Hercules City Council
January 27, 2026

Hercules Wastewater Fund
(An Enterprise Fund of the City of Hercules, California) Hercules, California
Independent Auditor’s Reports and
Basic Financial Statements
For the Year Ended June 30, 2025

Hercules Wastewater Fund
(An Enterprise Fund of the City of Hercules, California) Basic Financial Statements
For the Year Ended June 30, 2025
Table of Contents
Page
Independent Auditor’s Reports:

Report on the Financial Statements ................................................................................................................. 1 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 ................................................................................ 5 Basic Financial Statements:

Statement of Net Position .................................................................................................................................... 9 Statement of Revenues, Expenses, and Changes in Net Position ...................................................................... 11 Statement of Cash Flows .................................................................................................................................... 12 Notes to the Basic Financial Statements ............................................................................................................ 15 Required Supplementary Information:

Schedule of the Proportionate Share of the Plan’s Net Pension Liability .......................................................... 40 Schedule of Contributions to the Pension Plan .................................................................................................. 42 Schedule of the Proportionate Share of the Plan's Net OPEB Liability (Asset) - PEHMCA ............................ 44 Schedule of Contributions to the OPEB Plan - PEHMCA ................................................................................ 46 Schedule of the Proportionate Share of the Plan's Net OPEB Liability (Asset) - SOMAR ............................... 48 Schedule of Contributions to the OPEB Plan - SOMAR ................................................................................... 50 This page intentionally left blank.

INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and the Members of the City Council of the City of Hercules
Hercules, California
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of the Hercules Wastewater Fund (the “Fund”), an enterprise fund of the City of Hercules, California (the “City”), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the Fund’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of the Fund as of June 30, 2025, and the changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (“GAAS”) and the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States (“Government Auditing Standards”) . 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 the Fund 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 opinion.

Emphasis of a Matter
Wastewater Fund as an Enterprise Fund
As described in Note 1 to the basic financial statements, these financial statements present only the Fund and do not purport to and do not present fairly the financial position of the City as of June 30, 2025, the changes in its financial position, or where applicable, its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.

Change in Accounting Principle
As discussed in Notes 1 and 9 to the financial statements, the City adopted new accounting guidance, GASB Statement No. 101, Compensated Absences during the year ended June 30, 2025. The adoption of this standard resulted in the restatement of the Fund’s net position as of June 30, 2024. Our opinion is not modified with respect to this matter.

To the Honorable Mayor and the Members of the City Council of the City of Hercules
Hercules, California

2 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.

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions.

Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we exercise professional judgment and maintain professional skepticism throughout the audit. identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed. evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

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.

To the Honorable Mayor and the Members of the City Council of the City of Hercules
Hercules, California

3 Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Schedules of Proportionate Share of the Plan’s Net Pension Liability, the Schedules of Contributions to the Pension Plan, the Schedule of Proportionate Share of the Plan’s Net Other Postemployment Benefits Liability (Asset) - PEHMCA, the Schedules of Contributions to the OPEB Plan – PEHMCA, the Schedule of Proportionate Share of the Plan’s Net OPEB Liability (Asset) – SOMAR, and the Schedule of Contributions to the OPEB Plan - SOMAR as listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

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 the 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.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 18, 2025 on our consideration of the City's internal control over the Fund’s 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 Fund’s 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 the Fund’s financial reporting and compliance.

Santa Ana, California
December 18, 2025

4 This page intentionally left blank.

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
Independent Auditor’s Report
To the Honorable Mayor and the Members of the City Council of the City of Hercules
Hercules, 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 (“Government Auditing Standards”) , the financial statements of the Hercules Wastewater Fund (the “Fund”), an enterprise fund of the City of Hercules, California (the “City”), as of and for the year ended June 30, 2025, and the related notes to the basic financial statements, which collectively comprise the Fund’s basic financial statements, and have issued our report thereon dated December 18, 2025.

Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the C ity’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 opinion 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.

To the Honorable Mayor and the Members of the City Council of the City of Hercules
Hercules, California

6 Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Fund’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.

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.

Santa Ana, California
December 18, 2025

BASIC FINANCIAL STATEMENTS
7 This page intentionally left blank.
8 ASSETS
Current assets:

Cash and investments 16,611,554$
Cash and investments with fiscal agent 2,888
Total current assets 16,614,442
Noncurrent assets:

Net OPEB asset (PEHMCA) 17,400
Capital assets:

Nondepreciable 191,700
Depreciable, net 50,005,220
Total noncurrent assets 50,214,320
Total assets 66,828,762

DEFERRED OUTFLOWS OF RESOURCES
Pension-related deferred outflows of resources 278,792
OPEB-related deferred outflows of resources (PEHMCA) 13,392 OPEB-related deferred outflows of resources (SOMAR) 40,334 Total deferred outflows of resources 332,518

LIABILITIES
Current liabilities:

Accounts payable 527,334
Retention payable 632,081
Salaries and benefits payable 14,223
Accrued interest payable 14,587
Long-term debt - due within one year 1,643,853
Total current liabilities 2,832,078
Noncurrent liabilities:

Long-term debt - due in more than one year 24,481,394
Net pension liability 997,425
Net OPEB liability (SOMAR) 94,991
Total noncurrent liabilities 25,573,810
Total liabilities 28,405,888

DEFERRED INFLOWS OF RESOURCES
Pension-related deferred outflows of resources 45,959
OPEB-related deferred outflows of resources (PEHMCA) 66,999 OPEB-related deferred outflows of resources (SOMAR) 45,049 Total deferred inflows of resources 158,007

NET POSITION
Net investment in capital assets 23,529,978
Restricted for net OPEB assets 17,400
Unrestricted 15,050,007
Total net position 38,597,385$
Hercules Wastewater Fund
Statement of Net Position
June 30, 2025
See accompanying Notes to the Basic Financial Statements. 9 This page intentionally left blank.
10 OPERATING REVENUES:

Charges for services 6,330,489 $
Total operating revenues 6,330,489
OPERATING EXPENSES:

Salaries and benefits 705,046
Services and supplies 3,235,332
Depreciation 1,031,064
Total operating expenses 4,971,442
Operating income 1,359,047
NONOPERATING REVENUES (EXPENSES):

Interest income 905,811
Interest (expense) (516,321)
Total nonoperating revenues (expenses), net 389,490
CHANGE IN NET POSITION 1,748,537
NET POSITION:

Beginning of year, as previously reported 36,883,037
Change in accounting principle (GASB 101) (34,189)
Beginning of year, as restated (Note 9) 36,848,848
End of year 38,597,385$
Hercules Wastewater Fund
Statement of Revenues, Expenses, and Changes in Net Position For the Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements. 11 CASH FLOWS FROM OPERATING ACTIVITIES:

Cash receipts from customers 6,330,489 $
Cash paid to suppliers for goods and services (3,763,479) Cash paid to employees for services (718,404)
Net cash provided by operating activities 1,848,606

CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:

Payments related to the acquisition of capital assets (1,376,226) Principal repayments related to capital purposes (1,548,285) Interest repayments related to capital purposes (517,065) Net cash (used in) capital and related financing activities (3,441,576) CASH FLOWS FROM INVESTING ACTIVITIES:

Interest earnings 905,811
Net cash provided by investing activities 905,811

NET CHANGES IN CASH AND CASH EQUIVALENTS (687,159)
CASH AND CASH EQUIVALENTS:

