ORANGE COVE CITY COUNCIL
REGULAR MEETING MINUTES
April 22, 2026________________________________________________________ The Regular Meeting of the Orange Cove City Council was called to order by Mayor Pro Tem Garcia at 6:31 PM on Wednesday, April 22, 2026, at the City of Orange Senior Center at 699 6 th Street, Orange Cove, California.
1. ROLL CALL
COUNCIL MEMBERS’ PRESENT
Del Bosque, Ortiz, Rodriguez, Mayor Pro-Tem Garcia.
ABSENT
Mayor Diana Guerra-Silva.
INVOCATION
Council Member Ortiz.
PLEDGE OF ALLEGIANCE
Council Member Rodriguez.
2. CONFIRMATION OF AGENDA
There are no changes to the agenda.
3. PUBLIC COMMENT
Seven members of the public spoke on items addressed to the Council, including an introduction from an individual running for office, concerns of the possible hydrogen blending project and petitions submitted in opposition to bringing the hydrogen blending project to the City of Orange Cove.
CONSENT CALENDAR
4. Approval of Minutes of Regular Meeting of Orange Cove City Council on March 11th, 2026.
5. Warrant Register for March 2026
Action: Motion was made by Council Member Del Bosque to approve the consent calendar and seconded by Council Member Ortiz. The motion carried with the following vote:
AYES: 4 COUNCIL MEMBERS: Del Bosque, Ortiz, Rodriguez, Garcia NOES: 0 COUNCIL MEMBERS: None
ABSTAIN:0 COUNCIL MEMBER: None
ABSENT: 1 COUNCIL MEMBER: Guerra-Silva
STAFF COMMUNICATION
6. Sports Coordinator – Gabriel Jimenez-Provided a yearly sports calendar. Basketball was the first sport of the year, and a season recap was shared. Flag football is currently in progress. Appreciation was expressed for the Police Department's support. Upcoming sports include baseball, softball, and tee-ball sign-ups, followed by fall sports, including soccer and volleyball.
7. Fire Protection District - Fire Chief Hernandez-Provided Stats for the month of March. Three new hires are from the Valley ROP. Entered into an agreement with the California Office of Emergency Services. They have a new third green fire truck. They have been working on weed abatement.
8. Planning and Building Department - Director Patlan- Provided an update on DH Machine regarding an expansion.
Provided an update on a tentative track map submitted over a year ago. A previous code enforcement case that the city abated, incurring high costs. An update on the Singh property. Two applications were submitted for a fitness gym/auto detail shop in the same category.
ORANGE COVE CITY COUNCIL REGULAR MEETING MINUTES- April 22, 2026
9. Public Works Department - Director Estrada-Provided information on the upcoming City of Orange Cove Surplus Sale. The date of the surplus is May 23 and May 30, from 9 AM – 2 PM.
REGULAR BUSINESS
Administration-City Manager Escobar
10. Subject: Better Roads and Safe Streets Campaign Presentation by Steve Brandau Recommendation: Staff requests City Council direction and consideration to adopt Resolution No. 2026-05 supporting the Better Roads and Safe Streets Campaign.
City Manager Escobar addressed the council. Steve Brandau presented the Better Roads and Safe Streets Campaign presentation to the council and public in attendance.
Action: Motion was made by Council Member Rodriguez to adopt Resolution No. 2026-05 supporting the Better Roads and Safe Streets Campaign, and seconded by Council Member Ortiz. The motion carried with the following vote:
AYES: 4 COUNCIL MEMBERS: Rodriguez, Ortiz, Del Bosque, Garcia NOES: 0 COUNCIL MEMBERS: None
ABSTAIN:0 COUNCIL MEMBER: None
ABSENT: 1 COUNCIL MEMBER: Guerra-Silva
Administration-City Manager Escobar
11. Subject: Approval of Model 3 – Residential Special Tax per Unit; Non-Residential/Undeveloped Special Tax Rate per Acre Presentation by Amanda Welker.
Recommendation: Staff recommends that the City Council approve Model 3 – Residential Special Tax per Unit and Non-Residential/Undeveloped Special Tax Rate per Acre, which would provide proportionality based on the number of residential units and the acreage of non-residential and undeveloped properties.
City Manager Escobar addressed the Council. Amanda Welker with NBS presented the Special Tax Rate presentation.
Public Comments: Two members of the public spoke.
Action: Motion was made by Council Member Del Bosque to approve Model 3 – Residential Special Tax per Unit and Non-Residential/Undeveloped Special Tax Rate per Acre, which would provide proportionality based on the number of residential units and the acreage of non-residential and undeveloped properties and incorporate an oversight committee made of residents for this special tax rate, and seconded by Council Member Rodriguez. The motion carried with the following vote:
AYES: 4 COUNCIL MEMBERS: Del Bosque, Rodriguez, Ortiz, Garcia NOES: 0 COUNCIL MEMBERS: None
ABSTAIN:0 COUNCIL MEMBER: None
ABSENT: 1 COUNCIL MEMBER: Guerra-Silva
Administration-City Manager Escobar
12. Subject: Approve Resolution No. 2026-07 – CalHome Program Application Recommendation: Staff recommends that the City Council approve Resolution No. 2026-07 authorizing the City Manager, or designee, to apply for CalHome Program funding through the California Department of Housing and Community Development (HCD), sign the standard agreement, and complete any required documents to participate in the program.
City Manager addressed the council and provided details of the CalHome Program Funding.
Public Comments: None.
Action: Motion was made by Council Member Ortiz to approve Resolution No. 2026-07 authorizing the City Manager, or designee, to apply for CalHome Program funding through the California Department of Housing and Community ORANGE COVE CITY COUNCIL REGULAR MEETING MINUTES- April 22, 2026 Development (HCD), sign the standard agreement, and complete any required documents to participate in the program and seconded by Council Member Del Bosque. The motion carried with the following vote:
AYES: 4 COUNCIL MEMBERS: Ortiz, Del Bosque, Rodriguez, Garcia NOES: 0 COUNCIL MEMBERS: None
ABSTAIN:0 COUNCIL MEMBER: None
ABSENT: 1 COUNCIL MEMBER: Guerra-Silva
Public Works Department – Director Estrada
13. Subject: City Council Direction on Sidewalk Repair and Alley Maintenance Responsibilities Recommendation: Staff requests City Council direction and consideration regarding sidewalk repair and maintenance within the public right-of-way, including clarification of liability for injury-related costs resulting from sidewalk defects, as well as responsibility for maintenance of alleys within the public right-of-way.
Public Works Director Estrada addressed the council.
Public Comments: One member of the public spoke.
Action: Motion was made by Council Member Ortiz to approve Option #1 Adoption of municipal code aligning with state law and including a provision regarding the cost sharing if applicable to the project and seconded by Council Member Rodriguez. The motion carried as follows:
AYES: 4 COUNCIL MEMBERS: Ortiz, Rodriguez, Del Bosque, Garcia NOES: 0 COUNCIL MEMBERS: None
ABSTAIN: 0 COUNCIL MEMBER: None
ABSENT: 1 COUNCIL MEMBERS: Guerra-Silva
14. CITY MANAGER’S REPORT
• Reported that he, Shun and EDC are working together to put together a marketing strategy for ICSC Conference in Las Vegas.
15. CITY ATTORNEYS REPORT
Nothing to report.
16. CITY COUNCIL COMMUNICATIONS
Council Member Ortiz
• Invited everyone to the Hispanic Heritage Celebration, on Friday, May 01st.
Council Member Rodriguez
• Apologized for not being present at the Sheridan Park Ribbon Cutting Ceremony and heard lots of good things about the event.
Council Member Del Bosque
• Thanked everyone in the audience, departments, service clubs, administration, and staff.
• Announced the sports in the Recreation Department and asked to sign up kids for sports.
Mayor Pro-Tem
• He discussed the Sheridan Park Grand Opening and thanked everyone who came out. Also mentioned families were BBQ that evening at the park.
ORANGE COVE CITY COUNCIL REGULAR MEETING MINUTES- April 22, 2026
17. CLOSED SESSION
A closed session is needed to discuss the following matter:
Conference with Legal Counsel – Anticipated Litigation
Significant exposure to litigation pursuant to § 54956.9(b): 1 case
The Council reconvened in open session; no reportable action was taken in closed session.
18. ADJOURNMENT There being no further business, the meeting was adjourned at 8:40 PM.
Respectfully submitted,
_________________________ __________________________
Cynthia Cisneros, City Clerk Gilbert Garcia, Mayor Pro Tem For the Meeting of May 13, 2026
CITY OF ORANGE COVE
REPORT TO THE CITY COUNCIL
To: Orange Cove City Council
From: Samuel A. Escobar, City Manager
Subject: Appointment of Representative and Alternate Representative to the Kings Basin Water Authority Advisory Committee
Attachments: Resolution No. 2026-06
RECOMMENDATION:
Staff recommends that the City Council adopt Resolution No. 2026-06 appointing Orfil Muniz, PE, City Engineer, as the City of Orange Cove’s Representative to the Kings Basin Water Authority Advisory Committee and Samuel A. Escobar as the Alternate Representative.
BACKGROUND:
The City of Orange Cove is an Interested Party to the Kings Basin Water Authority (“KBWA”), a Joint Powers Authority established to coordinate groundwater management activities within the Kings Subbasin of the San Joaquin Valley. The KBWA collaborates with member agencies and stakeholders on matters related to groundwater sustainability, water supply planning, and the implementation of the Groundwater Sustainability Plan for the Kings Subbasin.
The KBWA Advisory Committee provides member agencies and Interested Parties the opportunity to designate a Representative and an Alternate Representative to participate in the affairs and activities of the Authority.
FISCAL IMPACT:
There is no direct fiscal impact associated with the recommended action.
CONFLICT OF INTEREST:
None.
Prepared by: Cynthia Cisneros Approved by: Samuel A. Escobar REVIEW: Samuel A. Escobar Finance: _______ City Attorney: ______ TYPE OF ITEM: COUNCIL ACTION: • APPROVED • DENIED • NO ACTION Consent
Info Item
X_ Action Item
Department Report
Redevelopment Agency
Public Hearing
Matter Initiated by a Council
Member
Other
Continued to: __________
RESOLUTION NO. 2026-06
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ORANGE COVE,
STATE OF CALIFORNIA, APPOINTING A REPRESENTATIVE AND ALTERNATE
REPRESENTATIVE TO THE KINGS BASIN WATER AUTHORITY
WHEREAS, the City of Orange Cove is an Interested Party to the Kings Basin Water Authority (“KBWA”), a Joint Powers Authority that coordinates groundwater management activities within the Kings Subbasin of the San Joaquin Valley; and WHEREAS, the KBWA Advisory Committee provides each member agency and Interested Party the opportunity to designate a Representative and an Alternate Representative to participate in the affairs of the Authority; and
WHEREAS, the City of Orange Cove desires to ensure continuous, informed, and effective participation in the activities of the KBWA, including matters relating to groundwater sustainability, water supply planning, and implementation of the Groundwater Sustainability Plan for the Kings Subbasin; and
WHEREAS, the City Council finds that Orfil Muniz, PE, City Engineer, possesses the professional qualifications, technical expertise, and institutional knowledge necessary to effectively represent the interests of the City of Orange Cove on the KBWA Advisory Committee; and
WHEREAS, the City Council further finds it appropriate to designate Samuel A. Escobar to serve as Alternate Representative in the absence of the designated Representative; and WHEREAS, the City Council has determined that the appointment of these representatives is in the best interest of the public health, safety, and welfare of the residents of Orange Cove.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Orange Cove as follows:
Section 1. The City Council hereby appoints Orfil Muniz, PE, City Engineer, to serve as the Representative of the City of Orange Cove on the Kings Basin Water Authority Advisory Committee.
Section 2. The City Council hereby appoints Samuel A. Escobar to serve as the Alternate Representative of the City of Orange Cove on the Kings Basin Water Authority Advisory Committee, with full authority to act on behalf of the City in the absence of the designated Representative.
Section 3. These appointments shall remain in effect until rescinded or superseded by subsequent action of the City Council.
Section 4. City staff is hereby authorized and directed to transmit a certified copy of this Resolution to the Kings Basin Water Authority and to take such other actions as may be necessary to give effect to this Resolution.
PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Orange Cove, on the ____ day of ____________, 2026, by the following vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
APPROVED:
___________________________
Gilbert Garcia, Mayor Pro Tem
ATTEST:
____________________________
Cynthia Cisneros, City Clerk
For the Meeting of May 13, 2026
CITY OF ORANGE COVE
REPORT TO CITY COUNCIL
TO: Orange Cove City Council
FROM: Samuel A. Escobar, City Manager
SUBJECT: Civicly Platform Monthly Agreement
ATTACHMENTS: Vortal- Civicly CRMS Platform Proposal
RECOMMENDATION:
Staff recommends the City Council to consider and approve the implementation of the Civicly CRMS Platform for resident engagement and service request management.
BACKGROUND:
The City continues to explore opportunities to improve transparency regarding community concerns, communication with residents and improving customer service.
The proposed platform will provide residents with a modern and user-friendly method of communicating with the City while allowing staff to manage requests efficiently.
Civicly CRMS is a citizen engagement platform built for small municipalities to improve communication, organize service requests, and provide residents with a simple way to connect with the city. It includes 311 issue reporting such as submitting work orders, requests for potholes, lights, graffiti, and so much more. This system will also allow community surveys, and SMS notifications into one easy-to-manage system, including mobile apps for residents and a centralized dashboard for staff.
CONFLICT OF INTEREST:
None.
FISCAL IMPACT:
The proposed cost for the Civicly CRMS platform includes a one-time set-up fee of $500.00 and a monthly service fee of $250.00 which results in a fiscal impact of $3,000.00 after implementation.
Prepared by: Jennifer Hernandez Approved by: Samuel A. Escobar REVIEW: Samuel Escobar Finance: _______ City Attorney: ______ TYPE OF ITEM: COUNCIL ACTION: APPROVED DENIED NO
ACTION
Consent
Info Item
X Action Item
Department Report
Redevelopment Agency
Public Hearing
Matter Initiated by a Council Member
Other
Continued to: _________
Civicly CRMS Platform Proposal – City of Orange Cove
Prepared by: David Castillo
Founder & Developer, Civicly (Vortal – Digital Platform Network) Overview
Civicly CRMS is a citizen engagement platform built for small municipalities like the City of Orange Cove to improve communication, organize service requests, and provide residents with a simple way to connect with the city.
It combines 311 issue reporting, community surveys, and SMS notifications into one easy-to-manage system, including mobile apps for residents and a centralized dashboard for staff.
Monthly Investment
Standard Rate: $250 / month
What’s Included
311 Issue Reporting
• Residents submit issues with photos and map location
• Status tracking
• Organized requests in one system
Admin Dashboard
• Manage, assign, and close requests
• Centralized tracking with map-based view
Survey & Feedback Tools
• Create and publish surveys
• Collect structured community input
SMS Notification System (Outbound)
• Send alerts, updates, and announcements
• Opt-in messaging for residents
Mobile Apps Included
• Native iOS and Android apps
• Residents can report issues and stay informed (web app as well) Hosting, Updates & Support
• Secure hosting and maintenance
• Ongoing updates and improvements
• Initial onboarding and training included
One-Time Setup
Setup Fee: $500
Includes platform configuration, setup, and onboarding.
Terms
• Month-to-month service
• 60-day cancellation notice required
Summary
Civicly CRMS provides the City of Orange Cove with a structured and modern way to manage resident communication and improve transparency, while keeping everything organized in one system for staff and accessible for residents. [SIGNATURES]
The signatures below serve as binding commitments from both parties to enforce and uphold the entire terms of this Agreement.
Print
Authorized Representative:
David Castillo
Owner, Vortal (Vortal digital platform network)
City of Orange Cove, California
Name:
Signature
Accepted by:
District Name:
DATE: May 6, 2026 DATE:
For the Meeting of May 13, 2026
CITY OF ORANGE COVE
REPORT TO THE CITY COUNCIL
To: Orange Cove City Council
From: Danny Jimenez, Finance Director
Subject: Fiscal Year 2022-2023 Audit Presentation
Attachments: Independent Auditor’s Report and Financial Statements RECOMMENDATION:
Staff recommends that the City Council accept the findings of the Independent Auditor’s Report and Financial Statements of June 30, 2023, performed by Bryant L. Jolley, Certified Public Accountants.
BACKGROUND:
Audit Presentation Fiscal Year 2022-2023-Patrick Chaffee. The purpose of this presentation is to provide the City Council with a presentation of the Audited Financial Statements for the fiscal year ending June 30, 2023. The City’s annual financial audit is a required component of fiscal oversight and transparency and is conducted in accordance with generally accepted accounting principles (GAAP) and applicable state and federal regulations.
CONFLICT OF INTEREST:
None.
Prepared by: Finance Director Approved by: Samuel A. Escobar REVIEW: Finance Director______ Finance: _______ City Attorney: ______ TYPE OF ITEM: COUNCIL ACTION: • APPROVED • DENIED • NO ACTION Consent
Info Item
X Action Item
Department Report
Redevelopment Agency
Public Hearing
Matter Initiated by a Council Member
Other
Continued to: __________
CITY OF ORANGE COVE
INDEPENDENT AUDITOR’S REPORT
AND
FINANCIAL STATEMENTS
JUNE 30, 2023
TABLE OF CONTENTS
INDEPENDENT AUDITOR’S REPORT ........................................................................................................ 1-3 FINANCIAL SECTION:
GOVERNMENT-WIDE FINANCIAL STATEMENTS:
Statement of Net Position ......................................................................................................................... 4 Statement of Activities ............................................................................................................................. 5 GOVERNMENTAL FUNDS FINANCIAL STATEMENTS:
Balance Sheet – Governmental Funds ....................................................................................................... 6 Reconciliation of Total Governmental Fund Balance to
Net Position of Governmental Activities ............................................................................................... 7
Statement of Revenues, Expenditures, and Changes in
Fund Balance – Governmental Funds .................................................................................................... 8
Reconciliation of the Statement of Revenues, Expenditures, and Changes In Fund Balances of the Governmental Funds to the Statement of Activities ......................................... 9
PROPRIETARY FUNDS FINANCIAL STATEMENTS:
Statement of Net Position – Proprietary Funds ....................................................................................... 10 Statement of Revenues, Expenses, and Changes in
Fund Net Position – Proprietary Funds ................................................................................................ 11
Statement of Cash Flow – Proprietary Funds .......................................................................................... 12 FIDUCIARY FUND FINANCIAL STATEMENTS:
Statement of Fiduciary Net Position – Private Purpose Trust Fund – Successor Agency ......................... 13 Statement of Changes in Fiduciary Net Position – Private Purpose Trust Fund – Successor Agency .................................................................................................................... 14 NOTES TO THE FINANCIAL STATEMENTS ................................................................................... 15-50 TABLE OF CONTENTS (Continued)
REQUIRED SUPPLEMENTARY INFORMATION:
Budgetary Comparison Schedule – General Fund .......................................................................................... 51 Budgetary Comparison Schedule – American Rescue Plan Act Special Revenue Fund .................................. 52 Budgetary Comparison Schedule – Daycare Special Revenue Fund .............................................................. 53 Schedule of the City’s Proportionate Share of Net Pension Asset/Liability ................................................... 54 Schedule of Contributions ............................................................................................................................. 55 Notes to Required Supplementary Information ......................................................................................... 56-57 SUPPLEMENTARY ONLY INFORMATION:
Combining Balance Sheet – Nonmajor Governmental Funds .................................................................... 58-60 Combining Statement of Revenues, Expenditures, and
Changes in Fund Balance – Nonmajor Governmental Funds .............................................................. 61-63 COMPLIANCE SECTION:
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER
MATTERS BASED ON AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS .............................................. 64-65 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM
AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY
UNIFORM GUIDANCE .......................................................................................................................... 66-68 Schedule of Expenditures of Federal Awards ....................................................................................................... 69 Notes to the Schedule of Expenditures of Federal Awards ................................................................................... 70 Schedule of Findings and Questioned Costs ................................................................................................... 71-74 Status of Prior Audit Findings and Questioned Costs ........................................................................................... 75 Corrective Action Plan ........................................................................................................................................ 76
BRYANT L. JOLLEY
CERTIFIED PUBLIC ACCOUNTANTS Bryant L. Jolley C.P.A.
Ryan P. Jolley C.P.A.
Darryl L. Smith C.P.A.
Luis A. Perez C.P.A.
Lan T. Kimoto
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and City Council
City of Orange Cove, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Orange Cove (the “City”), California, as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2023, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with 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 States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and 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.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if 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. 2 In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Required Supplementary Information
Management has omitted the management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinions on the basic financial statements are not affected by this missing information.
Accounting principles generally accepted in the United States of America require that the budgetary comparison information on pages 51-53, the schedule of the City’s proportionate share of net pension liability on page 54, and the schedule of contributions on page 55, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about 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 do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying combining and individual nonmajor fund financial statements, the schedule of revenue available for debt service, and schedule of expenditures of federal awards, as required by Title 2 U.S.
Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. 3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated April 20, 2026, on our consideration of the City of Orange Cove’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Orange Cove’s internal control over financial reporting and compliance.
