Agenda packet, regular meeting — La Mesa City Council, June 13, 2023 (part 3 of 3)

CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
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10. COMPENSATED ABSENCES
The summary of changes in compensated absences for governmental activities for the year ended June 30, 2022 was as follows:

Balance Balance Due Within Due in More
June 30, 2021 Additions Deletions June 30, 2022 One Year Than One Year Compensated Absences $ 3,885,126 $ 3,264,508 $ (2,865,241) $ 4,284,393 $ 2,870,000 $ 1,414,393 Classification
The
funds to be used to liquidate this liability include the General Fund, Housing Rehabilitation, Community Development Block Grant, Downtown Parking, Wastewater, Environmental Services, Workers Compensation Fund, Liability Risk Financing Fund and the Low-Moderate Housing Successor Fund. At June 30, 2022, compensated absences balance consisted of the following:

Vacation pay 2,158,720 $
Holiday pay 819,442
Sick leave 1,086,469
Compensatory time 219,762
Total $ 4,284,393

11. OTHER POST– EMPLOYMENT BENEFITS
Plan Description
The City provides the minimum required employer contribution under the CalPERS Health Plan for eligible retirees and surviving spouses in receipt of a pension benefit from CaIPERS. An employee is eligible for this employer contribution provided they are vested in their CalPERS pension benefit and commence payment of their pension benefit within 60 days of retirement with the City. Vesting requires at least 5 years of CalPERS total service. The surviving spouse of an eligible retiree who elected spouse coverage under CalPERS is eligible for the employer contribution upon the death of the retiree.

The scheduled minimum required employer contributions for each eligible retiree under the CalPERS Health Plan are $149 per month per employee in 2022. The City does not issue a financial report for the plan. A separate financial report is not prepared for the Plan.

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
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11. OTHER POST– EMPLOYMENT BENEFITS, (continued)
Employees Covered
As of the June 30, 2021 actuarial valuation, the following current and former employees were covered by the benefit terms under the Plan:

Active employees 248
Inactive employees or beneficiaries currently receiving benefits 142 Inactive employees entitled to, but not yet receiving benefits - Total 390
Contributions
By unanimous vote of the City Council on May 12, 2009, the City adopted pre-funding through the California Employers' Retiree Benefit Trust (CERBT), a GASB eligible trust. The CERBT has an investment policy with an expected long-term rate of return equal to approximately 6.80% for employers fully funding the annual required contribution each year. For the fiscal year ended June 30, 2022, the City’s cash contributions were $372,129 in payments to the trust.

Net OPEB Liability
The City’s net OPEB liability was measured as of June 30, 2021 based on the following actuarial methods and assumptions:

Actuarial Assumptions June 30, 2021 Measurement Date
Actuarial Valuation Date June 30, 2021
Actuarial cost method Entry age normal
Discount Rate 6.80%
General Inflation 2.50%
Mortality Society of Actuaries (SOA) Pub-2010 Continuing Survivor Headcount Weighted Mortality Table fully
generational using Scale MP-2021.

Retirement, Disability,
Termination
According to the rates under the 2021 experience
study for the CalPERS Pension plan.

Salary increases 2.80%
Medical Trend 6.5% for 2022, decreasing to an ultimate rate of

4.5% in 2030 and later years
Healthcare Participation 50% of eligible active employees are assumed to elect medical coverage at retirement.

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
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11. OTHER POST– EMPLOYMENT BENEFITS, (continued)
Net OPEB Liability (continued)
The long-term expected rate of return on OPEB plan investments was determined using a building – block method in which expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class Component Target Allocation
Long-Term
Expected Real
Rate of Return
Global equity 59% N/A
Global debt securities 25% N/A
Inflation assets 5% N/A
Commodities 8% N/A
REITs 3% N/A
Total 100%
Discount Rate
A discount rate of 6.80% was used in the valuation. This discount rate assumes the City continues to fully fund for its retiree health benefits through the CERBT under its investment allocation strategy.

Changes in the OPEB Liability
The changes in the net OPEB liability for the Plan are as follows:
(a) (b) (a) - (b) = (c)
Total OPEB
Liability
Plan
Fiduciary
Net Position
Net OPEB
Liability
Balance at June 30, 2020 (measurement date) 6,105,728 $ 4,479,457 $ 1,626,271 $ Changes recognized for the measurement period:

Service cost 104,011 - 104,011
Interest 415,772 - 415,772
Differences between expected and
actual experience 588,094 - 588,094
Changes of assumptions 82,245 - 82,245
Contributions – employer - 1,034,864 (1,034,864)
Net investment income - 1,279,360 (1,279,360)
Benefit payments (549,584) (549,584) -
Administrative expense - (1,763) 1,763
Net changes 640,538 1,762,877 (1,122,339)
Balance at June 30, 2021 (measurement date) $ 6,242,334 6,746,266 $ 503,932 $

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
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11. OTHER POST– EMPLOYMENT BENEFITS, (continued)
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the net OPEB liability of the City if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2021:
1% Decrease
(5.80%)
Current Discount
Rate (6.80%)
1% Increase
(7.80%)
Net OPEB Liability/
(Asset) $ 503,932 1,274,955 $ (138,656) $
Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the net OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2021:
1% Decrease
Current
Healthcare Cost
Trend Rates 1% Increase
Net OPEB Liability/
(Asset) $ 503,932 (203,243) $ 1,370,761 $
OPEB Plan Fiduciary Net Position
CalPERS issues a publicly available CERBT financial report that may be obtained from the CalPERS’ website at www.calpers.ca.gov.

Recognition of Deferred Outflows and Deferred Inflows of Resources Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time. Amounts are first 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 net difference between projected and actual earnings on OPEB plan investments is amortized using the straight-line method over 5 years, while all other amounts are amortized over the expected average remaining service lifetime (EARSL) of plan participants.

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
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11. OTHER POST– EMPLOYMENT BENEFITS, (continued)
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB A complete breakdown of the OPEB expense is as follows:

Service cost 104,011 $
Interest on total OPEB liability 415,772
Projected earnings on OPEB plan investments (330,199)
OPEB plan administrative expense 1,763
Current period recognition of deferred outflows (inflows) of resources:

Differences between expected and actual experience in
measurement of the total OPEB liability 10,330
Changes of assumptions (25,090)
Differences between projected and actual earnings on OPEB plan investments (180,221)
Annual OPEB expense (credit) (3,634) $
For the fiscal year ended June 30, 2022, the City recognized OPEB credit of $3,634. As of fiscal year ended June 30, 2022, the City reported deferred inflows and outflows of resources related to OPEB from the following sources:

Deferred Outflows
of Resources
Deferred Inflows of
Resources
Net difference between projected and actual
earnings on OPEB plan investments - $ (678,158) $
Changes of assumptions 71,964 (70,742)
Difference between expected and actuarial experience 720,437 (1,162,760) Contributions to OPEB plan subsequent to the measurement date 884,163 - Total $ (1,911,660) 1,676,564 $
Contributions subsequent to the measurement date of $884,163, reported as deferred outflows of resources will be recognized as a reduction of the net OPEB liability in the upcoming fiscal year. Other amounts reported as deferred outflows or inflows of resources related to OPEB will be recognized as expense as follows:

Fiscal Year
Ended June 30
Deferred
Outflows/(Inflows)
of Resources
2023 (178,955) $
2024 (175,131)
2025 (246,074)
2026 (272,149)
2027 (82,316)
Thereafter (164,634)
$ (1,119,259)

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
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12. OTHER REQUIRED DISCLOSURES
Generally accepted accounting principles require disclosure of certain information concerning unrestricted net position (deficit) and fund balance (deficit).

At June 30, 2022, the following funds had the following deficit fund balances:

Governmental Funds
Transportation CIP (1,598,296) $
Miscellaneous Grants (274,080)
Non-Major:

Transportation Improvement (769,787)
Community Services Grants (33,989)
The negative fund balance amount represents expenditures incurred before June 30, 2022, which as of the financial statement date and accrual period, were not yet reimbursed.

13. RISK MANAGEMENT
The City 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 disasters. The City self-insures against tort claims and workers' compensation exposures and purchases health benefits through the Public Employees' Retirement System.

The City is a member of the Public Entity Risk Management Authority (PERMA) for general liability, workers' compensation, and property risk financing.

Currently, the City has a Workers' Compensation Fund (an internal service fund) to account for and finance its uninsured risk of loss. Under this program, the Workers' Compensation Fund provides financing for up to a maximum of $250,000 for each accident (e.g., occurrence) and each claim for catastrophic illness. The City pools the exposure for claims in excess of the Self-Insured Retentions (S.I.R.s) from the Workers' Compensation Fund to statutory limits and for employers' liability to $5,000,000 limit of liability. Settled claims have not exceeded this commercial coverage in any of the past three years.

All funds of the City participate in the Workers' Compensation program and make payments to the Workers' Compensation Fund based on estimates of the amounts needed to pay prior and current year's claims.

The City also maintains an internal service fund for liability risk financing. Under the PERMA pooled program for general liability, the City's S.I.R. is $50,000 of each claim.

Excess liability financing includes layers of pooling and commercial excess liability insurance. Separate deposits are collected from PERMA members to cover claims between the S.I.R. and $1,000,000.

Additional reinsurance raises the limit of liability to $50,000,000 per occurrence. These deposits are subject to retrospective adjustments. Deposits are accrued based on the ultimate cost of the experience to date from members of PERMA.

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
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13. RISK MANAGEMENT, (continued)
The City participates in PERMA's All Risks Property Protection Program, which is underwritten by a casualty insurance company. The annual premiums paid by participating member cities are based upon insured values and deductible levels and are not subject to retroactive adjustments. The City's deductible is $5,000 for all risk, $10,000 for fire trucks and $2,500 for electronic and data processing equipment.

The claim liability of $5,947,934 reported in the Government-Wide Statement of Net Position in accordance with generally accepted accounting principles, which require a liability for claims be reported if information prior to issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of loss can be reasonably estimated.

Changes in claims liability amount for fiscal years 2020, 2021 and 2022 were:

Beginning of
Fiscal Year
Liability
Current Year Claims
and Change in
Estimates
Claims
Payments
Balance at
Fiscal Year End
2019 - 2020 3,822,925 $ 327,560 $ (164,342) $ 3,986,143 $ 2020 - 2021 3,986,143 1,064,751 (221,916) 4,828,978
2021 - 2022 4,828,978 1,543,974 (425,018) 5,947,934

14. DEFINED BENEFIT PENSION PLANS
A summary of pension plans and related deferred inflows and outflows of resources which reconciles to the Statement of Net Position is as follows:

PERS - Misc PERS - Safety PARS Total
Net Pension Liability / (Asset) 26, $ 47,039,925 563,831 $ (455,792) $ 73,147,964 $ Deferred Outflows - Pension Related 5,556,341 8,800,587 - 14,356,928 Deferred Inflows - Pension Related 9,342,794 14,613,941 233,335 24,190,070 A. General Information about the Pension Plans
Plan Description
The Plan is an agent multiple-employer defined benefit pension plan administered by the California Public Employees’ Retirement System (CalPERS). A full description of the pension plan regarding number of employees covered, benefit provisions, assumptions (for funding, but not accounting purposes), and membership information are listed in the Plan’s June 30, 2020 Annual Actuarial Valuation Report (funding valuation). Details of the benefits provided can be obtained in Appendix B of the actuarial valuation report. This report and CalPERS’ audited financial statements are publicly available reports that can be obtained at CalPERS’ website.

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
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14. DEFINED BENEFIT PENSION PLANS, (continued)
A. General Information about the Pension Plans, (continued) Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 5 years of service. The death benefit is one of the following: The Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

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

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

On or after
January 1, 2011
Prior to And prior to On or after
Hire Date January 1, 2011 January 1, 2013 January 1, 2013 Benefit formula 3.0% @ 60 2.5% @ 55 2.0% @ 62
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life Retirement age 50-60 50-55 52-62
Required employer contribution rates 11.600% 11.600% 11.600% On or after
January 1, 2011
Prior to And prior to On or after
Hire Date January 1, 2011 January 1, 2013 January 1, 2013 Benefit formula 3.0% @ 50 3.0% @ 55 2.7% @ 57
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 50 50
Required employer contribution rates 20.000% 20.000% 20.000% Miscellaneous
Safety

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
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14. DEFINED BENEFIT PENSION PLANS, (continued)
A. General Information about the Pension Plans, (continued) Employees Covered
At June 30, 2020, (valuation date) the following employees were covered by the benefit terms:

Miscellaneous Safety
Inactive employees or beneficiaries
currently receiving benefits 274 203
Inactive employees entitled to but
not yet receiving benefits 194 71
Active employees 153 103
Total 621 377
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions. Employer Contributions to the Plan for the fiscal year ended June 30, 2022 for the miscellaneous and safety plans were $4,656,051 and $7,273,122 respectively.

B. Net Pension Liability
The City’s net pension liability for each Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of each of the Plans is measured as of June 30, 2021, using an annual actuarial valuation as of June 30, 2020 rolled forward to June 30, 2021 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is as follows.

