Gonzales City Council
May 1, 2023

CITY OF GONZALES
INDEPENDENT AUDITOR’S REPORT
AND

FINANCIAL STATEMENTS
JUNE 30, 2022

TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR’S REPORT 1 – 3
BASIC FINANCIAL STATEMENTS:

Government-Wide Financial Statements
Statement of Net Position 4
Statement of Activities 5
Fund Financial Statements
Balance Sheet – Governmental Funds 6
Reconciliation of Total Governmental Fund Balance to
Net Position of Governmental Activities 7
Statement of Revenue, Expenditures and Changes in
Fund Balance – Governmental Funds 8
Reconciliation of Statement of Revenue, Expenditures
and Changes in Fund Balance of Governmental Funds
to the Statement of Activities 9
Statement of Net Position – Proprietary Funds 10
Statement of Revenue, Expenses and Changes in Fund Net
Position - Proprietary Funds 11
Statement of Cash Flows – Proprietary Funds 12 – 13
Statement of Fiduciary Net Position – Private Purpose Trust Fund 14 Statement of Changes in Fiduciary Net Position – Private Purpose Trust Fund 15 Notes to Basic Financial Statements 16 – 46
TABLE OF CONTENTS (Continued)
Page
Required Supplementary Information
Budgetary Comparison Schedule – General Fund 47
Budgetary Comparison Schedule – Community Development Block Grant 48 Budgetary Comparison Schedule – Measure X 49
Schedule of the City’s Proportionate Share of Net Pension Liability 50 Schedule of Contributions 51
Supplemental Only Information
Combining Balance Sheet – Nonmajor Governmental Funds 52 – 54 Combining Statement of Revenue, Expenditures and
Changes in Fund Balance – Nonmajor Governmental Funds 55 – 57 INDEPENDENT AUDITOR’S REPORT 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 58 – 59 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR

EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE 60 – 62
Schedule of Expenditures of Federal Awards 63
Notes to Schedule of Expenditures of Federal Awards 64
Schedule of Findings and Questioned Costs 65
Summary Schedule of Prior Audit Findings 66
BRYANT L. JOLLEY
CERTIFIED PUBLIC ACCOUNTANTS Bryant L. Jolley C.P.A.

Ryan P. Jolley C.P.A.

Darryl L. Smith C.P.A.

Luis A. Perez C.P.A.

Lan T. Kimoto
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and City Council
City of Gonzales, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Gonzales (the “City”), California, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2022, 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical 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.

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

Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

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

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

Required Supplementary Information
Management has omitted the management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements.

Such missing information, 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. Our opinion on the basic financial statements is not affected by this missing information.

Accounting principles generally accepted in the United States of America require that the budgetary comparison information on pages 47–51, the schedule of the City’s proportionate share of net pension liability on page 52, and the schedule of contributions on page 53, 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 3 comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying combining and individual nonmajor fund financial statements and schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 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 auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated April 24, 2023, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

April 24, 2023
See accompanying notes. 4

CITY OF GONZALES

STATEMENT OF NET POSITION
JUNE 30, 2022
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments 4,524,580 $ 8,048,479 $ 12,573,059 $ Accounts receivable, net - 525,994 525,994
Due from other governments 958,590 - 958,590
Due from Successor Agency - 499,343 499,343
Interest receivable 2,929 17,913 20,842
Notes and loans receivable 1,778,360 - 1,778,360
Other assets - deposits 80,564 - 80,564
Internal balances (594,000) 594,000 -
Capital assets, net of allowance
for depreciation 19,765,740 27,143,232 46,908,972
Total assets 29,451,469 33,894,255 63,345,724
DEFERRED OUTFLOWS OF RESOURCES 228,385 1,084,244 1,312,629

LIABILITIES
Accounts payable and accrued expense 509,738 397,392 907,130 Unearned revenues 77,465 - 77,465
Deposits payable 79,570 82,263 161,833
Long-term liabilities
Due within one year 296,873 558,151 855,024
Due in more than one year 2,324,692 2,394,755 4,719,447 Lease liability 227,550 197,736 425,286
Net pension liability 1,080,472 268,975 1,349,447
Compensated absences - 298,445 298,445
Total liabilities 3,929,086 4,864,991 8,794,077
DEFERRED INFLOWS OF RESOURCES 274,129 995,009 1,269,138

NET POSITION
Net investment in capital assets 24,521,667 15,986,699 40,508,366 Restricted for specific projects and programs 4,179,209 - 4,179,209 Restricted for capital improvements - 4,090,099 4,090,099 Unrestricted 5,399,841 417,623 5,817,464
Total net position $ 25,476,639 29,118,499 $ 54,595,138 $ See accompanying notes. 5
CITY OF GONZALESSTATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2022 Operating Capital
Charges for Grants and Grants and Governmental Business-Type Expense Services Contributions Contributions Activities Activities Total Primary Government
Governmental activities
General government 2,136,363 $ - $ 747,564 $ - $ (1,388,799) $ - $ (1,388,799) $ Public safety 3,834,278 20,222 1,211,477 - (2,602,579) - (2,602,579) Public works 1,964,777 259 393,855 3,708 (1,566,955) - (1,566,955) Parks and recreation 1,527,002 140,916 427 - (1,385,659) - (1,385,659) Community development 1,290,321 128,054 204,110 - (958,157) - (958,157) Debt Service
Interest and fiscal charges - 73,840 - - (73,840) - (73,840) Total governmental activities 289,451 10,904,993 2,557,433 3,708 (8,054,401) - (8,054,401) Business-type activities
Water 2,080,049 2,093,655 - - - 13,606 13,606
Sewer 1,788,585 1,671,244 - 12,248 - (105,093) (105,093) Garbage 1,396,898 1,656,745 - - - 259,847 259,847
Solar Energy 165,761 - - - - (165,761) (165,761)
Electric Power Authority - 229,800 - - - (229,800) (229,800) Total business-type activities 5,661,093 5,421,644 - 12,248 - (227,201) (227,201) Total primary government 5,711,095 16,566,086 2,557,433 15,956 (8,054,401) (227,201) (8,281,602) General Revenue
Property taxes - 2,953,368 2,953,368
Sales taxes - 3,246,109 3,246,109
Franchise and other taxes - 115,611 115,611Utility users tax - 292,267 292,267Business licenses - 58,858 58,858 Investment income 12,458 71,838 84,296
Other - 279,541 279,541Loss on disposal of property - 4,540 4,540 Transfers (226,191) 226,191 -
Total general revenue and transfers 7,248,323 (213,733) 7,034,590 Change in Net Position (440,934) (806,078) (1,247,012)Net Position Beginning of year, as restated 25,917,573 29,924,577 55,842,150 End of year $ 25,476,639 29,118,499 $ 54,595,138 $
Functions/Programs
Net Revenue/(Expense) and
Program Revenue Changes in Net Position
See accompanying notes. 6

CITY OF GONZALES
BALANCE SHEET – GOVERNMENTAL FUNDS
JUNE 30, 2022
Community TAMC Other Total
Development Measure Governmental Governmental
General Block Grant X Funds Funds
ASSETS
Cash and investments 277,782 $ 445,273 $ - $ 3,801,525 $ 4,524,580 $ Due from other governments 849,827 - 27,616 81,147 958,590 Interest receivable 1 408 - 2,520 2,929
Due from other funds 856,187 - - - 856,187
Notes and loans receivable - 1,481,979 - 296,381 1,778,360 Other assets - deposits - 80,564 - - 80,564
Total assets $ 1,927,660 2,064,361 $ 27,616 $ 4,181,573 $ 8,201,210 $

LIABILITIES
Accounts payable and accrued expense 346,127 $ 14,032 $ - $ 149,579 $ 509,738 $ Due to other funds - - - 856,187 856,187
Deposits and other liabilities 79,570 - - - 79,570
Unearned revenues 77,465 - - - 77,465
Advances from other funds - 594,000 - - 594,000
Total liabilities 14,032 1,097,162 - 1,005,766 2,116,960

DEFERRED INFLOWS OF RESOURCES
Deferred loans 1,481,979 - - 296,381 1,778,360
Total deferred inflows of resources 1,481,979 - - 296,381 1,778,360

FUND BALANCE
Restricted
Lighting, landscape & park maintenance - - - 2,801,548 2,801,548 Low-income housing activities - - - 80,792 80,792
Community development - 431,649 - 522,001 953,650
Street improvements - - 27,616 247,010 274,626
Public safety - - - 68,593 68,593
Committed for contingency reserve 1,000,000 - - - 1,000,000 Unassigned - (32,801) - (840,518) (873,319)
Total fund balance 967,199 431,649 27,616 2,879,426 4,305,890 Total liabilities, deferred inflows of resources,
and fund balance 2,064,361 $ 1,927,660 $ 27,616 $ 4,181,573 $ 8,201,210 $ See accompanying notes. 7

CITY OF GONZALES

RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCE TO NET POSITION

OF GOVERNMENTAL ACTIVITIES
JUNE 30, 2022
Total governmental fund balance 4,305,890 $
Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds 27,143,232 Governmental long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds (2,819,301) Compensated absences are not due and payable in the current period and therefore are not reported in the governmental funds (298,445) Deferred outflows of resources related to net pension liability, represent an consumptiom of net position or fund balance that applies to future period(s) and so will not be recognized as an outflow of resources (expense) until that time 1,084,244 Net pension liability applicable to governmental activities is not due and payable in the current period and accordingly is not reported in the governmental funds (1,080,472) Deferred inflows of resources related to net pension liability, represent an acquisition of net position or fund balance that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time (995,009) In governmental funds, receivables which are not considered available are deferred. Such items are not deferred in the Statement of Net Position 1,778,360 Net position of governmental activities $ 29,118,499
See accompanying notes. 8

CITY OF GONZALES
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE –

GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2022
Community TAMC Other Total
Development Measure Governmental Governmental
General Block Grant X Funds Funds
Revenue
Taxes and assessments 5,508,108 $ - $ - $ 825,133 $ 6,333,241 $ Licenses, permits and impact fees 164,720 - - 3,708 168,428 Intergovernmental 946,960 115,000 332,972 1,478,258 2,873,190 Charges for services 124,514 - - - 124,514
Fines and forfeitures 41,398 - - - 41,398
Loan repayments - 99,052 - 70,459 169,511
Use of money and property 54,867 9,585 - 7,387 71,839
Other 206,909 - - 72,634 279,543
Total revenue 223,637 7,047,476 332,972 2,457,579 10,061,664 Expenditures
Current
General government 1,518,774 - - 743,523 2,262,297
Public safety 3,976,568 - - 306,134 4,282,702
Public works 343,452 43,082 - 1,093,378 1,479,912
Parks and recreation 1,034,814 - - 280,926 1,315,740
Community development 830,751 156,077 - 93,182 1,080,010 Capital outlay - - - 747,429 747,429
Debt Service
Principal 132,192 - 286,201 22,411 440,804
Interest and fiscal charges - 31,788 42,052 185 74,025
Total expenditures 199,159 7,868,339 328,253 3,287,168 11,682,919 Revenue over/(under) expenditures (820,863) 24,478 4,719 (829,589) (1,621,255) Other Financing Sources/(Uses)
Sale of assets 4,540 - - - 4,540
Loan proceeds - - - 112,429 112,429
Transfers in/(out) - net 280,441 75,000 - (129,250) 226,191 284,981 75,000 - (16,821) 343,160
Change in Fund Balance 99,478 (535,882) 4,719 (846,410) (1,278,095) Fund Balance
Beginning of year 332,171 1,503,081 22,897 3,725,836 5,583,985 End of year $ 431,649 967,199 $ 27,616 $ 2,899,915 $ 4,305,890 $ See accompanying notes. 9

