CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(30)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Deposits (Continued)
Custodial Credit Risk (Continued)
As of June 30, 2025, all of the City’s deposits with financial institutions in excess of federal depository insurance limits were held in fully collateralized accounts, as permitted by the California Government Code.
Under Government Code Section 53655, the placement of securities by a bank or savings and loan association with an Agent of Depository has the effect of perfecting the security interest in the name of the local governmental agency. Accordingly, all collateral held by California Agents of Depository is considered to be held for, and in the name of, the local governmental agency.
Investments
The table below identifies the investment types that are authorized for the City by the California Government Code or by the City’s investment policy, where more restrictive. The table also identifies certain provisions of the California Government Code or the City’s investment policy, where more restrictive, that address interest rate risk, credit risk, and concentration of credit risk. The table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City rather than the general provisions of the California Government Code or the City’s investment policy.
Maximum Maximum Minimum
Maximum Percentage Investment Quality
Authorized Investment Type Maturity of Portfolio in One Issuer Requirements Local Agency Bonds 5 Years None None None
U.S. Treasury Obligations 5 Years None None None
State Obligations 5 Years None None None
CA Local Agency Obligations 5 Years None None None
U.S. Agency Obligations 5 Years None None None
Bankers Acceptance 180 Days 40% 30% None
Commercial Paper - Select Age 270 Days 25% 10% A-1
Commercial Paper - Other Agen 270 Days 40% 10% A-1
Negotiable Certificates of Depos 5 Years 30% None None
Non-Negotiable Certificates of D 5 Years None None None CD Placement Service 5 Years 30% None None
Repurchase Agreements 1 Year None None None
Reverse Repurchase Agreemen 92 Days 20% None None
Medium-Term Notes 5 Years 30% 10% A
Mutual Funds N/A 20% 10% Multiple
Mutual Money Market Funds N/A 15% None Multiple
Collateralized Bank Deposits 5 Years None None None
Mortgage Pass-Through Securit 5 Years 20% None AA
County Pooled Investment Fund N/A None None None
Joint Powers Authority Pool N/A None None Multiple
Local Agency Investment Fund N/A None None None
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(31)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Investments (Continued)
Interest Rate Risk
Interest rate risk is the risk that changes in the market interest rates will adversely affect the fair value of an investment. In accordance with its investment policy, the City manages its exposure to declines in fair values by limiting the maximum maturity length of investments to five years. As of June 30, 2025, the City had the following investments:
Investment Type Fair Value Maturity Date
State Treasurer's Investment Pool (LAIF) 21,603,646 $ N/A Total Investments 21,603,646 $
Credit Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The City’s investment in LAIF is not rated.
Concentration of Credit Risk
The concentration of credit risk is the risk of loss that may be caused by the City’s investment in a single issuer. The City is required to disclose any investment in any one issuer that represents 5% or more of total investments. Investments issued or explicitly guaranteed by the U.S. government and investments in mutual funds, external investment pools, and other pooled investments are excluded from this requirement. As such, the City has no concentration of credit risk that exceeds 5%.
Custodial Credit Risk
For an investment, this is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. With respect to investments, custodial credit risk generally applies only to direct investments in marketable securities. Custodial credit risk does not apply to a local government’s indirect investment in securities through the use of mutual funds or government investment pools (such as LAIF).
Fair Value of Investments
The City measures and records its investments using fair value measurement guidelines established by accounting principles generally accepted in the United States of America.
These guidelines recognize a three-tiered fair value hierarchy, as follows:
Level 1 – Quoted prices for identical investments in active markets; Level 2 – Observable inputs other than quoted market prices; and Level 3 – Unobservable inputs.
The City’s position in external investment pools is, in itself, regarded as a type of investment and looking through to the underlying investments of the pool is not appropriate. Therefore, the City’s investment in external investment pools is not recognized in the three-tiered fair value hierarchy described above.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(32)
NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Investment in External Investment Pools
The City participant in the State of California Local Agency Investment Fund (LAIF), managed by the State Treasurer. This fund is not registered with the Securities and Exchange Commission as an investment company, but is required to invest according to California State Code. The Local Investment Advisory Board (Board) has oversight responsibility for LAIF. The Board consists of five members as designated by State Statute.
The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. There are no restrictions on withdrawal of funds.
