1 INTRODUCTION
Our Office has completed an audit of the Kids First! Oakland Children’s Fund (Fund). We based the audit objectives on requirements of City Charter sections 1300 and 1306, which require the City of Oakland (City) to allocate a portion of its annual actual unrestricted General Purpose Fund revenues and expenditures to fund services and programs benefiting children and youth. The City Charter requires the City Auditor to annually calculate and publish the actual amount of City spending for children and youth services exclusive of expenditures mandated by state or federal law. To bring the City current on the audit requirements, this report covers Fiscal Years (FY) 2018-19 through 2023-24.
1 BACKGROUND
The Kids First! Fu nd was established by the Kids First! Oakland Fund for Children and Youth Act (Act), which voters first passed as Measure K in 1996. 2 The City Council most recently reauthorized and extended the Act for an additional 12 years in 2020, effective July 1, 2021, through June 30, 2033, the end of FY 2032-33.3 As
1 Past audits may be found on our website at https://www.oaklandauditor.com/reports/all -reports/. 2 Article XIII of the City Charter (sections 1300 to 1307) was added by the 1996 Kids First! Oakland Fund for Children and Youth Act; Article XIII of the City Charter and the Act may be referred to interchangeably. 3 Section 1307 of the City Charter sets out the process by which the law may be reauthorized . Every 12 years, the City Council can extend the law or place the question of whether to extend it to the voters through a ballot measure. Voters have previously amended the law. In 2008, Oakland voters repealed and replaced the Act from Measure K with Measure OO, and amended it
DATE: November 6, 2025
TO: Oakland Residents, Mayor Lee, Members of the City Council, City Attorney Richardson, City Administrator Johnson, and Kids First! OFCY Planning and Oversight Committee Members
FROM: City Auditor Michael C. Houston, MPP, CIA
SUBJECT: Audit of the Kids First! Oakland Children’s Fund for Fiscal Year (FY) 2018-19 through FY 2023-24
AUDIT REPORT
2 shown in Exhibit 1, the Act requires the City to set aside a portion of General Purpose Fund revenues and spend a minimum amount of money to support direct services for children and youth:
• Set-Aside Requirement: Each year, the City must set aside 3 percent of its actual unrestricted General Purpose Fund revenues and designate it to the Kids First! Fund. 4 This is a restricted fund for the sole purpose of supporting children and youth services, for the purposes outlined in Section 1301 of the Charter. Money cannot be used for services that only incidentally benefit youth. The Human Services Department manages the Kids First! Fund by awarding grants to nonprofits, the Oakland Unified School District, or other agencies that provide programs for children and youth.5 • Baseline Spending Requirement: In addition, the City must also spend an amount at least equal to
5.35 percent of the City’s actual General Purpose Fund expenditures on services for children and youth.6 Specifically, this minimum expenditure requirement is for sources outside of the Kids First! Fund. Expenditures that can be counted toward the baseline spending requirement include programs such as Head Start, internships, mentoring, and after-school recreational activities.
Exhibit 1: The Kids First! Act Requires the City to Set Aside 3 Percent of Unrestricted General Purpose Fund Revenues for Children and Youth and Spend an Additional Amount Equivalent to 5.35 Percent of Unrestricted General Purpose Fund Expenditures on Children and Youth
Source: Auditor summary of City Charter Article XIII and Finance Department guidelines.
again in 2009 as Measure D. The 2009 amendment changed the basis for the Fund’s set-aside in response to the City’s budget deficit following the Great Recession.
4 The Act specifies that the Fund receives “an amount equal to three percent (3.0%) of the City of Oakland's annual actual unrestricted General Purpose Fund (Fund 1010) revenues.” It further states that errors in the calculation shall be corrected by an adjustment in the set-aside depending on whether the actual revenue is greater or less than the estimate. The City must correct for any payment over or under the 3 percent requirement. 5 Per City Charter Section 1300, no less than 90 percent of the monies in the Fund shall be used to pay for eligible services for children and youth. No more than 10 percent of the monies in the Fund may be used for independent third-party evaluation, strategic planning, grant-making, grants management, training and technical assistance, and communications and outreach to ensure effective public participation.
