We evaluated the key factors and assumptions used to develop these estimates in determining that they were reasonable in relation to the financial statements taken as a whole.
Financial statement disclosures
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were:
The disclosure of the OPEB commitments reported in Note 10 to the financial statements.
The disclosure of PARS pension plan in Note 9 to the financial statements.
The disclosure of the claims liabilities reported in Note 12 to the financial statements.
The financia
l statement disclosures are neutral, consistent, and clear.
Significant unusual transactions
We identified no significant unusual transactions.
Difficulties encountered in performing the audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Uncorrected misstatements
Professional standards require us to accumulate all misstatements identified during the audit, other than those that are clearly trivial, and communicat e them to the appropriate level of management.
Management did not identify, and we did not notify them of any uncorrected financial statement misstatements.
Corrected misstatements
Management did not identify, and we did not notify them of any financial statement misstatements detected as a result of audit procedures.
Disagreements with management
For purposes of this communication, a disagreement with management is a disagreement on a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors’ report. No such disagreements arose during our audit.
Management representations
We have requested certain representations from management that are included in the management representation letter dated February 11, 2026.
Honorable Mayor and City Council
City of Lancaster
Management consultations with other independent accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the entity’s financial statements or a determination of the type of auditors’ opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other account ants. We were informed by management that there were no consultations with other accountants.
Significant issues discussed with management prior to engagement We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to engagement as the entity’s auditors. However, these discussions occurred in the normal course of our professional relationship, and our responses were not a condition to our engagement.
Required Supplementary Information
With respect to the required supplementary information (RSI) accompanying the financial statements, we made certain inquiries of management about the methods of preparing the RSI, including whether the RSI has been measured and presented in accordance with prescribed guidelines, whether the methods of measurement and preparation have been changed from the prior period and the reasons for any such changes, and whether there were any significant assumptions or interpretations underlying the measurement or presentation of the RSI. We compared the RSI for consistency with management’s responses to the foregoing inquiries, the basic financial statements, and other knowledge obtained during the audit of the basic financial statements. Because these limited procedures do not provide sufficient evidence, we did not express an opinion or provide any assurance on the RSI.
Supplementary information in relation to the financial statements as a whole With respect to the combining and individual nonmajor fund financial statements and schedules (collectively, the supplementary information) accompanying the financial statements, on which we were engaged to report in relation to the financial statements as a whole, 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 or the reasons for such changes, 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. We have issued our report thereon dated February 11, 2026.
Honorable Mayor and City Council
City of Lancaster
Other information included in annual reports
Other information (financial or nonfinancial information other than the financial statements and our auditors’ report thereon) is being included in your annual report and is comprised of introductory and statistical sections. Our responsibility for other information included in your annual report does not extend beyond the financial information identified in our opinion on the financial statements. We have no responsibility for determining whether such other information is properly stated and do not have an obligation to perform any procedures to corroborate other information contained in your annual report.
We are required by professional standards to read the other information included in your annual report and consider whether a material inconsistency exists between the other information and the financial statements because the credibility of the financial st atements and our auditors’ report thereon may be undermined by material inconsistencies between the audited financial statements and other information.
If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Our auditors’ report on the financial statements includes a separate section, “Other Information,” which states we do not express an opinion or any form of assurance on the other information included in the annual report. We did not identify any material inconsistencies between the other information and the audited financial statements. * * *
This communication is intended solely for the information and use of the City Council and management of City of Lancaster and is not intended to be, and should not be, used by anyone other than these specified parties.
CliftonLarsonAllen LLP
Irvine, California
February 11, 2026
CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.
CliftonLarsonAllen LLP
CLAconnect.com
INDEP
ENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Honorable Mayor and Members of the City Council
City of Lancaster
Lancaster, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United St ates, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Lancaster, as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City of Lancaster’s basic financial statements, and have issued our report thereon dated February 11, 2026.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered City of Lancaster’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of City of Lancaster’s internal control. Accordingly, we do not express an opinion on the effectiveness of City of Lancaster’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.
Honorable Mayor and Members of the City Council
City of Lancaster
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether City of Lancaster’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
CliftonLarsonAllen LLP
Irvine, California
February 11, 2026
CITY OF LANCASTER, CALIFORNIA
AGREED-UPON PROCEDURES
APPROPRIATIONS LIMIT WORKSHEET NO. 6
YEAR ENDED JUNE 30, 2025
CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.