Restricted Cash and Investments with Fiscal Agents
Cash and investments at June 30, 2025, that are restricted by legal or contractual requirements are comprised of the following:
Governmental-Type Activities:
General Fund
Debt Service Reserves 22,295 $
McFarland Improvement Authority:
Reserves for Capital Projects 3,800,940
Debt Service Reserves 276,393
Total 4,099,628
Business-Type Activities:
Sewer Fund:
Debt Service Reserves 845
Water Fund:
Debt Service Reserves 416
Total 1,261
Total Restricted Cash and Investments 4,100,889 $
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(33)
NOTE 3 CAPITAL ASSETS
Capital and right-to-use assets activity for the year ended June 30, 2025, was as follows:
Balance
July 1, 2024 Transfers/ Balance
as Restated Additions Retirements Adjustments June 30, 2025 Governmental-Type Activities:
Capital Assets, Not Being Depreciated:
Land 6,428,552 $ 51,438 $ - $ - $ 6,479,990 $
Construction In Progress 1,510,694 2,770,281 - (2,288,102) 1,992,873 Total Capital Assets, Not Being
Depreciated 7,939,246 2,821,719 - (2,288,102) 8,472,863 Capital Assets, Being Depreciated:
Buildings 1,280,454 - - - 1,280,454
Infrastructure 40,613,423 - - 2,288,102 42,901,525
Machinery and Equipment 2,488,442 113,953 - - 2,602,395 Vehicles 1,960,648 303,725 - - 2,264,373
Total Capital Assets, Being
Depreciated 46,342,967 417,678 - 2,288,102 49,048,747
Less Accumulated Depreciation for:
Buildings (141,791) (51,496) - - (193,287)
Infrastructure (10,833,022) (1,304,871) - - (12,137,893) Machinery and Equipment (1,760,528) (190,656) - - (1,951,184) Vehicles (1,313,428) (282,002) - - (1,595,430)
Total Accumulated Depreciation (14,048,769) (1,829,025) - - (15,877,794) Total Capital Assets, Being
Depreciated, Net 32,294,198 (1,411,347) - 2,288,102 33,170,953 Right-to-Use Assets, Being Amortized:
Machinery and Equipment 149,173 - (128,878) - 20,295
SBITAs 40,264 1,896 (14,220) - 27,940
Total Right-to-Use Assets, Being
Amortized 189,437 1,896 (143,098) - 48,235
Less Accumulated Amortization for:
Machinery and Equipment (114,352) (32,935) 128,878 - (18,409) SBITAs (17,571) (9,302) 14,220 - (12,653)
Total Accumulated Amortization (131,923) (42,237) 143,098 - (31,062) Total Right-to-Use Assets, Being
Amortized, Net 57,514 - (40,341) - 17,173
Governmental-Type Activities Capital
Assets, Net 40,290,958 $ 1,370,031 $ - $ - $ 41,660,989 $
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(34)
NOTE 3 CAPITAL ASSETS (CONTINUED)
As Restated
Balance Transfers/ Balance
July 1, 2024 Additions Retirements Adjustments June 30, 2025 Business-Type Activities:
Capital Assets, Not Being Depreciated:
Land 1,280,063 $ - $ - $ - $ 1,280,063 $
Construction In Progress 87,075 1,031,894 - - 1,118,969 Total Capital Assets, Not Being
Depreciated 1,367,138 1,031,894 - - 2,399,032
Capital Assets, Being Depreciated:
Infrastructure 6,836,223 - - - 6,836,223
Buildings and Improvements 8,579,010 31,241 - - 8,610,251 Machinery and Other 37,985 12,108,710 - - 12,146,695
Vehicles 1,060,455 220,674 - - 1,281,129
Total Capital Assets, Being
Depreciated 28,584,398 289,900 - - 28,874,298
Less Accumulated Depreciation for:
Infrastructure (1,065,060) - (170,905) - (1,235,965)
Buildings and Improvements (4,003,113) - (411,401) - (4,414,514) Machinery and Other (8,696,601) - (271,461) - (8,968,062) Vehicles (931,338) - (74,121) - (1,005,459)
Total Accumulated Depreciation (14,696,112) - (927,888) - (15,624,000) Total Capital Assets, Being
Depreciated, Net 13,888,286 - (637,988) - 13,250,298
Business-Type Activities Capital
Assets, Net 15,255,424 $ 393,906 $ - $ - $ 15,649,330 $ Depreciation
Depreciation expense was charged to governmental functions as follows at June 30, 2025:
General Government 465,078 $
Public Safety 326,620
Public Works 979,439
Community Development 57,888
Total Depreciation Expense - Governmental
Functions 1,829,025 $
Depreciation expense was charged to business-type functions as follows at June 30, 2025:
Solid Waste 424,881 $
Refuse 214
Water 470,703
Public Transit 32,090
Total Depreciation Expense - Business-Type
Functions 927,888 $
Amortization
Amortization expense was charged to governmental functions as follows at June 30, 2025:
General Government 42,237 $
Total Amortization Expense - Governmental
Functions 42,237 $
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(35)
NOTE 4 INTERFUND TRANSACTIONS
Due to/from Other Funds
During the course of operations, transactions occur between funds to account for goods received or services rendered. These receivables and payables are classified as due from or due to other funds. In addition, when funds overdraw their share of pooled cash, the receivables and payables are also classified as due from or due to other funds. The following are due from and due to balances as of June 30, 2025:
Due from Due to
Other Funds Other Funds
General Fund 2,347,115 $ - $
TDA-LTF - 2,138,842
Gas Tax - 60,785
Nonmajor Governmental Funds - 147,488
Total 2,347,115 $ 2,347,115 $
Transfers
Transfers are indicative of funding for capital projects, and lease payments or debt service.
The following are the interfund transfer balances for the year ended June 30, 2025:
Transfer In Transfer Out
General Fund - $ 289,888 $
Water 276,000 -
Nonmajor Governmental Funds 13,888 -
Total 289,888 $ 289,888 $
During the year, the City transferred monies to the general fund for shared costs allocated across each of the City’s funds.