CITY OF GONZALES

RECONCILIATION OF STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN

FUND BALANCE OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITES YEAR ENDED JUNE 30, 2022
Net change in fund balance - total governmental funds (1,278,095) $ Amounts reported for governmental activities in the Statement of Activities are different because:

Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated lives and reported as depreciation expense Capital outlay expenditures are therefore added back to fund balances 803,923 Depreciation and amortization expense not reported in governmental funds (1,302,401) (498,478)
Repayment of long-term debt and lease liability is an expenditure in governmental funds, but the repayment reduces long-term liabilities in the statement of net position 289,248
Issuance of new debt and lease liability is reported as an other financing source in governmental funds, however in the Statement of Activities it is accrued as a long-term debt (112,429) Pension expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the Governmental Funds 891,193
Repayment of long-term loans receivable is revenue in governmental funds, but the repayment reduces long-term assets in the statement of net position. Issuance of long-term loans receivable produces the opposite effect (193,436)
Compensated absence costs in the Statement of Activities does not require the use of current financial resources and, therefore, is not reported as expenditures in Governmental Funds 95,919 Change in net position of governmental activities (806,078) $ See accompanying notes. 10
CITY OF GONZALES STATEMENT OF NET POSITION – PROPRIETARY FUNDS JUNE 30, 2022 Nomajor
Electric Total
Solar Power Proprietary
Water Sewer Garbage Energy Authority Funds
ASSETSCurrent assets
Cash and investments 4,102,835 $ 3,749,516 $ - $ 123,805 $ 72,323 $ 8,048,479 $ Accounts receivable, net 147,263 112,055 266,676 - - 525,994 Interest receivable 9,036 3,395 5,293 - 189 17,913
Due from Successory Agency 499,343 - - - - 499,343
Due from other funds - 107,070 - - - 107,070
Total current assets 3,864,966 4,865,547 271,969 123,805 72,512 9,198,799 Non-current assets
Advances to other funds 594,000 - - - - 594,000
Property, plant and equipment,
net of allowance for depreciation 8,762,112 7,965,325 - 3,038,303 - 19,765,740 Total non-current assets 8,762,112 8,559,325 - 3,038,303 - 20,359,740 Total assets 12,627,078 13,424,872 271,969 3,162,108 72,512 29,558,539 DEFERRED OUTFLOWS OF RESOURCES 98,362 99,722 30,301 - - 228,385 LIABILITIESCurrent liabilities
Accounts payable and accrued expenses 183,277 82,446 102,365 6,654 22,650 397,392 Due to other funds - - 107,070 - - 107,070
Deposits 82,263 - - - - 82,263
Current portion of long-term debt - 205,937 - 352,214 - 558,151 Total current liabilities 82,446 471,477 209,435 358,868 22,650 1,144,876 Non-current liabilities
Long-term debt 534,801 - - 1,859,954 - 2,394,755
Lease liability 95,391 - - 132,159 - 227,550
Net pension liability 115,843 117,444 35,688 - - 268,975 Total noncurrent liabilities 115,843 747,636 35,688 1,992,113 - 2,891,280 Total liabilities 198,289 1,219,113 245,123 2,350,981 22,650 4,036,156 DEFERRED INFLOWS OF RESOURCES 118,064 119,695 36,370 - - 274,129

NET POSITION
Net investment in capital assets 7,224,587 8,762,112 - - - 15,986,699 Restricted for capital improvements 1,164,647 2,925,452 - - - 4,090,099 Unrestricted/(deficit) 721,523 3,796,552 20,777 811,127 49,862 5,399,841 Total net position $ 12,409,087 12,185,786 $ 20,777 $ 811,127 $ 49,862 $ 25,476,639 $ Business-Type Activities - Enterprise Funds
See accompanying notes. 11
CITY OF GONZALES STATEMENT OF REVENUE, EXPENSE, AND CHANGES IN FUND NET POSITION – PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2022 Nonmajor
Electric Total
Solar Power Proprietary
Water Sewer Garbage Energy Authority Funds
Operating Revenue
Charges for services $ 1,671,244 2,093,655 $ 1,656,745 $ - $ - $ 5,421,644 $ Total operating income 1,671,244 2,093,655 1,656,745 - - 5,421,644 Operating Expense
Contractual services and utilities 1,039,262 938,828 1,163,637 18,237 229,799 3,389,763 Personnel 502,534 544,434 221,842 - - 1,268,810
Supplies and materials 135,101 153,902 11,419 3,985 - 304,407 Depreciation 269,014 151,421 - 52,156 - 472,591
Total operating expense 1,788,585 1,945,911 1,396,898 74,378 229,799 5,435,571 Operating income/(loss) 147,744 (117,341) 259,847 (74,378) (229,799) (13,927) Nonoperating Revenue/(Expense)
Development impact fees - 12,248 - - - 12,248
Interest income 9,405 2,612 - - 440 12,457
Interest expense - (134,138) - (91,383) - (225,521)
Total nonoperating revenue/(expense) 14,860 (124,733) - (91,383) 440 (200,816) Net income/(loss) before transfers 23,011 (102,481) 259,847 (165,761) (229,359) (214,743) Operating Transfers In/(Out) (231,403) (353,958) (244,595) 503,515 100,250 (226,191) Change in Net Position (333,884) (330,947) 15,252 337,754 (129,109) (440,934)Net Position Beginning of year, as restated 12,742,971 12,516,733 5,525 473,373 178,971 25,917,573 End of year $ 12,409,087 12,185,786 $ 20,777 $ 811,127 $ 49,862 $ 25,476,639 $ Business-Type Activities - Enterprise Funds
See accompanying notes. 12
CITY OF GONZALES STATEMENT OF CASH FLOW - PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2022 Nonmajor
Electric Total
Solar Power Business-Type
Water Sewer Garbage Energy Authority Funds
Operating Activities
Receipts from customers and users 2,125,735 $ 1,686,113 $ 1,602,391 $ 4,312 $ - $ 5,418,551 $ Payments for contractual services and utilities (997,484) (1,239,762) (1,153,407) (11,583) (224,995) (3,627,231)Payments to employees (552,737) (593,952) (237,096) - - (1,383,785)Payment to suppliers (153,902) (135,101) (11,419) (3,985) - (304,407) Net cash provided by (used in) operating activities (301,503) 440,413 200,469 (11,256) (224,995) 103,128 Non-capital Financial Activities
Cash overdraft loan to Successor Agency (499,343) - - - - (499,343)Payments (to)/from developers - 12,248 - - - 12,248Transfers (to)/from other funds (231,403) (400,671) (197,882) 503,515 100,250 (226,191) Net cash provided by (used in)
noncapital financing activities (219,155) (900,014) (197,882) 503,515 100,250 (713,286) Capital and Related Financing Activities
Principal paid on long-term debt and lease liability (239,618) - - (324,986) - (564,604)Interest paid on long-term debt - (134,138) - (91,383) - (225,521) Net cash provided by (used in) capital
and related financing activities - (373,756) - (416,369) - (790,125) Investing Activities
Interest received 5,102 - (2,587) - 333 2,848Payments received on notes 1,094 - - - - 1,094 Net cash provided by (used in)
investing activities 1,094 5,102 (2,587) - 333 3,942
Net Increase (Decrease) in Cash (519,564) (828,255) - 75,890 (124,412) (1,396,341) Cash
Beginning of year 4,269,080 4,931,090 - 47,915 196,735 9,444,820 End of year $ 4,102,835 3,749,516 $ - $ 123,805 $ 72,323 $ 8,048,479 $ Business-Type Activities - Enterprise Funds
See accompanying notes. 13
CITY OF GONZALES STATEMENT OF CASH FLOW - PROPRIETARY FUNDS (CONTINUED) YEAR ENDED JUNE 30, 2022 Nonmajor
Electric Total
Solar Power Business-Type
Water Sewer Garbage Energy Authority Funds
Cash Flows from Operating Activities
Operating income (loss) 147,744 $ (117,341) $ 259,847 $ (74,378) $ (229,799) $ (13,927) $ Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:

Depreciation 269,014 151,421 - 52,156 - 472,591
(Increase) Decrease in Accounts Receivable 28,662 14,869 (54,354) 4,312 - (6,511)(Increase) Decrease in Deferred Outflows of Resources 25,252 24,909 7,673 - - 57,834Increase (Decrease) in Accounts Payable and Accrued Liabilities 41,778 (300,934) 10,230 6,654 4,804 (237,468) Increase (Decrease) in Deposits 3,418 - - - - 3,418Increase (Decrease) in Net Pension Liability (158,605) (156,443) (48,193) - - (363,241)Increase (Decrease) in Deferred Inflows of Resources 82,016 83,150 25,266 - - 190,432 Net Cash Provided by (Used in) Operating Activities $ (301,503) 440,413 $ 200,469 $ (11,256) $ (224,995) $ 103,128 $ Business-Type Activities - Enterprise Funds
See accompanying notes. 14

CITY OF GONZALES

STATEMENT OF FIDUCIARY NET POSITION

PRIVATE-PURPOSE TRUST FUNDS
JUNE 30, 2022
Assets
Current assets
Restricted cash and investments $ 531,610
Total current assets 531,610
Noncurrent assets
Notes receivable 348,707
Property, plant and equipment,
net of allowance for depreciation 461,051
Total noncurrent assets 809,758
Total assets 1,341,368
Liabilities
Current liabilities
Accounts payable and accrued liabilities 474
Due to City of Gonzales (cash overdraft) 499,343
Interest payable 94,191
Bonds - current portion 779,677
Total current liabilities 1,373,685
Noncurrent liabilities
Bonds - long term portion 8,659,981
Total noncurrent liabilities 8, 659,981
Total liabilities 10,033,666
Net Position
Held in trust for other governments (8,692,298) $
See accompanying notes. 15

CITY OF GONZALES

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

PRIVATE-PURPOSE TRUST FUND
JUNE 30, 2022
Successor
Agency
Additions
Property taxes 1,145,236 $
Interest and unrealized loss 2,836
Total additions 1,148,072
Deductions
Administrative expenses 129,395
Interest and fiscal expenses 343,464
Total deductions 472,859
Change In Net Position 675,213
Net Position
Beginning of year (9,367,511)
End of year $ (8,692,298)
16 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 1 – Summary of Significant Accounting Policies
Reporting Entity
The City of Gonzales (the City) is a municipal corporation, operating as a general law city, and governed by a city council of five members. As required by accounting principles generally accepted in the United States of America, as prescribed by the Governmental Accounting Standards Board (GASB), these financial statements present the City of Gonzales (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.

The Gonzales Public Financing Authority (the Authority) is governed by the City Council of the City of Gonzales.

Although, it is legally separate from the City, the Authority is reported as if it were part of the primary government because the City Council is the governing board and is able to impose its will on the Authority and management has the same operational responsibility for the Authority as it does for the rest of the City. The activity of the Authority is included as separate funds in the special revenue fund and debt service fund types. Separate financial statements are not issued by the Authority.

Basis of Presentation
The City has conformed to the pronouncements of the GASB, which are the primary authoritative statements of accounting principles generally accepted in the United States of America applicable to state and local governments.

Government-Wide Financial Statements
The Government-Wide Financial Statements (the Statement of Net Position and the Statement of Activities) report information of all of the nonfiduciary activities of the primary government and its component units. Eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the City. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely significantly on fees charged to external parties.