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
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14. DEFINED BENEFIT PENSION PLANS, (continued)
B. Net Pension Liability, (continued)
Actuarial Methods and Assumptions Used to Determine Total Pension Liability Miscellaneous Safety
Valuation Date June 30, 2020 June 30, 2020
Measurement Date June 30, 2021 June 30, 2021
Actuarial Cost Method Entry Age Normal Entry Age Normal Asset Valuation Method Market Value of Assets Actuarial Value of Assets Actuarial Assumptions
Discount Rate 7.15% 7.15%
Inflation 2.50% 2.50%
Salary Increases Varies by Entry Age and Service Varies by Entry Age and Service Mortality Rate Table (1) Derived using CALPERS' Derived using CALPERS' membership data for all Funds membership data for all Funds Post Retirement Benefit Increase
(1) The mortality table used was developed based on CalPERS’ specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.

The lesser of contract COLA or

2.50% until Purchasing Power
Protection Allowance floor on
purchasing power applies, 2.50%
thereafter.

The lesser of contract COLA or

2.50% until Purchasing Power
Protection Allowance floor on
purchasing power applies, 2.50%
thereafter.

All other actuarial assumptions used in the June 30, 2020 valuation were based on the results of an actuarial experience study for the period from 1997 to 2015, including updates to salary increase, mortality and retirement rates. The Experience Study report can be obtained at CalPERS’ website, at www.calpers.ca.gov.

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

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
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14. DEFINED BENEFIT PENSION PLANS, (continued)
B. Net Pension Liability, (continued)
The expected real rates of return by asset class are as follows:

Asset Class1
Current Target
Allocation
Real Return
Years 1 - 102
Real Return
Years 11+3
Public equity 50.0% 4.80% 5.98%
Fixed income 28.0% 1.00% 2.62%
Inflation assets - 0.77% 1.81%
Private equity 8.0% 6.30% 7.23%
Real assets 13.0% 3.75% 4.93%
Liquidity 1.0% - (0.92%)
2 An expected inflation of 2.0% used for this period
3 An expected inflation of 2.92% used for this period
1 In the System's ACFR, fixed income is included in global debt securities; liquidity is included in short-term investments; inflation assets are included in both global equity securities and global debt securities.

Change of Assumptions
There was no change of assumptions for measurement date June 30, 2021.

Discount Rate
The discount rate used to measure the total pension liability was 7.15%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Subsequent Events
On July 12, 2021, CalPERS reported a preliminary 21.3% net return on investments for fiscal year 2020-21. Based on the thresholds specified in CalPERS Funding Risk Mitigation policy, the excess return of 14.3% prescribes a reduction in investment volatility that corresponds to a reduction in the discount rate used for funding purposes of 0.20%, from 7.00% to 6.80%. Since CalPERS was in the final stages of the four-year Asset Liability Management (ALM) cycle, the board elected to defer any changes to the asset allocation until the ALM process concluded, and the board could make its final decision on the asset allocation in November 2021.

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
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14. DEFINED BENEFIT PENSION PLANS, (continued)
B. Net Pension Liability, (continued)
On November 17, 2021, the board adopted a new strategic asset allocation. The new asset allocation along with the new capital market assumptions, economic assumptions and administrative expense assumption support a discount rate of 6.90% (net of investment expense but without a reduction for administrative expense) for financial reporting purposes. This includes a reduction in the price inflation assumption from 2.50% to 2.30% as recommended in the November 2021 CalPERS Experience Study and Review of Actuarial Assumptions. This study also recommended modifications to retirement rates, termination rates, mortality rates and rates of salary increases that were adopted by the board. These new assumptions will be reflected in the GASB 68 accounting valuation reports for the June 30, 2022, measurement date.

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

Investments are reported at fair value.

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
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14. DEFINED BENEFIT PENSION PLANS, (continued)
C. Changes in Net Pension Liability
The following tables show the changes in net pension liability recognized over the measurement period for each plan.

Miscellaneous Plan:

Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(a) (b) (c)=(a)-(b)
Balance at: 6/30/2020 (VD) $ 82,383,227 120,850,595 $ 38,467,368 $ Changes Recognized for the
Measurement Period
• Service Cost 1,895,297 - 1,895,297
• Interest on the Total Pension
Liability 8,555,981 - 8,555,981
• Differences between Expected and
Actual Experience 1,305,190 - 1,305,190
• Changes of Assumptions - - -
• Net plan to plan resource movement - -
• Contributions from the Employer - 4,230,939 (4,230,939) • Contributions from the Employee - 852,004 (852,004)
• Net Investment Income - 18,659,358 (18,659,358)
• Benefit Payments, including
Refunds of Employee Contributions (6,878,738) (6,878,738) - • Administrative Expense - (82,296) 82,296
• Other miscellaneous expense - - -
Net Change during 2020-21 16,781,267 4,877,730 (11,903,537) Balance at: 6/30/2021 (MD) $ 99,164,494 125,728,325 $ 26,563,831 $ Increases (Decreases)
Valuation Date (VD), Measurement Date (MD).

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
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14. DEFINED BENEFIT PENSION PLANS, (continued)
C. Changes in Net Pension Liability, (continued)
Safety Plan:

Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(a) (b) (c)=(a)-(b)
Balance at: 6/30/2020 (VD) $ 130,081,304 196,329,137 $ 66,247,833 $ Changes Recognized for the
Measurement Period
• Service Cost 3,343,416 - 3,343,416
• Interest on the Total Pension Liability 13,814,851 - 13,814,851 • Differences between Expected and
Actual Experience 721,003 - 721,003
• Changes of Assumptions - - -
• Net plan to plan resource movement - - -
• Contributions from the Employer - 6,493,887 (6,493,887) • Contributions from the Employee - 1,350,773 (1,350,773) • Net Investment Income - 29,372,461 (29,372,461)
• Benefit Payments, including Refunds
of Employee Contributions (11,014,303) (11,014,303) -
• Administrative Expense - (129,943) 129,943
• Other miscellaneous expense - - -
Net Change during 2020-21 26,072,875 6,864,967 (19,207,908) Balance at: 6/30/2021 (MD) $ 156,154,179 203,194,104 $ 47,039,925 $ Increases (Decreases)
Valuation Date (VD), Measurement Date (MD).

Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability for each Plan as of the measurement date, calculated using the discount rate of 7.15 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (6.15 percent) or 1 percentage-point higher (8.15 percent) than the current rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(6.15%) Rate (7.15%) (8.15%)
Miscellaneous Plan's
Net Pension Liability 41,566,551 $ 26,563,831 $ 14,038,192 $ Safety Plan's Net
Pension Liability 74,129,174 47,039,925 24,797,061

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
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14. DEFINED BENEFIT PENSION PLANS, (continued)
C. Changes in Net Pension Liability, (continued)
Amortization of Deferred Outflows and Deferred Inflows of Resources Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time.

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

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

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

Difference between projected
and actual earnings
5-year straight-line amortization
All other amounts Straight-line amortization over the expected average remaining service lives (EARSL) of all members that
are provided with benefits (active, inactive and retired) as of the beginning of the measurement period
D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions
As of the start of the measurement period (July 1, 2020), the net pension liability for the Miscellaneous and Safety Plans is $38,467,368 and $66,247,833, respectively.

For the measurement period ending June 30, 2021 (the measurement date), the City of La Mesa incurred a pension expense of $1,976,316 and $3,844,745 for the Miscellaneous and Safety Plans, respectively. A complete breakdown of the pension expense is as follows:

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
-70-

14. DEFINED BENEFIT PENSION PLANS, (continued)
D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions, (continued)
Miscellaneous Plan:

Description Amount
Service Cost $ 1,895,297
Interest on the Total Pension Liability 8,555,981
Recognized Differences between Expected and Actual Experience 1,031,169 Recognized Changes in Assumptions -
Net Plan to Plan Resource Movement -
Employee Contributions (852,004)
Projected Earnings on Pension Plan Investments (5,814,417) Recognized Differences between Projected and Actual Earnings on Plan Investments (2,922,006) Administrative Expense 82,296
Other Miscellaneous Expense -
Total Pension Expense $ 1,976,316
Safety Plan:

Description Amount
Service Cost $ 3,343,416
Interest on the Total Pension Liability 13,814,851
Recognized Differences between Expected and Actual Experience 1,903,940 Recognized Changes in Assumptions (234,263)
Net Plan to Plan Resource Movement -
Employee Contributions (1,350,773)
Projected Earnings on Pension Plan Investments (9,180,670) Recognized Differences between Projected and Actual Earnings on Plan Investments (4,581,699) Administrative Expense 129,943
Other Miscellaneous Expense -
Total Pension Expense $ 3,844,745

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
-71-

14. DEFINED BENEFIT PENSION PLANS, (continued)
D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions, (continued)
As of June 30, 2022, the City of La Mesa has deferred outflows and deferred inflows of resources related to pensions as follows:

Miscellaneous Plan:

Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between Expected and
Actual Experience 900,290 $ - $
Changes of Assumptions - -
Net Difference between Projected and
Actual Earnings on Pension Plan
Investments - 9,342,794
Pension Contributions Subsequent to
Measurement Date 4,656,051 -
Total $ 9,342,794 5,556,341 $
Safety Plan:

Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between Expected and
Actual Experience 1,527,465 $ - $
Changes of Assumptions - -
Net Difference between Projected and
Actual Earnings on Pension Plan
Investments - 14,613,941
Pension Contributions Subsequent to
Measurement Date 7,273,122 -
Total $ 14,613,941 8,800,587 $
These amounts above are net of outflows and inflows recognized in the 2020-2021 measurement period expense. Contributions subsequent to the measurement date of $4,656,051 and $7,273,122 for the Miscellaneous and Safety Plans respectively, reported as deferred outflows of resources will be recognized as a reduction of the net pension liability in the upcoming fiscal year. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in future pension expense as follows:

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
-72-

14. DEFINED BENEFIT PENSION PLANS, (continued)
D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions, (continued)
Miscellaneous Plan:

Measurement Period
Deferred
Outflows/(Inflows) of
Ended June 30: Resources
2022 (1,730,112) $
2023 (1,900,405)
2024 (2,242,998)
2025 (2,568,989)
2026 -
Thereafter -
Safety Plan:

Measurement Period
Deferred
Outflows/(Inflows) of
Ended June 30: Resources
2022 (2,787,020) $
2023 (2,895,683)
2024 (3,365,414)
2025 (4,038,359)
2026 -
Thereafter -
E. Payable to the Pension Plan
At June 30, 2022, the City of La Mesa reported a payable of $0 for the outstanding amount of contributions to the pension plans required for the year ended June 30, 2022.

15. RETIREMENT ENHANCEMENT PLAN
A. PARS Retirement Enhancement Plan
Plan Description
The plan is an enhanced agent pension plan administered, an agent multiple employer plan, by Public Agency Retirement Services (PARS). The plan enhancement was designed to provide a retirement factor of 3.0% at 60. At the time the plan was implemented, the CalPERS benefit only extended to 2.0% at 55. The plan was closed on January 13, 2006 when employees voted to change to the 3.0% at 60 benefit formula through CalPERS. At this time the nature of the plan changed, and the participants were divided into three groups, those that were already retired and receiving the defined benefit of the enhancement plan, those that are currently inactive and will not receive a defined benefit payment but do have their contributions set aside and available at retirement, and one active employee.

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
-73-

15. RETIREMENT ENHANCEMENT PLAN, (continued)
A. PARS Retirement Enhancement Plan, (continued)
Benefits Provided
The benefit provided by PARS is equal to a percentage of the highest pay multiplied by years of service, with the percentage varying by retirement age based on a modified 3.0% target offset by CalPERS 3.0% at 60 formula for current actives. There are no active participants and twenty-one Drafformer employees who retired with PARS or are currently considered inactive. Benefits are increased by a 2% annual COLA after retirement. The plan has been closed to new entrants since January 7, 2006. Employees that elected to change over to the CalPERS 3.0% at 60 formula will receive their contributions made to the plan in a lump sum payment upon retirement.

The Plan’s provisions and benefits in effect at June 30, 2021, (measurement date) are summarized as follows:

Group I Group II Group III
Terminate before Inactive employees Active
Hire Date January 13, 2006 Not yet retired Employee
Benefit formula Modified 3.0% @ 60 Closed Plan Modified 3.0% @ 60 Benefit vesting schedule City CalPERS Service Vested City CalPERS Service Benefit payments
monthly for life-offset by
CalPERS Benefit at Retirement Accumulated Contributions monthly for life-offset by
CalPERS Benefit at Retirement
Retirement age 55-63 55-60 55-60
Monthly benefits, as a % of eligible compensation
combined with CalPERS 2.5%-3.0% N/A 2.7%-3.0%
Required employee contribution rates N/A N/A 1.5%
Required employer contribution rates Closed group-Normal Cost Closed Program Closed group-Normal Cost Employees Covered
At January 1, 2021 (valuation date), the following employees were covered by the benefit terms:

PARS
Inactive employees or beneficiaries
currently receiving benefits 18
Inactive employees entitled to but
not yet receiving benefits 3
Active employees -
Total 21
Contributions
The annual contribution for the PARS plan is determined on an actuarial basis. For the measurement period ended June 30, 2021 (the measurement date), the active employee contribution rate for the plan is 1.5% of annual pay. There are, however, no longer any active employees under this plan. The employer contributes an amount determined by an actuarial study performed at least every two years as long as the Plan exists. This is a closed plan.