April 20, 2026
GOVERNMENT-WIDE FINANCIAL STATEMENTS
CITY OF ORANGE COVE
STATEMENT OF NET POSITION
JUNE 30, 2023
See accompanying notes to the financial statements. 4
Governmental
Activities
Business-Type
Activities Total
ASSETS
Cash and investments 4,581,071 $ 1,080,199 $ 5,661,270 $ Cash and investments - restricted 261,609 - 261,609
Cash with fiscal agent - restricted - 14,148 14,148
Accounts receivable, net - 854,411 854,411
Interest receivable 352,631 9,576 362,207
Due from other governments 1,877,067 75,591 1,952,658
Internal balances 142,667 (142,667) -
Notes receivable 2,822,286 - 2,822,286
Land held for resale 332,743 - 332,743
Net pension asset 780,355 - 780,355
Capital assets, net of depreciation 9,515,054 16,726,593 26,241,647 Total assets 20,665,483 18,617,851 39,283,334
DEFERRED OUTFLOWS OF RESOURCES 267,898 1,291,323 1,559,221
LIABILITIES
Accounts payable and accrued expenses 891,422 426,863 1,318,285 Accrued interest 12,033 9,353 21,386
Deposits - 30,418 30,418
Compensated absences 131,546 64,245 195,791
Unearned revenues 184,771 - 184,771
Long-term liabilities:
Due within one year 90,178 79,721 169,899
Due in more than one year 640,908 1,769,269 2,410,177
Net pension liability 1,219,908 528,339 1,748,247
Total liabilities 3,170,766 2,908,208 6,078,974
DEFERRED INFLOWS OF RESOURCES 37,226 468,412 505,638
NET POSITION
Net investments in capital assets 8,783,968 14,877,603 23,661,571 Restricted for debt service 505,013 14,148 519,161
Restricted for capital projects 1,704,193 - 1,704,193
Restricted for specific projects and programs 2,796,893 - 2,796,893 Unrestricted 4,527,561 1,048,564 5,576,125
Total net position 18,317,628 $ 15,940,315 $ 34,257,943 $
CITY OF ORANGE COVE
STATEMENT OF ACTIVITIES JUNE 30, 2023 See accompanying notes to the financial statements. 5 Functions/Programs Expenses
Charges for
Services
Operating
Grants and
Contributions
Capital Grants
and
Contributions
Governmental
Activities
Business-Type
Activities Total
Primary GovernmentGovernmental activities:
General government 1,572,972 $ 34,005 $ 1,304,927 $ 11,361 $ (222,679) $ - $ (222,679) $ Public safety 3,944,801 32,167 257,031 8,785 (3,646,818) - (3,646,818) Public works 1,376,996 - 1,328,285 72,288 23,577 - 23,577 Planning and development 49,927 459,187 150,698 - (258,562) - (258,562) Parks and recreation 313,228 43,814 132,409 27,424 (109,581) - (109,581) Day care 1,912,877 - 1,912,877 - - - -
Debt service:
Interest and other charges 38,083 - - - (38,083) - (38,083) Total government activities 9,618,144 159,913 5,086,227 119,858 (4,252,146) - (4,252,146) Business-type activities:
Water 1,960,205 1,771,770 - 64,840 - (123,595) (123,595) Sewer 1,638,731 1,274,231 5,120 59,862 - (299,518) (299,518) Disposal 712,525 664,795 - - - (47,730) (47,730)
Total business-type activities 4,311,461 3,710,796 5,120 124,702 - (470,843) (470,843) Total primary government $ 3,870,709 13,929,605 $ 5,091,347 $ 244,560 $ (4,252,146) (470,843) (4,722,989)General Revenue Property taxes and special assessments - 499,051 499,051Sales taxes - 182,870 182,870Franchise taxes - 169,512 169,512Business licenses - 149,038 149,038Utility users tax - 623,106 623,106Motor vehicle in-lieu - 1,062,914 1,062,914Interest and rent 22,877 65,649 88,526 Sale of land - 111,045 111,045Other - 317,244 317,244Transfers (314,786) 314,786 - Total general revenue and transfers (291,909) 3,495,215 3,203,306 Change in Net Position (762,752) (756,931) (1,519,683)
Net Position
Beginning of year, restated 16,703,067 19,074,559 35,777,626 End of year $ 15,940,315 18,317,628 $ 34,257,943 $
Program Revenue Changes in Net Position
Net Revenue/(Expense) and
GOVERNMENTAL FUNDS FINANCIAL STATEMENTS
CITY OF ORANGE COVE
BALANCE SHEET – GOVERNMENTAL FUNDS
JUNE 30, 2023
See accompanying notes to the financial statements. 6
Other Total
Housing Day Governmental Governmental
General ARPA Grant Care Funds Funds
ASSETS
Cash and investments 439,404 $ 595,950 $ 271,250 $ - $ 3,274,467 $ 4,581,071 $ Cash and investments - restricted - - - 261,609 - 261,609 Interest receivable 2,555 4,815 136,472 - 208,789 352,631 Due from other governments 592,751 - - 163,056 1,121,260 1,877,067 Due from other funds 321,242 - - - - 321,242
Notes receivable - - 2,547,286 - 275,000 2,822,286
Land held for resale 56,000 - - - 276,743 332,743
Total assets 1,411,952 $ 600,765 $ 2,955,008 $ 424,665 $ 5,156,259 $ 10,548,649 $
LIABILITIES
Accounts payable and accrued expenses 526,906 $ 50,235 $ - $ 163,056 $ 151,225 $ 891,422 $ Due to other funds - - - 111,838 66,737 178,575
Unearned revenues - - - 149,771 35,000 184,771
Total liabilities 526,906 50,235 - 424,665 252,962 1,254,768
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - - 2,683,216 - 469,237 3,152,453
Total deferred inflows of resources - - 2,683,216 - 469,237 3,152,453
FUND BALANCE
Nonspendable:
Land held for resale 56,000 - - - 276,743 332,743
Restricted:
Low-income housing activities - - 271,792 - 71,776 343,568 Circulation improvements - - - - 2,453,325 2,453,325
Capital improvement projects - 550,530 - - 1,153,663 1,704,193 Debt service - - - - 505,013 505,013
Unassigned 829,046 - - - (26,460) 802,586
Total fund balance 885,046 550,530 271,792 - 4,434,060 6,141,428 Total liabilities, deferred inflows of
resources, and fund balance $ 600,765 1,411,952 $ 2,955,008 $ 424,665 $ 5,156,259 $ 10,548,649 $ Special Revenue Funds
CITY OF ORANGE COVE
RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCE TO NET POSITION
OF GOVERNMENTAL ACTIVITIES
JUNE 30, 2023
See accompanying notes to the financial statements. 7
Total governmental fund balance 6,141,428 $
Amounts reported for governmental activities in the Statement of Net Position are different because:
Capital assets used in governmental activities are not current financial resources and, therefore, are not reported in the funds 9,515,054 Accrued interest on long-term liabilities is not due and payable in the current period and, therefore, is not reported in the funds (12,033) Compensated absences are not due and payable in the current period and, therefore, are not reported in the funds (131,546) Deferred outflows of resources related to net pension liability/asset represent a consumption of net position or fund balance that applies to future period(s) and so will not be recognized as outflow of resources (revenue) until that time 1,291,323 Net pension liability/asset applicable to governmental activities are not due and payable in the current period and accordingly is not reported in the the funds (439,553)
Deferred inflows of resources related to net pension liability represent an acquisition of net position or fund balance that applies to future period(s) and so will not be recognized as inflow of resources (revenue) until that time (468,412) Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenues in the funds 3,152,453
Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds (731,086)
Net position of governmental activities 18,317,628 $
CITY OF ORANGE COVE
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE –
GOVERNMENTAL FUNDS
JUNE 30, 2023
See accompanying notes to the financial statements. 8
Other Total
Housing Governmental Governmental
General ARPA Grant Daycare Funds Funds
Revenues
Taxes 2,129,627 $ - $ - $ - $ 407,826 $ 2,537,453 $
Intergovernmental 538,634 1,228,760 - 1,912,877 1,465,204 5,145,475 Charges for service 135,562 - - - - 135,562
Licenses, permits and impact fees 175,023 - - - 58,975 233,998 Interest and rent 9,862 11,503 68,494 - 30,998 120,857
Other 316,532 - - - - 316,532
Total revenues 3,305,240 1,240,263 68,494 1,912,877 1,963,003 8,489,877 Expenditures
Current:
General government 521,479 843,142 - - 120,649 1,485,270 Public safety 2,409,304 - - - 265,976 2,675,280
Public works 513,397 - - - 593,404 1,106,801
Planning and development 458,506 - - - 2,292 460,798
Parks and recreation 210,045 - - - - 210,045
Day care - - - 1,912,877 - 1,912,877
Capital outlay 747,336 65,267 - - 147,153 959,756
Debt service:
Principal - - - - 87,178 87,178
Interest and other charges - - - - 39,500 39,500
Total expenditures 4,860,067 908,409 - 1,912,877 1,256,152 8,937,505 Revenue over/(under) expenditures (1,554,827) 331,854 68,494 - 706,851 (447,628) Other Financing Sources/(Uses)
Proceeds from sale of land 111,045 - - - - 111,045
Transfers in/(out) - net 670,138 (394,000) - - 38,648 314,786 Total other financing sources/(uses) 781,183 (394,000) - - 38,648 425,831 Change in Fund Balance (62,146) (773,644) 68,494 - 745,499 (21,797) Fund Balance
Beginning of year, restated 1,658,690 612,676 203,298 - 3,688,561 6,163,225 End of year 885,046 $ 550,530 $ 271,792 $ - $ 4,434,060 $ 6,141,428 $ Special Revenue Funds
CITY OF ORANGE COVE
RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF
ACTIVITIES
JUNE 30, 2023
See accompanying notes to the financial statements. 9
Change in fund balance - total governmental funds (21,797) $ Amounts reported for governmental activities in the Statement of Activities are different because:
Depreciation expense on capital assets is reported in the Statement of Activities, but it does not require the use of current financial resources. Therefore, depreciation expense is not reported as expenditures in the governmental funds (571,739) Governmental Funds report capital outlay as expenditures. However, in Statement of Activities the cost of those assets are capitalized as an asset and depreciated over the period of service 959,756
Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds (55,210) Pension expenses reported in the Statement of Activities do not require the use of current financial resources, and therefore, are not reported as expenditures in the funds (1,176,771) Compensated absences reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the funds 20,235
Repayment of long-term debt is an expenditure in governmental funds, but the repayment reduces long-term liabilities in the statement of net position 87,178 In the statement of activities, interest is accrued on long-term debt, whereas in governmental funds interest expenditure is reported when due 1,417 Change in net position of governmental activities (756,931) $
CITY OF ORANGE COVE
STATEMENT OF NET POSITION – PROPRIETARY FUNDS
JUNE 30, 2023
See accompanying notes to the financial statements. 10
Water Sewer Disposal
BusinessType
Funds
ASSETS
Current assets
Cash and investments $ - $ 934,080 $ 146,119 $ 1,080,199 Cash with fiscal agent - restricted 14,148 - - 14,148
Accounts receivable, net 417,544 277,375 159,492 854,411 Due from other governments 59,327 16,264 - 75,591
Interest receivable 4,167 4,892 517 9,576
Total current assets 495,186 1,232,611 306,128 2,033,925 Non-current assets
Property, plant and equipment
(net of allowances for depreciation) 8,795,893 7,930,700 - 16,726,593 Total noncurrent assets 8,795,893 7,930,700 - 16,726,593 Total assets 9,291,079 9,163,311 306,128 18,760,518
DEFERRED OUTFLOWS OF RESOURCES 152,010 115,888 - 267,898
LIABILITIES
Current liabilities
Accounts payable and accrued expenses 244,387 126,022 56,454 426,863 Accrued interest 9,353 - - 9,353
Deposits 30,418 - - 30,418
Compensated absences 36,576 27,669 - 64,245
Due to other funds 142,667 - - 142,667
Current portion of long-term debt 79,721 - - 79,721
Total current liabilities 543,122 153,691 56,454 753,267 Non-current liabilities
Long-term debt 814,924 954,345 - 1,769,269
Net pension liability 299,788 228,551 - 528,339
Total non-current liabilities 1,114,712 1,182,896 - 2,297,608 Total liabilities 1,657,834 1,336,587 56,454 3,050,875
DEFERRED INFLOWS OF RESOURCES 21,123 16,103 - 37,226
NET POSITION
Net investment in capital assets 7,901,248 6,976,355 - 14,877,603 Restricted for debt service 14,148 - - 14,148
Unrestricted (151,264) 950,154 249,674 1,048,564
Total net position 7,764,132 $ 7,926,509 $ 249,674 $ $ 15,940,315 Business-Type Activities - Enterprise Funds
CITY OF ORANGE COVE
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION –
PROPRIETARY FUNDS
JUNE 30, 2023
See accompanying notes to the financial statements. 11
Water Sewer Disposal
BusinessType
Funds
Operating Revenue
Charges for service 1,743,100 $ 1,266,935 $ 664,795 $ 3,674,830 $ Connection fees 28,670 7,296 - 35,966
Total operating revenue 1,771,770 1,274,231 664,795 3,710,796 Operating Expense
Contractual services and utilities 370,792 404,042 678,508 1,453,342 Personnel 703,575 554,284 - 1,257,859
Supplies and materials 238,882 190,994 34,017 463,893
Depreciation expense 610,987 489,411 - 1,100,398
Total operating expense 1,924,236 1,638,731 712,525 4,275,492 Operating income/(loss) (152,466) (364,500) (47,730) (564,696) Nonoperating Revenue/(Expense)
Capital grants 7,224 5,120 - 12,344
Development impact fees 57,616 59,862 - 117,478
Interest income 9,954 11,688 1,235 22,877
Interest expense (35,969) - - (35,969)
Total nonoperating revenue/(expense) 76,670 38,825 1,235 116,730 Net income/(loss) before transfers (113,641) (287,830) (46,495) (447,966) Operating Transfers In/(Out) (336,632) 21,846 - (314,786) Changes in Net Position (624,462) (91,795) (46,495) (762,752) Net Position
Beginning of year 7,855,927 8,550,971 296,169 16,703,067 End of the year 7,764,132 $ 7,926,509 $ 249,674 $ 15,940,315 $ Business-Type Activities - Enterprise Funds
CITY OF ORANGE COVE
STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS
JUNE 30, 2023
See accompanying notes to the financial statements. 12
Water Sewer Disposal
Total BusinessType Funds
Operating Activities
Receipts from customers and users 1, $ 1,209,292 662,546 $ 622,571 $ 3,494,409 $ Payments for contractual services and utilities (179,234) (332,370) (746,875) (1,258,479) Payments for employees (706,870) (548,064) - (1,254,934) Payments to suppliers (238,882) (190,994) - (429,876)
Net cash provided by (used in)
operating activities 537,560 137,864 (124,304) 551,120
Non-capital Financing Activities
Payments from developers 57,616 59,862 - 117,478
Payments received from (paid to) other funds 27,528 - - 27,528 Transfer (to)/from other funds 21,846 (336,632) - (314,786) Net cash provided by (used in)
non-capital financing activities 106,990 (276,770) - (169,780) Capital and Related Financing Activities
Purchase of property, plant and equipment (518,405) (804,230) - (1,322,635) Capital grants and contributions received (13, (11,144) 755) - (24,899) Proceeds from debt - 954,345 - 954,345
Principal paid on long-term debt (81,333) - - (81,333)
Interest paid on long-term debt (36,788) - - (36,788)
Net cash provided by (used in)
capital and related financing activities (650,281) 138,971 - (511,310) Investing Activities
Interest received 6,625 7,505 887 15,017
Net cash provided by (used in)
investing activities 6,625 7,505 887 15,017
Net Increase (Decrease) in Cash 7,570 894 (123,417) (114,953) Cash
Beginning of year 13,254 926,510 269,536 1,209,300
End of year 14,148 $ 934,080 $ 146,119 $ 1,094,347 $
Cash Flows from Operating Activities
Operating income (loss) (152,466) $ (364,500) $ (47,730) $ (564,696) $ Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:
Depreciation 610,987 489,411 - 1,100,398
(Increase) Decrease in accounts receivable ( (64,939) 109,042) (42,224) (216,205) (Increase) Decrease in deposits (182) - - (182)
(Increase) Decrease in deferred outflows of resources (78,720) (60,014) - (138,734) Increase (Decrease) in compensated absences (746) 8,164 - 7,418 Increase (Decrease) in deferred inflows of resources (105,370) (80,332) - (185,702) Increase (Decrease) in net pension liability 181,541 138,402 - 319,943 Increase (Decrease) in accounts payable
and accrued liabilities 71,672 191,558 (34,350) 228,880 Net Cash Provided (Used) by Operating Activities $ 537,560 137,864 $ (124,304) $ 551,120 $ Business-Type Activities - Enterprise Funds
CITY OF ORANGE COVE
STATEMENT OF FIDUCIARY NET POSITION PRIVATE-PURPOSE TRUST FUND –
SUCCESSOR AGENCY
JUNE 30, 2023
See accompanying notes to the financial statements. 13
Assets
Cash and investments
Held in City Treasury 276,733 $
Held with trustees 414,671
Taxes receivables 175,796
Interest receivable 2,241
Note receivable 200,000
Total assets 1,069,441
Liabilities
Accounts payable and accrued liabilities 9,115
Interest payable 46,098
Long-term debt:
Due within one year 286,027
Due in more than one year 2,704,133
Total liabilities 3,045,373
Net Position
Held in trust for other governments (1,975,932) $
CITY OF ORANGE COVE
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION PRIVATE-PURPOSE TRUST FUND – SUCCESSOR AGENCY
JUNE 30, 2023
See accompanying notes to the financial statements. 14
Additions
Property taxes 628,561 $
Investment earnings and other 47,550
Total additions 676,111
Deductions
Program expenses 81,314
Administrative costs 59,688
Interest and fiscal agency expenses of former redevelopment agency 114,057 Total deductions 255,059
Change In Net Position 421,052
Net Position
Beginning of year (2,396,984)
End of year (1,975,932) $
NOTES TO THE FINANCIAL STATEMENTS
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
15 Note 1 – Summary of Significant Accounting Policies
The financial statements of the City of Orange Cove, California (the City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental entities. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for governmental accounting and financial reporting principles.