The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and are clearly identifiable to a particular function. Program revenues include 1) charges paid by the recipients of goods or services offered by the programs and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.

Fund Financial Statements
The accounts of the City are organized on the basis of funds each of which is considered a separate accounting entity.

The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Government 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.
17 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 1 – Summary of Significant Accounting Policies (Continued) The fund financial statements provide information about the City's funds, including fiduciary funds and blended component units. Separate statements for each fund category - governmental, proprietary, and fiduciary – are presented. The emphasis of fund financial statements is on major individual funds, each of which is displayed in a separate column. All remaining funds are aggregated and reported as non-major funds.

Governmental Fund Financial Statements Funds
Major funds are defined as funds that have assets, liabilities, revenues, or expenditures/expenses equal to ten percent of their fund-type (governmental and enterprise funds, respectively) total and five percent of the grand total. The General Fund is always a major fund. The City may also select other funds it believes should be presented as major funds.

The following types of governmental funds are used:

General Fund
The General fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund.

Special Revenue Funds
Special revenue funds are used to account for and report the proceeds of specific revenue sources (other than debt service and capital projects) that are restricted or committed to expenditures for specified purposes.

Debt Service Funds
Debt service funds are used to account for and report the financial resources that are restricted, committed or assigned for the payment of long-term debt principal, interest, and related costs.

The City reported the following major governmental funds in the accompanying financial statements:
 General Fund – This fund accounts for all financial resources except those to be accounted for in another fund. It is the general operating fund of the City.
 Community Development Block Grant Fund – This fund accounts for Federal Grant monies restricted for specific community programs, which includes the activity related to loans provided to homeowners and businesses and the repayment of these loans.
 Measure X Fund – The fund is used to account for the City’s Transportation Safety and Investment Plan activities.
18 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 1 – Summary of Significant Accounting Policies (Continued) Fund Balance Classifications
The City’s fund balance policy establishes the procedures for reporting unrestricted fund balance (comprised of Committed, Assigned, and Unassigned categories) within the City’s governmental funds: General Fund, Special Revenue Funds, Debt Service Fund, and Capital Projects Funds.

Definitions
Fund balance is the difference between the assets and liabilities reported in the City’s governmental funds. There are generally limitations on the purpose for which all or a portion of the resources of a governmental fund may be used.

The force behind these limitations can vary significantly, depending upon their source. Consequently, the fund balance reported in the annual financial statements is categorized into five components whereby each component identifies the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the fund can be spent. The five components of fund balance are as follows:
 Nonspendable: Resources that are 1) not in spendable form, such as inventories, prepaids, long-term receivables, or non-financial assets held for resale, or 2) required to be maintained intact such as an endowment.
 Restricted: Resources that are subject to externally enforceable legal restrictions; these restrictions would be either 1) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or 2) imposed by law through constitutional provisions or enabling legislation.
 Committed: Resources that are constrained to specific purposes by a formal action of the City Council such as an ordinance or resolution. The constraint remains binding unless removed in the same formal manner by the City Council. Council action to commit fund balance must occur within the fiscal reporting period while the amount committed may be determined subsequently.
 Assigned: Resources that are constrained by the City’s intent to be used for specific purposes, but that are neither restricted nor committed. Intent is expressed by the City Council or to an official which the City Council has delegated this authority.
 Unassigned: Within the General Fund, the residual resources, either positive or negative, in excess of what can be properly classified in one of the other four fund balance categories. Within all other governmental funds, the negative residual resources in excess of what can be properly classified as nonspendable, restricted, or committed.

Policy

1. Unless necessary by other requirements and circumstances, when expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) fund balances are available, the City’s policy is to first apply restricted fund balance. When expenditures are incurred for purposes for which committed, assigned, or unassigned fund balances are available, the City’s policy is to first apply committed fund balance, then assigned fund balance, and finally unassigned fund balance.

2. The City’s Fund Balance policy delegates to the Finance Director the authority to assign unrestricted fund balance amounts where the City’s intent is for those amounts to be used for specific purposes. This delegation of authority is for the sole purpose of reporting these amounts in the annual financial statements. 19 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 1 – Summary of Significant Accounting Policies (Continued) Proprietary Fund Financial Statements
Proprietary fund financial statements include a Statement of Net Position, a Statement of Revenues, Expenses, and Change in Net Position, and a Statement of Cash Flows.

Proprietary fund types are accounted for using the “economic resources” measurement focus and accrual basis of accounting. This means that all assets and liabilities (whether current or non-current) 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 funds 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.

Proprietary funds distinguish operating revenues and expenses from non-operating 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 enterprise funds are charges to customers for sales and services. Operating expenses for the enterprise funds include the costs of sales and services, the costs of employee benefits, maintenance of capital assets, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

The City reported the following major proprietary (enterprise) funds:
 Water Fund - This fund accounts for the activities for providing water service to the residents of the City.  Sewer Fund - This fund accounts for the activities of providing sewer service to the residents of the City.  Garbage Fund - This fund accounts for the activities of providing garbage service to the residents of the City.  Solar Energy Fund – This fund accounts for the activities, the debt and the resources generated from the installation of solar energy panels.

Fiduciary Fund Financial Statements
Fiduciary funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, and other governmental units. The City maintains the Private Purpose Trust Fund for the Successor Agency of the former Redevelopment Agency.

Basis of Accounting
The government-wide, proprietary funds and fiduciary fund financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.

Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after fiscal year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent that they have matured. Capital asset acquisitions are reported as expenditures in governmental funds.

Proceeds of long-term debt and acquisitions under capital leases are reported as other financing sources. 20 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 1 – Summary of Significant Accounting Policies (Continued) Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

Other revenues susceptible to accrual include other taxes, intergovernmental revenues, interest, and charges for services.

Grant revenues are recognized in the fiscal year in which all eligibility requirements are met. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-reimbursement grants, categorical block grants, and general revenues. Thus, both restricted and unrestricted net position may be available to finance program expenditures/expenses. The City's policy is to first apply restricted net position to such programs, followed by unrestricted net position.

Financial Statement Amounts
Cash and Cash Equivalents – The City maintains a pooled cash and investment program. Therefore, for purposes of the statement of cash flows, the City considers the entire pooled cash and investment balance to be cash and cash equivalents.

Investments of the pool include only those investments authorized by the California Government Code such as, United States Treasury securities, agencies guaranteed by the United States Government, registered state warrants, and other investments. Investments primarily consist of deposits in the State of California Local Agency Investment Fund and certificates of deposit. Investments are recorded at amortized cost or fair value.

Fair value is based upon quoted market prices.

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, maturity, or sale of investments.

The City pools its cash and investments of all funds with the City’s pool, except for assets held by fiscal agents.

Investment income earned by the pooled investments is allocated to the various funds based on each fund’s average cash and investment balance.

Accounts Receivable – Billed, but unpaid, services provided to individuals or non-governmental entities are recorded as accounts receivable. The Proprietary Funds include a year end accrual for services through the end of the fiscal year which have not yet been billed. Accounts receivable are reported net of an allowance for uncollectibles.

Property taxes in the State of California are administered for all local agencies at the county level, and consist of secured, unsecured, and utility tax rolls. The following is a summary of major policies and practices relating to property taxes:
21 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 1 – Summary of Significant Accounting Policies (Continued) Property Valuations - are established by the Assessor of the County of Monterey for the secured and unsecured property tax rolls; the utility property tax roll is valued by the State Board of Equalization. Under the provisions of Article XIIIA of the State Constitution (Proposition 13 adopted by the voters on June 6, 1978), properties are assessed at 100 percent of full value. From this base of assessment, subsequent annual increases in valuation are limited to a maximum of 2 percent. However, increases to full value are allowed for property improvements or upon change in ownership. Personal property is excluded from these limitations, and is subject to annual reappraisal.

Tax Levies - are limited to 1 percent of assessed value which results in a tax rate of $1 per $100 assessed valuation, under the provisions of Proposition 13. Tax rates for voter-approved indebtedness are excluded from this limitation.

Tax Levy Dates - are attached annually on January 1st, proceeding the fiscal year for which the taxes are levied. The fiscal year begins July 1st and ends June 30th of the following year. Taxes are levied on both real and unsecured personal property as it exists at that time. Liens against real estate, as well as the tax on personal property, are not relieved by subsequent renewal or change in ownership.

Tax Collections – are the responsibility of the county tax collector. Taxes and assessments on secured and utility rolls which constitute a lien against the property, may be paid in two installments: The first installment is due on November 1st of the fiscal year and is delinquent, if not paid, by December 10th; and the second installment is due on March 1st of the fiscal year and is delinquent, if not paid, by April 10th. Unsecured personal property taxes do not constitute a lien against real property unless the taxes become delinquent. Payment must be made in one installment, which is delinquent, if not paid, by August 31st of the fiscal year. Significant penalties are imposed by the County for late payments.

Advances To/From Other Funds – This classification represents non-current portions of any long-term lending/borrowing transactions between funds. This amount will be equally offset by a reserve of fund balance which indicates that it does not represent available financial resources and therefore, is not available for appropriation. The current portion of any interfund long-term loan (advance) is included as an interfund receivable/payable.

Capital Assets – Capital outlays are recorded as expenditures of the General, Special Revenue, and Capital Projects Funds and as assets in the Government-Wide Financial Statements to the extent the City’s capitalization threshold are met.

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities column in the GovernmentWide Financial Statements. Capital assets are defined by the government as assets with an initial individual cost of more than $5,000 and with an estimated useful life of at least two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Betterments and major improvements which significantly increase values, change capacities or extend useful lives are capitalized. Upon sale or retirement of fixed assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations.
22 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 1 – Summary of Significant Accounting Policies (Continued) Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed.

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

Years
Buildings 40
Improvements 20 - 40
Equipment 5 - 15
Infrastructure 20 - 70
Compensated Absences – The City has adopted policies on sick leave and vacation leave. Sick leave is accrued at the rate of eight hours per month by all employees. A portion of the accumulated sick leave will be paid to retiring or resigning employees with a minimum of fifteen years of service. All other employees who terminate employment will receive no compensation for accumulated sick leave.

Employees are only allowed to carry forward one year worth of vacation hours as of January 1 of each year. Vacation is accrued for employees as follows:

Years of Service Monthly Accrual Annually
0 to 2 6-2/3 hours Two weeks
3 to 9 10 hours Three weeks
10 to 15 11-2/3 hours Three weeks and 2-1/2 days
15+ 13-1/3 hours Four weeks
Upon termination of employment and, after completion of at least six months of service with the City, the accrued vacation leave shall be paid to the terminated employee.

Unearned Revenue – Unearned revenue is that for which asset recognition criteria have been met, but for which revenue recognition criteria have not been met. The City typically records unearned revenue related to uncollected outstanding performing loans and intergovernmental revenues received but not earned (qualifying expenditures not yet incurred).

Deferred Compensation Plan – City employees may defer a portion of their compensation under a City sponsored deferred compensation plan created in accordance with Internal Revenue Code Section 457. Under this Plan, participants are not taxed on the deferred portion of their compensation until distributed to them; distributions may be made only upon termination, retirement, death, or in an emergency as defined by the Plan. The assets of the Plan are not included within the City's financial statements. 23 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 1 – Summary of Significant Accounting Policies (Continued) Pension Plan – All full-time City employees are members of the State of California Public Employees’ Retirement System. The City’s policy is to fund all pension costs accrued; such costs to be funded are determined annually as of July 1 by the System’s actuary.