Beginning of year 17,301,601
End of year 16,614,442$

RECONCILIATION OF CASH AND CASH EQUIVALENTS
TO STATEMENT OF NET POSITION:

Cash and investments 16,611,554 $
Cash and investments with fiscal agent 2,888
Total cash and cash equivalents 16,614,442$
Hercules Wastewater Fund
Statement of Cash Flows
For the Year Ended June 30, 2025
See accompanying Notes to the Basic Financial Statements. 12 RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:

Operating income 1,359,047 $
Adjustments to reconcile operating income
to net cash provided by operating activities:

Depreciation 1,031,064
(Increase) decrease in assets and deferred outflows
Pensions-related deferred outflows 121,318
OPEB-related deferred outflows (5,486)
Increase (decrease) in liabilities and deferred inflows Accounts payable (528,146)
Salaries and benefits payable 1,596
Net pension liability (93,780)
Net OPEB liability (2,776)
Pensions-related deferred inflows (39,651)
OPEB-related deferred inflows 8,157
Compensated absences (2,737)
Total adjustments 489,559
Net cash provided by operating activities 1,848,606$

NONCASH ITEMS
Retention Payable 632,081 $
For the Year Ended June 30, 2025
Hercules Wastewater Fund
Statement of Cash Flows (Continued)
See accompanying Notes to the Basic Financial Statements. 13 This page intentionally left blank.
14 Hercules Wastewater Fund
Notes to the Basic Financial Statements
For the Year Ended June 30, 2025

15 Note 1 – Summary of Significant Accounting Policies
The financial statements of the Hercules Wastewater Fund (“Fund”), an enterprise fund of the City of Hercules, California (the “City”), have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) as applied to governmental agencies. The Governmental Accounting Standards Board (“GASB”) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the City’s significant policies relating to the Fund:

A. Reporting Entities

The Fund is an enterprise fund of the City’s financial statements. This Fund accounts for wastewater treatment to the cities of Hercules and Pinole and for the maintenance of the City’s sewer lines and related facilities. It is a self- supporting activity which provides services on a user charge basis to residences and businesses.

These financial statements present only the Wastewater Fund and do not purport to and do not present fairly the financial position of the City as of June 30, 2025, the changes in its financial position, or where applicable, its cash flows for the year then ended in accordance with U.S. GAAP.

B. Measurement Focus and Basis of Accounting

Financial Statements include a Statement of Net Position, a Statement of Revenues, Expenses and Changes in Net Position, and a Statement of Cash Flows.

Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets, deferred outflows of resources, liabilities (whether current or noncurrent), and deferred inflows of resources are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Fund Net Position presents increases (revenues) and decreases (expenses) in total Net Position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. In these funds, receivables have been recorded as revenue and provisions have been made for uncollectible amounts.

Operating revenues are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses.

C. Cash and Investments

All cash and investments of the Fund are held in the City’s investment pool. These cash pools have the general characteristics of a demand deposit account, therefore, all cash and investments in the Fund are considered cash and cash equivalents for statement of cash flows purposes.

Investments are stated at fair value (quoted market price or best available estimate thereof).

D. Cash and Investments with Fiscal Agents

Cash and investments are held by fiscal agents for the redemption of bonded debt and maintaining required reserves.

E. Revenues

Wastewater revenues (wastewater disposal services) are recorded as billed to customers on a cyclical basis. All wastewater customers are billed annually by the Contra Costa County Treasurer-Tax Collector Office.

Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

16 Note 1 – Summary of Significant Accounting Policies (Continued)

F. Capital Assets

Capital assets are recorded at historical cost or estimated historical if purchased or constructed. Donated capital assets are valued at their estimated acquisition value on the date donated. City policy has set the capitalization threshold for reporting capital assets with an initial, individual cost of more than $2,500 for general capital assets and $5,000 for infrastructure capital assets, and an estimated useful life of one year or more.

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets is included as part of the capitalized value of the assets constructed.

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.

Capital assets used in operations are depreciated over their estimated useful lives using the straight-line method. The estimated useful lives used for depreciation purposes are as follows:

Wastewater structure 30 Years
Machinery and equipment 5-20 Years
Infrastructure 15-50 Years

G. Accounts Payable

Accounts payable consists of general administration costs incurred and construction services performed during the fiscal year, but paid after the fiscal year.

H. Long-Term Debt

Long-term debt and other long-term obligations are reported as liabilities in 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.

I. Compensated Absences

The City recognizes a liability for compensated absences that are attributable to services already rendered, accumulated, and are more likely than not to be paid or settled. The City's compensated absences include vested accrued vacation and accumulated sick leave as well as certain forms of leave that do not accumulate but are more likely than not to be paid in accordance with GASB Statement No. 101, Compensated Absences. The liability for compensated absences is determined annually, and is recognized as leave is earned, based on the employee’s pay rate in effect at the financial statement date, including any applicable salary-related costs. The liability includes only leave attributable to services already rendered and that is more likely than not to be paid.

J. Pensions

For purposes of measuring the aggregate 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 plans and additions to/deductions from the plans’ fiduciary net position have been determined on the same basis as they are reported by the plans (Note 6). For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with benefit terms. Investments are reported at fair value.

Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

17 Note 1 – Summary of Significant Accounting Policies (Continued)

J. Pensions (Continued)

The following timeframes are used for pension reporting:

CalPERS
Valuation Date June 30, 2023
Measurement Date June 30, 2024
Measurement Period July 1, 2023 - June 30, 2024
Gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized straight-line over 5 years. All other amounts are amortized straight-line over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period.

Pension benefits are expensed to the various funds in the period they are earned, and the unpaid liability is recorded as a long-term liability.

K. Other Postemployment Benefits (“OPEB”)

For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the plans and additions to/deductions from OPEB Plan's fiduciary net position have been determined on the same basis as they are reported by the plan (Note 7). For this purpose, the OPEB plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value.

The following timeframes are used for OPEB reporting for PEMHCA and SOMAR:

OPEB - PEMHCA and SOMAR
Valuation Date June 30, 2025
Measurement Date June 30, 2025
Measurement Period July 1, 2024 - June 30, 2025
Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time. The first amortized amounts are recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. The amortization period differs depending on the source of gain or loss. The difference between projected and actual earnings is amortized on a straight-line basis over 5 years. All other amounts are amortized on a straight-line basis over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) at the beginning of the measurement period.

L. Deferred Outflows and Inflows of Resources

The Statement of Net Position reports separate sections for Deferred Outflows of Resources, and Deferred Inflows of Resources, when applicable.

Deferred Outflows of Resources represent a consumption of net assets that applies to future periods.

Deferred Inflows of Resources represent an acquisition of net assets that applies to future periods.

Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

18 Note 1 – Summary of Significant Accounting Policies (Continued)

M. Net Position

Net position is classified as follows:

Net Investment in Capital Assets – This component of net position consists of capital assets, net of accumulated depreciation and related deferred charges on refunding capital debt, reduced by the related debt that are attributable to the acquisition, construction, or improvement of those items, net of unspent debt proceeds.

Restricted – This component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets.

Unrestricted – This component of net position is the amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position.

When expenses are incurred for purposes for which both restricted and unrestricted components of net position are available, the City’s policy is to apply the restricted component of net position first, then the unrestricted component of net position as needed.

N. Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Note 2 – Cash and Investments

Cash and investments at June 30, 2025 consisted of the following:

Cash and investments pooled with City 16,611,554$
Cash and investments with fiscal agents 2,888
Total 16,614,442$
A. Cash and Investments Pooled with City

The Fund pools its cash and investments with the City in order to achieve a higher return on investment. Certain funds which are held and invested by independent outside custodians through contractual agreements, are not pooled.

Interest earned on investments is allocated using the LAIF factor and average quarterly balances. Required disclosure information regarding investments and other deposit, and related risk disclosures can be found in the City’s financial statements. The City’s financial statements may be obtained by contacting the City’s Finance Department’s office at 111 Civic Drive, Hercules, California.

At June 30, 2025, the Fund has deposited $16,611,554 in the City’s investment pool. Investments held in the City’s investment pool are available on demand and are stated at cost plus accrued interest, which approximates fair value.

Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

19 Note 2 – Cash and Investments (Continued)

B. Investments Authorized by the California Government Code and the City's Investment Policy The table below identifies the investment types that are authorized by the City's investment policy and the California Government Code. The table also identifies certain provisions of the California Government Code (or the City's investment policy, if 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
Authorized Investment Type Maturity of Portfolio in One Issuer Local Agency Investment Fund (State Pool) N/A $50 Million $50 Million U.S. Treasury Obligations 5 Years None None
U.S. Government Agency Issues 5 Years None None
Insured Deposits with Banks and Savings and Loans N/A None None Bankers Acceptance (Must be Dollar Denominated) 180 Days 40% 30% Commercial Paper 270 Days 15% 10%
Negotiable Time Certificates of Deposits 5 Years 30% $100,000 Nonnegotiable Time Certificates of Deposits 5 Years 30% $100,000 Federally Issued Time Deposits 5 Years None $100,000
Repurchase Agreements 30 Days None 10%
Reverse Repurchase Agreements 92 Days 20% None
Medium-Term Notes 5 Years 30% 15%
Money M arket Mutual Funds N/A 20% 10%
Insured or Passbook Savings Accounts N/A None $100,000
*The table is based on state law requirements or investment policy requirements, whichever is more restrictive.

C. 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 investment policy of the City. The table below identifies the investment types that are authorized for investments held by bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk and concentration of credit risk.

Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

20 Note 2 – Cash and Investments (Continued)
C. Investments Authorized by Debt Agreements (Continued) Maximum Maximum
Maximum Percentage Investment
Authorized Investment Type Maturity of Portfolio in One Issuer Local Agency Investment Fund (State Pool) N/A $50 Million $50 Million U.S. Treasury Obligations 30 Years 20% None
U.S. Government Agency Issues 30 Years 20% None
Insured Deposits with Banks and Savings and Loans N/A None None Bankers Acceptance (Must be Dollar Denominated) 6 Months 40% 30% Commercial Paper 6 Months 15% 10%
Negotiable Time Certificates of Deposits 5 Years 30% $100,000 Nonnegotiable Time Certificates of Deposits 5 Years 30% $100,000 Federally Issued Time Deposits 1 Years 20% None
Repurchase Agreements 30 Days None None
Reverse Repurchase Agreements 92 Days 20% None
Medium-Term Notes 5 Years 30% 15%
Mutual Funds N/A 20% None
Money M arket Funds N/A None None
Insured or Passbook Savings Accounts N/A None $100,000
Guaranteed Investment Contract N/A None None
D. Fair Value Measurement

At June 30, 2025, the Fund’s investment consisted of $16,611,554 pooled with the City and the City invested in the State of California Local Agency Investment fund and $2,888 invested in money market mutual funds, which is valued at amortized cost and “uncategorized” under the fair value hierarchy as noted in the table below:

Investment Type Uncategorized Total
Cash and investments pooled with City 16,611,554$ 16,611,554$ Investments with fiscal agents:

Money M arket Mutual Funds 2,888 2,888 Total 16,614,442$ 16,614,442$
E. Risk Disclosures

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 is, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the Fund manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

21 Note 2 – Cash and Investments (Continued)
E. Risk Disclosures (Continued)

Disclosures Relating to Interest Rate Risk (Continued)
Information about the sensitivity of the fair values of the Fund’s investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the Fund's investments by maturity:

Maturity
12 Months
Investment Type Total or Less
Cash and investments pooled with City 16,611,554$ 16,611,554$ Investments with fiscal agents:

Money M arket Mutual Funds 2,888 2,888 Total 16,614,442$ 16,614,442$
Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations Interest rate risk is the market value fluctuation due to overall changes in the interest rates. It is mitigated by limiting the average maturity of the City’s portfolio, not to exceed three years.

As a means of maintaining liquidity and minimizing interest rate risk, the City’s investment policy limits are as follows:

Percentage
Maturity of Portfolio
Up to One Year 10% Minimum
One Year to Five Years 60% Maximum
More Than Five Years 30% Maximum
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 or the City's investment policy, or debt agreements, and the actual rating as of fiscal year end for each investment type.

Minimum
Legal Not
Investment Type Total Rating AAA Rated
Cash and investments pooled with City 16,611,554$ N/A - $ 16,611,554$ Investments with fiscal agents:

Money Market Mutual Funds 2,888 N/A 2,888 - Total 16,614,442$ 2,888 $ 16,611,554$ S&P Rating as of Fiscal Year Ended

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. The Fund has 100% of its cash and investments pooled with the City.

Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

22 Note 2 – Cash and Investments (Continued)
E. Risk Disclosures (Continued)
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that in the event of the failure of the counterparty (e.g., broker dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the provision for deposits as disclosed in Note 2A.

Note 3 – Capital Assets

Summary of changes in capital assets for the year ended June 30, 2025, was as follows:

Balance Reclassification/ Balance
July 1, 2024 Additions Retirements Transfers June 30, 2025 Nondepreciable assets:

Land 191,700 $ - $ -$ -$ 191,700$ Constrution in progress 13,642,030 1,439,043 - (15,081,073) - Total nondepreciable assets 13,833,730 1,439,043 - (15,081,073) 191,700 Depreciable assets:

Structures and improvements 38,325,271 - - (26,990,073) 11,335,198 Machinery and equipment 250,345 - - - 250,345 Infrastructure 14,945,319 - - 42,071,146 57,016,465 Subtotal 53,520,935 - - 15,081,073 68,602,008 Less: accumulated depreciation:

Structures and improvements (11,245,788) (144,187) - 157,647 (11,232,328) Machinery and equipment (224,513) (4,559) - - (229,072) Infrastructure (6,095,423) (882,318) - (157,647) (7,135,388) Subtotal (17,565,724) (1,031,064) - - (18,596,788) Total depreciable assets, net 35,955,211 (1,031,064) - 15,081,073 50,005,220 Total capital assets, net 49,788,941$ 407,979 $ - $ -$ 50,196,920$ Depreciation expense in the amount of $1,031,064 was charged to the Fund for the year ended June 30, 2025.

Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
23 Note 4 – Long-Term Debt
Summary of changes in long-term debt for the year ended June 30, 2025, was as follows:

Balance
July 1, 2024 Balance Due within Due in More
(As Restated) Additions Deletions June 30, 2025 One Year Than One Yea r State Water Resources
Construction Loan 19,856,034$ -$ (1,173,285) $ 18,682,749$ 1,193,230$ 17,489,519$ Wastewater Revenue Bonds, Series 2021A 7,730,000 - (375,000) 7,355,000 385,000 6,970,000 Compensated Absences 90,235 17,661 (20,398) 87,498 65,623 21,875 Total 27,676,269$ 17,661$ (1,568,683) $ 26,125,247$ 1,643,853$ 24,481,394$ A. State Water Resources Construction Loan
In June 2016, the City entered into an installment sale agreement with the California State Water Resources Control Board in the amount of $26,500,000. The funds are for construction costs for the Pinole-Hercules Wastewater Pollution Control Plant Improvement Project. The interest rate on the loan is 1.7%. The first principal and interest payment are due August 31, 2019, and is contingent on the total drawdowns at project completion. The loan matures on August 31, 2038. The City has drawn down $25,457,695 of the loan principal including construction loan interest as of June 30, 2025. The outstanding balance as of June 30, 2025 was $18,682,749.

The annual debt service requirements to maturity for the State Water Resources Construction Loan as of June 30, 2025 are as follows:

Year Ending
June 30, Principal Interest Total
2026 1,193,230$ 317,606$ 1,510,836$
2027 1,213,515 297,322 1,510,837
2028 1,234,145 276,692 1,510,837
2029 1,255,127 255,712 1,510,839
2030 1,276,463 234,374 1,510,837
2031-2035 6,715,284 838,902 7,554,186
2036-2039 5,794,985 248,363 6,043,348
Total 18,682,749$ 2,468,971$ 21,151,720$
B. Wastewater Revenue Bonds, Series 2021A
In July, 2021, the City issued the Direct Purchase Lease in the amount of $8,450,000 and the proceeds were used to early pay off the 2010 PFA Wastewater Revenue Bonds. The bonds bear interest at 2.38%. Interest on the bonds is payable semi-annually on February 1 and August 1 in each year, commencing February 1, 2022. Principal payments are due in annual installments ranging from $355,000 to $545,000, commencing August 1, 2022 through August 1, 2040. The principal balance at June 30, 2025 is $7,355,000.

In the event of default, the City shall declare the entire principal amount of the unpaid Series 2021 installment payments and accrued inteest thereon to be due and payable immediately in writing.

Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

24 Note 4 – Long-Term Debt (Continued)
B. Wastewater Revenue Bonds, Series 2021A (Continued)
The annual debt service requirements to maturity for as of June 30, 2025 are as follows:

Year Ending
June 30, Principal Interest Total
2026 385,000$ 170,468$ 555,468$ 2027 395,000 161,186 556,186 2028 400,000 151,725 551,725 2029 410,000 142,086 552,086 2030 420,000 132,209 552,209
2031-2035 2,255,000 504,501 2,759,501 2036-2040 2,545,000 219,258 2,764,258 2041 545,000 6,486 551,486 Total 7,355,000$ 1,487,919$ 8,842,919$

C. Compensated Absences

The liability is measured using the employee's pay rate at the financial statement date. There is no fixed payment schedule for earned but unpaid compensated absences.

Note 5 – Risk Management

The Fund is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disaster. The Fund participates in the City’s insurance programs to insure against these losses.

General Liability Insurance
Coverage is maintained with the Municipal Pooling Authority (MPA) with coverage limits of $1,000,000 with self- insured retention of $10,000 and $1,000,001 to $29,000,000 covered by California Affiliated Risk Management Authority (CARMA).

Workers’ Compensation
The City has coverage limits for the following without a deductible:

MPA $0 to $500,000
CSAC Excess Insurance Authority $500,000 to $50,000,000 Liberty Insurance Corporation Statutory excess of $50,000,000 Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

25 Note 5 – Risk Management (Continued)
Miscellaneous Coverages
The MPA provides additional coverage for the following risks incurred by the City:

Coverage
Type Deductibles Limits
Auto - Physical Damage:

Police Vehicles 3,000$ 250,000$
All Other Vehicles 2,000 250,000
All Risk Fire & Property 25,000 1,000,000,000 Cyber Liability 50,000 2,000,000
Pollution Liability 250,000 25,000,000
Crime Coverage 2,500 5,000,000
Boiler and Machinery 10,000 100% of primary $25,000,000; 100% of $75,000,000 excess of $25,000,000

The MPA is governed by a board consisting of representatives from member municipalities. The board controls the operations of the MPA, including selection of management and approval of operating budgets, independent of any influence by member municipalities beyond their representation on the board.

The City’s deposits with the MPA are in accordance with formulas established by the MPA. Actual surpluses or losses are shared according to a formula developed from overall loss costs and spread to member entities on a percentage basis after a retrospective rating. Audited financial statements can be obtained from the Municipal Pooling Authority, 1911 San Miguel Drive, #200, Walnut Creek, California 94596.

Note 6 – Public Employee Retirement System

A. General Information About the Pension Plans

Plan Descriptions

All qualified permanent and probationary employees are eligible to participate in the City’s Miscellaneous Employee Pension Plans, cost-sharing multiple employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS). Benefit provisions under the Plans are established by state statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

Benefits Provided

CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for nonduty disability benefits after 10 years of service.

The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

26 Note 6 – Public Employee Retirement System (Continued)

A. General Information About the Pension Plans (Continued)

Benefits Provided (Continued)

The Plans’ provisions and benefits in effect at June 30, 2024, are summarized below:

Miscellaneous
Miscellaneous Tier 2
Benefit formula 2.0% @ 55 2.0% @ 62
Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life
Retirement age 50-63 52 - 67
Monthly benefits, as a % of
eligible compensation 1.426 - 2.148% 1.0 - 2.5%
Required employee contribution rate 7.0% 7.75%
Required employer contribution rate 11.840% 7.680%

Employees Covered

At June 30, 2023, the valuation date, the following employees were covered by the Plan’s provisions:

Miscellaneous
Miscellaneous PEPRA
Active employees 22 27
Transferred employees 47 15
Separated employees 89 15
Retired employees and beneficiaries 99 1 Total 257 58

Contributions

Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions.

The City contributed $109,499 towards the Fund’s share of the Miscellaneous Pension Plan during the year ended June 30, 2025.

Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

27 Note 6 – Public Employee Retirement System (Continued)

B. Net Pension Liability
Actuarial Methods and Assumptions Used to Determine Total Pension Liability The June 30, 2023 valuation was rolled forward to determine the June 30, 2024 total pension liability, based on the following actuarial methods and assumptions:

Actuarial Cost Method Entry Age Normal Actuarial Cost Method Actuarial Assumptions:

Discount Rate
Inflation
Salary Increases
Mortality Rate Table1
Post Retirement Benefit Increase

6.90%

2.30%
Varies by Entry Age and Service
Derived using CalPERS’ Membership Data for all Funds.
1 The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experience study report from November 2021 that can be found on the CalPERS website.

The lesser of contract COLA or 2.30% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.30%

Change of Assumptions
There were no changes of assumptions in 2024.

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

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points. The expected real rates of return by asset class are as follows:

Asset Class1Assumed Asset AllocationReal Return1,2Global Equity - Cap-weighted 30.00% 4.54%Global Equity - Non-Cap-weighted 12.00% 3.84%Private Equity 13.00% 7.28%Treasury 5.00% 0.27%M ortgage-backed Securities 5.00% 0.50%Investment Grade Corporates 10.00% 1.56%High Yield 5.00% 2.27%Emerging M arket Debt 5.00% 2.48%Private Debt 5.00% 3.57%Real Assets 15.00% 3.21%Leverage -5.00% -0.59%100.00%1 An expected inflation of 2.30% was used for this period. 2 Figures are based on the 2021 Asset Liability M anagement study.

Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

28 Note 6 – Public Employee Retirement System (Continued)

B. Net Pension Liability (Continued)

Discount Rate

The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

C. Proportionate Share of Net Pension Liability

The following table shows the plan’s proportionate share of the risk pool collective net pension liability over the measurement period:

Plan Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability/(Asset)
Miscellaneous
Balance at: 6/30/23 (Valuation date) 4,080,826$ 2,989,621$ 1,091,205$ Balance at: 6/30/24 (Measurement date) 4,007,872 3,010,447 997,425 Net changes during 2023-2024 (72,954)$ 20,826$ (93,780)$ The Fund’s proportionate share of the City’s net pension liability for the retirement plans is measured as the proportionate share of the net pension liability. The net pension liability of the retirement plans is measured as of June 30, 2024, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2023 rolled forward to June 30, 2024 using standard update procedures. The Fund’s proportion of the net pension liability was based on a projection of the Fund’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The Fund’s proportionate share of the net pension liability as of the June 30, 2023 measurement date (June 30, 2024 reporting date) and 2024 measurement date (June 30, 2025 reporting date) was as follows:

Fund's Proportion
to City's Share
Measurement date Pool
Proportion - June 30, 2023 0.00875%
Proportion - June 30, 2024 0.00822%
Change - Increase/(Decrease) -0.00053%
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

The following presents the Fund’s proportionate share of the net position liability for the Plan, calculated using the discount rate, as well as what the Fund’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(5.90%) Rate (6.90%) (7.90%)
Miscellaneous 1,538,249$ 997,425$ 552,247$ Plan's Net Pension Liability
Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

29 Note 6 – Public Employee Retirement System (Continued)

C. Proportionate Share of Net Pension Liability (Continued) Pension Plan Fiduciary Net Position

Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pension

For the year ended June 30, 2025, the Fund recognized pension expense $89,924. At June 30, 2025, the Fund reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Contribution made after the measurement date 109,499$ - $ Changes of assumptions 25,636 -
Net difference between projected and actual
earnings on pension plan investments 57,421 - Difference between expected and actual
experience 86,236 (3,365)
Employer contributions in excess/(under)
proportionate share of contributions - (9,681) Adjustments due to difference in proportions - (32,913) Total 278,792 $ (45,959)$
Miscellaneous Plan

$109,499 was reported as deferred outflows of resources related to pensions resulting from Fund’s contributions subsequent to the measurement date and will be recognized as a reduction of the net pension liability in the measurement period ended June 30, 2025. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Measurement Period
Ended June 30 Miscellaneous Plan
2025 31,157$
2026 115,480
2027 (3,624)
2028 (19,679)
Total 123,334$
E. Payable to the CalPERS Pension Plans

At June 30, 2025, the Fund had no outstanding amounts owed to the CalPERS pension plans for contributions for the year ended June 30, 2025.

Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

30 Note 7 – Other Postemployment Benefits (“OPEB”)
A. Retiree Healthcare Plan (PEHMCA)

Plan Description and Administration

The City Retiree Healthcare Plan (Plan) is a single-employer benefit healthcare plan administered by the City. The Plan provides healthcare benefits to eligible retirees and their dependents. The Plan does not issue a financial report.

The City has prefunded a portion of its OPEB benefits in a Public Agency Retirement Services (PARS) trust. The PARS Trust is a tax qualified irrevocable trusts, organized under Internal Revenue Code (IRC) Section 115, established to pre-fund OPEB as described in GASB Statement 75. PARS issues annual audited financial statements for each participating agency of the Trust. PARS is considered an agency agent multiple-employer plan, required to provide financial statements and required supplementary information (Schedule of Changes in Fiduciary Net Position by Plan) that are prepared in conformance with GASB statement 75.

These reports may be obtained by writing the plan at the following address: PARS 4350 Von Karman Ave., Suite 100, Newport Beach, CA 92660-2043.

Employees become eligible to retire and receive City-paid healthcare benefits upon attainment of age 50 and 5 years of service. The City contribution towards retiree health benefits is determined under the "Equal Contribution Method" under PEHMCA under which the City's nominal contribution to PEMHCA is the same for active employees and retirees ($149/month for 2024 and $158/month for 2025).

Proportionate share of the City’s postemployment benefits liabilities and related deferred outflows and inflows have been allocated to the Fund.

Contributions

The contributions are based on pay-go for premiums and contributions to the PARS OPEB trust. The pay-go amount is the actual amount of retiree premiums. Total contributions (pay-go and trust contributions) for the year ended June 30, 2025 were $4,344.

Employees Covered by Benefit Terms

At June 30, 2025, valuation date, the following employees were covered by the benefit terms:

Active Employees Eligible for Future Benefits 64
Retirees Currently Receiving Benefits 18
82 Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

31 Note 7 – Other Postemployment Benefits (“OPEB”) (Continued) A. Retiree Healthcare Plan (PEHMCA) (Continued)
Actuarial Assumptions

The net OPEB liability of the Plan was determined using an actuarial valuation as of June 30, 2025 using the following actuarial assumptions:

Actuarial Assumptions:

Cost Method Entry age actuarial cost method
Discount Rate 5.15%
Inflation 2.50%
Aggregate payroll increases 2.75%
Expected long-term investment rate of return 5.15%
Mortality, Termination, and Disability1 2021 CalPERS Mortality Healthcare Trend Rate 4%
The mortality assumptions are based on the 2021 CalPERS Mortality for Miscellaneous and Schools Employees table created by CalPERS for the miscellaneous participant type and the 2021 CalPERS Mortality for Safety Employees for the safety participant type . CalPERS periodically studies mortality for participating agencies and establishes mortality tables that are modified versions of commonly used tables. This table incorporates mortality projection as deemed appropriate based on CalPERS analysis.

Changes of Assumptions

There were no changes of assumptions in 2025.

Discount Rate

The discount rate used to measure the total Plan’s OPEB liability was 5.15%. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the City plan's fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

The expected long-term rate of return on OPEB plan investments of 5.15%, gross of expenses, was determined by Highmark Capital Management using a building-block method in which best-estimate ranges of expected future real rates of return, net of inflation, are developed for each major asset class. These ranges are combined to produce the term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class
New Strategic
Allocation
Long-Term
Expected
Real Rate of
Return
All Domestic Equities 30.00% 7.25%
All Fixed Income 65.00% 4.25%
Short-Term Gov't Fixed 5.00% 3.00%
100.00%
Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

32 Note 7 – Other Postemployment Benefits (“OPEB”) (Continued) A. Retiree Healthcare Plan (PEHMCA) (Continued)
Proportionate Share of Net OPEB Liability and OPEB Expense

The following table shows the plan’s proportionate share of the risk pool collective net pension liability (asset) over the measurement period:

Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability (Asset)
Balance at: 6/30/24 (Measurement date) (128,727) $ (142,062)$ (13,335)$ Balance at: 6/30/25 (Measurement date) (136,128) (153,528) (17,400) Net changes during 2024-2025 7,401 $ 11,466$ 4,065$

The Fund’s proportionate share of the City’s net OPEB liability (asset) for the OPEB plan is measured as the proportionate share of the net OPEB liability (asset). The net OPEB liability (asset) of the OPEB plans is measured as of June 30, 2025, and the total OPEB liability (asset) used to calculate the net OPEB liability (asset) was determined by an actuarial valuation as of June 30, 2025 using standard update procedures.