These financial statements present the government and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities are, in substance, part of the government’s operations and data from these units are combined with data of the primary government. Each blended component unit has a June 30 year-end. The City has no component units to report.
The following sections further describe the significant policies of the City.
Reporting Entity
The City was incorporated as a general law city in 1948. The City operates under a Council-Manager form of government. The City’s major operations include public safety, public works, water, sewer, disposal, parks and recreation, streets, planning and community development, and general administrative services.
Basis of Presentation – Fund Accounting
Government-Wide Financial Statements – The statement of net position and the statement of activities display information about the primary government (the City) and its component units. These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double-counting of internal activities. These statements distinguish between the governmental and business-type activities of the City. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties.
The Statement of Activities presents a comparison between direct expenses and program revenues for each different identifiable activity of the City’s business-type activities and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are included in the program expense reported for individual functions. Certain indirect costs, which cannot be identified and broken down, are included in the program expense reported for individual functions and activities. Program revenues include, 1) fines, fees, and charges paid by the recipients of goods and services offered by the programs and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented instead as general revenues.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
16 Note 1 – Summary of Significant Accounting Policies (Continued) Basis of Presentation – Fund Accounting (Continued)
Certain eliminations have been made as prescribed by GASB No. 34 in regards to interfund activities, payables and receivables. All internal balances in the statement of net position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the statement of activities, those transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated: due to/due from other funds, advances from/to other funds, and transfers in/transfers out.
Net position is restricted when constraints placed on them are either externally imposed or are imposed by constitutional provisions or enabling legislation. Internally imposed designations of resources are not presented as restricted net position. When both restricted are unrestricted resources are available for use, generally, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed.
Governmental Fund Financial Statements – The fund financial statements provide information about the City’s funds. Separate statements for each fund category – governmental, proprietary, and fiduciary – are presented.
The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as non-major funds. An accompanying schedule is presented to reconcile and explain the differences in funds and changes in fund balances as presented in these statements of net position and changes in net position presented in the government-wide financial statements.
Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses.
The City reports the following major governmental funds:
General Fund – The General Fund is the general operating fund of the City. It is used for all financial resources except those required legally, or by sound financial management to be accounted for in another fund. Generally, the General Fund is used to account for those traditional governmental services of the City, such as police protection, planning and general administrative services.
ARPA Fund – The American Recovery Plan Act Fund is used to account for the ARPA funding and related expenditures.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
17 Note 1 – Summary of Significant Accounting Policies (Continued) Basis of Presentation – Fund Accounting (Continued)
Housing Grant Special Revenue Fund – The Housing Grant Fund is used to account for grant revenues and expenditures related to housing assistance loans for low income individuals.
Daycare Special Revenue Fund – The Daycare Fund is used to account for grant revenues and expenditures related to the operation of the Daycare.
Enterprise fund financial statements include a statement of net position, a statement of revenues, expenses, and changes in net position, and a statement of cash flows for each major enterprise fund and non-major fund.
The City has three major enterprise funds, the Water, Sewer and Disposal, which are used to account for operations that are financed and operated in a manner similar to private business enterprises. In an enterprise fund, the intent of the City Council is that costs (expenses, including depreciation) of providing services to the general public, on a continuing basis, be financed or recovered primarily through user charges.
The City reports the following three major enterprise funds:
The Water Fund is used to account for financial activity of the water utility system. The Sewer Fund is used to account for the financial activity of the sewer utility system. The Disposal Fund is used to account for the financial activity of the disposal utility system.
The City's fiduciary funds represent agency trust funds, which are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The agency trust funds are accounted for on an economic resources measurement focus and the accrual basis of accounting The City reports the following fiduciary fund:
Private-Purpose Trust Fund – The Private Purpose Trust Fund accounts for assets held by the City as trustee for Successor Agency.
CITY OF ORANGE COVE
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2023
18 Note 1 – Summary of Significant Accounting Policies (Continued) Measurement Focus, Basis of Accounting
Government-Wide, Proprietary and Fiduciary Fund Financial Statements – The government-wide, proprietary, and fiduciary fund financial statements are reported using the economic resources measurement focus. The government-wide and proprietary fund financial statements are reported using the accrual basis of accounting.
Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property and sales taxes, grants, entitlements and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenues from sales taxes are recognized when the underlying transactions take place. Revenues from grants, entitlements and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied.
Governmental Fund Financial Statements – Governmental funds are reported using current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when measurable and available. Property and sales taxes, interest, certain state and federal grants, and charges for services are accrued when their receipt occurs within sixty days after the end of the accounting period so as to be both measurable and available. Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to claims and judgments and compensated absences, are recorded only when payment is due. General capital assets acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and capital leases are reported as other financing sources.
Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of each fund. Nonoperating revenues, such as interest income, state and federal grants, and subsidies, result from nonexchange transactions or ancillary activities. Operating expenses include costs for providing services and delivering goods such as administrative expenses and depreciation on capital assets. All other expenses not meeting this definition are reported as nonoperating expenses.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
19 Note 1 – Summary of Significant Accounting Policies (Continued) Assets, Liabilities and Equity
Cash and Cash Equivalents – Cash and cash equivalents represent the City’s cash bank accounts including, but not limited to, certificates of deposit, money market funds and cash management pools for reporting purposes in the statement of cash flows. Additionally, investments with maturities of three months or less when purchased are included as cash equivalents in the statement of cash flows.
The City maintains a cash and investment pool that is available for use by all funds. Interest earnings as a result of this pooling are distributed to the appropriate funds based on month end cash balances in each fund.
Investments of the pool include only those investments authorized by the California Government Code such as, United States Treasury securities, agencies guaranteed by the United States Government, registered state warrants, and other investments. Investments primarily consist of deposits in the State of California Local Agency Investment Fund. Investments are recorded at amortized cost or fair value. Fair value is based upon quoted market prices.
Investments are reported at fair value.
Accounts Receivable – Billed, but unpaid, services provided to individuals or non-governmental entities are recorded as accounts receivable. The proprietary funds include a year-end accrual for services through the end of the fiscal year which have not yet been billed. Accounts receivable are reported net of an allowance for uncollectible accounts.
Property Tax Calendar – Fresno County is responsible for the assessment, collection and apportionment of property taxes for all taxing jurisdictions. Property taxes are levied in equal installments on November 1 and February 1. They become delinquent on December 10 and April 10, respectively. The lien date is January 1 of each year. Property taxes are accounted for in the General Fund. Property tax revenues are recognized when they become measurable and available to finance current liabilities. The City considers property taxes as available if they are collected within 60 days after the year-end. Property taxes on the unsecured roll are due on July 1 and become delinquent if unpaid on August 31. However, unsecured property taxes are not susceptible to year-end accrual.
The City is permitted by Article XIIIA of the State of California Constitution (known as Proposition 13) to levy a maximum tax of $1.00 per $100 of full cash value.
Interfund Receivables/Payables – Items classified as interfund receivable/payable represent short-term lending/borrowing transactions between funds. This classification also includes the current portion of an advance to or from another fund.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
20 Note 1 – Summary of Significant Accounting Policies (Continued) Assets, Liabilities and Equity (Continued)
Advances To/From Other Funds – This classification represents non-current portions of any long-term lending/borrowing transactions between funds. This amount will be equally offset by a reserve of fund balance which indicates that it does not represent available financial resources and, therefore, is not available for appropriation. The current portion of any interfund long-term loan (advance) is included as an interfund receivable/payable.
Capital Assets – Capital outlays are recorded as expenditures of the general, special revenue, and capital projects funds, and capitalized assets in the government-wide financial statements to the extent the City’s capitalization threshold is met.
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities column in the Government-Wide Financial Statements. Capital assets are defined by the government as assets with and initial individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Betterments and major improvements which significantly increase values, change capacities or extend useful lives are capitalized. Upon sale or retirement of fixed assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations.
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities are included as part of the capitalized value of the assets constructed.
Property, plant and equipment of the primary government, as well as the component units, are depreciated using the straight line method over the following estimated useful lives:
Buildings and improvements ..................... 10-50 years Plant system ................................................ 20-40 years Machinery and equipment ............................ 5-10 years Infrastructure ................................................... 40 years
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
21 Note 1 – Summary of Significant Accounting Policies (Continued) Assets, Liabilities and Equity (Continued)
Compensated Absences – Accumulated unpaid vacation benefits, sick pay, and compensatory time benefits are accrued as a liability as the benefits are earned. The entire compensated absence liability is reported on the government-wide financial statements as long-term debt. For governmental funds, the current portion of unpaid compensated absences is recognized upon the occurrence of relevant events such as employee resignations and retirements that occur prior to year end that have not yet been paid with expendable available financial resources.
These amounts are reported in the fund from which the employees who have accumulated leave are paid.
Sick leave is accumulated at 12 days per year for full-time regular employees. Vacation is accumulated at 12 days per year for full-time regular employees with less than five years of service to a maximum of 25 days per year for full-time regular employees with over 20 years of service with no limit on accrual of unused hours.
Upon employment termination, unused sick leave is paid out at 5% to 25% depending on years of service, with a maximum payout of $2,500. These amounts are included as liabilities in the government-wide and enterprise fund financial statements.
Vested leave of Proprietary Funds are recorded as an expense and liability as the benefits accrue.
Interest Payable – In the government-wide financial statements, interest payable of long-term debt is recognized as the liability is incurred for governmental fund-types and proprietary fund-types. In the fund financial statements, proprietary fund-types recognize the interest payable when the liability is incurred.
Unearned Revenue – Unearned revenue is that for which asset recognition criteria have been met, but for which revenue recognition criteria have not been met. The City typically records unearned revenue related to uncollected outstanding, performing loans and intergovernmental revenues (primarily grants and subventions) received but not earned (qualifying expenditures not yet incurred).
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
22 Note 1 – Summary of Significant Accounting Policies (Continued) Assets, Liabilities and Equity (Continued)
Long-term Obligations – In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund-type statement of net position. Debt principal payments of both governmental and business-type activities are reported as decreases in the balance of the liability on the statement of net position. Bond premiums and discounts, as well as insurance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount.
In the fund financial statements, however, debt principal payments of governmental funds are recognized as expenditures when paid. Governmental fund-types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources.
Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.
Pension Plan – All full-time City employees are members of the State of California Public Employees’ Retirement System. The City’s policy is to fund all pension costs accrued; such as costs to be funded are determined annually as of July 1 by the System’s actuary. See Note 11 for further discussion.
