063,018 See accompanying notes to financial statements
FOR THE YEAR ENDED JUNE 30, 2023
27

CITY OF DALY CITY

GENERAL FUND

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2023
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual Amounts (Negative)

REVENUES
Property tax $49,542,790 $49,542,790 $48,895,101 ($647,689) Sales tax 26,124,343 26,124,343 25,774,755 (349,588)
Utility users tax 5,554,668 5,554,668 6,934,379 1,379,711 Franchise fees 4,654,365 4,654,365 5,016,118 361,753
Other taxes 7,415,661 7,415,661 8,268,611 852,950
Licenses and permits 2,866,349 2,866,349 2,672,412 (193,937) Fines and forfeitures 2,359,876 2,359,876 2,628,742 268,866 Rents and interest 2,169,599 2,159,599 3,066,973 907,374 Federal programs and grants 5,000,000 5,105,000 6,263,152 1,158,152 Receipts from other agencies 773,159 1,399,855 1,099,328 (300,527) Charges and fees 6,796,357 6,806,357 6,529,787 (276,570) Miscellaneous 631,782 682,236 1,654,471 972,235
Total Revenues 113,888,949 114,671,099 118,803,829 4,132,730

EXPENDITURES
Current Operations:

General Government
Legislative:

Salaries and benefits 259,433 325,481 285,037 40,444
Services and supplies 55,929 55,929 50,989 4,940
Other charges 44,106 44,106 18,494 25,612
Total Legislative 359,468 425,516 354,520 70,996
Legal:

Salaries and benefits 1,679,762 1,193,080 1,220,466 (27,386) Services and supplies 240,603 740,603 241,263 499,340
Other charges 9,918 9,918 7,316 2,602
Total Legal 1,930,283 1,943,601 1,469,045 474,556
Administrative:

Salaries and benefits 8,532,810 10,257,595 8,805,072 1,452,523 Services and supplies 3,325,965 3,685,789 2,978,316 707,473 Capital outlay
Other charges 1,085,241 778,121 579,483 198,638
Total Administrative 12,944,016 14,721,505 12,362,871 2,358,634 Total General Government 15,233,767 17,090,622 14,186,436 2,904,186 Public Safety
Police:

Salaries and benefits 38,789,085 39,209,630 32,044,580 7,165,050 Services and supplies 7,386,567 7,681,885 7,272,563 409,322 Capital outlay 440,675 234,639 150,493 84,146
Other charges 671,659 696,659 671,935 24,724
Total Police 47,287,986 47,822,813 40,139,571 7,683,242 Fire:

Salaries and benefits 25,368,285 26,205,740 26,886,282 (680,542) Services and supplies 3,332,820 3,334,191 3,075,887 258,304 Capital outlay 280,000 262,000 42,627 219,373
Other charges 210,547 210,547 165,255 45,292
Total Fire 29,191,652 30,012,478 30,170,051 (157,573)
Total Public Safety 76,479,638 77,835,291 70,309,622 7,525,669 (Continued)
28

CITY OF DALY CITY

GENERAL FUND

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2023
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual Amounts (Negative)
Public Works
Salaries and benefits 4,935,045 5,272,915 4,016,054 1,256,861 Services and supplies 2,017,004 2,303,959 2,097,977 205,982 Other charges 120,448 118,948 108,924 10,024
Total Public Works 7,072,497 7,695,822 6,222,955 1,472,867 Culture and Recreation
Salaries and benefits 8,310,754 9,320,412 8,641,514 678,898 Services and supplies 5,811,275 6,534,005 6,062,296 471,709 Capital outlay 77,000 37,000 34,162 2,838
Other charges 138,799 133,399 133,350 49
Total Culture and Recreation 14,337,828 16,024,816 14,871,322 1,153,494 Economic and Community Development
Salaries and benefits 3,929,418 3,958,086 3,269,845 688,241 Services and supplies 1,459,681 2,337,599 1,441,576 896,023 Other charges 81,642 181,642 97,663 83,979
5,470,741 6,477,327 4,809,084 1,668,243
Debt service:

Principal 333,164 (333,164)
Interest 26,870 (26,870)
360,034 (360,034)
Total Expenditures 118,594,471 125,123,878 110,759,453 14,364,425

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (4,705,522) (10,452,779) 8,044,376 18,497,155

OTHER FINANCING SOURCES (USES)
Transfers in 2,857,974 3,224,907 3,484,848 259,941
Transfers out (2,406,492) (3,598,680) (3,340,398) 258,282 Total Other Financing Sources (Uses) 451,482 (373,773) 144,450 518,223 NET CHANGE IN FUND BALANCE ($4,254,040) ($10,826,552) 8,188,826 $19,015,378 BEGINNING FUND BALANCE 70,045,116
ENDING FUND BALANCE $78,233,942
See accompanying notes to financial statements
Total Economic and Community Development
29

CITY OF DALY CITY

GAS TAX SPECIAL REVENUE FUND

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2023
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual Amounts (Negative)

REVENUES
Gas tax $5,640,753 $5,640,753 $4,968,756 ($671,997)
Sales tax
Rents and interest 70,000 70,000 142,110 72,110
Federal programs and grants 450,000 624,233 117,442 (506,791) Receipts from other agencies 594,580 3,395,211 637,603 (2,757,608) Charges and services 1,066,757 1,078,733 1,157,262 78,529 Miscellaneous 9,500 9,500 61,252 51,752
Total Revenues 7,831,590 10,818,430 7,084,425 (3,734,005)

EXPENDITURES
Public works 4,980,549 5,161,512 4,715,517 445,995
Capital projects 7,971,008 27,186,263 5,773,916 21,412,347 Total Expenditures 12,951,557 32,347,775 10,489,433 21,858,342

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (5,119,967) (21,529,345) (3,405,008) 18,124,337

OTHER FINANCING SOURCES (USES)
Transfers in 4,826,575 15,294,260 3,628,964 (11,665,296) Transfers out (293,229) (293,229) (370,598) (77,369)
Total Other Financing Sources (Uses) 4,533,346 15,001,031 3,258,366 (11,742,665) NET CHANGE IN FUND BALANCE ($586,621) ($6,528,314) (146,642) $6,381,672 BEGINNING FUND BALANCE 8,833,310
ENDING FUND BALANCE $8,686,668
See accompanying notes to financial statements
30

CITY OF DALY CITY

GRANTS SPECIAL REVENUE FUND

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2023
Variance
Positive
Original Final Actual (Negative)

REVENUES
Rents and interest $5,233 $5,233 $12,710 $7,477
Federal programs and grants 1,325,733 69,124 (1,256,609) Receipts from other agencies 437,167 2,662,345 836,241 (1,826,104) Miscellaneous revenue
Total Revenues 442,400 3,993,311 918,075 (3,075,236)

EXPENDITURES
General Government
Administrative:

Services and supplies 159,077 83,488 75,589
Total General Government 159,077 83,488 75,589
Public Safety
Salaries and benefits 177,559 181,376 176,873 4,503
Services and supplies 36,690 201,783 45,332 156,451
Capital outlay 36,690 245,940 41,526 204,414
Other charges 4,351 2,206 2,145
Total Public Safety 250,939 633,450 265,937 367,513
Public Works
Capital Outlay 563,188 298,172 265,016
Total Public Works 563,188 298,172 265,016
Culture and Recreation
Salaries and benefits 133,791 70,805 50,499 20,306
Services and supplies 43,769 393,718 351,340 42,378
Capital Outlay 27,012 27,012
Total Culture and Recreation 177,560 491,535 428,851 62,684 Economic and Community Development
Salaries and benefits 148,477 148,571 (94)
Services and supplies 45,122 9,719 35,403
Other charges 2,582,270 47,176 2,535,094
Total Economic and Community Development 2,775,869 205,466 2,570,403 Total Expenditures 428,499 4,623,119 1,281,914 3,341,205

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 13,901 (629,808) (363,839) 265,969

OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out (366,933) (366,933)
NET CHANGE IN FUND BALANCE $13,901 ($996,741) (730,772) $265,969 BEGINNING FUND BALANCE 1,184,650
ENDING FUND BALANCE $453,878
Budgeted Amounts
See accompanying notes to financial statements
31

CITY OF DALY CITY

MEASURES A AND W SPECIAL REVENUE FUND

STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2023
Variance
Positive
Original Final Actual (Negative)

REVENUES
Sales taxes $3,539,939 $3,539,939 $3,906,134 $366,195
Rents and interest 204,942 204,942
Total Revenues 3,539,939 3,539,939 4,111,076 571,137

EXPENDITURES
General Government
Administrative:

Services and supplies 5,000 5,000 4,930 70
Total Expenditures 5,000 5,000 4,930 70

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 3,534,939 3,534,939 4,106,146 571,207

OTHER FINANCING SOURCES (USES)
Transfers in 77,369 77,369
Transfers out (2,836,620) (12,350,595) (1,854,795) 10,495,800 NET CHANGE IN FUND BALANCE $698,319 ($8,815,656) 2,328,720 $11,144,376 BEGINNING FUND BALANCE 9,065,779
ENDING FUND BALANCE $11,394,499
Budgeted Amounts
See accompanying notes to financial statements
32

CITY OF DALY CITY

PROPRIETARY FUNDS

STATEMENT OF NET POSITION
JUNE 30, 2023
Business-type Activities-Enterprise Funds Governmental
Nonmajor - ActivitiesWater Sanitation Civic Transfer Internal Service Utility District Center Station Totals Funds
ASSETS
Current Assets:

Cash and investments (Note 2G) $25,894,208 $34,059,854 $1,872,435 $1,545,317 $63,371,814 $47,798,077 Cash with fiscal agent (Note 2G) 11,326 11,326 118,160
Accounts receivable, net (Note 2I) 5,981,434 1,647,263 43,290 7,671,987 107,495 Inventories (Note 2H) 393,350 1,588,096 1,981,446 194,785 Prepaids 550 550 1,830,457
Total Current Assets 32,280,318 37,295,763 1,915,725 1,545,317 73,037,123 50,048,974 Noncurrent Assets:

Leases receivable (Note 7) 8,926,241 8,926,241
Capital Assets (Note 4):

Land 839,856 233,547 1,695,762 93,384 2,862,549 378,343 Buildings 272,379 893,519 5,568,728 1,184,278 7,918,904 35,817 Sewage facilities 59,413,041 59,413,041
Wells and pump stations 9,074,783 9,074,783
Water reservoirs 12,715,925 12,715,925
Mains and subsurface lines 21,568,821 26,871,004 48,439,825 Equipment 7,257,779 10,091,431 936,705 20,912 18,306,827 26,238,848 Furniture and fixtures 37,154 114,174 151,328 63,104
Subscription assets 2,419,811
Construction in progress 554,128 11,198,798 11,752,926 179,992 Total Capital Assets 52,320,825 108,815,514 8,201,195 1,298,574 170,636,108 29,315,915 Less accumulated depreciation (29,880,949) (67,803,716) (5,480,301) (1,205,190) (104,370,156) (18,325,508) Net Capital Assets 22,439,876 41,011,798 2,720,894 93,384 66,265,952 10,990,407 Total Noncurrent Assets 22,439,876 41,011,798 11,647,135 93,384 75,192,193 10,990,407 Total Assets 54,720,194 78,307,561 13,562,860 1,638,701 148,229,316 61,039,381

DEFERRED OUTFLOWS OF RESOURCES
Related to pension (Note 8D) 1,324,850 2,982,800 4,307,650 Related to OPEB (Note 9) 239,599 625,619 865,218 479,209 Total Deferred Outflows 1,564,449 3,608,419 5,172,868 479,209

LIABILITIES
Current Liabilities:

Accounts payable 883,971 1,667,612 5,782 2,557,365 655,125 Accrued payroll 56,271 131,264 187,535 81,389
Deposits payable 32,200 32,200
Interest payable 1,067 8,120 9,187 78,042
Unearned revenue
Accrued claims payable (Note 11) 2,622,041
Compensated absences (Note 2K) 274,404 608,208 882,612
Long-term debt (Note 5) 640,000 274,959 914,959 5,236,606 Total Current Liabilities 1,887,913 2,690,163 5,782 4,583,858 8,673,203 Noncurrent Liabilities:

Compensated absences (Note 2K) 304,070 1,442,250 1,746,320 1,511,171 Accrued claims payable (Note 10) 7,450,959
Net OPEB liability (Note 9) 1,459,061 3,809,770 5,268,831 2,918,121 Net Pension Liability (Note 8C) 3,924,859 8,836,525 12,761,384 Long-term debt (Note 5) 281,832 281,832 3,946,414
Total Noncurrent Liabilities 5,687,990 14,370,377 20,058,367 15,826,665 Total Liabilities 7,575,903 17,060,540 5,782 24,642,225 24,499,868

DEFERRED INFLOWS OF RESOURCES
Related to pension (Note 8D) 7,298 16,431 23,729
Related to OPEB (Note 9) 133,455 348,465 481,920 266,909 Related to leases (Note 7) 8,165,964 8,165,964
Total Deferred Inflows 140,753 364,896 8,165,964 8,671,613 266,909 NET POSITION (Note 12)
Net investment in capital assets 21,799,876 40,455,007 2,720,894 93,384 65,069,161 7,962,844 Restricted for:

Debt service 11,326 11,326 118,160
Qualified capital outlay 2,431,413 2,431,413
Unrestricted 26,756,785 21,604,124 2,670,220 1,545,317 52,576,446 28,670,809 Total Net Position $48,567,987 $64,490,544 $5,391,114 $1,638,701 120,088,346 $36,751,813 Some amounts reported for business-type activities in the statement of net position are different because certain internal service fund assets and liabilities are included in business-type activities 2,008,339 Net position of business-type activities $122,096,685
See accompanying notes to financial statements
33

CITY OF DALY CITY

PROPRIETARY FUNDS

STATEMENT OF REVENUES, EXPENSES

AND CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2023
Business-type Activities-Enterprise Funds Governmental
Nonmajor - ActivitiesWater Sanitation Civic Transfer Internal Service Utility District Center Station Totals Funds

OPERATING REVENUES
Water sales $27,892,142 $256,591 $28,148,733
Sewer service charges 24,544,359 24,544,359
Connection charges 331,063 331,063
Rental income $1,318,174 1,318,174
Charges to City departments $30,611,858
Other revenues 515,348 103,841 81,406 $114,580 815,175 801,357 Total Operating Revenues 28,407,490 25,235,854 1,399,580 114,580 55,157,504 31,413,215

OPERATING EXPENSES
Salaries and benefits 5,261,594 11,208,364 16,469,958 7,603,178 Services and supplies 2,181,791 12,350,645 598,624 15,131,060 4,733,315 Water purchases 7,845,248 7,845,248
Utilities 1,288,695 2,099,779 199,175 3,587,649 539,285 Insurance 422,673 1,073,769 30,528 1,526,970 4,228,464
Claims and settlements 2,336,204
Depreciation (Note 4) 1,347,688 2,324,857 190,694 3,863,239 2,436,842 Other charges 808,348 1,558,574 2,366,922 184,579
Total Operating Expenses 19,156,037 30,615,988 1,019,021 50,791,046 22,061,867 Operating Income (Loss) 9,251,453 (5,380,134) 380,559 114,580 4,366,458 9,351,348

NONOPERATING REVENUES (EXPENSES)
Property taxes 2,620,296 2,620,296
Intergovernmental 141,008 1,921,579 2,062,587 207,740
Gain on sale of capital assets 2,199 2,199 59,771
Loss on sale of capital assets (265,122)
Interest income 468,647 565,197 33,578 1,067,422 733,017 Interest expense (24,258) (16,714) (40,972) (551,144)
Total Nonoperating Revenues (Expenses) 585,397 5,092,557 33,578 5,711,532 184,262 Income (Loss) Before Transfers 9,836,850 (287,577) 414,137 114,580 10,077,990 9,535,610 Transfers in (Note 6) 392,208 3,107,300 3,499,508 2,103,676 Transfers (out) (Note 6) (3,627,155) (1,136,644) (15,089) (114,580) (4,893,468) (2,156,593) Net transfers (3,234,947) 1,970,656 (15,089) (114,580) (1,393,960) (52,917) CHANGE IN NET POSITION 6,601,903 1,683,079 399,048 8,684,030 9,482,693 BEGINNING NET POSITION 41,966,084 62,807,465 4,992,066 1,638,701 111,404,316 27,269,120 ENDING NET POSITION $48,567,987 $64,490,544 $5,391,114 $1,638,701 120,088,346 $36,751,813 Net change in net position 8,684,030
Some amounts reported for business-type activities in the statement of activities are different because the net revenue (expense) of certain internal service funds is reported with business-type activities. 937,792
Change in net position of business-type activities $9,621,822 See accompanying notes to financial statements
34

CITY OF DALY CITY

PROPRIETARY FUNDS

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2023
Governmental
Nonmajor - ActivitiesSanitation Civic Transfer Internal Service Water Utility District Center Station Totals Funds

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $29,225,712 $24,913,949 $1,043,662 $114,580 $55,297,903 $31,354,146 Payments to suppliers (13,155,224) (17,072,673) (847,757) (31,075,654) (11,757,108) Payments to employees (4,711,922) (11,887,186) (16,599,108) (7,049,427) Claims paid (2,750,204)
Cash Flows from Operating Activities 11,358,566 (4,045,910) 195,905 114,580 7,623,141 9,797,407