The Fund’s proportion of the net OPEB liability (asset) was based on a projection of the Fund’s long-term share of contributions to the OPEB plans relative to the projected contributions of all participating employers, actuarially determined. The Fund’s proportionate share of the net OPEB liability as of the June 30, 2025 measurement date and June 30, 2024 measurement date was as follows:

Fund's Proportion
to City's Share
Pool
Proportion - June 30, 2023 4.91803%
Proportion - June 30, 2024 4.91810%
Change - Increase/(Decrease) 0.00007%
Sensitivity of the Net OPEB Liability (Asset) to Changes in the Discount Rate

The following presents the net OPEB liability (asset) of the Plan, as well as what the City’s net OPEB liability (asset) would be if it were calculated using a discount rate 1% lower or 1% higher than the current discount rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(4.15%) Rate (5.15%) (6.15%)
(119)$ (17,400)$ (31,915)$ Net OPEB Liability (Asset)
Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

33 Note 7 – Other Postemployment Benefits (“OPEB”) (Continued)

A. Retiree Healthcare Plan (PEHMCA) (Continued)
Sensitivity of the Net OPEB Liability (Asset) to Changes in the Healthcare Trend Rate

The following presents the net OPEB liability (asset) of the Plan, as well as what the Plan’s net OPEB liability (asset) would be if it were calculated using healthcare cost trend rates that 1% lower or 1% higher than the current healthcare cost trend rate:

Healthcare Cost Healthcare Cost Healthcare Cost
Trend Rates Trend Rates Trend Rates
3% 4% 5%
(35,810)$ (17,400)$ 5,626 $
Net OPEB Liability (Asset)

OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Relate to OPEB

For the year ended June 30, 2025, the Fund recognized OPEB expense (gain) of $(1,063) for the Plan. OPEB expense (gain) represents the change in the net OPEB liability during the measurement period, adjusted for actual contributions and the deferred recognition of changes in investment gain/loss, and actuarial assumptions or method.

At June 30, 2025, the Fund reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Difference between expected and actual experience - $ (58,211)$ Changes of assumptions 13,392 (6,702)
Net difference between projected and actual earning on
OPEB plan investments - (2,086) Total 13,392$ (66,999)$
Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Measurement
Period Deferred Outflows/
Ending June 30 (Inflows) of Resources
2026 (6,303)$
2027 (11,022)
2028 (11,093)
2029 (10,118)
2030 (9,113)
Thereafter (5,958)
Total (53,607)$

Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

34 Note 7 – Other Postemployment Benefits (“OPEB”) (Continued) B. Retiree Cash Benefit Plan (SOMAR Plan)

Plan Description

The City SOMAR Plan is a single-employer benefit healthcare plan administered by the City. The Plan provides healthcare benefits to eligible retirees and their dependents. The Plan does not issue a financial report.

The SOMAR Plan benefit percentage is based on the lesser of actual years of service, or an equivalent based on sick- leave hours divided by 48, with a minimum percentage of 50% after 10 years and a maximum percentage of 100% after 20 years. The percentage is applied to a stated dollar amount prior to age 65 and the Kaiser Senior Advantage retiree only premium after age 65, offset by the PEMHCA Plan minimum, described above. The monthly dollar amounts under the SOMAR Plan are $388 per month and $292 per month in 2024 for Police and Executive Management, respectively, and $335 per month in 2025 for both groups. The amounts are contractually indexed each year by 3%.

The City provide an optional monetary allowance with an annual three (3%) adjustment each year to Public Safety and Executive employees who retire as regulated by the Public Employee’s Retirement System. To be eligible for the optional monies, an employee must retire as follows:

1. Service Retirement: Employees who have served the City for at least ten (10) consecutive years immediately prior to retirement and are at least fifty (50) years old when they separate service from the City.

2. Disability Retirement: Employees who retire with a disability retirement are not required to be a certain age, but must have at least twenty (20) years of service with the City.

Employees must have the minimum amount of sick leave on the books, as outlined in the chart below. If an employee has below the amount of sick leave required for their years of service, then they will only be eligible for the percentage paid equivalent to the amount of sick leave they do have on the books.

Years of Service
Sick Leave
Balance
% of Optional
Money
Available
10 480 50
11 528 55
12 576 60
13 624 65
14 672 70
15 720 75
16 768 80
17 846 85
18 864 90
19 912 95
20-24 960 100
25 No Minimum
amount required 100

Employees must retire within one hundred twenty (120) days. In addition, employees who separate service but do not retire as a PERS annuitant, shall not be eligible under for SOMAR benefits.

Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

35 Note 7 – Other Postemployment Benefits (“OPEB”) (Continued)

B. Retiree Cash Benefit Plan (SOMAR Plan) (Continued)

Plan Description (Continued)

The City will pay a portion of the optional money to a retiree until the retiree reaches age sixty-five (65), upon which they are required to enroll in Medicare. At that time, the optional money will drop to an amount equivalent to the Kaiser Supplemental to Medicare rate through PERS.

The SOMAR benefit is expected to last into perpetuity. Payments are made on a bi-annual basis.

Employees Covered by Benefit Terms

At the June 30, 2025 measurement date, the following employees were covered by the benefit terms:

Participating active employees 34
Inactive employees receiving benefits 16
50 Benefits Provided

The SOMAR plan’s provisions and benefits in effect at June 30, 2025, are summarized below:

Executives Police
Duration of benefits Lifetime Lifetime
Required service 50% at 10 years
grading to 100% at
20 years
50% at 10 years
grading to 100% at
20 years
Minimum age Retirement Retirement
Amount $335 per month pre-
65; based on Kaiser
premium post-65
$335 per month pre-
65; based on Kaiser
premium post-65
Contributions

For the year ended June 30, 2025, the Fund contributions recognized as part of OPEB expense for the SOMAR plan were $2,400.

Actuarial Assumptions

The net pension liability of the SOMAR Plan was determined using an actuarial valuation as of June 30, 2025 using the following actuarial assumptions:

Actuarial Assumptions:

Cost method Entry age normal
Discount Rate 5.20%
Inflation 2.50%
Aggregate payroll increases 2.75%
Mortality1, retirement, and turnover 2021 CalPERS tables Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

36 Note 7 – Other Postemployment Benefits (“OPEB”) (Continued)

B. Retiree Cash Benefit Plan (SOMAR Plan) (Continued)
Changes of Assumptions

The interest assumption changed from 3.93% to 5.20%. Assumed rates of retirement, termination, and mortality have been updated to align with those currently being used by the statewide pension systems.

Discount Rate

The discount rate used to measure the total OPEB liability for the SOMAR plan was 5.20% based on the Bond Buyer 20 Bond Index.