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s Pension Plan and additions to/deductions from the City’s Pension Plan’s fiduciary net position have been determined on the same basis as they are reported by the City’s Pension Plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms.
Encumbrances – The City does not use encumbrance accounting.
Budgetary and Budgetary Accounting – Budgets are adopted annually for the general fund, special revenue funds, capital funds, debt service funds, and enterprise funds. Formal budgetary integration is employed as a management control device during the year for these funds. The annual budgets are prepared on the basis of accounting utilized by the fund.
Expenditures may not legally exceed budgeted appropriations at the fund level. The City Manager is authorized to make budget transfers between accounts within any fund. All revisions must be reported to the City Council.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
23 Note 1 – Summary of Significant Accounting Policies (Continued) Assets, Liabilities and Equity (Continued)
Use of Estimates – The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Net Position - In the government-wide financial statements, net position is classified in the following categories:
Net investment in capital assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce this category.
Restricted net position – This category presents external restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation.
Unrestricted net position – This category presents the net position of assets that do not meet the definition of “net investment in capital assets” or “restricted net position”.
When both restricted and unrestricted net position are available, restricted resources are depleted first before the unrestricted resources are used.
Fund Balances - The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows:
Nonspendable: This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) are legally or contractually required to be maintained intact. Restricted: This classification includes amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors (such as through a debt covenant), grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation.
Committed: This classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the City Council. These amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by taking the same type of action (ordinance or resolution) that was employed when the funds were initially committed. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractual requirements.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
24 Note 1 – Summary of Significant Accounting Policies (Continued) Assets, Liabilities and Equity (Continued)
Assigned: This classification includes amounts that are constrained by the City’s intent to be used for a specific purpose but are neither restricted nor committed. This intent can be expressed by the City Council or through the City Council delegating this responsibility to the Finance Director through the budgetary process. This classification also includes the remaining positive fund balance for all governmental funds except for the general fund.
Unassigned: This classification is the residual classification for the general fund and represents fund balance that has not been assigned to other funds and that has not been restricted, committed or assigned to specific purposes within the general fund. In other governmental funds it includes any negative residual amounts that may exist as a result of expenditures incurred for specific purposes in excess of amounts restricted, committed or assigned to those purposes.
The City would typically use restricted fund balances first, followed by committed resources, and then assigned resources, as appropriate opportunities arise, but reserves the right to selectively spend unassigned resources first to defer the use of these other classified funds.
Note 2 – Stewardship, Compliance and Accountability
In accordance with applicable sections of the California Government Code and the Orange Cove Municipal Code, the City prepares and legally adopts an annual balanced budget on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted for the General Fund, specific Special Revenue Funds, and specific Capital Projects Funds. Budget plans are adopted for Proprietary Funds. A proposed budget is presented to the City Council during May of each year for review.
The Council holds public hearings and may add to, subtract from, or change appropriations within the revenues and reserves estimated as available. Expenditures may not legally exceed budgeted appropriations at the fund level. Supplementary appropriations which alter the total expenditures of any fund, or expenditures in excess of total budgeted fund appropriations, must be approved by the City Council.
All annual appropriations lapse at fiscal year-end to the extent they have not been expended or encumbered.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
25 Note 3 – Cash and Investments
The City pools all of its cash and investments except those funds required to be held by bond trustee or outside fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash is allocated to the various funds on average cash balances. Interest income from cash investments held by bond trustee is credited directly to the related funds.
Cash and investments as of June 30, 2023 are classified in the accompanying financial statements as follows:
Statement of Net Position:
Cash and Investments 5,661,270 $
Cash and Investments - restricted 261,609
Cash and Investment with fiscal agent - restricted 14,148 Fiduciary Funds:
Cash and Investments 276,733
Cash and Investments with fiscal agent 414,671
Total Cash and Investments 6,628,431 $
Cash and investments as of June 30, 2023 consist of the following:
Cash on hand 2,294 $
Deposit with Financial Institutions 1,832,482
Local Agency Investment Fund 4,364,836
Held by Fiscal Agent:
U.S. Treasury Obligations 14,148
U.S. Government Obligations 414,671
Total Cash and Investments 6,628,431 $
Fair Value Measurements
The framework for measuring fair value provides a fair value hierarchy that categorizes the inputs to valuation techniques used to measure fair value into three levels. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described as follows:
Level 1: Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets that a government can access at the measurement date.
Level 2: Inputs to valuation methodology include inputs – other than quoted prices included within Level 1 – that are observable for an asset or liability, either directly or indirectly.
Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
26 Note 3 – Cash and Investments (Continued)
The asset’s or liability’s fair value measurement level within a fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
Following is a description of the valuation methodologies used for assets measured at fair value.
Level 1 Level 2 Level 3
June 30, 2023
Balance
Investments by fair value level:
Debt Securities:
U.S. Treasury Obligations 14,148 $ - $ - $ 14,148 $
U.S. Government Obligations - 414,671 - 414,671
Total Debt Securities 14,148 414,671 - 428,819
Unclassified Investments
LAIF - - - 4,364,836
Total Unclassified Investments - - - 4,364,836
Cash:
Bank Deposits and Cash on Hand 1,834,776
Total Investments amortized at cost 1,834,776
Total Cash and Investments 6,628,431 $
The fair values of the U.S. treasury bonds are based on quoted market prices in active markets and are included in the Level 1 fair value hierarchy. The market for U.S. Treasury Obligations is an actively traded market given the high level of daily trading volume. The fair values of U.S. Government Obligations are determined using a matrix pricing technique that values securities based on their relationship to benchmark quoted prices and are in the Level 2 fair value hierarchy.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
27 Note 3 – Cash and Investments (Continued)
Investments Authorized by the California Government Code and the City’s Investments Policy The table below identifies the investment types that are authorized for the City by the California Government Code (or the City’s investments 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 City’s investment policy does not contain any specific provisions intended to limit the City’s exposure to interest rate risk, credit risk, and concentration of credit risk.
This table does not address investments of debts 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.
Authorized Investment Type
Maximum
Maturity
Maximum
Percentage
of Portfolio
Maximum
Investment In
One Issuer
Local Agency Bonds 5 years None None
U.S. Treasury Obligations 5 years None None
U.S. Agency Securities 5 years None None
Banker's Acceptances 180 days 40% 30%
Commercial Paper 270 days 25% 10%
Negotiable Certificates of Deposit 5 years 30% None
Medium-Term Notes 5 years 30% None
Mutual Funds N/A 20% 10%
Money Market Mutual Funds N/A 20% 10%
Mortgage Pass-Through Securities 5 years 20% None
County Pooled Investment Funds N/A None None
Local Agency Investment Fund (LAIF) N/A None None
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
28 Note 3 – Cash and Investments (Continued)
Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code of the City’s investment policy. The table below identifies the investment types that are authorized for investments held by the bond trustee. The table also identified certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.
Authorized Investment Type
Maximum
Maturity
Maximum
Percentage
of Portfolio
Maximum
Investment In
One Issuer
U.S. Treasury Obligations None None None
U.S. Agency Securities None None None
Banker's Acceptances 180 days None None
Commercial Paper 270 days None None
Money Market Mutual Funds N/A None None
Investment Contracts None None None
Certificates of Deposits 1 year None None
Repurchase Agreements 30 days None None
Local Agency Investment Fund (LAIF) N/A None None
Municipal Bonds None None None
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City manages its exposure to interest rate risk is by investing funds in liquid, short-term investments which can be converted to cash when necessary to meet disbursement requirements. As of June 30, 2023 the City had the following investments by maturity:
Investment Type Amount Maturity Date
Local Agency Investment Fund 4,364,836 $ N/A
Held by Bond Trustee:
U.S. Treasury Obligations 14,148 N/A
U.S. Government Obligations 414,671 N/A
Total 4,779,507 $
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
29 Note 3 – Cash and Investments (Continued)
Disclosure Relating to Credit Risk
Generally, 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. Presented below is the minimum rating required (where applicable) by the California Government Code, the City’s investment policy, or debt agreements, and the actual rating as of year-end for each investment type.
Investment Type Amount
Minimum Legal
Rating Not Rated AAAm
Local Agency Investment Fund 4,364,836 $ N/A 4,364,836 $ - $ Held by Bond Trustee:
U.S. Treasury Obligations 14,148 N/A - 14,148
U.S. Government Obligations 414,671 N/A - 414,671
Total 4,793,655 $ 4,364,836 $ 428,819 $
Rating as of Year Ended
Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. The City does not have any investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total City investments.
Custodial Credit Risk-Deposits
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in possession of an outside party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits, other than the following provisions for deposits: The California Government Code requires that a financial institution secure deposits made by the state or local government units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. As of June 30, 2023, the City’s bank balance of $1,817,890 was exposed to custodial credit risk because it was uninsured and collaterized with securities held by the pledging financial institution’s trust department or agent, but not in the name of the City.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
30 Note 3 – Cash and Investments (Continued)
The custodial risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of its investments or collateral securities that are in possession of another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for investments. 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 investments pools such as the Local Agency Investment Fund (LAIF).
Investment in State Investment Pool
The City is a voluntary participant in the LAIF that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City’s investments 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.
Note 4 – Accounts Receivable
Accounts receivable balances of the City’s enterprise funds, including the applicable allowance for uncollectible accounts as of June 30, 2023, are as follows:
Water Sewer Disposal Total
Accounts receivable 657,356 $ 447,242 $ 249,422 $ 1,354,020 $ Allowance for uncollectible accounts (239,812) (169,867) (89,930) (499,609) Total accounts receivable, net 417,544 $ 277,375 $ 159,492 $ 854,411 $
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
31 Note 5 – Interfund Activities
Due From/To Other Funds
Interfund receivables and payables consist of short-term loans resulting from regular transactions. These loans are expected to be repaid as soon as the borrowing fund has cash, and carry an interest rate equal to the rate earned on pooled cash. Individual fund interfund receivables and payables balances as of June 30, 2023 are as follows:
Due From Due To
General Fund 321,242 $ - $
Daycare Fund - 111,838
Water Fund - 142,667
Streets Capital Project Fund 66,737 -
$ 321,242 321,242 $
Operating Transfers
With the City Council approval, resources may be transferred from one City fund to another. The purpose of the majority of transfers is to reimburse a fund that has made expenditures on behalf of another fund. Transfers within fund types have been eliminated with the government-wide financial statements.
Transfers in and out for the year ended June 30, 2023 consisted of the following:
Transfer In Transfer Out
General 670,138 $ - $
American Rescue Plan - 394,000
Water 21,846 -
Sewer - 336,632
Community Development - 7,685
Development Impact Fees - 1,608
Measure C - 22,104
Streets - 2,244
Streets Capital Project - 8,622
Local Transportation 80,911 -
$ 772,895 $ 772,895
Transfer in of $80,911 to the Local Transportation from the General Fund was to reimburse for street related costs not covered.
Transfer out of American Rescue Plan to the General Fund of $394,000 was related to revenue recovery during the pandemic.
Sewer Fund had a transfer out of $336,632 to various funds to cover for ECI Solar and LED Lighting upgrade.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
32 Note 6 – Notes Receivable
Notes receivable at June 30, 2023 are as follows:
Housing Grant Notes – Through the grant, the City has loaned $1,290,000 to forty-three families at 1% interest.
The loan proceeds were used by these low and moderate income families to purchase homes. The loans are payable in thirty years or when property ownership is transferred. The proceeds for the loans are provided through a State Housing Grant. As of June 30, 2023, the notes receivable balance was $1,169,000. Deferred interest receivable on these notes was $135,930 as of June 30, 2023.
The City loaned four loans totaling $239,957 at 0% interest. The loan proceeds were used by these low and moderate income families to purchase homes. The loans are payable in thirty to forty-five years or when property ownership is transferred. The proceeds for the loans are provided through a Federal Housing Grant.
As of June 30, 2023, the City loaned forty-five loans totaling $1,138,329 at 0% interest. The loan proceeds were used by these low and moderate income families to purchase homes. The loans are payable in thirty years or when property ownership is transferred. The proceeds for the loans are provided through a State Housing Grant.
Low and Moderate Housing Notes – Note receivable is due from Citrus Gardens ’98 LP, to assist in the construction of low income apartment complex. The note incurs interest at three percent and requires annual payments of 50% of residual receipts” (revenues less debt service, property tax and maintenance and operating expenses). To date, there have been no payments on the note. The note is due in full in November 2029 with interest. The balance due on the note at June 30, 2023 was $275,000. Deferred interest receivable on the note at June 30, 2023 was $194,237.