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
-74-

15. RETIREMENT ENHANCEMENT PLAN, (continued)
A. PARS Retirement Enhancement Plan, (continued)
Contributions (continued)
The City’s net pension liability for the Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of June 30, 2021, using an annual actuarial valuation as of January 1, 2021 rolled forward to June 30, 2021 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is as follows.

B. Net Pension Liability
Actuarial Methods and Assumptions Used to Determine Total Pension Liability For the measurement period ended June 30, 2021 (the measurement date), the total pension liability was determined by rolling forward the January 1, 2021 total pension liability. The June 30, 2020 and June 30, 2021 total pension liabilities were based on the following actuarial methods and assumptions:

PARS
Valuation Date January 1, 2021
Measurement Date June 30, 2021
Actuarial Cost Method Entry Age Normal, Level % of Pay
Asset Valuation Method Investment gains and losses spread over 5-year rolling period
Actuarial Assumptions
Discount Rate 5.50% at June 30, 2021, and 6.00% at June 30, 2020 Inflation 2.50%
Mortality Rate Table Mortality projected fully generational with Scale MP-2020 Discount Rate
The discount rate used to measure the total pension liability was 5.50%. Discount rate was updated based on newer capital market assumptions. The City chose a Moderate Risk Investment Strategy when setting up this plan. The current 5.50% discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long-term expected discount rate of 5.50% is applied to the plan. Administrative expenses are expected to be 0.6% of assets, this is added to the discount rate bringing the Expected Long-Term Net Rate of Return to 5.50%.

According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without reduction for pension plan administrative expense. The 5.50% investment return assumption used in this accounting valuation is net of administrative expenses. Administrative expenses are assumed to be 0.6% of assets. An investment return excluding administrative expenses would have been 6.56%. Using this lower discount rate has resulted in a slightly higher total pension liability and net pension liability. This difference was deemed immaterial to the plan.

Refer to the sensitivity of the net pension liability to changes in the discount rate section of this note, which provides information on the sensitivity of the net pension liability to changes in the discount rate.

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
-75-

15. RETIREMENT ENHANCEMENT PLAN, (continued)
B. Net Pension Liability, (continued)
The following table reflects long-term expected real rate of return by asset class. Approximate expected real rates of return provided by Bartel Associates’ 2017 capital market assumptions which are based on a survey of various investment advisors’ expected asset class returns. These geometric rates of return are net of administrative expenses.

PARS Moderate Investment Policy
Target
Allocation
PARS -
Moderate
Expected
Real
Return
Global Equity 48.25% 4.56%
Fixed Income 45.00% 0.78%
REITs 1.75% 4.06%
Cash 5.00% -0.50%
Assumed Long-Term Rate of Inflation 2.50%
Expected Long-Tern Net Rate of Return, Rounded 5.50%
Pension Plan Fiduciary Net Position
Information about the pension plan’s assets, deferred outflows of resources, liabilities, deferred inflows of resources, and fiduciary net position are presented in the City’s GASB 68 Employer Accounting Information report. The plan’s fiduciary net position and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis used by the pension plan, which is the economic resources measurement focus and the accrual basis of accounting. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan.

Investments are reported at fair value.

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
-76-

15. RETIREMENT ENHANCEMENT PLAN, (continued)
C. Changes in the Net Pension Liability
The following table shows the changes in net pension liability recognized over the measurement period.

Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability/(Asset)
(a) (b) (c)=(a)-(b)
Balance at 6/30/2019 (MD) $ 2,495,825 2,412,244 $ (83,581) $ Changes Recognized for the
Measurement Period
• Service Cost - -
• Interest on the Total Pension
Liability 138,733 138,733
• Changes of Benefit Terms - -
• Differences between Expected and
Actual Experience 17,508 17,508
• Changes of Assumptions 60,325 60,325
• Contributions from the Employer - 125,000 (125,000)
• Contributions from the Employee - - -
• Net Investment Income - 472,636 (472,636)
• Benefit Payments, including
Refunds of Employee Contributions. (200,051) (200,051) - • Administrative Expenses - (8,859) 8,859
Net Change during 2019-20 388,726 16,515 (372,211)
Balance at: 6/30/2020 (MD) $ 2,884,551 2,428,759 $ (455,792) $ Increases (Decreases)
Measurement Date (MD)
Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the Plan as of the measurement date, calculated using the discount rate of 5.50 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (4.50 percent) or 1 percentagepoint higher (6.50 percent) than the current rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(4.50%) Rate (5.50%) (6.50%)
PARS Plan's Net Pension
Liability/(Asset) (247,509) $ (455,792) $ (636,843) $

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
-77-

15. RETIREMENT ENHANCEMENT PLAN, (continued)
C. Changes in the Net Pension Liability, (continued)
Subsequent Events
There were no subsequent events that would materially affect the results presented in this disclosure.

Recognition of Gains and Losses
Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense.

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

Difference between
projected and
actual earnings
5 year straight-line amortization
All other amounts Straight-line amortization 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
The expected average remaining service lifetime (EARSL) is calculated by dividing the total future service years by the total number of plan participants (active, inactive, and retired).

The EARSL for the Plan for the 2020-21 measurement period is 0.0 years, which was obtained by dividing the total service years of 0 (the sum of the remaining service lifetimes of the active employee) by 21 (the total number of participants: active, inactive, and retired). The reason the EARSL is 0 is that this is a closed plan and there are no active employees with no remaining service life. The last active employee left the City in fiscal year 2018. There are 21 total covered employees. Inactive employees and retirees have remaining service lifetimes equal to 0. Total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund.

As of the start of the measurement period (July 1, 2021), the net pension asset is $83,581.

For the measurement period ending June 30, 2021 (the measurement date), the City of La Mesa incurred pension expense of $17,047 for the Plan. A complete breakdown of the pension income is as follows:

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
-78-

15. RETIREMENT ENHANCEMENT PLAN, (continued)
D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions
Description Amount
Service Cost - $
Interest on the Total Pension Liability 138,733
Projected Earnings on Investments (146,047)
Employee Contributions -
Administrative Expenses 8,859
Experience 17,508
Assumptions 60,325
Asset returns (62,331)
Total Pension Expense (Income) $ 17,047
As of June 30, 2022, the City of La Mesa has deferred outflows and deferred inflows of resources related to pensions as follows:

Deferred Outflows Deferred Inflows
of Resources of Resources
Net Difference between Projected and
Actual Earnings on Pension Plan
Investments - $ 233,335 $
Pension Contributions Subsequent to
Measurement Date - -
Total $ 233,335 - $
These amounts above are net of outflows and inflows recognized in the 2020-2021 measurement period expense. Contributions subsequent to the measurement date of $0.00 reported as deferred outflows of resources will be recognized as a reduction of the net pension liability in the upcoming fiscal year. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in future pension expense as follows:

Fiscal Year
Deferred
Outflows/(Inflows) of
Ended June 30: Resources
2023 (53,758) $
2024 (56,450)
2025 (57,810)
2026 (65,317)
2027 -
Thereafter -
E. Payable to the Pension Plan
At June 30, 2022, the City of La Mesa reported a payable of $0 for the outstanding amount of contributions to the pension plan required for the year ended June 30, 2022.

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
-79-

16. COMMITMENTS AND CONTINGENCIES
Lawsuits in the Normal Course of Business
The City is presently involved in certain matters of litigation that have arisen in the normal course of conducting City business. The City incurred a significant settlement in February 2023, which was fully covered by insurance. There is no residual liability to the City. City management believes, based upon consultation with the City Attorney, that other outstanding cases, in the aggregate, are not expected to result in a material adverse financial impact on the City. Additionally, City management believes that the City's insurance programs are sufficient to cover any potential losses should an unfavorable outcome materialize.

17. RELATED PARTY TRANSACTIONS
On November 25, 2008, the City entered into a Purchase and Sale Agreement with the Redevelopment Agency to sell certain real property located at 8181 Allison Avenue, La Mesa, California at the appraised value of $8,350,000 for the purposes of increasing, improving and preserving the community's supply of housing available at affordable cost to persons and families of low or moderate income. The Agency made an initial payment of $1,000,000 at closing and issued a promissory note to the City for $7,350,000.

The outstanding balance was transferred from the Agency to the Successor Agency on February 1, 2012 as part of the dissolution of redevelopment. At June 30, 2022, the outstanding balance of the advances from the City to the Successor Agency relating to this transaction was $5,300,000.

On August 23, 2012, the City of La Mesa acting as Successor Agency filed the Recognized Obligation Payment Schedule (ROPS III) for the January through June 2013 time period. As it had been for all previous ROPS, included on the ROPS III was the outstanding loan balance ($5,300,000 at June 30, 2012) for the Police Station Land Sale between the General Fund and the Successor Agency and the related annual debt service ($750,000 per year). The Department of Finance denied the debt on the ROPS III as an enforceable obligation, despite approving it on all previous ROPS, stating:

HSC section 34171 (d) defines enforceable obligations. Based on our review and application of the law, Item No.5- a loan agreement between the City of La Mesa (City) and the Agency in the amount of $5.3 million is not an enforceable obligation. The loan was used to purchase the land under the police station. HSC section 34171 (d) (2) states that agreements between the City and the Agency are not enforceable.

The City requested a Meet and Confer with the Department of Finance, which was held on November 21, 2012. On December 19, 2012, the City received a determination from the Department of Finance that upheld the original determination to deny both the outstanding loan balance and related annual debt service as enforceable obligations. However, on December 7, 2017, the Oversight Board for the Successor Agency approved a repayment schedule in accordance with the maximum repayment amounts specified in the Dissolution Law including H&S Code Section 34191.4(b)(3) until the loan is repaid in full. On January 23, 2018, the Department of Finance issued a Determination Letter, approving the loan balance of $5,300,000. Repayments of this loan will begin after other Deferrals listed on the ROPS are repaid.

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
-80-

18. SUCCESSOR AGENCY
On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (“the Bill”) that provides for the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of the City of La Mesa that previously had reported a redevelopment agency within the reporting entity of the City as a blended component unit.

In accordance with the Bill, on January 10, 2012, the City Council elected to become the Successor Agency for the former redevelopment agency in accordance with the Bill as part of City resolution. The Successor Agency is subject to the control of the oversight board and remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution of the redevelopment agency (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments).

In future fiscal years, successor agencies will only be allocated revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated.

19. SUCCESSOR AGENCY LONG-TERM DEBT

In accordance with the provisions of the Bill and the California Supreme Court’s decision to uphold the Bill, the obligations of the former redevelopment agency became vested with the funds established for the successor agency upon the date of dissolution, February 1, 2012. Former tax increment revenues pledged to fund the debts of the former redevelopment agency will be distributed to the Successor Agency subject to the reapportionment of such revenues as provided by the Bill.

The debt of the Successor Agency as of June 30, 2022 was as follows:

Balance Balance Due Within Due in More
June 30, 2021 Additions Deletions June 30, 2022 One Year Than One Year Bonds payable:
1998-1 AD improvement bonds $ 1,395,000 $ - $ (440,000) $ 955,000 $ 465,000 $ 490,000 Total $ 1,395,000 $ - $ (440,000) $ 955,000 $ 465,000 $ 490,000 Classification
1998-1 AD Improvement Bonds
On June 24, 1998, the City issued Assessment District No. 1998-1 Limited Obligation Improvement Bonds in the amount of $6,825,000 bearing interest rates of 4.25-5.60% with maturity dates from September 2, 1999 to 2023. The Bonds were issued to provide funding for the acquisition of certain storm drains, surface improvements, rights-of-way associated with the improvements, to pay the costs of issuance and to establish a Reserve Fund. Interest is payable on March 2 and September 2 each year commencing March 2, 1999. The outstanding balance as of June 30, 2022 was $955,000. The Successor Agency has pledged a portion of future property tax increment revenue to repay the Alvarado Creek AD 1998-1 Improvement Bonds. Total principal and interest remaining on the bonds is $1,010,632 payable through 2024.

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2022
-81-

19. SUCCESSOR AGENCY LONG-TERM DEBT, (continued)
The annual debt service requirements for the Bonds outstanding at June 30, 2022 were as follows:

Year Ending
June 30, Principal Interest Total
2023 465,000 $ 41,544 $ 506,544 $
2024 490,000 14,088 504,088
Total $ 55,632 955,000 $ 1,010,632 $
1998-1 AD Improvement Bonds

20. RISK, UNCERTAINTIES & CONTINGENCIES
Grants
Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the government expects such amounts, if any, to be immaterial.