Proportionate Share of Net OPEB Liability and OPEB Expense

The Fund proportionate share of the net OPEB liability as of June 30, 2025, measurement date, is as follows:

Plan's Proportion to
Total Plan at June 30,
2025
Proportionate
Share of Net
OPEB Liability

4.918% 94,991$

Sensitivity of the Net OPEB Liability to Changes in the Discount Rate

The following presents the net pension liability of the SOMAR Plan, as well as what the SOMAR Plan’s net pension liability (asset) would be if it were calculated using a discount rate 1% lower or 1% higher than the current discount rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(4.20%) Rate (5.20%) (6.20%)
110,938$ 94,991$ 82,268$ SOMAR Plan's Total OPEB Liability

OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Relate to Pension

For the year ended June 30, 2025, the City recognized pension expense of $7,704 for the SOMAR plan. OPEB expense represents the change in the net pension liability during the measurement period, adjusted for actual contributions and the deferred recognition of changes in investment gain/loss, and actuarial assumptions or method.

At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources for the SOMAR plan:

Deferred Outflows Deferred Inflows
of Resources of Resources
Difference between expected and actual experience 29,759$ (10,862)$ Changes of assumptions 10,575 (34,187) Total 40,334 $ (45,049)$
S OMAR Plan

Hercules Wastewater Fund
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025

37 Note 7 – Other Postemployment Benefits (“OPEB”) (Continued)

B. Retiree Cash Benefit Plan (SOMAR Plan) (Continued)

OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Relate to Pension (Continued)

Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in pension expense as follows:

Measurement SOMAR Plan
Period Deferred Outflows/
Ending June 30 (Inflows) of Resources
2026 (400) $
2027 (400)
2028 (400)
2029 (400)
2030 (400)
Thereafter (2,715)
Total (4,715)$
Payable to the OPEB Plan

At June 30, 2025, the Fund had no outstanding amounts owed to the SOMAR OPEB plan for contributions for the year ended June 30, 2025.

Note 8 – Contingencies

Lawsuits

The Fund is not involved in any matters of litigation that have arisen in the normal course of conducting business.

Additionally, management believes that the City’s insurance programs are sufficient to cover any potential losses should an unfavorable outcome materialize.

Note 9 – Restatement

Implementation of GASB Statement No. 101, Compensated Absences

Effective for the fiscal year ended June 30, 2025, the City implemented GASB Statement No. 101, Compensated Absences. The implementation of GASB 101 resulted in a change in accounting principle, and prior year amounts have been restated accordingly. The effect on the beginning net position is as follows:

June 30, 2024 Change in
As Previously Accounting June 30, 2024
Reported Principle As Restated
Hercules Wastewater Fund 36,883,037$ (34,189) $ 36,848,848$ 38 This page intentionally left blank.

REQUIRED SUPPLEMENTARY INFORMATION
39 Measurement Date: June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 Proportion of the Net Pension Liability 0.0082% 0.0087% 0.0095% 0.0067% 0.0072% Proportionate Share of the Net Pension Liability997,425$ 1,091,205$ 1,092,885$ 364,008 $ 779,817$ Covered Payroll 472,871 $ 458,019$ 437,549$ 229,694$ 335,827$ Proportionate Share of the Net Pension Liability
as a Percentage of Covered Payroll 210.93% 238.24% 249.77% 158.48% 232.21% Fiduciary Net Position as a Percentage of the
Plan's Total Pension Liability 75.11% 73.26% 73.13% 85.66% 73.63% Miscellaneous Plans
California Public Employees' Retirement System (CalPERS) Hercules Wastewater Fund
Required Supplementary Information (Unaudited)
Schedule of the Proportionate Share of the Plan's Net Pension Liability For the Year Ended June 30, 2025
Last Ten Fiscal Years
40 Measurement Date: June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Proportion of the Net Pension Liability 0.0068% 0.0066% 0.0067% 0.0065% 0.0056% Proportionate Share of the Net Pension Liability694,727$ 637,000$ 659,623$ 562,902$ 481,238$ Covered Payroll 331,260 $ 321,063$ 0 301,916$ 251,715$ 251,715$ Proportionate Share of the Net Pension Liability
as a Percentage of Covered Payroll 209.72% 198.40% 218.48% 223.63% 191.18% Fiduciary Net Position as a Percentage of the
Plan's Total Pension Liability 75.07% 77.69% 75.39% 75.87% 78.32% Miscellaneous Plans
Last Ten Fiscal Years
California Public Employees' Retirement System (CalPERS) Hercules Wastewater Fund
Required Supplementary Information (Unaudited)
Schedule of the Proportionate Share of the Plan's Net Pension Liability (Continued) For the Year Ended June 30, 2025
41 Fiscal Year: 2024-25 2023-24 2022-23 2021-22 2020-21 Actuarially Determined Contribution1 109,499$ 101,808$ 105,146$ 88,805$ 102,423$ Contribution in Relation to the Actuarially
Determined Contribution2 (109,499) (101,808) (105,146) (88,805) (102,423) Contribution Deficiency (Excess) - $ -$ -$ -$ -$ Covered Payroll3 486,111$ 472,871$ 449,800$ 437,549$ 229,694$ Contributions as a Percentage of Covered Payroll 20.94% 22.74% 23.38% 20.30% 44.59% Notes to the Schedule:

Methods and assumptions used to determine contribution rates:

Actuarial cost method Actuarial cost method
Amortization method For details, see June 30, 2021, funding valuation report.

Asset valuation method Fair Value of Assets. For details, see June 30, 2021, funding valuation report.

Inflation 2.30%
Salary increases Varies by entry age and service
Payroll Growth 2.80%
Investment rate of return 6.80% Net of pension plan investment and administrative expenses; includes Inflation.

Retirement age
Mortality
Miscellaneous Plans
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2023-24 were derived from the June 30, 2023 funding valuation report.

The probabilities of retirement are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.

The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP- 2020 published by the Society of Actuaries.

Hercules Wastewater Fund
Required Supplementary Information (Unaudited)
Schedule of Contributions to the Pension Plan
For the Year Ended June 30, 2025
California Public Employees' Retirement System (CalPERS) 1As prescribed in GASB 68, paragraph 46, the information presented in the Schedule of Plan Contributions should also be presented as of the employer’s most recent fiscal year-end. The employer is responsible for determining this information as prescribed by the standard as this data is not available to CalPERS. 2 Employers are assumed to make contributions equal to the actuarially determined contributions. How ever, some employers may choose to make additional contributions tow ards their unfunded liability. Employer contributions for such plans exceed the actuarially determined contributions. 3Includes one year’s payroll growth using 2.80% payroll growth assumption for fiscal year 2022 through 2024; 2.75% payroll growth assumption for fiscal years 2018 through 2021; 3.00% payroll growth assumption for fiscal years 2015 through 2017.

Last Ten Fiscal Years
42 Fiscal Year: 2019-20 2018-19 2017-18 2016-17 2015-16 Actuarially Determined Contribution1 95,532$ 91,514$ 63,159$ 52,105$ 52,884$ Contribution in Relation to the Actuarially
Determined Contribution2 (95,532) (91,514) (63,159) (52,105) (52,884) Contribution Deficiency (Excess) - $ -$ -$ -$ -$ Covered Payroll3 335,827$ 331,260$ 321,063$ 301,916$ 251,715$ Contributions as a Percentage of Covered Payroll 28.45% 27.63% 19.67% 17.26% 21.01% Last Ten Fiscal Years
California Public Employees' Retirement System (CalPERS) Hercules Wastewater Fund
Required Supplementary Information (Unaudited)
Schedule of Contributions to the Pension Plan (Continued) For the Year Ended June 30, 2025
Miscellaneous Plans
43 Measurement Date: June 30, 2025 June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 Proportion of the Net OPEB Liability
(Asset) 4.92% 4.92% 5.36% 5.36% 5.88%
Proportionate Share of the Net OPEB
Liability (Asset) (17,400)$ (13,336)$ (12,132)$ (763) $ (28,052)$ Covered Payroll 437,549 $ 229,694$ 229,694$ 335,827$ 335,827$ Proportionate Share of the Net OPEB
Liability (Asset) as a Percentage of
Covered Payroll -3.98% -5.81% -5.28% -0.23% -8.35%
Fiduciary Net Position as a Percentage
of the Plan's Total Pension Liability 110.36% 109.27% 109.27% 100.56% 119.65% 1 Historical information is presented only for measurement periods for which GASB No. 75 is applicable.