NOTE 5 UNEARNED/UNAVAILABLE REVENUE
Unearned revenue consists of money received where the City has not yet incurred the qualifying expenditures.
Deferred inflows of resources represents an acquisition of net position or fund balance that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The City has transactions that qualify for reporting under this category:
unavailable revenue. Unavailable revenue is only reported in the governmental funds balance sheet under the modified accrual basis of accounting.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(36)
NOTE 5 UNEARNED/UNAVAILABLE REVENUE (CONTINUED)
At June 30, 2025, components of unearned and unavailable revenues were as follows:
Unearned Unavailable
Revenue Revenue Total
General Fund:
Grant Revenue 4,680,236 $ 644,804 $ 5,325,040 $
TDA:
Grant Revenue - 2,228,164 2,228,164
CalHOME:
Grant Revenue and Loans - 3,068,453 3,068,453
Nonmajor Governmental Funds:
Grant Revenue and Loans 175,094 709,906 885,000
Total Governmental-Type
Activities 4,855,330 $ 6,651,327 $ 11,506,657 $
Public Transportation:
Grant Revenue 215,968 $
Total Business-Type
Activities 215,968 $
NOTE 6 LONG-TERM LIABILITIES
The following is a summary of changes in long-term liabilities for the year ended June 30, 2025:
Amounts
Balance Balance Due Within
Type of Indebtedness July 1, 2024 Additions Retirements June 30, 2025 One Year Governmental-Type Activities:
Direct Placement
Revenue Bonds 4,030,000 $ - $ $ 3,915,000 (115,000) $ 115,000 $ Unamortized Premiums on Bonds 272,769 - 260,910 (11,859) - Direct Borrowing
Notes Payable 794,169 - 773,905 (20,264) 20,264
Other Liabilities
Leases 7,505 - 2,339 (5,166) 5,166
SBITAs 15,911 - 11,515 (4,396) 5,296
Compensated Absences 91,501 273,312 364,813 251,721
Total Governmental-Type
Activities 5,211,855 $ 273,312 $ $ 5,328,482 (156,685) $ 397,447 $ Business-Type Activities:
Direct Placement
Revenue Bonds 4,828,000 $ - $ $ 4,616,000 (212,000) $ 222,000 $ Other Liabilities
Compensated Absences 30,859 58,106 83,731 (5,234) 57,774 Total Business-Type Activities 4,858,859 $ 58,106 $ $ 4,699,731 (217,234) $ 279,774 $ Compensated absences for the governmental activities are generally liquidated by the fund where the accrued liability occurred.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(37)
NOTE 6 LONG-TERM LIABILITIES (CONTINUED)
Individual issues of debt payable outstanding at June 30, 2025, are as follows:
Governmental-Type Activities:
Revenue Bonds:
Series 2017 Lease Revenue Bonds dated December 1,
2017, in the original amount of $4,450,000 at 3% to 4%
interest; principal and interest payable each March 1
and September 1 until September 2, 2047, maturity.
Bonds issued by the McFarland Improvement
Authority. Secured by a pledge of lease revenues. 3,915,000 $ Total Revenue Bonds 3,915,000
Notes Payable:
Note payable to the United States Department of
Agriculture in the amount of $844,700; principal and
interest at 3.375% due each October 1 through 2058. 773,905 Total Notes Payable 773,905
Total Governmental-Type Activities 4,688,905 $
Business-Type Activities:
Revenue Bonds:
Revenue Bonds dated June 15, 2023, in the
original amount of $5,076,000 at 4.410% interest;
payable semi-annually commencing October 1,
2023. Principal is due annually commencing
October 1, 2023, with final payment due October 1,
2039. Secured by a pledge of water and wastewater
net revenues. 4,616,000 $
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(38)
NOTE 6 LONG-TERM LIABILITIES (CONTINUED)
The following are schedules of debt service requirements as of June 30, 2025:
Year Ending June 30, Principal Interest Principal Interest 2026 115,000 $ 154,250 $ 20,321 $ 2,036 $
2027 150,800 120,000 1,979 20,378
2028 147,200 125,000 1,922 20,436
2029 142,200 130,000 1,864 20,493
2030 137,000 135,000 1,749 20,551
2031 - 2035 600,000 750,000 7,871 103,624
2036 - 2040 437,400 920,000 6,402 105,089
2041 - 2045 238,600 1,110,000 4,911 106,575
2046 - 2050 30,800 510,000 3,400 108,083
2051 - 2055 - - 109,611 1,867
2056 - 2058 - - 88,804 376
2059 - - 49,940 -
Total 3,915,000 $ 2,038,250 $ 773,905 $ 34,377 $
Governmental-Type Activities
Revenue Bonds Note Payable
Year Ending June 30, Principal Interest
2026 222,000 $ 198,670
2027 232,000 188,660
2028 242,000 178,208
2029 253,000 167,293
2030 265,000 155,871
2031 - 2035 1,514,000 589,088
2036 - 2040 1,888,000 215,561
Total 4,616,000 $ 1,693,351 $
Business-Type Activities
Revenue Bonds
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(39)
NOTE 6 LONG-TERM LIABILITIES (CONTINUED)
Pledged Revenues
The McFarland Improvement Authority has pledged future lease revenue payments to repay lease revenue bonds issued in 2017. The bonds were issued to finance the costs of the city hall remodel and expansion project, finance the renovation of the former library building for a community meeting facility, to acquire land for a future police station and other public facilities improvements. Amounts of the scheduled Base Rental Payments are calculated to be sufficient to pay debt service on the bonds. The City has covenanted under the Sublease to take such action as may be necessary to include all Base Rental Payments and Additional Payments (consisting of certain administrative costs and other moneys due to the Authority and the Trustee under the Sublease) in its annual budget and to make the necessary annual appropriations for all such rental payments.