Successor Agency
Deductions (expenses) incurred by the Successor Agency for the year ended June 30, 2022 (and subsequent years in which the Successor Agency is in operation) are subject to review by various State agencies and the County in which the Successor Agency resides. If any expenses incurred by the Successor Agency are disallowed by the State agencies or County, the City, acting as the Successor Agency could be liable for the repayment of the disallowed costs from either its own funds or by the State withholding remittances normally paid to the City. The amount, if any, of expenses that may be disallowed by the State agencies or County cannot be determined at this time, although the Successor Agency expects such amounts, if any, to be immaterial.

In October 2014, the City received a letter from the State Controller’s Office stating that the City’s general government received an unallowable transfer of $2,409,056 in assets from the then RDA. The State Controller’s Office is requesting that the unallowable transfers be returned to the now Successor Agency.

The City continues to encumber the funds at June 30, 2022 and plans to pay off the demand.

21. PRIOR PERIOD ADJUSTMENT
The City posted a prior period adjustment to correct work in progress in prior year not included in the government-wide statements.

Governmental
Activities
Net position, beginning of year, prior to restatement 132,810,306 $ Prior period restatement 788,675
Net position, beginning of year, as restated 133,598,981 $ Government-wide Statements - Statement of Activities

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REQUIRED SUPPLEMENTARY INFORMATION

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CITY OF LA MESA
Required Supplementary Information
Budgetary Information
For the Year Ended June 30, 2022
‐82-
The City follows these procedures in establishing the budgetary data reflected in the financial statements:
 The biennial budget adopted by the City Council provides for the general operation of the City. It includes proposed expenditures and the means of financing them.  The City Council approves total budgeted appropriations and any amendments to appropriations throughout the year. All transfers between funds, departments and/or activities shall be made by the City Council except that the City Manager may, on his own initiative and without prior approval of the City Council, transfer between budget accounts within a single department or activity to any other account or appropriation, or to the reserve, amounts determined to be in excess of actual requirements.

Budget figures used in the financial statements are the final adjusted amounts.  Formal budgetary integration is employed as a management control device during the year.

Commitments for materials and services, such as purchase orders and contracts, are recorded as encumbrances to assist in controlling expenditures.
 Budgets for the General and Special Revenue Funds are adopted on a basis substantially consistent with generally accepted accounting principles in the United States (GAAP). Accordingly, actual revenues and expenditures can be compared with related budgetary amounts without any significant reconciling items. No budgetary comparisons are presented for the Debt Service and Capital Projects Funds since no "annual" budget is adopted for these funds. No budgetary comparisons are presented for proprietary fund types, as the City is not legally required to adopt a budget for these types of funds.  Excess expenditures over appropriations were as follows:

Expenditures Appropriations Excess
General Fund:

Capital outlay 20,169 $ - $ (20,169) $
Debt service:

Principal retirement 2,306 - (2,306)
Interest and fiscal charges 123 - (123)
Miscellaneous Grants Fund:

Police 656,708 600,000 (56,708)

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CITY OF LA MESA
Required Supplementary Information
Budgetary Comparison Schedule – General Fund
For the Year Ended June 30, 2022
‐83-
The following is a budget comparison schedule for the General Fund.

Variance
Actual with Final
Original Final Amounts Budget
Fund Balances - Beginning $ 53,364,673 53,364,673 $ 53,364,673 $ - $ Resources (inflows):

Property taxes 16,035,110 16,035,110 16,687,577 652,467 Other taxes 29,325,700 29,325,700 36,521,606 7,195,906
Licenses and permits 1,580,500 1,580,500 2,163,310 582,810 Fines and forfeitures 379,100 379,100 462,540 83,440
Use of money and property 1,365,920 1,365,920 (283,463) (1,649,383) Intergovernmental 1,258,120 1,258,120 2,139,554 881,434 Charges for services 1,866,100 1,866,100 2,557,339 691,239 Other revenues 145,490 145,490 142,126 (3,364)
Transfers from other funds - 3,090,200 2,644,716 (445,484) Amount available for appropriations 105,320,713 108,410,913 116,399,978 7,989,065 Charges to appropriations (outflows):

General government 7,974,070 10,711,302 7,350,118 3,361,184 Police 22,495,300 22,648,231 21,796,432 851,799
Fire 13,518,930 13,605,129 13,541,283 63,846
Public works 10,339,590 10,709,620 8,751,602 1,958,018
Community development 2,675,110 3,152,597 2,441,496 711,101 Community services 1,992,590 2,006,760 1,949,538 57,222 Capital outlay - - 20,169 (20,169)
Debt service:

Principal retirement - - 2,306 (2,306)
Interest and fiscal charges - - 123 (123)
Transfers to other funds - 2,100,390 1,583,148 517,242
Proceeds from lease - - (20,169) 20,169
Total charges to appropriations 58,995,590 64,934,029 57,416,046 7,517,983 Fund Balances - Ending $ 43,476,884 46,325,123 $ 58,983,932 $ 15,507,048 $ Budgeted Amounts

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CITY OF LA MESA
Required Supplementary Information
Budgetary Comparison Schedule – Housing Asset Fund
For the Year Ended June 30, 2022
‐84-
The following is a budget comparison schedule for the Housing Asset Fund.

Variance
Budgeted Amounts Actual with Final
Original Final Amounts Budget
Fund Balances - Beginning $ 10,202,170 10,202,170 $ 10,202,170 $ - $ Resources (inflows):

Use of money and property 2,980 2,980 (59,177) (62,157) Intergovernmental 1,021,160 1,021,160 1,021,154 (6)
Other revenues 25,000 25,000 93,546 68,546
Amount available for appropriations 11,251,310 11,251,310 11,257,693 6,383 Charges to appropriations (outflows):

Community development 219,570 267,880 222,110 45,770
Total charges to appropriations 219,570 267,880 222,110 45,770 Fund Balances - Ending $ 10,983,430 11,031,740 $ 11,035,583 $ 52,153 $ Note: Budgeted Fund Balances include only available amounts while Actual Fund Balances include both available and restricted amounts.

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CITY OF LA MESA
Required Supplementary Information
Budgetary Comparison Schedule – Miscellaneous Grants Fund For the Year Ended June 30, 2022
‐85-
The following is a budget comparison schedule for the Miscellaneous Grants Fund.

Variance
Budgeted Amounts Actual with Final
Original Final Amounts Budget
Fund Balances (Deficit) - Beginning $ (77,922) (77,922) $ (77,922) $ - $ Resources (inflows):

Intergovernmental 5,413,290 5,413,290 727,083 (4,686,207) Amount available for appropriations 5,335,368 5,335,368 649,161 (4,686,207) Charges to appropriations (outflows):

Police 600,000 600,000 656,708 (56,708)
Community development 385,200 862,783 266,533 596,250
Total charges to appropriations 985,200 1,462,783 923,241 539,542 Fund Balances (Deficit) - Ending $ 3,872,585 4,350,168 $ (274,080) $ (4,146,665) $

Page 319 of 382 ends

CITY OF LA MESA
Required Supplementary Information Schedules of Changes in Net Pension Liability and Related Ratios Last Ten Years* ‐86-
Miscellaneous Plan
6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021

TOTAL PENSION LIABILITY
Service Cost $ 1,605,289 1,725,483 $ 1,587,287 $ 1,736,333 $ 1,745,608 $ 1,735,047 $ 1,821,665 $ 1,895,297 $ Interest on Total Pension Liability 6,823,080 6,602,641 7,124,332 7,316,806 7,602,090 7,944,529 8,219,050 8,555,981 Difference Between Expected and Actual Experience - (1,101,092) 263,533 (5,847) 1,300,541 1,569,003 507,760 1,305,190 Changes of Assumptions (1,539,484) - - 5,617,856 (661,183) - - - Benefit Payments, Including Refunds of Employee Contributions (4,351,133) (4,592,998) (4,896,950) (5,490,512) (5,923,785) (6,320,349) (6,462,046) (6,878,738) Net Change in Total Pension Liability 3,976,991 1,194,795 4,078,202 9,174,636 4,063,271 4,928,230 4,086,429 4,877,730 Total Pension Liability - Beginning 89,348,041 93,325,032 94,519,827 98,598,029 107,772,665 111,835,936 116,764,166 120,850,595 Total Pension Liability - Ending (a) 93,325,032 94,519,827 98,598,029 107,772,665 111,835,936 116,764,166 120,850,595 125,728,325

PLAN FIDUCIARY NET POSITION
Contributions - Employer 2,233,832 2,018,839 2,553,613 2,693,445 3,000,728 3,398,605 3,871,245 4,230,939 $ Contributions - Employee 699,783 793,357 727,594 761,773 739,434 751,231 790,692 852,004 Net Investment Income 1,548,306 10,477,342 378,797 7,561,152 6,214,843 5,041,276 4,031,596 18,659,358 Benefit Payments, Including Refunds of Employee Contributions (4,351,133) (4,592,998) (4,896,950) (5,490,512) (5,923,785) (6,320,349) (6,462,046) (6,878,738) Net Plan to Plan Resource Movement - - - - (180) - - -
Administrative Expense (78,335) - (42,421) (100,879) (114,925) (55,269) (113,154) (82,296) Other Miscellaneous Income/(Expense) - - - - (218,244) 180 - - Net Change in Fiduciary Net Position 8,938,405 (189,412) (1,279,367) 5,424,979 3,697,871 2,815,674 2,118,333 16,781,267 Plan Fiduciary Net Position - Beginning 60,856,744 69,795,149 69,605,737 68,326,370 73,751,349 77,449,220 80,264,894 82,383,227 Plan Fiduciary Net Position - Ending (b) 69,795,149 69,605,737 68,326,370 73,751,349 77,449,220 80,264,894 82,383,227 99,164,494 Plan Net Position Liability - Ending (a) - (b) 23,529,883 $ 24,914,090 $ 30,271,659 $ 34,021,316 $ 34,386,716 $ 36,499,272 $ 38,467,368 $ 26,563,831 $ Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 74.79% 73.64% 69.30% 68.43% 69.25% 68.74% 68.17% 78.87%Covered Payroll $ 9,805,687 9,338,814 $ 10,775,401 $ 10,782,250 $ 9,713,133 $ 10,004,158 $ 9,771,136 $ 9,799,062 $ Plan Net Pension Liability as a Percentage of Covered Payroll 251.96% 254.08% 280.93% 315.53% 354.02% 364.84% 393.68% 271.09%Notes to Schedule:* Measurement period 2013-14 (fiscal year 2015) was the 1st year of implementation.

Measurement date
Changes in Assumptions: There were no assumption changes for 2021. For 2020, the Plan adopted a new amortization policy effective with the 2019 actuarial valuation. The new amortization policy shortens the period over which actuarial gains and losses are amortized from 30 years to 20 years with the payments computed as a level dollar amount. In addition, the new policy does not utilize a five-year ramp-up and ramp-down on UAL bases attributable to assumption changes and non-investment gains/losses. The new policy also does not utilize a five-year ramp-down on investment gains/losses. These changes apply only to new UAL bases established on or after June 30, 2019. There were no changes in assumptions in 2019. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate in 2019. In 2017, the accounting discount rate was reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes in the discount rate. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate.Changes in Benefit Terms: There were no changes to benefit terms that applied to all members of the Public Agency Pool. Additionally, the figures above do not include any liability impact that may have resulted from Golden Handshakes that occurred after the June 30, 2020 valuation date, unless the liability impact is deemed to be material to the Public Agency Pool.

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CITY OF LA MESA
Required Supplementary Information Schedules of Changes in Net Pension Liability and Related Ratios Last Ten Years* ‐87-
Safety Plan
6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021

TOTAL PENSION LIABILITY
Service Cost $ 2,407,587 2,511,204 $ 2,403,285 $ 2,727,872 $ 3,179,247 $ 3,150,403 $ 3,248,296 $ 3,343,416 $ Interest on Total Pension Liability 10,771,035 11,178,436 11,527,490 11,719,571 12,328,071 12,871,590 13,344,226 13,814,851 Difference Between Expected and Actual Experience - (161,921) (697,636) (1,952,708) 3,953,305 2,005,205 926,691 721,003 Changes of Assumptions (2,742,320) - - 9,776,293 (937,052) - - - Benefit Payments, Including Refunds of Employee Contributions (7,575,744) (8,057,546) (8,589,274) (8,796,139) (9,561,683) (10,231,175) (10,543,526) (11,014,303) Net Change in Total Pension Liability 5,706,495 2,624,236 4,643,865 13,474,889 8,961,888 7,796,023 6,975,687 6,864,967 Total Pension Liability - Beginning 146,146,054 151,852,549 154,476,785 159,120,650 172,595,539 181,557,427 189,353,450 196,329,137 Total Pension Liability - Ending (a) 151,852,549 154,476,785 159,120,650 172,595,539 181,557,427 189,353,450 196,329,137 203,194,104

PLAN FIDUCIARY NET POSITION
Contributions - Employer 3,238,613 2,864,566 3,767,485 4,477,395 4,559,719 5,192,920 5,934,636 6,493,887 Contributions - Employee 840,213 804,337 891,198 996,668 1,045,575 1,083,318 1,191,676 1,350,773 Net Investment Income 2,541,555 17,292,426 564,745 12,085,214 9,928,189 8,023,831 6,295,868 29,372,461 Benefit Payments, Including Refunds of Employee Contributions (7,575,744) (8,057,546) (8,589,274) (8,796,139) (9,561,683) (10,231,175) (10,543,526) (11,014,303) Net Plan to Plan Resource Movement - - - - (288) - - -
Administrative Expense (126,940) - (68,743) (161,464) (183,818) (88,062) (179,578) (129,943) Other Miscellaneous Income/(Expense) - - - - (349,074) 288 - - Net Change in Fiduciary Net Position 13,385,585 (1,564,105) (3,434,589) 8,601,674 5,438,620 3,981,120 2,699,076 26,072,875 Plan Fiduciary Net Position - Beginning 100,973,923 114,359,508 112,795,403 109,360,814 117,962,488 123,401,108 127,382,228 130,081,304 Plan Fiduciary Net Position - Ending (b) 114,359,508 112,795,403 109,360,814 117,962,488 123,401,108 127,382,228 130,081,304 156,154,179 Plan Net Position Liability - Ending (a) - (b) 37,493,041 $ 41,681,382 $ 49,759,836 $ 54,633,051 $ 58,156,319 $ 61,971,222 $ 66,247,833 $ 47,039,925 $ Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 75.31% 73.02% 68.73% 68.35% 67.97% 67.27% 66.26% 76.85%Covered Payroll $ 9,288,796 9,120,009 $ 9,570,037 $ 9,992,870 $ 9,226,022 $ 9,535,932 $ 10,584,174 $ 10,463,333 $ Plan Net Pension Liability as a Percentage of Covered Payroll 411.11% 448.73% 519.95% 546.72% 630.35% 649.87% 625.91% 449.57%Notes to Schedule:* Measurement period 2013-14 (fiscal year 2015) was the 1st year of implementation.