Valley Small Business Development Note – A note receivable is due from Valley Small Business Development Corporation (“Valley”) in which funds were used to assist Valley in retaining control of a community medical clinic (Orchard Medical Center) in the City of Orange Cove and enable the property to again be used as a financially viable medical clinic. The note is due if and when Valley sells the Property. The first $200,000 of net appreciation would be due to the Successor Agency in addition to 25% of any excess appreciation. The balance due on the note at June 30, 2023 was $200,000.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
33 Note 7 – Capital Assets
Capital assets activity of the governmental activities for the year ended June 30, 2023 was as follows:
Governmental Activities
Balance
July 1, 2022 Additions Retirements
Balance
June 30, 2023
Capital assets, not being depreciated:
Land 1,302,411 $ - $ - $ 1,302,411 $
Construction in progress 288,832 670,874 - 959,706
Total capital assets, not being depreciated 1,591,243 670,874 - 2,262,117 Capital assets, being depreciated:
Buildings and improvements 11,585,563 - - 11,585,563
Machinery and equipment 2,308,954 288,882 - 2,597,836
Total capital assets, being depreciated 13,894,517 288,882 - 14,183,399 Less accumulated depreciation for:
Buildings and improvements (4,482,694) (364,146) - (4,846,840) Machinery and equipment (1,876,029) (207,593) - (2,083,622) Total accumulated depreciation (6,358,723) (571,739) - (6,930,462) Total capital assets, being depreciated, net 7,535,794 (282,857) - 7,252,937 Governmental activities capital assets, net 9,127,037 $ 388,017 $ - $ 9,515,054 $ Depreciation expense was charged to governmental functions as follows:
Governmental Activities Functions:
General Government 109,738 $
Public Safety 88,774
Public Works 105,111
Parks and Recreation 102,191
Streets 165,925
$ 571,739
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
34 Note 7 – Capital Assets (Continued)
Capital assets activity of the business-type activities for the year ended June 30, 2023 was as follows:
Business-Type Activities
Balance
July 1, 2022 Additions Retirements
Balance
June 30, 2023
Capital assets, not being depreciated:
Land 769,772 $ - $ - $ 769,772 $
Construction in progress 1,127,413 1,115,153 - 2,242,566 Total capital assets, not being depreciated 1,897,185 1,115,153 - 3,012,338 Capital assets, being depreciated:
Buildings and improvements 26,353,820 - - 26,353,820
Machinery and equipment 3,140,773 207,482 - 3,348,255
Total capital assets, being depreciated 29,494,593 207,482 - 29,702,075 Less accumulated depreciation for:
Buildings and improvements (12,954,091) (713,287) - (13,667,378) Machinery and equipment (1,933,331) (387,111) - (2,320,442) Total accumulated depreciation (14, (1,100,398) 887,422) - (15,987,820) Total capital assets being depreciated, net 14,607,171 (892,916) - 13,714,255 Business-type activities capital assets, net 16,504,356 $ 222,237 $ - $ 16,726,593 $ Depreciation expense was charged to business-type functions as follows:
Business-Type Functions:
Water 610,987 $
Sewer 489,411
$ 1,100,398
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
35 Note 8 – Long-term Debt
The City generally incurs long-term debt to finance projects or purchase assets which will have useful lives equal to or greater than the related debt.
In government fund-types, debt discounts and issuance costs are recognized in the current period. Debt discounts incurred in proprietary funds are deferred and amortized over the term of the debt using the bondsoutstanding method, which approximates the effective interest method. The City’s debt activities are summarized below and discussed in detail thereafter:
Balance
July 1, 2022 Additions Retirements
Balance
June 30, 2023
Current
Portion
Governmental Activities:
Direct Placement:
Special Assessment Bonds 813,000 $ - $ (85,000) $ 728,000 $ 88,000 $ Direct Borrowing:
PG&E Streetlights Loan 5,264 - (2,178) 3,086 2,178
Total Governmental Activities Debt 818,264 $ - $ (87,178) $ 731,086 $ 90,178 $ Business-Type Activities:
Direct Placements:
Bonds Payable:
1995 Water System Improvement Project 445,207 $ - $ (30,531) $ 414,676 $ 28,000 $ 2005 COP Water Loan 329,300 - (8,300) 321,000 8,600
Direct Borrowing:
Notes Payable:
ECI Solar & LED Lighting Loan - 954,345 - 954,345 -
California Department of Water Resource 201,471 - (42,502) 158,969 43,121 Total Business-Type Activities Debt 975,978 $ 954,345 $ (81,333) $ 1,848,990 $ 79,721 $ Net Pension Liability/(Asset):
Governmental Activities
Net Pension Asset (1,380,942) $ - $ 600,587 $ (780,355) $ Net Pension Liability 481,211 $ 738,697 $ - $ 1,219,908 $ Business-Type Activities
Net Pension Liability 208,396 $ 319,943 $ - $ 528,339 $
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
36 Note 8 – Long-term Debt (Continued)
Long-term debt at June 30, 2023 was comprised of the following individual issues:
Governmental Activities
Special Assessment Bond Payable – In March 1990, the City issued $2,450,684 in special assessment bonds with interest rates at 5% payable semi-annually. The proceeds were used to finance a sewer plant expansion project. These bonds are payable from assessments on the property owners within the City. The principal payments range from $21,000 to $120,000 and are due annually through 2029. At June 30, 2023, bonds payable outstanding amounts to $728,000.
Annual debt service requirements for Special Assessment Bond Payable are as follows:
Years ending in June 30, Principal Interest Total
2024 88,000 $ 33,900 $ 123,225 $
2025 93,000 29,375 121,900
2026 98,000 24,600 122,375
2027 102,000 19,600 122,600
2028 108,000 14,350 122,350
2029-2030 239,000 11,825 250,825
$ 133,650 728,000 $ 863,275 $
PG&E Street Lights Loan – In 2015, the City financed $21,238 from Pacific Gas & Electric for the LED Street Lights project. The principal payments of $182 are due monthly through November 2024. At June 30, 2023, the note payable outstanding amounts to $3,086.
Annual debt service requirements for PG&E Street Lights Loan are as follows:
Years ending in June 30, Principal Interest Total
2024 2,178 $ - $ 2,178 $
2025 908 - 908
$ - 3,086 $ 3,086 $
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
37 Note 8 – Long-term Debt (Continued)
Business-Type Activities
1995 Orange Cove Public Financing Authority Revenues Bond Payable – In 1995, the City issued $907,650 in revenue bonds with interest rates at 4.5% payable semi-annually thru 2035. The proceeds were used to finance a Water System Improvement Project. The City signed a lease agreement with the Authority with loan payments plus interest due semiannually. The principal payments range from $8,650 to $47,000 and are due annually through 2035. At June 30, 2023, the bonds payable outstanding amounts to $414,676.
Annual debt service requirements for the 1995 Orange Cove Public Financing Authority Revenue Bonds Payable are as follows:
Years ending in June 30, Principal Interest Total
2024 28,000 $ 20,835 $ 48,561 $
2025 29,000 19,553 48,835
2026 30,500 18,214 48,553
2027 32,000 16,807 48,714
2028 33,000 15,345 48,345
2029-2033 189,500 52,481 241,981
2034-2036 72,676 9,294 81,970
$ 152,529 414,676 $ 566,959 $
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
38 Note 8 – Long-term Debt (Continued)
2005 Certificate of Participation Water Loan – In July 2005, the City borrowed $425,000 from the U.S.
Government to facilitate water plant improvements. The interest rates is at 4.125% payable semi-annually. The principal payments in amounts from $4,300 to $21,000 are due annually through 2045. At June 30, 2023, the bonds payable outstanding amounts to $321,000.
Annual debt service requirements for the 2005 Certificate of Participation Water Loan are as follows:
Years ending in June 30, Principal Interest Total
2024 8,600 $ 13,064 $ 21,713 $
2025 9,000 12,701 21,664
2026 9,400 12,322 21,701
2027 9,700 11,928 21,722
2028 10,100 11,519 21,619
2029-2033 57,400 50,821 108,221
2034-2038 70,200 37,710 107,910
2039-3043 86,000 21,658 107,658
2044-2047 60,600 3,816 64,416
$ 175,539 321,000 $ 496,624 $
Department of Water Resource Note Payable – In 1996, the City borrowed $943,280 from the California Department of Water Resource to finance water system improvements. The interest rates is at 2.955% payable semi-annually. The principal payments in amounts from $9,900 to $23,800 are due annually through 2026. At June 30, 2023, the note payable outstanding amounts to $158,969.
Annual debt service requirements for the Department of Water Resource Note Payable are as follows:
Years ending in June 30, Principal Interest Total
2024 43,121 $ 6,261 $ 48,145 $
2025 44,421 5,024 48,145
2026 45,736 3,723 48,144
2027 25,691 2,419 48,144
$ 17,427 158,969 $ 192,578 $
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
39 Note 8 – Long-term Debt (Continued)
ECI Solar and LED Lighting Loan Payable – In January 2022, the City was approved for a $2,178,616 ECI Solar and LED Lighting loan through the California Energy Commission’s Energy Conservation Assistance Act (ECAA) to finance energy improvements. Subsidized at a 1% interest rate with semi-annual payments due each June and December, the loan features principal payments ranging from $50,000 to $68,000 through 2041. As of June 30, 2023, the City has drawn down $954,354, with the remaining $1,224,271 set to be utilized as the project progresses.
Annual debt service requirements for the ECI Solar and LED Lighting loan payable are as follows:
Years ending in June 30, Principal Interest Total
2024 - $ - $ 21,713 $
2025 107,650 30,296 21,664
2026 116,052 20,339 21,701
2027 117,216 19,174 21,722
2028 118,342 18,047 136,389
2029-2033 495,085 72,409 567,494
$ 160,265 954,345 $ 790,683 $
Note 9 – Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position or fund balance that applies to a future period(s) and thus, will not be recognized as an outflow of resources (expense/expenditure) until then. The City reports $1,559,221 in deferred outflow of resources related to net pension liability in the Statement of Net Position, see Note 11 for more details.
In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City reports $505,638 in deferred inflows related to net pension in the Statement of Net Position, see Note 11 for more details.
The City also has one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting as deferred inflows of resources. Accordingly, that item, unavailable revenues, is reported only in the governmental funds balance sheet. The City reports in the governmental funds $3,152,453 as unavailable revenues in the governmental funds:
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
40 Note 9 – Deferred Outflows/Inflows of Resources (continued) Housing
Fund
LowModerate
Housing
Asset Total
Unavailable revenues:
Interest income 135,930 $ 194,237 $ 330,167 $
Loan repayments 2,547,286 275,000 2,822,286
$ 2,683,216 469,237 $ 3,152,453 $
Note 10 – Deficit Fund Balances
The following is a summary of deficit fund balances and net position as of June 30, 2023:
The deficit fund balance of $1,975,932 in the Successor Agency is due to a bond payable, which will be paid down with future tax increments.
The deficit fund balance of $26,460 in the Streets Capital Project Fund is due to operating expenditures exceeding operating revenues in the current year.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
41 Note 11 – Defined Benefit Pension Plan
Plan Description - The City contributes to the California Public Employees' Retirement System (PERS), an agent multiple-employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California.
Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of PERS' annual financial report may be obtained from their Executive Office - 400 P Street - Sacramento, CA 95814.
Fund Policy - Active plan members in the Plan are required to contribute 5% of their covered salary for miscellaneous members and 9% to 11.5% for safety members. The City makes the employees’ contributions on their behalf. The City is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration. The contribution requirements of plan members are established by State statute and the employer contribution is established and may be amended by PERS.
The Plans’ provisions and benefits in effect at June 30, 2023, are summarized as follows:
Miscellaneous Classic Safety Classic
Hire Date
Prior to
January 1, 2013
Prior to
January 1, 2013
Benefit Formula 2% @ 60;
maximum 2%
COLA
2.0% at 50;
maximum 2%
COLA
Benefit Vesting Schedule 5 years 5 years
Benefit Payments monthly for life monthly for life
Retirement Age 60 50
Monthly Benefits, as a % of Eligible Compensation 2% 2% Required Employee Contribution Rates 7% 9%
Required Employer Contribution Rates 8.630% 19.270%
PEPRA Miscellaneous PEPRA Safety
Hire Date
Prior to
January 1, 2013
Prior to
January 1, 2013
Benefit Formula 2% @ 62;
maximum 2%
COLA
2.7% at 57;
maximum 2%
COLA
Benefit Vesting Schedule 5 years 5 years
Benefit Payments monthly for life monthly for life
Retirement Age 62 57
Monthly Benefits, as a % of Eligible Compensation 2% 2% Required Employee Contribution Rates 6.25% 13.00%
Required Employer Contribution Rates 7.470% 12.780%
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
42 Note 11 – Defined Benefit Pension Plan (Continued)
Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on July 1 following notice of a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS. 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 City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.