The City has pledged future water and wastewater utility revenue to repay revenue bonds issued in 2010. The various bonds were issued for the purchase of construction of various water or wastewater infrastructure. At June 30, 2025, $4,616,000 remains outstanding to be repaid by future water and wastewater revenues. If such revenues prove insufficient, the remainder will be repaid as a general obligation of the City. For the fiscal year ended June 30, 2025, the net revenue available for service of this debt was $542,295. The debt principal and interest paid in fiscal year 2024-2025 equals $420,240 (77.49% of available pledged net revenues).
NOTE 7 LEASES
Leases Payable
The City leases equipment as well as certain operating and office facilities for various terms under long-term, noncancelable lease agreements. The leases expire at various dates through 2027 with interest rates ranging from 7.3918 to 14.4717%.
Total future minimum lease payments under lease agreements are as follows:
Year Ending June 30, Principal Interest
2026 1,832 $ 168 $
2027 507 18
Total Minimum Lease Payments 2,339 $ 186 $
Governmental-Type Activities
Right-to-use assets acquired through outstanding leases are shown below, by underlying asset class.
GovernmentalType Activities
Equipment 20,295 $
Less: Accumulated Amortization (18,409)
Total 1,886 $
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(40)
NOTE 7 LEASES (CONTINUED)
Leases Receivable
The City, acting as a lessor, leases property under a long-term, noncancelable lease agreement with no interest. The leases expires in 2027. During the year ended June 30, 2025, the City did not recognize lease revenue, pursuant to these contracts due to delinquent payments. Total minimum lease payments to be received under lease agreements are as follows:
Year Ending June 30, Principal Interest
2026 64,252 $ - $
2027 32,756 -
Total Minimum
Lease Payments 97,008 $ - $
Business-Type Activities
NOTE 8 SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS The City has entered into various long-term, non-cancellable subscription-based information technology agreements. Total future minimum lease payments under these agreements are as follows:
Year Ending June 30, Principal Interest
2026 5,678 $ - $
2027 5,837 322
Total Minimum Lease Payments 11,515 $ 322 $
Governmental-Type Activities
Right-to-use assets acquired through outstanding agreements are shown below, by underlying asset class.
GovernmentalType Activities
Equipment 27,940 $
Less: Accumulated Amortization (12,653)
Total 15,287 $
NOTE 9 FUND BALANCES
As prescribed by GASB Statement No. 54, governmental funds report fund balance in classifications based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the funds can be spent.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(41)
NOTE 9 FUND BALANCES (CONTINUED)
The fund balances for all major and nonmajor governmental funds as of June 30, 2025, were distributed as follows:
McFarland Other
Development Improvement Governmental
General TDA-LTF Gas Tax CalHOME Impact Authority Funds Total Nonspendable:
Prepaids 18,730 $ - $ - $ - $ - $ - $ 1,210 $ 19,940 $
Subtotal 18,730 - - - - - 1,210 19,940
Restricted for:
Streets and
Transportation - - - - - - 552,251 552,251
Impact Fees - - - - 3,947,763 - - 3,947,763
CalHOME - - - 275,000 - - - 275,000
Grants - - - - - 908,278 908,278
Debt Service 22,295 - - - - 276,393 - 298,688
Capital Projects - - - - - 3,838,385 - 3,838,385
Subtotal 22,295 - - 275,000 3,947,763 4,114,778 1,460,529 9,820,365 Assigned to:
CUP Fees for
Capital Projects 1,458,463 - - - - - - 1,458,463
Subtotal 1,458,463 - - - - - - 1,458,463
Unassigned 4,353,515 (2,138,842) (27,993) - - - (162,353) 2,024,327 Total 5,853,003 $ (2,138,842) $ (27,993) $ 275,000 $ 3,947,763 $ 4,114,778 $ 1,299,386 $ 13,323,095 $ NOTE 10 RETIREMENT PLAN
General Information About the Pension Plan
Plan Description
The City’s defined contribution plan provides for retirement benefits to plan members and beneficiaries. The plan is administrated by John Hancock Life Insurance Company.
Funding Policy
The City contributes 10% of permanent employees’ salaries who have at least three years of service. Vesting is at 33% per year over three years. In the event an employee terminates service prior to retirement, the employee is entitled to a refund of the employee’s contributions plus interest plus the vested portion of the City’s contributions.
