Fountain Valley City Council
March 18, 2025

7  Oppose legislation which would reduce local discretion over locally-imposed taxes such as transient occupancy tax.
 Oppose legislation that removes or limits the municipal bond tax exemption.  Oppose any legislation that diminishes or does not assure local franchise fees for all utilities’ and communication carriers’ use of City right‐of‐way.  Oppose efforts by the state legislature to assess taxes on public goods and services such as water and electricity.
 Oppose legislation that would lower the vote threshold as a method to impose new taxes or create new financing opportunities.
 Oppose any attempt or measures that seek to weaken or reverse Proposition 13 or other Constitutional provisions that strengthen taxpayer protections, or whose purpose is to raise tax revenues at the expense of the residential or business community.
 Oppose measures that would impose State and Federal mandated costs for which there is no guarantee of local reimbursement or offsetting benefits (i.e. unfunded mandates).
 Oppose any measure that restricts or limits a public entity’s ability to use taxexempt debt or tax increment financing for the purchase or construction of public purpose improvements.
 Oppose any measure that would divert local funds to the State, or any other entity, to balance its budget.
 Oppose any change in tax allocations, which would negatively affect local government.
 Oppose legislation which would reduce local discretion over locally-imposed taxes such as transient occupancy tax.

Transportation, Utilities and Public Works
 Support legislation that provides for a more equitable distribution of federal and state highway funds that consider population growth as well as location of sales and gas tax generation.
 Support legislation that provides funding and resources for retrofitting municipal infrastructure to increase energy efficiency.
 Support legislation that would lift the minimum requirement of payment of prevailing wages on municipal Public Works projects.
 Support measures that provide local and regional funding opportunities for local transportation and system projects.
 Support legislation that encourages the use of design-build methods to facilitate a faster, stream-lined approach to project delivery.
 Support legislation such that funding for stormwater and water quality programs would be treated similarly to water, sewer, and solid waste under Proposition 218.
 Support efforts that encourage energy and water conservation techniques.  Support measures which provide greater local control in meeting the environmental needs of the community, i.e. recycling/reclaiming of natural resources and energy efficiency measures.

8  Support legislation amending the State Code of Regulations to allow greater flexibility in land use and signage along state highways. 
 Oppose measures that attempt to raise federal and/or state revenues for transportation funding through new or increased taxes or fees (i.e. vehicle milestraveled tax/fee).  Oppose legislation that imposes undue hardship on local agencies to implement environmental regulations.
 Oppose new formula splits that reduce local share of transportation funding.
 Oppose a double taxation system (i.e., paying tax at the pump and a vehicle miles traveled tax).
 Support policies that provide funding and greater flexibility when complying with state environmental and transportation regulations.  Support policies that expand the eligibility of exemptions, extensions, and delays when complying with state environmental and transportation regulations.
 Support policies that restore local control, oversight, and due process when complying with state regulations.

Federal Legislation
 Support efforts to reinstate funding for Safe Routes to Schools programs.  Support streamlined environmental processing for federal regulatory permits.  Support continued funding for the Energy Efficiency Block Grant Program in order to provide resources directly to local governments for programs that improve energy efficiency.
 Support collecting and remitting state and local sales taxes to the state and city in which the purchaser is residing (i.e. purchases made over the Internet; by mail order; by catalog, etc.).
 Support legislation to modify the Federal Fair Labor Standards Act (FLSA) as it relates to regulating public sector employment.
 Support legislation that provides tangible and productive tools and incentives to support job creation and retention.
 Support legislation and grant opportunities that preserve or increase funding for Community Development Block Grant (CDBG), HOME, and Section 8 Housing.  Support legislation to hold the State of California and state agencies to the same transparency and accountability standards as cities.
 Support Federal legislation, which would require states to distribute Federal pass-through funds in an equitable manner to local subdivisions of the State.

9  Support legislation that would redistribute State and Federal revenues to better meet local government responsibilities.
 Support any measure that would provide greater local control over how local funds are expended.
 Support legislation that would reform or increase transparency and accountability into the legislative appropriation process.
 Support measures that provide relief to businesses and the City due to impacts of COVID-19.

1 CITY OF FOUNTAIN VALLEY
2025 LEGISLATIVE PLATFORM
Administrative and Employment Related
 Support legislation modifying the Fair Labor Standards Act to permit adjustable work schedules to meet the needs of management and labor and to eliminate prospective and retroactive overtime payments.
 Support legislation that strengthens or reinforces management rights to include contracting and contract negotiations.
 Support legislation that reduces the City’s liability exposure.  Support legislation promoting alternative technology options when posting and noticing of public hearings and meetings, including online posting, at no cost to the City
 Support legislation that advocates fair and proportionate representation on countywide and regional boards.
 Support legislation to continue the PEPRA system or similar measure.  Support legislation that would define the term “limited duration” when hiring for “extra help” positions.
 Oppose legislation which would increase employee benefits without system reforms which would offset increased employer costs.
 Oppose legislation which would increase employer liability for unemployment compensation, or which would reduce local discretion to manage this risk.  Oppose the imposition of unfunded or inadequately funded state mandates.  Oppose any measure that would divert local funds to the State, or any other entity, to balance its budget.

Recreation & Community Services
 Support legislation that provides funding for transportation services especially for senior citizens, local job-training programs especially for youth and young adults.
 Support legislation that promotes health & wellness for children and seniors, when financially feasible.
 Support measures that promote volunteerism.
 Support legislation and funding for the construction, rehabilitation and maintenance of public facilities, parks and open space at the local, State and Federal levels.
 Support Federal and State legislation and other opportunities that promote health and wellness services and education offered to youth, veterans, low income and senior communities.
 Support Federal and State funding opportunities that promote our ability to provide public access to technology at community facilities.

2  Support legislation that provides funding for, or otherwise promotes programs to address and increase the level of physical activity among our community’s children.
 Support legislation to provide flexibility to use Parking-in-lieu fees for other infrastructure projects.
 Support efforts to provide an expedited process for the fair distribution of State bond funds and other grant opportunities.
 Oppose efforts that erode funding for vital regional and community services that negatively impact California’s access to parks, open space, bike lanes, after school programming, senior services, facilities that promote physical activity, protect natural resources and strengthen safety and security.  Oppose legislation limiting Fountain Valley’s ability to address homeless issues.  Oppose all efforts of social service and program realignment where funding has not been fully appropriated.

Environment
 Support measure which increase the water supply or improve water quality within the region.
 Support efforts that encourage the use of energy and water conservation techniques, as long as those measures do not contain unnecessary punitive measures to residents, business owners and local agencies.  Support legislation that would protect consumers and small business owners and end excessive energy and water charges.
 Support Federal and State programs and legislation that encourage the use of commercially viable, new clean energy technology, if such clean technology has proven to be cost efficient.
 Support measures that provide greater local control in meeting the environmental needs of the community (i.e. recycling/reclaiming of natural resources and energy efficiency measures).
 Support efforts designed to reduce or eliminate the spread of graffiti.  Support measures that maintain and enhance local authority and economic flexibility to regulate solid waste and recycles.
 Support efforts to streamline and improve the California Environmental Quality Act (CEQA) process.
 Support legislation or grant opportunities for local governments that provide funding for development or enhancing alternative fueling stations for vehicles and energy efficiency upgrades to City facilities.
 Oppose legislation that imposes undue hardship on local agencies to implement environmental/air quality regulations.
 Oppose imposition of unreasonable and/or unfunded water testing and treatment requirements.

3 Housing, Land Use Planning,Community Development and Economic Development
 Support legislation that strengthens the concept of local control with regulatory tools to ensure the City can maintain its quality of life.  Support legislation that supports local businesses and industry, including measures that remove barriers allowing local industries to sell goods and services internationally (i.e., free trade agreements).  Support legislation and funding for the adoption of effective state building codes to promote community building safety and mitigation of natural hazards.  Support legislation that would increase available funding for affordable housing, especially funding for each community to meet the affordability requirement of the RHNA allocation within the eight-year housing element cycle and the express recognition that, absent funding, that the affordable RHNA allocations may be unattainable.
 Support Federal and State financial support for affordable housing for lowincome elderly and disabled individuals.  Support legislation that would provide additional resources, including adequate funding, to local agencies to address regional growth issues such as air quality, water quality, air pollution, ocean water quality, transportation corridors, and homelessness.
 Support efforts that restrict the legal and fiscal capability of local agencies to prepare, adopt and implement fiscal plans for orderly growth, development, beautification and conservation of local planning areas, including, but not limited to, the regulatory authority over zoning, subdivisions, annexations, and redevelopment areas.
 Support state and federal legislation that allows reasonable state and local government oversight of group/sober living home including licensing, location, and occupancy limits similar to state licensing requirements for Community Care Facilities.
 Support legislation allowing greater use of Housing Authority funds to construct and operate navigation centers.
 Support efforts that are designed to provide local governments with the tools necessary to bolster economic development.
 Support legislation and regulatory streamlining initiatives that would enhance the City’s ability to attract and retain businesses as well as encourage business expansion and job retention.
 Support legislation that supports and protects business owners.  Oppose any legislation that is inconsistent with the doctrine of home rule, interferes with local exercise of police powers over local land use, or requires a federal, state, and/or county entity to develop model planning practices and policies.
 Oppose legislation that preempts local government’s ability to regulate and exercise its enforcement powers.

4  Oppose additional housing mandates without necessary funding or legislation that penalizes a city if units identified in the Regional Housing Need Assessment (RHNA) are not constructed.
 Oppose any legislation mandate that supersedes local development standards or denies local governments the ability to enforce its development standards.  Oppose legislation that mandates increases in density or reduction in parking standards in residential zones.
 Oppose legislation to decrease Federal Community Block Grant funding.  Oppose legislation that would require local governments to compensate property owners for the effects of zoning and ordinary local land use control.

Oppose legislation requiring local governments to allow residential uses in nonresidential zones.  Support Legislation that would authorize a local government to count congregate housing for the elderly toward the locality’s share of the regional housing needs allocation (RHNA).

Public Safety
 Support legislation and funding to strengthen and enforce legal protections for all individuals who are victims of human trafficking and crime, including minors and victims of family violence and sexual assault.
 Support legislative efforts to address the negative impacts of AB 109 (Public Safety Realignment), Proposition 47 (Reduced Penalties for Some Crimes) and Proposition 57 (Parole for Non-Violent Criminals) on local governments and provide local law enforcement with the appropriate tools to reduce criminal activity.
 Support legislation that provides funding support for disaster preparedness, earthquake preparedness, fire suppression and prevention, hazardous materials mitigation, rescue, emergency medical services, Homeland Security, State COPS program, booking fee reimbursement and other local law enforcement activities.
 Support legislation that provides local law enforcement agencies authority to recover any costs associated with complying with any federal, state or court‐ordered licensing, registration and testing requirements.  Support legislation to provide a greater share of and increased latitude to spend asset forfeiture funds.
 Support legislation and funding that promotes comprehensive and effective drug and alcohol education and rehabilitation programs.
 Support efforts to address the illicit use of opioids and hold accountable those who illegally sell and distribute them.
 Support legislative efforts and additional funding to help address the issue of homelessness.
 Support legislation that prohibits drones from interfering with a firefighting operation or other public safety response.
 Support legislation that enhances the 9-1-1 system integration with technology to trace cell phone callers and their location.

5  Support legislation that would provide local jurisdictions with increased authority to regulate the sale of automobiles on public streets.
 Support legislation that establishes greater City Council latitude in setting speed limits.
 Support legislation to vigorously oppose the early release of prisoners, except in cases of extreme health conditions (COVID).
 Support legislation that limits the issuance of alcoholic beverage licenses in areas of high crime or where excessive numbers of licenses exist.  Support legislative efforts to increase the amount of grant funding for local law enforcement operations, including school resource officers, body-worn camera system, and disaster preparedness initiatives.
 Support efforts which strengthen local fire and life safety services, including providing for greater local control over emergency medical and ambulance services to ensure the residents of Fountain Valley receive the highest possible level of emergency care.
 Support legislation that requires maintenance of defensible space in wildfireprone areas.  Support regional efforts to improve interoperability of voice and data communications equipment.
 Support legislation that would provide local jurisdictions with increased authority regulate the sale of automobiles on public streets.
 Support legislation that provides funding for terrorism response training, with broad interpretations of training curriculums.
 Support legislation that would provide increased funding to public safety agencies to enhance training to address community needs such as mental health and homelessness.
 Support legislation that offers drug offenders a chance to avoid a criminal conviction by entering a treatment program that is supervised by a special court, also known as a drug court. Drug court was essentially eliminated with proposition 47 and its elimination has led to more addicted individuals on our streets.
 Support legislation that recognizes mental health treatment non-compliance and addresses the state, county and/or city’s inability to detain and assist those individuals that are refusing to take prescribed medication for a mental health disorder.
 Support legislation that addresses the ongoing impact of wall times (Ambulance Patient Offload Delays) on patient care throughout California.  Support legislation and implementation of State program and policies that promote pedestrian and bicycling safety.
 Support legislation that provides more support to those struggling with substance and opioid abuse.
 Support legislation to prevent the flow of fentanyl into the City, including legislation regarding treatment for addiction and criminal penalties and prosecution for the sale of fentanyl.

6  Support ongoing funding to bolster local efforts to support individuals experiencing or at risk of homelessness as well as strengthen state and local partnerships to improve access to wraparound services.
 Oppose legislation to create new financial burdens or erode public safety such as offenders who are now being supervised in the community by county probation departments rather than the California of Corrections and Rehabilitation parole officers.
 Oppose legislation that would impede local law enforcement from addressing crime problems and recovering costs resulting from a crime committed by the guilty party.
 Oppose legislation that would decrease funding for the Assistance to Firefighters Grant Program within the Department of Homeland Security.  Oppose legislation, which would eliminate abandoned vehicle programs and a local government’s ability to immediately remove abandoned vehicles.  Oppose legislation that would decrease funding to the various Community Oriented Policing Services (COPS) programs.
 Oppose legislation, which would eliminate abandoned vehicle programs and a local government’s ability to immediately remove abandoned vehicles.  Oppose legislation that would allow public access to unencrypted, or sensitive law enforcement information over law enforcement communication systems. (Senate Bill 1000 was defeated in 2022 and will be resubmitted in 2023) Revenue and Taxation
 Support legislation that leads to greater financial independence from federal, state and/or county government, and protects local resources from seizure by federal, state and/or county agencies.
 Supports any measure that would provide greater local control over how local funds are expended.
 Support legislation and funding that preserves and enhances a positive business climate and maintains and grows the business tax base.
 Support legislation that would support new financing tools and programs that would encourage local economic development through tax increment financing.  Support efforts which make funds to support public facilities more available to local municipalities including, but not limited to libraries and open space.  Support legislation to stabilize State and local government financing, to increase funding to local agencies in an equitable manner, and to permit the most costefficient management of State-mandated programs.  Support Federal legislation which would require states to distribute Federal passthrough funds in an equitable manner to local subdivisions of the State.  Support legislation that would redistribute State and Federal revenues to better meet local government responsibilities.
 Support legislation that sources the sales tax generated from online sources to the City they are delivered to as opposed to the current County pool system.

7  Oppose legislative and administrative efforts by online travel companies to circumvent remittance of transient occupancy taxes to local governments from hotel reservations purchased using the internet.
 Oppose legislation which would reduce local discretion over locally-imposed taxes such as transient occupancy tax.
 Oppose legislation that removes or limits the municipal bond tax exemption.  Oppose any legislation that diminishes or does not assure local franchise fees for all utilities’ and communication carriers’ use of City right‐of‐way.  Oppose efforts by the state legislature to assess taxes on public goods and services such as water and electricity.
 Oppose legislation that would lower the vote threshold as a method to impose new taxes or create new financing opportunities.
 Oppose any attempt or measures that seek to weaken or reverse Proposition 13 or other Constitutional provisions that strengthen taxpayer protections, or whose purpose is to raise tax revenues at the expense of the residential or business community.
 Oppose measures that would impose State and Federal mandated costs for which there is no guarantee of local reimbursement or offsetting benefits (i.e. unfunded mandates).
 Oppose any measure that restricts or limits a public entity’s ability to use taxexempt debt or tax increment financing for the purchase or construction of public purpose improvements.
 Oppose any measure that would divert local funds to the State, or any other entity, to balance its budget.
 Oppose any change in tax allocations, which would negatively affect local government.
 Oppose legislation which would reduce local discretion over locally-imposed taxes such as transient occupancy tax.

Transportation, Utilities and Public Works
 Support legislation that provides for a more equitable distribution of federal and state highway funds that consider population growth as well as location of sales and gas tax generation.
 Support legislation that provides funding and resources for retrofitting municipal infrastructure to increase energy efficiency.
 Support legislation that would lift the minimum requirement of payment of prevailing wages on municipal Public Works projects.
 Support measures that provide local and regional funding opportunities for local transportation and system projects.
 Support legislation that encourages the use of design-build methods to facilitate a faster, stream-lined approach to project delivery.
 Support legislation such that funding for stormwater and water quality programs would be treated similarly to water, sewer, and solid waste under Proposition 218.

8  Support efforts that encourage energy and water conservation techniques.  Support measures which provide greater local control in meeting the environmental needs of the community, i.e. recycling/reclaiming of natural resources and energy efficiency measures.
 Support legislation amending the State Code of Regulations to allow greater flexibility in land use and signage along state highways.  Oppose measures that attempt to raise federal and/or state revenues for transportation funding through new or increased taxes or fees (i.e. vehicle milestraveled tax/fee).  Oppose legislation that imposes undue hardship on local agencies to implement environmental regulations.
 Oppose new formula splits that reduce local share of transportation funding.  Oppose a double taxation system (i.e., paying tax at the pump and a vehicle miles traveled tax).Support policies that provide funding and greater flexibility when complying with state environmental and transportation regulations.  Support policies that expand the eligibility of exemptions, extensions, and delays when complying with state environmental and transportation regulations.  Support policies that restore local control, oversight, and due process when complying with state regulations.

Federal Legislation
 Support efforts to reinstate funding for Safe Routes to Schools programs.  Support streamlined environmental processing for federal regulatory permits.  Support continued funding for the Energy Efficiency Block Grant Program in order to provide resources directly to local governments for programs that improve energy efficiency.
 Support collecting and remitting state and local sales taxes to the state and city in which the purchaser is residing (i.e. purchases made over the Internet; by mail order; by catalog, etc.).
 Support legislation to modify the Federal Fair Labor Standards Act (FLSA) as it relates to regulating public sector employment.
 Support legislation that provides tangible and productive tools and incentives to support job creation and retention.
 Support legislation and grant opportunities that preserve or increase funding for Community Development Block Grant (CDBG), HOME, and Section 8 Housing.  Support legislation to hold the State of California and state agencies to the same transparency and accountability standards as cities.
 Support Federal legislation, which would require states to distribute Federal pass-through funds in an equitable manner to local subdivisions of the State.  Support legislation that would redistribute State and Federal revenues to better meet local government responsibilities.
 Support any measure that would provide greater local control over how local funds are expended.

9  Support legislation that would reform or increase transparency and accountability into the legislative appropriation process.
 Support measures that provide relief to businesses and the City due to impacts of COVID-19.

CITY OF FOUNTAIN VALLEY

CITY COUNCIL

COUNCIL ACTION REQUEST
To: Honorable Mayor and Agenda Date: March 18, 2025
Members of the City Council
SUBJECT: Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2024 Three-Year Strategic Goals
☐ Enhance the culture and environment of “A Nice Place to Live.” ☒ Achieve fiscal stability by evaluating processes, and attract and retain revenue producing businesses/opportunities
☐ Attract and retain quality staff through best practices and trends ☐ Maintain, build, and modernize infrastructure to support growth and future needs of the City ☐ Not applicable
EXECUTIVE SUMMARY:

Each year an independent audit of the City is conducted in conformity with generally accepted auditing standards (GAAS). Those standards require that an Independent Certified Public Accountant plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

The City exceeds the requirements of generally accepted accounting principles through its publication of an Annual Comprehensive Financial Report (ACFR), which includes financial statements, supporting schedules, statistical tables, and narrative explanations. These components ensure a thorough presentation of fiscal data crucial to stakeholders such as the City Council, investors, creditors, taxpayers, and others. The intent is to establish a clear, comprehensive reporting format that is likely to be free of ambiguities and potential misinterpretations. This document demonstrates the City's commitment to the highest levels of financial reporting standards by adhering to the criteria set forth by the Governmental Accounting Standards Board (GASB).

GASB is widely acknowledged as the authoritative institution responsible for promulgating standards in financial accounting and reporting pertaining to the activities and transactions of State and Local Governments.

FY 2023-24 ACFR
March 18, 2025

DISCUSSION:

The City’s independent auditor, Rogers, Anderson, Malody & Scott LLP, has concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City of Fountain Valley’s financial statements for the fiscal year ended June 30, 2024, are fairly presented in conformity with generally accepted accounting principles.

Highlights of the FY 2023-24 ACFR include the following:
 The City’s total net position – the difference between its assets and deferred outflows compared to its liabilities and deferred inflows of resources – was $203.9 million, an increase of $22.6 million, or 12.5%, compared to last fiscal year.  The net position of governmental activities increased by $18.4 million, or 14.2%, while the net position of business-type activities increased by $4.2 million, or 8.0%.  Total city-wide revenues for fiscal year 2024 were $117.1 million, a slight increase of $8.6 million, or 7.9%, compared to the prior fiscal year.
 Total city-wide expenditures for fiscal year 2024 were $95.6 million, an increase of $15.0 million, or 18.6% compared to the prior fiscal year.

Governmental Funds
The City’s governmental funds reported a combined ending fund balance of $107.4 million, a decrease of $5.5 million from the prior year balance.

The General Fund’s total fund balance was $80.1 million, a decrease of $8.6 million, or 9.7% from the 2023 fiscal year. The net decrease is primarily attributed to an adjustment in the reporting entity related to the City’s internal service funds. The City previously reported various funds that acted in an internal service capacity, combined with the General Fund. In order to report these activities in accordance with generally accepted accounting principles and GASB Statement 100, these funds have been extracted from the General Fund and separately reported as internal service funds, which qualifies as a change in reporting entity. The respective fund balance and net position for these funds have been restated as of July 1, 2023. This adjustment decreased the General Fund balance by approximately $14.6 million. The decrease from the adjustment was offset by a surplus realized in the General Fund in fiscal year 2024 of $6.0 million.

General Fund Reserves
The FY 2023/24 ACFR includes the fund balance reserve reporting methodology set forth in GASB Statement No. 54. It is a long-term goal to of the City to build unrestricted reserve funds to provide flexibility, respond to emergencies, fund new projects and replace and maintain facilities, capital equipment and assets. The schedule on the next page shows balances for key operating reserves.

FY 2023-24 ACFR
March 18, 2025

City of Fountain Valley
General Fund Reserves
2024 2023 Change
General Fund
Nonspendable
Prepaid Items $ 128,646.00 $ 267,824.00 $ (139,178)
Inventories - 12,590.00 (12,590.00)
Advances to other funds - 935,810.00 (935,810.00)
Restricted for
Transportation 2,238,242.00 2,238,242.00 -
Pension 17,367,544.00 15,799,650.00 1,567,894.00
Community development - 3,603.00 (3,603.00)
Capital projects - 184,350.00 (184,350.00)
Other purposes - 286,845.00 (286,845.00)
Committed
Emergencies 18,426,000.00 18,426,000.00 -
Assigned to
Employee benefits 2,422,711.00 2,422,710.00 1.00
Capital projects 7,634,238.00 9,950,427.00 (2,316,189.00) Economic development - 1,956,806.00 (1,956,806.00)
Measure HH 21,391,034.00 20,904,064.00 486,970.00
Contingency reserves 500,000.00 500,000.00 -
Unassigned Reserve 9,996,557.00 219,359.00 9,777,198.00 80,104,972 74,108,280 5,996,692
Fiscal Year Ended June 30,
Total General Fund Balances
Proprietary Funds
The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.

Business-type activity funds: there are three (3) funds in this group: Water Utility, Sewer, and Solid Waste.
 Total net position for the Water Utility Fund increased by $3.3 million, to $38.7 million as of June 30, 2024. Of this total, $21.6 million was unrestricted.  Total net position for the Sewer Fund increased by $900 thousand, to $16.3 million as of June 30, 2024. Of this total, $8.8 million was unrestricted.  Total net position for the Solid Waste Fund increased by $100 thousand, to $1.3 million as of June 30,2024. The entire amount was unrestricted.

Water and Sewer rates have remained unchanged since July 2022, which was the final year for the Council approved five-year implementation that began July 1, 2018. Water revenues increased by

2.5% due to higher consumption and sewer revenues decreased by 1.5% compared to the prior year. Solid Waste rates were raised in January 2024 which resulted in an 8.6% increase in revenues that were offset by a 9.7% increase in expenses.

Internal service funds: There are five (5) funds in this group: IT fund, Equipment Replacement, Building Maintenance, Vehicle Replacement, and Self Insurance.

FY 2023-24 ACFR
March 18, 2025

 Total net position for the Internal Service Funds was $17.1 million as of June 30, 2024.

Audit Communications
The City’s ACFR (Attachment 1) includes a Management’s Discussion and Analysis section that provides a more in-depth view of the City’s current financial health. This section begins on page number 5 of the ACFR.

The City’s audit was conducted in conformity with Generally Accepted Auditing Standards (GAAS).

These are the standards that a CPA must follow when auditing financial statements. In an independent audit, the CPA expresses an opinion as to whether the financial statements present fairly the financial position and results of operations for the year ended. The fiscal year 2023-24 audit report contains this unmodified opinion.

SAS 114, the Auditor’s Communication with Those Charged with Governance (Attachment 2) is a collection of findings discovered throughout the audit process. The purpose of this letter is to communicate and advise on matters related to the financial statement audit process and relay any issues found as they relate to the division of responsibilities between the independent auditor and management, management disagreements, audit adjustments, and accounting estimates used to prepare the financial statements, among others.

Generally Accepted Government Auditing Standards (GAGAS) are guidelines for audits created by the Comptroller General and the audit agency of the United States Congress, the Government Accountability Office. This includes reports on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with government auditing standards. Results of the City’s independent auditor’s findings are provided (Attachment 3).

During the course of the audit of the City’s internal controls, the City’s auditors identified weaknesses in two areas related to timeliness of monthly and year-end reconciliations and segregation of duties within payroll. The timeliness of accounting reconciliations weakness was primarily due to the vacancy in the Accounting Manager position during second half of the fiscal year. The segregation of duties in payroll weakness was primarily a product of the implementation and setup of the new payroll system. Both of these areas have been addressed and corrected within the processes in the finance department.

The City’s independent auditor, Rogers, Anderson, Malody & Scott LLP, also conducted an Agreed Upon Procedures (AUP) review of the City’s compliance with Section 1.5 of Article XIIIB of the California Constitution, also known as the GANN Limit (Attachment 4). The Gann Limit was approved by voters in 1979 and placed limits on the growth of expenditures for publicly funded programs.

The Single Audit is a rigorous, organization-wide audit of the City's grant funded programs that expend $750,000 or more of Federal assistance. The Single Audit's objective is to provide assurance to the federal government as to the management and use of federal funds by the City.

The City spent approximately $362,000 of federal funds in fiscal year 2023-24, as such, a Single Audit was not required to be performed.

FY 2023-24 ACFR
March 18, 2025

The City was awarded the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association for the ACFR for the prior fiscal year ended June 30, 2023. Staff is confident that this report will again earn this distinction.

FISCAL REVIEW:

There is no fiscal impact related to this item.