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s Pension Plan and additions to/deductions from the City’s Pension Plan’s fiduciary net position have been determined on the same basis as they are reported by the City’s Pension Plan. 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.

Leases – The City is a lessee for a noncancellable lease of equipment. The City recognizes a lease liability and an intangible right-to-use lease asset (lease asset) in the government-wide and enterprise fund financial statements. The City recognizes lease liabilities with an initial, individual value of $5,000 or more.

At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs.

Subsequently, the lease asset is amortized on a straight-line basis over its useful life.

Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments.  The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for leases.
 The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.

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

Long-Term Obligations – In the Government-Wide Financial Statements and in the Proprietary Fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or Proprietary Fund Type Statement of Net Position. Debt principal payments of both government and business-type activities are reported as decreases in the balance of the liability on the Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount.

In the fund financial statements, however, debt principal payments of Governmental Funds are recognized as expenditures when paid. Governmental Fund types recognize bond premiums and discounts during the current period.

The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 24 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 1 – Summary of Significant Accounting Policies (Continued) Net Position – The government-wide and business-type activities financial statements utilize a net position presentation. Net position are categorized as net investment in capital assets, restricted and unrestricted.  Net Investment in Capital Assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance in this category.  Restricted Net Position – This category presents external restrictions on net position imposed by creditors, grantors, contributors, laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation.
 Unrestricted Net Position – This category represents net position of the City not restricted for any project or other purpose.

When expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) fund balances are available, the City’s policy is to apply restricted first. When expenditures are incurred for purposes for which committed, assigned, or unassigned fund balances are available, the City’s policy is to apply committed fund balance first, then assigned fund balance, and finally unassigned fund balance.

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

Note 2 – Stewardship, Compliance and Accountability
California law authorizes the City to invest in obligations of the United States Treasury, agencies and instrumentalities, certificates of deposit or time deposits in banks and savings and loan associations which are insured by the Federal Deposit Insurance Corporation.

In accordance with applicable sections of the California Government Code and the Gonzales Municipal Code, the City prepares and legally adopts an annual balanced budget on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted for the General Fund, specific Special Revenue Funds, and specific Capital Projects Funds. Budget plans are adopted for Proprietary Funds. A proposed budget is presented to the City Council during June of each year for review. The Council holds public hearings and may add to, subtract from, or change appropriations within the revenues and reserves estimated as available. Expenditures may not legally exceed budgeted appropriations at the fund level. Supplementary appropriations which alter the total expenditures of any fund, or expenditures in excess of total budgeted fund appropriations, must be approved by the City Council.

All annual appropriations lapse at fiscal year end to the extent they have not been expended or encumbered.

25 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 3 – Cash and Investments
The City pools all of its cash and investments except those funds required to be held by outside fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash is allocated to the various funds on average cash balances. Interest income from cash investments held with fiscal agents is credited directly to the related funds.

Cash and investments as of June 30, 2022 are classified in the accompanying financial statements as follows:

Statement of Net Position:

Cash and Investments 12,573,059 $
Private Purpose Trust:

Restricted cash and investments 531,610
Total Cash and Investments $ 13,104,669
Cash and investments as of June 30, 2022 consist of the following:

Cash on hand 364 $
Deposits with Financial Institutions 730,567
Local Agency Investment Fund 4,375,092
Certificates of Deposit 10,954
Money Market Accounts 7,456,082
Cash Held by Fiscal Agent 531,610
Total Cash and Investments $ 13,104,669
Fair Value Measurements
The framework for measuring fair value provides a fair value hierarchy that categorizes the inputs to valuation techniques used to measure fair value into three levels. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described as follows:

Level 1: Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets that a government can access at the measurement date.

Level 2: Inputs to valuation methodology include inputs – other than quoted prices included within Level 1 – that are observable for an asset or liability, either directly or indirectly.

Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset’s or liability’s fair value measurement level within a fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. 26 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 3 – Cash and Investments (Continued)
Following is a description of the valuation methodologies used for assets measured at fair value.

LAIF is valued based on the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (Level 2 input).

The City had the following recurring fair value meausrements as of June 30, 2022:

Level 1 Level 2 Level 3
June 30, 2022
Balance
Investments by fair value level:

Equity Securities:

CDS 10,954 $ - $ - $ 10,954 $
LAIF - 4,375,092 - 4,375,092
Total Equity Securities 10,954 4,375,092 - 4,386,046
Cash equivalents carried at amortized cost:

Deposits 730,931
Money Market Mutual Funds 7,456,082
Cash Held by Fiscal Agent 531,610
Total cash and equivalents amortized at cost 8,718,623
Total Cash Equivalents & Investments 13,104,669 $
27 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 3 – 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 trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.

Maximum Maximum
Maximum Percentage Investment
Maturity of Portfolio In One Issuer
U.S. Treasury Obligations 5 years None None
U.S. Agency Securities 5 years None None
Banker's Acceptances 270 days 40% 30%
Commercial Paper 180 days 15% 10%
Time Certificates of Deposit 3 years 25% None
Negotiable Certificates of Deposit 3 years 30% None
Repurchase Agreements 1 year 20% None
Medium-Term Notes 5 years 30% 15%
Mutual Funds 5 years 20% 10%
Money Market Mutual Funds 5 years 15% 10%
Local Agency Investment Fund (LAIF) N/A None None
County Investment Pool N/A None None
Authorized Investment Type
28 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 3 – Cash and Investments (Continued)
Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy. The table below identifies the investment types that are authorized for investments held by the bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.

Maximum Maximum
Maximum Percentage Investment
Maturity of Portfolio In One Issuer
U.S. Treasury Obligations None None None
U.S. Agency Securities None None None
Banker's Acceptances 180 days None None
Commercial Paper 270 days None None
Money Market Mutual Funds N/A None None
Investment Contracts None None None
Certificates of Deposits 1 year None None
Repurchase Agreements 30 days None None
Local Agency Investment Fund (LAIF) N/A None None
Municipal Bonds None None None
Authorized Investment Type
Disclosures Relating to 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.

Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:
12 Months 13 to 24 25 to 60 More than
Fair Value or Less Months Months 60 Months
Local Agency Investment Fund 4,375,092 $ 4,375,092 $ - $ - $ - $ Certificates of deposit 10,954 10,954 - - -
Total $ 4,386,046 4,386,046 $ - $ - $ - $
Investment Type
Remaining Maturity (in months)
29 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 3 – Cash and Investments (Continued)
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 below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual rating as of year-end for each investment type:

Minimum
Rating Unrated Aaa
Local Agency Investment Fund $ N/A 4,375,092 4,375,092 $ - $ Certificates of deposit 10,954 N/A - 10,954
Total $ 4,386,046 4,386,046 $ - $
Investment Type
Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. There were no investments in any one issuer, other than U.S.

Treasury securities, mutual funds, and external investment pools, that represent 5% or more of total City-wide investments as of June 30, 2022.

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 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, 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 market 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, 2022, the balances held in bank accounts were (comprised of deposits, CD’s and money market accounts) collateralized by the pledging financial institution, but not in the City’s name. At June 30, 2022, total cash held in bank was $8,279,968 of which $8,029,968 was in excess of federal depository insurance limits. 30 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 3 – Cash and Investments (Continued)
Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The 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 (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.

LAIF is a governmental investment pool managed and directed by the California State Treasurer and is not registered with the Securities and Exchange Commission. An oversight committee comprised of California State officials and various participants provide oversight to the management of the fund. The daily operations and responsibilities of LAIF fall under the auspices of the State Treasurer's office. The City is a voluntary participant in the investment pool.

Note 4 – Notes Receivable and Deferred Loans Receivable Loans as of fiscal year ended June 30, 2022 were as follows:

Balance Balance
June 30, 2021 Additions Deletions June 30, 2022
Governmental Funds
Local Business Promissory Notes 66,964 $ - $ (66,964) $ - $ Developer Loans 110,046 - - 110,046
Rehabilitation Loans 115,000 1,794,786 (241,472) 1,668,314 $ 1,971,796 115,000 $ (308,436) $ 1,778,360 $
31 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 4 – Notes Receivable and Deferred Loans Receivable (Continued) Developer Loans
Original Balance as of
Date of Note Principal Interest Rate Maturity Date Collateral June 30, 2022 February 19, 2008 836,120 $ 4% January 1, 2028 Deed of Trust $ 110,046 Rehabilitation Loans
Original Balance as of
Date of Note Principal Interest Rate Maturity Date Collateral June 30, 2022 May 24, 2006 132,400 $ 2% May 24, 2036 Deed of Trust 132,400 $ May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 17,500 2% May 24, 2036 Deed of Trust 17,500 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 November 18, 2008 111,184 3% November 18, 2038 Deed of Trust 125,395 December 23, 2008 97,346 3% December 23, 2038 Deed of Trust 97,346 May 12, 2004 43,500 3% March 12, 2024 Deed of Trust 19,690 March 5, 2009 16,000 0% March 5, 2024 Deed of Trust 13,226 April 8, 2008 23,802 0% April 8, 2023 Deed of Trust 14,514 July 8, 2008 57,440 0% July 8, 2023 Deed of Trust 7,500 July 22, 2008 48,643 0% July 22, 2023 Deed of Trust 36,943 February 19, 2008 170,000 4% February 19, 2028 Deed of Trust 90,491 June 17, 2010 22,450 0% June 17, 2025 Deed of Trust 3,972 May 1, 2012 105,000 3% May 1, 2022 Security Agreement 26,463 April 11, 2014 91,511 3% April 11, 2024 Security Agreement 78,698 April 18, 2014 59,486 0% April 18, 2044 Deed of Trust 60,089 April 19, 2020 1% N/A N/A 10,000 10,000
April 24, 2020 1% N/A N/A 10,000 10,000
April 24, 2020 1% N/A N/A 10,000 10,000
April 15, 2020 1% N/A N/A 10,000 10,000
August 25, 2014 38,531 0% August 25, 2044 Deed of Trust 38,531 October 21, 2014 89,715 0% October 21, 2044 Deed of Trust 89,715 June 8, 2017 104,777 3% June 8, 2027 Security Agreement 89,619 April 20, 2020 1% N/A N/A 10,000 10,000
April 17, 2020 1% N/A N/A 10,000 10,000
April 21, 2020 1% N/A N/A 10,000 10,000
July 24, 2019 70,000 2% July 24, 2031 Security Agreement 68,427 September 30, 2015 175,000 2% September 30, 2030 Security Agreement 122,795 December 21, 2021 115,000 1% December 21, 2023 Security Agreement 115,000 $ 1,668,314

32 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 5 – Capital Assets – Capital asset activities for the year ended June 30, 2022 were as follows:

Restated
Balance Balance
July 1, 2021 Additions Retirements June 30, 2022
Governmental Activities
Capital assets, not being depreciated
Land $ 635,000 7,707,583 $ - $ 8,342,583 $
Total capital assets, not being depreciated 635,000 7,707,583 - 8,342,583 Capital assets, being depreciated
Buildings and improvements 10,563,825 - - 10,563,825
Infrastructure 36,520,519 - - 36,520,519
Machinery and equipment 2,810,139 - - 2,810,139
Total capital assets, being depreciated - 49,894,483 - 49,894,483 Less accumulated depreciation for
Buildings and improvements (3,012,273) (263,176) - (3,275,449) Infrastructure (24,496,220) (863,411) - (25,359,631)
Machinery and equipment (119,161) (2,537,077) - (2,656,238) Total accumulated depreciation (30,045,570) (1,245,748) - (31,291,318) Total capital assets, being depreciated, net (1,245,748) 19,848,913 - 18,603,165 Right of use assets, being amortized
Vehicles 170,839 112,429 - 283,268
Less: amortization (56,653) (29,131) - (85,784)
Total right of use assets, being amortized, net 55,776 141,708 - 197,484 Governmental activities capital assets, net $ (554,972) 27,698,204 $ - $ 27,143,232 $ Business-Type Activities
Capital assets, not being depreciated
Land 604,807 $ - $ - $ 604,807 $
Construction in progress 2,268,124 - - 2,268,124
Total capital assets, not being depreciated - 2,872,931 - 2,872,931 Capital assets, being depreciated
Buildings and improvements 46,939 - - 46,939
Infrastructure 24,422,183 - - 24,422,183
Machinery and equipment 2,117,305 - - 2,117,305
Total capital assets, being depreciated - 26,586,427 - 26,586,427 Less: accumulated depreciation (438,323) (9,443,968) - (9,882,291) Total capital assets, being depreciated, net (438,323) 17,142,459 - 16,704,136 Right of use assets, being amortized
Improvements 143,525 - - 143,525
Vehicles 147,483 - - 147,483
Less: amortization (34,268) (68,067) - (102,335)
Total right of use assets, being amortized, net (34,268) 222,941 - 188,673 Business-type activities capital assets, net $ (472,591) 20,238,331 $ - $ 19,765,740 $ 33 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 5 – Capital Assets (Continued)
Depreciation expense was charged to the following functions in the Statement of Activities:

Government Activities:

General Government 28,159 $
Public Safety 179,132
Public Works 523,158
Parks and Recreation 266,205
Community Development 249,094
$ 1,245,748
Business-Type Functions:

Water 269,014 $
Sewer 151,421
Solar 52,156
$ 472,591
Note 6 – Interfund Receivables, Payables and Transfers
Due From/To Other Funds
Current interfund balances and other short-term borrowings between funds were attributed to negative cash balances and are expected to be repaid shortly after the end of the fiscal year. The following is a summary of interfund balances as of June 30, 2022.

Due From Due To
General Fund 856,187 $ - $
Water Fund 107,070 -
Garbage Fund - 107,070
Infrastructure Improvement Fund - 488,608
Intersection Improvements Impact Fees - 10,434
Housing Successor - 195,472
Supplemental Local Law Enforcement - 8,033
CDBG Urban County Grant Fund - 123,935
SB1 Road Fund - 29,705
$ 963,257 963,257 $
Advances
During fiscal year 2009-2010 the City of Gonzales formalized an advance agreement between the City’s General Fund and the Water Fund for the amount of $594,000. The amount is payable by the General Fund to the Water Fund over a period of 20 years at an interest rate of 1 percent payable in annual payments of $33,057. During the fiscal year 2021- 2022, the General Fund did not make any payments.
34 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 6 – Interfund Receivables, Payables and Transfers (Continued) Interfund Transfers
In general, the City uses interfund transfers to (1) move revenues from the funds that collect them to the funds’ that statute or budget requires to expend them, (2) use unrestricted revenues collected in the General Fund to help finance various programs and capital projects accounted for in other funds in accordance with budgetary authorization, and (3) move cash to debt service funds from the funds responsible for payment as debt service payments become due. In general, the effect of the interfund activity has been eliminated from the government-wide financial statements.

Transfers In Transfers Out
Major Governmental Funds:

General Fund 280,441 $ - $
CDBG Block Grant - 75,000
Proprietary Funds:

Water - (353,958)
Sewer - (231,403)
Garbage - (244,595)
Solar Energy 503,515 -
Electric 100,250 -
Nonmajor Governmental Funds:

Supplemental Local Law Enforcement Fund - (251,601)
Public Safety Fund 301,157 -
California Breeze Maintenance District Fund - (19,000)
Canyon Creek Park Maintenance District Fund - (15,001)
Housing Successor - (10,000)
Cipriani Estates Park & Maintenance District Fund - (10,000) Gonzales Industrial Park Landscape & Maintenance Fund - (10,000) CDBG Urban County Grant Fund - (114,805)
$ (1,185,363) 1,185,363 $
The following describe the significant transfers made during the year:
 The Supplemental Local Law Enforcement Fund transferred $251,601 to the Public Safety Fund in order to finance various programs.
 Various nonmajor funds transferred $280,441 to the General Fund, principally as reimbursements to the General Fund for various costs including administrative costs.

35 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 7 – Long-Term Debt
The City generally incurs long-term debt to finance projects or purchase assets which will have useful lives equal to or greater than the related debt.

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

Balance Balance Current
July 1, 2021 Additions Retirements June 30, 2022 Portion Governmental Activities Long Term Debt
Direct Borrowings:

Pool Site Financed Purchase 1,119,573 $ - $ (98,108) $ 1,021,465 $ 100,954 $ TAMC Measure X Note Payable - 1,791,240 (191,140) 1,600,100 195,919 Total Governmental Activities Debt $ - 2,910,813 $ (289,248) $ 2,621,565 $ 296,873 $ Business-Type Activities Long Term Debt
Direct Borrowings:

Note Payable
2005 Water Tank & Sewer Expansion Refinance 950,937 $ - $ (210,199) $ 740,738 $ 205,937 $ Solar Panel Energy Financed Purchase 1,306,757 - (217,166) 1,089,591 241,267 Solar Panel Energy Financed Purchase - 1,230,397 (107,820) 1,122,577 110,947 Total Business-Type Activities Debt $ - 3,488,091 $ (535,185) $ 2,952,906 $ 558,151 $ Compensated Absences
Governmental Activities $ - 394,364 $ (95,919) $ 298,445 $ Net Pension Liability
Governmental Activities $ - 2,765,770 $ (1,685,298) $ 1,080,472 $ Business-type Activities $ - 632,216 $ (363,241) $ 268,975 $ 36 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 7 – Long-Term Debt (Continued)
Pool Site Financed Purchase – On March 1, 2016, the City entered into an agreement with the Gonzales Public Financing Authority to purchase the pool site for $1,575,000 at 2.88% interest rate. Purchase agreement terminates on February 1, 2031.

TAMC Measure X Loan – On August 23, 2017, the City entered into a project loan agreement for the street rehabilitation. The amount financed was $2,500,000 at 2.5% and monthly payments are determined by the lender. 2005 Water Tank & Sewer Expansion Refinance – On November 1, 2005 the Gonzales Public Financing Authority entered into a funding agreement with a financial institution to provide $3,131,500 for the Sewer Expansion and Water Tank Projects (the Project). The Note accrues interest at a rate of 4.55 percent. Principal and interest payments are due semi-annually on June 30th and December 30th.

The Financing Authority simultaneously entered into an installment sale agreement with the City of Gonzales where the Authority sells the Project to the City and the City purchases the Project from the Authority. The installment sale agreement accrues interest at the rate of 4.55 percent (the same rate as the Note) and the City is required to make semi-annual installment payments to the Authority in the same amounts due under the Note. The Authority has assigned the right to receive these installment payments to the Note holder.

In June of 2012, the above note was refinanced. The amount financed was $2,475,000 at the interest rate of 3.35 percent and payable in semi-annual installments on December 29th and June 29th of each year beginning on December 29, 2012.

Solar Panel Energy Financed Purchase – In February of 2012, the City entered into a purchase agreement for the purchase of Solar Panels. The amount financed was $2,697,589 and is payable over a 14 year term with payments commencing in October of 2012.

Solar Panel Energy Financed Purchase – In March of 2016, the City entered into a lease purchase agreement for the purchase of Solar Panels. The amount financed was $1,679,189 and is payable over a 15 year term with payments commencing in August of 2016.

The annual requirement to amortize the principal and interest on all long-term debt at June 30, 2022 were as follows:

Years ending June 30, Principal Interest Principal Interest 2023 296,873 $ 68,699 $ 558,151 $ 96,615 $
2024 304,699 60,873 592,217 75,727
2025 312,733 52,839 628,283 53,462
2026 320,979 44,592 524,363 29,738
2027 329,444 36,127 124,392 18,093
2028-2031 58,062 1,056,837 525,500 35,227
$ 321,192 2,621,565 $ 2,952,906 $ 308,862 $
Governmental Activities Business-Type Activities
37 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 8 – Lease Liability
Restated
Balance Balance Current
July 1, 2021 Additions Retirements June 30, 2022 Portion Lease Liability
Governmental Activities
Vehicles $ 112,429 141,801 $ (56,494) $ 197,736 $ 56,589 $ Total Governmental Activities Lease Liability $ 112,429 141,801 $ (56,494) $ 197,736 $ 56,589 $ Business-type Activities
Improvements 132,169 $ - $ - $ 132,169 $ 1,968 $
Vehicles - 124,810 (29,419) 95,391 29,478
Total Business-type Activities Lease Liability $ - 256,979 $ (29,419) $ 227,560 $ 31,446 $ The City entered into several sixty (60) month lease agreements as lessee for the acquisition and use of vehicles.

An initial lease liability was recorded in the amount of $430,751 during the year the lease was entered. As of June 30, 2022, the value of the lease liability was $293,127. The City is required to make monthly principal and interest payments of $411 to $6,873. The lease has an interest rate of 0.9%. The equipment has a five-year estimated useful life. The value of the right-to-use asset as of the end of the current fiscal year was $292,727 and had accumulated amortization of $138,024.

On March 2012, the City entered into a lease agreement with a Winery, for the rental of their rooftops in connection with the solar panels purchased by the City. The lease rental payments are equal to $5,000 annually for the first ten years and $10,000 for the sixteenth year at 3% interest, with a three percent annual escalator applied to each subsequent year of the agreement which terminates on December 31, 2042.

The future principal and interest lease payments as of June 30, 2022, were as follows:

Years ending June 30, Principal Interest Principal Interest 2023 56,589 $ 344 $ 31,446 $ 4,180 $
2024 56,702 230 30,640 4,002
2025 56,815 117 27,079 3,911
2026 27,630 29 11,604 3,835
2027 - - 6,269 3,731
2028-2032 - - 34,326 15,674
2033-2037 - - 39,873 10,127
2038-2042 - - 46,323 3,683
$ 720 197,736 $ 227,560 $ 15,928 $
Governmental Activities Business-Type Activities

38 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 9 – Fund Balance
The following is a summary of deficit fund balances as of June 30, 2022:

Nonmajor Funds:

American Rescue Plan Fund (20,489) $
Infrastructure Improvements Fund (488,608)
Housing Successor (195,472)
Public Safety Special Revenue Fund (1,705)
Intersection Improvements Impact Fees (10,309)
CDBG Urban County Grant Fund (123,935)
This deficit is expected to be relieved from future revenues or transfers from other funds.

Note 10 – Deferred Outflows/Inflows of Resources
GASB No. 65 establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows or resources, certain items that were previously reported as assets and liabilities.

In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows or resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position or fund balance that applies to a future period(s) and thus, will not be recognized as an outflow of resources (expense/expenditure) until then. The City has one item to report in this category:
 The City has $1,312,629 in pension related items that qualify to be reported in deferred outflows of resources.

The pension related deferred outflows of resources are described in Note 13.

In addition to liabilities, the statement of financial position 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 position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has two items to report in this category:
 The City has $1,269,138 in pension related items that qualify to be reported in deferred inflows of resources. The pension related deferred inflows of resources are described in Note 13.