6 The baseline amount (5.35%) represents the level of funding spent on children and youth services in FY 1995 -96, when the Act was initially passed.
3 Because set-aside and baseline spending requirements are to be based on actual revenues and expenditures, Finance Department staff make initial estimates each budget cycle and then make adjustments following the close of the fiscal year, when the City has information about actual amounts, as confirmed by the City’s audited financial statements.7 Adjustments then appear in the following year’s budget, or two years after the initial estimate.
RESULTS
We found the City met the baseline spending requirements for all years, but did not always meet the set-aside requirement, which must be equivalent to exactly 3 percent, no more or less .8 (See Appendix A for auditor set-aside calculations.)
Between the set-aside and baseline spending, the City spent approximately $401 million on children and youth programs over Fiscal Years 2018-19 through 2023-24, or an average of approximately $67 million per year.
In the Period Review ed, the City Did Not Always Meet the 3 Percent Set -Aside Requirement
Over a period of six years , from FY 2018-19 to 2023 -24, the City overpaid the F und in three years and underpaid the Fund in three years, as shown in Appendix B. The adjustments made did not match the amounts owed, based on our calculations.9
Based on requirements of the Act, City staff must first estimate the set -aside based on the budgeted unrestricted General Purpose Fund revenues, and then, when the audited financials are complete , staff finalize the set- aside and adjust the total to “true up” the amount based on actual unrestricted General Purpose Fund revenue (these are shown in the ‘adjustment year’ rows of Appendix B). If the initial estimated set-aside was too low or too high, the Finance Department reports that they aim to correct the underpayment or overpayment into the Kids First! Fund two fiscal years later by making adjustments equal to the difference into the Fund for underpayments, or into the General Purpose Fund for overpayments .10 As shown in Appendix B, the adjustments for FY 2013-14 and 2014-15 were made in FY 2018-19, beyond the two-year goal.
The Budget Bureau’s corrections were not always accurate. To correct for cumulative errors, we recommend that the Budget Bureau make a one-time adjustment from the Kids First! Fund back into the General Purpose
7 The City’s financial statements are reviewed by an independent external auditor to provide reasonable assurance that the statements are free from material misstatement, complete and reliable in all material respects . The City’s Annual Comprehensive Financial Reports are generally issued the December following the close of the fiscal year, and may be found at https://www.oaklandca.gov/documents/financial-reporting. 8 Article XIII Section 1300 of the City Charter states, “Errors in calculation for a fiscal year shall be corrected by an adjustment in the set aside depending upon whether the actual, unrestricted General Purpose Fund (Fund 1010) revenues are greater or less than the estimate.”
9 The Budget Bureau provided us with partial documentation of their adjustments and initial set -aside estimates. The Budget Administrator agreed to use auditor-calculated values for the purposes of presenting actual set-aside values for the remaining fiscal years. These values, shown in Appendix A, are based on actual revenues as audited by the City’s external financial auditor and recorded in Oracle. Importantly, these set-aside calculations assume, based on the Controller’s Bureau interpretation of Governmental Accounting Standards Board (GASB) guidance, that service charges are generally considered restricted revenues and that lease revenues are generally considered unrestricted, though specific sources may have contractual or leg al restrictions.
4 Fund (see Recommendations at the end of this report) . This adjustment should be documented for future reference.
The City Met the Baseline Spending Requirement for the Period Reviewed As described in the Background, the City is required by the Act to spend an amount equivalent to 5.35 percent of actual unrestricted General Purpose Fund expenditures on programs for children and youth. The City met or exceeded the baseline 5.35 percent spending requirement for FY 2018-19 through FY 2023-24, as shown in Exhibit 2.
Exhibit 2: The City Met or Exceeded the 5.35 Percent Baseline Spending Requirement in Each Year Analyzed
Source: Auditor analysis of expenditure data from Oracle, the City of Oakland’s financial management system.
Note: In the last two fiscal years, the inclusion of Oakland Promise funding, which started in FY 2022-23, increased overall expenses substantially.