ALTERNATIVES:

Alternative No. 1: Receive and File the Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2024.

Alternative No. 2: Direct staff to take an alternate action.

RECOMMENDATION:

Staff recommends Alternative No. 1.

Prepared by: Jenny Chau, Management Analyst
Reviewed by: Peter Samy, Accounting Manager
Fiscal Review by: Ryan Smith, Finance Director / City Treasurer Approved by: Maggie Le, City Manager
Attachment 1: Annual Comprehensive Financial Report for Fiscal Year Ended June 30, 2024 Attachment 2: SAS 114 - Auditor’s Communications with Those Charged with Governance Attachment 3: GAGAS – Report on Internal Control Over Financial Reporting and On Compliance and Other Matters Based on an Audit of Financial Statements Attachment 4: GANN Limit AUP

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

CITY OF FOUNTAIN VALLEY, CALIFORNIA
For the Fiscal Year Ended June 30, 2024
Prepared by:

Finance Department
10200 Slater Avenue, Fountain Valley, CA 92708
Telephone: 714-593-4400
Fountainvalley.gov

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City of Fountain Valley
Annual Comprehensive Financial Report
For the Year Ended June 30, 2024

TABLE OF CONTENTS
INTRODUCTORY SECTION:

Letter of Transmittal ................................................................................................................................ i City Officials ..................................................................................................................................... vii Organizational Chart ............................................................................................................................. viii GFOA Award Certificate ......................................................................................................................... ix FINANCIAL SECTION:

Independent Auditor’s Report ................................................................................................................ 1 Management’s Discussion and Analysis (Required Supplementary Information - Unaudited) .................................................................................................................. 5

Basic Financial Statements

Government-Wide Financial Statements:

Statement of Net Position ....................................................................................................... 15 Statement of Activities ............................................................................................................ 16 Fund Financial Statements:

Balance Sheet – Governmental Funds .................................................................................. 17 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ................................................................................................ 18 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ....................................................................................................... 19 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ........................... 20 Statement of Net Position – Proprietary Funds ...................................................................... 21 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds ............................................................................................................. 22 Statement of Cash Flows – Proprietary Funds ....................................................................... 23 Statement of Fiduciary Net Position – Fiduciary Funds ............. …..…………………………...24 Statement of Changes in Fiduciary Net Position – Fiduciary Funds ...................................... 25 Notes to the Basic Financial Statements ...................................................................................... 26 Required Supplementary Information (Unaudited)
Schedule of Proportionate Share of the Net Pension Liability Last 10 Years ........................................................................................................................ 64 Schedule of Pension Plan Contributions – Last 10 Years ............................................................ 65 Schedule of Changes in the Net OPEB Liability and Related Ratios – Last 10 Years ................. 66 Schedule of OPEB Contributions – Last 10 Years ....................................................................... 67

City of Fountain Valley
Annual Comprehensive Financial Report
For the Year Ended June 30, 2024
TABLE OF CONTENTS (Continued)
FINANCIAL SECTION (Continued):

Required Supplementary Information (Unaudited) (Continued) Schedules of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual:

General Fund ................................................................................................................... 68 Affordable Housing Special Revenue Fund .................................................................... 69 Notes to the Required Supplementary Information ................................................................. 70 Other Supplementary Information
Combining Balance Sheet – Nonmajor Governmental Funds ............................................... 75 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds ........................................................... 77 Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual – Special Revenue Fund:

Criminal Activities ............................................................................................................. 79 Road Maintenance and Rehabilitation Program (SB1) .................................................... 80 Gas Tax ............................................................................................................................ 81 Abandoned Vehicle Abatement ........................................................................................ 82 Traffic Improvement ......................................................................................................... 83 Pollution Reduction ........................................................................................................... 84 HOME Grants .................................................................................................................... 85 Measure M2 ...................................................................................................................... 86 Community Development Block Grant .............................................................................. 87 Fountain Valley Public Financing Authority Debt Service ................................................. 88 Drainage Capital Projects Fund ........................................................................................ 89 Combining Statement of Net Position – Internal Service Funds ............................................ 90 Combining Statement of Revenues, Expenditures, and Changes in Fund Net Position – Internal Service Funds .................................................................... 92 Combining Statement of Cash Flows– Internal Service Funds .............................................. 94

City of Fountain Valley
Annual Comprehensive Financial Report
For the Year Ended June 30, 2024
TABLE OF CONTENTS (Continued)
STATISTICAL SECTION:

Net Position by Component ................................................................................................................. 96 Changes in Net Position ...................................................................................................................... 97 Fund Balances of Governmental Funds .............................................................................................. 99 Changes in Fund Balances of Governmental Funds ......................................................................... 100 Assessed Value and Estimated Actual Value of Taxable Property ................................................... 101 Direct and Overlapping Property Tax Rates ...................................................................................... 102 Principal Property Taxpayers ............................................................................................................ 103 Property Tax Levies and Collections ................................................................................................. 104 Ratios of Outstanding Debt by Type ................................................................................................. 105 Ratios of General Bonded Debt Outstanding .................................................................................... 106 Direct and Overlapping Debt ............................................................................................................. 107 Legal Debt Margin Information .......................................................................................................... 108 Pledged Revenue Coverage ............................................................................................................. 109 Demographic and Economic Statistics .............................................................................................. 110 Principal Employers ........................................................................................................................... 111 Full-Time Equivalent City Government Employees by Function ....................................................... 112 Operating Indicators by Function ........................................................................................................ 113 Capital Asset Statistics by Function/Program ................................................................................... 114

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-iCITY OF FOUNTAIN VALLEY www.fountainvalley.gov
10200 SLATER AVE – FOUNTAIN VALLEY, CA 92708-4736 (714) 593-4400, FAX (714)593-4498 February 25, 2025
Honorable Mayor,
Members of the City Council,
and Citizens of the City of Fountain Valley
Transmitted Through the City Manager:

The Annual Comprehensive Financial Report (ACFR) of the City of Fountain Valley for the fiscal year ended June 30, 2024, is hereby submitted. These statements have been prepared in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by an independent public accounting firm of licensed certified public accountants. The report was prepared in accordance with the guidelines set forth by the Governmental Accounting Standards Board (GASB).

REPORT PURPOSE AND ORGANIZATION
Purpose and Management Responsibility - The report consists of management’s representation concerning the finances of the City of Fountain Valley. Consequently, management assumes full responsibility for the completeness and reliability of all information presented in this report. To provide a reasonable basis for making these representations, management for the City has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with the Generally Accepted Accounting Principles (GAAP). Because the cost of internal controls should not outweigh their benefits, the City’s framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatements.

As management, we assert that, to the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds and component units of the City of Fountain Valley. All disclosures necessary to enable the reader to gain an understanding of the City’s financial activities have been included.

Audited Financial Statements – The City of Fountain Valley’s financial statements have been audited by Rogers, Anderson, Malody & Scott, LLP (RAMS), a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the City’s financial statements for the

-iifiscal year ended June 30, 2024, are free of material misstatement. The independent audit involves examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City of Fountain Valley’s financial statements for the fiscal year ended June 30, 2024, are fairly presented in conformity with GAAP.

The independent auditor’s report is presented as the first component of the financial section of this report.

Single Audit – The independent audit of the financial statements of the City of Fountain Valley is usually a part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on internal controls and compliance with legal requirements, with emphasis on those involving the administration of federal awards. The report of the Single Audit is published separately from this ACFR and may be obtained upon request from the City’s Finance Department.

For Fiscal Year 2023-24, the City of Fountain Valley received federal grants supporting community development, transportation, traffic safety, and Coronavirus related arrearage aid for water utilities.

However, an annual single audit is not required, as expenditures remained below the established $750 thousand threshold.

Transmittal letter – GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the Independent Auditors Report.

Reporting Entities – the reporting entities (the City of Fountain Valley) financial statements include all funds and account groups of the primary government (i.e., the City of Fountain Valley, as legally defined) as well as all its component units. Component units are legally separate entities for which the primary government is financially accountable.

The City’s component units are the Fountain Valley Public Financing Authority and the Fountain Valley Housing Authority. Since the City Council serves as the governing board for these component units, although legally separate entities are, in substance, part of the primary government’s operations.

Accordingly, the component unit’s financial activities have been included in the appropriate combining schedules.

Under ABX1 26 that was approved by the legislature on June 28, 2011, all redevelopment agencies were eliminated effective February 1, 2012, and the Successor Agency was constituted. The City of Fountain Valley became the Successor Agency to the former Community Redevelopment Agency. The Successor Agency’s assets and liabilities are reported under the City’s Trust/Agency funds.

-iiiPROFILE OF THE CITY OF FOUNTAIN VALLEY
Governmental Profile – The City of Fountain Valley, incorporated June 13, 1957, has an estimated population of 56,333 (May 2024, State Dept of Finance) and a land area of 9.75 square miles. It is located in the northern tip of Orange County, California and is bordered by the cities of Santa Ana, Costa Mesa, Huntington Beach, and Westminster. The City is roughly 30 miles southeast of Los Angeles and 90 miles northwest of San Diego. One of the greatest features of the City is Mile Square Park with its two golf courses; large passive park area, Boys and Girls Club, and City run Recreation Center and Sports Park.

The City has operated under a council-manager form of government since incorporation. Policymaking and legislative authority are vested in the City Council, which is comprised of five (5) members elected at large, on a non-partisan basis, to four-year terms of office with staggered elections occurring every two (2) years.

The Council is responsible, among other things, for passing ordinances, adopting the budget, appointing members to commissions and committees, and hiring the City Manager and City Attorney. The City Manager is responsible for carrying out the policies and ordinances of the City Council, overseeing the dayto-day operations of the City and appointing the City’s department heads. Commissions and Advisory Committees play an integral role in the governmental structure of Fountain Valley and provide opportunities for citizens to participate in community affairs.

As a full-service city, Fountain Valley offers its residents a complete range of municipal services including:

Public Safety in the form of Police, Fire protection, and Building & Safety; environmental services such as a water delivery system, sewer and storm drain maintenance; park and median landscaping; street and sidewalk repairs; development services for land use planning and zoning; housing and community development; a full range of recreation and cultural activities; and legislative, legal, financial and general administrative support.

ECONOMIC OVERVIEW
The City of Fountain Valley is a well-planned, suburban community, with a great balance of land uses. It is located in the heart of Orange County, just minutes from the I-405 Freeway, and points of interest such as Disneyland, Knott’s Berry Farm, famous beaches, the Honda Center, Angel Stadium, John Wayne Airport, and world-class shopping.

The City of Fountain Valley boasts a well-earned reputation as "A Nice Place to Live," with its thoughtfully designed environment that offers a residential oasis amidst the bustling sprawl of metropolitan Orange County. This ambiance is by design, and we are mindful of the residential predominance when ascertaining the level of service that will be provided to the community each year.

On November 8, 2016, the residents of Fountain Valley approved Measure HH, a one-percent transactions and use (i.e. “sales”) tax, which provided additional tax revenue in the amount of approximately $17.1 million in Fiscal Year 2023-24. Without Measure HH, the General Fund would have had an operating deficit for Fiscal Year 2023-24 of $11,370,942. In accordance with the Responsible Spending Pledge, an additional payment of $3 million was made to CalPERS consistent with the City’s 20-Year Financial Plan where the goal is to pay off all debt by 2037 when Measure HH sunsets. The balance of Measure HH revenue was

-ivused to fund essential services such as public safety and senior and youth programs, in addition to increases to reserves set-aside for capital projects as approved by the City Council.

ECONOMIC DEVELOPMENT ACTIVITIES
Successful economic development calls for creating an environment that supports and strengthens existing business areas, attracts new businesses, and creates employment opportunities in the community, while also enhancing City revenues. To ensure that the City is and remains focused on its economic development efforts, in FY 2022-23, the City worked with HdL ECONsolutions to create a three-year Economic Development Action Plan. This Plan was presented to, and adopted by, the City Council. The City is now implementing the Action Plan through multiple business retention and attraction efforts.

Under-Utilized Commercial Centers – The City continues to target under-utilized commercial centers to encourage property owners to reinvest in Fountain Valley with notable success. The City Council also created the Commercial Property and Business Improvement Loan Program in 2017 to support existing property owners to upgrade the commercial centers through a low interest rate loan to update and improve existing commercial properties in the community. For program details, businesses can visit the City’s website.

General Plan – In a largely built-out community, planning to meet the challenges of housing and economic development, while enhancing quality of life, services, and infrastructure, requires careful thought. To that end, the City recently completed its Vision 2045 General Plan Update, which creates an updated long-term comprehensive plan for the City’s next 20 years. The update effort kicked off in late 2018 and was completed in November of 2023.

Housing Element Implementation – The City of Fountain Valley’s Housing Element was adopted and certified in September and October of 2022. As part of the Housing Element, implementation efforts have been initiated to remain in compliance with the provisions of State Law. In FY 2022-23, the City began the process of rezoning properties consistent with the Opportunity Sites listed in the Housing Element. This only included the creation of new zoning districts to allow for higher density residential development. This process was completed for the majority of the Opportunity Sites in December of 2023. The City is now in the process of updating three Specific Plans to allow for housing consistent with the updated Housing Element. In addition, applications have been submitted for two large scale projects on two of the opportunity sites identified in the Housing Element. Another two applications are expected to be submitted within the next year or two.

LONG-TERM FINANCIAL PLANNING
The City’s fiscal policy is guided by the 20-Year Financial Plan, which encompasses the long-term operating and capital needs of the General Fund. The long-term goal is to achieve fiscal sustainability with a balanced operating budget when Measure HH sunsets in 2037. Additional payments are projected to be made to CalPERS over the next 20 years, in addition to the amounts required annually by CalPERS to pay down the City’s unfunded actuarial liability (UAL) faster. In addition, the City plans to continue making additional contributions to the City’s Pension Trust, which is designed to mitigate CalPERS investment risk. In 2037,

-vthe City’s goal is for the UAL to be paid off along with all other long-term debt. This 20-Year Financial Plan is utilized and integrated into the City’s annual budget and semi-annual strategic planning processes.

RELEVANT FINANCIAL POLICIES
The City has adopted prudent fiscal policies to help assist the City Council and staff in making sound financial decisions. Several of the policies had a significant impact on the current financial statements and the 2023-24 budget followed key policies concerning investments, budget administration, long range financial planning and fund balance reserve policies.

CITY VISION AND GOALS
The City of Fountain Valley is a team driven organization committed to providing excellent service to our community through the core values of fiscal stability; honesty, integrity, and ethical behavior; teamwork; excellent customer service; innovation; and quality of life.

The City’s current three-year strategic goals are to:
 Enhance the culture and environment of “A Nice Place to Live”.  Achieve fiscal stability by evaluating processes, and attract and retain revenue producing businesses/opportunities.
 Attract and retain quality staff through best practices and trends.  Maintain, build, and modernize infrastructure to support growth and future needs of the City.

AWARDS AND ACKNOWLEDGEMENTS
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 for its annual comprehensive financial report (ACFR) for the Fiscal Year ended June 30, 2023. This was the ninth year that the City received this prestigious award. In order to be awarded a Certificate of Achievement, the City had to publish an easily readable and efficiently organized comprehensive annual financial report. This report satisfied 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 comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to GFOA to determine its eligibility for another certificate.

Acknowledgements – The preparation of the Comprehensive Annual Financial Report is made possible by the dedicated efforts of the Finance Department staff with special thanks to Robin Harnish, Finance Manager, Peter Samy, Accounting Manager, and Deborah Beckley, Accountant. Their dedicated efforts in the preparation of the final financial documents are reflected in the quality of this report. In addition, appreciation is extended to our independent auditors, Rogers, Anderson, Malody & Scott, LLP, for their expertise and advice in preparing this year’s financial report.

-viIn closing, without the leadership and support of the City Council, City Manager, and each operating department, it would not have been possible to conduct the financial operation of the City in the responsible and effective manner in which it has been managed.

Respectfully submitted,
Maggie Le Ryan Smith
City Manager Director of Finance / City Treasurer

-viiPage 219
-viiiCity of Fountain Valley
Organizational Chart

-ixPage 221

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FINANCIAL SECTION

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735 E. Carnegie Dr. Suite I 00
San Bernardino. CA 92408
909 889 0871 T
909 889 5361 F
ramscpa. net

PARTNERS
Scott W Manno. CPA. CGMA
Leena Shanbhag, CPA. MST. CGMA
Bradferd A. Welebir. CPA. MBA. CGMA
Jenny W. Liu. CPA, MST
Ga,·denya Duran, CPA, CGMA
Brianna Schultz, CPA. CGMA
Brenda L. Odle. CPA. MST (Partne, Emeritus)
Te, ry P Shea, CPA (Panner Emenws)

MANAGERS/ STAFF
Seong-Hyea Lee. CPA. MBA
Evelyn Morenlin-Barcena. CPA
Vernnica Hernandez, CPA
Laura A1v1zu. CPA
John Maldonado, CPA, MSA
Julia Rodriguez Fuentes. CPA, MSA
Dem, Hite. CPA
Jeffrey McKennan. CPA
Mornca Wysock,, CPA
Jacob Weatherb,e. CPA, MSA
Bolim Han. CPA. MAcc
Anny Gonzalez, CPA

MEMBERS
Amencan lnsutuce of
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PCPS The A/CPA Alliance
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Governmental Audit
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ROGERS, ANDERSON , MALODY & SCOTT, LLP
CERTIFIED PUBLIC ACCOUNTANTS. SINCE 1948
STABILITY. ACCURACY. TRUST.
-1-
Independent Auditor’s Report
The Honorable City Council
City of Fountain Valley, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Fountain Valley (the City), as of and for the year ended June 30, 2024, 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 accompanying 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, 2024, and the respective changes in financial position and, where applicable, cash flows thereof 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 (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards (GAS), 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 requirements 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.

Emphasis of Matter
As discussed in Note 1 to the financial statements, in the year ended June 30, 2024, the City adopted new accounting guidance under Governmental Accounting Standards Board (GASB) Statement No. 100, Accounting Changes and Error Corrections. Our opinions are not modified with respect to this matter.

-2-
Responsibilities of Management for the Financial Statements The City’s management is responsible for the preparation and fair presentation of the 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 financial statements that are free from material misstatement, whether due to fraud or error.

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 GAAS 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 GAAS 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.

-3-
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, and schedules 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 combining and individual nonmajor fund financial statements, and the budgetary comparison schedules are presented for purposes of additional analysis and are 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 GAAS. In our opinion, the accompanying supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information
Management is responsible for the other information included in the annual comprehensive financial report (ACFR). The other information comprises the introductory and statistical sections 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 exists, we are required to describe it in our report.

-4-
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 25, 2025, 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 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.

San Bernardino, California
February 25, 2025

City of Fountain Valley
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2024
-5-
As management of the City of Fountain Valley (the City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City of Fountain Valley for the fiscal year ended June 30, 2024. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal and the accompanying basic financial statements.

Financial Highlights
During the fiscal year ended June 30, 2024, the City continued to maintain its stable financial position, enabling delivery of appropriate services to the community, and undertaking necessary economic development and infrastructure projects. The City’s fiscal policy continues to be guided by a 20-Year Financial Plan.

Long-term Economic Resource (Government-wide) Focus – Economic resources are differentiated from financial resources in that the economic measurement focus measures changes in net position as soon as the event occurs regardless of the timing of related cash flows.

Therefore, this measurement focus includes current spendable resources, fixed non-spendable assets plus deferred outflows of resources, and long-term claims against these assets plus deferred inflows of resources. The resulting net position utilizing this measurement focus provides one measure of the City’s overall long- term financial condition.
 The City’s total net position – the difference between its assets and deferred outflows compared to its liabilities and deferred inflows of resources – was $203.9 million, an increase of $22.6 million, or

12.5%, compared to last fiscal year. The net position of governmental activities increased by $18.4 million, or 14.2%, while the net position of business-type activities increased by $4.2 million, or 8.0%.  Net position of $203.9 million consisted of: $147.6 million of net investment in capital assets; $46.9 million of resources that are subject to external restrictions on how they may be used; $31.8 million that may be used to meet the City’s obligations for its business-type activities; and a $21.7 million deficit related to its governmental activities.
 Total city-wide governmental revenues for fiscal year 2024 were $117.1 million, an increase of $8.6 million, or 7.9%, compared to the prior year. Program revenues increased $3.9 million, or 8.9%, to $48.1 million. General revenues increased by $4.7 million, or 7.3%, to $69.0 million. Expenses for governmental and business-type activities were $95.6 million, an increase of $15.0 million or 18.6%.

Short-term Financial Resource (Fund) Focus – The Financial Resources focus measures inflows of current spendable assets. The resulting net difference between current financial assets and current financial liabilities, otherwise known as fund balance (or net working capital in the private sector), is a measure of the City’s ability to finance activities in the near term.
 The City’s governmental funds reported a combined ending fund balance of $107.4 million, a decrease of $5.5 million compared to the previous fiscal year. Of this amount, $42.0 million (the sum of assigned and unassigned fund balances) may be spent at the City’s discretion.  The City adheres to a Reserve Policy governing committed and assigned fund balances. As of June 30, 2024, the Committed fund balance for the General Fund was $18.4 million, representing

56.2% of total sales tax revenue, inclusive of Measure HH. In the same period, the General Fund's Assigned and Unassigned fund balances were $31.9 million and $9.9 million, respectively. This signifies an $18.8 million reduction in Assigned and an $8.6 million increase in Unassigned fund balances from the previous fiscal year.

City of Fountain Valley
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2024
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Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: 1) governmentwide financial statements, 2) fund financial statements and 3) notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements.

Government-Wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business.

The Statement of Net Position presents information on all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The Statement of Activities presents information to show how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (businesstype activities). The governmental activities of the City of Fountain Valley include general government, public safety, transportation, community development, community services, and interest on long-term debt. The business-type activities of the City are comprised of water, sewer, and solid waste funds.

The government-wide financial statements include not only the City itself (known as the primary government), but also the legally separate Fountain Valley Housing Authority, and the Fountain Valley Public Financing Authority that function as integral parts of the primary government and have been included in these financial statements.

The government-wide financial statements can be found immediately following this discussion and analysis.

Fund Financial Statements
Fund financial statements are designed to report information about groupings of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. All of the funds of the City can be divided into three categories:
governmental funds, proprietary funds, and fiduciary funds.

Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.

City of Fountain Valley
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2024
-7-
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions.

Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The City maintains thirteen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund and Housing Authority, which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation.

Individual fund data for each of the non-major governmental funds is provided in the form of combining statements elsewhere in this report.

The City adopts an annual appropriated budget for its General Fund, Special Revenue Funds, Debt Service Funds and Capital Projects Funds. Budgetary comparison schedules have been provided to demonstrate compliance with these budgets elsewhere in this report.

The basic governmental fund financial statements can be found immediately following the government-wide financial statements.

Proprietary funds are generally used to account for services for which the City charges outside customers, or internal departments of the City. Proprietary funds provide the same type of information as shown in the government-wide statements, only in more detail. The City maintains three different types of proprietary funds.

Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water utility, sewer, and solid waste operations.

Internal service funds are used to report activities that provide internal services for the City. The City uses internal service funds to account for its government buildings, liability administration, equipment replacement and information systems. Because internal service funds predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements.

The basic proprietary fund financial statements can be found immediately following the governmental funds financial statements.

Fiduciary funds financial statements include a Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position for the private-purpose trust funds and City’s fiduciary custodial funds.

The private-purpose trust funds account for the assets held by the City for the Successor Agency to the Fountain Valley Community Development. The City uses custodial funds to account for the collection and disbursement of funds for fees assessed by other governments collected by the City on behalf of others.

Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City’s own programs.

City of Fountain Valley
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2024
-8-
The basic fiduciary fund financial statements can be found immediately following the proprietary fund financial statements.

Notes to the Basic Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found immediately following the fiduciary funds financial statements.

Other Information
In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s proportionate share of the net pension liability, contributions to the CalPERS pension plans, annual money-weighted rate of return on investments – OPEB, changes in the net OPEB liability and related ratios and budget to actual comparisons for major funds, and disclosure information pertaining to the use of the Modified Approach with infrastructure. Required supplementary information can be found immediately following the notes to the basic financial statements.

The combining statements referred to earlier in connection with non-major governmental funds are presented for all non-major Special Revenue Funds, non-major Capital Projects Funds, and all non-major Debt Service Funds. These combining and individual fund statements and schedules can be found immediately following the notes to the required supplementary information.

GOVERNMENT-WIDE FINANCIAL ANALYSIS
Analysis of Net Position
As noted earlier, net position may serve, over time, as a useful indicator of a government’s financial position.

This analysis addresses the financial statements of the City as a whole.

City assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $203.9 million as of June 30, 2024. This is an increase of $22.5 million compared to the City’s net position at the end of last fiscal year, as shown in the condensed statement of net position below. 2024 2023 2024 2023 2024 2023
Assets:

Current and other assets $ 138,103,055 $ 127,055,633 $ 47,014,452 $ 40,320,766 $ 185,117,507 $ 167,376,399 Capital assets 135,260,166 132,155,695 34,141,559 33,796,477 169,401,725 165,952,172 Total assets 273,363,221 259,211,328 81,156,011 74,117,243 354,519,232 333,328,571 Deferred outflows of resources 52,874,675 55,845,373 6,201,499 4,032,244 59,076,174 59,877,617 Liabilities:

Other liabilities 11,813,411 10,672,671 5,912,561 4,581,449 17,725,972 15,254,120 Long-term liabilities 142,123,580 142,745,699 21,605,752 19,025,752 163,729,332 161,771,451 Total liabilities 153,936,991 153,418,370 27,518,313 23,607,201 181,455,304 177,025,571 Deferred inflows of resources 24,707,808 32,448,551 3,482,600 2,380,047 28,190,408 34,828,598 Net position:

Net investment in capital assets 122,451,600 118,812,613 24,572,602 24,404,708 147,024,202 143,217,321 Restricted 46,854,171 27,459,109 - 46,854,171 - 27,459,109 Unrestricted (21,712,674) (17,081,942) 31,783,995 27,757,531 10,071,321 10,675,589 Total net position $ 147,593,097 $ 129,189,780 $ 56,356,597 $ 52,162,239 $ 203,949,694 $ 181,352,019 Governmental Activities Business-type Activities Total

City of Fountain Valley
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2024
-9-
The City continued to report positive balances in two of the three categories of net position for the government as a whole, as well as for its separate governmental and business-type activities.

Net position – Restricted for governmental activities ($46.8 million or 31.75% of total net position) represents resources that are subject to external restrictions on how they may be used. This is an increase of $19.4 million or 70.65% compared to the previous fiscal year.

Net position – Net investment in capital assets represents the largest portion (72.0%) of the City’s net position for both governmental and business-type activities. The City’s investment of $147.0 million in capital assets is net of accumulated depreciation and any related outstanding debt used to acquire those assets. This is an overall increase of $3.8 million, or 2.6% from the prior year. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.

Although the investment in capital assets is reported net of related debt, resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

Net position – Unrestricted for the government as a whole has a balance of $10.0 million as of June 30, 2024, a decrease of $.6 million or 5.6% compared to the prior year. The unrestricted net position for governmental activities has a deficit balance of $21.7 million as of June 30, 2024.