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Property tax 2,620,296 2,620,296 207,740
Intergovernmental 141,008 1,825,004 1,966,012
Principal paid on noncapital debt (3,925,000)
Interest paid on noncapital debt (486,420)
Advance from other funds (2,570,647) (2,570,647)
Advance to other funds 2,570,647 2,570,647
Transfers in 392,208 3,107,300 3,499,508 2,103,676
Transfers out (3,627,155) (1,136,644) (15,089) (114,580) (4,893,468) (2,156,593) Cash Flows from (used for) Noncapital Financing Activities (5,664,586) 8,986,603 (15,089) (114,580) 3,192,348 (4,256,597)

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Proceeds from sale of capital assets 2,199 2,199 59,771 Acquisition of capital assets (1,339,603) (1,455,020) (2,794,623) (2,521,544) Proceeds from issuance of capital lease 1,830,457
Principal paid on subcription liabilities (479,103)
Interest paid on subscription liabilities (11,111)
Principal paid on capital debt (625,000) (268,254) (893,254) (200,711) Interest paid on capital debt (25,299) (20,624) (45,923) (34,377) Cash Flows from (used for) Capital and
Related Financing Activities (1,989,902) (1,741,699) (3,731,601) (1,356,618) CASH FLOWS FROM INVESTING ACTIVITIES:

Interest income (expense) 468,647 565,197 33,578 1,067,422 733,017 Net Cash Flows 4,172,725 3,764,191 214,394 8,151,310 4,917,209 Cash and investments at beginning of period 21,732,809 30,295,663 1,658,041 1,545,317 55,231,830 42,999,028 Cash and investments at end of period $25,905,534 $34,059,854 $1,872,435 $1,545,317 $63,383,140 $47,916,237 Reconciliation of Operating Income (Loss) to Cash Flows from Operating Activities:

Operating income (loss) $9,251,453 ($5,380,134) $380,559 $114,580 $4,366,458 $9,351,348 Adjustments to reconcile operating income (loss) to cash flows from operating activities:

Depreciation 1,347,688 2,324,857 190,694 3,863,239 2,436,842 Change in assets and liabilities:

Accounts receivable, net 814,622 (321,905) (3,247) 489,470 (59,069) Inventories 15,869 73,964 89,833 (1,144)
Prepaids 5,030 5,030 (1,830,457)
Accounts payable (624,338) (68,900) (19,430) (712,668) (239,864) Accrued payroll 8,848 23,387 32,235 16,343
Deposits payable 3,600 3,600
Accrued claims payable (414,000)
Compensated absences 182,251 (215,880) (33,629) 683,935 Leases-related activity (352,671) (352,671)
Due to OPEB system (73,262) (191,293) (264,555) (146,527) Due to retirement system 431,835 (295,036) 136,799
Cash Flows from Operating Activities $11,358,566 ($4,045,910) $195,905 $114,580 $7,623,141 $9,797,407

NONCASH TRANSACTIONS
Subscription assets $1,328,754
Subscription liabilities ($1,328,754)
Retirement of capital assets ($265,122)
See accompanying notes to financial statements
Business-type Activities-Enterprise Funds
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FIDUCIARY FUNDS

FIDUCIARY FUNDS
These funds are used to account for assets held by the City as an agent for individuals, private organizations, and other governments. The financial activities of these funds are excluded from the City-wide financial statements, but are presented in separate Fiduciary Fund financial statements.

SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY PRIVATE PURPOSE TRUST
The fund is used to account for the activities of the Successor Agency to the former Redevelopment Agency of the City.

CUSTODIAL FUNDS
These funds report resources, not in a trust, that are held by the City for other parties outside of the City’s reporting entity.
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CITY OF DALY CITY

FIDUCIARY FUNDS

STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2023
Successor Agency Custodial Funds
to the External
Redevelopment Agency Custodial Investment
Private-Purpose Trust Funds Pool Fund
ASSETS
Cash and investments (Note 2G) $208,404 $2,051,137 $980,351 Receivables 14,978 2,896,675
Total Assets 223,382 4,947,812 980,351

LIABILITIES
Accounts payable 4,336,080
Deposits payable 4,050
Loans payable to City (Note 15C) 10,907,153
Total Liabilities 10,911,203 4,336,080

NET POSITION
Restricted for:

Other agencies and organizations (10,687,821) 611,732
Pool participant 980,351
Total Net Position ($10,687,821) $611,732 $980,351
See accompanying notes to financial statements
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CITY OF DALY CITY

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FOR THE YEAR ENDED JUNE 30, 2023
Successor Agency Custodial Funds
to the External
Redevelopment Agency Custodial Investment
Private-Purpose Trust Funds Pool Fund

ADDITIONS
Taxes $1,235,632
Receipts from other agencies $90,000
Rents and interest 73,660 $15,659
Other receipts 545 5,773,148
Total additions 1,309,837 90,000 5,788,807

DEDUCTIONS
Services and supplies 59,415
Culture and recreation 1,397
Other payments 5,111,078
Total deductions 59,415 1,397 5,111,078
CHANGE IN NET POSITION 1,250,422 88,603 677,729

NET POSITION
Net Position (Deficit) - Beginning (11,938,243) 523,129 302,622 Net Position (Deficit) - Ending ($10,687,821) $611,732 $980,351 See accompanying notes to financial statements
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CITY OF DALY CITY

ANNUAL COMPREHENSIVE FINANCIAL REPORT

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2023
NOTE 1.

REPORTING ENTITY
The City of Daly City (City) was incorporated on March 22, 1911 and operates under a council-manager form of government. Daly City is a general law city, and provides the following services: public safety (police and fire), highways and streets, water, sanitary sewer, social services, library, recreation, public improvements, planning and zoning, and general administrative services.

The City's Basic Financial Statements include the financial activities of the City, the North San Mateo County Sanitation District, the Daly City Public Facilities Financing Corporation and the Daly City Housing Development Finance Agency. These entities are controlled by governing boards consisting of the City Council and are reported as blended component units. Council members are financially accountable for these entities’ operations and approve fees, debt issues and adopt budgets. Blended component units, although legally separate entities are, in substance, part of the government’s operations, thus, data from these units are combined with that of the primary government.

The North San Mateo County Sanitation District became a subsidiary district of the City on July 1, 1985. The activities of the District are reported in the Sanitation District Enterprise Fund. The District does not issue separate financial statements.

The activities of the Daly City Public Facilities Financing Corporation (Corporation) are included in the basic financial statements of the Water Utility Enterprise Fund in proportion to the activities carried out on its behalf because the City Council sits as the Board of this entity. The City established the Corporation to facilitate the issuance of Certificates of Participation, currently consisting of various expansion and upgrade projects in the Water Utility. The Corporation acts as a conduit for the leasing of the associated facilities of the utility in order to allow the issuance of its Certificates of Participation (See Note 5). The Corporation does not issue separate financial statements.

The activities of the Daly City Housing Development Finance Agency (Finance Agency) are included in the Affordable Housing and the Low and Moderate Income Housing Assets Special Revenue Funds.

The City established the Finance Agency in 1985 pursuant to California Health and Safety Code (HSC) Division 24, Part 2, Chapter 1, to address the housing needs of the City and the Finance Agency serves as the Housing Successor to the former Daly City Redevelopment Agency. The primary activity of the Finance Agency is to develop nonsubsidized multifamily rental housing development financing pursuant to Section 34312.3 of the HSC that is owned, operated and managed by private and other agencies, not the Finance Agency. The Finance Agency is administered by a Governing Board whose members are the City Council of the City of Daly City, and the City also performs all accounting and administrative functions for the Finance Agency. The Finance Agency does not issue separate financial statements.
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The City and the Sanitation District established the Daly City Joint Powers Financing Authority (Financing Authority) in March 2022 pursuant to the Joint Exercise of Powers Act (commencing at Government Code Section 6500) to provide assistance with public financings, including, among others, General Fund lease financings and enterprise fund financings. The Financing Authority is administered by a Governing Board whose members are the City Council of the City of Daly City, and the City also performs all accounting and administrative functions for the Financing Authority. The Financing Authority does not issue separate financial statements. The Financing Authority did not have any activity during the year ended June 30, 2023.

NOTE 2.

DESCRIPTION OF FUNDS AND SUMMARY OF ACCOUNTING POLICIES The Basic Financial Statements include financial information for entities which are directly or indirectly governed by the City Council. The entities included are the City, the North San Mateo County Sanitation District, the Daly City Public Facilities Financing Corporation and the Daly City Joint Powers Financing Authority (see Note 1).

The accounting policies of the City conform with generally accepted accounting principles as they apply to governments. The following is a summary of the more significant policies.

A. BASIS OF PRESENTATION
The City’s Basic Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Governmental Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the U.S.A. These standards require that the financial statements described below be presented.

Government-wide Statements: The Statement of Net Position and the Statement of Activities display information about the primary government (the City and its blended component units). These statements include the financial activities of the overall City government, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities.

Interfund services provided and used are not eliminated in the process of consolidation. These statements distinguish between the governmental and business-type activities of the City.

Governmental activities are generally financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties.

The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the City’s governmental activities and for each segment of the business-type activities of the City. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include charges paid by the recipients of goods or services offered by the programs, grants and contributions that are restricted to meeting the operational needs of a particular program and fees, grants and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. 42

Fund Financial Statements: The fund financial statements provide information about the City's funds, including fiduciary funds and blended component units. Separate statements for each fund category—governmental, proprietary, and fiduciary—are presented. The emphasis of fund financial statements is on major individual governmental and enterprise funds, each of which is displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds.

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange 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.

B. MAJOR FUNDS
Major funds are defined as funds which have either assets, liabilities, revenues or expenditures/expenses equal to ten percent of their fund-type total and five percent of the grand total of governmental and enterprise funds. Major governmental and business-type funds are identified and presented separately in the fund financial statements. All other funds, called nonmajor funds, are combined and reported in a single column, regardless of their fund type. The General Fund is always a major fund, and the City may select other funds it believes should be presented as major funds. The City selected the Gas Tax Fund for presentation as a major fund because of its importance and because it often qualifies as a major fund.

The City reported the following major governmental funds in the accompanying financial statements:

GENERAL FUND is the general operating fund of the City. It is used to account for all financial resources traditionally associated with governments which are not required to be accounted for in a separate fund.

GAS TAX SPECIAL REVENUE FUND is used to account for gas tax monies allocated by the State to the City for the streets and roads program.

GRANTS SPECIAL REVENUE FUND is used to account for miscellaneous grant monies, such as HOME, law enforcement special grants, and after school safety grants.

MEASURES A AND W SPECIAL REVENUE FUND is used to account for the City’s portion of the Measure A special half cent sales tax receipts restricted for maintaining local streets and roads improvements and the City’s portion of the Measure W special half cent sales tax receipts restricted for congestion relief and transit improvements.

CAPITAL PROJECTS FUND is used to account for financial resources to be used for the acquisition or construction of major capital facilities or infrastructure other than those financed by proprietary funds.

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The City reported the following enterprise funds as major funds in the accompanying financial statements:

WATER UTILITY FUND is used to account for activity related to providing water service to the community.

SANITATION DISTRICT FUND is used to account for activity related to providing residents with sanitary sewer services.

CIVIC CENTER FUND is used to account for rental activity of real property owned by the City in the Civic Center area.

The City also reports the following fund types:

Internal Service Funds - These funds account for motor vehicles, central services, telephone, building maintenance, information services, self-insurance and pension bond payments. All of these services are provided to other departments on a cost-reimbursement basis.

Fiduciary Funds - The Successor Agency to the Redevelopment Agency Private-Purpose Trust Fund accounts for the accumulation of resources to be used for payments at appropriate amounts and times in the future. Custodial Funds are used to account for assets held by the City for Billing Services and Supporters of Senior Center and monies held for an external investment pool for the San Mateo PreHospital Emergency Medical Services Group, none of which are held in trust. In addition, The financial activities of these funds are excluded from the government-wide financial statements because they are not directly or indirectly governed by the City Council.

C. PROPERTY HELD FOR DEVELOPMENT
Property held for development is stated at the lower of historical cost or net realizable value (equal to agreed upon sales price if a disposition and development agreement has been reached with a developer).

D. BASIS OF ACCOUNTING
The government-wide, proprietary, and fiduciary fund financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.
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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. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, including lease liabilities, as well as claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. Governmental capital asset acquisitions are reported as expenditures in governmental funds, including entering into contracts giving the City the right to use leased assets and right to use subscription assets. Proceeds of governmental long-term debt and financing through leases are reported as other financing sources.

In addition to assets, the statement of net position or balance sheet will report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then.

In addition to liabilities, the statement of net position or balance sheet will report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has one item, which arises only under a modified accrual basis of accounting, that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from loans and deferred amounts related to leases. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.

Property taxes and sales taxes are considered measurable and available when in the hands of intermediary collecting governments and are recognized as revenue at that time. The primary revenue sources which are susceptible to accrual include taxes, rents, licenses, interest, grants and contributions. Fines and penalties and other revenues are recorded as revenues when received in cash because they are generally not measurable until actually received.

The City may fund programs with a combination of cost-reimbursement grants, categorical block grants, and general revenues. Thus, both restricted and unrestricted net position may be available to finance program expenditures. The City’s policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary.

Certain indirect costs are included in program expenses reported for individual functions and activities. Nonexchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include taxes, grants, entitlements, and donations. On an accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied.

Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
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E. BUDGETS, BUDGETARY ACCOUNTING AND ENCUMBRANCES
The City uses a biennial budget process whereby two individual annual budgets are adopted by City Council for all funds and component units other than the Custodial Funds. Due to the COVID-19 pandemic and ongoing economic uncertainties, the City moved to a one-year budget cycle starting in FY2021. The City is monitoring and evaluating the economic climate in hopes of switching back to a biennial budget process. Budgets are subject to public hearing before they are adopted by the City Council. Budgets are prepared on the basis of generally accepted accounting principles (GAAP basis).

The City is not legally required to prepare budgets for any of its funds, but does so as a matter of managerial policy. Budgets submitted to the City Council include both proposed appropriations and the means of financing them. The City Council approves total appropriations on a departmental basis.

The City Manager is authorized and directed to make any changes or transfers of appropriations within any Department of the City and from one Department to another as deemed necessary or feasible, as long as the total appropriations of the funds are not exceeded. Additional appropriations not included in the original budget resolutions require approval by the City Council. Budgeted amounts shown are as adopted and amended by the City Council. Individual amendments were not material in relation to the original appropriations. Budgets for the City's proprietary funds are considered as memorandum budgets used for the purpose of management control. These nonappropriated budgets are not included in the Basic Financial Statements.

The City uses an encumbrance system as an extension of normal budgetary accounting. Under this system purchase orders, contracts and other commitments for the expenditure of monies are recorded to reserve that portion of applicable appropriations. Encumbrances outstanding at year-end are recorded as an assignment of fund equity since they do not constitute expenditures or liabilities.

Outstanding encumbrances at year end are automatically reappropriated the following year.

Unencumbered and unexpended appropriations for other than capital outlay lapse at year-end.

However, the Capital Projects Fund is not budgeted on a project-length basis. Only the budget estimated to be spent in the current fiscal year is appropriated, even if the project will continue into future fiscal years. The City prepares a ten year capital plan, and each project year budget (GAAP Basis) is appropriated separately on an on-going basis.

Expenditures in Excess of Appropriations – The General Fund incurred in excess of appropriations of $157,573 in the Public Safety-Fire department. Sufficient resources were available within the fund to finance these expenditures.
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F. FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for an asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for an asset or liability.

If the fair value of an asset or liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement.

G. CASH AND INVESTMENTS
The City’s investments are carried at fair value, as required by generally accepted accounting principles. The City adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, and it includes the effects of these adjustments in income for that fiscal year.

The City pools cash from all sources and all funds, except restricted cash and cash and investments with fiscal agents, so the pool of funds can be invested consistent with goals for safety and liquidity, while maximizing yield. Cash is pooled so individual funds can make expenditures at any time.

Investment income is allocated among funds on the basis of average daily cash and investment balances in each fund, unless there are specific legal or contractual requirements to do otherwise.

Cash and investments are classified in the financial statements as shown below, based on whether or not their use is restricted under the terms of City debt instruments or Agency agreements:

Cash and investments $246,542,250
Cash with fiscal agent 129,486
Restricted cash and investments 4,477,007
Cash and investments of the City 251,148,743
Cash and investments in Fiduciary Funds (separate statement):

Private-purpose Trust Fund 208,404
Custodial Funds 2,051,137
Custodial Funds - External investment pool 980,351
Total cash and investments $254,388,635
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Investments Authorized by the California Government Code and the City’s Investment Policy The City’s Investment Policy and the California Government Code allow the City to invest in the following, provided the credit ratings of the issuers are acceptable to the City and approved percentages and maturities are not exceeded. The following table also identifies certain provisions of the California Government Code, or the City’s Investment Policy where the City’s Investment Policy is more restrictive, that addresses interest rate risk, credit risk and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s Investment Policy.

Minimum Maximum Maximum
Maximum Credit in Investment
Authorized Investment Type Maturity Quality Portfolio In One Issuer U. S. Treasury Bonds, Notes and Bills or
Certificates of Indebtedness 5 Years N/A No Limit No Limit U.S. Government Agency Securities and
U.S. Government Sponsored Enterprise Agencies 5 Years * N/A No Limit No Limit State of California Local Agency
Investment Fund (LAIF Pool) Upon Demand N/A
$75,000,000
per account
$75,000,000
per account
San Mateo County Treasurer's Pool Upon Demand N/A No Limit No Limit State of California Treasury Notes or Bonds 5 Years A No Limit 5% California Local Agency Obligations 5 Years A 30% 5%
Bankers' Acceptances 180 Days N/A 40% 5%
Commercial Paper 270 Days A1/P1 25% 5%
Negotiable Certificates of Deposit 5 Years A 30% No Limit Non-Negotiable Certificates of Deposit 5 Years A 30% No Limit FDIC Insured/Collateralized Time Certificates of Deposit 5 Years N/A 30% 5% Money Market Mutual Funds Upon Demand AAAm 15% 5%
Passbook Savings Account None N/A No Limit No Limit
Repurchase Agreements 1 year N/A 15% 5%
Reverse Repurchase Agreements 92 Days N/A 15% 5%
* However, the City Council specifically grants the authority to the City Treasurer to invest a maximum of $14,000,000 of the City’s portfolio in Government National Mortgage Association securities which, at the time of investment, have terms remaining to maturity in excess of five years.