Expenditures above the required level ranged from a low of about $5 71,000 in FY 2021-22 to highs of $17.8 million in FY 2022-23 and $29.3 million in FY 2023-24, due to the infusion of funds from the Oakland Children’s Initiative (Measure AA, passed in 2018) for operational uses starting in FY 2022-23.11 Overall, these expenses included programs and services like: year- round lunch, youth adult sports, child care, coaching, support for at-risk youth, and programs for supporting the healthy development of young children.
City Attorney Review of Finance Department Guidance Will Help Ensure Consistency The Act is complex insofar as it applies to multiple funds, requires estimates and adjustments based on actuals, and timing necessarily results in adjustments in subsequent years to ensure compliance . It also requires
11 The following five voter-approved measures contribute to services directly serving children and youth: The Oakland Children’s Initiative of 2018 (Measure AA) provides funding for early education and Oakland Promise ; the 2024 Oakland Public Safety and Services Violence Prevention Act (Measure NN); the 2018 Oakland Public Library Preservation Act (Measure D) and the 2022 Library Services Retention and Enhancement Act (Measure C) for children’s room, children’s services, and teen services ; and the 2016 Tax on Sugar-Sweetened Beverages (Measure HH) for youth adult sports and youth services. $0 M
$10 M
$20 M
$30 M
$40 M
$50 M
$60 M
$70 M
$80 M
FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 All Other Funds
General Purpose Fund
5.35% Baseline Requirement
5 ongoing legal interpretation, as described in a past audit.12 As noted above, there were fiscal years where the adjustment was higher or lower than required.
Over the course of the audit, relevant City staff expressed some uncertainty relating to the Kids First! requirements in terms of both revenue set-asides and eligible baseline expenses. We also have an open audit recommendation to the Finance Department to establish guidance and methodologies for eligibility of expenses that meet and do not meet baseline spending requirement as required by the Act.13 Past audits have also recommended formalizing policies and procedures for calculating the Kids First set-aside, including identifying which revenue sources are restricted and unrestricted, and clarifying when the City should reconcile its Kids First Fund set-aside.14
To ensure consistency of interpretation and promote compliance, the Finance Department should consult with the City Attorney’s Office to finalize and adopt formal guidance and document the methodology for future reference.
RECOMMENDATIONS
1. To ensure consistency of interpretation and to promote compliance with Article XIII of the Oakland City Charter, the Finance Department should consult with the City Attorney’s Office to finalize and adopt formal guidance and document the methodology of its process for: (a) adjusting set-asides based on actual revenues rather than appropriations, (b) calculating baseline spending on eligible expenses, for example, within defined org codes and program codes, (c) defining the timing of true -ups and adjustments for the two -year adjustment cycle , and (d) validating interpretations of ‘restricted’ General Purpose Fund revenues.
2. In accordance with Kids First! The Oakland Fund for Children and Youth Act, the Finance Department should, in consultation with the City Attorney’s Office, correct for the over -and under-payments between FY 2018-19 and FY 2023-24, and document this one-time correction for future reference.
12 Measure D Children and Youth Services Baseline Spending and Set Aside Requirements for the Kids First Fund Audit FY 2009 -10 through FY 2011-12.
13 The recommendation from the 2020 Audit of Measure D: Kids First Oakland Fund for Children and Youth Act Fiscal Years 2016 - 17 and 2017-18 is partially implemented as of June 30, 2025. 14 Measure D Children and Youth Services Baseline Spending and Set Aside Requirements for the Kids First Fund Audit FY 2009 -10 through FY 2011-12. The same audit also noted that the Act requires continuous legal interpretation, and recommended convening a working group with members of the Planning and Oversight Committee, Controller’s Bureau , and City Attorney’s Office to clarify the Act and bring a revised ballot measure to the voters. 6 CITY ADMINISTRATION’S RESPONSE
We presented the audit’s findings, conclusions, and recommendations to the City Administration, including staff from the Finance Department, Human Services Department, and City Attorney’s Office. The Administration agreed with the findings and recommendations, and their response is attached at the end of this report.