This represents an increase to the deficit balance of $6.8 million or 39% compared to the prior year. The deficit balance is the result of implementing Governmental Accounting Standards Board (GASB) statements related to pension and other post-employment benefits (OPEB) liabilities. The deficit reflects the extent to which the City must defer to future periods the financing of a portion of its pension and OPEB liabilities. Generally accepted accounting principles require financial statement recording when a liability is incurred. However, the City, like many other governments, raises and budgets resources needed to liquidate certain liabilities during the year in which the liability is incurred. In the case of the pension liability, the City will continue to fund this obligation on an actuarial basis, contributing the full amount of annual required contributions to the pension system every year. For the OPEB liability, the City pays this obligation on a pay-as-you-go basis. To assist with the paydown of these liabilities, the City set up two IRS Section 115 Trust Funds. Funds deposited into these accounts are restricted and may only be used for the purpose of the trust.

Analysis of Activities
The Statement of Activities shows how the government’s net position changed during the fiscal year. As shown in the condensed Statement of Activities below, the City’s net position increased by $21.5 million in FY 2023-24.

City of Fountain Valley
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2024
-10-
2024 2023 2024 2023 2024 2023
Revenues:

Charges for services $ 13,502,365 $ 9,588,071 $ 26,556,950 $ 25,948,826 $ 40,059,315 $ 35,536,897 Operating grants and contributions 6,762,548 6,645,582 - 62,321 6,762,548 6,707,903 Capital grants and contributions 1,268,710 1,935,254 24,175 - 1,292,885 1,935,254 General Revenues:

Taxes:

Property taxes 24,808,441 23,365,555 - 24,808,441 - 23,365,555 Sales taxes 15,638,648 16,504,276 - 15,638,648 - 16,504,276 Sales taxes - Measure HH 17,146,213 17,363,447 - 17,146,213 - 17,363,447 Franchise taxes 2,619,098 2,595,444 - - 2,619,098 2,595,444 Other taxes 1,411,257 1,522,875 - - 1,411,257 1,522,875 Investment income (loss) 5,172,048 1,648,971 1,470,543 356,396 6,642,591 2,005,367 Miscellaneous 558,720 992,907 214,521 - 773,241 992,907 Total revenues 88,888,048 82,162,382 28,266,189 26,367,543 117,154,237 108,529,925 Expenses:

General government 15,634,174 4,113,134 - 15,634,174 - 4,113,134 Public safety 37,647,876 42,181,933 - 37,647,876 - 42,181,933 Transportation 7,191,749 9,633,255 - - 7,191,749 9,633,255 Community development 6,248,000 5,480,927 - - 6,248,000 5,480,927 Community services 4,259,013 2,925,694 - - 4,259,013 2,925,694 Interest charges 393,715 425,387 - - 393,715 425,387
Water - 17,616,366 - 10,474,663 17,616,366 10,474,663
Sewer - - 1,839,256 1,025,684 1,839,256 1,025,684
Solid waste - - 4,858,073 4,428,766 4,858,073 4,428,766 Total expenses 71,374,527 64,760,330 24,313,695 15,929,113 95,688,222 80,689,443 Transfers 293,693 2,887,046 (293,693) (2,887,046) - -
Change in net position 17,807,214 20,289,098 3,658,801 7,551,384 21,466,015 27,840,482 Net position - beginning of year, as restated 129,785,883 108,900,682 52,697,796 44,610,855 182,483,679 153,511,537 Net position - end of year $ 147,593,097 $ 129,189,780 $ 56,356,597 $ 52,162,239 $ 203,949,694 $ 181,352,019 Governmental Activities Business-type Activities Total

City of Fountain Valley
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2024
-11-
Governmental activities increased the City’s net position by $17.8 million compared to fiscal year 2023.

Program revenues increased by $3.3 million, or 18.5%, to $21.5 million. General revenue totaled $67.3 million, a $3.3 million, or 5.3% increase over the previous fiscal year. The majority of the rise is attributed to a notable $5.1 million in investment income, which marks a significant $3.5 million increase compared to last year. The increase is due to continued rising interest rates. Property taxes increased $1.4 million or

6.2% to $24.8 million. This revenue growth was offset by a slight decline in Sales tax and Measure HH transaction tax, which decreased by 5.2% and 1.3% to $15.6 and $17.1 million, respectively.

Expenses for governmental activities total $71.3 million, an increase of $6.5 million, or 10.1% compared to 2023. The variance is largely due to a $12.1 million increase in pension costs vs the prior year. This increase is partially offset by a $5.2 million decrease in OPEB costs as compared to the last fiscal year.

Business-type activities increased the City’s net position by $3.6 million. Program revenue was 2.2% higher than last fiscal year, at $26.6 million, while general revenues increased by $1.3 million due to investment income and an unrealized gain from the FMV adjustment. Expenses for the Water, Sewer, and Solid Waste Funds increased by $7.1 million (68.2%), $0.8 million (79.3%), and $0.5 million (9.7%), respectively, due to an overall rise in pension expense.

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

The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.

As of the close of Fiscal Year 2023-24, the City’s governmental funds reported a combined ending fund balance of $107.4 million, a decrease of $5.5 million from the prior year balance. Approximately $128 thousand, or 0.1% of this combined amount is not available for spending; $46.8 million, or 43.6% is restricted; $18.4 million, or 17.2% is committed; $32.0 million, or 29.8% is assigned; and $9.9 million, or

9.3% is unassigned.

As of June 30, 2024, the general fund’s total fund balance was $80.1 million, a decrease of $8.6 million, or

9.7% from the 2023 fiscal year. The net decrease is primarily attributed to an adjustment in the reporting entity related to the City’s internal service funds. The City previously reported various funds that acted in an internal service capacity, combined with the General Fund. In order to report these activities in accordance with generally accepted accounting principles and GASB Statement 100, these funds have been extracted from the General Fund and separately reported as internal service funds, which qualifies as a change in reporting entity. The respective fund balance and net position for these funds have been restated as of July 1, 2023. This adjustment decreased the General Fund balance by approximately $14.6 million. The decrease from the adjustment was offset by a surplus realized in the General Fund in fiscal year 2024 of $6 million.

There are three major funds within the governmental fund accounts. They include the General Fund, the Fountain Valley Housing Authority, and the Capital Projects Fund. The Fountain Valley Housing Authority was established in 2011 to preserve the ability to provide affordable housing uses and activities. At the end of the fiscal year, the fund balance in the Housing Authority Fund was $17.7 million, a decrease of $200 thousand. The Capital Projects Fund is reported as a major fund in the financial statements for the fiscal year 2023-24. This designation is based on its critical role in financing and accounting for the City’s significant capital improvements and infrastructure development projects. The fund reported a $0 fund balance as all revenues and resources were fully utilized for project expenditures.

City of Fountain Valley
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2024
-12-
As of June 30, 2024, combined nonmajor governmental fund balances totaled $9.6 million, an increase of $3.2 million compared to the 2023 fiscal year. The overall increase in fund balance is primarily due to activity in the Road Maintenance and Rehab Program (SB1) Fund, Traffic Improvement Fund, and Measure M Fund. The Road Maintenance fund balance increased by $900 thousand due to a road maintenance related project that was incomplete at year end. The Traffic Improvement fund balance increased by $800 thousand due to the final grant payment for a project completed last fiscal year and coupled with a reduction in traffic related projects in the current year. Finally, the Measure M fund balance increased by $1.4 million due to several transportation projects that were incomplete at year end.

The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.

Business-type activity funds: there are three (3) funds in this group: Water Utility, Sewer, and Solid Waste.

Total net position for the Water Utility Fund increased by $3.3 million, to $38.7 million as of June 30, 2024.

Of this total, $21.6 million was unrestricted.

Total net position for the Sewer Fund increased by $900 thousand, to $16.3 million as of June 30, 2024.

Of this total, $8.8 million was unrestricted.

Total net position for the Solid Waste Fund increased by $100 thousand, to $1.3 million as of June 30, 2024. The entire amount was unrestricted.

Water and Sewer rates have remained unchanged since July 2022, which was the final year for the Council approved five-year implementation that began July 1, 2018. Water revenues increased by 2.5% due to higher consumption and sewer revenues decreased by 1.5% compared to the prior year. Solid Waste rates were raised in January 2024 which resulted in an 8.6% increase in revenues that were offset by a 9.7% increase in expenses.

Internal service funds: There are five (5) funds in this group: IT fund, Equipment Replacement, Building Maintenance, Vehicle Replacement, and Self Insurance. Total net position for the Internal Service Funds was $17.1 million as of June 30, 2024.

GENERAL FUND BUDGETARY HIGHLIGHTS
A detailed budgetary comparison schedule for the year ended June 30, 2024, is presented as required supplementary information following the notes to the financial statements. Revenues, transfers in, and the issuance of IT subscriptions related to GASB 96 were $83.2 million, or $5.6 million lower than the City’s final budget of $88.8 million. Significant revenues over budget were largely due to Property Taxes, which were $500 thousand higher than the final budget. Investment income exceeded the final budget by $4.0 million, driven by heightened interest earnings and tempered by an unrealized loss resulting from recording the FMV adjustment as of June 30, 2024. Expenditures and transfers out were $77.2 million, or 9.7% lower than the final budget of $85.5 million. The primary reason for the variance between actual expenditures and final budget are due to several capital projects that were not completed by the end of the fiscal year.

City of Fountain Valley
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2024
-13-
Differences between the original and final revenue budget reflect an increase of $1.6 million or 2.1%. The most notable adjustment was a budget increase of $1.5 million for State Grants based on year-to-date activity and projections at mid-year. Other revenue adjustments included $270 thousand for property taxes, $200 thousand for fire revenue, and a $500 thousand reduction for community service donations.

Differences between the original and final total expenditures budget reflect an increase of $1.0 million or

1.6%. The expenditure budget was increased at mid-year to accommodate personnel costs related to salary schedule changes, unforeseen traffic signal maintenance, and the I-405 improvement project.

The table below summarizes the General Fund’s original budget, final budget, and actual results for 2024 revenues, expenditures, and transfers:

Original Budget Final Budget Actual Amount
Variance with
Final Budget
Revenues $ 76,297,090 $ 77,880,840 $ 82,381,551 $ 4,500,711 Expenditures 63,716,045 64,726,265 69,248,164 (4,521,899) Other financing sources (uses) (10,036,940) (9,808,540) (7,136,694) 2,671,846 Net change in fund balance $ 2,544,105 $ 3,346,035 $ 5,996,693 $ 2,650,658

CAPITAL ASSETS AND LONG-TERM LIABILITIES
The City’s investment in capital assets for its governmental and business type activities as of June 30, 2024, amounts to $169.4 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, construction in progress, improvements other than buildings, vehicles and equipment, park facilities, roads, highway, and sidewalks/curbs/gutters. The total increase in the City’s investment in capital assets for the current fiscal year was $3.4 million or 2.1%. This increase was due to the addition of $7.5 million in capital assets, which was offset by $4.1 million in depreciation expense.

Major additions included $3.5 million for construction costs related to the Police Locker Room Improvement Project and $1.0 million for various vehicle and equipment. 2024 2023 2024 2023 2024 2023
Land $ 15,003,148 $ 15,003,148 $ 123,076 $ 123,076 $ 15,126,224 $ 15,126,224 Vehicles and equipment 6,212,448 6,564,729 (278,629) 12,970 5,933,819 6,577,699 Furniture and fixtures 169,507 136,736 - - 169,507 136,736 Buildings 7,877,411 8,327,087 18,708,282 19,173,481 26,585,693 27,500,568 Construction in progress 6,321,423 897,968 611,891 47,252 6,933,314 945,220 Improvements other than structures 5,517,236 5,799,157 14,976,939 14,439,698 20,494,175 20,238,855 Rights of way 17,948,464 17,948,464 - 17,948,464 - 17,948,464 Infrastructure 75,703,932 76,540,928 - 75,703,932 - 76,540,928 Subscription-based IT assets 506,597 937,478 - - 506,597 937,478 Net capital asests $ 135,260,166 $ 132,155,695 $ 34,141,559 $ 33,796,477 $ 154,275,501 $ 150,825,948 Governmental Activities Business-type Activities Total
The City elected to use the modified approach in reporting its street pavement infrastructure network. The condition of the City’s roadway pavement is measured using the Carte Graph Pavement Management System. The system uses a measurement scale that is based on a Pavement Condition Index (PCI) ranging from zero for a very poor pavement to 100 for a pavement in very good condition. The overall condition of the City’s pavement network, based on the most recently completed assessment performed in fiscal year 2024, was “Very Good” with a weighted average PCI of 84.7 based on the surface area of each segment.

This reflects a slight downtick due to not being able to pave as many residential quadrants as a result of increasing costs. There have been no significant changes in the assessed condition of the infrastructure assets from the last fiscal year. The current condition of these assets complies with the condition levels adopted by the City. Variances in budgeted versus actual expenditures is due to the timing of project completion. Additional information on the City’s capital assets can be found in Note 4 in the Financial Section of this report.

City of Fountain Valley
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2024
-14-
At year-end, the City had $169.6 million in outstanding long-term debt, reflecting a net increase of $2.1 million compared to the prior year. This increase is primarily attributed to the following: a $4.3 million rise in net pension liability, a $1.1 million increase in other post-employment benefits, and a $200 thousand increase in compensated absences liability. These increases were partially offset by a $2.2 million reduction in bond liabilities due to scheduled principal repayments, a $900 thousand decrease in claims payable, and a $400 thousand decrease in the City’s lease liability related to the present value of future subscriptionbased IT agreement payments. 2024 2023 2024 2023 2024 2023
Revenue bonds $ - $ - $ 9,514,059 $ 10,183,732 $ 9,514,059 $ 10,183,732 Lease revenue bonds 11,801,452 12,507,318 - 11,801,452 - 12,507,318 Taxable pension obligation bonds 11,795,853 12,618,467 - 11,795,853 - 12,618,467 Compensated absences 2,644,100 2,420,123 230,459 217,765 2,874,559 2,637,888 Claims payable 3,997,800 4,925,954 - - 3,997,800 4,925,954 Subscription liabilities 403,952 835,764 - - 403,952 835,764 Net OPEB liability 20,994,082 23,468,478 5,485,846 1,896,830 26,479,928 25,365,308 Net pension liability 95,460,860 90,926,331 7,256,432 7,493,858 102,717,292 98,420,189 Total long-term liabilities $ 147,098,099 $ 147,702,435 $ 22,486,796 $ 19,792,185 $ 169,584,895 $ 167,494,620 Governmental Activities Business-type Activities Total
Additional information on the City’s long-term liabilities can be found in Note 5 in the Financial Section of this report.

FISCAL YEAR 2024-2025 OPERATING BUDGET AND ENTERPRISE RATES The City Council adopted the fiscal year 2024-2025 Budget with total appropriations of $161.6 million and projected revenues of $137.2 million.

The General Fund estimated revenues for fiscal year 2024-2025 are $80.1 million and budgeted appropriations are $78.6 million. The General Fund includes an additional $7.6 million of one-time capital improvement projects that utilize reserves, which are legally required to be spent on specific capital projects.

The General Fund Operating Budget is balanced with a healthy operating surplus of $1.5 million, which will be used to build and maintain reserves. Measure HH provides the necessary funding to maintain essential city services, fund capital improvements, pay down debt, and restore reserves. The City’s fiscal policy is guided by the 20-Year Financial Plan with the goal of being debt free in 2037 when Measure HH sunsets.

The City is on a solid path towards long-term fiscal sustainability.

The fiscal year 2024-2025 budget includes an approved 6.92% CPI increase to residential trash collection rates as of January 2024. Water and sewer rates have not been increased for the current fiscal year.

Future increases will be dependent on public hearings and Council adoption of an updated resolution.

REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the financial position of the City for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Fountain Valley, Finance Department, 10200 Slater Avenue, Fountain Valley, California 92708.

BASIC FINANCIAL STATEMENTS

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City of Fountain Valley
Statement of Net Position
June 30, 2024
The accompanying notes are an integral part of these financial statements. -15-
Primary Government
Governmental Business-Type
Activities Activities Total
Assets:

Cash and investments $ 93,655,370 $ 41,185,452 $ 134,840,822 Restricted cash and investments 2 807,091 807,093
Restricted cash and investments - pension 17,367,544 17,367,544 - Receivables:

Accounts 8,243,277 4,651,592 12,894,869
Accrued interest 1,351,903 1,351,903 -
Loans 9,016,058 9,016,058 -
Leases 8,165,565 8,165,565 -
Inventories 12,590 370,317 382,907
Prepaid items 290,746 - 290,746
Capital assets, not being depreciated 102,821,732 734,967 103,556,699 Capital assets, net of accumulated depreciation 32,438,434 33,406,592 65,845,026 Total assets 273,363,221 81,156,011 354,519,232
Deferred outflows of resources:

Deferred outflows related to pension 44,291,550 3,958,687 48,250,237 Deferred outflows related to OPEB 8,583,125 2,242,812 10,825,937 Total deferred outflows of resources 52,874,675 6,201,499 59,076,174 Liabilities:

Accounts payable 5,060,528 4,576,568 9,637,096
Accrued wages payable 1,012,318 1,012,318 -
Accrued interest payable 249,386 182,091 431,477
Unearned revenue 213,585 201,438 415,023
Deposits payable 303,075 71,420 374,495
Long term liabilities
Due within one year 4,974,519 881,044 5,855,563
Due in more than one year:

Other long-term liabilities 25,668,638 8,863,474 34,532,112 Net pension liability 95,460,860 7,256,432 102,717,292
Net OPEB liability 20,994,082 5,485,846 26,479,928
Total liabilities 153,936,991 27,518,313 181,455,304
Deferred inflows of resources:

Deferred inflows related to pension 8,249,171 1,198,030 9,447,201 Deferred inflows related to OPEB 8,742,945 2,284,570 11,027,515 Deferred inflows related to leases 7,715,692 7,715,692 - Total deferred inflows of resources 24,707,808 3,482,600 28,190,408 Net position:

Net investment in capital assets 122,451,600 24,572,602 147,024,202 Restricted for:

Public safety 1,555,327 1,555,327 -
Transportation 9,662,739 9,662,739 -
Housing 18,072,562 18,072,562 -
Community development 195,997 - 195,997
Capital projects - - -
Other 17,367,546 17,367,546 -
Unrestricted (deficit) (21,712,674) 31,783,995 10,071,321 Total net position $ 147,593,097 $ 56,356,597 $ 203,949,694

City of Fountain Valley
Statement of Activities For the Fiscal Year Ended June 30, 2024 The accompanying notes are an integral part of these financial statements. -16-
Net (Expense) Revenues and
Program Revenues Changes in Net Position
Operating Capital
Charges for Contributions Contributions Governmental Business-Type Functions/programs Expenses Services and Grants and Grants Activities Activities Total Governmental activities:

General government $ 15,634,174 $ 3,258,353 $ - $ - $ (12,375,821) $ - $ (12,375,821) Public safety 37,647,876 5,561,826 859,661 - (31,226,389) - (31,226,389) Transportation 7,191,749 - 4,723,903 1,268,710 (1,199,136) - (1,199,136) Community development 6,248,000 3,243,172 629,300 - (2,375,528) - (2,375,528) Community services 4,259,013 1,439,014 549,684 - (2,270,315) - (2,270,315) Interest on long-term debt 393,715 - - - (393,715) - (393,715) Total governmental activities 71,374,527 13,502,365 6,762,548 1,268,710 (49,840,904) - (49,840,904) Business-type activities:

Water 17,616,366 19,180,215 - 1,409 - 1,565,258 1,565,258 Sewer 1,839,256 2,488,964 - - - 649,708 649,708
Solid waste 4,858,073 4,887,771 - 22,766 - 52,464 52,464 Total business-type activities 24,313,695 26,556,950 - 24,175 - 2,267,430 2,267,430 Total $ 95,688,222 $ 40,059,315 $ 6,762,548 $ 1,292,885 (49,840,904) 2,267,430 (47,573,474) General revenues:

Taxes:

Property taxes 24,808,441 - 24,808,441Sales taxes 15,638,648 - 15,638,648Sales taxes - Measure HH 17,146,213 - 17,146,213 Franchise taxes 2,619,098 - 2,619,098Other taxes 1,411,257 - 1,411,257 Investment income 5,172,048 1,470,543 6,642,591Miscellaneous 558,720 214,521 773,241 Transfers 293,693 (293,693) -
Total general revenues 67,648,118 1,391,371 69,039,489Change in net position 17,807,214 3,658,801 21,466,015 Net position, beginning of fiscal year, as previously reported 129,189,780 52,162,239 181,352,019 Adjustment - correction of error 596,103 535,557 1,131,660 Net position, beginning of fiscal year, as restated 129,785,883 52,697,796 182,483,679Net position at end of fiscal year $ 147,593,097 $ 56,356,597 $ 203,949,694

City of Fountain Valley
Balance Sheet
Governmental Funds
June 30, 2024
The accompanying notes are an integral part of these financial statements. -17-
Special
Revenue Fund
Capital
Projects Fund
General
Housing
Authority
Capital
Improvement
Program
Nonmajor
Governmental
Funds Total
Assets:

Cash and investments $ 56,322,357 $ 8,961,509 $ 2,746,827 $ 9,441,796 $ 77,472,489 Receivables:

Accounts 7,274,639 6,000 - 712,638 7,993,277
Accrued interest 1,084,625 267,278 - - 1,351,903
Loans - 8,805,712 - 210,346 9,016,058
Leases 8,165,565 - - - 8,165,565
Due from other funds 298,234 - - - 298,234
Prepaid items 128,646 - - - 128,646
Restricted Assets:

Cash and investments - - - 2 2
Cash and investments - pension 17,367,544 - - - 17,367,544 Total assets $ 90,641,610 $ 18,040,499 $ 2,746,827 $ 10,364,782 $ 121,793,718 Liabilities, deferred inflows of resources,
and fund balances:

Liabilities:

Accounts payable $ 1,452,899 $ 314,534 $ 2,746,827 $ 23,387 $ 4,537,647 Accrued wages payable 1,012,318 - - - 1,012,318
Deposits payable 80,282 - - 222,793 303,075
Unearned revenues - - - 213,585 213,585
Due to other funds - - - 298,234 298,234
Total liabilities 2,545,499 314,534 2,746,827 757,999 6,364,859 Deferred inflows of resources:

Deferred amounts from leases 7,715,692 - - - 7,715,692
Unavailable revenues 275,447 - - 24,285 299,732
Total deferred inflows of resources 7,991,139 - - 24,285 8,015,424 Fund balances:

Nonspendable:

Prepaid items 128,646 - - - 128,646
Restricted for:

Public safety - - - 1,555,327 1,555,327
Transportation 2,238,242 - - 7,424,497 9,662,739
Housing - 17,725,965 - 346,597 18,072,562
Community development - - 195,997 195,997
Debt service - - 2 2
Pension 17,367,544 - - - 17,367,544
Committed:

Emergencies 18,426,000 - - - 18,426,000
Assigned to:

Employee benefits 2,422,711 - - - 2,422,711
Capital projects 7,634,238 - - 60,078 7,694,316
Measure HH 21,391,034 - - - 21,391,034
Contingency reserves 500,000 - - - 500,000
Unassigned 9,996,557 - - - 9,996,557
Total fund balances 80,104,972 17,725,965 - 9,582,498 107,413,435 Total liabilities, deferred inflows of
resources, and fund balances $ 90,641,610 $ 18,040,499 $ 2,746,827 $ 10,364,782 $ 121,793,718

City of Fountain Valley
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position
June 30, 2024
The accompanying notes are an integral part of these financial statements. -18-
Fund balances of governmental funds $ 107,413,435
133,819,432
Long-term liabilities (30,258,768)
Accrued interest on long-term debt (249,386)
Net OPEB obligation (20,994,082)
Net pension liability (95,460,860)
299,732
Pension related deferred outflow of resources 44,291,550 OPEB related deferred outflows of resources 8,583,125
Pension related deferred inflows of resources (8,249,171) OPEB related deferred inflows of resources (8,742,945)
17,141,035
Net position of governmental activities $ 147,593,097
Internal service funds are used by management to charge the costs of certain activities, such as fleet management and information technology, to individual funds. The assets and liabilities of the internal service funds must be added to the Statement of Net Position.

Revenues that do not meet the "availability" criteria for revenue recognition are deferred inflows of resources in the governmental funds.

Deferred outflows and inflows of resources related to pension and OPEB are not reported in the government funds:

Amounts reported for governmental activities in the statement of net position are different because:

Capital assets net of accumulated depreciation used in governmental activities are not current financial resources and, therefore, are not reported in the governmental funds.

Noncurrent liabilities, as listed below, are not due and payable in the current period and therefore are not reported in the governmental funds:

City of Fountain Valley
Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds
For the Fiscal Year Ended June 30, 2024
The accompanying notes are an integral part of these financial statements. -19-
Special
Revenue Fund
Capital
Projects Fund
General
Housing
Authority
Capital
Improvement
Program
Nonmajor
Governmental
Funds Total
Revenues:

Taxes 62,161,304 $ $ - $ - $ - $ 62,161,304
Licenses and permits 2,249,296 - - - 2,249,296
Fines and penalties 458,155 - - - 458,155
Investment income 5,172,818 364,631 - 211,455 5,748,904 Rental income 1,178,485 - - - 1,178,485
Intergovernmental 1,280,332 - - 6,081,221 7,361,553
Charges for services 8,905,864 9,187 - 15,358 8,930,409 Miscellaneous 975,297 6,000 - - 981,297
Total revenues 82,381,551 379,818 - 6,308,034 89,069,403 Expenditures:

Current:

General government 16,511,898 - - - 16,511,898
Public safety 36,707,788 - - 132,068 36,839,856
Transportation 4,436,679 - 3,012,454 4,415 7,453,548
Community development 5,320,661 585,238 - 313,437 6,219,336 Community services 4,526,955 - - 863 4,527,818
Capital outlay 889,557 - 5,456,637 - 6,346,194
Debt service: -
Principal 853,790 - - 660,968 1,514,758
Interest 836 - - 436,236 437,072
Total expenditures 69,248,164 585,238 8,469,091 1,547,987 79,850,480 Excess (deficiency) of revenues
over (under) expenditures 13,133,387 (205,420) (8,469,091) 4,760,047 9,218,923 Other financing sources (uses):

Transfers in 797,514 - 8,469,091 1,097,202 10,363,807
Transfers out (7,951,473) - - (2,483,641) (10,435,114)
Aquisition of IT subscriptions 17,265 - - - 17,265
Total other financing sources (uses) (7,136,694) - 8,469,091 (1,386,439) (54,042) Net change in fund balances 5,996,693 (205,420) - 3,373,608 9,164,881 Fund balances beginning of fiscal year,
as previously reported 88,662,580 17,931,385 - 6,389,171 112,983,136 Prior period restatement:

Adjustment - change in reporting entity (14,554,301) - - (14,554,301) - Adjustment - correction of error - - - (180,281) (180,281) Fund balance, beginning of year, as restated 74,108,279 17,931,385 - 6,208,890 98,248,554 Fund balances end of fiscal year $ 80,104,972 $ 17,725,965 $ - $ 9,582,498 $ 107,413,435

City of Fountain Valley
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2024
The accompanying notes are an integral part of these financial statements. -20-
Net changes in fund balances - total governmental funds $ 9,164,881 Capital outlay 5,575,926
Depreciation (3,078,962)
Changes in accrued interest on long-term debt 14,531
Changes in claims and judgments obligation 220,376
Changes in bond premium/discount 28,826
Changes in compensated absence benefits, net (223,977)
Principal repayments 1,514,758
Subscription acquisition (17,265)
(181,355)
(3,701,687)
5,987,899
2,503,263
Change in net position of governmental activities $ 17,807,214 Internal service funds are used by management to charge the costs of certain activities, such as fleet management and information technology, to individual funds. The net revenues (expenses) of the internal service funds is reported with governmental activities.