During the current year, the City was required to make contributions to the plan in the amount of $429,434. The plan included $10,692 in forfeitures during the current year.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(42)
NOTE 11 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.
For general liability and workers’ compensation programs, the City is a member of the Central San Joaquin Valley Risk Management Authority (the RMA). The RMA is comprised of 55 member cities and special districts and is organized under a Joint Powers Agreement pursuant to the California Government Code. The purpose of the RMA is to arrange and administer programs of insurance for the pooling of self-insured losses and to purchase excess insurance coverage. Each member has a representative on the Board of Directors with officers of the RMA being elected annually by the Board Members.
General Liability
Annual deposits are paid by members and are adjusted retrospectively to cover costs. Each member has a specific self-insured retention (SIR) level. The City of McFarland’s SIR is $25,000. The city is responsible for the first $25,000 of each occurrence. The City does not share or pay for losses of other members with SIRs under $25,000. Specific coverage includes general and automobile liability, personal injury, errors and omissions, and certain other coverage. Claims from $25,000 to $1,000,000 are covered by a special pre-funded self-insurance pool maintained by the RMA. Claims from $1,000,000 to $4,000,000 are selfinsured by the California Affiliated Risk Management Authorities (CARMA), a joint powers authority providing excess coverage to a membership consisting of six underlying joint powers authorities, representing approximately 175 cities and special districts. Claims from $4,000,000 to $39,000,000 are covered by Excess Comprehensive General Liability Policies.
Workers’ Compensation
Annual deposits are paid by members and are adjusted retrospectively to cover costs. Each member has a specific self-insured retention (SIR) level. The City of McFarland’s SIR is $25,000 per occurrence. The City is responsible for the first $25,000 of each occurrence.
The City does not share or pay for losses of other members with SIRs under $25,000.
Losses between $25,000 and $500,000 are covered by a special pre-funded self-insurance pool maintained by the RMA.
Claims from $500,000 to $5,000,000 are self-insured by the Local Agency Workers’ Compensation Excess Joint Powers Authority which is a joint powers authority providing excess coverage to 36 members including cities, special districts, and joint powers authorities. Claims in excess of $5,000,000 and a limit of $50,000,000 are self-insured by the California State Association of Counties Excess Insurance Authority, another joint powers authority.
There were no settlements in excess of insurance coverage in any of the three prior fiscal years.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(43)
NOTE 11 RISK MANAGEMENT (CONTINUED)
Workers’ Compensation (Continued)
The audited financial information from Central San Joaquin Valley Risk Management Authority for the year ended June 30, 2025, is as follows:
Total Assets 179,635,612 $
Total Liabilities 144,400,470
Net Position 35,235,142 $
Total Revenues 95,596,916 $
Total Expenses 94,324,180
Change in Net Position 1,272,736 $
Complete audited financial statements can be obtained from their office at 1750 Creekside Oaks Drive, Suite 200, Sacramento, California 95833.
NOTE 12 OTHER INFORMATION
Fund Deficits
The City has accumulated fund deficits in the following individual funds:
Governmental Funds:
TDA-LTF (2,138,842) $
Gas Tax (27,993)
HOME (85,457)
Lighting and Landscape (75,686)
These deficits will be resolved by future charges for services and receipt of grant funds.
Commitments
The City has signed agreements to construct various capital improvements subsequent to June 30, 2025. The balance owed on the commitments at June 30, 2025, was approximately $3,598,700.
Contingencies
Federal and State Government Programs
The City participates in several federal and state grant programs. These programs are subject to audit and review by the grantor pursuant to grant provisions. Expenditures may be disallowed by the granting agencies that cannot be determined at this time. The City expects such amounts, if any, to be immaterial.
The City is involved in several lawsuits. Due to the nature of the cases, The City’s counsel is unable to estimate at this time the probability of favorable or unfavorable outcomes. Therefore, no provision has been made in the financial statements for a loss contingency.
CITY OF MCFARLAND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025
(44)
NOTE 13 CORRECTION OF ERROR IN PREVIOUSLY ISSUED FINANCIAL STATEMENTS Net Position and Fund Balances as of July 1, 2024 were restated as follows:
Nonmajor
Governmental Business-Type Miscellaneous Governmental
Activities Activities Grants Funds Sewer Refuse Water
Net Position/Fund Balance - Beginning,
as Originally Reported 54,438,951 $ 20,598,850 $ 303,025 $ 217,803 $ 8,612,239 $ 114,580 $ 11,755,486 $ Error Correction - Capital Assets (1) (1,168,483) - - - - - - Error Correction - Write-Off Accounts
Payable (2) - 188,890 - - 31,884 100,528 56,478
Error Correction - Accrue Unbilled
Water Receivables (3) - 34,722 - - - - 34,722
Change in Reporting Entity (4) - - (303,025) 303,025 - - - Net Position/Fund Balance - Beginning,
as Restated 53,270,468 $ 20,822,462 $ - $ 520,828 $ 8,644,123 $ 215,108 $ 11,846,686 $ (1) Due to a clerical error, the balance of beginning net position and capital assets in the governmental activities were adjusted by $1,168k to remove amounts inadvertently added to the vehicles line item.