For the year ended June 30, 2023, the contributions recognized as part of the pension expense was $387,969.
Pension Liability/(Asset), Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2023, the City reported net pension liability/(asset) for its proportionate shares of the net pension liability/(asset) of each Plan as follows:
Proportionate Share of
Net Pension Liability (Asset)
Miscellaneous $ 1,748,247
Safety ($ 780,355)
The City’s net pension liability/(asset) for each Plan is measured as the proportionate share of the net pension liability/(asset). The net pension liability/(asset) of each of the Plan is measured as of June 30, 2021, and the total pension liability/(asset) for each Plan used to calculate the net pension liability/(asset) was determined by an actuarial valuation as of June 30, 2021 rolled forward to June 30, 2022 using standard update procedures.
The City’s proportion of the net pension liability/(asset) was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability/(asset) for each Plan as of June 30, 2022 and 2023 was as follows:
Miscellaneous Safety
Proportion – June 30, 2022 0.03632% -(0.03935%)
Proportion – June 30, 2023 0.03736% -(0.01136%)
Change – Increase/(Decrease) 0.00104% 0.02799%
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
43 Note 11 – Defined Benefit Pension Plan (Continued)
For the year ended June 30, 2023, the City recognized a pension expense of $1,548,532. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:
Deferred Outflows
of Resources
Deferred Inflows of
Resources
Pension contributions subsequent to
measurement date 376,254 $ - $
Change in employer's proportion 639,980 -
Difference between expected and actual
experience 43,584 (55,811)
Difference between projected and actual
contributions - (247,916)
Changes in assumptions or other inputs 179,154 (78,682) Net differences between projected and
actual earnings on pension plan investments (123,229) 320,249 Total $ (505,638) 1,559,221 $
The $376,254 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability/(asset) in the year ended June 30, 2024. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Year Ended
June 30
2024 225,338 $
2025 213,685
2026 117,602
2027 120,704
$ 677,329
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
44 Note 11 – Defined Benefit Pension Plan (Continued)
Actuarial Assumptions – The total pension liability in the June 30, 2021 actuarial valuations were determined using the following actuarial assumptions:
Valuation Date June 30, 2021
Measurement Date June 30, 2022
Actuarial Cost Method Entry-Age Normal Cost Method in
accordance with the requirements of
GASB Statement No. 68
Amortization Method Level Percent of Payroll
Asset Valuation Method Market Value
Actuarial Assumptions:
Discount Rate 6.90%
Inflation 2.30%
Payroll Growth 2.30%
Projected Salary Increase Varies by Entry Age and Service Investment Rate of Return 6.90%
Mortality Derived using CalPERS' Membership
Data for all Funds
1 Post Retirement Benefit Increase Contract COLA up to 2.30% until Purchasing Power Protection
Allowance Floor on Purchasing Power
applies
1 The mortality table used was developed based on CalPERS’ specific data. The table includes 20 years of mortality improvements using Society of Actuaries Scale BB. For more details on this table, please refer to the 2014 experience study report.
All other actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for fiscal years 1997-2011, including updates to salary increase, mortality and retirement rates. The Experience Study can be obtained at CalPERS’ website under Forms and Publications.
Change of assumptions – There were no changes of assumptions during the measurement period ended June 30, 2022.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
45 Note 11 – Defined Benefit Pension Plan (Continued)
Discount rate – The discount rate used to measure the total pension liability was 6.90 percent.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected rate of 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, staff took into account both short-term and long-term market return expectations as well as the expected pension fund (Public Employees’ Retirement Fund) cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11-60 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. The expected nominal rate of return was set by calculating the 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 equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.
The long-term expected real rates of return by asset class can be found in CalPERS’ Comprehensive Annual Financial Report for the fiscal year ended June 30, 2022.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
46 Note 11 – Defined Benefit Pension Plan (Continued)
The table below reflects long-term expected real rates of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. The geometric rates of return are net of administrative expenses.
Asset Class
Assumed Asset
Allocation
Real Return
Years 1-10
1,
2 Global equity - cap-weighted 30% 4.45%
Global equity - noncap-weighted 12% 3.84%
Private equity 13% 7.28%
Treasury 5% 0.27%
Mortgage-backed securities 5% 0.50%
Investment grade corporates 10% 1.56%
High yield 5% 2.27%
Emerging market debt 5% 2.48%
Private debt 5% 3.57%
Real assets 15% 3.21%
Leverage -5% -0.59%
Total 100%
1 An expected inflation of 2.30% used for this period
2 Figures are based on the 2021-22 Asset Liability Management study.
Sensitivity of the Proportionate Share of the Net Pension Liability/(Asset) to Changes in the Discount Rate The following presents the City’s proportionate share of the net pension liability/(asset) for each Plan, calculating using the discount rate of each Plan, as well as what the City’s proportionate share of the net pension liability/(asset) would be if it were calculated using a discount rate that is 1-percentage point lower (5.90%) or 1-percentage point higher (7.90%) than the current rate:
1% Decrease
(5.90%)
Current
Discount Rate
(6.90%)
1% Increase
(7.90%)
Miscellaneous 2,773,787 $ 1,748,247 $ 904,647 $
Safety (319,737) $ (780,355) $ (1,156,807) $
Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.
Payable to the Pension Plan – At June 30, 2023, the City has no outstanding amount of contributions to the pension plan required for the year ended June 30, 2023.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
47 Note 12 – Risk Management
The City participates with other public entities in a joint venture under a joint powers agreement which establishes the Central San Joaquin Valley Risk Management Authority (CSJVRMA). The relationship between the City and CSJVRMA is such that CSJVRMA is not a component unit of the City for financial reporting purposes.
The City is a member of the Central San Joaquin Valley Risk Management Authority (CSJVRMA), which is a joint powers authority established under the provisions of California Government Code Section 6500, et. seq.
The CSJVRMA is comprised of 54 member cities, and is governed by a Board of Directors which meets three times per year. The Board is comprised of one Board member and one alternate Board member appointed by each member city. The day-to-day business is handled by a management firm under contract with the CSJVRMA. The audited financial statements of the CSJVRMA are available at 1750 Creekside Oaks Drive, Suite 200, Sacramento, CA 95833.
The City purchases liability coverage through the CSJVRMA at a $10,000 self-insured retention. This risk sharing pool covers the first $1 million of losses (CSJVRMA’s retained limit). The CSJVRMA is a member of the California Affiliated Risk Management Authorities (CARMA) for the purpose of obtaining excess coverage in a risk sharing pool. CARMA provides coverage in excess of the CSJVRMA’s retained limit up to $29 million.
As of June 30, 2023, 54 cities participated in the CSJVRMA’s liability program. The City also purchases workers’ compensation coverage through the CSJVRMA at a $10,000 self-insured retention. This risk sharing pool covers the first $500,000 of losses (CSJVRMA’s retained limit). The CSJVRMA is a member of the Local Agency Workers’ Compensation Excess Joint Powers Authority (LAWCX) for excess workers’ compensation coverage. LAWCX provides $4.5 million of coverage in excess of the CSJVRMA’s retained limit and participates in the California State Association of Counties Excess Insurance Authority (CSAC-EIA) for coverage in excess of $5 million up to statutory. As of June 30, 2023, 51 cities participated in the CSJVRMA’s workers’ compensation program.
For both the liability and workers’ compensation coverage, expected claims are actuarially determined and deposited with the CSJVRMA along with all estimated operating costs each program year. Each program year is retrospectively adjusted five years following its conclusion and any funds remaining in excess of the minimum funding requirements established by the Board are returned to the member city. Any funding shortfalls are collected from the member city.
The City also purchases various property coverage programs. Deductibles and limits per property type can be obtained from the City Manager.
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
48 Note 12 – Risk Management (Continued)
The latest audited financial information and the most current information available for CSJVRMA for fiscal year ended June 30, 2023 is as follows:
Total assets 153,984,502 $
Total liabilities 120,022,096 $
Total equities 33,962,406 $
Total revenues 73,088,767 $
Total expenses 71,300,255 $
Revenues over (under) expenses 1,788,512 $
Note 13 – Contingencies
The City participates in several federal and state grant programs. These programs have been audited, as needed, in accordance with the provisions of federal Single Audit Act of 1984 and applicable state requirements. No cost disallowances were proposed as of results of these audits. However, these programs are still subject to further examination by the grantors and the amount, if any, of expenditures, which may be disallowed by the granting agencies, cannot be determined at this time. The City expects such amounts, if any, to be immaterial.
The City is a defendant in various lawsuits and claims. The City attorney anticipates that actual or potential claims against the City, not covered by insurance, would not materially affect the financial position of the City.
Note 14 – Julia A. Lopez Day Care
The City operates a full day care program funded by the State of California Department of Education. The City was awarded the contract not to exceed $1,502,446 for child care reimbursements. The City sub-contracts the daily operation to Target 8 Advisory Council, a non-profit that operates another day care program in the City.
The following administrative costs, not to exceed 15% of the grant were incurred:
Accounting and oversight: $103,262
Note 15 – Successor Agency Trust Fund
On January 18, 2012, the City Council elected to become the Successor Agency for the former redevelopment agency in accordance with Assembly Bill 1X26 (the “Bill”) which dissolved all redevelopment agencies in the State of California.
Under the control of an oversight board, 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).
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
49 Note 15 – Successor Agency Trust Fund (Continued)
Successor agencies are only allocated revenue in the amount that is necessary to pay 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.
Management believes, in consultation with legal counsel, that the obligations of the former redevelopment agency due to the City are valid enforceable obligations payable by the successor agency trust under the requirements of the Bill. The City’s position on this issue is not a position of settled law and there is considerable uncertainty regarding this issue. It is reasonably possible that a legal determination may be made at a later date by an appropriate judicial authority that would resolve this issue favorably for the City.
After the date of the dissolution, the assets and activities of the dissolved redevelopment agency are reported in a fiduciary fund (private-purpose trust fund) in the financial statements of the City.
Long-term Debt
Long-term debt reported in the Successor Agency Trust Fund at June 30, 2023 was comprised of the following individual issue:
Orange Cove RDA Tax Refunding Bonds – The former Redevelopment Agency of the City of Orange Cove issued a tax allocation bond payable in annual installments ranging from $55,340 to $396,299 with interest payable semi-annually at a rate between 3.7% per annum. At June 30, 2023, the bond outstanding amounts to $2,990,160.
Annual debt service requirements to maturity for the Orange Cove RDA Tax Refunding Bonds are as follows:
Principal Interest Total
2024 286,027 $ 107,990 $ 394,017 $
2025 294,468 97,329 391,797
2026 307,796 86,311 394,107
2027 320,911 74,801 395,712
2028 328,606 62,856 391,462
2029-2032 1,452,352 123,409 1,575,761
$ 552,696 2,990,160 $ 3,542,856 $
CITY OF ORANGE COVE
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
50 Note 16 – Subsequent Event
The City evaluated subsequent events for recognition and disclosure through April 20, 2026, the date which these financials were available to issue.
On April 15, 2025, an employee was terminated by the City and the total severance and compensated absences payout was $203,752.
On October 27, 2023, a contractor filed a claim with the City and in April 2025, the City settled with that contractor in the amount of $312,214.
Starting in fiscal year 2023, the City had a series of fraudulent bank charges in a electronic debits totaling $680,075. The City has only recovered $214,880 as of April 20, 2026, leaving $465,194 still being disputed. The City is exploring options and have contacted the appropriate authorities.
Note 17 – Prior Period Adjustments
The City had a prior period adjustment of $200,913 in the General Fund for the overstatement of receivable which decreased beginning fund balance by the same amount. In the Statement of Activities, the beginning net position was also decreaesd by $200,913 in the governmental activtiives..