Governmental funds recognize OPEB costs when employer contributions are made; however, in the statement of activities, OPEB costs are recognized on the accrual basis. This is the difference between accrual-basis OPEB costs and actual employer contributions.

Governmental funds recognize pension costs when employer contributions are made; however, in the statement of activities, pension costs are recognized on the accrual basis. This is the difference between accrual-basis pension costs and actual employer contributions.

Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlay as expenditures. However, in the statement of activities, the costs of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlay exceeded depreciation in the current period.

Some expenses reported in the statement of activities do not require the use of current resources and therefore are not reported as expenditures in governmental funds. The following adjustments combine the net change of these liabilities:

Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position.

Revenues reported as unavailable revenue in the governmental funds. Amounts are not recorded as revenue under the modified accrual basis of accounting. This is the net change in unavailable revenue from the prior fiscal year.

City of Fountain Valley
Statement of Fund Net Position
Proprietary Funds
June 30, 2024
The accompanying notes are an integral part of these financial statements. -21-
Water Utility Sewer
Solid Waste
(Nonmajor) Total
Internal
Service Funds
Assets:

Current:

Cash and investments $ 29,208,312 $ 10,488,204 $ 1,488,936 $ 41,185,452 $ 16,182,881 Accounts receivable 3,403,916 404,129 843,547 4,651,592 250,000 Inventory 370,317 - - 370,317 12,590
Prepaid items - - - - 162,100
Restricted assets:

Cash and investments 807,091 - - 807,091 -
Total current assets 33,789,636 10,892,333 2,332,483 47,014,452 16,607,571 Noncurrent:

Capital assets not being depreciated 662,371 72,596 - 734,967 - Capital assets - net of accumulated depreciation 25,979,127 7,427,465 - 33,406,592 1,440,734 Total capital assets, net 26,641,498 7,500,061 - 34,141,559 1,440,734 Total noncurrent assets 26,641,498 7,500,061 - 34,141,559 1,440,734 Total assets 60,431,134 18,392,394 2,332,483 81,156,011 18,048,305 Deferred outflows of resources:

Deferred amounts from OPEB plan 1,801,329 441,483 - 2,242,812 - Deferred amounts from pension plan 3,179,446 779,241 - 3,958,687 - Total deferred outflows of resources 4,980,775 1,220,724 - 6,201,499 - Liabilities:

Current:

Accounts payable 3,725,381 32,840 818,347 4,576,568 522,881 Unearned revenues - - 201,438 201,438 -
Deposits payable 71,420 - - 71,420 -
Interest payable 182,091 - - 182,091 -
Accrued claims payable - - - - -
Compensated absences, current portion 149,012 32,359 - 181,371 - Long-term liabilities, current portion 699,673 - - 699,673 245,216 Total current liabilities 4,827,577 65,199 1,019,785 5,912,561 768,097 Noncurrent:

Compensted absences, net 22,086 27,002 - 49,088 -
Long-term liabilities, net 8,814,386 - - 8,814,386 139,173 Net OPEB liability 4,405,995 1,079,851 - 5,485,846 -
Net pension liability 5,828,053 1,428,379 - 7,256,432 - Total noncurrent liabilities 19,070,520 2,535,232 - 21,605,752 139,173 Total liabilities 23,898,097 2,600,431 1,019,785 27,518,313 907,270 Deferred inflows of resources:

Deferred amounts from OPEB plan 1,834,869 449,701 - 2,284,570 - Deferred amounts from pension plan 962,206 235,824 - 1,198,030 - Total deferred inflows of resources 2,797,075 685,525 - 3,482,600 - Net position:

Net investment in capital assets 17,082,059 7,490,543 - 24,572,602 1,056,345 Unrestricted 21,634,678 8,836,619 1,312,698 31,783,995 16,084,690 Total net position $ 38,716,737 $ 16,327,162 $ 1,312,698 $ 56,356,597 $ 17,141,035 Business-Type Activities

City of Fountain Valley
Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds
For the Fiscal Year Ended June 30, 2024
The accompanying notes are an integral part of these financial statements. -22-
Water Utility Sewer
Solid Waste
(Nonmajor) Total
Internal
Service Funds
Operating revenues
Charges for services $ 19,180,215 $ 2,488,964 $ 4,887,771 $ 26,556,950 $ 11,663,283 Miscellaneous 214,521 - - 214,521 30,719
Total operating revenues 19,394,736 2,488,964 4,887,771 26,771,471 11,694,002 Operating expenses:

Distribution maintenance 77,602 32,292 - 109,894 -
Utility administration 2,637,749 1,265,257 - 3,903,006 - Contract services - 205,245 4,858,073 5,063,318 -
Pumping and maintenance 1,843,102 - - 1,843,102 -
Water treatment 11,797,734 - - 11,797,734 -
Personnel services - - - - 3,629,728
Maintenance and operations - - - - 2,643,423
Equipment and software - - - - 1,391,964
Insurance premiums - - - - 1,424,613
Depreciation 970,670 336,462 - 1,307,132 466,279
Total operating expenses 17,326,857 1,839,256 4,858,073 24,024,186 9,556,007 Operating income 2,067,879 649,708 29,698 2,747,285 2,137,995 Nonoperating revenue (expense):

Investment income 1,067,917 373,948 28,678 1,470,543 -
Intergovernmental 1,409 - 22,766 24,175 -
Interest expense (289,509) - - (289,509) -
Sale of assets - - - - 268
Total non-operating revenue (expense) 779,817 373,948 51,444 1,205,209 268 Income before transfers 2,847,696 1,023,656 81,142 3,952,494 2,138,263 Transfers
Transfers in - - - - 365,000
Transfers out (125,062) (168,631) - (293,693) -
Total transfers (125,062) (168,631) - (293,693) 365,000 Net change in net position 2,722,634 855,025 81,142 3,658,801 2,503,263 Net position - beginning of fiscal year, as previously reported 35,458,546 15,472,137 1,231,556 52,162,239 - Adjustment - change in reporting entity - - - 14,554,301 - Adjustment - correction of error 535,557 535,557 83,471 Net position - beginning of year, as restated 35,994,103 15,472,137 1,231,556 52,697,796 14,637,772 Net position - end of fiscal year $ 38,716,737 $ 16,327,162 $ 1,312,698 $ 56,356,597 $ 17,141,035 Business-Type Activities

City of Fountain Valley
Statement of Cash Flows
Proprietary Funds
For the Fiscal Year Ended June 30, 2024
The accompanying notes are an integral part of these financial statements. -23-
Water Utility Sewer Solid Waste Total
Internal
Service Funds
Cash flows from operating activities:

Cash received from customers and users $ 19,219,685 $ 2,472,512 $ 4,934,113 $ 26,626,310 $ 11,456,932 Cash paid to suppliers for goods and services (13,057,683) (225,375) (4,444,908) (17,727,966) (5,389,302) Cash paid to employees for services (767,160) (838,264) - (1,605,424) (3,629,728) Net cash provided by operating activities 5,394,842 1,408,873 489,205 7,292,920 2,437,902 Cash flows from noncapital activities:

Cash paid (to) from other funds for advances (125,062) (168,631) - (293,693) 365,000 Net cash used by noncapital activities (125,062) (168,631) - (293,693) 365,000 Cash flows from capital and related financing activities:

Acquisition and construction of capital assets (1,052,478) (64,179) - (1,116,657) (1,054,026) Proceeds from sales of assets - - - - 268
Loan payment (595,000) - - (595,000) (385,127)
Interest paid (379,057) - - (379,057) -
Intergovernmental grant proceeds 1,409 - 22,766 24,175 - Net cash provided by (used by) capital and related financing activities (2,025,126) (64,179) 22,766 (2,066,539) (1,438,885) Cash flows from investing activities:

Interest received on investments 1,067,917 373,948 28,678 1,470,543 - Net cash provided by (used by) investing activities 1,067,917 373,948 28,678 1,470,543 - Net increase in cash and cash equivalents 4,312,571 1,550,011 540,649 6,403,231 1,364,017 Cash and cash equivalents at beginning of fiscal year 25,702,832 8,938,193 948,287 35,589,312 14,818,864 Cash and cash equivalents at end of fiscal year $ 30,015,403 $ 10,488,204 $ 1,488,936 $ 41,992,543 $ 16,182,881 Reconciliation of cash and cash equivalents to
amounts reported on the statement of net position
Cash and investments $ 29,208,312 $ 10,488,204 $ 1,488,936 $ 41,185,452 $ 16,182,881 Restricted cash and investments 807,091 - - 807,091 -
Cash and cash equivalents at end of fiscal year $ 30,015,403 $ 10,488,204 $ 1,488,936 $ 41,992,543 $ 16,182,881 Reconciliation of operating income to net cash
provided by operating activities
Operating income $ 2,067,879 $ 649,708 $ 29,698 $ 2,747,285 $ 2,137,995 Adjustments to reconcile operating income to net cash
provided by operating activities:

Depreciation 970,670 336,462 - 1,307,132 466,279
Decrease (increase) in receivables (175,051) (16,452) (101,142) (292,645) (237,070) Decrease (increase) in inventory (23,483) - - (23,483) - Decrease (increase) in prepaid items 25,673 - - 25,673 (24,695) Decrease (increase) in deferred outflows (1,755,171) (414,083) - (2,169,254) - Increase (decrease) in accounts payable 669,117 12,162 413,165 1,094,444 95,393 Increase (decrease) in deposits payable (10,552) - - (10,552) - Increase (decrease) in compensated absences (7,815) 20,509 - 12,694 - Increase (decrease) in accrued claims payable - - - - - Increase (decrease) in unearned revenues - - 147,484 147,484 - Increase (decrease) in pension and OPEB liabilities 2,729,272 622,317 - 3,351,589 - Increase (decrease) in deferred inflows 904,303 198,250 - 1,102,553 - Total adjustments 3,326,963 759,165 459,507 4,545,635 299,907 Net cash provided by operating activities $ 5,394,842 $ 1,408,873 $ 489,205 $ 7,292,920 $ 2,437,902 Business-Type Activities

City of Fountain Valley
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2024
The accompanying notes are an integral part of these financial statements. -24-
PrivatePurpose Trust
Fund
Successor
Agency
Custodial
Fund
Assets:

Cash and investments $ 550,287 $ 130,017
Total assets 550,287 130,017
Liabilities:

Account payable - 22,105
Total liabilities - 22,105
Net position:

Held for Successor Agency 550,287 -
Restricted for others - 107,912
Total net position $ 550,287 $ 107,912

City of Fountain Valley
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Fiscal Year Ended June 30, 2024
The accompanying notes are an integral part of these financial statements. -25-
PrivatePurpose Trust
Fund
Successor
Agency
Custodial
Fund
Additions:

Taxes $ 100,000 $ -
Net investment income 12,566 94
Fees assessed by other governments - 290,106
Total additions 112,566 290,200
Deductions:

Community development 100,000 -
Payments to other governments - 497,424
Total deductions 100,000 497,424
Change in net position 12,566 (207,224)
Net position - beginning of fiscal year 537,721 315,136 Net position - end of fiscal year $ 550,287 $ 107,912

THIS PAGE INTENTIONALLY LEFT BLANK

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-26-
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Fountain Valley, California (City) have been prepared in accordance with accounting principles generally accepted in the United States of America, as applied to government units. The Governmental Accounting Standards Board is the accepted standardsetting body for establishing governmental accounting and financial reporting principles. The following is a summary of the City’s significant accounting policies.

A) Reporting Entity
The City of Fountain Valley is a general law city governed by an elected five-member city council. As required by generally accepted accounting principles, these financial statements present the City of Fountain Valley (the primary government) and its component units. The component units discussed below are included in the City’s reporting entity because of the significance of their operational or financial relationship with the City. These entities are legally separate from the City. However, the City’s elected officials have a continuing full or partial accountability for fiscal matters of the other entities.

An organization is fiscally dependent on the primary government if it is unable to adopt its budget, levy taxes or set rates or charges, or issue bonded debt without approval by the primary government.

In a blended presentation, a component unit’s balances and transactions are reported in a manner similar to the balances and transactions of the City. Component units are presented on a blended basis when the component unit’s governing body is substantially the same as the City’s or the component unit provides services almost entirely to the City and the City either has a financial benefit or burden relationship or has operational responsibility for the component unit. The component units discussed below have governing bodies substantially the same as the City and the City has operational responsibility for them. Therefore, these component units of the City are blended within the financial statements of the City.

The Fountain Valley Housing Authority (Housing Authority) was established in 2011 to preserve the ability to provide affordable housing activities. The City provides management assistance to the Housing Authority and the members of the City Council also act as the Housing Authority’s governing body. The activities of the Housing Authority are reported in the Housing Authority Special Revenue Fund. Separate financial statements are not prepared for this blended component unit.

The Fountain Valley Public Financing Authority (Authority) was established on August 19, 2014, for the purpose of issuing tax exempt obligations for the water utility proprietary fund (2014 Revenue Bond) and for the City’s governmental activities (Lease Revenue Bond, Series 2016A and Clean Renewable Energy Bonds). The activities of the Authority are reported in the Water Utility Proprietary Fund and the Fountain Valley Public Financing Authority Debt Service Fund. Separate financial statements are not prepared for this blended component unit.

B) Basis of Accounting, measurement Focus and Financial Statement Presentation The basic financial statements of the City are composed of the following:
 Government-wide financial statements
 Fund financial statements
 Notes to basic financial statements

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-27-
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B) Basis of Accounting, measurement Focus and Financial Statement Presentation (continued) The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements.

Government-Wide Financial Statements
While separate government-wide and fund financial statements are presented, they are interrelated. In the government-wide financial statements, the governmental activities column incorporates data from governmental funds and internal service funds, while business-type activities incorporate data from the government’s enterprise funds.

Government-wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Under the economic resources measurement focus, all (both current and long-term) economic resources and obligations of the reporting government are reported in the government-wide financial statements. Accrual basis of accounting refers to when revenues and expenses are recognized in the accounts and reported in the financial statements. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.

Revenue from property taxes is recognized in the fiscal year which the taxes are levied. Grants and similar items are recognized as revenues as soon as the eligibility requirements imposed by the provider have been satisfied. Special assessments are recorded as revenue when earned. Unbilled receivables are recorded as revenues when services are provided.

The Statement of Activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. The types of transactions reported as program revenues for the City are reported in three categories:
 Charges for services,
 Operating grants and contributions
 Capital grants and contributions.

Charges for services include revenues from customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function. Grants and contributions include revenues restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Amounts paid to acquire capital assets are capitalized as assets in the government-wide financial statements, rather than reported as expenses. Proceeds of long-term debt are recorded as a liability in the government-wide financial statements, rather than as another financing source.

Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as an expenditure.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-28-
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B) Basis of Accounting, measurement Focus and Financial Statement Presentation (continued) As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments in lieu of taxes where the amounts are reasonably equivalent in value to the interfund services provided and other charges between the government’s Water Utility, Sewer, and Solid Waste functions and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Fund Financial Statements
The underlying accounting system of the City is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity (net position), revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

The fund financial statements provide information about the government’s funds, including its 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 governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds.

During the course of operations, the City has activity between funds for various purposes. Any residual balances outstanding at year-end are reported as due to/from other funds and advances to/from other funds. While these balances are reported in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Balances between the funds included in governmental activities are eliminated so that only the net amount is included as internal balances in the governmental activities column. Similarly, balances between the funds included in business-type activities are eliminated so that only the net amount is included as internal balances in the business-type activities column.

Further, certain activity occurs during the year involving transfers of resources between funds. In fund financial statements, these are reported at gross amounts as transfers in/out. While this is the reporting method for the fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Transfers between the funds included in governmental activities are eliminated so that only the net amount is included as transfers in the governmental activities column. Similarly, balances between the funds included in business- type activities are eliminated so that only the net amount is included as transfers in the business-type activities column.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-29-
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B) Basis of Accounting, measurement Focus and Financial Statement Presentation (continued) Governmental Funds
In the fund financial statements, governmental funds are presented using the modified-accrual basis of accounting. Under the modified-accrual basis of accounting, revenues are recognized when they become both measurable and available. Revenues are considered to be available when they are collected within the current period or soon enough thereafter to pay liabilities of the current period.

For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal year (within 60 days of year-end for all revenue except for grant revenue for which the availability period is 90 days). Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt and acquisitions under capital leases are reported as other financing sources.

Sales taxes, property taxes, franchise taxes, intergovernmental, rental income, transient occupancy taxes and special assessments are all considered to be susceptible to accrual and have been recognized as revenues in the current fiscal period to the extent normally collected within the availability period. Expenditure driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been met, and the amount is received during the period or within the availability period for this revenue source (within 60 days of year-end for all revenue except for grant revenue for which the availability period is 90 days).

Other revenue items are considered to be measurable and available when cash is received by the government.

In the fund financial statements, governmental funds are presented using the current financial resources measurement focus. This means that only current assets, deferred outflows of resources, current liabilities and deferred inflows of resources are generally included on their balance sheets. The reported fund balance is considered to be a measure of “available spendable resources”. Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balance.

Accordingly, they are said to present a summary of sources and uses of “available spendable resources” during a period.

Proprietary Funds
Proprietary fund types are accounted for using the economic resources measurement focus and accrual basis of accounting. This means that all assets, deferred outflows of resources, liabilities, and deferred inflows of resources (whether current or noncurrent) associated with the activity are included on the statement of net position. Their reported fund equity presents total net position.

The operating statement of the proprietary fund presents increases (revenues) and decreases (expenses) in total net position. Revenues are recognized when they are earned, and expenses are recognized when the liability is incurred.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-30-
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B) Basis of Accounting, measurement Focus and Financial Statement Presentation (continued) Proprietary funds distinguish operating revenues and expenses from nonoperating items.

Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's water utility, sewer, and solid waste funds are charges to customers for sales and services. Operating expenses for proprietary funds include all cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

Fiduciary Funds
Fiduciary Fund Financial Statements include a Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position. The City's Fiduciary private-purpose trust funds are accounted for using the economic resources measurement focus and accrual basis of accounting. The private-purpose trust funds account for the assets held by the City for the Successor Agency to the Fountain Valley Agency for Community Development. The City's Fiduciary custodial funds use the economic resources measurement focus and utilize the accrual basis for reporting its assets and liabilities. The City uses custodial funds to account for the collection and disbursement of funds for fees assessed by other governments collected by the City on behalf of others. Because these funds are not available for use by the City, fiduciary funds are not included in the governmental-wide statements.

C) Fund Classifications
The City reports the following major governmental funds:

General Fund - This is the primary operating fund of the City. It accounts for all activities of the general government, except those required to be accounted for in another fund.

Housing Authority Special Revenue Fund - This special revenue fund is used to account for the housing activities of the former Fountain Valley Agency for Community Development. Funding sources consists primarily of loan repayments and corresponding interest that are used to increase, improve, and preserve the community’s supply of low- and moderate-income housing.

Capital Improvement Program Fund – This capital projects fund is used to account for major capital improvement projects.

The City of Fountain Valley reports the following major enterprise funds:

Water Utility Fund - This enterprise fund is used to account for the provision of water to the residents of the City. All activities necessary to provide such services are accounted for in this fund including, but not limited to, administration, operation, maintenance, construction, financing, and related debt service.

Sewer Utility Fund - This enterprise fund is used to account for fees and services for sewer activities.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-31-
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) C) Fund Classifications (continued)
Additionally, the government reports the following fund types:

The Special Revenue Funds are used to account for proceeds of specific revenue sources that are legally restricted or otherwise assigned for specific purposes.

The Debt Service Funds are used to account for resources restricted or assigned for expenditure of principal and interest.

The Capital Projects Funds are used to account for resources restricted or assigned for capital improvements.

The Private-Purpose Trust Fiduciary Funds are used to account for the activities of the Successor Agency of the former Fountain Valley Agency for Community Development.

The Custodial Fund are used to account for the collection and disbursement of funds for fees assessed by other governments collected by the City on behalf of others in the special deposit and receipt fund.

The Internal Service Funds are established to account for the financing of goods or services provided by one department to other departments of the City, on a cost reimbursement basis. The City’s internal service funds include information technology, government buildings, fleet management, capital equipment and self insurance.

D) Accounting Changes
New Governmental Accounting Standards Implemented for the Year Ended June 30, 2024:
 GASB Statement No. 100 – Accounting Changes and Error Corrections. See Note 13 for further details.

Upcoming Governmental Accounting Standards Implementation:

The City is currently analyzing its accounting practices to determine the potential impact on the financial statements for the following GASB statements:
 GASB Statement No. 101 – Compensated Absences. The requirements of this Statement will take effect for fiscal years beginning after December 15, 2023.  GASB Statement No. 102 – Certain Risk Disclosures. The requirements of this Statement will take effect for fiscal years beginning after June 15, 2024.  GASB Statement No. 103 – Financial Reporting Model Improvements. The requirements of this Statement will take effect for fiscal years beginning after June 15, 2025.  GASB Statement No. 104 – Disclosure of Certain Capital Assets. The requirements of this Statement will take effect for fiscal years beginning after June 15, 2025.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-32-
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) E) Cash and Investments
Investments are reported in the accompanying basic financial statements at fair value, which is 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. Investments in external pools are valued based on the stated fair value represented by the external pool.

Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments. The City pools cash and investments of all funds, except for assets held by fiscal agents. Each fund’s share in this pool is displayed in the accompanying financial statements as cash and investments.

F) Cash Equivalents
For purposes of the statement of cash flows, cash equivalents are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of changes in value because of changes in interest rates and have an original maturity date of three months or less. Cash equivalents represent the proprietary funds’ share in the cash and investment pool of the City of Fountain Valley.

G) Inventories
Inventories are stated at average cost. Physical counts of inventory are taken on a cyclical basis during each fiscal year with perpetual records adjusted to actual at that time. The City uses the consumption method of accounting for inventories.

H) Prepaid Items
Payments to vendors that reflect costs applicable to future accounting periods are recorded as prepaid expenses in both government-wide and fund financial statements utilizing the consumption method.

I) Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements.

Capital assets are valued at historical cost or estimated cost if purchased or constructed.

Donated capital assets are valued at acquisition value on the date of donation. Capital assets subject to lease obligations or subscription-based information technology arrangements (SBITA) are valued at the present value of future lease/SBITA payments at the inception of the lease/SBITA.

Depreciation of all exhaustible capital assets used by the governmental and business-type activities is charged as an expense against their operations. Accumulated depreciation is reported on the statement of net position.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-33-
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) I) Capital Assets (continued)
Depreciation has been calculated using the straight-line method over the following estimated useful lives:

Buildings 25 – 40 years
Improvements other than buildings 10 – 50 years
Vehicles 3 – 25 years
Machinery and equipment 10 years
Furniture and fixtures 10 years
Infrastructure 20 – 50 years
Reservoirs 60 years
Wells, pumps and mains 25 – 75 years
Water meters and hydrants 30 years
Other water equipment 6 – 25 years
Subscription-based IT assets 1 – 10 years
The following schedule shows the minimum threshold at which the various types of asset purchases are capitalized when the estimated useful life is in excess of one year:

Land/land improvements Capitalize all
Buildings $50,000
Building improvements $25,000
Structures and improvements other than buildings $25,000 Equipment and vehicles $5,000
Infrastructure $100,000
The City has reported all capital assets including infrastructure in the government-wide statement of net position. The City has elected to use the straight-line depreciation method for some of the infrastructure assets and the modified approach for others, in which the City agrees to maintain those assets at a specified level of maintenance. Those assets reported using the straight-line depreciation method are traffic signals, sewers, and storm drains. Those assets reported using the modified approach are arterial pavement, local pavement, curbs and gutters and sidewalks.

J) Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represent a consumption of net assets that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditure) until that time. The City the following items that qualify for reporting in this category: deferred outflows – pension related and deferred outflows – Other Post Employment Benefits (OPEB) related.

In addition to liabilities, the statement of net position and governmental funds balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represent an acquisition of net assets that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time.

The City has the following items that qualify for reporting in this category: Unavailable revenue deferred and recognized as inflow of resources in the period that the amounts become available, deferred inflows – pension related, deferred inflows – OPEB related, and deferred inflows – lease related.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-34-
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) K) Property Taxes
Under California law, property taxes are assessed and collected by the counties up to 1 % of assessed value, plus other increases approved by the voters. The property taxes go into a pool and are then allocated to the cities based on complex formulas. Accordingly, the City of Fountain Valley accrues only those taxes which are received within 60 days after year-end.

The property tax calendar is as follows:

Lien Date: January 1
Levy Date: July 1
Due Date: First installment – November 1
Second Installment – February 1
Delinquent Date: First installment – December 10
Second installment – April 10
L) Claims and Judgments
The City records a liability for litigation, judgments, and claims when it is probable that an asset has been impaired or a liability (including incurred but not reported) has been incurred prior to year-end and the probable amount of loss (net of any insurance coverage) can be reasonably estimated.

This liability is recorded in the government-wide financial statements and has typically been paid from the City’s general fund.

M) Employee Leave Benefits
A liability is recorded for unused vacation and similar compensatory leave balances since the employees’ entitlement to these balances are attributable to services already rendered and it is probable that virtually all of these balances will be liquidated by either paid time off or payments upon termination or retirement.

A liability is recorded for unused sick leave balances only to the extent that it is probable that the unused balances will result in termination payments. This is estimated by including in the liability the unused balances of employees currently entitled to receive termination payment, as well as those who are expected to become eligible to receive termination benefits as a result of continuing their employment with the City. Other amounts of unused sick leave are excluded from the liability since their payment is contingent solely upon the occurrence of a future event (illness) which is outside the control of the City and the employee.

If material, a proprietary fund liability is accrued for all leave benefits relating to the operations of the proprietary funds. A current liability is accrued in the governmental funds for material leave benefits due on demand to governmental fund employees that have terminated prior to year-end.

All other amounts are recorded in the government-wide financial statements. These non-current amounts will be recorded as fund expenditures in the year in which they are paid or become due on demand to terminated employees.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-35-
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) N) Subscription-based Information Technology Arrangements The City is a participant in subscription-based IT arrangements as detailed in Note 5. The City recognizes a subscription-based IT payable and right to use IT assets in the financial statements.

At the commencement of the arrangement, the City initially measures the payable at the present value of payments expected to be paid during the arrangement term. Subsequently, the payable is reduced by the principal portion of payments made. The right to use assets are initially measured at the initial amount of the subscription-based IT payable. Subsequently, the right to use assets are amortized over the life of the arrangement term.

O) Net Position
The government-wide financial statements, proprietary fund statements and fiduciary fund statements utilize a net position presentation. Net position is classified in the following categories:

Net investment in capital assets - This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that is attributed to the acquisition, construction, or improvement of the assets.

Restricted net position - This amount is restricted by enabling legislation (such as external creditors, grantors, contributors, or laws or regulations of other governments) and includes unspent proceeds of bonds issued to acquire or construct capital assets.

Unrestricted net position - This amount is all net position that does not meet the definition of “net investment in capital assets” or “restricted net position”.

P) Net Position Flow Assumption
Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City’s practice to consider restricted net position to have been depleted before unrestricted net position is applied, unless otherwise directed by Council.

Q) Fund Balances
Fund balances are reported in the fund statements in the following classifications:

Nonspendable Fund Balance - this includes amounts that cannot be spent because they are either not spendable in form (such as inventory) or legally or contractually required to be maintained intact (such as endowments).

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-36-
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Q) Fund Balances (continued)
Restricted Fund Balance - this includes amounts that can be spent only for specific purposes stipulated by legal requirements imposed by other governments, external resource providers, or creditors. City Council imposed restrictions do not create restricted fund balance unless the legal document that initially authorized the revenue (associated with that portion of fund balance) also included language that specified the limited use for which the authorized revenues were to be expended.