(2) The City recorded prior period adjustments in the Sewer, Refuse, and Water funds in the amounts of $32k, $101k, and $56k to clear out stale accounts payable balances that should have been reversed in prior years.
(3) The City posted a $35k adjustment to correct beginning net position and recognize a receivable for water utility services rendered, but not yet billed as of year-end. (4) The Miscellaneous Grants fund was reclassified from major to non-major due to decreases in grant activity in the current year.
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REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
CITY OF MCFARLAND
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
YEAR ENDED JUNE 30, 2025
See accompanying Note to Required Supplementary Information (46)
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Taxes 3,653,492 $ 4,220,509 $ 4,631,372 $ 410,863 $
Licenses and Permits 309,749 626,933 644,244 17,311
Fines and Forfeitures 40,000 60,000 97,289 37,289
Use of Money and Property 26,366 341,341 449,666 108,325 Intergovernmental Revenues 12,769,551 12,847,281 1,852,962 (10,994,319) Charges for Services 1,038,988 1,138,988 1,021,075 (117,913) Contributions 5,000 30,085 73,230 43,145
Other Revenues - 23,700 91,587 67,887
Total Revenues 17,843,146 19,288,837 8,861,425 (10,427,412)
EXPENDITURES
Current:
General Government 1,782,463 1,715,727 1,674,678 41,049 Public Safety 4,384,708 4,504,669 3,978,610 526,059
Public Works 566,329 797,312 294,614 502,698
Community Development 593,950 693,620 606,060 87,560
Debt Service:
Principal 20,265 20,265 29,826 (9,561)
Interest and Other Charges 26,000 26,000 27,204 (1,204) Capital Outlay 12,603,330 12,803,444 1,597,454 11,205,990 Total Expenditures 19,977,045 20,561,037 8,208,446 12,352,591
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
EXPENDITURES (1,272,200) (2,133,899) 652,979 1,925,179
OTHER FINANCING USES
Transfers Out (276,000) (276,000) (289,888) (13,888)
Total Other Financing
Uses (276,000) (276,000) (289,888) (13,888)
NET CHANGE IN FUND BALANCES (1,548,200) (2,409,899) 363,091 1,911,291 Fund Balances - Beginning of Year 5,489,912 5,489,912 5,489,912 - FUND BALANCES - END OF YEAR $ 3,941,712 3,080,013 $ 5,853,003 $ 1,911,291 $
CITY OF MCFARLAND
BUDGETARY COMPARISON SCHEDULE
TDA-LTF
MAJOR SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2025
See accompanying Note to Required Supplementary Information (47)
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Intergovernmental Revenues 2,443,484 $ 2,801,311 $ 156,158 $ (2,645,153) $ Total Revenues 2,443,484 2,801,311 156,158 (2,645,153)
EXPENDITURES
Capital Outlay 1,958,900 2,334,447 1,645,326 689,121
Total Expenditures 1,958,900 2,334,447 1,645,326 689,121 NET CHANGE IN FUND BALANCES 466,864 484,584 (1,489,168) (1,956,032) Fund Balances - Beginning of Year (649,674) (649,674) (649,674) - FUND BALANCES - END OF YEAR $ (182,810) (165,090) $ (2,138,842) $ (1,956,032) $
CITY OF MCFARLAND
BUDGETARY COMPARISON SCHEDULE
GAS TAX
MAJOR SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2025
See accompanying Note to Required Supplementary Information (48)
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Use of Money and Property - $ - $ 9,092 $ 9,092 $
Intergovernmental Revenues 376,824 376,824 385,605 8,781 Total Revenues 376,824 376,824 394,697 17,873
EXPENDITURES
Current:
Public Works 612,058 612,058 698,720 (86,662)
Capital Outlay - 71,000 - 71,000
Total Expenditures 612,058 683,058 698,720 (15,662)
NET CHANGE IN FUND BALANCES (306,234) (235,234) (304,023) 2,211 Fund Balances - Beginning of Year 276,030 276,030 276,030 - FUND BALANCES - END OF YEAR $ (30,204) 40,796 $ (27,993) $ 2,211 $
CITY OF MCFARLAND
BUDGETARY COMPARISON SCHEDULE
DEVELOPMENT IMPACT
MAJOR SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2025
See accompanying Note to Required Supplementary Information (49)
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Licenses and Permits 434,052 $ 523,723 $ 519,684 $ (4,039) $ Use of Money and Property - - 153,214 153,214
Total Revenues 434,052 523,723 672,898 149,175
EXPENDITURES
Capital Outlay 108,500 176,329 - 176,329
Total Expenditures 108,500 176,329 - 176,329
NET CHANGE IN FUND BALANCES 347,394 325,552 672,898 325,504 Fund Balances - Beginning of Year 3,274,865 3,274,865 3,274,865 - FUND BALANCES - END OF YEAR $ 3,622,259 3,600,417 $ 3,947,763 $ 325,504 $
CITY OF MCFARLAND
BUDGETARY COMPARISON SCHEDULE
MISCELLANEOUS GRANTS
MAJOR SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2025
See accompanying Note to Required Supplementary Information (50)
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Intergovernmental Revenues - $ - $ - $ - $
Total Revenues - - - -
EXPENDITURES
Current:
General Government - -
Public Safety - - - -
Total Expenditures - - - -
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
EXPENDITURES - - - -
OTHER FINANCING SOURES (USES)
Transfers Out (763) - - -
Total Other Financing
Soures (Uses) (763) - - -
NET CHANGE IN FUND BALANCES - (763) - -
Fund Balances - Beginning of Year 303,025 303,025 303,025 - Change within the Financial Reporting Entity (303,025)
FUND BALANCES - END OF YEAR $ 303,025 302,262 $ - $ - $
CITY OF MCFARLAND
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2025
(51)
NOTE 1 APPROPRIATED BUDGET AND BUDGETARY CONTROL
The City Council is required to adopt an annual budget resolution by July 1 of each fiscal year for the General and Special Revenue funds. The budgets are presented for reporting purposes on a budgetary basis consistent with accounting principles generally accepted in the United States of America. The McFarland Improvement Authority does not adopt a budget.