Last Ten Fiscal Years 1
Hercules Wastewater Fund
Required Supplementary Information (Unaudited)
Schedule of the Proportionate Share of the Plan's Net OPEB Liability (Asset) - PEHMCA For the Year Ended June 30, 2025
44 Measurement Date: June 30, 2020 June 30, 2019 June 30, 2018 Proportion of the Net OPEB Liability
(Asset) 6.80% 5.16% 5.19%
Proportionate Share of the Net OPEB
Liability (Asset) (11,718)$ 66,474$ 75,521$ Covered Payroll 331,260 $ 321,063$ 301,916$ Proportionate Share of the Net OPEB
Liability (Asset) as a Percentage of
Covered Payroll -3.54% 20.70% 25.01%
Fiduciary Net Position as a Percentage
of the Plan's Total Pension Liability 106.92% 65.60% 59.11% 1 Historical information is presented only for measurement periods for which GASB No. 75 is applicable.

Last Ten Fiscal Years 1
Hercules Wastewater Fund
Required Supplementary Information (Unaudited)
Schedule of the Proportionate Share of the Plan's Net OPEB Liability (Asset) - PEHMCA (Continued) For the Year Ended June 30, 2025
45 Fiscal Year: 2024-252 2023-242 2022-232 2021-222 2020-212 Actuarially Determined Contribution 4,344 $ 4,282$ 5,879$ 7,721$ 1,179$ Contribution in Relation to the
Actuarially Determined Contribution (4,344) (4,282) (5,879) (7,721) (1,179) Contribution Deficiency (Excess) - $ -$ -$ -$ -$ Covered Payroll 486,111 $ 462,395$ 449,800$ 437,549$ 229,694$ Contributions as a Percentage of Covered
Payroll 0.89% 0.93% 1.31% 1.76% 0.51%
1 Historical information is presented only for measurement periods for which GASB No. 75 is applicable. 2 Effective for the year ended June 30, 2020, PEHMCA Plan is valued separately.

Hercules Wastewater Fund
Required Supplementary Information (Unaudited)
Schedule of Contributions to the OPEB Plan - PEHMCA
For the Year Ended June 30, 2025
Last Ten Fiscal Years 1
46 Fiscal Year: 2019-202 2018-19 2017-18
Actuarially Determined Contribution 11,571 $ 18,642$ 10,641$ Contribution in Relation to the
Actuarially Determined Contribution (11,571) (18,642) (10,641) Contribution Deficiency (Excess) - $ -$ -$ Covered Payroll 335,827 $ 331,260$ 321,063$ Contributions as a Percentage of Covered
Payroll 3.45% 5.63% 3.31%
Last Ten Fiscal Years 1
1 Historical information is presented only for measurement periods for which GASB No. 75 is applicable. 2 Effective for the year ended June 30, 2020, PEHMCA Plan is valued separately.

Hercules Wastewater Fund
Required Supplementary Information (Unaudited)
Schedule of Contributions to the OPEB Plan - PEHMCA (Continued) For the Year Ended June 30, 2025
47 Measurement Date: June 30, 20251 2 June 30, 20241 2 June 30, 20231 2 Proportion of the Net OPEB Liability (Asset) 4.92% 4.92% 5.36% Proportionate Share of the Net OPEB Liability (Asset) 94,991$ 93,703$ 100,875$ Covered Payroll 486,111 $ 462,395$ 437,549$ Proportionate Share of the Net OPEB Liability (Asset) as a Percentage of Covered Payroll 19.54% 20.26% 23.05%
Fiduciary Net Position as a Percentage of the Plan's Total Pension Liability 0.00% 0.00% 0.00%
1 Historical information is presented only for periods for which GASB 73 is applicable. 2 SOMAR Plan is now valued separately from PEHMCA Plan effective June 30, 2020.

Last Ten Fiscal Years 1
Hercules Wastewater Fund
Required Supplementary Information (Unaudited)
Schedule of the Proportionate Share of the Plan's Net OPEB Liability (Asset) - SOMAR For the Year Ended June 30, 2025
48 Measurement Date: June 30, 20221 2 June 30, 20211 2 June 30, 20201 2 Proportion of the Net OPEB Liability (Asset) 5.36% 5.36% 5.36% Proportionate Share of the Net OPEB Liability (Asset) 71,848$ 86,665$ 99,901$ Covered Payroll 364,008 $ 345,902$ 335,827$ Proportionate Share of the Net OPEB Liability (Asset) as a Percentage of Covered Payroll 19.74% 25.05% 29.75%
Fiduciary Net Position as a Percentage of the Plan's Total Pension Liability 0.00% 0.00% 0.00%
1 Historical information is presented only for periods for which GASB 73 is applicable. 2 SOMAR Plan is now valued separately from PEHMCA Plan effective June 30, 2020.

Last Ten Fiscal Years 1
Hercules Wastewater Fund
Required Supplementary Information (Unaudited)
Schedule of the Proportionate Share of the Plan's Net OPEB Liability (Asset) - SOMAR (Continued) For the Year Ended June 30, 2025
49 Fiscal Year: 2024-252 2023-242 2022-232
Actuarially Determined Contribution 2,400 $ 2,404$ 2,303$ Contribution in Relation to the Actuarially Determined Contribution (2,400) (2,404) (2,303) Contribution Deficiency (Excess) - $ -$ -$ City's Covered-Employee Payroll -$ -$ -$ Contributions as a Percentage of Covered Payroll 0.00% 0.00% 0.00% 1 Historical information is presented only for measurement periods for which GASB No. 73 is applicable. 2 Effective for the year ended June 30, 2020, SOMAR Plan is valued separately.

Hercules Wastewater Fund
Required Supplementary Information (Unaudited)
Schedule of Contributions to the OPEB Plan - SOMAR
For the Year Ended June 30, 2025
Last Ten Fiscal Years 1
50 Fiscal Year: 2021-222 2020-212 2019-202
Actuarially Determined Contribution 2,342 $ 2,332$ 2,182$ Contribution in Relation to the Actuarially Determined Contribution (2,342) (2,332) (2,182) Contribution Deficiency (Excess) - $ -$ -$ City's Covered-Employee Payroll -$ -$ -$ Contributions as a Percentage of Covered Payroll 0.00% 0.00% 0.00% Last Ten Fiscal Years 1
1 Historical information is presented only for measurement periods for which GASB No. 73 is applicable. 2 Effective for the year ended June 30, 2020, SOMAR Plan is valued separately.

Hercules Wastewater Fund
Required Supplementary Information (Unaudited)
Schedule of Contributions to the OPEB Plan - SOMAR (Continued) For the Year Ended June 30, 2025
51 This page intentionally left blank.
52