Public Agencies Post-Employment Trust
On May 22, 2017, the City Council adopted resolution 17-58 approving the adoption of the Public Agencies Post-Employment Trust administered by Public Agency Retirement Services (PARS). The Trust is an irrevocable trust and qualifies as an Internal Revenue Section 115 Trust. This Trust will assist the City in mitigating the CalPERS contribution rate volatility. Investments of funds held in Trust are governed by the Investment Guideline Document for the investment account and by the agreement for administrative services with PARS, rather than the general provisions of the California Government Code of the City’s investment policy. The City elected a discretionary investment approach which allows the City to maintain oversight of the investment management, control on target yield and the portfolio’ risk of tolerance, under the Moderately Conservative Index PLUS investment option. The assets in the Trust will eventually be used to fund pension plan obligations. 48

portfolio’ risk of tolerance, under the Moderately Conservative Index PLUS investment option. The assets in the Trust will eventually be used to fund pension plan obligations.

Investments Authorized by Debt Agreements
The City must maintain required amounts of cash and investments with trustees or fiscal agents under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged as reserves to be used if the City fails to meet its obligations under these debt issues. The California Government Code requires these funds to be invested in accordance with City ordinance, bond indentures or State statute.

The following table identifies the investment types that are authorized for investments held by fiscal agents. The table also identifies certain provisions of these debt agreements:

Minimum Maximum Maximum
Maximum Credit In Investment
Authorized Investment Type Maturity Quality Portfolio In One Issuer U. S. Treasury Bonds, Notes and Bills N/A N/A No Limit No Limit U.S. Government Agency Securities
U.S. Government Sponsored N/A AAA No Limit No Limit
State Obligations
N/A
Highest Rating
Category No Limit No Limit
Commercial Paper 270 Days A No Limit No Limit
Negotiable Certificates of Deposit 365 days A-1+ No Limit No Limit Money Market Mutual Funds N/A AAAm No Limit No Limit
Bankers Acceptances 360 days A-1+ No Limit No Limit
Local Obligations
N/A
Highest Rating
Category No Limit No Limit
State of California Local Agency
Investment Fund (LAIF Pool) Upon Demand N/A No Limit No Limit Municipal Obligations N/A AAA No Limit No Limit
Repurchase Agreements N/A A No Limit No Limit
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Normally, the longer the maturity of an investment the greater the sensitivity of its fair value to changes in market interest rates.
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Information about the sensitivity of the fair values of the City’s cash and investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s cash and investments by maturity:

Less than One to More than
Investment Type One Year Five Years Five Years Total
U.S. Treasury Note $952,150 $952,150
U.S. Government Agency Securities 28,412,659 $373,668 28,786,327 Money Market Mutual Funds $129,486 129,486
California Local Agency Investment Fund 30,251,577 30,251,577 San Mateo County Investment Pool 166,893,108 166,893,108 Negotiable Certificates of Deposit 737,388 16,569,478 17,306,866 PARS Moderately Conservative Index PLUS Fund 4,477,007 4,477,007 Total Investments $202,488,566 $45,934,287 $373,668 248,796,521 Cash in Bank and On Hand 5,592,114
Total Cash and Investments $254,388,635
The City is a participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City reports its investment in LAIF at the fair value amount provided by LAIF, which is the same as the value of the pool share. The balance is available for withdrawal on demand, and is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Each regular LAIF account is permitted to have up to 15 transactions per month, with a minimum transaction amount of $5,000, a maximum transaction amount of $75 million and at least 24 hours advance notice for withdrawals of $10 million or more. Bond proceeds accounts are subject to a one‐time deposit with no cap and are set up with a monthly draw down schedule. Included in LAIF’s investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain state funds, United States Treasury Notes and Bills, and floating rate securities issued by federal agencies, government-sponsored enterprises, and corporations. At June 30, 2023, these investments have an average maturity of 260 days.

The City is a participant in the San Mateo County Investment Pool (SMCIP) that is regulated by California Government Code Section 53600 under the oversight of the Treasurer of the County of San Mateo. The City reports its investment in SMCIP at the fair value amount provided by SMCIP. The balance available for withdrawal is based on the accounting records maintained by SMCIP, which are recorded on an amortized cost basis. Included in SMCIP’s investment portfolio are U.S. Treasury Notes, obligations issued by agencies of the U.S. Government, LAIF, corporate notes, commercial paper, collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, and floating rate securities issued by federal agencies, government-sponsored enterprises, and corporations. At June 30, 2023, these investments matured in an average of 1.65 years.

Money Market Mutual Fund investments are available for withdrawal on demand.

Fair Value Investments
Generally accepted accounting principles require governments to present investments at fair value.

The City adjusts the carrying value of its investment to reflect the fair value at each fiscal year-end, and it includes the effect of this adjustment in income for that fiscal year. 50

Credit Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The actual ratings as of June 30, 2023 are provided by Standard and Poor’s except as noted.

Total
Investment Type AAAm AA+/AA/A-1 Investments
U.S. Government Agency Securities $25,678,799 $25,678,799 Money Market Mutual Funds $118,160 11,326 129,486
San Mateo County Investment Pool 166,893,108 166,893,108 Total $118,160 $192,583,233 192,701,393
Not rated:

U.S. Government Agency Securities 3,107,528
California Local Agency Investment Fund 30,251,577
Negotiable Certificates of Deposit 17,306,866
PARS Moderately Conservative Index PLUS Fund 4,477,007
Exempt:

U.S. Treasury Note 952,150
Total Investments $248,796,521
Custodial Credit Risk
The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (for example, broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party.

The City’s investment policy requires that securities transactions be executed on a delivery vs. payment basis. Funds are not wire-transferred until securities are delivered into safekeeping with the City's third party custodian. The custodial relationship is subject to an agreement for services which may be separate from the agreement for other banking services. The safekeeping requirement does not apply to securities which are physically delivered to the City.

Fair Value Hierarchy
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The fair value hierarchy, which has three levels, is based on the valuation inputs used to measure an asset’s fair value. The following provides a summary of the hierarchy used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets that the City has the ability to access at the measurement date. Level 1 assets may include debt and equity securities that are traded in an active exchange market and that are highly liquid and are actively traded in over-the-counter markets.
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Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, or other inputs that are observable, such as interest rates and curves observable at commonly quoted intervals, implied volatilities, and credit spreads. For financial reporting purposes, if an asset has a specified term, a Level 2 input is required to be observable for substantially the full term of the asset.

Level 3 - Unobservable inputs should be developed using the best information available under the circumstances, which might include the City’s own data. The City should adjust that data if reasonable available information indicates that other market participants would use different data or certain circumstances specific to the City are not available to other market participants.

The following is a summary of the fair value hierarchy of the fair value of investments of the City as of June 30, 2023:

Investment Type Level 1 Level 2 Total
Investments by Fair Value Level:

U.S. Treasury Note $952,150 $952,150
U.S. Government Agency Securities $28,786,327 28,786,327 Negotiable Certificates of Deposit 17,306,866 17,306,866 Subtotal $952,150 $46,093,193 47,045,343
Investments Measured at Amortized Cost:

Money Market Mutual Funds 129,486
PARS Moderately Conservative Index PLUS Fund 4,477,007
Investments Not Subject to the Fair Value Hierarchy:

California Local Agency Investment Fund 30,251,577
San Mateo County Investment Pool 166,893,108
Total Investments $248,796,521
The U.S. Treasury Note classified in Level 1 of the fair value hierarchy are valued using quoted prices in an active market for identical assets. All investments classified in Level 2 were valued using prices provided by the City’s custodian bank.

H. INVENTORY AND PREPAIDS
Inventory is valued at cost, using the first-in, first-out method. For the General Fund, inventories consist of consumable supplies, and do not constitute available spendable resources, even though they are a component of net current assets. For proprietary funds, inventories represent materials and supplies for operations. The consumption method of accounting is applied to inventories.

Prepaids represent services that are paid for in advance. For governmental funds, prepaids do not constitute available spendable resources even though they are a component of net current assets. The consumption method of accounting is applied to prepaids. 52

I. WATER UTILITY ACCOUNTS RECEIVABLE
The City bills usage to water utility customers on a bimonthly basis in arrears. At any given time, an average of one month's usage is unread and unbilled. These unbilled estimated usages have been recognized as revenue and receivables in the financial statements of the Water Utility enterprise fund.

J. ADVANCES TO OTHER FUNDS AND AGENCIES
Current portions of interfund loans receivable (reported in "due from" asset accounts) are considered available spendable resources.

K. ACCUMULATED UNPAID VACATION, COMPENSATORY AND SICK LEAVE Accumulated unpaid employee benefits are accrued at year-end. If vacation or compensatory leave is not taken by employees during their employment, the City is obligated to make cash payments to them on termination or retirement at the salary rates then in effect. City employees receive from thirteen to twenty-eight days of vacation each year.

Full-time City employees receive one working day of sick leave for each month of employment.

Employees who terminate for reasons other than death, retirement or abolishment of position lose all accumulated sick leave. Upon death, retirement after the age of 50 and 5 years of service or abolishment of position the City is obligated to pay 50% of unused sick leave, up to from 750 to 1,392 hours, depending on the bargaining unit, at the salary rate then in effect. The value of vested sick leave liability for all employees qualified for retirement on June 30 of each year is accrued.

The City’s liability for compensated absences is recorded in various governmental funds or proprietary funds as appropriate. The liability for compensated absences is determined annually. For all governmental funds, compensated absences are reported only if they are still outstanding following an employee’s resignation or retirement.

The changes in the liability for compensated absences were as follows:

Governmental
Activities
Business Type
Activities Total
Balance July 1, 2022 $12,880,813 $2,662,561 $15,543,374 Additions 12,343,378 1,113,693 13,457,071
Payments (7,380,051) (1,147,322) (8,527,373)
Balance June 30, 2023 $17,844,140 $2,628,932 $20,473,072 Due within one year $5,897,667 $882,612 $6,780,279
Compensated absences are liquidated by the fund that has recorded the liability. Governmental activities compensated absences are liquidated primarily by the General Fund. 53

L. CLAIMS AND JUDGMENTS
The City has recognized a liability for workers' compensation and general liability claims in the Self-Insurance Internal Service Fund. This liability reflects the costs of claims determined to be probable of assertion and measurable in amount.

M. PROPERTY TAX LEVY, COLLECTION, MAXIMUM RATES
Article 13 of the California State Constitution provides for a maximum general property tax rate statewide of $1.00 per $100 of assessed value, and may be adjusted by no more than two percent per year unless the property is sold or transferred, in which case it is then assessed at sales price. Assessed value is calculated at 100% of sales price as defined by the above referenced Article 13.

The State Legislature has determined the method of distribution of receipts from the $1.00 tax levy among the county, cities, school districts and other districts. Counties, cities and school districts may levy such additional tax rate as is necessary to provide for voter-approved debt service. San Mateo County assesses properties, bills for, and collects property taxes on the following schedule:

SECURED UNSECURED
Valuation dates March 1 March 1
Lien/levy dates January 1 January 1
Due Dates 50% on November 1 July 1
50% on February 1
Delinquent as of December 10 August 31
April 10
The term "unsecured" refers to taxes on property not secured by liens on real property. Property taxes levied are recorded as revenue and receivables, net of estimated uncollectible amounts, in the fiscal year of levy. Property taxes which cannot be recorded as current year revenues, in accordance with the modified accrual basis of accounting, have been recorded as unearned revenues.

N. 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 expenses during the reporting period. Actual results could differ from those estimates.

O. NEW FUND
The City established the Pension UAL Internal Service Fund during the year ended June 30, 2023 to account for funding set-aside towards the City’s pension unfunded actuarial liability. 54

NOTE 3.

COMMITMENTS AND CONTINGENCIES
A. CONSTRUCTION CONTRACTS
At June 30, 2023, the City had made commitments of approximately $16.5 million for construction work, legal and consulting fees, and purchases of supplies and equipment, which includes the encumbrances in Note 3C below.

B. LITIGATION
The City is subject to litigation arising in the normal course of business. In the opinion of the City Attorney, there is no pending litigation which is likely to have a material adverse effect on the financial position of the City.

C. ENCUMBRANCES
The City uses an encumbrance system as an extension of normal budgetary accounting for governmental funds. Under this system, purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of applicable appropriations.

Encumbrances outstanding at year-end are recorded as restricted, committed or assigned fund balance, depending on the classification of the resources to be used to liquidate the encumbrance, since they do not constitute expenditures or liabilities. Outstanding encumbrances at year-end are automatically reappropriated for the following year. Unencumbered and unexpended appropriations lapse at yearend. Encumbrances outstanding as of June 30, 2023 were $754,432 in the General Fund, $5,238,385 in the Gas Tax Special Revenue Fund, $19,222 in the Grants Special Revenue Fund, $3,003,713 in the Capital Projects Fund, and $304,772 in nonmajor governmental funds.

D. FEDERAL AND STATE GRANT PROGRAMS
The City participates in Federal and State grant programs. These programs have been audited by the City’s independent accountants in accordance with the provisions of the Federal Single Audit Act as amended and applicable State requirements. No cost disallowances were proposed as a result of these audits. However, these programs are still subject to further examination by the grantors and the amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time. The City expects such amounts, if any, to be immaterial.

NOTE 4.

CAPITAL ASSETS
All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available, except for intangible right to‐use lease assets, the measurement of which is discussed in Note 7 below and intangible right to use subscription assets the measurement of which is discussed in Note 14 below. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are reported at acquisition value. The City’s policy is to capitalize all assets with costs exceeding $25,000 for all classes of capital assets with useful lives exceeding two years. Prior to July 2020, the City’s policy was to capitalize costs exceeding $25,000 for infrastructure and $5,000 for all other classes of capital assets. 55

The City depreciates capital assets over their estimated useful lives. The purpose of depreciation is to spread the cost of capital assets equitably among all users over the life of these assets. The amount charged to depreciation expense each year represents that year’s pro rata share of the cost of capital assets.

Depreciation is calculated using the straight-line method, which means the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated. The City has assigned the useful lives listed below to capital assets:

Buildings and Improvements 20-50 years Sewage Collection Facilities 10-50 years Streets and Infrastructure 20-60 years Sewage Disposal and Treatment Facilities
15-50 years
Park Structures and Improvements 10-30 years Sanitation Subsurface Lines and Water Mains
25 years
Vehicles, Equipment, Furniture
and Fixtures
5-20 years Wells and Pump Stations 40-50 years
Right to Use Leased Building 2 years Water Reservoirs 40-99 years Right-to-use Subscription Assets 3 years
The City capitalizes major asset purchases and improvements which increase the useful life of the related assets. Minor purchases and routine repair and maintenance costs are charged directly to expense. Major outlays for capital assets and improvements are capitalized as projects are constructed. 56

A. CAPITAL ASSET ADDITIONS AND RETIREMENTS
Capital assets at June 30 comprise:

Balance
June 30, 2022 Balance
(as Restated) Additions Retirements Transfers June 30, 2023 Governmental activities:

Capital assets not being depreciated:

Land $27,856,486 $27,856,486
Construction in progress 10,965,170 $3,093,706 ($2,591,226) 11,467,650 Total capital assets not being depreciated 38,821,656 3,093,706 (2,591,226) 39,324,136 Capital assets being depreciated:

Buildings & improvements 59,226,591 750,000 268,237 60,244,828 Right-to-use building 98,554 146,267 244,821
Streets & infrastructure 92,598,352 159,997 92,758,349
Park structures & improvements 8,030,071 1,647,293 9,677,364 Vehicles & equipment 31,612,571 2,593,515 ($2,796,348) 515,699 31,925,437 Furniture & fixtures 458,590 458,590
Subscription assets 3,704,316 1,328,754 5,033,070
Total capital assets being depreciated 195,729,045 4,818,536 (2,796,348) 2,591,226 200,342,459 Less accumulated depreciation for:

Buildings & improvements 38,753,479 1,588,947 40,342,426 Right-to-use building 69,567 73,743 143,310
Streets & infrastructure 66,493,503 1,916,369 68,409,872 Park structures & improvements 4,848,456 342,500 5,190,956 Vehicles & equipment 22,256,088 2,463,225 (2,527,660) 22,191,653 Furniture & fixtures 440,984 2,829 443,813
Subscription assets 796,856 796,856
Total accumulated depreciation 132,862,077 7,184,469 (2,527,660) 137,518,886 Net depreciable assets 62,866,968 (2,365,933) (268,688) 2,591,226 62,823,573 Governmental activity capital assets, net $101,688,624 $727,773 ($268,688) $102,147,709

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Balance Balance
June 30, 2022 Additions Retirements June 30, 2023
Business-type activities:

Capital assets not being depreciated:

Land $2,862,549 $2,862,549
Construction in progress 10,026,420 $1,726,506 11,752,926 Total capital assets not being depreciated 12,888,969 1,726,506 14,615,475 Capital assets being depreciated:

Buildings & improvements 7,918,904 7,918,904
Sewage facilities 59,413,041 59,413,041
Mains & subsurface lines 47,945,935 493,890 48,439,825
Water reservoirs 12,715,925 12,715,925
Wells & pump stations 9,074,783 9,074,783
Equipment 17,755,904 574,227 ($23,304) 18,306,827
Furniture & fixtures 151,328 151,328
Total capital assets being depreciated 154,975,820 1,068,117 (23,304) 156,020,633 Less accumulated depreciation for:

Buildings & improvements 6,446,406 166,401 6,612,807
Sewage facilities 42,133,844 1,128,347 43,262,191
Mains & subsurface lines 27,619,704 1,590,173 29,209,877 Water reservoirs 6,024,437 159,293 6,183,730
Wells & pump stations 4,893,228 185,664 5,078,892
Equipment 13,303,908 626,041 (23,304) 13,906,645
Furniture & fixtures 108,694 7,320 116,014
Total accumulated depreciation 100,530,221 3,863,239 (23,304) 104,370,156 Net depreciable assets 54,445,599 (2,795,122) 51,650,477 Business-type activity capital assets, net $67,334,568 ($1,068,616) $66,265,952 B. CAPITAL ASSET CONTRIBUTIONS
Some capital assets may be acquired using federal and state grant funds, or they may be contributed by developers or other governments. These contributions are accounted for as revenues at the time the capital assets are contributed.
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C. DEPRECIATION ALLOCATION
Depreciation expense is charged to functions and programs based on the usage of the related assets.