Unavailable revenues arise only under a modified accrual basis of accounting and is reported only in the governmental funds balance sheet. The City has $1,778,360 in notes and loans receivable reported as deferred inflows of resources reported for unavailable revenues. Of this amount $1,481,979, $110,046, and $186,335 is reported in the Community Block Grant Fund, Infrastructure Improvements Fund, and Housing Successor Fund, respectively See Note 4 for details.

39 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 11 – Commitments and Contingencies
General
The City participates in a number of Federal and State assisted grant programs which are subject to financial and compliance audits. Audits for these programs and the respective findings are to be determined at a future date, and the City expects the amount, if any, of the expenditures which may be disallowed by the granting agency to be immaterial.

The City is a defendant in various lawsuits and claims. The City attorney anticipates that actual or potential claims against the City, not covered by insurance, would not materially affect the financial position of the City.

Note 12 – Risk Management
The City provides for workers' compensation and liability through a self-funded joint powers agency, Monterey Bay Area Self Insurance Authorities. Joint Powers Agreement (JPA) accounts are not separately maintained for each participant.

Description of Self-Insurance Pool Pursuant to Joint Powers Agreement The City is a member of the Monterey Bay Area Self Insurance Authority (MBASIA). MBASIA is composed of 10 California public entities and is organized under a joint powers agreement pursuant to California Government Code 6500 et seq. The purpose of MBASIA 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 coverage.

General Liability: The City is self-insured for the first $10,000 of each liability claims. Claims above $10,000 up to $499,000 are paid by MBASIA. Claims above $499,000 up to $20 million are covered by insurance purchased by MBASIA.

Workers’ Compensation: The City does not retain a self-insured portion of workers’ compensation claims. Annual premiums for coverage up to statutory levels are paid to MBASIA based on the level of claims activity. A third party claims administrator is contracted by MBASIA to manage claims activity.

Adequacy of Protection
During the past three fiscal (claims) years none of the above programs of protection have had settlements or judgments that exceeded insured coverage. There have been no significant reductions in insured liability coverage from coverage in the prior year. Audited financial statements for MBASIA can be obtained from their management at 100 Pine Street, 11th Floor, San Francisco, CA 94111.
40 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 13 – Pension Plan
Plan Description – The City contributes to the California Public Employees' Retirement System (PERS), an agent multiple-employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of PERS' annual financial report may be obtained from their Executive Office - 400 P Street - Sacramento, CA 95814.

Funding Policy – Active plan members in the Plan are required to contribute 7% of their covered salary for both miscellaneous and public safety members. The City contributes 3.5% of the employees required share of 7%. The City is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration. The required employer contribution rate for the fiscal year ended June 30, 2022 was 8.650%, 14.810%,

7.590%, and 11.130% for the miscellaneous, safety, PEPRA miscellaneous, and PEPRA safety, respectively. The contribution requirements of plan members are established by State statute and the employer contribution is established and may be amended by PERS.

The Plans’ provisions and benefits in effect at June 30, 2022, are summarized as follows:

Miscellaneous Safety
Hire Date
Prior to
January 1, 2013
Prior to
January 1, 2013
Benefit Formula 2.0% at 60;
maximum 2%
COLA

2.0% at 55;
maximum 2%
COLA
Benefit Vesting Schedule 5 years service 5 years service Benefit Payments monthly for life monthly for life
Retirement Age 60 55
Monthly Benefits, as a % of Eligible Compensation 2.00% 2.00% Required Employee Contribution Rates 7.00% 7.00%
Required Employer Contribution Rates 8.650% 14.810%
PEPRA
Miscellaneous
PEPRA Safety
Police and Fire
Hire Date
On or after
January 1, 2013
On or after
January 1, 2013
Benefit Formula 2.0% at 62;
maximum 2%
COLA

2.0% at 57;
maximum 2%
COLA
Benefit Vesting Schedule 5 years service 5 years service Benefit Payments monthly for life monthly for life
Retirement Age 62 57
Monthly Benefits, as a % of Eligible Compensation 2.00% 2.00% Required Employee Contribution Rates 6.25% 9.50%
Required Employer Contribution Rates 7.590% 11.130%
41 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 13 – Pension Plan (Continued)
Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all employers be determined on an annual basis by the actuary and shall be effective on July 1 following the notice of change in the rate. Funding contributions for the Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

For the year ended June 30, 2022, the contributions recognized as part of the pension expense is as follows:

Contributions – employer $ 642,112
Contributions – employee $ 272,470
Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions As of June 30, 2022, the City reported net pension liabilities for its proportionate shares of the net pension liability as follows:

Proportionate Share of
Net Pension Liability
Total Net Pension Liability – Miscellaneous $ 752,859
Total Net Pension Liability – Safety $ 596,588
General Information about the Pension Plan
The City’s net pension liability is measured as the proportionate share of the net pension liability. The net pension liability of each Plan is measured as of June 30, 2021, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2020 rolled forward to June 30, 2021 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability for the Plan as of June 30, 2021 and 2022 was as follows:

Miscellaneous Safety
Proportion – June 30, 2021 0.04195% .02444%
Proportion – June 30, 2022 0.03965% .01700%
Change – Increase/(Decrease) (0.00230%) (.00744%)

42 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 13 – Pension Plan (Continued)
For the year ended June 30, 2022, the City recognized pension credit of $364,055. At June 30, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:

Deferred Outflows
of Resources
Deferred Inflows
of Resources
Pension contributions subsequent to
measurement date 642,112 $ - $
Change in employer's proportion 484,165 -
Changes of assumptions - -
Difference between employer's contributions and
proportionate share of contributions - (256,849)
Differences between projected and actual investment
earnings (1,012,289) -
Differences between expected and actual
experience - 186,352
Total 1,312,629 $ (1,269,138) $
The $642,112 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Year Ended
June 30
2023 16,480 $
2024 (139,561)
2025 (196,209)
2026 (279,332)
Total (598,622) $
43 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 13 – Pension Plan (Continued)
Actuarial Methods and Assumptions – The collective total pension liability for the June 30, 2021 measurement period was determined by an actuarial valuation as of June 30, 2020, with update procedures used to roll forward the total pension liability to June 30, 2021. The collective total pension liability was based on the following assumptions:

Valuation Date June 30, 2020
Measurement Date June 30, 2021
Actuarial Cost Method Entry-Age Normal Cost Method in
accordance with the requirements of
GASB Statement No. 68
Actuarial Assumptions:

Discount Rate 7.15%
Inflation 2.50%
Payroll Growth 2.50%
Salary Increases Varies by Entry Age and Service
Mortality Rate Table Derived using CalPERS' Membership
Date for all Funds
1 Post Retirement Benefit Increase Contract COLA up to 2.75% until Purchasing Power Protection
Allowance Floor on Purchasing Power
applies
1 The mortality table used was developed based on CalPERS-specific data. The table includes 15 years of mortality improvements using Society of Actuaries Scale 90% of scale MP 2016. For more details on this table, please refer to the December 2017 experience study report (based on CalPERS demographic data from 1997 to 2015) that can be found on the CalPERS website.

All other actuarial assumptions used in the June 30, 2018 valuation was based on the results of an December 2017 experience study report (based on CalPERS demographic data from 1997 to 2015), including updates to salary increase, mortality and retirement rates. The Experience Study can be obtained at CalPERS’ website.

Change of assumptions – None.

44 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 13 – Pension Plan (Continued)
Discount rate – The discount rate used to measure the total pension liability for PERF C was 7.15%. 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. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected rate of returns, net of pension plan investment expense and inflation) are developed for each major asset class.

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

The long-term expected real rates of return by asset class can be found in CalPERS’ Comprehensive Annual Financial Report for the fiscal year ended June 30, 2021.

The table below reflects long-term expected real rates of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. The geometric rates of return are net of administrative expenses.

Asset Class1
New Strategic
Allocation
Real Return
Years 1-102
Real Return
Years 11+3
Global Equity 50% 4.80% 5.98%
Fixed Income 28% 1.00% 2.62%
Inflation Assets 0% 0.77% 1.81%
Private Equity 8% 6.30% 7.23%
Real Estate 13% 3.75% 4.93%
Infrastructure and Forestland 0% 0.00% 0.00%
Liquidity 1% 0.00% -0.92%
Total 100%
1 In the System’s CAFR, Fixed Income is included in Global Debt Securities; Liquidity is included in Shortterm Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities 2 An expected inflation of 2% used for this period
3 An expected inflation of 2.9% used for this period
45 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 13 – Pension Plan (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 for each Plan, calculating using the discount rate of each Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (6.15%) or 1-percentage point higher (8.15%) than the current rate:
1% Decrease
(6.15%)
Current Discount
Rate
(7.15%)
1% Increase
(8.15%)
Miscellaneous 1,988,589 $ 752,859 $ (268,702) $
Safety 1,805,681 $ 596,588 $ (396,533) $
Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issue CalPERS financial reports.

Note 14 – Subsequent Events
The City evaluated subsequent events for recognition and disclosure through April 24, 2023, the date which these financial statements were available to be issued. Management concluded that no material subsequent events have occurred since June 30, 2022 that required recognition or disclosure in such financial statements.

Note 15 – Restatement of Fund Balance/Net Position
Change in Accounting Principle
The beginning net position of Government-wide for Governmental Activities and Business-Type Activities has been restated in the Statement of Activities as a result of the implementation of the Governmental Accounting Standards Board, Statement No. 87, Leases. The beginning net position of the Water and Solar Energy Enterprise Funds financial statements was also restated in the Statement of Net Position to conform to this presentation.

Governmental Activities Business-type Activites Water Fund Solar Energy Net Position, June 30, 2021, as previously reported 29,924,670 $ 25,951,601 $ 12,516,803 $ 507,331 $ Change in accounting principle
Record understament of right of use assets 141,708 222,941 124,740 98,201 Record understatement of lease liability (141,801) (256,969) (124,810) (132,159) Total change in accounting principle (93) (34,028) (70) (33,958) Net Position, July 1, 2021, as restated 29,924,577 $ 25,917,573 $ 12,516,733 $ 473,373 $ Government-Wide Enterprise Funds
46 CITY OF GONZALES

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2022
Note 16 – Excess of Expenditures over Appropriations
The excess of expenditures over appropriations are as follows:

General Fund:

Current:

General government $ 94,950
Public safety $ 129,912
Public works $ 3,166
Community development $ 632,673
Debt Service
Principal $ 34,084
Interest $ 246

The excess of expenditures over appropriations are covered by the available fund balance in the corresponding funds.