Page 321 of 382 ends

CITY OF LA MESA
Required Supplementary Information Schedules of Changes in Net Pension Liability and Related Ratios Last Ten Years* ‐88-
PARS Retirement Enhancement Plan
6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021

TOTAL PENSION LIABILITY
Service Cost $ 3,000 3,000 $ 3,000 $ 3,000 $ 1,527 $ - $ - $ - $ Interest on Total Pension Liability 171,000 171,000 178,000 178,000 159,542 157,449 142,093 138,733 Changes of Benefit Terms - - - - - - - -
Difference Between Expected and Actual Experience - (1,000) - (154,000) - (215,926) - 17,508 Changes of Assumptions 118,000 - - 77,000 - (7,519) - 60,325 Benefit Payments, Including Refunds of Employee Contributions (174,000) (178,000) (179,000) (187,000) (188,512) (192,282) (196,128) (200,051) Net Change in Total Pension Liability 113,000 - 2,000 (83,000) (27,443) (258,278) (54,035) 16,515 Total Pension Liability - Beginning 2,720,000 2,720,000 2,833,000 2,835,000 2,752,000 2,724,557 2,466,279 2,412,244 Total Pension Liability - Ending (a) 2,720,000 2,833,000 2,835,000 2,752,000 2,724,557 2,466,279 2,412,244 2,428,759

PLAN FIDUCIARY NET POSITION
Contributions - Employer 105,800 106,000 118,000 118,000 125,000 125,000 125,000 125,000 Contributions - Employee 1,000 1,000 2,000 1,000 1,127 - - - Net Investment Income 60,000 275,000 50,000 187,000 123,563 134,170 106,642 472,636 Benefit Payments, Including Refunds of Employee Contributions (174,000) (178,000) (179,000) (187,000) (188,512) (192,282) (196,128) (200,051) Administrative Expenses (22,000) (22,000) (21,000) (8,000) (8,370) (8,556) (8,629) (8,859) Other Changes in Fiduciary Net Position - - - - - - - - Net Change in Fiduciary Net Position 186,000 (33,200) (30,000) 111,000 52,808 58,332 26,885 388,726 Plan Fiduciary Net Position - Beginning 2,124,000 2,310,000 2,276,800 2,246,800 2,357,800 2,410,608 2,468,940 2,495,825 Plan Fiduciary Net Position - Ending (b) 2,310,000 2,276,800 2,246,800 2,357,800 2,410,608 2,468,940 2,495,825 2,884,551 Plan Net Position Liability / (Asset) - Ending (a) - (b) 410,000 $ 556,200 $ 588,200 $ 394,200 $ 313,949 $ (2,661) $ (83,581) $ (455,792) $ Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 84.93% 80.37% 79.25% 85.68% 88.48% 100.11% 103.46% 118.77%Covered Payroll $ 100,872 97,932 $ 103,896 $ 105,972 $ 108,096 $ 108,096 $ 113,544 $ 113,544 $ Plan Net Pension Liability / (Asset) as a Percentage of Covered Payroll 418.66% 551.39% 566.14% 371.99% 290.44% -2.46% -73.61% -401.42%Notes to Schedule:* Measurement period 2013-14 (fiscal year 2015) was the 1st year of implementation.

Measurement date
Changes in Assumptions for Measurement Date June 30, 2021:

Discount rate was updated based on newer capital market assumptions. Mortality improvement scale was updated to Scale MP-2020

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CITY OF LA MESA
Required Supplementary Information Schedule of Plan Contributions Last Ten Years* ‐89-
Miscellaneous Plan
Fiscal Year
Actuarially Determined
Contribution
Contributions in Relation
to the Actuarially
Determined Contribution
Contribution
Deficiency
(Excess) Covered Payroll
Contributions as a
Percentage of
Covered Payroll
6/30/2015 2,018,839 $ (2,018,839) $ - $ 9,805,687 $ 20.59%6/30/2016 2,233,832 (2,233,832) - 10,775,401 20.73%6/30/2017 2,553,613 (2,553,613) - 10,782,250 23.68%6/30/2018 2,693,445 (2,693,445) - 9,713,133 27.73%6/30/2019 3,000,728 (3,000,728) - 10,004,158 29.99%6/30/2020 3,398,605 (3,398,605) - 9,771,136 34.78%6/30/2021 3,871,245 (3,871,245) - 9,799,062 39.51%6/30/2022 4,656,051 (4,656,051) - 10,158,798 45.83% * Measurement period 2013-14 (fiscal year 2015) was the 1st year of implementation.Notes to Schedule:Actuarial Cost MethodAmortization Method/PeriodAsset Valuation MethodActuarial Assumptions:

Discount RateInflationSalary IncreasesMortality Rate TablePost Retirement Benefit Increase

2.50%Varies by Entry Age and ServiceThe mortality table used was developed based on CalPERS’ specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.The lesser of contract COLA or 2.50% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.50% thereafter.

The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2021-22 were from the June 30, 2020 Funding Valuation Report.

Entry Age NormalFor details, see June 30, 2020 Funding Valuation Report.Market Value of Assets7.15%

Page 323 of 382 ends

CITY OF LA MESA
Required Supplementary Information Schedule of Plan Contributions Last Ten Years* ‐90-
Safety Plan
Fiscal Year
Actuarially Determined
Contribution
Contributions in Relation
to the Actuarially
Determined Contribution
Contribution
Deficiency
(Excess) Covered Payroll
Contributions as a
Percentage of
Covered Payroll
6/30/2015 6,864,566 $ (6,864,566) $ - $ 9,288,796 $ 73.90%6/30/2016 3,238,613 (3,238,613) - 9,570,037 33.84%6/30/2017 3,767,485 (3,767,485) - 9,992,870 37.70%6/30/2018 4,477,395 (4,477,395) - 9,226,022 48.53%6/30/2019 4,559,719 (4,559,719) - 9,535,932 47.82%6/30/2020 5,192,920 (5,192,920) - 10,584,174 49.06%6/30/2021 5,934,636 (5,934,636) - 10,463,333 56.72%6/30/2022 7,273,122 (7,273,122) - 11,505,777 63.21% * Measurement period 2013-14 (fiscal year 2015) was the 1st year of implementation.Notes to Schedule:Actuarial Cost MethodAmortization Method/PeriodAsset Valuation MethodActuarial Assumptions:

Discount RateInflationSalary IncreasesMortality Rate TablePost Retirement Benefit Increase

The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2021-22 were from the June 30, 2020 Funding Valuation Report.

Entry Age NormalFor details, see June 30, 2020 Funding Valuation Report.Market Value of Assets7.15%

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CITY OF LA MESA
Required Supplementary Information Schedule of Plan Contributions Last Ten Years* ‐91-
PARS Retirement Enhancement Plan
Fiscal Year
Actuarially Determined
Contribution
Contributions in Relation
to the Actuarially
Determined Contribution1
Contribution
Deficiency
(Excess) Covered Payroll
Contributions as a
Percentage of
Covered Payroll
6/30/2015 105,800 $ (105,800) $ - $ 100,872 $ 104.89%
6/30/2016 118,300 (118,300) - 103,896 113.86%
6/30/2017 - - - 105,972 0.00%
6/30/2018 114,700 (125,000) (10,300) 108,096 106.11%
6/30/2019 114,700 (125,000) (10,300) 108,096 106.11%
6/30/2020 22,800 (125,000) (102,200) 113,544 20.08%
6/30/2021 22,800 (125,000) (102,200) 113,544 20.08%
6/30/2022 - (25,689) (25,689) 113,544 0.00%
* Measurement period 2013-14 (fiscal year 2015) was the 1st year of implementation.Notes to Schedule:
1Actual contributions from employer's financial statements.

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CITY OF LA MESA
Required Supplementary Information
Schedule of Changes in the Net OPEB Liability and Related Ratios Last Ten Years*
‐92-

Fiscal Year 2017-18 2018-19 2019-20 2020-21 2021-22
Measurement Period 2016-17 2017-18 2018-19 2019-20 2020-21 Total OPEB Liability
Service cost 177,546 $ 189,976 $ 195,675 $ 210,776 $ 104,011 $ Interest 450,042 465,322 479,727 516,097 415,772
Differences between expected and
actual experience - - 514,636 (1,494,978) 588,094
Changes of assumptions - - (176,855) - 82,245
Benefit payments (393,258) (450,210) (460,206) (566,820) (549,584) Net change in total OPEB liability 205,088 234,330 552,977 (1,334,925) 640,538 Total OPEB liability - beginning 6,448,258 6,682,588 6,887,676 7,440,653 6,105,728 Total OPEB liability - ending (a) 6,682,588 6,887,676 7,440,653 6,105,728 6,746,266 Plan Fiduciary Net Position
Contributions – employer 673,038 744,210 910,206 1,046,550 1,034,864 Net investment income 240,564 216,245 221,144 155,315 1,279,360 Benefit payments (393,258) (450,210) (460,206) (566,820) (549,584) Administrative expense (1,213) (1,484) (1,653) (1,959) (1,763) Other expense - (3,534) - - -
Net change in plan fiduciary net position 519,131 505,227 669,491 633,086 1,762,877 Plan fiduciary net position - beginning 2,152,522 2,671,653 3,176,880 3,846,371 4,479,457 Plan fiduciary net position - ending (b) 2,671,653 3,176,880 3,846,371 4,479,457 6,242,334 Net OPEB liability - ending (a) - (b) 4,010,935 $ 3,710,796 $ 3,594,282 $ 1,626,271 $ 503,932 $ Plan fiduciary net position as a percentage
of the total OPEB liability 40.0% 46.1% 51.7% 73.4% 92.5% Covered payroll 20,699,310 $ 21,602,500 $ 22,439,700 $ 23,695,500 $ 30,502,020 $ Net OPEB liability as a percentage of covered payroll 19.4% 17.2% 16.0% 6.9% 1.7% Notes to Schedule:

Valuation Date June 30, 2021
Actuarial Cost Method Entry age normal, level percentage of payroll Amortization Methodology Straight-line amortization. For assumption changes and experience gains/losses: Expected Average Remaining Service Lifetime of all members that are provided with benefits. For asset gains and losses: 5 years.

Asset Valuation Method Market value
Discount Rate 6.80% as of June 30, 2021 and 7.00% as of July 1, 2020 for accounting disclosure purposes
General Inflation 2.50%
Medical Trend 6.5% for 2022, decreasing to an ultimate rate of 4.5% in 2030 and later years Mortality Employees and retirees: SOA Pub-2010 General Headcount Weighted Mortality Table fully generational using Scale MP-2021.

Surviving Spouses: SOA Pub-2010 Continuing Survivor Headcount Weighted Mortality Table fully generational using Scale MP-2021.

Disabled Retirees: SOA Pub-2010 Safety Headcount Weighted Mortality Table fully generational using Scale MP-2021
Methods and Assumptions for 2021-2022 Actuarially Determined Contribution *Historical information is required only for measurement periods for which GASB 75 is applicable. Future years’ information will be displayed up to 10 years as information becomes available. Fiscal year 2017-18 was the first year of implementation.