CliftonLarsonAllen LLP
CLAconnect.com
INDEP
ENDENT ACCOUNTANTS’ REPORT
ON AGREED-UPON PROCEDURES
APPLIED TO APPROPRIATIONS LIMIT WORKSHEET NO. 6
To the Honorable Mayor and
Members of the City Council
of the City of Lancaster
Lancaster, California
We have performed the procedures enumerated below to the accompanying Appropriations Limit Worksheet No. 6 of the City of Lancaster, California (the City) for the year ended June 30, 2025. The City’s management is responsible for the Appropriations Limit Worksheet No. 6.
The City and the League of California Cities (as presented in the League publication entitled "Article XIII-B Appropriations Limit Uniform Guidelines")
have agreed to and acknowledged that the procedures
performed a
re appropriate to meet the intended purpose of meeting the requirements of Sectio n 1.5 of Article XIII-B of the Cal
ifornia Constitution. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the ne
eds of all users of this report and, as such, users are responsible for de termining whether the procedu
res performed are appropriate for their purposes.
The proced
ures and the associated findings are as follows:
1. We obtained the completed Appropriations Limit Worksheet No. 6 for the year ended June 30, 2025 and compared the limit and annual adjus tment factors included in that worksheet to the limit and an
nual adjustment factors that were adopted by resolution of the City Council. We also compared the population and inflation option
s included in the aforementioned worksheet to
those that were selected by a recorded vote of the City Council.
The City transposed two numbers on the resolution and approved a limit that was $270,000 higher than the actual calculation.
2. For the Appropriations Limit Worksheet No. 6, we added last year’s limit to the total adjustments, and compared the resulting amount to this
year’s limit. We also recalculated the
adjustment factor and th
e adjustment for inflation and population, and compared the results to the amounts on Appropriations Limit Worksheet No. 6.
No exceptio
ns were noted as a result of our performing this procedure.
3. We compared the prior year appropriations limit presented in the accompanying Ap propriations Limit Worksheet No. 6 to the prior year appropriations limit adopted by the City Council for the
prior year.
No exceptions were noted as a result of our performing this procedure.
City Council
City of Lancaster
Lancaster, California
(3)
We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the accompanying Appropriations Limit Worksheet No. 6. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.
This report is intended solely for the information and use of the City Council and management of the City of Lancaster, California and is not intended to be, and should not be, used by anyone other than these specified parties.
CliftonLarsonAllen LLP
Irvine, California
February 19, 2026
CITY OF LANCASTER
APPROPRIATIONS LIMIT WORKSHEET NO. 6
YEAR ENDED JUNE 30, 2025
See accom
panying Notes to Appropriations Limit Worksheet No. 6.
(4)
Appropriations Limit for Fiscal Year Ended June 30, 2024 (see Note 2) 250,768,962 Adjustments Factors for the Fiscal Year Ended June 30, 2025 (see Note 2):
Inflation Population
Factor Factor Combined
(Note 3) (Note 4) Factor
1.0362000 0.9990000 1.03516380 0.03516380
Adjustment for Inflation and Population 8,817,990
Other Adjustments (Note 5) -
Total Adjustments 8,817,990
Appropriations Limit for Fiscal Year Ended June 30, 2025 259,586,952$
CITY OF LANCASTER
NOTES TO APPROPRIATIONS LIMIT WORKSHEET NO. 6
JUNE 30, 2025
(5)
NOTE 1 PURPOSE OF AGREED-UPON PROCEDURES
Under Article XIIIB of the California Consti tution (the Gann Spending Limitation Initiative), California governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes. Effective for years beginning on or after July 1, 1990, under Section
1.5 of Article XIIIB, the annual calculation of the appropriations limit is subject to agreed- upon procedures in connection with the annual audit.
NOTE 2 METHOD OF CALCULATION
Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July 1, 1990, the appropriations limit is required to be calculated based on the limit for the fiscal year 1986-87, adjusted for the inflation and population factors discussed at Notes 3 and 4 below.
NOTE 3 INFLATION FACTORS
A California governmental agency may adjust its appropriations limit by either the percentage change in California per capita personal income from the preceding year (which percentage is supplied by the State Department of Finance), or the percentage change in the local assessment roll from the preceding year due to the change of local nonresidential construction. The factor adopted by the City of Lancaster (the “City”) for fiscal year 2024- 2025 represents the percentage change in California per capita personal income from the preceding year.
NOTE 4 POPULATION FACTORS
A California governmental agency may adjust its appropriations limit by either the annual percentage change of the jurisdiction’s own population, or the annual percentage change in population in the County where the jurisdiction is located. The factor adopted by the City for fiscal year 2024-2025 represents the annual percentage change in the population for the City.
NOTE 5 OTHER ADJUSTMENTS
A California governmental agency may be required to adjust its appropriations limit when certain events occur, such as the transfer of re sponsibility for municipal services to, or from, another governmental agency or private entity. The City had no such adjustments for the year ended June 30, 2025.