Committed Fund Balance - this includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the City Council. Those committed amounts cannot be used for any other purpose unless City Council removes or changes the specified use by taking the same type of action (for example, resolution, ordinance, minutes action, etc.) that it employed to previously commit those amounts. If the Council action that limits the use of the funds was separate from the action that initially created the revenues that form the basis for the fund balance, then the resultant fund balance is considered to be committed, not restricted. The City considers a resolution to constitute the highest formal action of City Council for the purposes of establishing committed fund balance.

Assigned Fund Balance - this includes amounts that are intended to be used for specific purposes as indicated either by City Council or by persons to whom City Council has delegated the authority to assign amounts for specific purposes. City Council has not delegated this authority.

Unassigned Fund Balance - this includes the remaining spendable amounts which are not included in one of the other classifications. In other funds, the unassigned classification is used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed, or assigned. Only the General Fund shows a positive unassigned fund balance.

It is the City’s policy that restricted resources will be applied first, followed by (in order of application) committed, assigned, and unassigned resources, in the absence of a formal policy adopted by the Council.

The emergencies stabilization arrangement amount of $18,426,000 is presented as committed fund balance in the General Fund and has been formally approved by the City Council. This balance is to be utilized when the City Council declares an emergency for natural disasters or financial emergencies. A financial emergency is considered when annual general fund operating revenues decrease, or expenditures increase by 5% or more. City Council authorization through the declaration of an emergency is required for use of this amount.

R) OPEB
For purposes of measuring the net OPEB liability and deferred outflows/inflows of resources related to OPEB and OPEB expense, information about the fiduciary net position of the City’s OPEB Plan and additions to/deductions from the OPEB Plans’ fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, the City’s OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms.

Investments are reported at fair value.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-37-
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) S) Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms.

Investments are reported at fair value.

T) Use of Estimates
The preparation of financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities, and deferred inflows of resources, at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
2) CASH AND INVESTMENTS
Cash and Investments
Cash and investments as of June 30, 2024, are classified in the accompanying financial statements as follows:

Statement of Net Position:

Cash and investments $ 134,840,822
Restricted cash and investments 807,093
Restricted cash and investments - pension 17,367,544
Statement of Fiduciary Net Position:

Cash and investments 680,304
Total cash and investments $ 153,695,763
Cash and investments held by the City at June 30, 2024 consisted of the following:

Cash on hand $ 43,175
Deposits with financial institutions 18,920,524
Investments 134,732,064
Total $ 153,695,763

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-38-
2) CASH AND INVESTMENTS (continued)
Investments Authorized by the California Government Code and the City’s Investment Policy
The table below identifies the investment types that are authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk.

This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City or the investment of the funds within the pooled trusts with PARS and CERBT that are governed by the agreements between the City and the trustee, rather than the general provisions of the California Government Code or the City’s investment policy.

Maximum Maximum
Maximum Percentage Investment
Authorized Investment Type Maturity* of Portfolio* in One Issuer* Local Agency Bonds 5 years None None
U.S. Treasury Obligations 5 years None None
U.S. Government-Sponsored Agency Securities 5 years None 25% Banker's Acceptances 180 days 40% 5%
Commercial Paper 270 days 25% 5%
Negotiable Certificates of Deposit 5 years 30% 5
Repurchase Agreements 1 year None None
Medium-Term Notes 5 years 30% 5%
Mutual Funds N/A 20% 10%
Money Market Mutual Funds N/A 20% 10%
Mortgage Pass-Through Securities 5 years 20 5
Local Agency Investment Funds N/A $75 million None
JPA Pools (other investment pools) N/A None None
Supranational Investments 5 years 30% 10
*Based on state law requirements or the City’s investment policy requirements, whichever is more restrictive
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of short-term and long-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flows and liquidity needed for operations.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-39-
2) CASH AND INVESTMENTS (continued)
Disclosures Relating to Interest Rate Risk
Information about the sensitivity of the fair values of the City’s investments (including those held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity. For purposes of the schedule shown below, any callable securities are assumed to be held to maturity. 12 Months or 1 to 3 3 to 5
Less Years Years Total
Local Agency Investment Fund $ 62,688,586 $ - $ 62,688,586 - $ U.S. Government Sponsored
Agency Securities 3,705,743 2,386,787 1,919,888 8,012,418 U.S. Treasury Notes 1,403,000 7,439,207 14,751,016 23,593,223 Money Market Mutual Funds 736,801 - - 736,801
Medium-Term Notes 1,650,280 3,708,284 8,868,983 14,227,547 Asset Backed Securities 378,689 1,103,781 1,284,549 2,767,019 Supranational Investments 759,849 1,679,667 947,426 3,386,942 Collateralized Mortgage Obligations 329,571 - 812,793 1,142,364 Held by Trust:

PARS Pooled Pension Trust:

Money Market Mutual Funds 615,736 - - 615,736
Mutual Funds - Equity 7,012,723 - - 7,012,723
Mutual Funds - Fixed Income 9,741,614 - - 9,741,614
Held by Fiscal Agent:

Money Market Mutual Funds 807,091 - - 807,091
$ 89,829,683 $ 16,317,726 $ 28,584,655 $ 134,732,064
Remaining Investment Maturities
Disclosures Relating to Credit Risk
Generally, 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. Presented on the following page is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the Standard and Poor’s actual rating as of fiscal year end for each investment type.

Total
Minimum
Legal Rating AAA Other
Exempt/
Not Rated
Local Agency Investment Fund $ 62,688,586 N/A $ - $ 62,688,586 - $ U.S. Government Sponsored
Agency Securities 8,012,418 N/A 8,012,418 - -
U.S. Treasury Notes 23,593,223 N/A 23,593,223 - -
Money Market Mutual Funds 736,801 A 736,801 - -
Medium-Term Notes 14,227,547 A 93,565 14,133,982 -
Asset Backed Securities 2,767,019 AA 2,767,019 - -
Supranational Investments 3,386,942 AA 3,386,942 - -
Collateralized Mortgage Obligations 1,142,364 AA 1,142,364 - - Held by Fiscal Agent:

Money Market Mutual Funds 807,091 A 807,091 - -
Held by Trust:

PARS Pooled Pension Trust:

Money Market Mutual Funds 615,736 N/A 615,736 - -
Mutual Funds - Equity 7,012,723 N/A - - 7,012,723
Mutual Funds - Fixed Income 9,741,614 N/A - - 9,741,614 Total 134,732,064 $ $ 41,155,159 $ 14,133,982 $ 79,442,923 Ratings as of Fiscal Year End

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-40-
2) CASH AND INVESTMENTS (continued)
The ratings for the “Other” category above are as follows:

AA / AA- A+ / A / A- Total
Medium-Term Notes $ 4,892,662 $ 9,241,320 $ 14,133,982
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., 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 California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. At June 30, 2024, the City deposits (bank balances) were insured by the Federal Depository Insurance Corporation or collateralized as required under California Law.

For investments identified herein as held by bond trustee, the bond trustee selects the investment under the terms of the applicable trust agreement, acquires the investment, and holds the investment on behalf of the City.

Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio. The balance available for withdrawal is based on the accounting records maintained by LAIF. LAIF is not rated.

Cash and Investments - OPEB and Pension Trusts
The City pre-funds the City’s pension plans and OPEB health plan through tax qualified irrevocable trusts organized under Internal Revenue Code Section 115. OPEB and Pension trust fund assets are held on behalf of the City by the Public Agency Retirement Services (PARS). The City provides investment direction and determines the amount and timing of disbursements for PARS trust fund assets.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-41-
2) CASH AND INVESTMENTS (continued)
Those guidelines are as follows:

Risk Tolerance Moderate
Risk Management The portfolio is constructed to control risk through four layers of diversification – asset classes (cash, fixed income, equity), investment styles (large cap, small cap, international, value, growth), managers and securities. Disciplined mutual fund selection and monitoring process helps to drive return potential while reducing portfolio risk.

Investment Objective To provide growth of principal and income. It is expected that dividend and interest income will comprise a significant portion of total return, although growth through capital appreciation is equally important.

Strategic Ranges OPEB
0% - 10% Cash
40% - 60% Fixed Income
40% - 60% Equity
Pension
0% - 10% Cash
45% - 65% Fixed Income
30% - 50% Equity
Fair Value Measurements
The City categorizes its fair value measurement within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in active markets for identical assets, Level 2 inputs are quoted prices for similar assets in active markets, and Level 3 inputs are significant unobservable inputs.

The City has the following recurring fair value measurements as of June 30, 2024:

Quoted Prices
Level 1
Observable
Inputs Level 2
Unobservable
Inputs Level 3 Total
U.S. Government Sponsored
Agency Securities $ - $ 8,012,418 $ - $ 8,012,418
U.S. Treasury Notes 23,593,223 - 23,593,223 -
Medium-Term Notes 14,227,547 - 14,227,547 -
Asset Backed Securities - 2,767,019 - 2,767,019
Supranational Investments - 3,386,942 - 3,386,942
Collateralized Mortgage Obligations - 1,142,364 - 1,142,364 Held by Trust:

PARS Pooled Pension Trust:

Mutual Funds - Equity 7,012,723 - - 7,012,723
Mutual Funds - Fixed Income 9,741,614 - - 9,741,614
Total Leveled Investments $ 16,754,337 $ 53,129,513 $ 69,883,850 - Local Agency Investment Fund* 62,688,586
Money Market Mutual Funds* 736,801
Held by Fiscal Agent:

Money Market Mutual Funds* 807,091
Held by Trust:

PARS Pooled Pension Trust:

Money Market Mutual Funds* 615,736
Total Investment Portfolio $ 134,732,064
*Not subject to fair value measurements.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-42-
3) INTERFUND ACTIVITY
The following represents the interfund activity of the City for the fiscal year ended June 30, 2024.

Due to/From Other Funds
Receivable Fund Payable Fund Amount
General Fund Nonmajor Governmental Funds 298,234 $
Current interfund balances arise in the normal course of business and to assist funds with negative cash balance at fiscal year-end. They are expected to be repaid shortly after the end of the fiscal year.

Transfers In/Out
The following schedule summarizes the City’s transfer activity:

Transfers in Transfers out Amount
Non-major Fund $ 573,821
Water Fund 95,062
Sewer Fund 128,631
Capital Improvement Program Non-major Fund 1,909,820
General Fund 6,489,271
Water Fund 30,000
Sewer Fund 40,000
General Fund 1,097,202
General Fund 365,000
$ 10,728,807
Internal Service Fund
Non-major Fund
General Fund
(a) Transfers into the General Fund include $478,011 from Other Government Funds to fund HUT 2107 and 2107.5 Pass-Thru to General Fund and $95,810 from the Measure M Special Revenue Fund for funding assistance for Senior Transportation Services. (b) Transfers into the General Fund include $95,062 that was transferred from the Water Utility Fund for the contribution for employee benefits and $128,631 from the Sewer Fund to the General Fund partially for administrative services and partially for employee benefits. (c) Transfers out of the non-major funds consisted of contributions for various CIP projects. There were transfers from the Gas Tax Fund of $1,114,102, from the Road Maintenance and Rehabilitation Fund of $597,570, from the Measure M Fund of $177,088 and from the Pollution Reduction Fund of $21,060.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-43-
3) INTERFUND ACTIVITY (continued)
Transfers In/Out (continued)
(d) Transfers out of the General Fund include $6,489,271 to the Capital Improvement Program Fund for various CIP projects, $1,097,202 for the Fountain Valley Public Financing Authority Debt Service Fund for debt service payments on the 2017 Clean Revenue Renewal Energy Bonds and 2016A Lease Revenue Bonds and $365,000 for the Measure HH contribution to the Fleet Management Fund for fire apparatus.
(e) Transfers out of the Water Utility Proprietary Fund into the Capital Improvement Fund for $30,000 were to fund water related expenses incurred for the Residential Roadway Rehabilitation Project. (f) Transfers out of the Sewer Proprietary Fund into the Capital Improvement Fund for $40,000 were to fund water related expenses incurred for the Residential Roadway Rehabilitation Project. 4) CAPITAL ASSETS
Governmental Activities
Changes in capital assets for governmental activities for the year ended June 30, 2024 were as follows:

Balance Adjustments/ Balance
July 1, 2023 Increases Decreases Transfers June 30, 2024 Governmental Activities:

Capital Assets, Not Being Depreciated:

Infrastructure (modified approach) 63,548,697 $ $ - $ - $ - $ 63,548,697 Land 15,003,148 - - - 15,003,148
Right of way 17,948,464 - - - 17,948,464
Construction in progress 897,968 5,655,836 - (232,381) 6,321,423 Total Capital Assets
Not Being Depreciated 97,398,277 5,655,836 - (232,381) 102,821,732 Capital Assets, Being Depreciated:

Buildings 20,648,428 - - - 20,648,428
Improvements 10,196,394 - - 232,381 10,428,775
Vehicles and equiment 16,463,764 1,011,243 (615,756) - 16,859,251 Furniture and fixtures 231,536 58,729 - - 290,265
Infrastructure 30,605,306 - - - 30,605,306
Right-to-use subscriptions 1,217,249 52,170 - (92,227) 1,177,192 Total Capital Assets
Being Depreciated 79,362,677 1,122,142 (615,756) 140,154 80,009,217 Less Accumulated Depreciation:

Buildings (12,321,341) (449,676) - (12,771,017) -
Improvements (4,397,237) (514,302) - - (4,911,539)
Vehicles and equipment (9,899,035) (1,329,688) 581,920 (10,646,803) - Furniture and fixtures (94,800) (25,958) - - (120,758)
Infrastructure (17,613,075) (836,996) - (18,450,071) -
Right-to-use subscriptions (279,771) (388,621) - (2,203) (670,595) Total Accumulated Depreciation (44,605,259) (3,545,241) 581,920 (2,203) (47,570,783) Total Capital Assets
Being Depreciated, Net 34,757,418 (2,423,099) (33,836) 137,951 32,438,434 Capital Assets, Net $ 132,155,695 $ 3,232,737 $ (33,836) $ (94,430) $ 135,260,166

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-44-
4) CAPITAL ASSETS (continued)
Depreciation expense was charged to the following functions in the Statement of Activities:

General government $ 392,978
Transportation 3,540
Public safety 1,209,304
Community development 896,836
Community services 576,304
Internal Service Funds 466,279
Total $ 3,545,241
Business-type Activities
Changes in capital assets for business-type activities for the fiscal year ended June 30, 2024 were as follows:

Balance Adjustments/ Balance
July 1, 2023 Increases Decreases Transfers June 30, 2024 Business-Type Activities:

Capital Assets, Not Being Depreciated:

Land 123,076 $ $ - $ - $ - $ 123,076
Construction In Progress 47,252 1,116,657 - (552,018) 611,891 Total Capital Assets
Not Being Depreciated 170,328 1,116,657 - (552,018) 734,967 Capital Assets, Being Depreciated:

Buildings 30,360,250 - - 202,018 30,562,268
Improvements 30,858,833 - - 750,000 31,608,833
Machinery and equipment 252,088 - - - 252,088
Total Capital Assets
Being Depreciated 61,471,171 - - 952,018 62,423,189
Less Accumulated Depreciation:

Buildings (11,186,769) (667,217) - (11,853,986) -
Improvements (16,419,135) (348,316) - 135,557 (16,631,894) Machinery and equipment (239,118) (291,599) - - (530,717) Total Accumulated Depreciation (27,845,022) (1,307,132) - 135,557 (29,016,597) Total Capital Assets
Being Depreciated, Net 33,626,149 (1,307,132) - 1,087,575 33,406,592 Capital Assets, Net $ 33,796,477 $ (190,475) $ - $ 535,557 $ 34,141,559 Depreciation expense was charged to the following proprietary funds:

Water Utility $ 970,670
Sewer 336,462
Total $ 1,307,132

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-45-
5) LONG-TERM LIABILITIES
Changes in long-term liabilities for the governmental activities for the year ended June 30, 2024 (including unamortized discounts and refunding costs) are as follows:

Balance Balance Due Within
July 1, 2023 Adjustment Additions Deletions June 30, 2024 One Year Governmental Activities:

Taxable Pension Obligation
Bonds, Series 2015A $ 12,830,000 $ - $ - $ (840,000) $ 11,990,000 $ 925,000 Less: unamortized bond discount (211,533) - - 17,386 (194,147) (17,386) Lease Revenue Refunding Bonds,
Series 2016A 9,635,000 - - (535,000) 9,100,000 550,000
Add: unamortized bond premium 598,637 - - (44,898) 553,739 44,898 2017 Clean Renewable Energy Bonds 2,273,681 - - (125,968) 2,147,713 131,939 Compensated absences 2,420,123 - 2,681,630 (2,457,653) 2,644,100 2,080,907 Claims and judgements 4,925,954 (707,778) 1,913,945 (2,134,321) 3,997,800 999,450 Subscription liability 835,764 (79,565) 46,670 (398,917) 403,952 259,711 Total $ 33,307,626 $ (787,343) $ 4,642,245 $ (6,519,371) $ 30,643,157 $ 4,974,519 Taxable Pension Obligation Bonds Series 2015A
On August 19, 2015, the City issued $15,995,000 in Taxable Pension Obligation bonds for the financing of the City’s outstanding side fund obligation to CalPERS with respect to its Tier I Safety Plan (3% @ 50) and Tier I Miscellaneous Plan (2.5% @ 55). The bonds are obligations imposed by law payable from any source of funds to be appropriated by the City pursuant to Retirement Law.

The City will deposit with the Trustee on or before August 1 of each Fiscal Year the amount which, together with excess moneys remaining in the bond fund after the last interest payment date of each fiscal year, is sufficient to pay the City’s debt service obligations on the bonds payable during such fiscal year. The bonds bear interest ranging from 3.33% to 6.39%, payable semiannually on March 1 and September 1, commencing March 1, 2016.

The bonds maturing on September 1, 2035 are subject to mandatory sinking fund redemption on September 1 in each year, commencing September 1, 2030, at a redemption price equal to the principal amount thereof to be redeemed, without premium, plus accrued interest to the date of redemption, in the aggregate principal amounts ranging from $650,000 to $1,440,000.

The amount of bonds outstanding at June 30, 2024 is $11,990,000.

Future debt service principal and interest payments on the Taxable Pension Obligation Bonds Series 2015A are as follows:

Fiscal Year
Ending June 30, Principal Interest Total
2025 $ 925,000 $ 473,638 $ 1,398,638
2026 1,010,000 439,144 1,449,144
2027 1,110,000 398,638 1,508,638
2028 1,215,000 352,138 1,567,138
2029 1,320,000 301,438 1,621,438
2030 - 2034 4,450,000 867,926 5,317,926
2035 - 2036 1,960,000 87,501 2,047,501
Total $ 11,990,000 $ 2,920,423 $ 14,910,423

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-46-
5) LONG-TERM LIABILITES (continued)
Lease Revenue Bonds, Series 2016A
On January 27, 2016, the Fountain Valley Public Financing Authority issued $12,895,000 in Lease Revenue Bonds for the purpose of refunding the 2003 Certificates of Participation and financing the improvement of two storm water pump stations of the City. The issuance of the Lease Revenue Bonds, Series 2016A resulted in the full repayment of the 2003 Certificates of Participation in the fiscal year ended June 30, 2016. The bonds are payable from Lease Payments to be made by the City to the Fountain Valley Public Financing Authority. The bonds bear interest ranging from 3.000% to

3.125%, payable semiannually on May 1 and November 1, commencing May 1, 2016.

The amount of bonds outstanding at June 30, 2024 is $9,100,000.

Future debt service principal and interest payments on the Lease Revenue Bonds, Series 2016A are as follows:

Fiscal Year
Ending June 30, Principal Interest Total
2025 $ 550,000 $ 314,950 $ 864,950
2026 570,000 292,550 862,550
2027 595,000 269,250 864,250
2028 620,000 244,950 864,950
2029 645,000 219,650 864,650
2030 - 2034 3,640,000 695,575 4,335,575
2035 - 2037 2,480,000 117,468 2,597,468
Total $ 9,100,000 $ 2,154,393 $ 11,254,393
2017 Clean Renewable Energy Bonds
On January 7, 2017, the Fountain Valley Public Financing Authority issued $2,843,166 in Clean Renewable Energy bonds for the financing of the City’s energy efficiency project including the acquisition, construction, and installation of solar photovoltaic systems. The bonds are payable from Lease Payments to be made by the City to the Fountain Valley Public Financing Authority. The bonds bear interest of 4.44%, payable semiannually on March 1 and September 1, commencing September 1, 2017. The amount of bonds outstanding at June 30, 2024 is $2,147,713.

Future debt service principal and interest payments on the 2017 Clean Renewable Energy Bonds are as follows:

Fiscal Year
Ending June 30, Principal Interest Total
2025 $ 131,939 $ 93,928 $ 225,867
2026 138,111 88,002 226,113
2027 144,490 81,800 226,290
2028 151,082 75,313 226,395
2029 157,894 68,531 226,425
2030 - 2034 899,808 229,884 1,129,692
2035 - 2037 524,389 35,400 559,789
Total $ 2,147,713 $ 672,858 $ 2,820,571

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-47-
5) LONG-TERM LIABILITES (continued)
Compensated Absences
Governmental compensated absences are generally liquidated by the General Fund.

Subscription-based Information Technology Arrangements (SBITAs) As of June 30, 2024, the City had 8 active subscriptions. The subscriptions have payments that range from $0 to $193,566 and interest rates that range from 1.7100% to 3.2380%. As of June 30, 2024, the total combined value of the subscription liability is $403,952, and the total combined value of the short-term subscription liability is $267,488. The combined value of the right to use asset, as of June 30, 2024 of $1,177,192 with accumulated amortization of $670,595 is included in the rightto-use subscriptions classifications of capital assets, found in Note 4. The subscriptions had $693 of variable payments not included in the subscription liability, within the fiscal year.

Future debt service principal and interest payments on the SBITAs are as follows:

Fiscal Year
Ending June 30, Principal Interest Total
2025 $ 259,711 $ 7,777 $ 267,488
2026 62,757 2,564 65,321
2027 26,814 1,399 28,213
2028 27,272 941 28,213
2029 27,398 474 27,872
Total $ 403,952 $ 13,155 $ 417,107
Business-type Activities
Changes in long-term liabilities for business-type activities for the year ended June 30, 2024, are as follows:

Balance Balance Due Within
July 1, 2023 Adjustment Additions Deletions June 30, 2024 One Year Business-Type Activities:
2014A Revenue Bond $ 9,325,000 $ - $ - $ (595,000) $ 8,730,000 $ 625,000 Add: unamortized bond premium 858,732 - - (74,673) 784,059 74,673 Compensated absences 217,765 - 233,498 (220,804) 230,459 181,371 Total $ 10,401,497 $ - $ 233,498 $ (890,477) $ 9,744,518 $ 881,044 2014A Revenue Bonds
On December 17, 2014, the Fountain Valley Public Financing Authority (the Authority) issued approximately $13,695,000 in Revenue bonds for the financing of the acquisition and construction of certain improvements, betterments, renovations and expansions of facilities within its water system (the 2014 Project) and to refinance the Orange County Water District Note Payable. The Bonds are special limited obligation of the Authority payable solely from Authority revenues, which consist of installment payments to be made by the City to the Authority pursuant to an installment purchase agreement, dated as of December 1, 2014 by and between the City and the Authority. The Bonds are secured by installment payments to be made pursuant to an Installment Purchase Agreement, by and between the City and the Authority.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-48-
5) LONG-TERM LIABILITES (continued)
The 2014A Revenue Bonds were issued to provide for the refinancing of the OCWD Well Loan and the financing of the 2014 Project which installment payments will be payable from net revenues of the City’s water system. The Installment Purchase Agreement also requires the water fund to fix, prescribe and collect rates and charges for the water service which will be at least sufficient to yield during each fiscal year net revenues equal to 120% of the debt service for such fiscal year. For the fiscal year 2023-2024, the net revenues equal 214% of the debt service. Total interest expense for the 2014A bonds was $364,181 for the year ended June 30, 2024.

Future requirements to amortize outstanding 2014A Revenue Bonds as of June 30, 2024, are as follows:

Fiscal Year
Ending June 30, Principal Interest Total
2025 $ 625,000 $ 332,931 $ 957,931
2026 655,000 300,181 955,181
2027 690,000 265,681 955,681
2028 725,000 229,431 954,431
2029 765,000 191,181 956,181
2030 - 2034 4,315,000 376,543 4,691,543
2035 955,000 94,525 1,049,525
Total $ 8,730,000 $ 1,790,473 $ 10,520,473
Compensated Absences
Business-type compensated absences are generally liquidated by the Water Utility and Sewer Funds.
6) CLAIMS AND JUDGMENTS
Self-Insurance
At June 30, 2024, the City was self-insured for workers’ compensation, employee long-term disability, and earthquake and flood insurance. Additionally, the City has purchased coverage for individual workers’ compensation claims in excess of $750,000 for general employees and $1,000,000 for public safety. The City has also purchased coverage for individual earthquake and flood claims in excess of $50,000 up to a limit of $10,000,000 per occurrence.

Description of Self-Insurance Pool Pursuant to Joint Powers Agreement The City’s general and auto liability self-insurance retention is $350,000, and the balance extending to $25,000,000 is covered by the use of pooling maintained through the California State Association of Counties Excess Insurance Authority (Insurance Authority). The City also purchased commercial insurance for other risks of loss, including pollution, property loss, fidelity, and vehicle physical damage.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-49-
6) CLAIMS AND JUDGMENTS (continued)
The City is a member of the Insurance Authority (Insurance Authority). The Insurance Authority is composed of 283 California public entities, including 55 of 58 California Counties, and is organized under a joint power’s agreement pursuant to California Government Code Section 6500 et. seq. The purpose of the Insurance Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The Insurance Authority began covering claims of its members in 1979. The Insurance Authority has 55 County Board Members, appointed by the Board of Supervisors of each participating County. Additionally, the Insurance Authority has 10 Public Entity Board Members, including 3 alternates, appointed by the public entity membership. The Board operates through an eleven-member Executive Committee, and a ninemember Finance Committee.

Self-Insurance Programs of the Insurance Authority
The City pays an annual basic premium for excess coverage and is assessed an annual risk premium based on an actuarial review that estimates each of the program participant’s ultimate liabilities.

Should actual losses among participants be greater than anticipated, the City will be assessed its pro rata share of that deficiency. Conversely, if the actual losses are less than anticipated, the City will be refunded its pro rata share of the excess.

Property Insurance
The City participates in the all-risk property protection program of the Insurance Authority. This insurance protection is underwritten by several insurance companies. The City property is currently insured according to a schedule of covered property submitted by the City to the Insurance Authority. The City property currently has all-risk property insurance protection in the amount of $79 million. There is a $10,000 deductible per occurrence.

Crime Insurance
The City of Fountain Valley purchases crime insurance coverage in the amount of $1,000,000 with a $2,500 deductible. The fidelity coverage is provided through the Insurance Authority.

Adequacy of Protection
During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in 2023-24.

Changes in Claims and Judgments Payable
Changes in claims and judgments payable amounts for the past two fiscal years are as follows:

Fiscal Year
Beginning
balance
Claims Incurred
and Changes in
Estimates Claim Payments Ending Balance
2022-2023 $ 4,830,132 $ 1,566,504 $ (1,470,682) $ 4,925,954 2023-2024* 4,218,176 1,913,945 (2,134,321) 3,997,800
* Beginning balance adjusted, see Note 13

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-50-
7) OTHER POST-EMPLOYMENT BENEFITS
A. Plan Description
The City administers a single-employer defined benefit other post-employment benefit (OPEB) plan that provides eligible retirees and qualified family members with a subsidy towards medical and dental insurance premiums. Benefits vary by hire date, employment status and employment classification. Benefits continue to the surviving spouses.