The amounts allocated to each function or program are as follows:

Governmental Activities
General government $193,868
Public safety 958,391
Public works 2,062,991
Culture and recreation 1,532,377
Capital assets held by the City's internal service
funds charged to the various functions
based on their usage of the assets 2,436,842
Total Governmental Activities $7,184,469
Business-Type Activities
Water Utility $1,347,688
Sanitation District 2,324,857
Civic Center 190,694
Total Business-Type Activities $3,863,239
NOTE 5.

LONG-TERM DEBT
Changes in Long-Term Debt for the fiscal year ended June 30, 2023, are as follows:

Original Issue Balance Balance Current
Amount June 30, 2022 Additions Retirements June 30, 2023 Portion Governmental Activities Debt
Housing & Urban Development Section 108 Loan

0.35%-2.49%, due FY 2023 (Direct Borrowing) $4,500,000 $418,000 $418,000 2004 Series A-1 Pension Obligation Bonds

2.650%-5.896%, due FY 2024 36,235,000 8,250,000 3,925,000 $4,325,000 $4,325,000 Community First National Bank Lease-Fire Pumpers

2.670%, due FY 2028 1,483,056 1,287,566 200,711 1,086,855 206,069 Community First National Bank Lease-Fire Engines

3.81%, due FY 2030 1,830,457 $1,830,457 1,830,457 215,700 Total Governmental Activities 9,955,566 1,830,457 4,543,711 7,242,312 4,746,769 Business-Type Activities Debt
State Water Resources Control Board Loan

2.5%, due FY 2025 (Direct Borrowing) 4,450,128 825,045 268,254 556,791 274,959 2012 Water Revenue Refunding Bond

2.0%-3.0%, due FY 2024 6,890,000 1,265,000 625,000 640,000 640,000 Total Business-Type Activities 2,090,045 893,254 1,196,791 914,959 Total City Long-Term Debt $12,045,611 $1,830,457 $5,436,965 $8,439,103 $5,661,728 59

During fiscal 2004, the City entered into a $4,500,000 note payable agreement guaranteed under the Department of Housing and Urban Development’s (HUD) Section 108 Loan Guarantee Program.

Proceeds from the note were used to finance the design and construction of the Bayshore Community Center. Principal payments are due annually on August 1; interest payments are due semi-annually on August 1 and February 1. Debt service is payable from future Federal Block Grant monies. The City has pledged certain future grants revenue under Section 106 and Section 108(q) for which the City may become eligible and program income generated directly from the use of the loan funds to repay the note. On April 27, 2015, the City refinanced the outstanding principal balance of the loan of $2,670,000 in order to obtain a lower interest rate. The City realized an interest savings of approximately $384,328. The final payment on the note was made during the year ended June 30, 2023. For fiscal year 2023, principal and interest paid were $423,121 and total block grant revenues were $1,794,755.

On June 1, 2004, the City, through the California Statewide Communities Development Authority, issued $36,235,000 of Taxable Pension Obligation Bonds, Series A-1, to prepay the City’s unfunded PERS accrued actuarial liability of $35,600,000. The City’s outstanding debt under the Taxable Pension Obligation Bonds is unsecured, however it is subject to mandatory sinking fund contributions each year beginning June 1, 2017 for the current year principal amount. Events of default include nonpayment of interest or principal when due. The City shall have 60 days to cure any default. There have been no events of default since the Bonds were issued. Principal is due annually on June 1 and interest is due semiannually on June 1 and December 1, through June 1, 2024. Debt service is payable from available City resources. For fiscal year 2023, principal and interest paid were $4,411,420.

On December 18, 2020, the City entered into a lease financing agreement in the amount of $1,483,056 with Community First National Bank, to acquire two fire pumpers. Events of default on the lease include non-payment of principal and interest when due. A penalty of 10% per year of the amount due will be added on all amount due, and, after five days written notice, the lessor has the right to take possession of the equipment. There have been no events of default since the lease was issued.

Principal and interest are due annually starting on December 18, 2021, with annual payments of $235,088 through 2027. The lease bears an interest rate of 2.670%. For fiscal year 2023, principal and interest paid were $235,088.

On October 11, 2022, the City entered into a lease financing agreement in the amount of $1,830,457 with Community First National Bank, to acquire two fire engines. Events of default on the lease include non-payment of principal and interest when due. A penalty of 10% per year of the amount due will be added on all amount due, and, after five days written notice, the lessor has the right to take possession of the equipment. There have been no events of default since the lease was issued. Principal and interest are due annually starting on January 15, 2024, with annual payments of $306,115 through 2030. The lease bears an interest rate of 3.81%. 60

On November 18, 2003, the City received a loan in the amount of $4,450,128, plus accrued interest, from the California State Water Resources Control Board. Proceeds from the loan were used for construction of tertiary treatment facilities and distribution pipelines in the City’s Sanitation District.

Principal and interest are due annually on December 1 through December 1, 2024. As long as the loan is outstanding, the City has pledged the Sanitation District Enterprise Fund revenues, net of the operations and maintenance expenses, but excluding depreciation, as defined in the loan agreement.

The City’s outstanding debt under the California State Water Resources Control Board are secured by a pledge of net revenues as previously defined. Events of default include non-payment of interest or principal when due. The City shall have 10 days to cure any default. A penalty of one-tenth of one percent (0.1%) of the amount due will be added for each day of nonpayment. There have been no events of default since the loan was issued. As of June 30, 2023, total principal and interest remaining on the note is $577,761. For fiscal year 2023, principal and interest paid were $288,878 and total Sanitation District Enterprise net revenues were $915,151.

On September 10, 2012, the City authorized the sale of $6,890,000 of 2012 Water Revenue Refunding Bonds to refinance the outstanding balance of the 2004 Certificates of Participation. Principal payments are due annually on June 1 and interest is due semiannually on June 1 and December 1, commencing June 1, 2013, through June 1, 2024. The City has pledged Water Utility Enterprise Fund revenues, net of the operations and maintenance expenses but excluding depreciation, for debt service, as defined in the indenture. The City’s outstanding debt under the Water Revenue Refunding Bonds is secured by a pledge of net revenues as previously defined. Events of default include non-payment of interest or principal when due, or failing to maintain a debt coverage ratio of at least 1.00. The Trustee of the Bonds shall immediately notify the City upon the occurrence and during the continuance of any default. The City has 60 days to correct any default. The Trustee may declare the Bonds to become immediately due and payable if the City is unable to cure the default. Prior to any judgment or decree for the payment of the amount due has been obtained or entered, the City shall deposit with the Trustee a sum sufficient to pay all matured principal and unpaid interest prior to the default declaration, with a 10% interest rate per annum on the outstanding amount, to cure the default. There have been no events of default since the Bonds were issued. As of June 30, 2023, total principal and interest remaining on the bonds is $652,801. For fiscal year 2023, principal and interest paid were $650,299 and total Water Utility Enterprise Fund net revenues were $7,581,641.

Annual debt service requirements are shown below for all long-term debt with specified repayment terms:

Pension Obligation Bonds Fire Apparatus Pumpers Lease Fire Engines Lease Year ending June 30 Principal Interest Principal Interest Principal Interest Principal Interest 2024 $4,325,000 $255,002 $206,069 $29,019 $215,700 $90,416 $4,746,769 $374,437 2025 211,571 23,517 244,619 61,496 456,190 85,013
2026 217,220 17,868 253,935 52,180 471,155 70,048
2027 223,020 12,068 263,606 42,509 486,626 54,577
2028 228,975 6,114 273,645 32,470 502,620 38,584
2029 - 2030 578,952 33,279 578,952 33,279
$4,325,000 $255,002 $1,086,855 $88,586 $1,830,457 $312,350 $7,242,312 $655,938 Governmental Activities
Total
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Business-Type Activities
SWRCB Loan Water Revenue Refunding Bond
Year ending June 30 Principal Interest Principal Interest Principal Interest 2024 $274,959 $13,921 $640,000 $12,801 $914,959 $26,722 2025 281,832 7,049 281,832 7,049
$556,791 $20,970 $640,000 $12,801 $1,196,791 $33,771
Total
The City is subject to a debt limit that is 3.75% of the total assessed value of property, net of exempt real property. At June 30, 2023, that amount was $578,841,171. As of June 30, 2023, the City did not have any outstanding debt applicable to the limit.

CONDUIT DEBT
The Finance Agency has assisted private-sector entities by sponsoring their issuance of debt for purposes the City deems to be in the public interest. These debt issues are secured solely by the property financed by the debt. The City and Finance Agency are not legally or morally obligated to pay these debts or be the purchaser of last resort of any foreclosed properties secured by these debts, nor is it obligated to advance City or Finance Agency funds to repay these debts in the event of default by any of these issuers. At June 30, 2023, the balance of this issuers’ outstanding debt was as follows:

Franciscan Moblie Home Park Acquisition Project:

Senior Revenue Refunding Bonds, Series 2007A and
Subordinate Revenue Refunding Bonds, Series 2007B $41,970,000 Third Tier Revenue Refunding Bonds, Series 2007C 6,985,000 Fourth Tier Revenue Bonds, Series 2002D 692,000
NOTE 6.

CURRENT INTERFUND BALANCES
Current interfund balances arise in the normal course of business and are expected to be repaid shortly after the end of the fiscal year. The purpose of these interfunds was to cover deficit cash in receiving funds. At June 30, 2023, Community Block Grant Special Revenue Fund owed the General Fund $360,842.

INTERFUND ADVANCE
On November 13, 2018, the City Council authorized an appropriation of $5,000,000 to maintain water utility operating fund or capital fund reserve balances in compliance with City policy or to fund water utility capital improvement or maintenance projects included in the City’s then current Capital Improvement Plan. Funding for this project was provided by an advance from the Sanitation District Enterprise Fund to the Water Utility Enterprise Fund. The loan and all accrued interest was repayable on or before June 30, 2023, beginning on July 1, 2021, and the loan bears interest at the end of each fiscal year at the quarterly LAIF rate. The remaining balance of the advance of $2,570,647, including accrued interest, was repaid during the year ended June 30, 2023. 62

INTERFUND TRANSFERS
Transfers between funds during the fiscal year ended June 30, 2023 were as follows:

Fund Making Transfer Fund Receiving Transfer Transfer Amount General Fund Gas Tax Special Revenue Fund $1,724,183
Capital Projects Fund 301,873
Non Major Governmental Funds 247,126
Internal Service Fund - Building Maintenance 2,445
Internal Service Fund - Central Services 24,955
Internal Service Fund - Pension UAL Fund 1,000,000
Internal Service Fund - Information Services 39,816
Gas Tax Special Revenue Fund General Fund 293,229
Measures A and W Special Revenue Fund 77,369
Grants Special Revenue Fund General Fund 366,933
Measures A and W Special Revenue Fund Gas Tax Special Revenue Fund 1,854,795 Capital Projects Fund Gas Tax Special Revenue Fund 49,986 Water Utility Enterprise Fund 277,628
Internal Service Fund - Information Services 32,965
Water Utility Enterprise Fund General Fund 519,855
Sanitation District Enterprise Fund 3,107,300
Sanitation District Enterprise Fund General Fund 1,133,149 Internal Service Fund - Information Services 3,495
Civic Center Enterprise Fund General Fund 15,089
Non Major Enterprise Fund Water Utility Enterprise Fund 114,580 Internal Service Fund - Motor Vehicles General Fund 475,769 Internal Service Fund - Central Services General Fund 14,445 Internal Service Fund - PBX General Fund 6,711
Internal Service Fund - Building Maintenance General Fund 361,605 Internal Service Fund - Information Services General Fund 192,788 Internal Service Fund - PERS Contribution Internal Service Fund - Pension UAL 1,000,000 Internal Service Fund - Self-Insurance General Fund 105,275 $13,343,364
The purpose of the majority of transfers is to provide general support to another fund. General Fund transfers out typically represent a subsidy or in the case of grants, a match of another fund’s expenditures.
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INTERNAL BALANCES
Internal balances are presented in the governmental-wide financial statements only. They represent the net interfund receivables and payables remaining after the elimination of all such balances within governmental and business-type activities.

NOTE 7.

LEASES
A. POLICIES
A lease is defined as a contract that conveys control of the right to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. The City recognizes lease receivables or liabilities with an initial, individual value of $25,000 or more.

Lessee - The City is a lessee for a noncancellable lease of office space, as well as the financed purchase discussed in Note 5. The City recognizes a lease liability and an intangible right‐to‐use lease asset (lease asset) in the government‐wide financial statements.

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.

Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments as follows:
• The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally 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 payments and purchase option price that the City is reasonably certain to exercise.

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.

Lease assets are reported with other capital assets and lease liabilities are reported with long-term debt on the statement of net position.

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Lessor - The City is a lessor for noncancellable leases of buildings and facilities. The City recognizes a lease receivable and a deferred inflow of resources in the government‐wide and 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 is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term.

Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts as follows:
• 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.

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.

B. LEASES RECEIVABLE
The balances related to leases receivable and deferred inflows of resources as of June 30, 2023 were:

Deferred
Lease Inflows of
Receivable Resources
General Fund
Property easement $39,837 $39,837
Communication sites 8,908,305 8,639,983
Civic Center Enterprise Fund
Facilities leases 8,926,241 8,165,964
Total $17,874,383 $16,845,784
Property Easement – The City entered into an easement agreement in December 2020 to facilitate the acquisition of an easement for parking access and utilities. As of June 30, 2023, the lease had one year remaining, with an annual payment of $40,000. Payments under the agreement began in October 2022, and the City recognized $39,674 in lease revenue and $326 in interest revenue during the current fiscal year related to this lease. Also, the City has deferred inflows of resources related to this lease that will be recognized over the lease term.
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Communication Site Leases – The City leases various locations to third parties for the provisions of mobile/wireless communications services. During the year ended June 30, 2023, the City had ten leases, with original lease terms ranging from five to fifty-five years, including the optional extension periods, and as of June 30, 2023, the leases had 1 to 49 years remaining. The City recognized $416,244 in lease revenue and $186,503 in interest revenue during the current fiscal year related to these leases. Also, the City has deferred inflows of resources associated with these leases that will be recognized as revenue over the lease term.

Facilities Leases – The City leases various facilities to third parties. During the year ended June 30, 2023, the City had four leases, with original lease terms ranging from three to twelve years and as of June 30, 2023, the leases had 1 to 14.5 years remaining. The City recognized $842,261 in lease revenue and $452,463 in interest revenue during the current fiscal year related to these leases. Also, the City has deferred inflows of resources associated with these leases that will be recognized as revenue over the lease term.

C. LEASE PAYABLE
A summary of governmental activities lease transactions for the fiscal year ended June 30, 2023, are as follows:

Balance Balance Current
June 30, 2022 Additions Retirements June 30, 2023 Portion Governmental Activities
Lease Payable
MKD Cedar Hill $29,703 $146,267 ($62,619) $113,351 $78,888 Building Lease – The City entered into a five year lease agreement with MKD Cedar Hill as lessee for the use of office space that commenced in November 2017. An initial lease liability was recorded in the amount of $98,554 during fiscal year, but the lease term was extended two years during fiscal year 2023 and the lease liability increased by $146,267. As of June 30, 2023, the value of the lease liability was $113,351. The City is required to make monthly principal and interest payments of $6,014. The lease bears the City’s incremental borrowing rate of 4.92%. The value of the right-to-use asset as of the end of the current fiscal year was $244,821 and had accumulated amortization of $143,310.

The future principal and interest lease payments as of June 30, 2023, were as follows:

For the Year
Ended June 30 Principal Interest Total
2024 $78,888 $3,828 $82,716
2025 34,463 425 34,888
$113,351 $4,253 $117,604

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NOTE 8.

RETIREMENT PLAN
A. GENERAL INFORMATION ABOUT THE PENSION PLANS
Plan Descriptions – All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety (police and fire) and Miscellaneous (all other) Plans, agent multipleemployer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

Benefits Provided – CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries.

Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.
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The Plans’ provisions and benefits in effect at June 30, 2023, are summarized as follows:

Miscellaneous
Hire date
Prior to
January 1, 2013
On or after
January 1, 2013
Benefit formula 3% @ 60 2% @ 62
Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life
Retirement age 50-60 52-67
Monthly benefits, as a % of eligible compensation 2.0%-3.0% 1.0%-2.5% Required employee contribution rates 8.00% 7.50%
Required employer contribution rates 12.17% * 12.17% *
Required Unfunded Accrued Liability Contribution $7,524,146 *Effective February 15, 2014, members in the Teamsters Local 856 Public Safety Dispatchers and Police Assistants were required to pay an additional 5.41% for their share of pension costs and members in the Teamsters Local 856 Clerical/Technical unit pay an additional 5.51% for their share of pension costs.

Safety
Hire date
Prior to
January 1, 2013
On or after
January 1, 2013
Benefit formula 3% @ 55 2.7% @ 57
Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life
Retirement age 50-55 50-57
Monthly benefits, as a % of eligible compensation 2.4%-3.0% 2.0%-2.7% Required employee contribution rates 9.00% 11.50%
Required employer contribution rates 17.30% * 17.30% *
Required Unfunded Accrued Liability Contribution $9,413,235 *Effective July 11, 2020, members in the Daly City Police Officers Association and Daly City Police Management Bargaining Unit were required to pay an additional 3.0% for their share of pension costs.

Beginning in fiscal year 2016, CalPERS collects employer contributions for each Plan as a percentage of payroll for the normal cost portion as noted in the rates above and as a dollar amount for contributions toward the unfunded liability (UAL). The dollar amounts are billed on a monthly basis, or the City can elect to make a lump-sum payment at the beginning of the fiscal year. The City’s required contributions for the unfunded liability in the Miscellaneous and Safety Plans for the year ended June 30, 2023 were $7,524,116 and $9,413,235, respectively, which were made under the lumpsum payment option. 68

Employees Covered – The following employees were covered by the benefit terms for each Plan as of the most recent actuarial valuation date of June 30, 2021 and measurement date of June 30, 2022:

Miscellaneous Safety
Inactive employees or beneficiaries currently receiving benefits 544 343 Inactive employees entitled to but not yet receiving benefits 406 100 Active employees 276 152
Total 1,226 595
Contributions – Section 20814(c) of the California Public Employees’ Retirement Law 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. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS.

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 City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions.

The City’s Contributions to the Plans for the year ended June 30, 2023 were $10,858,503 for the Miscellaneous Plan and $13,581,978 for the Safety Plan.

B. NET PENSION LIABILITY
The City’s net pension liability for each Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of each Plan is measured as of June 30, 2022, using an annual actuarial valuation as of June 30, 2021 rolled forward to June 30, 2022 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

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Actuarial Assumptions – The total pension liabilities in the June 30, 2021 actuarial valuations were determined using the following actuarial assumptions:

Valuation Date June 30, 2021
Measurement Date June 30, 2022
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:

Discount Rate 6.90%
Inflation 2.30%
Payroll Growth 2.80%
Projected Salary Increase Varies by Entry Age and Service Investment Rate of Return 6.90% (1)
Mortality Derived using CalPERS Membership Data for all Funds (2) Post Retirement Benefit Increase
The lesser of contract COLA or 2.30% until Purchasing
Protection Allowance floor on purchasing power applies,

2.30% thereafter
(1) Net of pension plan investment expenses, including inflation (2) The mortality table used was developed based on CalPERS' specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study for the period from 2001 to 2019. Preretirement and post-retirement mortality rates include generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be found on the CalPERS website.

The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2021 valuation were based on the results of a November 2021 actuarial experience study for the period 2001 to 2019. Further details of the Experience Study can be found on the CalPERS website at www.calpers.ca.gov.

Discount Rate – The discount rate used to measure the total pension liability for each Plan was 6.90%.

The projection of cash flows used to determine the discount rate for each Plan assumed that contributions from all plan members in the Public Employees Retirement Fund (PERF) will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, each Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members for all plans in the PERF. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability for each Plan.

The long-term expected rate of return on pension plan investments was determined using a buildingblock 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. 70

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach.

The expected rate of return was then adjusted to account for assumed administrative expenses of 10 basis points.

The expected real rates of return by asset class are as follows:

Asset Class (a)
Assumed Asset
Allocation
Real return
(a) (b)
Global Equity - Cap-weighted 30.0% 4.54%
Global Equity - Non-cap-weighted 12.00 3.84
Private Equity 13.00 7.28
Treasury 5.00 0.27
Mortgage-backed Securities 5.00 0.50
Investment Grade Corporates 10.00 1.56
High Yeild 5.00 2.27
Emerging Market Debt 5.00 2.48
Private Debt 5.00 3.57
Real Assets 15.00 3.21
Leverage (5.00) (0.59)
(a) An expected inflation of 2.30% used for this period. (b) Figures are based on the 2021 Asset Liability
Management study.

Changes of Assumptions – Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions.

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C. CHANGES IN THE NET PENSION LIABILITY
The changes in the Net Pension Liability for each Plan follow:

Miscellaneous Plan:

Increase (Decrease)
Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability/(Asset)
Balance at June 30, 2021 (Measurement Date) $357,259,684 $319,920,437 $37,339,247 Changes in the year:

Service cost 5,243,267 5,243,267
Interest on the total pension liability 24,450,276 24,450,276 Changes of Benefit Terms
Changes of Assumptions 4,197,477 4,197,477
Differences between actual and expected experience (265,160) (265,160) Plan to Plan Resource Movement
Contributions - employer 9,832,902 (9,832,902)
Contributions - employees 2,255,948 (2,255,948)
Net investment income (24,109,678) 24,109,678
Benefit payments, including refunds of employee
contributions (18,923,625) (18,923,625)
Other Miscellaneous Expense
Administrative Expense (199,291) 199,291
Net changes 14,702,235 (31,143,744) 45,845,979
Balance at June 30, 2022 (Measurement Date) $371,961,919 $288,776,693 $83,185,226 Safety Plan:

Increase (Decrease)
Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability/(Asset)
Balance at June 30, 2021 (Measurement Date) $379,284,241 $301,348,636 $77,935,605 Changes in the year:

Service cost 6,709,103 6,709,103
Interest on the total pension liability 26,435,472 26,435,472 Changes of Benefit Terms
Changes in assumptions 9,574,276 9,574,276
Differences between actual and expected experience 1,705,342 1,705,342 Plan to Plan Resource Movement
Contributions - employer 12,262,596 (12,262,596)
Contributions - employees 3,050,038 (3,050,038)
Net investment income (22,624,777) 22,624,777
Benefit payments, including refunds of employee
contributions (21,591,268) (21,591,268)
Other Miscellaneous Expense
Administrative Expense (187,722) 187,722
Net changes 22,832,925 (29,091,133) 51,924,058
Balance at June 30, 2022 (Measurement Date) $402,117,166 $272,257,503 $129,859,663 TOTAL - BOTH PLANS $774,079,085 $561,034,196 $213,044,889 72

Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The following presents the net pension liability of the City for each Plan, calculated using the discount rate for each Plan, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1- percentage point lower or 1-percentage point higher than the current rate:

Miscellaneous Safety Total
1% Decrease 5.90% 5.90% 5.90%
Net Pension Liability $131,565,327 $181,287,814 $312,853,141 Current Discount Rate 6.90% 6.90% 6.90%
Net Pension Liability $83,185,226 $129,859,663 $213,044,889 1% Increase 7.90% 7.90% 7.90%
Net Pension Liability $43,180,835 $87,263,334 $130,444,169 Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

D. PENSION EXPENSE AND DEFERRED OUTFLOWS/INFLOWS OF RESOURCES

RELATED TO PENSIONS
Pension expense is the change in net pension liability from the previous fiscal year to the current fiscal year less adjustments. Deferred outflows and deferred inflows of resources related to pensions are certain changes in total pension liabilities and fiduciary net position that are to be recognized in future pension expense. For the year ended June 30, 2023 the City recognized pension expense of $10,445,693 for the Miscellaneous Plan and $17,355,028 for the Safety Plan, for total pension expense of $27,800,721. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Miscellaneous Plan:

Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to measurement date $10,858,503 Differences between actual and expected experience 248,218 ($154,677) Changes in assumptions 2,448,528
Net differences between projected and actual earnings on plan investments 14,524,209
Total $28,079,458 ($154,677)
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Safety Plan:

Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to measurement date $13,581,978 Differences between actual and expected experience 2,720,059 Changes in assumptions 6,582,315
Net differences between projected and actual earnings on plan investments 13,725,829
Total $36,610,181
Total Miscellaneous and Safety Plans $64,689,639 ($154,677) The amount of $24,440,481 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2024. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Year Ended
June 30 Miscellaneous Plan Safety Plan Total
2024 $4,209,661 $7,159,455 $11,369,116
2025 2,714,862 5,606,492 8,321,354
2026 957,273 1,625,829 2,583,102
2027 9,184,482 8,636,427 17,820,909
Annual Amortization
E. SUBSEQUENT EVENT - REDUCTION OF CALPERS DISCOUNT RATE On July 12, 2021, CalPERS reported a preliminary 21.3% net return on investments for fiscal year 2020-21. Based on the thresholds specified in CalPERS Funding Risk Mitigation policy, the excess return of 14.3% prescribes a reduction in investment volatility that corresponds to a reduction in the discount rate used for funding purposes of 0.20%, from 7.00% to 6.80%. Since CalPERS was in the final stages of the four-year Asset Liability Management (ALM) cycle, the CalPERS Board elected to defer any changes to the asset allocation until the ALM process concluded, and the Board could make its final decision on the asset allocation in November 2021.

On November 17, 2021, the board adopted a new strategic asset allocation. The new asset allocation along with the new capital market assumptions, economic assumptions and administrative expense assumption support a discount rate of 6.90% (net of investment expense but without a reduction for administrative expense) for financial reporting purposes. This includes a reduction in the price inflation assumption from 2.50% to 2.30% as recommended in the November 2021 CalPERS Experience Study and Review of Actuarial Assumptions. This study also recommended modifications to retirement rates, termination rates, mortality rates and rates of salary increases that were adopted by the CalPERS Board. These new assumptions are reflected in the GASB 68 accounting valuation reports for the June 30, 2022 measurement date.
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NOTE 9.

POST EMPLOYMENT BENEFITS OTHER THAN PENSION
The City provides certain health care benefits for employees who retire directly from the City with at least five years of service with the City and who are vested in the California Public Employees Retirement System (CalPERS). The City participates in the CalPERS health care plan which is governed under the California Public Employees Health and Medical Care Act (PEHMCA). Required retiree medical plan contributions are also governed by PEHMCA for member agencies. The City joined the California Employers' Retiree Benefit Trust (CERBT), an agent multiple-employer plan administered by CALPERS, consisting of an aggregation of single-employer plans. The CERBT issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained from the California Public Employees' Retirement System, CERBT, P.O. Box 942703, Sacramento, CA 94229-2703.

For employees hired prior to February 1, 2023, the City contributes up to a fixed dollar amount for retiree medical benefits, which varies by employee bargaining group and coverage level as governed by PEHMCA. Benefits continue for surviving spouses in amounts as required by PEHMCA. Should an eligible retiree opt out of the CalPERS medical plan, they will receive $120 to $125 per month in lieu of contributions to the CalPERS plan.

For employees hired on or after February 1, 2023, the City contributes the PEHMCA minimum, which was $151 in 2023.

As of the June 30, 2022 measurement date, approximately 508 retirees were eligible and were receiving retiree health care benefits from the City and approximately 38 inactive employees entitled to but not yet receiving benefit payments. There were approximately 421 active full time employees that should they meet requirements will be eligible to receive health care benefits upon retirement.

For the year ended June 30, 2023, the City contributed $4,407,355 to the Plan, which was comprised of benefit premiums of $2,505,335, prefunding contributions of $1,000,000 and implied subsidy benefit payments of $902,000.

A. FUNDING POLICY AND ACTUARIAL ASSUMPTIONS
The total OPEB liability was determined as part of a June 30, 2021 actuarial valuation using the entry age normal actuarial cost method. This is a projected benefit cost method, which takes into account those benefits that are expected to be earned in the future as well as those already accrued. The actuarial assumptions included 2.50% inflation rate, 5.75% investment rate of return, 2.75% projected annual salary increase, and a medical trend of 6.50% (Non-Medicare), 5.65% (Medicare-Non-Kaiser) and 4.6% (Medicare-Kaiser) in 2023 decreasing to an ultimate rate of 3.75% in 2076. The actuarial methods and assumptions used include techniques that smooth the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets.

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Actuarial calculations reflect a long-term perspective and actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future.

Actuarially determined amounts are subject to revision at least biannually as results are compared to past expectations and new estimates are made about the future. The City’s OPEB unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll using a 30 year closed amortization period for an initial June 30, 2008 Unfunded Accrued Actuarial Liability (UAAL), a 20 year closed amortization period for method assumptions and plan changes and 15 years for gains and losses, with a maximum of a 30 year combined closed period.

B. NET OPEB LIABILITY
Actuarial Methods and Assumptions – The City’s net OPEB liability was measured as of June 30, 2022 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2021.

The long-term expected rate of return on OPEB plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Long-Term
Target Expected Real
Asset Class Allocation Rate of Return
Global Equity 34% 4.56%
Fixed Income 41% 1.56%
TIPS 5% -0.08%
Commodities 3% 1.22%
REITs 17% 4.06%
Assumed Long-Term Rate of Inflation 2.50%
Expected Long-Term Net Rate of Return 5.75%
Discount Rate – The discount rate used to measure the total OPEB liability was 5.75%. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

Changes of Assumptions – For the measurement date of June 30, 2022, the discount rate increased from 5.5% to 5.75%. In addition, the City changed from CERBT’s Investment Strategy 2 to 1 effective August 23, 2022, to take advantage of typically higher returns in Strategy 1.

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C. CHANGES IN NET OPEB LIABILITY
The changes in the net OPEB liability follows:

Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability/(Asset)
(a) (b) (a) - (b)
Balance at June 30, 2022 $57,996,877 $19,724,303 $38,272,574 Changes Recognized for the Measurement Period:

Service Cost 1,443,352 1,443,352
Interest on the total OPEB liability 3,174,237 3,174,237 Changes in benefit terms 0
Differences between expected and actual experience 0
Changes of assumptions (1,564,568) (1,564,568)
Contributions from the employer 4,453,620 (4,453,620)
Net investment income (2,477,143) 2,477,143
Administrative expenses (4,993) 4,993
Benefit payments (3,453,620) (3,453,620) 0
Net changes (400,599) (1,482,136) 1,081,537
Balance at June 30, 2023 (June 30, 2022 Measurement Date) $57,596,278 $18,242,167 $39,354,111 Increase (Decrease)
Detailed information about the OPEB plan’s fiduciary net position is available in the separately issued Plan financial report that may be obtained from the CERBT. The benefit payments above include implied subsidy benefit payments in the amount of $923,000.

D. SENSITIVITY OF THE NET OPEB LIABILITY TO CHANGES IN THE DISCOUNT

RATE AND HEALTHCARE COST TREND RATES
The following presents the net OPEB liability of the City, as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentagepoint higher than the current discount rate:

Net OPEB Liability/(Asset)
Discount Rate -1%
Current
Discount Rate Discount Rate +1%
(4.75%) (5.75%) 6.75%
$46,049,115 $39,354,111 $33,722,727
The following presents the net OPEB liability of the City, as well as what the City's net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1- percentage-point higher than the current healthcare cost trend rates:

Net OPEB Liability/(Asset)
Current
Healthcare Cost
1% Decrease Trend Rates 1% Increase
$35,822,474 $39,354,111 $43,539,502
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E. OPEB EXPENSE AND DEFERRED OUTFLOWS/INFLOWS OF RESOURCES RELATED

TO OPEB
For the year ended June 30, 2023, the City recognized OPEB expense of $2,431,324. At June 30, 2023, the City reported deferred outflows and inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
$4,407,335
Difference between expected and actual experience ($1,856,937) Changes in assumptions 369,823 (1,742,629)
Net differences between projected and actual earnings on 1,685,348 plan investments
Total $6,462,506 ($3,599,566)
Employer contributions made subsequent to the measurement date $4,407,335 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the OPEB liability in the year ended June 30, 2024. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as part of OPEB expense as follows:

Year Annual
Ended June 30 Amortization
2024 ($1,106,787)
2025 (548,002)
2026 (112,668)
2027 390,695
2028 (167,633)
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NOTE 10.

DEFERRED COMPENSATION PLAN
City employees may defer a portion of their compensation under a City sponsored deferred compensation plan created in accordance with Internal Revenue Code Section 457. Under this plan, participants are not taxed on the deferred portion of their compensation until distributed to them; distributions may be made only at termination, retirement, death or in an emergency as defined by the Internal Revenue Service.

The Plan is part of the public agency agent multiple-employer defined contribution plan that is administered by CalPERS. Benefit provisions under the Plan are established by City Resolution.

The laws governing deferred compensation plan assets require plan assets to be held by a trust for the exclusive benefit of plan participants and their beneficiaries. Since the assets held under these plans are not the City’s property and are not subject to City control, they have been excluded from these financial statements.

The City has no liability for any losses incurred by the Plan and does not participate in any gains, but does have the duty of due care that would be required of an ordinary prudent investor. The City has a contract with Mission Square to manage and invest the assets of the Plan. The administrator pools the assets of the Plan with those of other participants and does not make separate investments for the City. The assets in the Plan are the sole property of the participants or their beneficiaries. Since the assets held under the Plan are not the City’s property and are not subject to claims by general creditors of the City, they have been excluded from these financial statements. The Plan requires investments to be stated at fair market value and it requires all gains and losses on Plan investments to accrue directly to participant accounts.