The appropriated budget is prepared by fund, function, and department. The City had one fund, the miscellaneous grant fund, exceed its budget appropriation by $100,837. All other expenditures did not exceed the budget for the year. The City Manager may make transfers of appropriations within a department and make transfers of appropriations between departments as long as there is no increase or decrease to the overall budget. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is the function level. Unexpended or unencumbered appropriations lapse at the end of the fiscal year. Encumbered appropriations are reappropriated in the ensuing year’s budget.
The City Council adopts budgets for the Enterprise funds. However, all Proprietary fund types are accounted for on a cost of service (net income), or “capital maintenance” measurement focus. As a result, budget comparisons are impractical. Additionally, the City is not legally mandated to report the results of operations for these Proprietary fund types on a budget comparison basis; therefore, budgetary data related to these funds has not been presented.
The City did not present a budgetary schedule for the CalHOME Fund since this fund did not adopt a budget this year.
(52)
SUPPLEMENTARY INFORMATION
CITY OF MCFARLAND
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2025
(53)
Road
Miscellaneous Lighting and Maintenance
CDBG Grants HOME Landscape COPS and Rehab
ASSETS
Cash and Investments - $ 326,466 $ - $ - $ 603,884 $ 516,383 $ Receivables:
Accounts - - 3,383 - - -
Intergovernmental - 2,588 - - - 32,441
Prepaid Expenses - - - 1,210 - -
Loans Receivable - - 709,906 - - -
Total Assets - $ 329,054 $ 713,289 $ 1,210 $ 603,884 $ 548,824 $
LIABILITIES, DEFERRED
INFLOWS OF RESOURCES,
AND FUND BALANCES
LIABILITIES
Accounts Payable - $ 24,600 $ - $ 16,042 $ - $ - $
Accrued Liabilities - - - 2,206 - -
Due to Other Funds - - 88,840 58,648 - -
Unearned Revenue - 60 - - - 416
Total Liabilities - 24,660 88,840 76,896 - 416
DEFERRED INFLOWS OF
RESOURCES
Unavailable Revenue - - 709,906 - - -
FUND BALANCES
Nonspendable - - - 1,210 - -
Restricted - 304,394 - - 603,884 548,408
Unassigned - - (85,457) - (76,896) -
Total Fund Balances - 304,394 (85,457) 603,884 (75,686) 548,408 Total Liabilities, Deferred
Inflows of Resources,
and Fund Balances - $ 329,054 $ 713,289 $ 1,210 $ 603,884 $ 548,824 $ Special Revenue
CITY OF MCFARLAND
COMBINING BALANCE SHEET (CONTINUED)
NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2025
(54)
Community Permanent
Facilities Local Housing
District Allocation Total
ASSETS
Cash and Investments 1,956 $ 174,618 $ 1,623,307 $
Receivables:
Accounts - - 3,383
Intergovernmental 1,887 - 36,916
Prepaid Expenses - - 1,210
Loans Receivable - - 709,906
Total Assets 3,843 $ 174,618 $ 2,374,722 $
LIABILITIES, DEFERRED
INFLOWS OF RESOURCES,
AND FUND BALANCES
LIABILITIES
Accounts Payable - $ - $ 40,642 $
Accrued Liabilities - - 2,206
Due to Other Funds - - 147,488
Unearned Revenue - 174,618 175,094
Total Liabilities - 174,618 365,430
DEFERRED INFLOWS OF
RESOURCES
Unavailable Revenue - - 709,906
FUND BALANCES
Nonspendable - - 1,210
Restricted 3,843 - 1,460,529
Unassigned - - (162,353)
Total Fund Balances 3,843 - 1,299,386
Total Liabilities, Deferred
Inflows of Resources,
and Fund Balances 3,843 $ 174,618 $ 2,374,722 $
Special Revenue
CITY OF MCFARLAND
COMBINING STATEMENT OF REVENUES,
EXPENDITURES, AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2025
(55)
Road
Miscellaneous Lighting and Maintenance
CDBG Grants HOME Landscape COPS and Rehab
REVENUES
Taxes - $ - $ - $ 161,853 $ - $ - $
Use of Money and Property - - - 271 - 15,057
Intergovernmental Revenues - - - - 604,798 385,552
Other Revenues - 1,369 - - - -
Total Revenues - 1,369 - 162,124 604,798 400,609
EXPENDITURES
Current:
Public Safety - - - - - -
Public Works - - - 340,258 - -
