FY 2023/24 Annual Comprehensive
Financial Report (ACFR) & Year-End
Budget Adjustments
City Council Meeting
January 21, 2025
1 Presentation Overview
• FY 2023/24 Year-End Audit and Annual Comprehensive Financial Report (ACFR)
• Presentation given by Auditor Jonathan Foster CPA, Partner – DavisFarr • FY 2023/24 Year-End Budget Adjustment Requests
2 City FY 2023/24 Year-End Audit and
Annual Comprehensive Financial Report
(ACFR)
3 Reports Issued
• Audited Opinion
• Unmodified
• Communication to those in Governance
• Internal Control Letter – issued in conjunction with Single Audit Report • One material audit adjustment noted
• In progress
• Single Audit over Federal Expenditures
4 Areas of Audit Focus
Pension Obligations
OPEB Obligations
Revenue and
Expenditure testing
Testing of Capital
Asset Activities
Single Audit
FY 2023/24 Performance (Audited)
Description In Thousands
ASSETS
Current and Other Assets $523,525
Non-Current Assets 5,207
Capital Assets 932,745
Total Assets 1,461,477
Deferred Outflows – Pensions & OPEB 135,090
LIABILITIES
Current and Other Liabilities 75,969
Long-Term Obligations* 604,946
Total Liabilities 680,915
Deferred Inflows – Pension & OPEB 18,868
TOTAL NET POSITION $896,784
Government-Wide Highlights:
* Reflects GASB 68 recording of Net Pension Liability of $193,451 million General Fund Reserves (Audited)
* Other Fund Balance includes Encumbrances, Non-Spendable, and Restricted Items.
Fund Balance Category
FY 19/20
Audited
FY 20/21
Audited
FY 21/22
Audited
FY 22/23
Audited
FY 23/24
Audited
Economic Uncertainties 25,010 25,381 26,114 48,411 49,090 Equipment Replacement 8,295 8,295 8,295 8,295 8,295 General Plan Maintenance 791 791 1,143 1,515 1,651 General Liability Plan Migration 2,801 2,801 2,801 2,801 2,801 Capital Improvement Reserve (CIR) 8,046 8,230 8,597 9,086 9,425 Pension Rate Stabilization 741 2,206 4,160 5,517 Cityview Replacement 1,028 1,028 1,028 Strategic Initiatives 16,536 16,536 16,536 Section 115 Trust 10,003 12,878 15,927 20,641 24,423 Triple Flip 896 749 109 Year-End Market Value 1,983 1,983 1,983 3,025 Housing Agreement 101 174 1,657 Litigation Reserves 3,650 3,650 3,650 3,650 AES Reserves 4,900 4,900 4,900 HB Recovery Fund 10,886 10,886
Oceanview Estates 365 641
Other Fund Balance* 4,598 6,472 7,878 11,827 12,915 Unassigned
Total Fund Balance 80,088 94,609 102,824 126,537 132,319 FY 2023/24 General Fund (Audited) (Fund 100)
Description In Thousands
Revenue (Recurring) $290,289
Revenue (One-Time) * 2,276
Planned Use of Reserves 4,900
Total Sources of Funds $297,465
Expenditures less UAL 266,694
CalPERS UAL 4,643
POB Payment 13,255
One-Time Expenditures** 6,038
Total Expenditures $290,630
Other Restricted Changes in General Fund Balance*** 4,119 General Fund (Fund 100) Surplus $2,716
* FY 23/24 one-time revenue consists of $2.3M for Emerald Cove Superior Court Judgment ** Includes $4.9M for AES Transfer and $1.1M Transfer of 50% of Emerald Cove settlement to the General Liability Fund *** Includes adjustments to YE Market Value and set-asides for Ocean View Estates and General Plan Maintenance General Fund Surplus Allocation
Description Amount
FY 2023/24 General Fund (Fund 100) Surplus $2,715,730
Pension Rate Stabilization 1,357,865
Economic Uncertainties 678,932
Capital Improvement Reserve 339,466
Infrastructure Fund Transfer 339,466
Total Allocated Surplus per Fund Balance Policy $2,715,730 General Fund Reserve Policy requires the following:
• 50% to Pension Rate Stabilization Reserve (per Unfunded Accrued Liability Pension Funding Policy) Remaining surplus allocated as follows (until Economic Uncertainties is fully funded):
• 50% to Economic Uncertainties Reserve
• 25% to Capital Improvement Reserve
• 25% for Infrastructure Fund
FY 2023/24 Year-End Budget Adjustments
10 FY 2023/24 Year-End Budget Adjustments
• As part of the FY 2023/24 year-end closing process, certain technical year-end budget adjustments are requested to align appropriations in certain funds with actual expenditures incurred through June 30, 2024 • Adjustments are also required to ensure compliance with Generally Accepted Accounting Principles (GAAP), Governmental Accounting Standards Board (GASB), and other regulatory, contractual or legal requirements.