REQUIRED SUPPLEMENTARY INFORMATION
47 CITY OF GONZALES

BUDGETARY COMPARISON SCHEDULE

GENERAL FUND
YEAR ENDED JUNE 30, 2022
Variance with
Final Budget
Budgeted Amounts Actual Positive/
Original Final Amounts (Negative)
Revenue
Taxes and assessments 1,907,000 $ 1,907,000 $ 5,508,108 $ 3,601,108 $ Licenses, permits and impact fees 331,950 331,950 164,720 (167,230) Intergovernmental 279,800 279,800 946,960 667,160
Charges for services 43,000 43,000 124,514 81,514
Fines and forfeitures 20,000 20,000 41,398 21,398
Use of money and property - - 54,867 54,867
Other 152,000 152,000 206,909 54,909
Total revenue 2,733,750 2,733,750 7,047,476 4,313,726
Expenditures
Current
General government 1,423,824 1,423,824 1,518,774 (94,950) Public safety 3,846,656 3,846,656 3,976,568 (129,912)
Public works 340,286 340,286 343,452 (3,166)
Parks and recreation 1,093,461 1,093,461 1,034,814 58,647 Community development 198,078 198,078 830,751 (632,673) Debt service
Principal 98,108 98,108 132,192 (34,084)
Interest and fiscal charges 31,542 31,542 31,788 (246)
Total expenditures 7,031,955 7,031,955 7,868,339 (836,384) Revenue over (under) expenditures (4,298,205) (4,298,205) (820,863) 3,477,342 Other Financing Sources
Sale of assets - - 4,540 4,540
Transfers in (out) - net - (147,802) 280,441 280,441
Net Change in Fund Balance $ (4,298,205) (4,446,007) $ (535,882) $ 3,762,323 Fund Balance
Beginning of year 1,503,081
End of year $ 967,199
48 CITY OF GONZALES

BUDGETARY COMPARISON SCHEDULE

COMMUNITY DEVELOPMENT BLOCK GRANT
YEAR ENDED JUNE 30, 2022
Variance with
Final Budget
Budgeted Amounts Actual Positive/
Original Final Amounts (Negative)
Revenue
Intergovernmental - $ - $ 115,000 $ 115,000 $
Loan repayments 85,000 85,000 99,052 14,052
Use of money and property 10,000 10,000 9,585 (415)
Total revenue 95,000 95,000 223,637 128,637
Expenditures
Public works 108,150 108,150 43,082 65,068
Community development 220,250 220,250 156,077 64,173
Total expenditures 328,400 328,400 199,159 129,241
Revenue over expenditures (233,400) (233,400) 24,478 257,878 Other Financing Sources/(Uses)
Transfers in/(out) - net 175,000 175,000 75,000 (100,000) Change in Fund Balance $ (58,400) (58,400) $ 99,478 $ 157,878 Fund Balance
Beginning of year 332,171
End of year $ 431,649

49 CITY OF GONZALES

BUDGETARY COMPARISON SCHEDULE

MEASURE X FUND
YEAR ENDED JUNE 30, 2022
Variance with
Final Budget
Budgeted Amounts Actual Positive/
Original Final Amounts (Negative)
Revenue
Taxes and assessments $ 263,279 263,279 $ 332,972 $ 69,693 $ Total revenue 263,279 263,279 332,972 69,693
Expenditures
Debt service
Principal 216,649 216,649 286,201 (69,552)
Interest 46,630 46,630 42,052 4,578
Total expenditures 263,279 263,279 328,253 (64,974)
Change in Fund Balance $ - - $ 4,719 $ 4,719
Fund Balance
Beginning of year 22,897
End of year $ 27,616
50 CITY OF GONZALES SCHEDULE OF THE CITY’S NET PROPORTIONATE SHARE OF NET PENSION LIABILITY LAST 10 YEARS* YEAR ENDED JUNE 30, 2022 Proportion of the net pension
liability
Proportionate share of the net
pension liability
Covered -
employee
payroll
Proportionate share of the net pension
liability as a percentage of
covered-employee payroll
Plan's fiduciary net
position
Plan's fiduciary net
position as a percentage of
the Total Pension Liability
2015 0.05204% 1,286,053 $ 1,112,163 $ 115.64% 4,587,216 $ 78.100%2016 0.03955% 1,084,895 $ 982,675 $ 110.40% 5,044,102 $ 82.298%2017 0.03916% 1,360,265 $ 947,145 $ 143.62% 4,725,496 $ 77.648%2018 0.03895% 1,535,641 $ 1,378,772 $ 111.38% 5,518,046 $ 78.229%2019 0.01890% 712,326 $ 1,366,906 $ 52.11% 4,468,191 $ 86.250%2020 0.03936% 1,576,056 $ 1,678,041 $ 93.92% 6,694,872 $ 80.945%2021 0.04195% 1,769,575 $ 1,820,163 $ 97.22% 6,952,747 $ 79.712%2022 0.03965% 752,859 $ 1,917,739 $ 39.26% 8,606,543 $ 91.956%2015 0.02316% 868,678 $ 992,049 $ 87.56% 3,422,038 $ 79.750%2016 0.01684% 693,833 $ 1,039,081 $ 66.77% 3,797,755 $ 84.550%2017 0.02010% 1,040,872 $ 1,098,540 $ 94.75% 4,298,623 $ 84.550%2018 0.02090% 1,248,529 $ 1,181,291 $ 105.69% 4,968,043 $ 79.916%2019 0.02135% 1,252,487 $ 1,297,002 $ 96.57% 5,511,384 $ 81.483%2020 0.02256% 1,408,172 $ 1,395,445 $ 100.91% 6,011,305 $ 81.021%2021 0.02444% 1,628,411 $ 1,509,649 $ 107.87% 6,814,985 $ 80.714%2022 0.01700% 596,588 $ 1,579,112 $ 37.78% 8,385,699 $ 93.358% Miscellaneous
Safety
*Fiscal year 2014-15 was the first year of implementation, therefore only eight years are shown. Changes of Assumptions: None 51 CITY OF GONZALES SCHEDULE OF CONTRIBUTIONS LAST 10 YEARS* YEAR ENDED JUNE 30, 2022 Contractually required
contribution (actuarially
determined)
Contributions in relation to the
actuarially determined
contributions
Contributions
deficiency
(excess) Covered-employee payroll
Contributions as a
percentage of coveredemployee payroll
2015 160,656 $ (160,656) $ - $ 1,112,163 $ 14.45%2016 137,778 $ (137,778) $ - $ 982,675 $ 14.02%2017 185,525 $ (185,525) $ - $ 947,145 $ 19.59%2018 231,233 $ (231,233) $ - $ 1,378,772 $ 16.77%2019 149,308 $ (149,308) $ - $ 1,366,906 $ 10.92%2020 189,303 $ (189,303) $ - $ 1,678,041 $ 8.90%2021 232,321 $ (232,321) $ - $ 1,820,163 $ 10.40%2022 263,908 $ (263,908) $ - $ 1,917,739 $ 12.11%2015 161,844 $ (161,844) $ - $ 992,049 $ 16.31%2016 152,643 $ (152,643) $ - $ 1,039,081 $ 14.69%2017 159,930 $ (159,930) $ - $ 1,098,540 $ 14.56%2018 185,473 $ (185,473) $ - $ 1,181,291 $ 15.70%2019 193,362 $ (193,362) $ - $ 1,297,002 $ 14.91%2020 235,139 $ (235,139) $ - $ 1,395,445 $ 16.85%2021 274,368 $ (274,368) $ - $ 1,509,649 $ 18.17%2022 305,992 $ (305,992) $ - $ 1,579,112 $ 19.38% Miscellaneous
Safety
*Fiscal year 2014-15 was the first year of implementation, therefore only eight years are shown.

SUPPLEMENTAL ONLY INFORMATION
See accompanying notes. 52
CITY OF GONZALES COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2022 California Canyon Creek
Supplemental Ag Industrial Breeze Park &
Infrastructure Gas Local Law Public Park Federal Housing Maintenance Maintenance Improvements Tax Enforcement Safety Grant AQMD Successor District District ASSETS
Cash and investments - $ 894 $ - $ 1,496 $ 4,900 $ 80,792 $ - $ 70,152 $ 1,644,663 $ Due from other governments - 15,794 35,648 - - - - - -
Interest receivable - - - - - - - 256 1,022
Notes and loans receivable - 110,046 - - - - 186,335 - - Total assets $ 16,688 110,046 $ 35,648 $ 1,496 $ 4,900 $ 80,792 $ 186,335 $ 70,408 $ 1,645,685 $

LIABILITIES
Accounts payable and accrued expense - 16,688 - 3,201 - - - 3,033 1,018 Due to other funds - 488,608 8,033 - - - 195,472 - -
Total liabilities 16,688 488,608 8,033 3,201 - - 195,472 3,033 1,018

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - 110,046 - - - - 186,335 - -
Total deferred inflows of resources - 110,046 - - - - 186,335 - -

FUND BALANCE
Restricted
Lighting, landscape & park maintenance - - - - - - - 67,375 1,644,667 Low-income housing activities - - - - - 80,792 - - -
Community development - - - - 4,900 - - - -
Street improvements - - - - - - - - -
Public safety - - 27,615 - - - - - -
Unassigned - (488,608) - (1,705) - - (195,472) - -
Total fund balance (488,608) - 27,615 (1,705) 4,900 80,792 (195,472) 67,375 1,644,667 Total liabilities, deferred inflows
of resources and fund balance 110,046 $ 16,688 $ 35,648 $ 1,496 $ 4,900 $ 80,792 $ 186,335 $ 70,408 $ 1,645,685 $ Special Revenue
See accompanying notes. 53
CITY OF GONZALES COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS (CONTINUED) JUNE 30, 2022 Cipriani Gonzales
Estates Park & Industrial Park Intersection Circulation American Maintenance Landscape & Improvements Police Park Fire System Rescue District Maintenance Impact Fees Impact Fees Impact Fees Impact Fees Impact Fees Plan ASSETS
Cash and investments 721,857 $ 368,276 $ - $ 33,024 $ 1,999 $ 7,954 $ 247,009 $ 99,331 $ Due from other governments - - - - - - - -
Interest receivable 660 139 125 - - - 1 -
Notes and loans receivable - - - - - - - -
Total assets $ 368,415 722,517 $ 125 $ 33,024 $ 1,999 $ 7,954 $ 247,010 $ 99,331 $

LIABILITIES
Accounts payable and accrued expense 831 595 - - - - - 119,820 Due to other funds - - 10,434 - - - - -
Total liabilities 595 831 10,434 - - - - 119,820

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - - - - - - - -
Total deferred inflows of resources - - - - - - - -

FUND BALANCE
Restricted
Lighting, landscape & park maintenance 721,686 367,820 - - - - - - Low-income housing activities - - - - - - - -
Community development - - - - 1,999 - - -
Street improvements - - - - - - 247,010 -
Public safety - - - 33,024 - 7,954 - -
Unassigned - - (10,309) - - - - (20,489)
Total fund balance 721,686 367,820 (10,309) 33,024 1,999 7,954 247,010 (20,489) Total liabilities, deferred inflows
of resources and fund balance 722,517 $ 368,415 $ 125 $ 33,024 $ 1,999 $ 7,954 $ 247,010 $ 99,331 $ Special Revenue
See accompanying notes. 54
CITY OF GONZALES COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS (CONTINUED) JUNE 30, 2022 Storm Total
Drainage Public Public Uses Sphere of CDBG Non-major
Facility Facilities Mitigation Influence General Plan SB1 Urban Governmental Impact Fees Impact Fees Fees Impact Fees Impact Fees Road County Grant Funds ASSETS
Cash and investments 33,782 $ 96,563 $ 3,655 $ 303,772 $ 81,406 $ - $ - $ 3,801,525 $ Due from other governments - - - - - 29,705 - 81,147
Interest receivable - 96 21 197 3 - - 2,520
Notes and loans receivable - - - - - - - 296,381
Total assets $ 96,659 33,782 $ 3,676 $ 303,969 $ 81,409 $ 29,705 $ - $ 4,082,242 $

LIABILITIES
Accounts payable and accrued expense - $ - $ - $ 4,393 $ - $ - $ - $ 149,579 $ Due to other funds - - - - - 29,705 123,935 856,187
Total liabilities - - - 4,393 - 29,705 123,935 885,946

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - - - - - - - 296,381
Total deferred inflows of resources - - - - - - - 296,381