ACKNOWLEDGMENTS
I want to express our appreciation to the Finance Department, the Human Services Department, and the City Attorney’s Office for their cooperation and collaboration during this audit. I also want to acknowledge the staff who contributed to this audit, Senior Performance Auditor Mark Carnes, Performance Audit Manager Stephanie Noble, and Assistant City Auditor Eduardo Luna.
OBJECTIVE AND SCOPE
The objectives of the audit were to verify that the City correctly calculated and set aside the appropriate amount to the Kids First! Fund and that the City met the baseline spending requirements from FY 2018 -19 through FY 2023-24.
METHODOLOGY
The objective of this audit was to review the City’s compliance with the Kids First! Oakland Fund for Children and Youth Act, as described above. To this end, we reviewed management controls relevant to the objectives and:
• Reviewed the requirements of the Act.
• Reviewed previous City Auditor reports on Measure D titled:
o Measure K 2.5% Set-Aside Performance Audit: City of Oakland’s Calculation of the Set-Aside for the Kids First! Oakland Children’s Fund published in July 2009, o Measure D Children and Youth Services Baseline Spending and Set Aside Requirements for the Kids First Fund Audit FY 2009-10 through FY 2011-12 published in October 2014, o Measure D Kids First! Oakland Fund for Children and Youth Act FY 2012-13 through FY 2015- 16 published in August 2018, and
o Performance Audit of Measure D: Kids First! Oakland Fund for Children and Youth Act Fiscal Years 2016-17 and 2017-18 published in November 2020.
• Verified if calculated amounts due to the Kids First! Fund met requirements. • Verified the transfer of set-aside monies into the Kids First! Fund (Fund 1780). • Calculated expenditures for the baseline spending to verify requirements were met. • Interviewed Budget and Controller’s Office staff on interpretation and application of the Act. 7 STATEMENT OF COMPLIANCE WITH AUDITING STANDARDS
We conducted this performance audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
ERRATA
We initially released this report on April 3, 2025. We announced the removal of the report on April 8, pending additional audit work. After the initial release of the report, we identified a potential error stemming from the scope of the report. In expanding the scope of the period reviewed, we were able to confirm and correct for that error, and make subsequent changes based on that review. This report has been corrected based on that review. We made the following changes:
• Added Appendix A, which shows the auditor’s set-aside calculations. • Added Appendix B, which shows the true-ups dating back to FY 2012-13. • Removed Exhibit 2 (replaced with Appendix B).
• Removed language that described a transfer made in error. Upon additional review, these interfund transfers were not in error, but were two late true-ups, made to correct for the period prior to the scope of the report.
• Revised Recommendation #2 to remove reference to the amount in error. • Added reference to prior audit recommendations.
We made these changes in accordance with Generally Accepted Government Auditing Standards.