• All requested appropriation increases are fully offset by commensurate amounts of revenues, available cash, or fund balances in each Fund • No General Fund adjustments are being requested
11 Inter-Fund Transfers
12 Surf City “3” Cable Channel, Infrastructure, and Equipment Replacement Funds (243, 314 and 324) • $612K – transfer from the City “3” Cable Channel Fund (243) into the Infrastructure Fund (314) in the amount of $611,888.68 to reimburse the Infrastructure Fund for its fair share of various fiber upgrades that benefitted the City’s Cable Channel • $152K – transfer from the Surf City “3” Cable Channel Fund (243) into the Equipment Replacement Fund (324) in the amount of $151,615.53 to reimburse the Equipment Replacement Fund for its fair share of server and other equipment upgrades that benefitted the City’s Cable Channel
Debt Service Bella Terra and Bella Terra Parking Structure Funds (410 and 711) • $184K – transfer from the Debt Service Bella Terra Fund (410) into the Bella Terra Parking Structure Fund (711) to cover increased maintenance and operations costs that are paid for from the Bella Terra Parking Structure Fund (711).
• A corresponding expenditure appropriation is being requested in the Bella Terra Parking Structure Fund (711) to cover the increased maintenance costs Total Inter-Fund Transfer Adjustments - $947,504.21
Appropriation Increases
13 Hotel/Motel Business Improvement District (Hotel/Motel BID) Fund (709) • $46,673 to align the budget with actual FY 2023/24 revenues and expenditures.
The Hotel/Motel BID Fund is a pass-thru fund in which the City collects self- assessed revenues from the participating hotels and motels and submits them to Visit Huntington Beach per the BID’s agreement. There are sufficient offsetting revenues for a net zero impact.
Downtown Business Improvement District (Downtown BID) Fund (710) • $9,011 to align the budget with actual FY 2023/24 revenues and expenditures. All Downtown merchants have a self-assessment through the Business Improvement District (BID) that the City Council approves annually. The City collects the fees and redistributes them back to the District. There are sufficient offsetting revenues for a net zero impact.
Appropriation Increases
14 Bella Terra Parking Structure Fund (711)
• $184,000 to align the align the budget with actual FY 2023/24 revenues and expenditures. The City collects a maintenance fee from the owners of the center which is used to fund maintenance and operations costs for the structure. There are sufficient offsetting revenues for a net zero impact.
Used Oil Grant Fund (960)
• $12,453.39 to align the budget with actual FY 2023/24 revenues and expenditures. A portion of prior year grant funds from the OPP13 term were unspent and needed to be returned to the Department of Resources Recycling and Recovery (CalRecycle). There are sufficient offsetting grant revenues for a net zero impact.
Total Appropriation Increases - $252,137.39
Council Action Requested
• Receive and file the FY 2023/24 Annual Comprehensive Financial Report and other auditor-issued reports
• Approve year-end inter-fund transfers in the amount of $947,504.21 • Approve year-end appropriation increases in the amount of $252,137.39 • The General Fund is not impacted by these year-end adjustment requests
15 Questions?