In 2010, the City established a trust with Public Agency Retirement Services (PARS) to hold assets that are legally restricted for the City’s OPEB plan under Section 115 of the Internal Revenue Code. Contributions to the OPEB Trust and earnings on those contributions are irrevocable.

The PARS OPEB Trust issues a publicly available financial report for the fiduciary net position that is available upon request. Copies of PARS’s annual financial report may be obtained from its executive office at 4350 Von Karman Ave. Suite 100, Newport Beach, California 92660.

The City’s OPEB Plan does not issue a separate financial report.

Benefits Provided
For all covered employees with effective dates of retirement after October 1, 1980, and a minimum of 10-20 years of continuous service, the City contributes the actual cost of insurance up to the amount contributed for active employees. For general, professional, and technical employees hired prior to February 16, 1986, insurance with the City will be supplemental to Medicare upon reaching the age of 65.

For employees hired after February 16, 1986, benefits with the City will terminate upon reaching age

65. For fire employees hired prior to August 10, 1985, insurance with the City will be supplemental to Medicare upon reaching the age of 65. For fire employees hired after August 10, 1985, benefits with the City will terminate upon reaching age 65. For police employees, insurance with the City will be supplemental to Medicare upon reaching the age of 65. Department Directors receive paid supplemental coverage after the age of 65.

Employees are eligible for retiree health benefits if they retire from the City on or after age 50 with at least five years of service and are eligible for a CalPERS pension.

Employees Covered
As of measurement date June 30, 2023, the following current and former employees were covered by the benefit terms under the plan:

Inactive employees or beneficiaries currently receiving benefits 189 Inactive employees entitled to but not yet receiving benefits - Active employees 214
Total 403

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-51-
7) OTHER POST-EMPLOYMENT BENEFITS (continued)
A. Plan Description (continued)
Contributions
The benefit provisions and contribution requirements of plan members and the City are established and may be amended through agreements and memorandums of understanding between the City, it its employees, and unions representing the City’s employees. Administrative costs of the OPEB plan are financed through investment earnings. The contribution required to be made under City Council and labor agreements is based on a pay-as-you-go basis (i.e., as medical insurance premiums become due). For the fiscal year ending June 30, 2024, the City contributed $2,622,288 for current premiums.

No contributions were made to the PARS OPEB Trust for the fiscal year ended June 30, 2024. The contributions to the OPEB plan are generally made from the General Fund. The water utility and sewer proprietary funds are responsible for the pay-as-you-go amounts for their respective employees.

Method Used to Value Investments
Investments are reported at fair value, which is determined by the means of the most recent bid and asked prices as obtained from dealers that make markets in such securities. Securities for which market quotations are not readily available are valued at their fair value as determined by the custodian with the assistance of a valuation service.

B. Net OPEB liability
The City’s total OPEB liability was measured as of June 30, 2023, and was used to calculate the net OPEB liability measured as of June 30, 2023.

Actuarial Assumptions
Measurement Date June 30, 2023
Actuarial Cost Method Entry-Age Normal, Level Percentage of Salary Actuarial Assumptions:

Discount Rate 6.28%
Investment Rate of Return 6.58%
Inflation 2.30%
Salary Increase 2.80%**
Healthcare Cost Trend
Rates:

Pre-Medicare 7.40%*
Medicare 4.20%*
Mortality Rates Based on CalPERS tables
*Trending down to 4.14% over 52 years; applies to calendar years **Additional merit-based increases based on CalPERS merit salary increase tables.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-52-
7) OTHER POST-EMPLOYMENT BENEFITS (continued)
B. Net OPEB liability (continued)
Discount Rate
The discount rate used to measure the total OPEB liability was 6.28%. The projection of cash flows used to determine the discount rate assumed that the City would make benefit payments outside of the trust. 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 the PARS OPEB was applied to all periods of the projected benefit payments to determine the total OPEB liability.

C. Changes in the Net OPEB Liability
The changes in the net OPEB liability are as follows:

Total OPEB
Liability
Plan Fiduciary
Net Position
Net OPEB
Liability
Balance at June 30, 2023
(measurement date 6/30/22) $ 37,741,384 $ 12,376,076 $ 25,365,308 Service cost 803,013 - 803,013
Interest 2,174,224 - 2,174,224
Differences between expected
and actual experience 3,569,475 - 3,569,475
Changes of assumptions (1,780,592) (1,780,592) -
Net investment income - 947,870 (947,870)
Contributions - city contributions and implicit subsidy - 2,756,326 (2,756,326) Benefit payments, including refunds
of employee contributions (1,945,708) (1,945,708) -
Implicit subsidy credit (810,618) (810,618) -
Administrative expense - (52,696) 52,696
Net changes 2,009,794 895,174 1,114,620
Balance at June 30, 2024
(measurement date 6/30/23) $ 39,751,178 $ 13,271,250 $ 26,479,928 Change of Assumptions
The discount rate increased from 5.85% to 6.28%.

Sensitivity of the Net OPEB Liability to Changes in the Discount Rate 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 (5.28%) or 1-percentage point higher (7.28%) than the current discount rate:

Discount Rate - Current Discount Discount Rate
1% (5.28%) Rate (6.28%) +1% (7.28%)
Net OPEB Liability 30,563,588 $ $ 26,479,928 $ 22,985,574

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-53-
7) OTHER POST-EMPLOYMENT BENEFITS (continued)
C. Changes in the Net OPEB Liability (continued)
Sensitivity of the Total OPEB Liability to Changes in Medical Trend Rates The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using medical trend rates that are 1-percentage point lower and 1- percentage point higher than the current medical trend rate:

Current
Healthcare Cost
1% Decrease Trend Rates 1% Increase
Net OPEB Liability 23,083,157 $ $ 26,479,928 $ 30,496,205 D. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ended June 30, 2024, the City recognized OPEB expense of $808,887. At June 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Deferred
Outflows of Inflows of
Resources Resources
OPEB contributions subsequent to measurement date 2,622,288 $ $ - Differences between expected and actual experience 3,619,183 5,163,201 Changes of assumption 3,878,878 5,864,314
Differences between projected and actual earnings
on OPEB plan investments 705,588 -
Total $ 10,825,937 $ 11,027,515
The contributions subsequent to the measurement date of $2,622,288 will be recognized as a reduction of the total OPEB liability in the subsequent fiscal year. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows:

Deferred Outflows
Fiscal Year (Inflows) of
Ended June 30, Resources
2025 $ (1,486,698)
2026 (1,539,322)
2027 274,698
2028 (408,341)
2029 107,595
Thereafter 228,202

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-54-
8) DEFINED BENEFIT PENSION PLANS (CalPERS)
A. General Information about the Pension Plans
Plan Descriptions
All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan (Plan or PERF C) administered by the California Public Employees’ Retirement System (CalPERS.) The Plan consists of a miscellaneous pool and a safety pool (also referred to as “risk pools”), which are comprised of individual employer miscellaneous and safety rate plans, respectively. Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous pools. Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under generally accepted accounting principles.

Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools.

The City participates in one miscellaneous and one safety plans. Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS’ website, at www.calpers.ca.gov.

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 5 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.

The Plan operates under the provisions of the California Public Employees’ Retirement Law (PERL), the California Public Employees’ Pension Reform Act of 2013 (PEPRA), and the regulations, procedures and policies adopted by the CalPERS Board of Administration. The Plan’s authority to establish and amend the benefit terms are set by the PERL and PEPRA, and may be amended by the California state legislature and in some cases require approval by the CalPERS Board.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-55-
8) DEFINED BENEFIT PENSION PLANS (CalPERS) (continued)
A. General Information about the Pension Plans (continued) The Plan’s provisions and benefits in effect at June 30, 2024 are summarized as follows:

Miscellaneous
Tier I Tier II Tier III - PEPRA
Prior to On or After On or After
December 25, 2010 December 25, 2010 January 1, 2013
Benefit formula 2.5% @ 55 2% @ 60 2% @ 62
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life monthly for life monthly for life Retirement age 50-55 50-62 52-67
Monthly benefits, as a % of eligible compensation 2.0% to 2.5% 1.092% to 2.418% 1.0% to 2.5% Required employee contribution rates 8.00% 7.00% 6.25%
Required employer contribution rates 14.92% 10.10% 7.68% Safety - Police
Tier I Tier II Tier III - PEPRA
Prior to On or After On or After
December 25, 2010 December 25, 2010 January 1, 2013
Benefit formula 3% @ 50 3% @ 55 2.7% @ 57
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life monthly for life monthly for life Retirement age 50 50-55 50-57
Monthly benefits, as a % of eligible compensation 3.00% 2.4% to 3.0% 2% to 2.7% Required employee contribution rates 12.00% 9.00% 11.50% Required employer contribution rates 29.09% 22.83% 13.54% Safety - Fire
Tier I Tier II Tier III - PEPRA
Prior to On or After On or After
December 25, 2010 December 25, 2010 January 1, 2013
Benefit formula 3% @ 50 2% @ 50 2.7% at 57
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life monthly for life monthly for life Retirement age 50 50-55 50-57
Monthly benefits, as a % of eligible compensation 2.0% to 2.5% 1.092% to 2.418% 1.0% to 2.5% Required employee contribution rates 9.00% 9.00% 11.50% Required employer contribution rates 29.09% 19.95% 13.54%

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-56-
8) DEFINED BENEFIT PENSION PLANS (CalPERS) (continued)
A. General Information about the Pension Plans (continued) Contributions
Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. 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.

Employer contributions to the Plan for the fiscal year ended June 30, 2024 were $13,795,740. The actual employer payments of $13,725,318 made to CalPERS by the City during the measurement period ended June 30, 2022 differed from the City’s proportionate share of the employer’s contributions of $11,288,830 by $2,436,488, which is being amortized over the expected average remaining service lifetime in the Public Agency Cost-Sharing Multiple Employer Plan.

B. Net Pension Liability
The City’s net pension liability for the Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of June 30, 2023, using an annual actuarial valuation as of June 30, 2022 rolled forward to June 30, 2023 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is as follows.

Actuarial Methods and Assumptions Used to Determine Total Pension Liability The collective total pension liability for the June 30, 2023 measurement period was determined by an actuarial valuation as of June 30, 2022, with update procedures used to roll forward the total pension liability to June 30, 2023. The collective total pension liability was based on the following assumptions:

Valuation Date June 30, 2022
Measurement Date June 30, 2023
Actuarial Cost Method
Asset Valuation Method Fair Value of Assets
Actuarial Assumptions:

Discount Rate
Inflation 2.30%
Salary Increases Varies by Entry Age and Service
Mortality Rate Table (1)
Post Retirement Benefit Increase The lesser of contract COLA or 2.30% until Purchasing Power Protection Allowance floor on purchasing power
applies, 2.30% thereafter.
(1) The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer Entry Age Actuarial Cost Method

6.90%
Derived using CalPERS' membership data for all funds

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-57-
8) DEFINED BENEFIT PENSION PLANS (CalPERS) (continued)
B. Net Pension Liability (continued)
Long-term Expected Rate of Return
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.

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 of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a buildingblock 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
Assumed
Asset
Allocation
Real
Return1,2
Global equity - cap-weighted 30.00% 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 yield 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%)
2 Figures are based on the 2021 Asset Liability Management study. 1 An expected inflation of 2.30% used for this period.

Change of Assumptions
There were no assumption changes in 2023. Effective with the June 30, 2021 valuation date (June 30, 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. In addition, demographic assumptions and the price inflation assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement dates June 30, 2017 through June 30, 2021, 7.65% for measurement dates June 30, 2015 through June 30, 2016, and 7.50% for measurement date June 30, 2014.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-58-
8) DEFINED BENEFIT PENSION PLANS (CalPERS) (continued)
B. Net Pension Liability (continued)
Discount Rate
The discount rate used to measure the total pension liability for PERF C was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members 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, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. 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.

Subsequent Events
There were no subsequent events that would materially affect the results presented in this disclosure.

Pension Plans Fiduciary Net Position
Information about the pension plan’s assets, deferred outflows of resources, liabilities, deferred inflows of resources, and fiduciary net position are presented in CalPERS’ audited financial statements, which are publicly available reports that can be obtained at CalPERS’ website, at www.calpers.ca.gov. The plan’s fiduciary net position and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis used by the pension plan, which is the economic resources measurement focus and the accrual basis of accounting. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Investments are reported at fair value.

C. Proportionate Share of Net Pension Liability
The following table shows the City’s proportionate share of the Plan’s net pension liability over the measurement period.

Increase (Decrease)
Proportionate
Share of Total
Pension Liability
Proportionate
Share of Fiduciary
Net Position
Proportionate
Share of Net
Pension Liability
Balance at: 6/30/2022 (VD) $ 364,726,345 $ 266,306,156 $ 98,420,189 Balance at: 6/30/2023 (MD) 381,988,160 279,270,868 102,717,292 Net Changes during 2022-23 $ 17,261,815 $ 12,964,712 $ 4,297,103 The City’s proportion of the net pension liability was determined by CalPERS using the output from the Actuarial Valuation System and the fiduciary net position, as provided in the CalPERS Public Agency Cost-Sharing Allocation Methodology Report, which is a publicly available report that can be obtained at CalPERS’ website, at www.calpers.ca.gov. The City’s proportionate share of the net pension liability for the total Plan as of the June 30, 2023 and 2024 fiscal year ends was as follows:

Proportionate Share - June 30, 2023 0.85206%
Proportionate Share - June 30, 2024 0.82336%
Change - Increase (Decrease) (0.02870%)

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-59-
8) DEFINED BENEFIT PENSION PLANS (CalPERS) (continued)
C. Proportionate Share of Net Pension Liability (continued) Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City’s proportionate share of the net pension liability of the Plan as of the measurement date, calculated using the discount rate of 6.9 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (5.9 percent) or 1 percentage-point higher (7.9 percent) than the current rate:

Discount Discount
Rate - 1% Current Discount Rate +1%
(5.90%) Rate (6.90%) (7.90%)
Plan's Net Pension Liability/(Asset) $ 154,871,594 $ 102,717,292 $ 59,982,044 Amortization of Deferred Outflows and Deferred Inflows of Resources Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time.

The first amortized amounts are recognized in pension expense for the year the gain or loss occurs.

The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense.

The amortization period differs depending on the source of the gain or loss:

Net difference between projected
and actual earnings on pension
plan investments
5-year straight-line amortization
All other amounts Straight-line amortization over the expected average remaining service lives (EARSL) of all members that
are provided with benefits (active, inactive and retired) as of the beginning of the measurement period
The expected average remaining service lifetime (EARSL) is calculated by dividing the total future service years by the total number of plan participants (active, inactive, and retired) in the Public Agency Cost-Sharing Multiple-Employer Plan (PERF C).

The EARSL for PERF C for the measurement period ending June 30, 2023 is 3.8 years, which was obtained by dividing the total service years of 600,538 (the sum of remaining service lifetimes of the active employees) by 160,073 (the total number of participants: active, inactive, and retired) in PERF C. Inactive employees and retirees have remaining service lifetimes equal to 0. Total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-60-
8) DEFINED BENEFIT PENSION PLANS (CalPERS) (continued)
D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions
As of the start of the measurement period (July 1, 2022), the City’s net pension liability was $98,420,189. For the measurement period ending June 30, 2022 (the measurement date), the City incurred a pension expense of $16,491,857.

As of June 30, 2024, the City has deferred outflows and deferred inflows of resources related to pensions as follows:

Deferred Outflows
of Resources
Deferred Inflows of
Resources
Changes of Assumptions $ 6,065,233 $ -
Differences between expected and
actual experience 6,759,096 703,033
Differences between projected and actual
investment earnings 14,934,571 -
Differences between employer's contributions
and proportionate share of contributions 2,946,137 3,344,116 Change in employer's proportion 3,749,460 5,400,052
Pension contributions subsequent to the
measurement date 13,795,740 -
Total $ 48,250,237 $ 9,447,201
The amounts above are net of outflows and inflows recognized in the 2022-23 measurement period expense. Contributions subsequent to the measurement date of $13,795,740 reported with deferred outflows of resources will be recognized as a reduction of the net pension liability in the upcoming fiscal year. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in future pension expense as follows:

Deferred Outflows
Fiscal Year (Inflows) of
Ended June 30, Resources
2025 $ 7,470,108
2026 5,317,047
2027 11,798,853
2028 421,288
2029 -
Thereafter -

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-61-
8) DEFINED BENEFIT PENSION PLANS (CalPERS) (continued)
E. Payable to the Pension Plan
At June 30, 2024, the City reported a payable of $124,199 for the outstanding amount of contributions to the pension plan required for the year then ended.
9) DEFINED CONTRIBUTION PENSION PLAN (PARS)
As of January 1, 1992, the City implemented a defined contribution pension Plan through PARS for all of its non-regular employees. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. All non-regular employees are eligible to participate from the date of employment. Federal legislation requires contributions of at least 7.5% to a retirement plan, and City Council has resolved to match the employees’ contributions of 3.75% for employees hired prior to August 29, 2014. Employees hired after August 29, 2014, are required to pay the full 7.5%. The City’s contributions for each employee (and interest earned by the accounts) are fully vested immediately. For the year ended June 30, 2024, the City’s payroll covered by the plan was $1,030,135 and the City made employer contributions of $2,021 (3.75% of current covered payroll for employees hired before August 29, 2014).
10) LOANS RECEIVABLE
The City has outstanding rehabilitation and first-time home buyer loans receivable totaling $871,719 from qualified applicants. Loans receivable of $8,805,712 is recorded in the Housing Authority Fund; $195,998 in the Community Development Block Grant (CDBG) Special Revenue Fund; and $14,348 in the HOME Grant Special Revenue Fund. All housing rehabilitation loans are repaid when title to the property changes or according to payment schedules.

On October 1, 2002, the City entered into an Affordable Housing Agreement with Fountain Valley Partners, L.P. for the development of an apartment complex for seniors. Under the agreement, the City agreed to loan Fountain Valley Housing Partners, L.P. $5,606,071 at an interest rate of 2%.

Principal and interest are due at various maturity dates but no later than 55 years from the date of the note. The loan was paid off in full in the year ended June 30, 2024.

On January 22, 2019, the Fountain Valley Housing Authority approved a loan agreement with The Related Companies of California LLC (“Developer”) to assist with the development of a new 50-unit multifamily affordable housing project intended for tenancy by qualified extremely low, very low and low-income persons and families.

Under the loan agreement, the Housing Authority will advance and loan Developer up to $6,443,882 for the sole purposes of acquisition of the property and termination of the billboard lease of the proposed project. The loan will be funded from the Housing Authority Special Revenue Fund utilizing low and moderate housing asset funds of the former Fountain Valley Agency for Community Development. The outstanding principal balance of the loan shall bear simple interest at the rate of zero percent (0%) per annum. The loan will have a 60-year term to be repaid from residual receipts from operation of the proposed project. The amount outstanding at June 30, 2024 is $8,144,339.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-62-
11) LEASE RECEIVABLE
As of June 30, 2024, the City had 4 active leases. The leases have receipts that range from $25,000 to $424,900 and interest rates of 3.0%. As of June 30, 2024, the total combined value of the lease receivable is $8,165,565, the total combined value of the short-term lease receivable is $298,128, and the combined value of the deferred inflow of resources is $7,715,692. The leases had $13,489 of variable receipts, not included in the lease receivable, within the fiscal year.

The annual lease receipts expected through maturity are as follows:

Fiscal Year
Ending June 30, Principal Interest Total
2025 $ 298,128 $ 241,079 $ 539,207
2026 293,128 232,209 525,337
2027 305,318 223,255 528,573
2028 346,389 213,575 559,964
2029 363,053 202,926 565,979
2030 - 2034 2,111,953 837,357 2,949,310
2035 - 2039 2,749,894 475,334 3,225,228
2040 - 2044 1,649,864 89,340 1,739,204
2045 - 2046 47,838 2,163 50,001
Total $ 8,165,565 $ 2,517,238 $ 10,682,803
12) TAX ABATEMENT
Hotel Incentive Program
In January 2017, the City Council adopted guidelines that established a Hotel Incentive Program (HIP) which provides economic incentives to develop 3-to-5-star quality hotels in the City of Fountain Valley. The City will reimburse up to 50 percent of the total new transient occupancy tax (TOT) each year over a period of 15 years or less for new hotels with 100 or more rooms maintained at 3 to 5 star quality. Reimbursement applies for TOT above a $200,000 revenue requirement. No amounts have been abated under the HIP.

City of Fountain Valley
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2024
-63-
13) CORRECTION OF ERROR AND CHANGE IN REPORTING ENTITY
The City previously reported various funds that acted in an internal service capacity, combined with the General Fund. In order to report these activities in accordance with generally accepted accounting principles and GASB Statement 100, these funds have been extracted from the General Fund and separately reported as internal service funds, which qualifies as a change in reporting entity. The respective fund balance and net position for these funds have been restated as of July 1, 2023. In addition, various corrections of errors have been identified, with the fund balance and net position of those funds restated as of July 1, 2023.

General Fund
Nonmajor
Governmental
Funds
Fund balance, beginning of year,
as previously reported $ 88,662,580 $ 6,389,171
Adjustment - change in reporting entity (14,554,301) -
Adjustment - correction of error - (180,281)
Fund balance, beginning of year,
as restated $ 74,108,279 $ 6,208,890
Internal Service
Funds Water Fund
Governmental
Activities
Net position, beginning of year,
as previously reported $ - $ 35,458,546 $ 129,189,780
Adjustment - change in reporting entity 14,554,301 - -
Adjustment - correction of error 83,471 535,557 596,103 Net position, beginning of year,
as restated $ 14,637,772 $ 35,994,103 $ 129,785,883

REQUIRED SUPPLEMENTARY INFORMATION

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City of Fountain Valley
Schedule of Proportionate Share of the Net Pension Liability Last Ten Fiscal Years
-64-
Measurement Date
Employer's
Proportion of the
Collective Net
Pension Liability1
Employer's
Proportionate
Share of the
Collective Net
Pension Liability Covered Payroll
Employer's
Proportionate
Share of the
Collective Net
Pension Liability as
a percentage of the
Covered Payroll
Pension Plan's
Fiduciary Net
Position as a
percentage of the
Total Pension
Liability
6/30/2014 1.07112% 61,958,803 $ $ 17,787,691 348.32% 76.12% 6/30/2015 1.07012% 73,452,278 18,347,687 400.34% 72.13% 6/30/2016 0.84126% 72,795,357 19,284,950 377.47% 73.43% 6/30/2017 0.82936% 82,249,932 19,741,697 416.63% 72.29% 6/30/2018 0.83345% 80,313,009 18,733,501 428.71% 73.63% 6/30/2019 0.82843% 84,889,944 20,505,883 413.98% 73.27% 6/30/2020 0.81153% 88,298,205 21,555,099 409.64% 73.32% 6/30/2021 0.93115% 50,359,180 21,061,543 239.10% 85.39% 6/30/2022 0.85206% 98,420,189 20,811,283 472.92% 73.02% 6/30/2023 0.82336% 102,717,292 21,770,775 471.81% 73.11% 1 Proportion of the net pension liability represents the plan's proportion of PERF C, which includes both the Miscellaneous and Safety Risk Pools excluding the 1959 Survivors Risk Pool.

City of Fountain Valley
Schedule of Pension Plan Contributions
Last Ten Fiscal Years
-65-
Fiscal Year
Actuarially
Determined
Contribution
Contributions in
Relation to the
Actuarially
Determined
Contribution
Contribution
Deficiency
(Excess) Covered Payroll
Contributions as a
Percentage of
Covered Payroll
6/30/2015 $ 4,945,455 $ (4,945,455) $ - $ 18,347,687 26.95% 6/30/2016 6,447,749 (22,260,050) (15,812,301) 19,284,950 115.43% 6/30/2017 5,717,808 (5,717,808) - 19,741,697 28.96%
6/30/2018 6,183,724 (6,183,724) - 18,733,501 33.01%
6/30/2019 7,352,296 (7,352,296) - 20,505,883 35.85%
6/30/2020 8,391,979 (8,391,979) - 21,555,099 38.93%
6/30/2021 11,034,403 (11,034,403) - 21,061,543 52.39%
6/30/2022 9,991,154 (12,991,154) (3,000,000) 20,811,283 62.42% 6/30/2023 10,752,318 (13,752,318) (3,000,000) 21,770,775 63.17% 6/30/2024 10,795,740 (13,795,740) (3,000,000) 23,157,296 59.57% Notes to Schedule:

Changes in Benefit Terms: There were no changes to benefit terms that applied to all members of the Public Agency Pool.

Additionally, the figures above do not include any liability impact that may have resulted from Golden Handshakes that occurred after the June 30, 2021 valuation date, unless the liability impact is deemed to be material to the Public Agency Pool.

Changes in 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. There were no assumption changes for 2021. For 2020, the Plan adopted a new amortization policy effective with the 2019 actuarial valuation. The new amortization policy shortens the period over which actuarial gains and losses are amortized from 30 years to 20 years with the payments computed as a level dollar amount. In addition, the new policy does not utilize a fiveyear ramp-up and ramp-down on UAL bases attributable to assumption changes and non-investment gains/losses. The new policy also does not utilize a five-year ramp-down on investment gains/losses. These changes apply only to new UAL bases established on or after June 30, 2019. There were no changes in assumptions in 2019. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate in 2019. In 2017, the accounting discount rate was reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes in the discount rate. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate.

City of Fountain Valley
Schedule of Changes in the Net OPEB Liability and Related Ratios Last Ten Fiscal Years* -66-
Fiscal Year End 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 6/30/2024 Measurement Date 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 Total OPEB liability:

Service cost $ 783,000 $ 853,490 $ 110,595 $ 894,122 $ 918,710 $ 781,521 $ 803,013 Interest on total OPEB liability 2,737,000 2,792,205 2,042,543 2,554,439 2,608,735 2,124,178 2,174,224 Benefit payments, including refunds and the implied subsidy benefit payments (2,209,000) (2,256,000) (1,647,702) (2,620,294) (2,692,398) (1,804,338) (2,756,326) Expected minus actual benefit payments - - - 74,233 96,952 (364,241) 3,569,475Actuarial - experience gains (losses) - 1,808,185 (226,446) - (8,423,561) - - Actuarial - changes in assumptions - (16,183,013) 8,170,158 - 891,311 - (1,780,592) Net change in total OPEB liability 1,311,000 (12,985,133) 8,449,148 902,500 (6,600,251) 737,120 2,009,794 Total OPEB liability -beginning of year 45,927,000 47,238,000 34,252,867 42,702,015 43,604,515 37,004,264 37,741,384 Total OPEB liability - end of year (a) 47,238,000 34,252,867 42,702,015 43,604,515 37,004,264 37,741,384 39,751,178 Plan Fiduciary Net Position:

Contributions - employer 2,209,000 3,956,000 1,647,702 2,620,294 2,692,398 - Net investment income 807,000 555,665 59,466 (263,144) 711,322 833,476 947,870 Administrative expenses (20,000) (45,829) (43,248) (50,751) (54,189) (57,489) (52,696) Employer contributions as benefit payments - - - - - 1,804,338 (2,756,326) Benefit payments, including refunds and the implied subsidy benefit payments (2,209,000) (2,256,000) (1,647,702) (2,620,294) (2,692,398) (1,804,338) 2,756,326 Actuarial - investment gains (losses) - 5,118 648,267 688,572 1,930,956 (2,676,116) - Net change in plan fiduciary net position 787,000 2,214,954 664,485 374,677 2,588,089 (1,900,129) 895,174 Plan fiduciary net position - beginning of year 7,647,000 8,434,000 10,648,954 11,313,439 11,688,116 14,276,205 12,376,076 Plan fiduciary net position - end of year (b) 8,434,000 10,648,954 11,313,439 11,688,116 14,276,205 12,376,076 13,271,250 Net OPEB liability - ending (a)-(b) $ 38,804,000 $ 23,603,913 $ 31,388,576 $ 31,916,399 $ 22,728,059 $ 25,365,308 $ 26,479,928 Plan fiduciary net position as a percentage of 17.85% 31.09% 26.49% 26.80% 38.58% 32.79% 33.39% the total OPEB liability
Covered - employee payroll $ 19,742,000 $ 18,734,000 $ 21,555,000 $ 21,061,543 $ 20,811,283 $ 21,770,775 $ 21,767,048 Net OPEB liability as percentage of covered -
employee payroll 196.56% 126.00% 145.62% 151.54% 109.21% 116.51% 121.65% Notes to schedule:Changes in assumptions: Discount rate increased from 5.85% to 6.28%.*GASB Statement No. 75 was implemented in FY 2018; additional years will be presented as they are available.