FUND BALANCE
Restricted
Lighting, landscape & park maintenance - - - - - - - 2,801,548 Low-income housing activities - - - - - - - 80,792
Community development 33,782 96,659 3,676 299,576 81,409 - - 522,001 Street improvements - - - - - - - 247,010
Public safety - - - - - - - 68,593
Unassigned - - - - - - (123,935) (840,518)
Total fund balance 33,782 96,659 3,676 299,576 81,409 - (123,935) 2,899,915 Total liabilities, deferred inflows
of resources and fund balance 33,782 $ 96,659 $ 3,676 $ 303,969 $ 81,409 $ 29,705 $ - $ 4,082,242 $ Special Revenue
See accompanying notes. 55
CITY OF GONZALES COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2022 California Canyon Creek
Supplemental Ag Industrial Breeze Park &
Infrastructure Gas Local Law Public Park Federal Housing Maintenance Maintenance Improvements Tax Enforcement Safety Grant AQMD Successor District District Revenue
Taxes and assessments - $ - $ - $ - $ - $ - $ - $ 143,007 $ 292,040 $ Licenses, permits and impact fees - - - - - - - - -
Intergovernmental 48,789 412,150 251,572 - - - - - -
Use of money and property - - 29 - - 753 82 605 2,586
Loan repayments - - - - - 67,390 3,069 - -
Other revenue - - - - - - 1,559 - -
Total revenue 412,150 48,789 251,601 - - 68,143 4,710 143,612 294,626 Expenditures
General government - - - - - - - - -
Public safety - - - 301,157 - - - - -
Public works 55,841 410,619 - - - - - - -
Parks and recreation - - - - - - - 180,891 84,730
Community development - - - - - - 3,000 - -
Capital outlay - - - - - 112,429 635,000 - -
Debt service
Principal - - - - - 22,411 - - -
Interest and fiscal charges - - - - - 185 - - -
Total expenditures 410,619 55,841 - 301,157 - 135,025 638,000 180,891 84,730 Revenue over (under) expenditures (7,052) 1,531 251,601 (301,157) - (66,882) (633,290) (37,279) 209,896 Other financing sources/(uses)
Lease proceeds - - - - - 112,429 - - -
Operating transfers in/(out) - net - - (251,601) 301,157 - - (10,000) (19,000) (15,001) - - (251,601) 301,157 - 112,429 (10,000) (19,000) (15,001) Change in Fund Balance 1,531 (7,052) - - - 45,547 (643,290) (56,279) 194,895 Fund Balance
Beginning of year (481,556) (1,531) 27,615 (1,705) 4,900 35,245 447,818 123,654 1,449,772 End of year (488,608) $ - $ 27,615 $ (1,705) $ 4,900 $ 80,792 $ (195,472) $ 67,375 $ 1,644,667 $ Special Revenue
See accompanying notes. 56
CITY OF GONZALES COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2022 Cipriani Gonzales
Estates Park & Industrial Park Intersection Circulation American Maintenance Landscape & Improvements Police Park Fire System Rescue District Maintenance Impact Fees Impact Fees Impact Fees Impact Fees Impact Fees Plan Revenue
Taxes and assessments 99,026 $ 119,810 $ - $ - $ - $ - $ - $ - $ Licenses, permits and impact fees - - - - - - 3,708 -
Intergovernmental - - - - - - - 723,034
Use of money and property 1,635 371 408 - - - 83 -
Loan repayments - - - - - - - -
Other revenue - - - - - - - -
Total revenue 120,181 100,661 408 - - - 3,791 723,034
Expenditures
General government - - - - - - - 743,523
Public safety - - - - - 4,977 - -
Public works 21,466 38,042 396,160 - - - - -
Parks and recreation 15,305 - - - - - - -
Community development - - - - - - 5,221 -
Capital outlay - - - - - - - -
Debt service
Principal - - - - - - - -
Interest and fiscal charges - - - - - - - -
Total expenditures 38,042 36,771 396,160 - - 4,977 5,221 743,523 Revenue over (under) expenditures 63,890 82,139 (395,752) - - (4,977) (1,430) (20,489) Other financing sources/(uses)
Lease proceeds - - - - - - - -
Operating transfers in/(out) - net (10,000) (10,000) - - - - - - (10,000) (10,000) - - - - - -
Change in Fund Balance 72,139 53,890 (395,752) - - (4,977) (1,430) (20,489) Fund Balance
Beginning of year 667,796 295,681 385,443 33,024 1,999 12,931 248,440 - End of year 721,686 $ 367,820 $ (10,309) $ 33,024 $ 1,999 $ 7,954 $ 247,010 $ (20,489) $ Special Revenue
See accompanying notes. 57
CITY OF GONZALES COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE NON-MAJOR GOVERNMENTAL FUNDS (CONTINUED) YEAR ENDED JUNE 30, 2022 Storm Total
Drainage Public Public Uses Sphere of CDBG Non-major
Facility Facilities Mitigation Influence General Plan SB1 Urban Governmental Impact Fees Impact Fees Fees Impact Fees Impact Fees Road County Grant Funds Revenue
Taxes and assessments - $ - $ - $ - $ - $ 171,250 $ - $ 825,133 $ Licenses, permits and impact fees - - - - - - - 3,708
Intergovernmental - - - 42,713 - - - 1,478,258
Use of money and property - 225 50 533 27 - - 7,387
Loan repayments - - - - - - - 70,459
Other revenue - - - 71,075 - - - 72,634
Total revenue 225 - 50 114,321 27 171,250 - 1,734,545
Expenditures
General governement - - - - - - - 743,523
Public safety - - - - - - - 306,134
Public works - - - - - 171,250 - 1,093,378
Parks and recreation - - - - - - - 280,926
Community development 3,509 3,509 3,509 74,434 - - - 93,182 Capital outlay - - - - - - - 747,429
Debt service
Principal - - - - - - - 22,411
Interest and fiscal charges - - - - - - - 185
Total expenditures 3,509 3,509 3,509 74,434 - 171,250 - 3,287,168 Revenue over (under) expenditures (3,509) (3,284) (3,459) 39,887 27 - - (1,552,623) Other financing sources/(uses)
Lease proceeds - - - - - - - 112,429
Operating transfers in/(out) - net - - - - - - (114,805) (129,250) - - - - - - (114,805) (16,821)
Change in Fund Balance (3,284) (3,509) (3,459) 39,887 27 - (114,805) (1,569,444) Fund Balance
Beginning of year 99,943 37,291 7,135 259,689 81,382 - (9,130) 3,725,836 End of year 33,782 $ 96,659 $ 3,676 $ 299,576 $ 81,409 $ - $ (123,935) $ 2,899,915 $ Special Revenue
BRYANT L. JOLLEY
CERTIFIED PUBLIC ACCOUNTANTS Bryant L. Jolley C.P.A.

Ryan P. Jolley C.P.A.

Darryl L. Smith C.P.A.

Luis A. Perez C.P.A.

Lan T. Kimoto
INDEPENDENT AUDITOR’S REPORT 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 To the Honorable Mayor and City Council
City of Gonzales, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of City of Gonzales (the “City”), California, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise City’s basic financial statements, and have issued our report thereon dated April 24, 2023.

Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements, on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements.

However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 59 Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

April 24, 2023
BRYANT L. JOLLEY
CERTIFIED PUBLIC ACCOUNTANTS Bryant L. Jolley C.P.A.

Ryan P. Jolley C.P.A.

Darryl L. Smith C.P.A.

Luis A. Perez C.P.A.

Lan T. Kimoto
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM

AND ON INTERNAL CONTROL OVER COMPLIANCE

REQUIRED BY THE UNIFORM GUIDANCE
To the Honorable Mayor and City Council
City of Gonzales, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited City of Gonzales (the “City”), California’s compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2022. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2022.

Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with 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 opinion on compliance for each major federal program.

Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above.

Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s federal programs.
61 Auditor’s Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about City’s compliance with the requirements of each major federal program as a whole.

In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material noncompliance, 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 City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.  Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance. Accordingly, no such opinion is expressed.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.

Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. 62 Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

April 24, 2023
63 CITY OF GONZALES

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2022
Federal Agency or
Federal Grantor/Pass-through CFDA Pass-through Federal
Grantor/Program Title Number Number Expenditures
U.S. Department of Housing and Urban Development
Passed through State Department of Housing and Community Development HOME Investment Partnership Program 14.239 N/A 84,162 $ Passed through County of Monterey
Community Development Block Grant 14.218 N/A 115,000
Total U.S. Department of Housing and Urban Development 199,162 U.S. Department of the Treasury
Passed through United Way Monterey County
Coronavirus Relief Fund 21.019 N/A 358,887
Passed through California Department of Finance
Coronavirus State and Local Fiscal Recovery Funds
American Rescue Plan Act 21.027 N/A 743,523
Total U.S. Department of the Treasury 1,102,410
U.S. Department of Homeland Security
Passed through United Way Monterey County
Emergency Food and Shelter National Board Program 97.024 N/A 1,822 Total U.S. Department of Homeland Security 1,822
Total Federal Expenditures $ 1,303,394
*N/A – not applicable
64 CITY OF GONZALES

NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2022
Note 1 – Significant Accounting Policies
The accompanying Schedule of Expenditures of Federal Awards (SEFA) presents the activity of all federal award programs of the City of Gonzales, California (the City). Federal awards received directly from federal agencies as well as federal awards passed through other nonfederal agencies, primarily the State of California, are included in the SEFA. The City’s reporting entity is defined in Note 1 to the City’s basic financial statements.

Note 2 – Basis of Accounting
The accompanying SEFA is presented using the modified accrual basis of accounting for grants accounted for in the governmental fund types and the accrual basis of accounting for grants accounted for in the proprietary fund types, as described in Note 1 to the City’s basic financial statements. The information in the SEFA is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).

Therefore, some amounts presented in, or used in the preparation of, the SEFA may differ from amounts presented in the basic financial statements
Note 3 – Catalog of Federal Domestic Assistance (CFDA) Numbers The CFDA numbers included in the accompanying SEFA were determined based on program name, review of grant contract information, and the Office of Management and Budget’s Catalog of Federal Domestic Assistance.

Note 4 – Relationship to the Financial Statements
Expenditures of federal awards are reported in the City’s basic financial statements as expenditures/expenses in the General Fund, nonmajor special revenue funds, nonmajor capital project funds, and the enterprise funds.

Note 5 – Indirect Cost Rate
The City did not elect to use the 10% de minimus cost rate as covered in 2 CFR §200.414. 65 CITY OF GONZALES

SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2022
A. Summary of Auditor’s Results
Financial Statements
Type of auditor’s report issued: Unmodified

Internal control over financial reporting:
 Material weaknesses identified? Yes No
 Significant deficiency(ies) identified that
are not considered to be material
weaknesses? Yes None reported
 Non-compliance material to financial
statements noted? Yes No
Federal Awards
Internal control over major programs:
 Material weaknesses identified? Yes No
 Significant deficiency(ies) identified that
are not considered to be material
weaknesses? Yes None reported
Type of auditor’s report issued on compliance for
major programs: Unmodified
Any audit findings disclosed that are required to
be reported in accordance with 2CFR section
200.516? Yes No
Identification of Major Programs
CFDA Number Name of Federal Program or Cluster

21.027 Coronavirus State and Local Fiscal Recovery
Funds
Dollar threshold used to distinguish between
Type A and Type B programs: $750,000
Auditee qualified as low-risk auditee? Yes No
B. Findings – Financial Statements Audit
None noted.

C. Findings and Questioned Costs – Major Federal Award Programs Audit None noted.
66 CITY OF GONZALES

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
YEAR ENDED JUNE 30, 2022
Summary Schedule of Prior Audit Findings
There were no prior year audit findings