The City adopted a Resolution in November 2020 that required a monthly deferred compensation contribution of $1,000 for the City Manager. Effective January 2023, the City’s required monthly deferred compensation contribution was reduced to $500. In addition, in August 2022, the City Council approved a one-time payment of vacation accruals in the amount of $17,250 toward the City Manager’s deferred compensation account. The City does not make any other contributions to the Plan. The City’s required contributions for the year ended June 30, 2023 totaled $26,250. 79

NOTE 11.

SELF-INSURANCE
The Self-Insurance Internal Service Fund was established in 1979 to provide for payment of costs associated with the City’s risk management programs. Fund revenues consist of interest earnings, reimbursements of claims paid by the Fund and charges to other funds. The latter is intended to match the charges for insurance premiums for coverage in excess of self-insured amounts, estimated payments resulting from self-insurance programs, operating expenses and the provision of reserves for pending and possible future claims.

The City has a self-insured retention for the first $500,000 of general and automobile liability claims and maintains a $50,000 deductible for property losses. Losses in excess of the retention up to $25,000,000 on general and automobile liability are covered by purchased excess insurance. Prior to July 1, 2022, the City’s a self-insured retention for general and automobile liability claims was $250,000 and losses in excess of the retention up to $10,000,000 were covered by purchased excess insurance. The City purchases combined property, boiler and machinery and automobile comprehensive insurance covering all but the deductible on the full value of City property. Effective July 1, 2022, the City also has a law enforcement liability policy with a deductible of $350,000 and coverage of up to $5 million per occurrence. Settlements have never exceeded insurance coverage. The City expenses the incurred liabilities for claims in cases where such amounts are reasonably determinable and where the likelihood of liability exists. Included are estimates for incurred but not reported claims, which are calculated based on claims experience.

The City is a member of Public Risk Innovation, Solutions, and Management (PRISM), a joint powers authority (JPA) which provides excess workers’ compensation liability claims coverage above the City’s self-insured retention of $350,000 per occurrence. Losses above the self-insured retention are pooled with excess reinsurance purchased to provide coverage to statutory limits. During the fiscal year ended June 30, 2023, the City contributed $614,232 to PRISM for current year coverage. Audited financial statements for PRISM are available from PRISM at 75 Iron Point Circle, Suite 200, Folsom, CA 95630.

The City’s present value liability for uninsured claims including a provision for claims incurred but not reported using a discount rate of 2% was computed as follows based on claims experience for the years ended June 30, 2023 and 2022:
2023 2022
Beginning balance of claims payable $10,487,000 $10,150,000 Increase in estimated claims liability 2,336,204 3,587,995 Claims paid (2,750,204) (3,250,995)
Ending balance of claims payable $10,073,000 $10,487,000 Current Portion $2,622,041 $2,544,159
The undiscounted claims totaled $11,088,000 at June 30, 2023.

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NOTE 12.

NET POSITION AND FUND BALANCE
A. NET POSITION
Net Position is the excess of all the City’s assets and deferred outflows over all its liabilities and deferred inflows, regardless of fund. Net Position is divided into three captions. These captions apply only to Net Position and are described below:

Net Investment in Capital Assets describes the portion of Net Position which is represented by the current net book value of the City’s capital assets, less the outstanding balance of any debt issued to finance these assets.

Restricted describes the portion of Net Position which is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the City cannot unilaterally alter. These principally include developer fees received for use on capital projects, debt service requirements and amounts required to be set aside for low and moderate income housing.

Unrestricted describes the portion of Net Position which is not restricted as to use.

B. GOVERNMENTAL FUND BALANCES
The City’s fund balances are classified in accordance with generally accepted accounting principles, Fund Balance Reporting and Governmental Fund Type Definitions, which requires the City to classify its fund balances based on spending constraints imposed on the use of resources.

For programs with multiple funding sources, the City prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint.

Nonspendables represents balances set aside to indicate items do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and assets not expected to be converted to cash, such as prepaids, notes receivable, and land held for redevelopment are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed or assigned, then Nonspendable amounts are required to be presented as a component of the applicable category.

Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for a specific purpose.

Encumbrances and nonspendable amounts subject to restrictions are included along with spendable resources.

Committed fund balances have constraints imposed by formal action of the City Council by resolution which may be altered only by formal action in the same manner. Encumbrances and nonspendable amounts subject to council commitments are included along with spendable resources. 81

Assigned fund balances are amounts constrained by the City’s intent to be used for a specific purpose, but are neither restricted nor committed. Intent is expressed by the City Council by resolution or its designee (City Manager) and may be changed at the discretion of the City Council by resolution. This category includes encumbrances; Nonspendables, when it is the City’s intent to use proceeds or collections for a specific purpose, and residual fund balances, if any, of Special Revenue, Capital Projects and Debt Service Funds which have not been restricted or committed.

Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual general fund balance and residual fund deficits, if any, of other governmental funds.

Detailed classifications of the City’s Fund Balances, as of June 30, 2023, are below:

Other
General Gas Measures Capital Governmental
Fund Balance Classifications Fund Tax Grants A and W Projects Funds Total Nonspendables:

Items not in spendable form:

Inventories $16,554 $28,151 $44,705
Petty cash 7,357 7,357
Prepaids 252,055 252,055
Leases receivable 268,322 268,322
Loan receivable from
Successor Agency 10,907,153 10,907,153
Total Nonspendable 11,451,441 28,151 11,479,592
Restricted for:

Pension benefits 4,477,007 4,477,007
Gas Tax Projects 8,658,517 8,658,517
Capital Projects 1,000,000 $11,394,499 $13,318,328 25,712,827 Affordable Housing $5,178,412 5,178,412
Low and Moderate Income
Housing Assets 4,189,548 4,189,548
586,005 586,005
Traffic Safety 112,635 112,635
Grants $453,878 453,878
Total Restricted 5,477,007 8,658,517 453,878 11,394,499 13,318,328 10,066,600 49,368,829 Assigned to:

Capital Projects 15,664,989 15,664,989
Other Contracts 754,432 754,432
Total Assigned 754,432 15,664,989 16,419,421
Unassigned:

Contingency Fund 1,000,000 1,000,000
Operating Reserve 19,500,000 19,500,000
Unassigned 40,051,062 40,051,062
Total Unassigned 60,551,062 60,551,062
Total Fund Balances $78,233,942 $8,686,668 $453,878 $11,394,499 $28,983,317 $10,066,600 $137,818,904 Linda Vista Benefit Assessment
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C. MINIMUM FUND BALANCE POLICY
The City Council adopted a General Fund Reserve Policy in July 2020 to establish target reserve levels and the methodology for calculating reserve levels. The Policy also establishes criteria for the use of reserves and a process to replenish reserves.

The Policy requires the City to strive to maintain the following fund balances:
1) Contingency Fund
The City shall maintain a minimum Contingency Fund reserve equal to $1,000,000 within its General Fund to provide a financial cushion to cover revenue shortfalls resulting from unexpected economic changes or recessionary periods or to provide funds in the event of major unplanned expenditures the City could face as a result of natural or man-made disasters such as earthquakes, windstorms, landslides, floods, wildfires, natural gas leaks, or terrorist attacks.

The balance of the Contingency Fund Reserve was $1,000,000 at June 30, 2023 and is reported as a component of General Fund unassigned fund balance. 2) General Fund Operating Reserve
The City shall maintain a minimum General Fund operating reserve equal to two months (17%), and a targeted reserve equal to three months (25%), of General Fund annual operating expenditures plus recurring (i.e., not one-time) transfers to other funds for that fiscal year.

These reserves will be used to provide adequate cash flow and budget contingencies.

The balance of the Operating Reserve was $19.5 million at June 30, 2023 and is reported as a component of General Fund unassigned fund balance.

If reserves are projected to fall below, or unexpectedly fall below, the minimum levels as set by this policy, the City shall include within its annual budget a plan to restore reserves to the minimum levels within two years based on its long-range financial forecast. Such a plan may include, but not be limited to, revenue enhancements, service delivery changes, expenditure controls/cost shifts, and/or service level reductions. At no time shall reserves be planned to fall below zero for any operating or capital fund.

D. NET POSITION RESTRICTED FOR QUALIFIED CAPITAL OUTLAY The City established a Reserve for Qualified Capital Outlay in the Sanitation District Enterprise Fund and transferred into it amounts from fiscal years 2019 to 2023 necessary to ensure compliance with State Gann Limit provisions. These funds will be used solely to pay for Gann Limit excludable capital expenses. To qualify, they must be for assets with a value greater than $100,000 and a useful life of at least 10 years.
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E. RESTATEMENT
The City implemented the provisions of Governmental Accounting Standards Board Statement No. 96, Subscription-Based Information Technology Arrangement (SBITA), during the year ended June 30, 2023. As a result, the City determined that beginning the balances of subscription assets and subscription liabilities were $3,704,316 and as of July 1, 2022 restated and increased the respective balances in that amount, and the net effect on beginning net position was zero. See the SBITA disclosure in Note 14.

NOTE 13.

LOANS AND NOTES RECEIVABLE
Housing Rehabilitation Program - The City administers a housing rehabilitation program using Housing and Community Development Block Grant (CDBG) and Cal Home funds that is accounted for in the Community Block Grant Special Revenue Fund and Grants Special Revenue Fund. Under this program, individuals with incomes below a certain level are eligible to receive low interest loans, secured by deeds of trust or mobile home liens, for construction work on their homes. Although these loans and notes are expected to be repaid, their balance has been offset by unavailable revenue as they are not expected to be repaid during the next fiscal year.

During fiscal year 2023, the City made loans to three participants under this program and the CDBG and Cal HOME loan program activity is as follows:

Beginning Balance $1,423,472
New loans 88,194
Loan repayments (117,138)
Loans forgiven (4,039)
Ending Balance $1,390,489
Daly City Partnership Loan – In October 2021, the City made a loan of $200,000 to the Daly City Partnership, a nonprofit corporation, to administer the services provided for the rental support and case management services for very low income residents negative impacted by the COVID-19 pandemic, by supporting cash flow during the administration of those programs. The loan was repaid during the year ended as of June 30, 2023.

NOTE 14.

SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS
A. POLICIES
A subscription-based information technology arrangement (SBITA) is a contract that conveys control of the right to use another party’s (a SBITA vendor’s) IT software, alone or in combination with tangible capital assets (the underlying IT assets), as specified in the contract for a period of time in an exchange or exchange-like transaction.
84

At the commencement of a SBITA, the City initially measures the subscription liability at the present value of payments expected to be made during the contract term. Subsequently, the subscription liability is reduced by the principal portion of payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for payments made at or before the SBITA commencement date, plus certain initial direct costs. Subsequently, the subscription asset is amortized on a straight‐line basis over shorter of the subscription term or the useful life of the underlying IT assets. The City recognizes subscription assets with an initial, individual value of $25,000 or more.

Key estimates and judgments related to SBITAs include how the City determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) subscription term, and (3) subscription payments as follows:
• The City uses the interest rate charged by the IT vendor as the discount rate. When the interest rate charged by the IT vendor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for subscription liabilities. • The subscription term includes the noncancellable period of the subscription.

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

Subscription assets are reported with other capital assets and subscription liabilities are reported on the statement of net position.

B. SUBSCRIPTION LIABILITIES
A summary of the City’s SBITA transaction activities for the fiscal year ended June 30, 2023, are as follows:

Balance
June 30, 2022 Balance
(as restated) Additions Retirements June 30, 2023
Governmental Activities
Subscription Liabilities
Axon Enterprises $2,613,259 $270,545 $2,342,714
Tyler Technologies 557,927 91,927 466,000
Microsoft Enterprise Enrollment $1,328,754 218,930 1,109,824 Superion 533,130 168,246 364,884
Total Subscription Liabilities $3,704,316 $1,328,754 $749,648 $4,283,422

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In May 2021, the City entered into a five‐year SBITA for the use of body-worn camera-related cloud services. The agreement automatically renews for an additional five years, but the vendor may increase the cost of services by up to 3% per year during the renewal period. An initial subscription liability was recorded in the amount of $2,613,259 as of July 1, 2022. As of June 30, 2023, the balance of the subscription liability was $2,342,714. The City is required to make annual principal and interest payments of $282,544 to $327,547. The software has a nine‐year estimated useful life.

The value of the right‐to‐use asset as of the end of the current fiscal year was $2,613,259 and had accumulated amortization of $293,076.

In August 2020, and amended in November 2021, the City entered into a five‐year SBITA for the use of community development and cashiering software. Due to a delay in the implementation, the amendment revised the commencement date of the agreement to November 1, 2021. The agreement automatically renews for one year, at the vendor’s current service rate. An initial subscription liability was recorded in the amount of $557,927 as of July 1, 2022. As of June 30, 2023, the balance of the subscription liability was $466,000. The City is required to make annual principal and interest payments of $94,488. The software has a six‐year estimated useful life. The value of the right‐to‐use asset as of the end of the current fiscal year was $557,927 and had accumulated amortization of $104,611.

In December 2022, the City entered into a three‐year SBITA for the use of Microsoft Enterprise cloud services. The agreement can be renewed for an additional three year term. An initial subscription liability was recorded in the amount of $1,328,754 during the current fiscal year. As of June 30, 2023, the balance of the subscription liability was $1,109,824. The City is required to make annual principal and interest payments of $225,032. The software has a six‐year estimated useful life. The value of the right‐to‐use asset as of the end of the current fiscal year was $1,328,754 and had accumulated amortization of $221,459.

In May 2020, the City entered into a one‐year SBITA for the use of finance enterprise software. The agreement automatically renews for successive one year terms. An initial subscription liability was recorded in the amount of $533,130 as of July 1, 2022. As of June 30, 2023, the balance of the subscription liability was $364,884. The City is required to make annual principal and interest payments of $179,229. The software has a three‐year estimated useful life. The value of the right‐to‐ use asset as of the end of the current fiscal year was $533,130 and had accumulated amortization of $177,710.

The future principal and interest subscription liability payments as of June 30, 2023, were as follows:

For the Year
Ended June 30 Principal Interest Total
2024 $761,625 $19,668 $781,293
2025 774,085 16,170 790,255
2026 589,447 12,617 602,064
2027 600,630 9,910 610,540
2028 612,119 7,153 619,272
Thereafter 945,516 8,782 954,298
Totals $4,283,422 $74,300 $4,357,722
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NOTE 15.

ACTIVITIES OF THE SUCCESSOR AGENCY TO THE FORMER REDEVELOPMENT AGENCY The activities of the Successor Agency are reported in the Successor Agency to the Redevelopment Agency Private-Purpose Trust Fund as the activities are under the control of the Oversight Board. The City provides administrative services to the Successor Agency to wind down the affairs of the former Redevelopment Agency.

Information presented in the following footnotes represents assets and liabilities of the Successor Agency.

A. CASH
Cash and investments of the Successor Agency as of June 30, 2023 are discussed in Note 1H above.

Information presented in the following footnotes represents other assets and liabilities of the Successor Agency as of June 30, 2023.

B. LONG RANGE PROPERTY MANAGEMENT PLAN APPROVAL
On December 14, 2015 the Successor Agency received confirmation from the DOF that the DOF had reviewed and approved the Successor Agency’s Long Range Property Management Plan (LRPMP).

C. LOANS BETWEEN THE CITY AND THE SUCCESSOR AGENCY
Due to the dissolution of the Redevelopment Agency, loans payable, totaling $23,842,357, from the Redevelopment Agency to the General Fund were written off as of June 30, 2012. In May 2016 the State Department of Finance (DOF) confirmed and approved repayment of the loan payment from the former Redevelopment Agency to the City General Fund totaling $13,775,503, payable at the statutory interest rate of 3% of the outstanding amount. In October 2016, the City received confirmation and approval of an additional repayment of the loan from the former Redevelopment Agency to the City General Fund totaling $4,579,613. These loans are recorded as a loan receivable in the City’s General Fund and is classified as nonspendable fund balance as it cannot be appropriated against until funds are received from the State. The balance of the loans as of June 30, 2023 is $10,907,153.

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REQUIRED SUPPLEMENTARY INFORMATION

AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLANS AND OPEB PLANS:

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS This schedule reports the beginning and ending balances of the total pension liability, the plan assets available for pension benefits (called plan net position), and the net pension liability, as well as the change in those amounts during the year presented by cause (similar to the note disclosure). It also reports the total pension liability, plan net position, net pension liability, a ratio of plan net position divided by the total pension liability, the payroll amount for current employees in the plan (covered payroll), and a ratio of the net pension liability divided by covered-employee payroll.

SCHEDULE OF CONTRIBUTIONS – PENSION PLANS
This schedule reports the agent multiple-employer’s contributions to the plan which are actuarially determined, the employer’s actual contributions, the difference between the actual and actuarially determined contributions, and a ratio of the actual contributions divided by covered payroll.

SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS This schedule reports the beginning and ending balances of the total OPEB liability, the plan assets available for OPEB benefits (called plan net position), and the net OPEB liability, as well as the change in those amounts during the year presented by cause (similar to the note disclosure). It also reports the total OPEB liability, plan net position, net OPEB liability, a ratio of plan net position divided by the total OPEB liability, the payroll amount for current employees in the plan (coveredemployee payroll), and a ratio of the net OPEB liability divided by covered-employee payroll.