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CITY OF LA MESA
Required Supplementary Information
Schedule of OPEB Contributions
Last Ten Years*
‐93-
Fiscal Year 2017-18 2018-19 2019-20 2020-21 2021-2022
Actuarially Determined Contribution (ADC) 564,577 $ 582,063 $ 588,161 $ 582,847 $ 549,584 $ Contributions in relation to the ADC 673,038 744,210 719,379 1,046,550 1,034,864 Contribution deficiency (excess) (108,461) $ (162,147) $ (131,218) $ (463,703) $ (485,280) $ Covered payroll 20,699,310 $ 21,602,500 $ 22,439,700 $ 23,695,500 $ 30,502,020 $ Contributions as a percentage of covered payroll 3.3% 3.4% 3.2% 4.4% 3.4% *Historical information is required only for measurement periods for which GASB 75 is applicable. Future years’ information will be displayed up to 10 years as information becomes available. Fiscal year 2017-18 was the first year of implementation.

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SUPPLEMENTARY INFORMATION

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NON‐MAJOR GOVERNMENTAL FUNDS

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CITY OF LA MESA
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2022
‐94-
Housing
Rehabilitation/
CDBG Transportation Street
Administration Gas Tax Improvement Parking
Assets
Cash and investments $ 575,976 - $ - $ 436,965 $
Restricted:

Cash and investments - - - -
Receivables:

Accounts 114,385 264 - 38,134
Loans - 139,699 - -
Grants - 450,697 - -
Lease - - - -
Total assets $ 690,361 590,660 $ - $ 475,099 $
Liabilities
Accounts payable $ - 91,972 $ - $ 10,887 $
Salaries payable - - - 9,688
Due to other funds - 211,994 769,787 -
Total liabilities - 303,966 769,787 20,575
Deferred Inflows of Resources
Unearned revenue - housing rehab loans - 139,699 - -
Leases - - - -
Total deferred inflows of resources - 139,699 - -
Fund Balances
Restricted for:

General government - - - -
Public safety - - - -
Capital outlays 690,361 - - -
Community services - - - -
Community development - 146,995 - 454,524
Debt service - - - -
Unassigned - - (769,787) -
Total fund balances (deficit) 690,361 146,995 (769,787) 454,524 Total liabilities, deferred inflows of resources
and fund balances $ 690,361 590,660 $ - $ 475,099 $

SPECIAL REVENUE FUNDS

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‐95-
Community Public Supplemental
Environmental Service Safety County Drug Asset Law
Services Improvement Augmentation Housing Seizure Enforcement $ 107,264 322,351 $ 388,218 $ 555,486 $ 157,374 $ 274,080 $ - - - - - -
- 29,455 32,748 - 157 209
- - - - - -
- - - - - -
- - - - - -
$ 107,264 351,806 $ 420,966 $ 555,486 $ 157,531 $ 274,289 $ $ - 31,623 $ - $ - $ - $ - $
- 4,842 - - - -
- - - - - -
- 36,465 - - - -
- - - - - -
- - - - - -
- - - - - -
- 315,341 - - - -
- - 420,966 - 157,531 274,289
- - - - - -
107,264 - - - - -
- - - 555,486 - -
- - - - - -
- - - - - -
107,264 315,341 420,966 555,486 157,531 274,289
$ 107,264 351,806 $ 420,966 $ 555,486 $ 157,531 $ 274,289 $ (continued)

SPECIAL REVENUE FUNDS

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CITY OF LA MESA
Combining Balance Sheet
Non-Major Governmental Funds, (continued)
June 30, 2022
‐96-
Community
Service Public Safety CIP Donations
Grants Grants Grants Fund
Assets
Cash and investments $ - - $ - $ 7,002 $
Restricted:

Cash and investments - - - -
Receivables:

Accounts - - 46,213 -
Loans - - - -
Grants 91,044 2,897 44,746 -
Lease - - - -
Total assets $ 91,044 2,897 $ 90,959 $ 7,002 $
Liabilities
Accounts payable $ 2,997 2,297 $ - $ - $
Salaries payable 6,322 - - -
Due to other funds 63,599 34,589 28,703 -
Total liabilities 72,918 36,886 28,703 -
Deferred Inflows of Resources
Unearned revenue - housing rehab loans - - - -
Leases - - - -
Total deferred inflows of resources - - - -
Fund Balances
Restricted for:

General government - - - 7,002
Public safety 18,126 - - -
Capital outlays - - 62,256 -
Community services - - - -
Community development - - - -
Debt service - - - -
Unassigned (33,989) - - -
Total fund balances (deficit) 18,126 (33,989) 62,256 7,002 Total liabilities, deferred inflows of resources
and fund balances $ 91,044 2,897 $ 90,959 $ 7,002 $

SPECIAL REVENUE FUNDS

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‐97-

DEBT SERVICE
FUNDS
2006
CASP Road Maintenance PEG Transportation Certificates of Fund Fund Fund Fund Participation
$ 2,105,296 68,565 $ 349,832 $ 6,679 $ - $
- - - - 1
212,668 2,016 3,049 12 -
- - - - -
- - - - -
- - - - -
$ 2,317,964 70,581 $ 352,881 $ 6,691 $ 1 $
$ - 336 $ 12,488 $ - $ - $
- - - - -
- - - - -
- 336 12,488 - -
- - - - -
- - - - -
- - - - -
- - 6,691 340,393 -
- - - - -
- - - - -
2,317,964 70,245 - - -
- - - - -
- - - - 1
- - - - -
2,317,964 70,245 340,393 6,691 1
$ 2,317,964 70,581 $ 352,881 $ 6,691 $ 1 $
(continued)

SPECIAL REVENUE FUNDS

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CITY OF LA MESA
Combining Balance Sheet
Non-Major Governmental Funds, (continued)
June 30, 2022
‐98-

DEBT SERVICE
FUNDS
2016 Parks
Government Obligation Public Storm and
Refunding Bonds Building Drains Recreation
Assets
Cash and investments $ 868,892 3,697,901 $ 157,411 $ 798,916 $ Restricted:

Cash and investments - - - 142,038
Receivables:

Accounts - 14,288 - -
Loans - - - -
Grants - - - 370,485
Lease 367,688 - - -
Total assets $ 1,236,580 3,712,189 $ 157,411 $ 1,311,439 $ Liabilities
Accounts payable $ - - $ 5,421 $ 124,782 $
Salaries payable - - - -
Due to other funds - - - -
Total liabilities - - 5,421 124,782
Deferred Inflows of Resources
Unearned revenue - housing rehab loans - - - -
Leases 324,832 - - -
Total deferred inflows of resources 324,832 - - -
Fund Balances
Restricted for:

General government - - - -
Public safety - - - -
Capital outlays 911,748 - 151,990 1,186,657
Community services - - - -
Community development - - - -
Debt service - 3,712,189 - -
Unassigned - - - -
Total fund balances (deficit) 911,748 3,712,189 151,990 1,186,657 Total liabilities, deferred inflows of resources
and fund balances $ 1,236,580 3,712,189 $ 157,411 $ 1,311,439 $

CAPITAL PROJECTS FUNDS

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‐99-
Total
Misc Capital Asset Non-Major
Civic Capital Management Governmental
Center Improvement Plan Funds
$ 317,676 92,599 $ 881,718 $ $ 12,170,201
- - - 142,039
- - - 493,598
- - - 139,699
- - - 959,869
- - - 367,688
$ 317,676 92,599 $ 881,718 $ 14,273,094 $
$ - - $ - $ $ 282,803
- - - 20,852
- - - 1,108,672
- - - 1,412,327
- - - 139,699
- - - 324,832
- - - 464,531
- - - 669,427
- - - 870,912
317,676 92,599 881,718 4,295,005
- - - 2,495,473
- - - 1,157,005
- - - 3,712,190
- - - (803,776)
317,676 92,599 881,718 12,396,236
$ 317,676 92,599 $ 881,718 $ 14,273,094 $
(concluded)

CAPITAL PROJECTS FUNDS

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CITY OF LA MESA
Combining Statement of Revenues, Expenditures,
and Changes in Fund Balances
Non-Major Governmental Funds
For the Year Ended June 30, 2022
‐100-
Housing
Rehabilitation/
CDBG Transportation Street
Administration Gas Tax Improvement Parking
Revenues:

Property taxes $ - - $ - $ - $
Other taxes - - - -
Licenses and permits - - - -
Fines and forfeitures - - - 84,323
Use of money and property - (9,336) - 318,498
Intergovernmental 1,422,707 450,697 656,990 -
Charges for services - - - -
Other revenues 7,547 - - -
Total revenues 1,422,707 448,908 656,990 402,821
Expenditures:

Current:

General government - - - 12,829
Police - - - 137,055
Fire - - - 245
Community development - 532,668 - 154,795
Community services - - - -
Capital outlay - - - -
Debt service:

Principal retirement - - 500,004 -
Interest and fiscal charges - - 6,986 -
Total expenditures - 532,668 506,990 304,924
Excess (deficiency) of
revenues over (under) expenditures 1,422,707 (83,760) 150,000 97,897 Other financing sources (uses):

Transfers in - - - -
Transfers out - (1,118,625) (711,426) (125,500)
Total other financing sources (uses) - (1,118,625) (711,426) (125,500) Net change in fund balances 304,082 (83,760) (561,426) (27,603) Fund balances (deficit), beginning of year 386,279 230,755 482,127 (208,361) Fund balances (deficit), end of year $ 690,361 146,995 $ $ 454,524 (769,787) $

SPECIAL REVENUE FUNDS

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‐101-
Community Public Supplemental
Environmental Service Safety County Drug Asset Law
Services Improvement Augmentation Housing Seizure Enforcement $ - - $ - $ - $ - $ - $
- - 399,040 - - -
- - - - - -
- - - - 23,166 -
- (11,809) - (7,534) (5,562) (7,391)
- 100,032 - - - 161,285
- 422,904 - - - -
10,006 - - - - -
10,006 511,127 391,506 - 17,604 153,894
- 596,724 - - - -
- - - - 407 -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- 596,724 - - 407 -
10,006 (85,597) 391,506 - 17,197 153,894
- 50,000 - - - -
(57,200) - (6,000) - - -
(7,200) - (6,000) - - -
4,006 (92,797) 391,506 - 17,197 153,894
103,258 408,138 29,460 555,486 140,334 120,395
$ 107,264 315,341 $ 420,966 $ 555,486 $ 157,531 $ 274,289 $ (continued)

SPECIAL REVENUE FUNDS

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CITY OF LA MESA
Combining Statement of Revenues, Expenditures,
and Changes in Fund Balances
Non-Major Governmental Funds, (continued)
For the Year Ended June 30, 2022
‐102-
Community
Service Public Safety CIP Donations
Grants Grants Grants Fund
Revenues:

Property taxes $ - - $ - $ - $
Other taxes - - - -
Licenses and permits - - - -
Fines and forfeitures 1,557 - - -
Use of money and property - - - -
Intergovernmental 623,043 100,384 1,252,326 -
Charges for services - 7,196 - -
Other revenues 12,206 - - -
Total revenues 624,600 119,786 1,252,326 -
Expenditures:

Current:

General government - - - -
Police 550,307 - - -
Fire - - - -
Community development - 67,000 - -
Community services - 123,705 - -
Capital outlay - - - -
Debt service:

Principal retirement - - - -
Interest and fiscal charges - - - -
Total expenditures 550,307 190,705 - -
Excess (deficiency) of
revenues over (under) expenditures 74,293 (70,919) 1,252,326 - Other financing sources (uses):

Transfers in - - - -
Transfers out - - - (1,190,070)
Total other financing sources (uses) - - - (1,190,070)
Net change in fund balances 74,293 (70,919) 62,256 -
Fund balances (deficit), beginning of year (56,167) 36,930 - 7,002 Fund balances (deficit), end of year $ 18,126 (33,989) $ 62,256 $ 7,002 $

SPECIAL REVENUE FUNDS

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DEBT SERVICE
FUNDS
2006
CASP Road Maintenance PEG Transportation Certificates of Fund Fund Fund Fund Participation
$ - - $ - $ - $ - $
- - 109,337 - -
- - - - -
- - - - -
- - (61,909) 2 (423)
1,205,433 - - - -
17,839 - - - -
- - - - -
1,143,524 17,839 109,337 (423) 2
- - 396,730 - 4,699
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - 330,000
- - - - 116,692
- - 396,730 - 451,391
1,143,524 17,839 (287,393) (423) (451,389)
- - - - 447,708
- - (100,000) - (55,670)
- - (100,000) 447,708 (55,670)
1,043,524 17,839 (287,393) (56,093) (3,681)
1,274,440 52,406 627,786 62,784 3,682
$ 2,317,964 70,245 $ 340,393 $ 6,691 $ 1 $
(continued)

SPECIAL REVENUE FUNDS

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CITY OF LA MESA
Combining Statement of Revenues, Expenditures,
and Changes in Fund Balances
Non-Major Governmental Funds, (continued)
For the Year Ended June 30, 2022
‐104-

DEBT SERVICE
FUNDS
2016 Parks
Government Obligation Public Storm and
Refunding Bonds Building Drains Recreation
Revenues:

Property taxes $ - 1,604,594 $ - $ - $
Other taxes - - - -
Licenses and permits - - - 146,895
Fines and forfeitures - - - -
Use of money and property 134,130 (110,521) - 25,307
Intergovernmental - - - 370,485
Charges for services - - - -
Other revenues - - - -
Total revenues 134,130 1,494,073 - 542,687
Expenditures:

Current:

General government - 5,754 - -
Police - - - -
Fire - - - -
Community development - - - -
Community services - - - -
Capital outlay 49,313 - 368,547 548,065
Debt service:

Principal retirement - 810,000 - -
Interest and fiscal charges - 766,150 - -
Total expenditures 49,313 1,581,904 368,547 548,065
Excess (deficiency) of
revenues over (under) expenditures 84,817 (87,831) (368,547) (5,378) Other financing sources (uses):

Transfers in 150,000 - 363,005 88,140
Transfers out - - (141,965) -
Total other financing sources (uses) 8,035 - 363,005 88,140 Net change in fund balances 92,852 (87,831) (5,542) 82,762 Fund balances (deficit), beginning of year 818,896 3,800,020 157,532 1,103,895 Fund balances (deficit), end of year $ 911,748 3,712,189 $ 151,990 $ 1,186,657 $

CAPITAL PROJECTS FUNDS

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‐105-
Total
Misc Capital Asset Non-Major
Civic Capital Management Governmental
Center Improvement Plan Funds
$ - - $ - $ $ 1,604,594
- - - 508,377
- - - 146,895
- - - 109,046
- - - 263,452
- - - 6,343,382
- - - 447,939
- - - 29,759
- - - 9,453,444
- - - 1,016,736
- - - 687,769
- - - 245
- - - 754,463
- - - 123,705
- - - 965,925
- - - 1,640,004
- - - 889,828
- - - 6,078,675
- - - 3,374,769
- - 141,916 1,240,769
- - (150,000) (3,656,456)
- - (8,084) (2,415,687)
- - (8,084) 959,082
317,676 92,599 889,802 11,437,154
$ 317,676 92,599 $ 881,718 $ $ 12,396,236
(concluded)

CAPITAL PROJECTS FUNDS

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INTERNAL SERVICE FUNDS

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CITY OF LA MESA
Combining Statement of Net Position
Internal Service Funds
June 30, 2022
-106-
Employee Workers' Equipment Liability Risk
Benefits Compensation Replacement Financing Total
Assets
Current assets:

Cash and investments 496,806 $ 6,404,478 $ 3,064,474 $ 1,116,542 $ 11,082,300 $ Accounts receivable, net - 6,815 3,435 142,758 153,008
Total current assets 496,806 6,411,293 3,067,909 1,259,300 11,235,308 Noncurrent assets:

Restricted cash and investments 12,801 185,621 - 22,112 220,534 Intangible assets - - 3,291,866 - 3,291,866
Intangible assets - right-to-use assets, net - - 459,246 - 459,246 Capital assets:

Depreciable, net - - 3,276,789 - 3,276,789
Total capital assets - - 3,276,789 - 3,276,789
Total noncurrent assets 12,801 185,621 7,027,901 22,112 7,248,435 Total assets 509,607 6,596,914 10,095,810 1,281,412 18,483,743 Liabilities
Current liabilities:

Accounts payable 969,377 71 207,583 420,855 1,597,886
Salaries payable - 2,771 - 2,771 5,542
Interest payable - - 4,499 - 4,499
Long-term liabilities - due in one year - - 284,125 - 284,125 Total current liabilities 969,377 2,842 496,207 423,626 1,892,052 Noncurrent liabilities:

Long-term liabilities - due in more than one year - - 830,105 - 830,105 Claims payable - 4,923,270 - 1,024,664 5,947,934
Total noncurrent liabilities - 4,923,270 830,105 1,024,664 6,778,039 Total liabilities 969,377 4,926,112 1,326,312 1,448,290 8,670,091 Net Position
Net investment in capital assets - - 5,913,671 - 5,913,671 Restricted 12,801 185,621 - 22,112 220,534
Unrestricted (472,571) 1,485,181 2,855,827 (188,990) 3,679,447 Total net position (deficit) (459,770) $ 1,670,802 $ 8,769,498 $ (166,878) $ 9,813,652 $

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CITY OF LA MESA
Combining Statement of Activities, and Changes in Net Position Internal Service Funds
For the Year Ended June 30, 2022
-107-
Employee Workers' Equipment Liability Risk
Benefits Compensation Replacement Financing Total
Operating Revenues:

Charges for services 4,210,560 $ 1,110,110 $ 1,851,630 $ - $ 7,172,300 $ Other operating revenues 44,189 351,976 - 142,295 538,460 Total operating revenues 4,254,749 1,462,086 1,851,630 142,295 7,710,760 Operating Expenses:

Salaries and payroll - 177,312 - 177,312 354,624
Professional services 4,245,764 1,036,968 897,861 682,865 6,863,458 Supplies and materials - 1,856 - 5,157 7,013
Insurance premiums and settlements - 833,596 - 2,211,926 3,045,522 Depreciation - - 631,622 - 631,622
Amortization - - 51,028 - 51,028
Total operating expenses 4,245,764 2,049,732 1,580,511 3,077,260 10,953,267 Operating income (loss) 8,985 271,119 (587,646) (2,934,965) (3,242,507) Nonoperating Revenues (Expenses):

Investment income (loss) - (240,965) (121,445) (16,372) (378,782) Interest expense - - (25,080) - (25,080)
Gain (loss) on disposal of assets - - (301,425) - (301,425) Total nonoperating income (loss) - (240,965) (447,950) (16,372) (705,287) Income (loss) before transfers 8,985 (828,611) (176,831) (2,951,337) (3,947,794) Transfers:

Transfers in - - - 1,888,900 1,888,900
Total transfers - - - 1,888,900 1,888,900
Change in net position 8,985 (828,611) (176,831) (1,062,437) (2,058,894) Net position (deficit), beginning of year 2,499,413 (468,755) 8,946,329 895,559 11,872,546 Net position (deficit), end of year $ 1,670,802 (459,770) $ 8,769,498 $ $ 9,813,652 (166,878) $

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CITY OF LA MESA
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2022
-108-
Employee Workers' Equipment Liability Risk
Benefits Compensation Replacement Financing Total

CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers/other funds 4,210,560 $ 1,532,565 $ 1,851,936 $ - $ 7,595,061 $ Cash payments to suppliers for goods and services - (1,184,067) (696,735) (327,877) (2,208,679) Cash payments to employees for services - (180,086) - (180,086) (360,172) Insurance premiums and settlements (4,543,910) (482,548) - (1,444,018) (6,470,476) Other operating revenues 44,189 351,976 - 695 396,860
Net Cash Provided (Used) by Operating Activities (289,161) 37,840 1,155,201 (1,951,286) (1,047,406)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers in - - - 1,888,900 1,888,900
Net Cash Provided Noncapital Financing Activities - - - 1,888,900 1,888,900

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets - - (1,031,159) - (1,031,159) Payment of interest - - (25,080) - (25,080)
Payments on notes/leases payable - - (284,508) - (284,508) Net Cash (Used) for Capital and Related Financing Activities - - (1,340,747) - (1,340,747)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment income - (240,965) (121,445) (16,372) (378,782) Net Cash (Used) by Investing Activities - (240,965) (121,445) (16,372) (378,782) Net Increase (Decrease) in Cash and Cash Equivalents (289,161) (203,125) (306,991) (78,758) (878,035) Cash and Cash Equivalents - beginning of the year 6,793,224 798,768 3,371,465 1,217,412 12,180,869 Cash and Cash Equivalents - end of the year $ 6,590,099 509,607 $ 3,064,474 $ 1,138,654 $ 11,302,834 $

RECONCILIATION TO STATEMENT OF NET POSITION
Current assets:

Cash and cash equivalents 496,806 $ 6,404,478 $ 3,064,474 $ 1,116,542 $ 11,082,300 $ Cash and cash equivalents - restricted 12,801 185,621 - 22,112 220,534 Total cash and cash equivalents 509,607 $ 6,590,099 $ 3,064,474 $ 1,138,654 $ 11,302,834 $ Reconciliation of operating income (loss) to net cash provided (used) by operating activities:

Operating income (loss) 8,985 $ (587,646) $ 271,119 $ (2,934,965) $ (3,242,507) $ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation expense - - 631,622 - 631,622
Amortization expense - - 51,028 - 51,028
Change in assets and liabilities:

Accounts receivable - 422,455 306 (141,600) 281,161
Accounts payable (298,146) (145,243) 201,126 360,145 117,882 Claims payable - 351,048 - 767,908 1,118,956
Salaries and benefits payable - (2,774) - (2,774) (5,548) Net Cash Provided (Used) by Operating Activities (289,161) $ 37,840 $ 1,155,201 $ (1,951,286) $ (1,047,406) $ Noncash Financing Activities
Acquisition of right to use asset - $ - $ (510,274) $ - $ (510,274) $ Lease liability - - 510,274 - 510,274

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- 1 -
May 22, 2023
To the Honorable City Council
City of La Mesa
La Mesa, California
We have audited the financial statements of the City of La Mesa, California, (the City) as of and for the year ended June 30, 2022, and have issued our report thereon dated May 22, 2023. Professional standards require that we advise you of the following matters relating to our audit.

Our Responsibility in Relation to the Financial Statement Audit As communicated in our engagement letter dated May 13, 2022, our responsibility, as described by professional standards, is to form and express opinions about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities.

Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of the City solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.

We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.

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- 2 -
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously communicated to you.

Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, and our firm, have complied with all relevant ethical requirements regarding independence.

Significant Risks Identified
We have identified the possibility of the following significant risks:

Management's override of internal controls over financial reporting – Management override of internal controls is the intervention by management in handling financial information and making decisions contrary to internal control policy.

Revenue recognition – Revenue recognition is a generally accepted accounting principle that refers to the conditions under which an entity can recognize a transaction as revenue. Auditing standards indicate that recognizing revenue is a presumed fraud risk and usually classified as a significant risk in most audits.

These significant risks are presumptive in most audits and merit attention by the auditors due to the direct impact over financial reporting and internal control processes. Although identified as significant risks, we noted no matters of management override of controls or deviations from generally accepted accounting principles which caused us to modify our audit procedures or any related matters which are required to be communicated to those charged with governance due to these identified risks.

Qualitative Aspects of the City’s Significant Accounting Practices Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the City is included in Note 1 to the financial statements. As described in Note 1 of the financial statements, during the year, the City adopted provisions of Governmental Accounting Standards Board Statement No. 87, Leases. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus.

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- 3 -
Significant Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events.

Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments.

The most sensitive accounting estimates affecting the financial statements are:

Management’s estimate of fair market value of investments based on market values provided by outside sources. We evaluated the key factors and assumptions used to develop the fair market value of investments in determining that it is reasonable in relation to the financial statements taken as a whole.

Management’s estimate of capital asset depreciation is based on historical estimates of each capitalized item’s useful life. We evaluated the key factors and assumptions used to develop the estimated useful lives in determining that it is reasonable in relation to the financial statements as a whole.

Management’s estimate of the net pension liability and related deferred inflows and outflows are based on actuarial reports provided by independent actuaries. We evaluated the key factors and assumptions used to develop the estimate in determining that it is reasonable in relation to the financial statements taken as a whole.

Management’s estimate of the liability for other post-employment benefits is based on actuarial reports provided by independent actuaries. We evaluated the key factors and assumptions used to develop the estimate in determining that it is reasonable in relation to the financial statements as a whole.

Management’s estimate of leases receivable, deferred inflows of resources related to leases, and lease amortization is based on present value calculations using certain terms and assumptions in the lease agreements in accordance with generally accepted accounting principles. Management’s estimate of lease liabilities, right-to-use assets, and asset amortization is based on present value calculations using certain terms and assumptions in the lease agreements and estimated useful lives of assets in accordance with generally accepted accounting principles. We evaluated the key factors and assumptions used to develop the lease related estimates in determining that it is reasonable in relation to the financial statements taken as a whole.

Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the City’s financial statements relate to:

The disclosure of fair value of investments in the notes to the financial statements represents amounts susceptible to market fluctuations.

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- 4 -
The disclosure of accumulated depreciation, in notes to the basic financial statements is based on estimated useful lives which could differ from actual useful lives of each capitalized item.

The disclosure of net pension liability and related deferred inflows and outflows in the notes to the financial statements is based on actuarial assumptions. Actual future liabilities may vary from disclosed estimates.

The disclosure of the other post-employment benefits (OPEB) and related deferred inflows and outflows in the notes to the basic financial statements is based on actuarial assumptions.

Actual future liabilities may vary from disclosed estimates.

The disclosure of leases receivable, deferred inflows of resources related to leases, lease amortization, leases liabilities, right-to-use assets, and asset amortization in the basic financial statements is based on certain terms and assumptions in the lease agreements which could differ from actual amounts.

The financial statement disclosures are neutral, consistent, and clear.

Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the performance of the audit.

Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevent classes of transactions, account balances or disclosures, and the financial statements as a whole and each applicable opinion unit. The attached schedule summarizes uncorrected financial statement misstatements whose effects in the current and prior periods, as determined by management, are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. Uncorrected misstatements or matters underlying those uncorrected misstatements could potentially cause future-period financial statements to be materially misstated, even though the uncorrected misstatements are immaterial to the financial statements currently under audit.

In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. None of the misstatements identified by us as a result of our audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole or applicable opinion units.

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- 5 -
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the City’s financial statements or the Auditor’s report. No such disagreements arose during the course of the audit.

Representations Requested from Management
We have requested certain written representations from management, which are included in the attached letter dated May 22, 2023.

Management’s Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters.

Other Significant Matters, Findings, or Issues
In the normal course of our professional association with the City, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, operating and regulatory conditions affecting the City, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the City’s auditors.

Other Information Included in Annual Reports
Pursuant to professional standards, our responsibility as auditors for other information in documents containing the City’s audited financial statements does not extend beyond the financial information identified in the audit report, and we are not required to perform any procedures to corroborate such other information. However, in accordance with such standards:

We have applied certain limited procedures to the required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the Required Supplementary Information (RSI) and do not express an opinion or provide any assurance on the RSI.

We were engaged to report on the supplementary information, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.

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Our responsibility also includes communicating to you any information which we believe is a material misstatement of fact. Nothing came to our attention that caused us to believe that such information, or its manner of presentation, is materially inconsistent with the information, or manner of its presentation, appearing in the financial statements.

This report is intended solely for the information and use of the City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.

San Bernardino, California

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Uncorrected Financial Statement Misstatements
In the fiscal year ended June 30, 2022, the City did not post adjustment to cash in order to agree ending balance to the June 2022 Trust statements for General Liability Program.

Amount of
Misstatement
Asset
Over/(Under)
Stated
Opinion Unit Account
Classification
$47,663 $(47,663) Aggregate Remaining Asset

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May 22, 2023
Rogers, Anderson, Malody & Scott, LLP
This representation letter is provided in connection with your audit of the financial statements of governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of La Mesa (the City) as of June 30, 2022 and for the year then ended, and the related notes to the financial statements, for the purpose of expressing opinions on whether the basic financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows, where applicable, of the various opinion units of the City in accordance with accounting principles generally accepted for governments in the United States of America (U.S. GAAP).

Certain representations in this letter are described as being limited to matters that are material.

Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information such that, in the light of surrounding circumstances, 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.

We confirm that, to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves as of May 22, 2023.

Financial Statements

1. We have fulfilled our responsibilities, as set out in the terms of the audit engagement dated May 13, 2022, for the preparation and fair presentation of the financial statements of the various opinion units referred to above in accordance with U.S.

GAAP.

2. We acknowledge our responsibility 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.

3. We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud.

4. We acknowledge our responsibility for compliance with the laws, regulations, and provisions of contracts and grant agreements.

5. We have reviewed, approved, and taken responsibility for the financial statements and related notes.

6. We have a process to track the status of audit findings and recommendations.

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7. We have identified and communicated to you all previous audits, attestation engagements, and other studies related to the audit objectives and whether related recommendations have been implemented.

8. Significant assumptions used by us in making accounting estimates, including those measured at fair value, are reasonable.

9. Related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the requirements of U.S. GAAP.

10. All events subsequent to the date of the financial statements and for which U.S. GAAP requires adjustment or disclosure have been adjusted or disclosed.

11. The effects of uncorrected misstatements summarized in the attached schedule and aggregated by you during the current engagement are immaterial, both individually and in the aggregate, to the applicable opinion units and to the financial statements as a whole.

12. The effects of all known actual or possible litigation and claims have been accounted for and disclosed in accordance with U.S. GAAP.

13. All component units, as well as joint ventures with an equity interest, are included and other joint ventures and related organizations are properly disclosed.

14. All funds and activities are properly classified.

15. All funds that meet the quantitative criteria in GASB Statement No. 34, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments, GASB Statement No. 37, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments: Omnibus as amended, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, for presentation as major are identified and presented as such and all other funds that are presented as major are considered important to financial statement users.

16. All components of net position, nonspendable fund balance, and restricted, committed, assigned, and unassigned fund balance are properly classified and, if applicable, approved.

17. Our policy regarding whether to first apply restricted or unrestricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position/fund balance are available is appropriately disclosed and net position/fund balance is properly recognized under the policy.

18. All revenues within the statement of activities have been properly classified as program revenues, general revenues, contributions to term or permanent endowments, or contributions to permanent fund principal.

19. All expenses have been properly classified in or allocated to functions and programs in the statement of activities, and allocations, if any, have been made on a reasonable basis.

20. All interfund and intra-City transactions and balances have been properly classified and reported.

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21. Special items and extraordinary items have been properly classified and reported.

22. Deposit and investment risks have been properly and fully disclosed.

23. Capital assets, including infrastructure assets, are properly capitalized, reported, and if applicable, depreciated.

24. All required supplementary information is measured and presented within the prescribed guidelines.

25. With regard to investments and other instruments reported at fair value:
a. The underlying assumptions are reasonable and they appropriately reflect management’s intent and ability to carry out its stated courses of action. b. The measurement methods and related assumptions used in determining fair value are appropriate in the circumstances and have been consistently applied. c. The disclosures related to fair values are complete, adequate, and in accordance with U.S. GAAP.
d. There are no subsequent events that require adjustments to the fair value measurements and disclosures included in the financial statements.

26. With respect to the nonattest services provided, we have performed the following:
a. Made all management decisions and performed all management functions; b. Assigned a competent individual to oversee the services; c. Evaluated the adequacy of the services performed;
d. Evaluated and accepted responsibility for the result of the service performed; and e. Established and maintained internal controls, including monitoring ongoing activities.

Information Provided

1. We have provided you with:
a. Access to all information, of which we are aware that is relevant to the preparation and fair presentation of the financial statements of the various opinion units referred to above, such as records, documentation, meeting minutes, and other matters; b. Additional information that you have requested from us for the purpose of the audit; and
c. Unrestricted access to persons within the City from whom you determined it necessary to obtain audit evidence.

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2. The financial statements and any other information included in the annual report are consistent with one another, and the other information does not contain any material misstatements

3. All transactions have been recorded in the accounting records and are reflected in the financial statements.

4. We have disclosed to you the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud.

5. We have provided to you our analysis of the City’s ability to continue as a going concern, including significant conditions and events present, and if necessary, our analysis of management’s plans, and our ability to achieve those plans.

6. We have no knowledge of fraud or suspected fraud that affects the City and involves:
a. Management;
b. Employees who have significant roles in internal control; or c. Others where the fraud could have a material effect on the financial statements.

7. We have no knowledge of any allegations of fraud, or suspected fraud, affecting the City’s financial statements communicated by employees, former employees, vendors, regulators, or others.

8. We have disclosed to you all known actual or possible litigation, claims, and assessments whose effects should be considered when preparing the financial statements.

9. We have disclosed to you the identity of the City’s related parties and all the related party relationships and transactions of which we are aware.

10. There have been no communications from regulatory agencies concerning noncompliance with or deficiencies in accounting, internal control, or financial reporting practices.

11. The City has no plans or intentions that may materially affect the carrying value or classification of assets and liabilities.

12. We have disclosed to you all guarantees, whether written or oral, under which the City is contingently liable.

13. We have disclosed to you all nonexchange financial guarantees, under which we are obligated and have declared liabilities and disclosed properly in accordance with GASB Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees, for those guarantees where it is more likely than not that the City will make a payment on any guarantee.

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14. For nonexchange financial guarantees where we have declared liabilities, the amount of the liability recognized is the discounted present value of the best estimate of the future outflows expected to be incurred as a result of the guarantee. Where there was no best estimate but a range of estimated future outflows has been established, we have recognized the minimum amount within the range.

15. We have disclosed to you all significant estimates and material concentrations known to management that are required to be disclosed in accordance with GASB Statement No. 62 (GASB-62), Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. Significant estimates are estimates at the balance sheet date that could change materially within the next year.

Concentrations refer to volumes of business, revenues, available sources of supply, or markets or geographic areas for which events could occur that would significantly disrupt normal finances within the next year.

16. We have identified and disclosed to you the laws, regulations, and provisions of contracts and grant agreements that could have a direct and material effect on financial statement amounts, including legal and contractual provisions for reporting specific activities in separate funds.

17. There are no:
a. Violations or possible violations of laws or regulations, or provisions of contracts or grant agreements whose effects should be considered for disclosure in the financial statements or as a basis for recording a loss contingency, including applicable budget laws and regulations.
b. Unasserted claims or assessments that our lawyer has advised are probable of assertion and must be disclosed in accordance with GASB-62. c. Other liabilities or gain or loss contingencies that are required to be accrued or disclosed by GASB-62
d. Continuing disclosure consent decree agreements or filings with the Securities and Exchange Commission and we have filed updates on a timely basis in accordance with the agreements (Rule 240, 15c2-12).

18. The City has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets nor has any asset or future revenue been pledged as collateral, except as disclosed to you.

19. We have complied with all aspects of grant agreements and other contractual agreements that would have a material effect on the financial statements in the event of noncompliance.

Supplementary Information in Relation to the Financial Statements as a Whole With respect to the supplementary information accompanying the financial statements:
a. We acknowledge our responsibility for the presentation of the supplementary information in accordance with accounting principles generally accepted in the United States of America.

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b. We believe the supplementary information, including its form and content, is fairly presented in accordance with accounting principles generally accepted in the United States of America.
c. The methods of measurement or presentation have not changed from those used in the prior period.
d. When the supplementary information is not presented with the audited financial statements, management will make the audited financial statements readily available to the intended users of the supplementary information no later than the date of issuance by the City of the supplementary information and the auditor’s report thereon. e. We acknowledge our responsibility to include the auditor’s report on the supplementary information in any document containing the supplementary information and that indicates the auditor reported on such supplementary information. f. We acknowledge our responsibility to present the supplementary information with the audited financial statements or, if the supplementary information will not be presented with the audited financial statements, to make the audited financial statements readily available to the intended users of the supplementary information no later than the date of issuance by the City of the supplementary information and the auditor’s report thereon.

Required Supplementary Information
With respect to the required supplementary information accompanying the financial statements:
a. We acknowledge our responsibility for the presentation of the required supplementary information in accordance with accounting principles generally accepted in the United States of America.
b. We believe the required supplementary information, including its form and content, is measured and fairly presented in accordance with accounting principles generally accepted in the United States of America.
c. The methods of measurement or presentation have not changed from those used in the prior period.

Use of a Specialist
We agree with the findings of specialists in evaluating the City’s pension and OPEB net liabilities and related deferred amounts and have adequately considered the qualifications of the specialist in determining the amounts and disclosures used in the financial statements and underlying accounting records. We did not give or cause any instructions to be given to specialists with respect to the values or amounts derived in an attempt to bias their work, and we are not otherwise aware of any matters that have had an impact on the independence or objectivity of the specialists.

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Pension and Postretirement Benefits
We believe that the actuarial assumptions and methods used to measure pension and other postemployment benefit liabilities and costs for financial accounting purposes are appropriate in the circumstances.

There have been no changes or updates to legal information disclosed to you by our attorneys since the date of such legal responses and now.

Tammi Royales
Director of Finance

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Schedule of Uncorrected Misstatements
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In the current year the City did not post adjustment to cash in order to agree ending balance to the June 2022 Trust statements for General Liability Program.

Amount of
Misstatement
Asset
Over/(Under) Stated
Opinion Unit Account
Classification
$47,663 $(47,663) Aggregate Remaining Asset

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Certain representations in this letter are described as being limited to matters that are material.

We confirm that, to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves as of May 22, 2023.

Financial Statements

GAAP.

3. We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud.

4. We acknowledge our responsibility for compliance with the laws, regulations, and provisions of contracts and grant agreements.

5. We have reviewed, approved, and taken responsibility for the financial statements and related notes.

6. We have a process to track the status of audit findings and recommendations.

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8. Significant assumptions used by us in making accounting estimates, including those measured at fair value, are reasonable.

9. Related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the requirements of U.S. GAAP.

10. All events subsequent to the date of the financial statements and for which U.S. GAAP requires adjustment or disclosure have been adjusted or disclosed.

12. The effects of all known actual or possible litigation and claims have been accounted for and disclosed in accordance with U.S. GAAP.

13. All component units, as well as joint ventures with an equity interest, are included and other joint ventures and related organizations are properly disclosed.

14. All funds and activities are properly classified.

16. All components of net position, nonspendable fund balance, and restricted, committed, assigned, and unassigned fund balance are properly classified and, if applicable, approved.

19. All expenses have been properly classified in or allocated to functions and programs in the statement of activities, and allocations, if any, have been made on a reasonable basis.

20. All interfund and intra-City transactions and balances have been properly classified and reported.

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21. Special items and extraordinary items have been properly classified and reported.

22. Deposit and investment risks have been properly and fully disclosed.

23. Capital assets, including infrastructure assets, are properly capitalized, reported, and if applicable, depreciated.

24. All required supplementary information is measured and presented within the prescribed guidelines.

Information Provided

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