Community Development - - - - - -
Capital Outlay - - - - - 67,815
Total Expenditures - - - 340,258 - 67,815
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
EXPENDITURES 1,369 - - 604,798 (178,134) 332,794
OTHER FINANCING
SOURCES (USES)
Transfers In 13,888 - - - - -
Total Other Financing
Soures (Uses) - 13,888 - - - -
NET CHANGE IN FUND
BALANCES 1,369 13,888 - 604,798 (178,134) 332,794
Fund Balance - Beginning of Year,
as Previously Reported - (13,888) 102,448 (85,457) 215,614 (914) Change within the Financial Reporting Entity 303,025 - - - - - Fund Balance - Beginning of Year, as Restated 303,025 (13,888) 102,448 (85,457) 215,614 (914)
FUND BALANCES - END
OF YEAR $ 304,394 - $ $ (85,457) $ 603,884 (75,686) $ 548,408 $ Special Revenue
CITY OF MCFARLAND
COMBINING STATEMENT OF REVENUES,
EXPENDITURES, AND CHANGES IN FUND BALANCES (CONTINUED)
NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2025
(56)
Community Permanent
Facilities Local Housing
District Allocation Total
REVENUES
Taxes - $ - $ 161,853 $
Use of Money and Property - 1,956 17,284
Intergovernmental Revenues 606,240 - 1,596,590
Other Revenues - - 1,369
Total Revenues 608,196 - 1,777,096
EXPENDITURES
Current:
Public Safety - 474,603 474,603
Public Works 108,506 - 448,764
Community Development 21,244 - 21,244
Capital Outlay - - 67,815
Total Expenditures 604,353 - 1,012,426
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
EXPENDITURES - 3,843 764,670
OTHER FINANCING
SOURCES (USES)
Transfers In - - 13,888
Total Other Financing
Soures (Uses) - - 13,888
NET CHANGE IN FUND
BALANCES - 3,843 778,558
Fund Balance - Beginning of Year,
as Previously Reported - - 217,803
Change within the Financial Reporting Entity - - 303,025 Fund Balance - Beginning of Year, as Restated - - 520,828
FUND BALANCES - END
OF YEAR $ - 3,843 $ 1,299,386 $
Special Revenue
CITY OF MCFARLAND
BUDGETARY COMPARISON SCHEDULE
LIGHTING AND LANDSCAPE
NONMAJOR SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2025
(57)
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Taxes 163,200 $ 163,200 $ 161,853 $ (1,347) $
Use of Money and Property - - 271 271
Total Revenues 163,200 163,200 162,124 (1,076)
EXPENDITURES
Current:
Public Works 417,261 399,599 340,258 59,341
Capital Outlay - - - -
Total Expenditures 417,261 399,599 340,258 59,341
NET CHANGE IN FUND BALANCES (236,399) (254,061) (178,134) 58,265 Fund Balances - Beginning of Year 102,448 102,448 102,448 - FUND BALANCES - END OF YEAR $ (133,951) (151,613) $ (75,686) $ 58,265 $
CITY OF MCFARLAND
BUDGETARY COMPARISON SCHEDULE
ROAD MAINTENANCE AND REHAB
NONMAJOR SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2025
(58)
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Use of Money and Property - $ - $ 15,057 $ 15,057 $
Intergovernmental 362,848 362,848 385,552 22,704
Total Revenues 362,848 362,848 400,609 37,761
EXPENDITURES
Capital Outlay 11,383 - 67,815 (67,815)
Total Expenditures 11,383 - 67,815 (67,815)
NET CHANGE IN FUND BALANCES 362,848 351,465 332,794 (30,054) Fund Balances - Beginning of Year 215,614 215,614 215,614 - FUND BALANCES - END OF YEAR $ 578,462 567,079 $ 548,408 $ (30,054) $
CITY OF MCFARLAND
BUDGETARY COMPARISON SCHEDULE
COMMUNITY FACILITIES DISTRICT
NONMAJOR SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2025
(59)
Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Use of Money and Property - $ - $ 1,956 $ 1,956 $
Intergovernmental Revenues 217,468 463,166 606,240 143,074 Total Revenues 217,468 463,166 608,196 145,030
EXPENDITURES
Current:
Public Safety 148,421 350,827 474,603 (123,776)
Public Works 34,047 80,477 108,506 (28,029)
Community Development 35,000 35,000 21,244 13,756
Total Expenditures 217,468 466,304 604,353 (138,049)
NET CHANGE IN FUND BALANCES (3,138) - 3,843 6,981
Fund Balances - Beginning of Year - - - -
FUND BALANCES - END OF YEAR $ (3,138) - $ 3,843 $ 6,981 $