SCHEDULE OF CONTRIBUTIONS – OPEB PLAN
This schedule reports the agent multiple-employer’s contributions to the plan which are actuarially determined, the employer’s actual contributions, the difference between the actual and actuarially determined contributions (ADC) or contractually required contributions if the ADC has not been calculated, and a ratio of the actual contributions divided by covered-employee payroll. 89

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS As of fiscal year ending June 30, 2023
Last 10 Years*

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS

MISCELLANEOUS
Measurement Period 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 Total Pension Liability
Service Cost $4,928,638 $4,355,451 $4,356,641 $4,961,492 $4,820,144 $4,846,377 $4,734,206 $4,750,071 $5,243,267 Interest 19,456,167 20,028,375 20,453,457 21,126,222 21,405,533 22,557,657 23,372,961 24,305,480 24,450,276 Differences between expected and actual
experience (5,096,599) (6,329,013) (1,376,656) 1,006,212 5,081,458 432,569 2,730,394 (265,160) Changes in assumptions (4,888,600) 17,607,198 (9,036,830) 4,197,477 Changes in benefits
Benefit payments, including refunds of employee
contributions (11,304,889) (12,134,586) (12,862,999) (13,610,749) (14,549,197) (15,864,061) (16,891,285) (18,715,236) (18,923,625) Net change in total pension liability 13,079,916 2,264,041 5,618,086 28,707,507 3,645,862 16,621,431 11,648,451 13,070,709 14,702,235 Total pension liability - beginning 262,603,681 275,683,597 277,947,638 283,565,724 312,273,231 315,919,093 332,540,524 344,188,975 357,259,684 Total pension liability - ending (a) $275,683,597 $277,947,638 $283,565,724 $312,273,231 $315,919,093 $332,540,524 $344,188,975 $357,259,684 $371,961,919 Plan fiduciary net position
Contributions - employer $3,860,928 $3,732,343 $4,446,777 $5,539,675 $6,152,860 $7,068,468 $8,214,918 $8,924,993 $9,832,902 Contributions - employee 2,090,754 1,959,273 2,019,542 2,110,207 2,068,466 2,144,408 2,252,506 2,129,297 2,255,948 Net investment income 34,374,839 5,074,277 1,142,662 24,378,978 19,945,939 16,443,055 12,936,801 59,983,132 (24,109,678) Benefit payments, including refunds of employee
contributions (11,304,889) (12,134,586) (12,862,999) (13,610,749) (14,549,197) (15,864,061) (16,891,285) (18,715,236) (18,923,625) Other miscellaneous income (expense) (708,784) 585
Administrative Expense (255,289) (138,235) (326,924) (373,237) (179,872) (368,964) (267,582) (199,291) Plan to Plan Resource Movement (493) (585) 54,276
Net change in plan fiduciary net position 29,021,632 (1,624,475) (5,392,253) 18,091,187 12,535,462 9,666,859 6,143,976 52,054,604 (31,143,744) Plan fiduciary net position - beginning 199,423,445 228,445,077 226,820,602 221,428,349 239,519,536 252,054,998 261,721,857 267,865,833 319,920,437 Plan fiduciary net position - ending (b) $228,445,077 $226,820,602 $221,428,349 $239,519,536 $252,054,998 $261,721,857 $267,865,833 $319,920,437 $288,776,693 Net pension liability - ending (a)-(b) $47,238,520 $51,127,036 $62,137,375 $72,753,695 $63,864,095 $70,818,667 $76,323,142 $37,339,247 $83,185,226 Plan fiduciary net position as a percentage of the
total pension liability 82.86% 81.61% 78.09% 76.70% 79.78% 78.70% 77.83% 89.55% 77.64% Covered payroll $24,443,972 $22,658,681 $22,823,982 $23,568,915 $22,688,822 $24,144,928 $24,817,517 $24,973,064 $27,629,117 Net pension liability as percentage of covered
payroll 193.25% 225.64% 272.25% 308.68% 281.48% 293.31% 307.54% 149.52% 301.08% Notes to Schedule:
* Fiscal year 2015 was the 1st year of implementation.

Source: CalPERS Accounting Valuation
Changes in assumptions. In 2016, 2018, 2019, 2020 and 2021 there were no changes. In 2017, the accounting discount rate reduced from 7.65 percent to 7.15 percent. In 2022, the accounting discount rate reduced from 7.15% to 6.90%. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate. All other assumptions for the June 30, 2014 measurement date were the same as those used for the June 30, 2015 and 2016 measurement dates.

Benefit changes. The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes). 90

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS As of fiscal year ending June 30, 2023
Last 10 Years*

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS SAFETY
Measurement Period 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 Total Pension Liability
Service Cost $5,018,136 $4,776,984 $4,859,775 $5,566,167 $5,314,299 $5,562,199 $5,837,397 $5,977,808 $6,709,103 Interest 19,532,405 20,368,130 21,118,384 21,794,377 22,455,535 23,732,977 24,739,728 25,785,538 26,435,472 Differences between expected and actual experience (455,068) (1,021,524) 293,934 (978,042) 7,441,738 3,245,246 3,789,911 1,705,342 Changes in assumptions (4,770,631) 17,425,044 (632,875) 9,574,276 Changes in benefits
Benefit payments, including refunds of
employee contributions (12,996,278) (13,776,270) (14,939,167) (15,643,224) (17,110,200) (17,828,231) (19,366,927) (20,254,165) (21,591,268) Net change in total pension liability 11,554,263 6,143,145 10,017,468 29,436,298 9,048,717 18,908,683 14,455,444 15,299,092 22,832,925 Total pension liability - beginning 275,975,394 264,421,131 282,118,539 292,136,007 321,572,305 330,621,022 349,529,705 363,985,149 379,284,241 Total pension liability - ending (a) $275,975,394 $282,118,539 $292,136,007 $321,572,305 $330,621,022 $349,529,705 $363,985,149 $379,284,241 $402,117,166 Plan fiduciary net position
Contributions - employer $4,225,009 $4,630,110 $5,309,673 $6,087,507 $6,986,096 $8,259,177 $9,741,720 $10,622,105 $12,262,596 Contributions - employee 2,632,654 1,864,455 1,917,899 1,935,079 2,062,297 2,040,072 2,186,070 2,777,982 3,050,038 Net investment income 33,622,839 4,997,920 1,208,758 23,497,877 18,994,354 15,591,708 12,209,629 56,328,465 (22,624,777) Benefit payments, including refunds of employee
contributions (12,996,278) (13,776,270) (14,939,167) (15,643,224) (17,110,200) (17,828,231) (19,366,927) (20,254,165) (21,591,268) Administrative Expense (249,064) (134,719) (316,566) (358,363) (171,174) (349,203) (251,859) (187,722) Other Miscellaneous Expense 556 (680,537)
Plan to Plan Resource Management 493 341 (556) (54,276) Net change in plan fiduciary net position (2,532,356) 27,484,224 (6,637,556) 15,561,014 9,893,091 7,837,832 4,421,289 49,222,528 (29,091,133) Plan fiduciary net position - beginning 223,582,794 196,098,570 221,050,438 214,412,882 229,973,896 239,866,987 247,704,819 252,126,108 301,348,636 Plan fiduciary net position - ending (b) $223,582,794 $221,050,438 $214,412,882 $229,973,896 $239,866,987 $247,704,819 $252,126,108 $301,348,636 $272,257,503 Net pension liability - ending (a)-(b) $52,392,600 $61,068,101 $77,723,125 $91,598,409 $90,754,035 $101,824,886 $111,859,041 $77,935,605 $129,859,663 Plan fiduciary net position as a percentage of the
total pension liability 81.02% 78.35% 73.39% 71.52% 72.55% 70.87% 69.27% 79.45% 67.71% Covered payroll $19,652,763 $19,567,377 $19,784,134 $19,829,558 $20,477,192 $21,410,816 $22,001,988 $23,722,063 $26,760,075 Net pension liability as percentage of covered
payroll 266.59% 312.09% 392.86% 461.93% 443.20% 475.58% 508.40% 328.54% 485.27% Notes to Schedule:
* Fiscal year 2015 was the 1st year of implementation.

Source: CalPERS Accounting Valuation
Changes in assumptions. In 2016, 2018, 2019, 2020 and 2021 there were no changes. In 2017, the accounting discount rate reduced from 7.65 percent to 7.15 percent. In 2022, the accounting discount rate reduced from 7.15% to 6.90%.In 2015, amounts reported reflect an adjustment of the discount rate from

7.5 percent (net of administrative expense) to 7.65 (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate. All other assumptions for the June 30, 2014 measurement date were the same as those used for the June 30, 2015 and 2016 tdt
Benefit changes. The figures above do not include any liability impact that may have resulted from plan changes which occurred June 30. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes).

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MISCELLANEOUS
Fiscal Year Ended June 30 2015 2016 2017 2018 2019 2020 2021 2022 2023 Actuarially determined contribution $4,637,116 $6,771,305 $5,540,220 $6,146,305 $7,064,967 $8,236,678 $8,901,914 $9,382,915 $10,858,503 Contributions in relation to the actuarially
determined contributions (4,637,116) (6,771,305) (5,540,220) (6,146,305) (7,064,967) (8,236,678) (8,901,914) (9,382,915) (10,858,503) Contribution deficiency (excess)
Covered payroll $22,658,681 $22,823,982 $23,568,915 $22,688,822 $24,144,928 $24,817,517 $24,973,064 $27,629,117 $28,935,160 Contributions as a percentage of covered
payroll 20.47% 29.67% 23.51% 27.09% 29.26% 33.19% 35.65% 33.96% 37.53% Notes to Schedule
Valuation date: 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS As of fiscal year ending June 30, 2023
Last 10 Years*

SCHEDULE OF CONTRIBUTIONS
SAFETY
Fiscal Year Ended June 30 2015 2016 2017 2018 2019 2020 2021 2022 2023 Actuarially determined contribution $4,225,009 $5,309,673 $6,090,350 $6,985,429 $8,263,084 $9,742,714 $10,620,215 $12,263,576 $13,351,978 Contributions in relation to the actuarially
determined contributions (4,225,009) (5,309,673) (6,090,350) (6,985,429) (8,263,084) (9,742,714) (10,620,215) (12,263,576) (13,351,978) Contribution deficiency (excess)
Covered payroll $19,567,377 $19,784,134 $19,829,558 $20,477,192 $21,410,816 $22,001,988 $23,722,063 $26,760,075 $26,939,202 `
Contributions as a percentage of covered
payroll 21.59% 26.84% 30.71% 34.11% 38.59% 44.28% 44.77% 45.83% 49.56% Notes to Schedule
Valuation date: 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS As of fiscal year ending June 30, 2023
Last 10 Years*

SCHEDULE OF CONTRIBUTIONS
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Measurement Date Ended June 30 2017 2018 2019 2020 2021 2022 Total OPEB Liability
Service Cost $1,470,697 $1,514,818 $1,560,263 $1,455,663 $1,480,458 $1,443,352 Interest 3,449,729 3,567,790 3,690,181 3,500,744 3,541,517 3,174,237 Changes in benefit terms - - - - -
Differences between expected and actual experience - - (4,588,272) - (1,048,749) Changes of assumptions - - (281,571) (865,013) 581,149 (1,564,568) Benefit payments (2,980,461) (3,170,657) (3,168,930) (3,445,074) (3,482,594) (3,453,620) Net change in total OPEB liability 1,939,965 1,911,951 (2,788,329) 646,320 1,071,781 (400,599) Total OPEB liability - beginning 55,215,189 57,155,154 59,067,105 56,278,776 56,925,096 57,996,877 Total OPEB liability - ending (a) $57,155,154 $59,067,105 $56,278,776 $56,925,096 $57,996,877 $57,596,278 Plan fiduciary net position
Contributions - employer $5,980,461 $4,170,657 $3,168,930 $5,445,074 $5,482,594 $4,453,620 Contributions - employee - - - - -
Net investment income 557,870 604,302 799,047 653,960 2,914,658 (2,477,143) Administrative expense (4,247) (18,096) (2,447) (6,040) (5,425) (4,993) Benefit payments (2,980,461) (3,170,657) (3,168,930) (3,445,074) (3,482,594) (3,453,620) Net change in plan fiduciary net position 3,553,623 1,586,206 796,600 2,647,920 4,909,233 (1,482,136) Plan fiduciary net position - beginning 6,230,721 9,784,344 11,370,550 12,167,150 14,815,070 19,724,303 Plan fiduciary net position - ending (b) $9,784,344 $11,370,550 $12,167,150 $14,815,070 $19,724,303 $18,242,167 Net OPEB liability - ending (a)-(b) $47,370,810 $47,696,555 $44,111,626 $42,110,026 $38,272,574 $39,354,111 Plan fiduciary net position as a percentage of the total OPEB liability 17.12% 19.25% 21.62% 26.03% 34.01% 31.67% Covered-employee payroll $50,082,473 $49,471,054 $50,975,693 $51,740,099 $54,458,885 $63,519,016 Net OPEB liability as a percentage of covered-employee payroll 94.59% 96.41% 86.53% 81.39% 70.28% 61.96% * Fiscal year 2018 was the first year of implementation.

City of Daly City, Agent Multiple-Employer Defined Benefit OPEB Plan As of fiscal year ending June 30, 2023
Last 10 Years*

SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS 93

Fiscal Year Ended June 30, 2023 2022 2021 2020 2019 2018 Actuarially determined contributions $4,441,000 $5,021,000 $4,873,000 $5,264,000 $5,109,000 $4,185,306 Contractually required contributions (a)
Contributions in relation to the
contractually required or actuarially
determined contributions (4,407,335) (4,453,620) (5,482,594) (5,445,074) (3,168,930) (4,185,306) Contribution deficiency (excess) $33,665 $567,380 ($609,594) ($181,074) $1,940,070 $0 Covered-employee payroll $63,958,980 $63,519,016 $54,458,885 $51,740,099 $50,975,693 $49,471,054 Contributions as a percentage of
covered-employee payroll 6.89% 7.01% 10.07% 10.52% 6.22% 6.22% * Fiscal year 2018 was the first year of implementation. (a) The City did not obtain an actuarially determined contribution calculation in fiscal year 2018, therefore the contractually required contributions were reported.

City of Daly City, Agent Multiple-Employer Defined Benefit OPEB Plan As of fiscal year ending June 30, 2023
Last 10 Years*

SCHEDULE OF CONTRIBUTIONS
94

GENERAL FUND
The General Fund is the general operating fund of the City. It is used to account for all financial resources traditionally associated with governments which are not required to be accounted for in a separate fund. It comprises of the following activities: General, Special Deposits, and Traffic Enforcement.
95

CITY OF DALY CITY

GENERAL FUND

COMBINING FUND BALANCE SHEET
JUNE 30, 2023
Special Traffic Total
General Deposits Enforcement General Fund
ASSETS
Cash and investments $65,122,676 $12,264,547 $681,785 $78,069,008 Restricted cash and investments 4,477,007 4,477,007
Accounts receivable, net 8,304,025 130,277 2,222 8,436,524 Due from other funds 360,842 360,842
Prepaids 252,055 252,055
Inventories 16,554 16,554
Loan receivable
Loan receivable from Successor Agency 10,907,153 10,907,153 Leases receivable 8,948,142 8,948,142
Total Assets $98,388,454 $12,394,824 $684,007 $111,467,285

LIABILITIES
Accounts payable $2,160,943 $5,359,866 $7,520,809
Accrued payroll 1,049,321 1,049,321
Deposits payable 6,585,211 6,585,211
Unearned revenue 9,398,182 9,398,182
Total Liabilities 12,608,446 11,945,077 24,553,523

DEFERRED INFLOWS OF RESOURCES
Related to leases 8,679,820 8,679,820

FUND BALANCES
Fund Balance
Nonspendable 11,451,441 11,451,441
Restricted 5,477,007 5,477,007
Assigned 754,432 754,432
Unassigned 59,417,308 449,747 $684,007 60,551,062
Total Fund Balances 77,100,188 449,747 684,007 78,233,942 Total Liabilities, and Fund Balances $98,388,454 $12,394,824 $684,007 $111,467,285 96

CITY OF DALY CITY

GENERAL FUND

COMBINING FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2023
Total
Special Traffic General
General Deposits Enforcements Funds

REVENUES
Property tax $48,895,101 $48,895,101
Sales tax 25,774,755 25,774,755
Utility users tax 6,934,379 6,934,379
Franchise fees 5,016,118 5,016,118
Other taxes 8,268,611 8,268,611
Licenses and permits 2,672,412 2,672,412
Fines and forfeitures 2,617,134 $11,608 2,628,742
Rents and interest 3,066,973 3,066,973
Federal programs and grants 6,263,152 6,263,152
Receipts from other agencies 1,099,328 1,099,328
Charges and fees 6,515,002 $14,785 6,529,787
Miscellaneous 1,650,664 3,807 1,654,471
Total Revenues 118,773,629 18,592 11,608 118,803,829

EXPENDITURES
Current:

General government 14,184,886 1,550 14,186,436
Public safety 70,309,622 70,309,622
Public works 6,222,955 6,222,955
Culture and recreation 14,868,172 3,150 14,871,322
Economic and community development 4,809,084 4,809,084
Debt service:

Principal 333,164 333,164
Interest 26,870 26,870
Total Expenditures 110,754,753 4,700 110,759,453

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 8,018,876 13,892 11,608 8,044,376

OTHER FINANCING SOURCES (USES)
Transfers in 3,484,848 3,484,848
Transfers (out) (3,340,398) (3,340,398)
Total Other Financing Sources (Uses) 144,450 144,450
NET CHANGES IN FUND BALANCES 8,163,326 13,892 11,608 8,188,826 BEGINNING FUND BALANCES 68,936,862 435,855 672,399 70,045,116 ENDING FUND BALANCES $77,100,188 $449,747 $684,007 $78,233,942 97

MAJOR GOVERNMENTAL FUNDS, OTHER THAN

GENERAL FUND AND SPECIAL REVENUE FUNDS
The Capital Projects Fund is used to account for financial resources to be used for the acquisition, construction or rehabilitation of major capital assets other than those financed by Proprietary Funds.
99

CITY OF DALY CITY

CAPITAL PROJECTS FUND

SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE

BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2023
Variance
Positive
Budget Actual (Negative)

REVENUES
Rents and interest $75,000 $555,266 $480,266
Federal programs and grants $6,671,010 239,807 (6,431,203) Receipts from other agencies 6,262,576 432,324 (5,830,252) Charges and fees 2,231,695 1,681,511 (550,184)
Miscellaneous 560,000 1,536,169 976,169
Total Revenues 15,800,281 4,445,077 (11,355,204)

EXPENDITURES
Capital projects 27,159,720 2,501,363 24,658,357
Total Expenditures 27,159,720 2,501,363 24,658,357

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (11,359,439) 1,943,714 13,303,153

OTHER FINANCING SOURCES (USES)
Transfers in 1,233,451 301,873 (931,578)
Transfers (out) (4,220,216) (360,579) 3,859,637
Total Other Financing Sources (Uses) (2,986,765) (58,706) 2,928,059 NET CHANGE IN FUND BALANCES ($14,346,204) 1,885,008 $16,231,212 BEGINNING FUND BALANCE 27,098,309
ENDING FUND BALANCE $28,983,317
100

NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS
Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than special assessments, expendable trusts, or major capital projects) that are legally restricted to expenditures for specified purposes or for which separate accounting is required by administrative action.