8 APPENDIX A: Set-Aside Calculations
Fund/Object/Account FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 TOTAL 1010 Total General Purpose Fund Revenue $ 649,944,457.59 $ 631,757,260.26 $ 707,104,467.27 $ 723,819,867.23 $ 729,542,371.02 $ 734,847,240.61 $ 4,177,015,663.98 Restricted Revenues
41313 Sales and Use Tax: Proposition 172 $ 3,619,790.33 $ 3,613,858.67 $ 3,772,731.90 $ 4,306,867.53 $ 4,406,822.59 $ 4,492,859.99 $ 24,212,931.01 44200 Land Rental Income $ 224,756.26 $ 186,903.59 $ 160,739.62 $ 186,333.72 $ 166,240.82 $ 116,642.01 $ 1,041,616.02 44219
Interest, Rent, and Concession – Real Estate – add back (effectively unrestricted)* $ (224,756.26) $ (186,903.59) $ (160,739.62) $ (186,333.72) $ (166,240.82) $ (116,642.01) 44300 Facility Rental Income $ 180,126.44 $ 165,674.22 $ (3,412.39) $ 344.78 $ 55,852.08 $ 57,789.81 $ 456,374.94 44319 Facility Rental: Facility Rentals to Profit-Making Groups $ - $ 341.64 $ (3,920.34) $ (9,308.52) $ 145.94 $ (5,781.43) 44329 Facility Rentals: Miscellaneous $ 180,126.44 $ 165,332.58 $ 507.95 $ 9,653.30 $ 55,706.14 $ 63,571.24 44419 Other Rental Miscellaneous $ 572,183.43 $ 677,673.70 $ 691,268.97 $ 543,777.91 $ 574,999.88 $ 464,159.72 $ 3,524,063.61 44419
Interest, Rent, and Concession – Real Estate – add back (effectively unrestricted)* $ (571,783.43) $ (677,673.70) $ (692,661.69) $ (548,115.89) $ (574,999.88) $ (466,424.44) 44500 Concession Income $ 823,846.41 $ 861,688.07 $ 590,471.00 $ 473,292.40 $ 474,831.00 $ 480,883.00 $ 3,705,011.88 45100 Public Works Fee $ 259,511.79 $ 353,953.44 $ 521,851.89 $ 2,406.28 $ (441.00) $ - $ 1,137,282.40 45200 Park and Recreation Fee $ - $ - $ - $ - $ - $ - $ - 45300 Parking Fee $ 17,035,130.15 $ 11,738,138.33 $ 7,994,760.10 $ 11,345,247.46 $ 11,346,593.45 $ 10,238,648.42 $ 69,698,517.91 45311 Parking Fee: On Street Parking Meters – add back (effectively unrestricted) $ (17,035,130.15) $ (11,738,138.33) $ (7,994,760.10) $ (11,345,247.46) $ (11,346,593.45) $ (10,238,648.42) $ (69,698,517.91) 45312 Parking Fee: Off Street Parking (Including OPR Parking) $ - $ - $ - $ - $ - $ - $ - 45313 Parking Stall Fees $ - $ - $ - $ - $ - $ - $ - 45400 Other Fees $ 6,112,934.05 $ 8,255,463.90 $ 6,155,157.64 $ 1,674,303.24 $ 1,757,100.10 $ 1,722,505.79 $ 25,677,464.72 45500 Sales (service charges restricted due to Prop 26; GASB)* $ 52,707.85 $ 58,934.00 $ 51,661.00 $ 29,873.00 $ 29,145.85 $ 22,080.00 $ 244,401.70 45519 Service Charges - Library – add back (effectively unrestricted) $ - $ - $ - $ - $ - $ - $ - 45600 Port Revenue $ 8,987,839.78 $ 9,677,287.30 $ 10,426,791.49 $ 10,029,630.11 $ 11,358,090.23 $ 12,054,618.69 $ 62,534,257.60 45700 Other Service Charges $ 12,664,524.41 $ 7,880,916.68 $ 7,556,917.77 $ 8,583,212.91 $ 8,056,455.57 $ 8,238,217.21 $ 52,980,244.55 46000 Grant and Subvention Revenue $ 1,983,302.35 $ 2,217,850.39 $ 3,508,676.81 $ 1,839,561.83 $ 2,420,811.99 $ 1,774,725.63 $ 13,744,929.00 48100 Sale of Real/Personal Property $ 141,727.68 $ 560,567.51 $ 634,304.74 $ 114,250.30 $ 4,303.00 $ 796,246.00 $ 2,251,399.23 48200 Bond and Loan Revenues $ - $ 874,460.07 $ - $ - $ 961,239.91 $ - $ 1,835,699.98 48400 Insurance Claims and Settlements $ 88,009.60 $ 73,571.75 $ 503,026.00 $ 29,844.00 $ 1,399,124.13 $ 5,684,850.04 $ 7,778,425.52 48500 Coliseum Revenue $ 171,212.91 $ 149,612.43 $ - $ - $ - $ - $ 320,825.34 48715 Other Revenue: Receipt of Trust Funds $ - $ (0.09) $ - $ 498.70 $ - $ 4,666.00 $ 5,164.61 48716 Other Revenue: Revolving Loan Repayment $ - $ - $ - $ - $ - $ - $ - 48716 Oak Center & City Center West Garage Loan Repayment $ - $ - $ - $ - $ - $ - $ - 48721 Other Revenue: Pass Through Loans $ - $ - $ - $ - $ - $ 2,957.88 $ 2,957.88 48723 Other Revenue: Port of Oakland (Revenue / Expense Clearing) $ - $ 2,456.83 $ - $ - $ - $ - $ 2,456.83 9 Fund/Object/Account FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 TOTAL 49100 Reserve Transfers: Projects $ - $ - $ - $ - $ - $ - $ - 49200 Operating Transfers In $ 3,578,733.87 $ 4,006,233.00 $ 17,552,618.00 $ 3,256,618.19 $ 2,904,867.00 $ 13,075,123.00 $ 44,374,193.06 Total Restricted $ 38,664,667.47 $ 38,752,528.17 $ 51,269,403.13 $ 30,336,365.29 $ 33,828,202.45 $ 48,405,258.32 $ 241,256,424.83 Unrestricted GPF Revenue Subject to Kids First! Set-Aside $ 611,279,790.12 $ 593,004,732.09 $ 655,835,064.14 $ 693,483,501.94 $ 695,714,168.57 $ 686,441,982.29 $ 3,935,759,239.15 Total Kids First Unrestricted Revenue Allocation (3%) $ 18,338,393.70 $ 17,790,141.96 $ 19,675,051.92 $ 20,804,505.06 $ 20,871,425.06 $ 20,593,259.47 $ 118,072,777.17
Source: Auditor analysis of Oracle expenditure data (FM 450 Report) for period 13 of each fiscal year shown. *Note: Revenues are categorized as ‘restricted’ based on historical calculations for Kids First set-asides and Finance Department guidance. As described within the report, Kids First has required ongoing legal interpretation. As of this report, lease revenues may be treated differently relative to past audits due to the implementation of GASB 87 in December 2019. Lease revenues are generally considered unrestricted, in accordance with Controller’s Bureau interpretations of GASB. While some lease revenues have restrictions on use, based on authorizing legislation or if they are for buildings developed with redevelopment bond funds, the Real Estate Division of the Department of Economic and Workforce Development tracks the leases for which the City is a lessor, and codes revenues to fund sources accordingly. As such, we treated lease revenues within the General Purpose Fund (1010) as unrestricted. Additionally, based on interpretation of Budget Bureau and Controller’s Bureau staff, all service fees are considered restricted for the purposes of calculating the Kids First set aside. This interpretation is based on requirements under California Proposition 26 and GASB.
10 APPENDIX B: True-Ups for FY 2012-13 through FY 2023-24 Applicable Fiscal Year
FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 TOTAL
Initial set-aside $10,954,613 $12,181,625 $13,031,188 $14,049,327 $14,536,156 $16,178,477 $16,792,565 $18,238,542 $17,802,336 $18,650,594 $21,013,357 $22,336,804 $23,565,016 $219,330,600
Required set-aside $12,892,327 $13,115,076 $14,144,226 $15,466,991 $15,665,540 $16,509,822 $18,338,394 $17,790,142 $19,675,052 $20,804,505 $20,871,425 $20,593,259
$205,866,759
Difference $1,937,714 $933,451 $1,113,038 $1,417,664 $1,129,384 $331,345 $1,545,829 $(448,400) $1,872,716 $2,153,911 $(141,932) $(1,743,545)
$10,101,175
Kids First owed TRUE TRUE TRUE TRUE TRUE TRUE TRUE FALSE TRUE TRUE FALSE FALSE
FALSE
Difference owed $1,937,714 $933,451 $1,113,038 $1,417,664 $1,129,384 $331,345 $1,545,829 $(448,400) $1,872,716 $2,153,911 $(141,932) $(1,743,545)
$10,101,175
Adjustment Year
FY 2015 $1,937,714 $40,823
$1,978,537
FY 2016
**
$-
FY 2017
**
$-
FY 2018
$1,417,664
$1,417,664
FY 2019
$892,628 $1,113,038
$1,129,384
$3,135,050
FY 2020
$331,345
$331,345
FY 2021
$1,515,083
$1,515,083
FY 2022
$(810,513)
$(810,513)
FY 2023
$308,206
$308,206
FY 2024
$2,429,776
$2,429,776
FY 2025
$-
FY 2026
$-
Total adjustment $1,937,714 $933,451 $1,113,038 $1,417,664 $1,129,384 $331,345 $1,515,083 $(810,513) $308,206 $2,429,776 $- $-
$10,305,148
Remainder $- $- $- $- $- $- $30,746 $362,113 $1,564,510 $(275,865) $(141,932) $(1,743,545)
$(203,973)
**Late adjustment. As described within the report, transfers to adjust the set-aside based on actual unrestricted General Purpose Fund revenues generally occur two fiscal years later, but in some instances have been later, partial, or combined. These years appeared as a single transfer in FY2019 for $2,005,666.