City of Fountain Valley
Schedule of OPEB Plan Contributions
Last Ten Fiscal Years*
-67-
Fiscal Year
Actuarially
Determined
Contribution
Contributions in
Relation to the
Actuarially
Determined
Contribution
Contribution
Deficiency
(Excess) Covered Payroll
Contributions as
a Percentage of
Covered Payroll
6/30/2018 $ 3,534,962 $ (2,209,000) $ 1,325,962 $ 19,742,000 11.19% 6/30/2019 3,699,062 (3,956,000) (256,938) 18,734,000 21.12% 6/30/2020 1,832,900 (1,647,702) 185,198 21,555,000 7.64% 6/30/2021 3,222,849 (2,620,294) 602,555 21,061,543 12.44% 6/30/2022 3,237,566 (2,692,398) 545,168 20,811,283 12.94% 6/30/2023 2,460,257 (1,804,338) 655,919 21,770,775 8.29% 6/30/2024 2,660,361 (2,756,326) (95,965) 21,767,048 12.66% Notes to Schedule:

Assumptions and Methods:

Actuarial cost method: Entry-age normal, level percent of pay Amortization method: Closed period, level percent of pay Amortization period: 20 years
Inflation: 2.30%
Assumed payroll growth: 2.80%
Healthcare trend rates: 7.40%, trending down to 4.14%
Rate of return on assets: 6.58%
Mortality rate: CalPERS rates
Retirement rates: CalPERS rates
*GASB Statement No. 75 was implemented in FY 2018; additional years will be presented as they are available.

City of Fountain Valley
Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual – General Fund
For the Year Ended June 30, 2024
-68-
Variance with
Final Budget
Budgeted Amount Actual Positive
Original Final Amounts (Negative)
Revenues
Taxes 61,503,740 $ $ 61,803,740 $ 62,161,304 $ 357,564
Licenses and permits 2,034,500 2,034,500 2,249,296 214,796 Fines and penalties 547,000 497,000 458,155 (38,845)
Investment income 1,111,200 1,111,200 5,172,818 4,061,618 Rental income 1,106,040 1,111,040 1,178,485 67,445
Intergovernmental 869,900 2,424,900 1,280,332 (1,144,568) Charges for services 7,883,680 7,984,430 8,905,864 921,434 Miscellaneous 1,241,030 914,030 975,297 61,267
Total revenues 76,297,090 77,880,840 82,381,551 4,500,711 Expenditures
Current:

General government 8,817,140 8,880,236 16,511,898 (7,631,662) Public safety 37,421,950 37,328,693 36,707,788 620,905
Transportation 5,073,480 5,154,157 4,436,679 717,478
Community development 5,949,720 6,074,629 5,320,661 753,968 Community services 4,620,050 5,043,409 4,526,955 516,454 Capital outlay 993,705 1,396,578 889,557 507,021
Debt service:

Principal retirement 840,000 848,563 853,790 (5,227)
Interest - - 836 (836)
Total expenditures 63,716,045 64,726,265 69,248,164 (4,521,899) Excess of Revenues over
(under) Expenditures 12,581,045 13,154,575 13,133,387 (21,188) Other financing sources (uses):

Transfers in 10,939,270 10,939,270 (10,141,756) 797,514 Transfers out (20,976,210) (20,747,810) (7,951,473) 12,796,337 Issuance of IT subscriptions - - 17,265 17,265
Total other financing sources (uses) (10,036,940) (9,808,540) (7,136,694) 2,671,846 Net change in fund balance 2,544,105 3,346,035 5,996,693 2,650,658 Fund balances beginning of fiscal year,
as previously reported 88,662,580 88,662,580 88,662,580 - Prior period restatement:

Adjustment - change in reporting entity (14,554,301) (14,554,301) (14,554,301) - Fund balance, beginning of year, as restated 74,108,279 74,108,279 74,108,279 - Fund balance at beginning of fiscal year, as restated 74,108,279 74,108,279 74,108,279 - Fund balance at end of fiscal year $ 76,652,384 $ 77,454,314 $ 80,104,972 $ 2,650,658

City of Fountain Valley
Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual – Housing Authority Special Revenue Fund For the Year Ended June 30, 2024
-69-
Variance with
Final Budget
Budgeted Amount Actual Positive
Original Final Amounts (Negative)
Revenues
Investment income $ 84,000 $ 154,000 $ 364,631 $ 210,631 Charges for services - 9,000 9,187 187
Miscellaneous - - 6,000 6,000
Total revenues 84,000 163,000 379,818 216,818
Expenditures
Community development 1,596,355 1,596,355 585,238 1,011,117 Total expenditures 1,596,355 1,596,355 585,238 1,011,117 Net change in fund balance (1,512,355) (1,433,355) (205,420) 1,227,935 Fund balance at beginning of fiscal year 17,931,385 17,931,385 17,931,385 - Fund balance at end of fiscal year $ 16,419,030 $ 17,725,965 16,498,030 $ 1,227,935 $

City of Fountain Valley
Notes to Required Supplementary Information
June 30, 2024
-70-
NOTE 1 - BUDGETS AND BUDGETARY DATA
The adopted budget of the City consists of the presentation of a Council action request in the form of a staff report specifying the total appropriation for each departmental activity, (e.g., Police Administration, Street Maintenance, etc.).

Total appropriations for each fund may only be increased by the City Council by the approval of a staff report requesting to amend the budget with the exception of budget adjustments which involve offsetting revenues and expenditures. In cases involving offsetting revenues and expenditures, the Finance Director is authorized to increase or decrease an appropriation for a specific purpose where said appropriation is offset by unbudgeted revenue which is designated for said specific purpose.

The City Manager has the authority to adjust the amounts appropriated between the departments and activities of a fund, objects within each departmental activity and between accounts within the objects, provided, however, that the total appropriations for each fund does not exceed the amounts provided in the original Council action formally adopting the budget.

The level at which expenditures may not legally exceed appropriations is the fund level.

All appropriations lapse at fiscal year-end unless City Council takes formal action in the form of an adopted staff report that allows the appropriation to continue into the following fiscal year.

Budgets for the various funds are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are legally adopted for the general, special revenue, debt service, capital projects, and proprietary fund types.

NOTE 2 - DISCLOSURES FOR STREETS, SIDEWALKS, CURBS AND GUTTERS The City elected to use the modified approach in reporting its street pavement infrastructure network.

Under the modified approach, infrastructure assets that are part of a network or subsystem of a network are not required to be depreciated as long as two requirements are met.

First, the government must manage the eligible infrastructure assets using an asset management system that has the following characteristics:
 An up-to-date inventory of eligible infrastructure assets,  Annual condition assessments of the eligible infrastructure assets and summaries of the results using a measurement scale, and
 Estimates of the annual cost to maintain and preserve the eligible infrastructure assets at the condition level established and disclosed by the government.

Second, the government must document that the eligible infrastructure assets are being preserved approximately at (or above) a condition level established and disclosed by the government. If eligible infrastructure assets meet all requirements and are not depreciated, all expenditures made for those assets (except for additions and improvements) are expensed in the period incurred. Additions and improvements to eligible infrastructure assets are capitalized. Additions or improvements increase the capacity or efficiency of infrastructure assets rather than preserve the useful life of the assets.

City of Fountain Valley
Notes to Required Supplementary Information
June 30, 2024
-71-
NOTE 2 - DISCLOSURES FOR STREETS, SIDEWALKS, CURBS AND GUTTERS (continued) Streets
The condition of the City’s roadway pavements is measured using the CarteGraph Pavement Management System. The system uses a measurement scale that is based on a Pavement Condition Index (PCI) ranging from zero for a very poor pavement to 100 for a pavement in very good condition. The City’s road system is divided into roadway segments according to the classifications of Primary, Major, and Secondary routes which are combined for reporting purposes as Master Plan of Arterial Highways (MPAH) and Locals. Field condition surveys of the pavement surface are conducted using 19 pavement distress types and a five-level measurement scale to develop the PCI for each roadway segment and an overall pavement network rating. The five levels are: Very Good (86-100), Good (75-85), Fair (60-74), Poor (41- 59), and Very Poor (0-40). Field condition surveys are undertaken, and PCI ratings are compiled biannually for MPAH’s and Locals. It is the City’s policy to maintain a weighted average of all roadway segments at a PCI of 65 or better. The following table shows the results of the field condition surveys:

Condition PCI Range MPAH Locals Total Mi. % of Network
Very good 86-100 23.5 54.2 77.7 47.1%
Good 75-85 18.9 46.1 65.0 39.4%
Fair 60-74 9.3 9.2 18.5 11.2%
Poor 41-59 2.5 0.7 3.2 1.9%
Very poor 0-40 - 0.4 0.4 0.2%
Totals 54.2 110.6 164.8 100%
The overall condition of the City’s pavement network based on the most recent complete assessment performed in fiscal year 2024 was “Very Good” with a weighted average PCI of 84.7 based on the surface area of each segment. The City’s four assessments performed previously in fiscal years 2020, 2018, 2016, and 2014 were “Very Good” to “Good” with a weighted average Overall Condition Index (OCI) of 86.4, 86.1, 85.1, and 81.4, respectively.

Sidewalks
The City’s maintenance standards for sidewalks are based upon the various vertical offset criteria listed below:

Sidewalk Maintenance
 0” to ½” - will be flagged for identification purposes, however, will be excluded from the budgetary section of the report. These distress locations are potential hazards and should be considered for future maintenance.
 ½” to 1” - will be flagged for grinding maintenance.
 1” to 2”- will be flagged for ramping maintenance.
 >2” caused by a tree - will be flagged as ramp maintenance until the tree is removed. Then the City will remove the deficient sidewalk and/or curbs and gutter.

It is the City’s policy to perform maintenance on sidewalks consistent with the above criteria.

City of Fountain Valley
Notes to Required Supplementary Information
June 30, 2024
-72-
NOTE 2 - DISCLOSURES FOR STREETS, SIDEWALKS, CURBS AND GUTTERS (continued) Curbs and Gutters
The City’s maintenance standards for curbs and gutters requires that sections of curbs and gutters that experience a vertical offset of 1-1/2 inches or greater, which create “standing” water shall be placed on a schedule for removal and replacement consistent with existing City Council policy. To the greatest extent possible, removal and replacement of curbs and gutters meeting the above criteria shall be performed in conjunction with street resurfacing projects within which the deficient curbs and gutters sections are located.

Comparison of Needed-to-Actual Maintenance/Preservation 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 2023-2024 Sidewalks, curbs and gutters:

Budgeted 296,000 296,000 - 575,000 575,000 2,055,000 -
Actual 12,540 - 9,310 152,184 348,134 1,137,293 -
Roadway Classification:

Arterial and collectors
Budgeted 1,426,127 3,259,479 3,800,494 1,819,743 1,920,000 2,377,015 2,890,000 Actual 43,755 1,287,645 2,106,312 1,267,756 1,353,847 2,087,181 528,123 Residential roadway
Budgeted 1,800,000 1,800,000 2,300,000 2,921,000 2,000,000 3,050,000 1,155,000 Actual 1,535,470 1,485,305 2,287,898 2,615,071 1,798,038 2,864,058 1,137,359

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SUPPLEMENTARY SCHEDULES

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City of Fountain Valley
Nonmajor Government Funds
June 30, 2024
-73-
Special Revenue Funds
Special revenue funds are used to account for specific revenue sources that are legally restricted to or otherwise assigned for specific purposes.

Criminal Activities - This fund is used to account for receipts and disbursements of seized and forfeited assets used for sale of controlled substances and to account for state monies to be used for policing activities. This fund includes the opioid settlement allocation from the State of California (Abatement Funds) and related opioid remediation activities.

Road Maintenance and Rehabilitation Program SB 1 - This fund is used to account for revenues received from the State SB1 taxes. Expenditures are restricted to basic road maintenance, rehabilitation, and critical safety projects.

Gas Tax - This fund is used to account for state gasoline taxes received by the City. These funds may be used for street maintenance, right-of-way acquisition and street construction.

Abandoned Vehicle Abatement - This fund is used to account for abatement of abandoned or disabled vehicles illegally parked in the City.

Traffic Improvement - This fund is used to account for Measure M revenues received by the City. These funds may be used for street projects to improve traffic.

Pollution Reduction - This fund is used to account for South Coast Air Quality Management District revenues received by the City. These funds may be used for various programs to reduce air pollution.

HOME Grant - This fund is used to account for federal HOME Grant funds.

Measure M2 - This fund is used to account for Measure M2 revenue and interest earnings. These funds are transferred out for traffic improvement related projects.

Community Development Block Grant - This fund is used to account for federal Housing and Community Development Block Grant funds.

Debt Service Funds
Debt service funds are used to account for resources restricted or assigned for expenditure of principal and interest.

Fountain Valley Public Financing Authority - This fund is used to account for the repayment of principal and interest on the Lease Revenue Bonds, Series 2016A.

City of Fountain Valley
Nonmajor Government Funds
June 30, 2024
-74-
Capital Project Funds
Capital projects funds are used to account for resources restricted or assigned for capital improvements.

Drainage - This fund is used to account for the implementation of goals and objectives of the master drainage plan and to mitigate water runoff impacts of new development in the drainage area.

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City of Fountain Valley
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2024
-75-
Criminal
Activities
Road Maint
and Rehab
Program
SB1 Gas Tax
Abandoned
Vehicle
Abatement
Traffic
Improvement
Assets:

Cash and investments $ 1,199,508 $ 887,406 $ 654,283 $ 4,567 $ 1,328,397 Receivables:

Accounts 5,113 257,100 135,593 - -
Loans - - - - -
Restricted assets:

Restricted cash and investments - - - - -
Total assets $ 1,204,621 $ 1,144,506 $ 789,876 $ 4,567 $ 1,328,397 Liabilities, deferred inflows of resources, and fund balances Liabilities:

Accounts payable $ - -$ -$ $ - $ -
Deposits payable - - 140,455 - 82,338
Unearned revenues 213,585 - - - -
Due to other funds - - - - -
Total liabilities 213,585 - 140,455 - 82,338
Deferred inflows of resources:

Unavailable revenues 5,113 - - - -
Total deferred inflows of resources 5,113 - - - -
Fund balances:

Restricted for:

Public safety 985,923 - - - -
Transportation 1,144,506 - 649,421 4,567 1,246,059
Housing - - - - -
Community development - - - - -
Debt service - - - - -
Assigned:

Capital projects - - - - -
Total fund balances 985,923 1,144,506 649,421 4,567 1,246,059 Total liabilities, deferred inflows of resources, and fund balances (deficit) $ 1,204,621 $ 1,144,506 $ 789,876 $ 4,567 $ 1,328,397 Special Revenue Funds

-76-
Debt Service
Fund
Capital
Projects Fund
Pollution
Reduction HOME Grant Measure M2
Community
Development
Block Grant
Fountain Valley
Public
Financing
Authority Drainage Total
$ 569,404 $ 332,249 $ 4,125,751 $ 3,616 $ 276,537 $ 60,078 $ 9,441,796 19,172 - 254,193 41,467 - - 712,638
- 14,348 - 195,998 - - 210,346
- - - - 2 - 2
$ 588,576 $ 346,597 $ 4,379,944 $ 241,081 $ 276,539 $ 60,078 $ 10,364,782 $ - $ - $ - $ 23,387 $ - $ - $ 23,387
- - - - - - 222,793
- - - - - - 213,585
- - - 21,697 276,537 - 298,234
- - - 45,084 276,537 - 757,999
19,172 - - - - - 24,285
19,172 - - - - - 24,285
569,404 - - - - - 1,555,327
- - 4,379,944 - - - 7,424,497
- 346,597 - - - - 346,597
- - - 195,997 - - 195,997
- - - - 2 - 2
- - - - - 60,078 60,078
569,404 346,597 4,379,944 195,997 2 60,078 9,582,498
$ 588,576 $ 346,597 $ 4,379,944 $ 241,081 $ 276,539 $ 60,078 $ 10,364,782 Special Revenue Funds

City of Fountain Valley
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds
For the Year Ended June 30, 2024
-77-
Criminal
Activities
Road Maint
and Rehab
Program SB1 Gas Tax
Abandoned
Vehicle
Abatement
Traffic
Improvement
Revenues:

Investment income $ 24,586 $ 26,005 $ 19,459 $ 120 $ 18,734 Intergovernmental 289,374 1,475,228 1,569,419 - 743,268 Charges for services 550 - - - 10,301
Total revenues 314,510 1,501,233 1,588,878 120 772,303
Expenditures:

Current:

Public safety 132,068 - - - -
Transportation - - - - 4,415
Community development - - - - -
Community services - - - 863 -
Debt service:

Principal - - - - -
Interest - - - - -
Total expenditures 132,068 - - 863 4,415
Excess (deficiency) of revenues
over (under) expenditures 182,442 1,501,233 1,588,878 (743) 767,888 Other financing sources (uses):

Transfers in - - - - -
Transfers out - (597,570) (1,592,113) - -
Total other financing sources (uses) - (597,570) (1,592,113) - - Net change in fund balances 182,442 903,663 (3,235) (743) 767,888 Fund balances - beginning of fiscal year,
as previously reported 846,308 240,843 790,110 5,310 478,171 Adjustment - correction of error (42,827) - (137,454) - - Fund balances - beginning of fiscal year, as restated 803,481 240,843 652,656 5,310 478,171 Fund balances - end of fiscal year $ 985,923 $ 1,144,506 $ 649,421 $ 4,567 $ 1,246,059 Special Revenue Funds

-78-
Debt Service
Fund
Capital
Projects Fund
Pollution
Reduction HOME Grant
Measure
M2
Community
Development
Block Grant
Fountain Valley
Public
Financing
Authority Drainage Total
$ 13,971 $ 8,241 $ 100,337 $ - $ 2 $ - $ 211,455
76,347 1,595,457 - 332,128 - - 6,081,221
- - - - - 4,507 15,358
90,318 1,695,794 8,241 332,128 2 4,507 6,308,034
- - - - - - 132,068
- - - - - - 4,415
- - - 313,437 - - 313,437
- - - - - - 863
- - - - 660,968 - 660,968
- - - - 436,236 - 436,236
- - - 313,437 1,097,204 - 1,547,987
90,318 1,695,794 8,241 18,691 (1,097,202) 4,507 4,760,047 - - - - 1,097,202 - 1,097,202
(21,059) (272,899) - - - - (2,483,641)
(21,059) (272,899) - - 1,097,202 - (1,386,439)
69,259 1,422,895 8,241 18,691 - 4,507 3,373,608
500,145 338,356 2,957,049 177,306 2 55,571 6,389,171
- - - - - - (180,281)
500,145 338,356 2,957,049 177,306 2 55,571 6,208,890
$ 569,404 $ 346,597 $ 195,997 4,379,944 $ $ 2 $ 60,078 $ 9,582,498 Special Revenue Funds

City of Fountain Valley
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual – Criminal Activities Special Revenue Fund For the Year Ended June 30, 2024
-79-
Variance with
Final Budget
Budgeted Amount Actual Positive
Original Final Amounts (Negative)
Revenues
Investment income $ 8,250 $ 8,250 $ 24,586 $ 16,336
Intergovernmental 160,000 220,000 289,374 69,374
Charges for services - - 550 550
Total revenues 168,250 228,250 314,510 86,260
Expenditures
Current:

Public safety 207,640 267,640 132,068 135,572
Total expenditures 207,640 267,640 132,068 135,572
Net change in fund balance (39,390) (39,390) 182,442 221,832 Fund balance at beginning of fiscal year, as restated 803,481 803,481 803,481 - Fund balance at end of fiscal year $ 764,091 $ 764,091 $ 985,923 $ 221,832

City of Fountain Valley
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual – Road Maintenance and Rehabilitation Program (SB1) Special Revenue Fund
For the Year Ended June 30, 2024
-80-
Variance with
Final Budget
Budgeted Amount Actual Positive
Original Final Amounts (Negative)
Revenues
Investment income $ 7,250 $ 7,250 $ 26,005 $ 18,755
Intergovernmental 1,413,160 1,413,160 1,475,228 62,068
Total revenues 1,420,410 1,420,410 1,501,233 80,823
Excess (Deficiency) of Revenues
over (under) Expenditures 1,420,410 1,420,410 1,501,233 80,823 Other financing sources (uses)
Transfers out (1,413,160) (1,413,160) (597,570) 815,590 Total other financing sources (uses) (1,413,160) (1,413,160) (597,570) 815,590 Net change in fund balance 7,250 7,250 903,663 896,413
Fund balance at beginning of fiscal year 240,843 240,843 240,843 - Fund balance at end of fiscal year $ 248,093 $ 248,093 $ 1,144,506 $ 896,413

City of Fountain Valley
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual – Gas Tax Special Revenue Fund
For the Year Ended June 30, 2024
-81-
Variance with
Final Budget
Budgeted Amount Actual Positive
Original Final Amounts (Negative)
Revenues
Investment income $ 22,950 $ 22,950 $ 19,459 $ (3,491)
Intergovernmental 1,636,500 1,636,500 1,569,419 (67,081) Total revenues 1,659,450 1,659,450 1,588,878 (70,572)
Expenditures
Current:

Transportation 73,500 73,500 - 73,500
Total expenditures 73,500 73,500 - 73,500
Excess (Deficiency) of Revenues
over (under) Expenditures 1,732,950 1,585,950 1,588,878 2,928 Other financing sources (uses)
Transfers out (1,654,575) (1,704,575) (1,592,113) 112,462 Total other financing sources (uses) (1,654,575) (1,704,575) (1,592,113) 112,462 Net change in fund balance 78,375 (118,625) (3,235) 115,390 Fund balance at beginning of fiscal year, as restated 652,656 652,656 652,656 - Fund balance at end of fiscal year $ 731,031 $ 534,031 $ 649,421 $ 115,390

City of Fountain Valley
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual – Abandoned Vehicle Abatement Special Revenue Fund For the Year Ended June 30, 2024
-82-
Variance with
Final Budget
Budgeted Amount Actual Positive
Original Final Amounts (Negative)
Revenues
Investment income $ 100 $ 100 $ 120 $ 20
Total revenues 100 100 120 20
Expenditures
Current:

Community services 1,190 1,190 863 327
Total expenditures 1,190 1,190 863 327
Net change in fund balance (1,090) (1,090) (743) 347
Fund balance at beginning of fiscal year 5,310 5,310 5,310 - Fund balance at end of fiscal year $ 4,220 $ 4,220 $ 4,567 $ 347

City of Fountain Valley
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual – Traffic Improvement Special Revenue Fund For the Year Ended June 30, 2024
-83-
Variance with
Final Budget
Budgeted Amount Actual Positive
Original Final Amounts (Negative)
Revenues
Investment income $ 19,000 $ 19,000 $ 18,734 $ (266)
Intergovernmental - - 743,268 743,268
Charges for services 10,000 10,000 10,301 301
Total revenues 29,000 29,000 772,303 743,303
Expenditures
Current:

Transportation - 50,000 4,415 45,585
Capital outlay 65,000 15,000 - 15,000
Total expenditures 65,000 65,000 4,415 60,585
Excess (Deficiency) of Revenues
over (under) Expenditures (36,000) (36,000) 767,888 803,888 Other financing sources (uses)
Transfers out (23,000) (23,000) - 23,000
Total other financing sources (uses) (23,000) (23,000) - 23,000 Net change in fund balance (59,000) (59,000) 767,888 826,888 Fund balance at beginning of fiscal year 478,171 478,171 478,171 - Fund balance at end of fiscal year $ 419,171 $ 419,171 $ 1,246,059 $ 826,888

City of Fountain Valley
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual – Pollution Reduction Special Revenue Fund For the Year Ended June 30, 2024
-84-
Variance with
Final Budget
Budgeted Amount Actual Positive
Original Final Amounts (Negative)
Revenues
Investment income $ 7,650 $ 7,650 $ 13,971 $ 6,321
Intergovernmental 74,000 74,000 76,347
Total revenues 81,650 81,650 90,318 6,321
Expenditures
Current:

Public safety 2,000 2,000 - 2,000
Total expenditures 2,000 2,000 - 2,000
Excess (Deficiency) of Revenues
over (under) Expenditures 79,650 79,650 90,318 10,668
Other financing sources (uses)
Transfers out (220,000) (295,000) (21,059) 273,941
Total other financing sources (uses) (220,000) (295,000) (21,059) 273,941 Net change in fund balance (140,350) (215,350) 69,259 284,609 Fund balance at beginning of fiscal year 500,145 500,145 500,145 - Fund balance at end of fiscal year $ 359,795 $ 284,795 $ 569,404 $ 284,609

City of Fountain Valley
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual – HOME Grants Special Revenue Fund
For the Year Ended June 30, 2024
-85-
Variance with
Final Budget
Budgeted Amount Actual Positive
Original Final Amounts (Negative)
Revenues
Investment income $ 4,350 $ 4,350 $ 8,241 $ 3,891
Total revenues 4,350 4,350 8,241 3,891
Net change in fund balance 4,350 4,350 8,241 3,891
Fund balance at beginning of fiscal year 338,356 338,356 338,356 - Fund balance at end of fiscal year $ 342,706 $ 342,706 $ 346,597 $ 3,891

City of Fountain Valley
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual – Measure M2 Special Revenue Fund
For the Year Ended June 30, 2024
-86-
Variance with
Final Budget
Budgeted Amount Actual Positive
Original Final Amounts (Negative)
Revenues
Investment income $ 47,750 $ 47,750 $ 100,337 $ 52,587
Intergovernmental 1,690,130 1,690,130 1,595,457 (94,673) Total revenues 1,737,880 1,737,880 1,695,794 (42,086)
Other financing sources (uses)
Transfers out (2,641,455) (2,971,299) (272,899) 2,698,400 Total other financing sources (uses) (2,641,455) (2,971,299) (272,899) 2,698,400 Net change in fund balance (903,575) (1,233,419) 1,422,895 2,656,314 Fund balance at beginning of fiscal year 2,957,049 2,957,049 2,957,049 - Fund balance at end of fiscal year $ 2,053,474 $ 1,723,630 $ 4,379,944 $ 2,656,314

City of Fountain Valley
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual – Community Development Block Grant Special Revenue Fund For the Year Ended June 30, 2024
-87-
Variance with
Final Budget
Budgeted Amount Actual Positive
Original Final Amounts (Negative)
Revenues
Intergovernmental 532,285 $ $ 532,285 $ 332,128 $ (200,157) Total revenues 532,285 532,285 332,128 (200,157)
Expenditures
Current:

Community development 532,285 504,938 313,437 191,501
Debt service:

Principal - 27,347 - 27,347
Total expenditures 532,285 532,285 313,437 218,848
Net change in fund balance - - 18,691 18,691
Fund balance at beginning of fiscal year 177,306 177,306 177,306 - Fund balance at end of fiscal year $ 177,306 $ 177,306 $ 195,997 $ 18,691

City of Fountain Valley
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual – Fountain Valley Public Financing Authority Debt Service Fund For the Year Ended June 30, 2024
-88-
Variance with
Final Budget
Budgeted Amount Actual Positive
Original Final Amounts (Negative)
Revenues
Investment income $ - -$ $ 2 $ 2
Total revenues - - 2 2
Expenditures
Debt service:

Principal 660,970 660,970 660,968 2
Interest 436,240 436,240 436,236 4
Total expenditures 1,097,210 1,097,210 1,097,204 6
Excess (Deficiency) of Revenues over
(under) Expenditures (1,097,210) (1,097,210) (1,097,202) 8 Other financing sources (uses)
Transfers in 1,097,210 1,097,210 1,097,202 (8)
Total other financing sources (uses) 1,097,210 1,097,210 1,097,202 (8) Net change in fund balance - - - -
Fund balance at beginning of fiscal year 2 2 2 -
Fund balance at end of fiscal year $ 2 $ 2 $ 2 $ -

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City of Fountain Valley
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual – Drainage Capital Projects Fund
For the Year Ended June 30, 2024
-89-
Variance with
Final Budget
Budgeted Amount Actual Positive
Original Final Amounts (Negative)
Revenues
Charges for services $ 1,000 $ 1,000 $ 4,507 $ 3,507
Total revenues 1,000 1,000 4,507 3,507
Expenditures
Capital outlay 410,000 410,000 - 410,000
Total expenditures 410,000 410,000 - 410,000
Excess (Deficiency) of Revenues
over (under) Expenditures (409,000) (409,000) 4,507 413,507 Other financing sources (uses)
Transfers in 410,000 410,000 - (410,000)
Total other financing sources (uses) 410,000 410,000 - (410,000) Net change in fund balance 1,000 1,000 4,507 3,507
Fund balance at beginning of fiscal year 55,571 55,571 55,571 - Fund balance at end of fiscal year $ 56,571 $ 56,571 $ 60,078 $ 3,507

City of Fountain Valley
Combining Statement of Net Position
Internal Service Funds
June 30, 2024
-90-
Information
Technology
Government
Buildings
Fleet
Management
Assets:

Current:

Cash and investments $ 1,960,807 $ 5,314,612 $ 4,063,241 Accounts receivable - - -
Inventory - - 12,590
Prepaid items 162,100 - -
Total current assets 2,122,907 5,314,612 4,075,831
Noncurrent:

Capital assets - net of accumulated depreciation 553,405 53,894 833,435 Total capital assets, net 553,405 53,894 833,435
Total noncurrent assets 553,405 53,894 833,435
Total assets 2,676,312 5,368,506 4,909,266
Liabilities:

Current:

Accounts payable 79,979 160,143 144,905
Long-term liabilities, current portion 245,216 - -
Total current liabilities 325,195 160,143 144,905
Noncurrent:

Long-term liabilities, net 139,173 - -
Total noncurrent liabilities 139,173 - -
Total liabilities 464,368 160,143 144,905
Net position:

Net investment in capital assets 169,016 53,894 833,435 Unrestricted 2,042,928 5,154,469 3,930,926
Total net position $ 2,211,944 $ 5,208,363 $ 4,764,361

-91-
Capital
Equipment Self Insurance Total
$ 1,440,302 $ 3,403,919 $ 16,182,881
- 250,000 250,000
- - 12,590
- - 162,100
1,440,302 3,653,919 16,607,571
- - 1,440,734
- - 1,440,734
- - 1,440,734
1,440,302 3,653,919 18,048,305
37,291 100,563 522,881
- - 245,216
37,291 100,563 768,097
- - 139,173
- - 139,173
37,291 100,563 907,270
- - 1,056,345
1,403,011 3,553,356 16,084,690
$ 1,403,011 $ 3,553,356 $ 17,141,035

City of Fountain Valley
Combining Statement of Revenues, Expenses and Changes in Fund Net Position Internal Service Funds
For the Year Ended June 30, 2024
-92-
Information
Technology
Government
Buildings
Fleet
Management
Operating revenues
Charges for services $ 3,018,890 $ 2,684,840 $ 2,545,295 Miscellaneous 30,719 - -
Total operating revenues 3,049,609 2,684,840 2,545,295
Operating expenses:

Personnel services 602,779 489,731 451,169
Maintenance and operations 669,013 1,319,783 621,149
Equipment and software 1,059,851 43,540 102,275
Insurance premiums - - -
Depreciation 384,820 4,835 76,624
Total operating expenses 2,716,463 1,857,889 1,251,217
Operating income 333,146 826,951 1,294,078
Nonoperating revenue (expense):

Sale of assets - - 268
Total non-operating revenue (expense) - - 268
Income before transfers 333,146 826,951 1,294,346
Transfers
Transfers in - - 365,000
Total transfers - - 365,000
Net change in net position 333,146 826,951 1,659,346
Net position - beginning of fiscal year, as previously reported - - - Adjustment - change in reporting entity 1,795,327 4,381,412 3,105,015 Adjustment - correction of error 83,471
Net position - beginning of year, as restated 1,878,798 4,381,412 3,105,015 Net position - end of fiscal year $ 2,211,944 $ 5,208,363 $ 4,764,361

-93-
Capital
Equipment Self Insurance Total
$ 326,305 $ 3,087,953 $ 11,663,283
- - 30,719
326,305 3,087,953 11,694,002
- 2,086,049 3,629,728
- 33,478 2,643,423
186,298 - 1,391,964
- 1,424,613 1,424,613
- - 466,279
186,298 3,544,140 9,556,007
140,007 (456,187) 2,137,995
- - 268
- - 268
140,007 (456,187) 2,138,263
- - 365,000
- - 365,000
140,007 (456,187) 2,503,263
- - -
1,263,004 4,009,543 14,554,301
83,471
1,263,004 4,009,543 14,637,772
$ 1,403,011 $ 3,553,356 $ 17,141,035

City of Fountain Valley
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2024
-94-
Information
Technology
Government
Buildings
Fleet
Management
Cash flows from operating activities:

Cash received from customers and users $ 3,049,609 $ 2,684,840 $ 2,545,295 Cash paid to suppliers for goods and services (1,750,275) (1,314,324) (662,076) Cash paid to employees for services (602,779) (489,731) (451,169) Net cash provided by operating activities 696,555 880,785 1,432,050 Cash flows from noncapital activities:

Cash paid from other funds for advances - - 365,000
Net cash used by noncapital activities - - 365,000
Cash flows from capital and related financing activities:

Acquisition and construction of capital assets (85,238) (58,729) (910,059) Proceeds from sales of assets - - 268
Loan payment (385,127) - -
Net cash used by capital and related financing activities (470,365) (58,729) (909,791) Net increase in cash and cash equivalents 226,190 822,056 887,259 Cash and cash equivalents at beginning of fiscal year 1,734,617 4,492,556 3,175,982 Cash and cash equivalents at end of fiscal year $ 1,960,807 $ 5,314,612 $ 4,063,241 Reconciliation of operating income to net cash
provided by operating activities
Operating income $ 333,146 $ 826,951 $ 1,294,078
Adjustments to reconcile operating income to net cash
provided by operating activities:

Depreciation 384,820 4,835 76,624
Decrease (increase) in receivables - - -
Decrease (increase) in prepaid items (24,695) - -
Increase (decrease) in accounts payable 3,284 48,999 61,348 Increase (decrease) in accrued claims payable -
Total adjustments 363,409 53,834 137,972
Net cash provided by operating activities $ 696,555 $ 880,785 $ 1,432,050

-95-
Capital
Equipment Self Insurance Total
$ 339,235 $ 2,837,953 $ 11,456,932
(236,454) (1,426,173) (5,389,302)
- (2,086,049) (3,629,728)
102,781 (674,269) 2,437,902
- - 365,000
- - 365,000
- - (1,054,026)
- - 268
- - (385,127)
- - (1,438,885)
102,781 (674,269) 1,364,017
1,337,521 4,078,188 14,818,864
$ 1,440,302 $ 3,403,919 $ 16,182,881
$ 140,007 $ (456,187) $ 2,137,995
- - 466,279
12,930 (250,000) (237,070)
- - (24,695)
(50,156) 31,918 95,393
- -
(37,226) (218,082) 299,907
$ 102,781 $ (674,269) $ 2,437,902

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STATISICAL SECTION

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CITY OF FOUNTAIN VALLEY
Description of Statistical Section Contents
June 30, 2024
This part of the City of Fountain Valley’s annual comprehensive financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information say about the government’s overall financial health.

Contents: Pages
Financial Trends - Theses schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. 96
Revenue Capacity - These schedules contain information to help the reader assess the City’s most significant local revenue source, the property tax. 101
Debt Capacity - These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. 105 Demographic and Economic Information - These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. 110 Operating Information - These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs. 113

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City of Fountain Valley
Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) -96-
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Governmental activities: Net Investment in Capital Assets $ 97,768,732 $ 95,231,907 $ 93,401,436 $ 97,951,856 $ 103,764,607 101,064,072 $ 107,617,521 $ 107,890,367 $ $ 122,451,600 118,812,613 $ Restricted 19,856,331 24,307,690 26,763,094 35,436,520 33,994,978 29,866,794 28,451,630 29,865,667 27,459,109 46,854,171 Unrestricted (deficit) (33,410,687) (39,176,211) (39,063,347) (73,293,802) (67,204,319) (63,160,488) (49,292,105) (28,855,352) (17,081,942) (21,712,674) Total governmental activities net assets $ 84,214,376 $ 80,363,386 $ 81,101,183 $ 60,094,574 $ 67,854,731 $ 70,470,913 $ 86,777,046 $ 108,900,682 $ 147,593,097 129,189,780 $ Business-type activities Net Investment in Capital Assets $ 22,427,033 $ 22,772,437 $ 22,721,048 $ 22,877,809 $ 22,720,616 $ 23,153,001 $ 25,735,726 $ 24,914,150 $ 24,404,708 $ 24,572,602 Restricted 9,720,189 - - - - - - - - -
Unrestricted (3,417,051) 7,465,990 8,378,389 6,367,172 9,938,356 13,563,383 15,478,713 19,696,705 27,757,531 31,783,995 Total business-type activity net assets $ 28,730,171 $ 30,238,427 $ 31,099,437 $ 29,244,981 $ 32,658,972 $ 36,716,384 $ 41,214,439 $ 44,610,855 $ 52,162,239 $ 56,356,597 Primary government: Net Investment in Capital Assets $ 118,004,344 120,195,765 $ 116,122,484 $ 120,829,665 $ 123,784,688 $ 126,917,608 $ 133,353,247 $ 132,804,517 $ $ 1 143,217,321 $ 47,024,202 Restricted 29,576,520 24,307,690 26,763,094 35,436,520 33,994,978 29,866,794 28,451,630 29,865,667 27,459,109 46,854,171 Unrestricted (36,827,738) (31,710,221) (30,684,958) (66,926,630) (57,265,963) (49,597,105) (33,813,392) (9,158,647) 10,675,589 10,071,321 Total primary government net assets $ 110,601,813 112,944,547 $ 112,200,620 $ 89,339,555 $ $ 107,187,297 100,513,703 $ 127,991,485 $ 153,511,537 $ $ 203,949,694 181,352,019 $ Fiscal Year Ended June 30,

City of Fountain Valley
Changes in Net Position – Expenses and Program Revenues Last Ten Fiscal Years (accrual basis of accounting) -97-
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Expenses: Governmental activities: General government $ 3,394,812 $ 4,060,614 $ 3,490,836 $ 5,355,236 $ 6,367,611 $ 5,465,753 $ 5,496,861 $ 7,138,620 $ 4,113,134 $ 15,634,174 Public safety 27,397,338 30,519,703 30,725,287 35,670,029 36,295,298 38,015,694 35,711,555 30,384,895 42,181,933 37,647,876 Transportation 8,270,272 7,228,722 9,956,544 8,613,423 11,109,470 12,176,938 11,972,499 12,598,733 9,633,255 7,191,749 Community development 5,068,347 4,962,051 4,986,214 5,306,588 5,159,303 5,237,500 6,637,024 6,638,725 5,480,927 6,248,000 Community services 2,602,832 2,770,264 3,090,014 3,424,384 3,728,605 3,164,169 2,807,876 3,735,705 2,925,694 4,259,013 Interest and other charges 334,168 600,774 332,056 640,767 549,006 499,535 477,206 452,983 425,387 393,715 Total governmental activities expenses $ 47,067,769 $ 50,142,128 $ 52,580,951 $ 59,010,427 $ 63,209,293 $ 64,559,589 $ 63,103,021 $ 60,949,661 $ 64,760,330 $ 71,374,527 Business-type activity: Water 12,173,386 12,198,363 13,474,865 15,563,270 12,060,429 13,319,761 15,403,363 16,095,806 10,474,663 17,616,366 Sewer 1,050,288 1,187,547 1,586,054 1,621,912 1,265,982 990,369 1,184,187 1,369,997 1,025,684 1,839,256 Solid Waste 2,976,404 2,979,627 2,995,313 3,240,886 3,307,447 3,484,877 3,730,439 3,853,705 4,428,766 4,858,073 Total business-type activity expenses $ 16,200,078 $ 16,365,537 $ 18,056,232 $ 20,426,068 $ 16,633,858 $ 17,795,007 $ 20,317,989 $ 21,319,508 $ 15,929,113 $ 24,313,695 Total primary government expenses $ 63,267,847 $ 66,507,665 $ 70,637,183 $ 79,436,495 $ 79,843,151 $ 82,354,596 $ 83,421,010 $ 82,269,169 $ 80,689,443 $ 95,688,222Program revenues: Governmental activities: Charges for services: General government 1,541,214 1,485,945 1,322,154 1,263,170 1,709,408 1,584,928 4,444,160 3,027,505 1,275,650 3,258,353 Public safety 2,407,751 2,580,643 2,628,927 2,779,810 2,590,953 2,476,200 3,538,314 4,314,296 3,957,206 5,561,826 Transportation - - - - 44,865 - - - - - Community development 1,798,307 1,857,165 1,990,806 1,992,671 1,922,787 1,961,130 2,908,827 3,073,777 3,310,491 3,243,172 Community services 2,031,969 1,335,765 1,406,686 1,316,668 1,991,614 782,464 297,772 855,376 1,044,724 1,439,014 Operating grants and contributions 3,844,012 3,342,815 4,632,452 4,403,294 6,664,738 5,406,933 6,564,949 13,553,937 6,645,582 6,762,548 Capital grants and contributions - - - 46,100 - 1,131,106 - 704,835 1,935,254 1,268,710 Total governmental activities program revenues $ 11,623,253 $ 10,602,333 $ 11,981,025 $ 11,755,613 $ 14,925,600 $ 12,256,520 $ 18,885,128 $ 25,529,726 $ 18,168,907 $ 21,533,623 Business-type activities: Charges for services: Water 13,104,591 12,723,158 13,818,022 15,820,684 16,240,470 17,483,253 19,418,208 19,988,530 18,922,198 19,180,215 Sewer 1,891,019 1,917,391 1,974,735 2,046,393 2,164,911 2,176,199 2,383,617 2,417,275 2,526,629 2,488,964 Solid Waste 3,226,183 3,275,267 3,236,804 3,253,768 3,389,777 3,541,474 3,752,561 3,913,741 4,499,999 4,887,771 Operating grants and contributions 62,321 - Capital grants and contributions - - - 189,259 - 47,311 98,539 71,183 - 24,175 Total business-type activities program revenues $ 18,221,793 $ 17,915,816 $ 19,029,561 $ 21,120,845 $ 21,984,417 $ 23,248,237 $ 25,652,925 $ 26,390,729 $ 26,011,147 $ 26,581,125 Total primary government program revenues $ 29,845,046 $ 28,518,149 $ 31,010,586 $ 32,876,458 $ 36,910,017 $ 35,504,757 $ 44,538,053 $ 51,920,455 $ 44,180,054 $ 48,114,748Net revenues (expenses): Governmental activities (35,444,516) (39,539,795) (40,599,926) (47,254,814) (48,283,693) (52,303,069) (44,217,893) (35,419,935) (46,591,423) (49,840,904) Business-type activities 2,021,715 1,550,279 973,329 694,777 5,350,559 5,453,230 5,334,936 5,071,221 10,082,034 2,267,430 Total net revenues (expenses) $ (37,989,516) (33,422,801) $ (39,626,597) $ (46,560,037) $ (42,933,134) $ (46,849,839) $ (38,882,957) $ (30,348,714) $ (36,509,389) $ (47,573,474) $ * Sewer Fund previously reported in governmental activities Fiscal Year Ended June 30,

City of Fountain Valley
Changes in Net Position – General Revenues Last Ten Fiscal Years (accrual basis of accounting) -98-
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
General revenues and other changes in net position: Governmental activities: Taxes: Property taxes $ 16,247,191 $ 16,782,178 $ 17,704,506 $ 18,807,430 $ 19,651,638 $ 20,450,086 $ 21,340,781 $ 22,019,180 $ 23,365,555 $ 24,808,441 Sales taxes 11,556,673 12,963,883 12,284,030 12,369,585 13,559,781 12,254,561 14,006,993 16,091,255 16,504,276 15,638,648 Sales taxes - Measure HH - 2,547,720 - 11,742,254 13,287,116 12,364,200 14,062,109 17,162,175 17,363,447 17,146,213 Franchise taxes 1,790,685 1,766,769 1,635,261 1,920,165 1,975,656 2,072,908 1,971,665 2,088,568 2,595,444 2,619,098 Other taxes 3,032,589 3,158,311 3,221,064 3,227,918 1,442,220 1,185,655 2,748,711 1,305,350 1,522,875 1,411,257 Revenue from other governmental agen --- 221,349 - 233,956 240,373 - - - Investment income (loss) 547,066 729,762 118,500 516,705 1,830,759 2,034,377 1,873,429 (3,390,470) 1,648,971 5,172,048 Transfers 197,855 195,240 336,812 194,760 2,661,845 2,219,108 914,050 1,006,157 2,887,046 293,693 Gain on sale of property 465,509 26,696 3,427,663 1,284,231 - 1,871,361 5,318 156,276 - - Miscellaneous 87,486 9,320 62,167 20,172 129,255 233,039 371,820 1,105,080 992,907 558,720 Extraordinary gain 4,918,798 56,646 - - - - - - - -
Total governmental activities $ 38,843,852 $ 35,688,805 $ 41,337,723 $ 48,798,989 $ 56,043,850 $ 54,919,251 $ 57,535,249 $ 57,543,571 $ 66,880,521 $ 67,648,118 Business-type activities: Investment income (loss) 126,889 153,217 184,868 (3,240) 725,277 823,290 8,169 (668,648) 356,396 1,470,543 Transfers (197,855) (195,240) (336,812) (194,760) (2,661,845) (2,219,108) (914,050) (1,006,157) (2,887,046) (293,693) Miscellaneous - - 39,625 58,767 - 69,000 - - - 214,521
Extraordinary Gain (loss) 4,000,000 - - - - - - - - -
Total business-type activities $ 3,929,034 $ (42,023) $ (112,319) $ (139,233) $ (1,936,568) $ (1,395,818) $ (836,881) $ (1,674,805) $ (2,530,650) $ 1,391,371 Total primary government $ 42,772,886 $ 35,646,782 $ 41,225,404 $ 48,659,756 $ 54,107,282 $ 53,523,433 $ 56,698,368 $ 55,868,766 $ 64,349,871 $ 69,039,489Changes in net position: Governmental activities 3,399,336 (3,850,990) 737,797 1,544,175 7,760,157 2,616,182 13,317,356 22,123,636 20,289,098 17,807,214 Business-type activities 5,950,749 1,508,256 861,010 555,544 3,413,991 4,057,412 4,498,055 3,396,416 7,551,384 3,658,801 Total primary government $ 9,350,085 $ (2,342,734) $ 1,598,807 $ 2,099,719 $ 11,174,148 $ 6,673,594 $ 17,815,411 $ 25,520,052 $ 27,840,482 $ 21,466,015 Fiscal Year Ended June 30,

City of Fountain Valley
Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) -99-
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
General fund: Nonspendable $ 1,599,806 $ 1,698,026 $ 807,126 $ 405,583 $ 136,233 $ 1,648,597 $ 1,664,859 $ 982,832 $ 1,216,224 $ 128,646 Restricted 4,714,142 4,555,926 4,430,934 8,364,256 13,360,125 15,222,812 15,924,621 13,911,169 18,512,690 19,605,786 Committed - - 13,000,000 - 14,200,000 13,700,000 15,578,000 18,426,000 18,426,000 18,426,000 Assigned 21,971,647 22,547,158 16,961,310 26,613,049 30,791,835 31,631,113 41,450,633 54,143,595 50,288,307 31,947,983 Unassigned 19,191,130 17,975,150 27,155,079 327,080 2,412 3,760 52,504 (679,481) 219,359 9,996,557 Total general fund $ 47,476,725 $ 46,776,260 $ 49,354,449 $ 48,709,968 $ 58,490,605 $ 62,206,282 $ 74,670,617 $ 86,784,115 $ 88,662,580 $ 80,104,972All other governmental funds: Nonspendable $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Restricted 15,142,189 19,751,764 22,332,160 27,072,264 28,312,259 25,488,079 25,289,799 26,486,425 24,264,985 27,248,385 Assigned 161,316 127,402 (464,523) 149,668 38,522 - 22,951 60,954 55,571 60,078 Unassigned - - - (165,595) - - - - - -
Total all other governmental funds $ 15,303,505 $ 19,879,166 $ 21,867,637 $ 27,221,932 $ 28,146,664 $ 25,526,601 $ 25,312,750 $ 26,547,379 $ 24,320,556 $ 27,308,463 Fiscal Year Ended June 30,

City of Fountain Valley
Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) -100-
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Revenues: Taxes $ 30,655,218 $ 32,689,435 $ 36,060,441 $ 46,463,473 $ 49,916,411 $ 48,327,410 $ 52,295,198 $ 58,666,528 $ 61,889,534 $ 62,161,304 Licenses and permits 1,915,471 2,006,480 1,869,865 1,906,153 1,988,757 1,850,421 2,140,736 2,200,559 2,331,633 2,249,296 Fines and forfeitures (penalties) 705,372 643,936 564,786 619,096 651,129 616,823 645,037 678,489 503,600 458,155 Investment income (loss) 572,377 757,868 156,162 578,312 2,404,272 2,330,442 2,156,247 (3,027,937) 2,040,056 5,748,904 Revenue from use of money and property 1,203,964 1,094,844 1,255,618 1,167,468 1,145,604 1,042,561 688,239 959,121 1,150,302 1,178,485 Intergovernmental 3,758,497 2,920,345 4,130,922 3,990,316 5,789,190 5,376,671 7,622,971 13,471,387 7,948,261 7,361,553 Charges for services 4,285,172 4,335,669 4,866,961 4,553,747 2,805,579 2,502,673 5,452,583 6,934,339 5,171,318 8,930,409 Miscellaneous 2,021,825 1,371,496 8,316,814 1,351,792 2,322,432 1,038,301 4,499,999 1,439,608 1,235,361 981,297 Total revenues $ 45,117,896 $ 45,820,073 $ 57,221,569 $ 60,630,357 $ 67,023,374 $ 63,085,302 $ 75,501,010 $ 81,322,094 $ 82,270,065 $ 89,069,403 Expenditures Current: General government 2,883,285 3,085,759 3,212,619 4,916,069 3,679,299 3,540,459 4,907,222 4,721,463 4,863,471 16,511,898 Public safety 25,333,018 27,618,810 28,550,818 31,934,793 32,536,436 35,862,528 35,894,663 40,889,387 42,194,093 36,839,856 Transportation 7,903,404 7,082,567 9,914,437 7,564,408 8,817,469 11,046,220 10,533,417 10,493,946 14,648,041 7,453,548 Community development 4,041,504 4,026,081 4,170,849 3,994,652 4,185,304 4,321,408 5,482,190 5,501,221 5,383,738 6,219,336 Community services 2,328,863 2,407,019 2,618,815 2,653,045 3,206,775 2,670,156 2,306,922 3,193,303 3,570,561 4,527,818 Capital outlay 2,085,519 839,613 6,382,540 10,324,969 6,266,831 6,966,245 3,316,790 2,550,120 13,003,189 6,346,194 Debt service: Principal retirement 644,547 659,275 430,000 470,398 1,046,105 1,138,981 1,214,205 1,294,603 1,781,677 1,514,758 Interest and fiscal charges 344,400 440,725 444,629 575,222 552,048 534,160 514,484 492,357 466,080 437,072 Costs of debt issuance - 395,488 110,180 - - - - - - -
Payment to refunded bond escrow agent - 889,617 - - - - - - - - Total expenditures $ 45,564,540 $ 47,444,954 $ 55,834,887 $ 62,433,556 $ 60,290,267 $ 66,080,157 $ 64,169,893 $ 69,136,400 $ 85,910,850 $ 79,850,480 Excess (deficiency) of revenues over (under) expenditures $ (446,644) $ (1,624,881) $ 1,386,682 $ (1,803,199) $ 6,733,107 $ (2,994,855) $ 11,331,117 $ 12,185,694 $ (3,640,785) $ 9,218,923 Other financing sources (uses): Transfers in 3,225,390 17,012,787 7,011,672 5,985,246 7,933,565 12,680,545 5,363,530 4,607,793 8,504,676 10,363,807 Transfers out (3,027,535) (16,817,547) (6,674,860) (5,790,486) (5,271,720) (10,461,437) (4,449,481) (3,601,636) (5,617,630) (10,435,114) Issuance of IT subscriptions(1) - - - - - - - - 405,381 17,265 Proceeds from sale of capital assets - - - 1,310,417 - 1,871,361 5,318 156,276 - - Proceeds from issuance of bonds 28,890,000 - 2,843,166 - - - - - - - Bond premium (discount) - 580,162 - - - - - - - -
Payment to refunded bond escrow agent (6,785,383) - - - - - - - - - Total other financing sources (uses) $ 197,855 $ 22,880,019 $ 3,179,978 $ 194,760 $ 3,972,262 $ 4,090,469 $ 919,367 $ 1,162,433 $ 3,292,427 $ (54,042) Net change in fund balances, before extraordinary/special item (248,789) 21,255,138 4,566,660 (1,608,439) 10,705,369 1,095,614 12,250,484 13,348,127 (348,358) 9,164,881 Special Item Payment of defined benefit pension plan side fund (17,436,588) - - - - - - - - - Extraordinary gain (loss) 4,918,798 56,646 - - - - - - - - Net change in fund balances $ 4,670,009 $ 3,875,196 $ 4,566,660 $ (1,608,439) $ 10,705,369 $ 1,095,614 $ 12,250,484 $ 13,348,127 $ (348,358) $ 9,164,881 Debt service as a percentage of noncapital expenditures 2.26% 2.35% 1.64% 1.97% 2.93% 2.83% 2.82% 2.68% 3.11% 2.63% (1) Note: Issuance of IT subscriptions is a new line-item as of June 2023, due to the implementation of GASB 96.

Fiscal Year Ended June 30,