The City's Special Revenue Funds are as follows:
• Affordable Housing – to account for the activities of the Daly City Housing Development Finance Agency.
• Community Block Grant - to account for monies received by the City as a participant in the federal Community Development Block Grant (CDBG) program. • Linda Vista Benefit Assessment - to account for the charges and for the costs of maintenance of storm drains in the Linda Vista Subdivision.
• Traffic Safety – to account for grant funds and vehicle impound fees authorized by State law specifically to provide traffic safety programs.
• Low and Moderate Income Housing Assets – to account for the activities of the Housing Successor Agency to the Daly City Redevelopment Agency. 101

CITY OF DALY CITY

NONMAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEET
JUNE 30, 2023

SPECIAL REVENUE FUNDS
Total
Community Linda Vista Low and Moderate Nonmajor
Affordable Block Benefit Traffic Income Housing Governmental Housing Grant Assessment Safety Assets Funds
ASSETS
Cash and investments $5,183,077 $586,005 $112,635 $823,852 $6,705,569 Accounts receivable, net $533,125 533,125
Notes receivable 921,477 921,477
Property held for development 3,366,888 3,366,888
Total Assets $5,183,077 $1,454,602 $586,005 $112,635 $4,190,740 $11,527,059

LIABILITIES
Accounts payable $168,073 $168,073
Accrued payroll $664 4,210 $1,192 6,066
Due to other funds 360,842 360,842
Deposits payable 4,001 4,001
Total Liabilities 4,665 533,125 1,192 538,982

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - loans 921,477 921,477

FUND BALANCES
Restricted 5,178,412 $586,005 $112,635 4,189,548 10,066,600 Total Fund Balances 5,178,412 586,005 112,635 4,189,548 10,066,600 Total Liabilities, Deferred Inflows of
Resources and Fund Balances $5,183,077 $1,454,602 $586,005 $112,635 $4,190,740 $11,527,059 102

CITY OF DALY CITY

NONMAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2023

SPECIAL REVENUE FUNDS
Total
Community Linda Vista Low and Moderate Nonmajor
Affordable Block Benefit Traffic Income Housing Governmental Housing Grant Assessment Safety Assets Funds

REVENUES
Sales tax
Rents and interest $95,740 $10,466 $12,196 $118,402
Federal programs and grants 65,378 $1,794,755 562 1,860,695 Charges and fees 44,378 $33,360 77,738
Miscellaneous 3,450 171,627 175,077
Total Revenues 164,568 1,966,382 54,844 33,360 12,758 2,231,912

EXPENDITURES
Public safety 17,967 17,967
Public works 24,401 24,401
Economic and community development 87,912 1,543,262 131,945 1,763,119 Debt service:

Principal 418,000 418,000
Interest 5,121 5,121
Total Expenditures 87,912 1,966,383 24,401 17,967 131,945 2,228,608

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 76,656 (1) 30,443 15,393 (119,187) 3,304

OTHER FINANCING SOURCES (USES)
Transfers in 247,126 247,126
Total Other Financing Sources (Uses) 247,126 247,126
NET CHANGE IN FUND BALANCES 76,656 (1) 30,443 15,393 127,939 250,430 BEGINNING FUND BALANCES 5,101,756 1 555,562 97,242 4,061,609 9,816,170 ENDING FUND BALANCES $5,178,412 $586,005 $112,635 $4,189,548 $10,066,600 103

CITY OF DALY CITY

BUDGETED NONMAJOR GOVERNMENTAL FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2023

COMMUNITY BLOCK GRANT
Variance Variance
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)

REVENUES
Sales tax
Rents and interest $50,000 $95,740 $45,740
Federal programs and grants 1,307,350 65,378 (1,241,972) $2,342,937 $1,794,755 ($548,182) Receipts from other agencies
Charges and fees 3,473,085 (3,473,085)
Miscellaneous 3,450 3,450 140,595 171,627 31,032
Total Revenues 4,830,435 164,568 (4,665,867) 2,483,532 1,966,382 (517,150)

EXPENDITURES
Public Safety
Services and supplies
Capital outlay
Other charges
Total Public Safety
Public Works
Services and supplies
Capital outlay
Other charges
Total Public Works
Economic and Community Development
Salaries and benefits 54,576 53,548 1,028 547,896 298,196 249,700 Services and supplies 97,496 34,364 63,132 476,961 309,309 167,652 Other charges 5,441,983 5,441,983 791,302 586,347 204,955 Capital outlay 355,490 349,410 6,080
Debt Service:

Principal 418,000 418,000
Interest 5,121 5,121
Total Economic and Community Development 5,594,055 87,912 5,506,143 2,594,770 1,966,383 628,387 Total Expenditures 5,594,055 87,912 5,506,143 2,594,770 1,966,383 628,387

EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES (763,620) 76,656 840,276 (111,238) (1) 111,237

OTHER FINANCING SOURCES (USES)
Transfers in
Total Other Financing Sources (Uses)
NET CHANGE IN FUND BALANCES ($763,620) 76,656 $840,276 ($111,238) (1) $111,237 BEGINNING FUND BALANCES 5,101,756 1
ENDING FUND BALANCES $5,178,412

AFFORDABLE HOUSING
104

LINDA VISTA

BENEFIT ASSESSMENT TRAFFIC SAFETY
Variance Variance Variance
Positive Positive Positive
Budget Actual (Negative) Budget Actual (Negative) Budget Actual (Negative) $6,921 $10,466 $3,545 $5,000 $12,196 $7,196
562 562
44,381 44,378 (3) $7,080 $33,360 $26,280
100 (100) 16,000 (16,000)
51,302 54,844 3,542 7,180 33,360 26,180 21,000 12,758 (8,242) 28,556 12,927 15,629
1,146 1,146
5,450 5,040 410
35,152 17,967 17,185
22,866 22,696 170
4,000 1,204 2,796
500 501 (1)
27,366 24,401 2,965
100,181 100,750 (569)
630,304 31,195 599,109
730,485 131,945 598,540
27,366 24,401 2,965 35,152 17,967 17,185 730,485 131,945 598,540 23,936 30,443 6,507 (27,972) 15,393 43,365 (709,485) (119,187) 590,298 247,126 247,126
247,126 247,126
$23,936 30,443 $6,507 ($27,972) 15,393 $43,365 ($462,359) 127,939 $590,298 555,562 97,242 4,061,609
$586,005 $112,635 $4,189,548

INCOME HOUSING ASSETS

LOW AND MODERATE
105

INTERNAL SERVICE FUNDS
Internal Service Funds are used to finance and account for special activities and services performed by a designated department for other departments in the City on a cost reimbursement basis.

The concept of major funds does not extend to internal service funds because they do not do business with outside parties. For the Statement of Activities, the net revenues or expenses of each internal service fund are eliminated by netting them against the operations of the other City departments which generated them. The remaining balance sheet items are consolidated with these same funds in the Statement of Net Position. However, internal service funds are still presented separately in the Fund financial statements.

The City's Internal Service Funds are:
• Motor Vehicles - to account for the purchase and maintenance of all motor vehicles provided as a service to City departments.
• Central Services - to account for and allocate costs related to providing mail messenger services for City departments.
• PBX - to account for services provided for the operation and maintenance of the City's telephone system.
• Building Maintenance - to account for services provided for the maintenance of City facilities. • Information Services - to account for the distribution of computer hardware, software and operating costs to various City departments.
• Self-Insurance - to account for the costs of workers compensation, automotive, and general liability claims against the City.
• PERS Contributions - to account for the long-term debt, prepaid PERS contributions and repayments from benefiting City funds and departments resulting from the City’s PERS Obligation Bond issue.
• Pension UAL - to account for funding set-aside towards the City’s pension unfunded actuarial liability.
107

CITY OF DALY CITY

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF NET POSITION
JUNE 30, 2023
Motor Central Building
Vehicles Services PBX Maintenance
ASSETS
Current Assets:

Cash and investments $7,027,446 $350,801 $435,458 $3,470,974 Cash with fiscal agent
Accounts receivable, net 31,657
Inventories 134,959 59,826
Prepaids 1,830,457
Total Current Assets 9,024,519 350,801 435,458 3,530,800 Capital Assets:

Land
Buildings 35,817
Equipment 20,654,925 1,025,840 132,467
Furniture and fixtures 16,490
Subscription assets
Construction in progress
Total Capital Assets 20,690,742 1,025,840 148,957
Less Accumulated Depreciation (12,386,195) (966,145) (89,937) Net Capital Assets 8,304,547 59,695 59,020
Total Assets 17,329,066 350,801 495,153 3,589,820

DEFERRED OUTFLOWS OF RESOURCES
Related to OPEB 113,144 33,278 252,910

LIABILITIES
Current Liabilities:

Accounts payable 163,010 5,627 5,210 65,795
Accrued payroll 13,685 2,397 39,486
Interest payable 56,792
Accrued claims payable
Leases payable 421,769
Subscription liability
PERS obligation bonds
Total Current Liabilities 655,256 8,024 5,210 105,281
Long-Term Liabilities:

Compensated absences 379,531 626,777
Accrued claims payable
Net OPEB Liability 689,001 202,647 1,540,120
Leases payable 2,495,543
Subscription liability
Total Long-Term Liabilities 3,564,075 202,647 2,166,897 Total Liabilities 4,219,331 210,671 5,210 2,272,178

DEFERRED INFLOWS OF RESOURCES
Related to OPEB 63,020 18,535 140,869

NET POSITION
Net investment in capital assets 7,217,692 59,695 59,020 Restricted for debt service
Unrestricted 5,942,167 154,873 430,248 1,370,663
Total Net Position (Deficit) $13,159,859 $154,873 $489,943 $1,429,683 108

Information Self- PERS Pension
Services Insurance Contributions UAL Total
$5,294,006 $19,768,276 $9,451,116 $2,000,000 $47,798,077 118,160 118,160
150 75,688 107,495
194,785
1,830,457
5,294,156 19,843,964 9,569,276 2,000,000 50,048,974
378,343 378,343
35,817
4,425,616 26,238,848
46,614 63,104
2,419,811 2,419,811
179,992 179,992
7,072,033 378,343 29,315,915
(4,883,231) (18,325,508)
2,188,802 378,343 10,990,407
7,482,958 20,222,307 9,569,276 2,000,000 61,039,381
73,221 6,656 479,209
48,120 112,638 254,725 655,125
20,157 5,664 81,389
21,250 78,042
2,622,041 2,622,041
421,769
489,837 489,837
4,325,000 4,325,000
558,114 2,740,343 4,600,975 8,673,203
246,656 258,207 1,511,171
7,450,959 7,450,959
445,824 40,529 2,918,121
2,495,543
1,450,871 1,450,871
2,143,351 7,749,695 15,826,665
2,701,465 10,490,038 4,600,975 24,499,868
40,778 3,707 266,909
248,094 378,343 7,962,844
118,160 118,160
4,565,842 9,356,875 4,850,141 2,000,000 28,670,809
$4,813,936 $9,735,218 $4,968,301 $2,000,000 $36,751,813 109

CITY OF DALY CITY

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF REVENUES, EXPENSES AND

CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2023
Motor Central Building
Vehicles Services PBX Maintenance

OPERATING REVENUES
Charges to City departments $6,680,141 $265,797 $301,556 $5,904,856 Other revenues 305,226 4,921
Total Operating Revenues 6,985,367 265,797 301,556 5,909,777

OPERATING EXPENSES
Salaries and benefits 1,448,865 110,535 3,599,243
Services and supplies 1,918,574 126,176 61,985 1,539,156 Utilities 21,439 365 153,559 283,786
Insurance 866,748 328 10,423
Claims and settlements
Depreciation 1,125,105 31,146 7,073
Other charges 6,543 4,867 5,366
Total Operating Expenses 5,387,274 242,271 246,690 5,445,047 Operating Income (Loss) 1,598,093 23,526 54,866 464,730

NONOPERATING REVENUES (EXPENSES)
Intergovernmental 4,344 408 187,559
Interest income 138,902 6,451 6,992 62,521
Gain on sale of capital assets 59,771
Loss on sale of capital assets
Interest expense (72,898)
Total Nonoperating Revenues (Expenses) 130,119 6,859 6,992 250,080 Income (Loss) Before Transfers 1,728,212 30,385 61,858 714,810 Transfers in 24,955 2,445
Transfers out (475,769) (14,445) (6,711) (361,605)
Net Transfers (475,769) 10,510 (6,711) (359,160)
Change in Net Position 1,252,443 40,895 55,147 355,650
BEGINNING NET POSITION (DEFICITS) 11,907,416 113,978 434,796 1,074,033 ENDING NET POSITION (DEFICITS) $13,159,859 $154,873 $489,943 $1,429,683 110

Information Self- PERS Pension
Services Insurance Contributions UAL Total
$3,579,679 $8,978,475 $4,901,354 $30,611,858
14,831 476,379 801,357
3,594,510 9,454,854 4,901,354 31,413,215
1,745,502 699,033 7,603,178
646,509 434,757 6,158 4,733,315
79,073 1,063 539,285
413 3,350,552 4,228,464
2,336,204 2,336,204
1,273,518 2,436,842
158,153 9,650 184,579
3,903,168 6,831,259 6,158 22,061,867
(308,658) 2,623,595 4,895,196 9,351,348
5,234 10,195 207,740
92,421 309,017 116,713 733,017
59,771
(265,122) (265,122)
(11,111) (467,135) (551,144)
(178,578) 319,212 (350,422) 184,262
(487,236) 2,942,807 4,544,774 9,535,610
76,276 $2,000,000 2,103,676
(192,788) (105,275) (1,000,000) (2,156,593)
(116,512) (105,275) (1,000,000) 2,000,000 (52,917)
(603,748) 2,837,532 3,544,774 2,000,000 9,482,693
5,417,684 6,897,686 1,423,527 27,269,120
$4,813,936 $9,735,218 $4,968,301 $2,000,000 $36,751,813 111

CITY OF DALY CITY

INTERNAL SERVICE FUNDS

COMBINING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2023
Motor Central Building
Vehicles Services PBX Maintenance

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $6,977,144 $265,797 $301,556 $5,909,847 Payments to suppliers (4,711,560) (131,822) (215,690) (1,930,022) Payments to employees (1,280,843) (120,533) (3,475,350) Claims paid
Cash Flows from (used for) Operating Activities 984,741 13,442 85,866 504,475

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Principal paid on noncapital debt
Interest paid on noncapital debt
Intergovernmental 4,344 408 187,559
Interfund receipts 24,955 2,445
Interfund payments (475,769) (14,445) (6,711) (361,605) Cash Flows from (used for) Noncapital
Financing Activities (471,425) 10,918 (6,711) (171,601)

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Acquisition of capital assets (2,420,949)
Proceeds from sale of capital assets 59,771
Issuance of lease 1,830,457
Principal paid on subscription liabilities
Interest paid on subscription liabilities
Principal paid on capital debt (200,711)
Interest paid on capital debt (34,377)
Cash Flows from (used for) Capital and Related
Financing Activities (765,809)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest income (expense) 138,902 6,451 6,992 62,521
Net Cash Flows (113,591) 30,811 86,147 395,395
Cash and investments at beginning of period 7,141,037 319,990 349,311 3,075,579 Cash and investments at end of period $7,027,446 $350,801 $435,458 $3,470,974 Reconciliation of operating income (loss) to net cash flows from operating activities:

Operating income (loss) $1,598,093 $23,526 $54,866 $464,730 Adjustments to reconcile operating income (loss) to net cash flows from operating activities:

Depreciation 1,125,105 31,146 7,073
Change in assets and liabilities:

Receivables, net (8,223) 70
Inventories (5,844) 4,700
Prepaids (1,830,457)
Accounts payable (61,955) (86) (146) (95,991)
Accrued claims payable
Accrued payroll 5,556 178 3,409
Compensated absences 197,063 197,815
OPEB related items (34,597) (10,176) (77,331)
Cash Flows from (used for) Operating Activities $984,741 $13,442 $85,866 $504,475

NONCASH TRANSACTIONS
Subscription assets
Subscription liabilities
Retirement of capital assets
112