Source: Auditor analysis of Oracle data for operating transfers from the General Purpose Fund (Fund 1010) to the Kids First Fund (Fund 1780), 2018 Kids First Audit (FY 2013 through FY 2016), 2020 Kids First Audit (FY 2017 through FY 2018), and auditor set-aside calculations based on Oracle revenue data and Finance Department guidance (FY 2019 through FY 2024), as detailed in Appendix A.
Note: Positive values show a transfer of funds from the General Purpose Fund (Fund 1010) to the Kids First Fund (Fund 1780). FY 2024-25 initial set-aside is shown for informational purposes; the required set-aside will be in a future report, following the external financial audit of the City’s FY 2024-25 revenues.
Office of the City Auditor
Audit of the Kids First! Oakland Children’s Fund for Fiscal Year (FY) 2018-19 through FY 2023-24
City Administration’s Recommendation Implementation Plan
1 Rec# City Auditor’s Recommendations Management Action Plan Responsible Party
Target Date for
Completion
1 To ensure consistency of interpretation and to promote compliance with Article XIII of the Oakland City Charter, the Finance Department should consult with the City Attorney’s Office to finalize and adopt formal guidance and document the methodology of its process for: (a) adjusting set-asides based on actual revenues rather than appropriations, (b) calculating baseline spending on eligible expenses, for example, within defined org codes and program codes, (c) defining the timing of true-ups and adjustments for the two- year adjustment cycle, and (d) validating interpretations of ‘restricted’ General Purpose Fund revenues.
The Finance Department agrees with this
recommendation. We agree to consult
with the City Attorney’s Office to confirm
and, if needed, clarify the classification of
restricted versus unrestricted revenues.
We believe that other components of the
recommendation have already been
substantially implemented:
• Set-aside adjustments have consistently
been based on audited actuals, in
alignment with existing budget procedures
that incorporate “true-up” entries two
years after the initial budget year.
• Eligibility criteria for baseline
expenditures have been drafted for
internal use to improve consistency across
departments and reporting years in
response to this audit. Per the audit
recommendation please see document
attached for this internal guidance.
• The timing and mechanics of the true-up
process are well-established and have
been consistently applied through the
City’s biennial budget development
process and will be continued to be
applied in future cycles.
Finance
Department
January 2026
Office of the City Auditor
Audit of the Kids First! Oakland Children’s Fund for Fiscal Year (FY) 2018-19 through FY 2023-24
City Administration’s Recommendation Implementation Plan
2 Rec# City Auditor’s Recommendations Management Action Plan Responsible Party
Target Date for
Completion
2 In accordance with Kids First! The Oakland Fund for Children and Youth Act, the Finance Department should, in
consultation with the City Attorney’s Office, correct for the over-and under-payments between FY 2018-19 and FY 2023- 24, and document this one-time correction for future
reference.
Management agrees that a one-time
adjustment is necessary to correct slight
discrepancies for the true-up adjustment
payments from prior fiscal years (2018-19
to 2023-24). This action will be
documented in the City’s financial system
and the published adopted budget book to
ensure transparency.
Finance
Department
June 2026