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF ORANGE COVE
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
FOR THE YEAR ENDED JUNE 30, 2023
51 Variance with
Final Budget
Original Final
Actual
Amounts
Positive/
(Negative)
Revenues
Taxes 2,158,575 $ 2,158,575 $ 2,129,627 $ (28,948) $
Intergovernmental 7,890,843 7,890,843 538,634 (7,352,209) Charges for service 143,581 143,581 135,562 (8,019)
Licenses, permits and impact fees 144,755 144,755 175,023 30,268 Interest and rent 8,630 8,630 9,862 1,232
Other 218,925 218,925 316,532 97,607
Total revenues 10,565,309 10,565,309 3,305,240 (7,260,069) Expenditures
Current:
General government 1,099,714 1,099,714 521,479 578,235
Public safety 2,152,360 2,152,360 2,409,304 (256,944)
Public works 228,382 228,382 513,397 (285,015)
Planning and development 356,484 356,484 458,506 (102,022) Parks and recreation 1,867,425 1,867,425 210,045 1,657,380 Capital outlay 5,516,049 5,516,049 747,336 4,768,713
Total expenditures 11,220,414 11,220,414 4,860,067 6,360,347 Revenue over/(under) expenditures (655,105) (655,105) (1,554,827) (899,722) Other Financing Sources/(Uses)
Proceeds from sale of land - - 111,045 111,045
Transfers in/(out) - net 32,000 32,000 670,138 638,138
Total other financing sources/(uses) 32,000 32,000 781,183 749,183 Change in Fund Balance $ (687,105) (687,105) $ (773,644) (150,539) $ Fund Balance
Beginning of year 1,658,690
End of year 885,046 $
Budgeted Amounts
CITY OF ORANGE COVE
BUDGETARY COMPARISON SCHEDULE
AMERICAN RESCUE PLAN ACT SPECIAL REVENUE FUND
FOR THE YEAR ENDED JUNE 30, 2023
52 Variance with
Final Budget
Original Final
Actual
Amount
Positive/
(Negative)
Revenues
Intergovernmental 1,228,760 $ 1,228,760 $ 1,228,760 $ - $ Interest and rent - - 11,503 11,503
Total revenues 1,228,760 1,228,760 1,240,263 11,503
Expenditures
Current:
General government 1,228,760 - 843,142 (843,142)
Capital outlay - - 65,267 -
Total expenditures 1,228,760 - 908,409 (843,142)
Revenue over/(under) expenditures - 1,228,760 331,854 (831,639) Other Financing Sources/(Uses)
Transfers in/(out) - net - - (394,000) (394,000)
Total other financing sources/(uses) - - (394,000) (394,000) Change in Fund Balance $ - 1,228,760 $ (62,146) (1,225,639) $ Fund Balance
Beginning of year 612,676
End of year 550,530 $
Budgeted Amounts
CITY OF ORANGE COVE
BUDGETARY COMPARISON SCHEDULE
DAY CARE SPECIAL REVENUE FUND
FOR THE YEAR ENDED JUNE 30, 2023
53 Variance
with Final
Budget
Original Final
Actual
Amount
Positive/
(Negative)
Revenues
Intergovernmental 1,912,877 $ 1,912,877 $ 1,912,877 $ - $ Interest and rent 100 100 - (100)
Total revenues 1,912,977 1,912,977 1,912,877 (100)
Expenditures
Current:
Day care 1,912,877 1,912,877 1,912,877 -
Total expenditures 1,912,877 1,912,877 1,912,877 -
Change in Fund Balance $ 100 100 $ - 100 $
Fund Balance
Beginning of year -
End of year - $
Budgeted Amount
CITY OF ORANGE COVE
SCHEDULE OF THE CITY’S PROPORTIONATE SHARE OF NET PENSION LIABILITY/(ASSET) LAST 10 YEARS* FOR THE YEAR ENDED JUNE 30, 2023 54 Proportion of the net pension liability
Proportionate
share of the net
pension liability
Covered -
employee payroll
Proportionate share of the
net pension liability as a
percentage of
covered-employee
payroll
Plan's fiduciary
net position
Plan's fiduciary net position as
a percentage of the Total
Pension Liability
Miscellaneous
2015 0.01071% 666,533 $ 1,092,158 $ 65.32% 3,917,081 $ 85.46% 2016 0.02037% 558,760 $ 1,041,735 $ 53.64% 4,202,928 $ 99.12% 2017 0.02559% 888,986 $ 852,798 $ 104.24% 4,235,032 $ 82.65%2018 0.02784% 1,097,391 $ 877,360 $ 125.08% 4,622,119 $ 80.81%2019 0.02870% 1,081,502 $ 773,792 $ 139.77% 4,965,531 $ 82.12%2020 0.03093% 1,238,376 $ 776,655 $ 159.45% 5,340,241 $ 81.18%2021 0.03321% 1,400,755 $ 781,468 $ 179.25% 5,264,916 $ 78.99%2022 0.03632% 689,607 $ 905,182 $ 76.18% 6,162,241 $ 89.94%2023 0.03736% 1,748,337 $ 1,210,593 $ 144.42% 5,774,142 $ 76.76% Safety
2015 -0.01254% (780,109) $ 762,323 $ -102.33% 1,568,579 $ 198.94% 2016 -0.02013% (829,606) $ 739,296 $ -112.22% 2,229,193 $ 133.71%2017 -0.01404% (727,001) $ 720,786 $ -100.86% 2,223,046 $ 148.59%2018 -0.01276% (762,676) $ 734,007 $ -103.91% 2,551,526 $ 142.63%2019 -0.01432% (840,277) $ 763,507 $ -110.05% 2,871,423 $ 141.37%2020 -0.01350% (842,730) $ 750,151 $ -112.34% 3,193,989 $ 135.84%2021 -0.01206% (803,253) $ 800,023 $ -100.40% 3,355,850 $ 131.47%2022 -0.03935% (1,380,852) $ 823,864 $ -167.61% 4,156,528 $ 149.75%2023 -0.03935% (780,355) $ 947,748 $ -82.34% 4,115,793 $ 123.40% *Fiscal year 2014-15 was the first year of implementation, therefore only nine years are shown.
CITY OF ORANGE COVE
SCHEDULE OF CONTRIBUTIONS LAST 10 YEARS* FOR THE YEAR ENDED JUNE 30, 2023 55 Contractually required contribution
(actuarially determined)
Contributions in
relation to the
actuarially
determined
contributions
Contributions
deficiency (excess) Covered-employee payroll
Contributions as a
percentage of
covered-employee
payroll
Miscellaneous
2015 70,820 $ (70,820) $ - $ 1,092,158 $ 6.48%
2016 62,311 $ (62,311) $ - $ 1,041,735 $ 5.98%
2017 68,123 $ (68,123) $ - $ 852,798 $ 7.99%
2018 84,070 $ (84,070) $ - $ 877,360 $ 9.58%
2019 89,462 $ (89,462) $ - $ 773,792 $ 11.56%
2020 103,360 $ (103,360) $ - $ 776,655 $ 13.31%2021 120,367 $ (120,367) $ - $ 781,468 $ 15.40%2022 164,984 $ (164,984) $ - $ 905,182 $ 18.23%2023 244,788 $ (244,788) $ - $ 1,210,593 $ 20.22% Safety
2015 59,090 $ (59,090) $ - $ 762,323 $ 7.75%
2016 44,824 $ (44,824) $ - $ 739,296 $ 6.06%
2017 87,083 $ (87,083) $ - $ 720,786 $ 12.08%
2018 102,006 $ (102,006) $ - $ 734,007 $ 13.90%2019 105,577 $ (105,577) $ - $ 763,507 $ 13.83%2020 103,755 $ (103,755) $ - $ 750,151 $ 13.83%2021 116,069 $ (116,069) $ - $ 800,023 $ 14.51%2022 134,526 $ (134,526) $ - $ 823,864 $ 16.33%2023 143,181 $ (143,181) $ - $ 947,748 $ 15.11% *Fiscal year 2014-15 was the first year of implementation, therefore only nine years are shown.
CITY OF ORANGE COVE
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2023
56 Note 1 – Budgetary Information
The City follows the following procedures, annually, in establishing the budgetary data reflected in the budgetary comparison schedules:
1. The City Manager submits to the City Council a proposed budget for the fiscal year commencing the following July 1. The budget includes proposed expenditures and the means of financing them.
2. The City Council reviews the proposed budget at specially scheduled sessions, which are open to the public. The Council also conducts a public hearing on the proposed budget to obtain comments from interested persons.
3. Prior to July 1, the budget is legally adopted through passage of an ordinance. This budget is reported as Original Budget in the budgetary comparison schedules.
4. During the fiscal year, changes to the adopted budget may be authorized as follows:
a. Items requiring City Council action – appropriation of fund balance reserves; transfers of appropriations between funds; appropriation of any non-departmental revenue; new interfund loans or advances; and creation of new capital projects or increases to existing capital projects. b. Items delegated to the City Manager – transfers between departments within funds; appropriation of unbudgeted departmental revenues; and approval of transfers which increase salary and benefit appropriations.
c. Items delegated to the department head – allocation of departmental appropriations to line item level.
5. Formal budgetary integration is employed as a management tool for all funds. Annual budgets are legally adopted and amended as required for the general, special revenue, and enterprise funds. Project-length budgets are adopted for the capital projects funds. All budgets are prepared on a basis consistent with generally accepted accounting principles (GAAP), and budgetary comparisons for the general and major special revenue funds are presented on that basis in the required supplementary information. A debt service payment schedule for the debt service funds is also approved as part of the budget process.
6. Budget amounts are reflected after all authorized amendments and revisions. This budget is reported as the Final Budget in the budgetary comparison schedules.
7. For each legally adopted operating budget, expenditures may not exceed budgeted appropriations at the activity level. The legal appropriation basis is at the level called “department”. A “department” for legal appropriation purposes may be a single organization or an entire department having multiple organizations within the same fund, or an entire fund.
CITY OF ORANGE COVE
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2023
57 Note 2 – Excess of Expenditures over Appropriations
The excess of expenditures over appropriations are as follows:
General Fund:
Current:
Public safety $ 256,944
Public works $ 285,015
Planning and development $ 102,022
The excess of expenditures over appropriations are covered by the available fund balance in the General Fund.
OTHER SUPPLEMENTARY INFORMATION
CITY OF ORANGE COVE
COMBINING BALANCE SHEET- NON-MAJOR GOVERNMENTAL FUNDSFOR THE YEAR ENDED JUNE 30, 2023 58 Low-Moderate
Housing Asset Streets Measure O Gas Tax
ASSETS
Cash and investments 71,776 $ - $ 53,304 $ 561,296 $
Interest receivable 538 194,237 - 2,002
Due from other governments - - - 58,818
Notes receivable - 275,000 - -
Land held for resale - - - -
Total assets 541,013 $ 538 $ 53,304 $ 622,116 $
LIABILITIES AND FUND BALANCE Liabilities:
Accounts payable and accrued expenses - $ - $ 53,304 $ 1,893 $ Due to other funds - - - -
Unearned revenues - - - -
Total liabilities - - 53,304 1,893
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 469,237 - - -
Total deferred inflows of resources 469,237 - - -
Fund BalanceNonspendable:
Land held for resale - - - -
Restricted:
Public safety - - - -
Low-income housing activities 71,776 - - -
Circulation improvements - 538 - 620,223
Capital improvement projects - - - -
Debt service - - - -
Unassigned - - - -
Total fund balance 71,776 538 - 620,223
Total liabilities, deferred inflows of resources, and fund balance $ 538 541,013 $ 53,304 $ 622,116 $ Special Revenue Funds
CITY OF ORANGE COVE
COMBINING BALANCE SHEET- NON-MAJOR GOVERNMENTAL FUNDS (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2023 59 Community
Development Traffic Congestion
Local
Transportation Fund SB2
ASSETS
Cash and investments 333,053 $ - $ 474,004 $ 35,000 $
Interest receivable 1,575 - 1,923 -
Due from other governments 35,394 - 806,137 -
Notes receivable - - - -
Land held for resale 276,743 - - -
Total assets 646,765 $ - $ 1,282,064 $ 35,000 $
LIABILITIES AND FUND BALANCE Liabilities:
Accounts payable and accrued expenses - $ - $ 3,509 $ - $ Due to other funds - - - -
Unearned revenues - - - 35,000
Total liabilities - - 3,509 35,000
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - - - -
Total deferred inflows of resources - - - -
Fund BalanceNonspendable:
Land held for resale 276,743 - - -
Restricted:
Parks and recreation - - - -
Circulation improvements - - 1,278,555 -
Capital improvement projects 370,022 - - -
Debt service - - - -
Unassigned - - - -
Total fund balance 646,765 - 1,278,555 -
Total liabilities, deferred inflows of resources, and fund balance $ - 646,765 $ 1,282,064 $ 35,000 $ Special Revenue Funds
CITY OF ORANGE COVE
COMBINING BALANCE SHEET- NON-MAJOR GOVERNMENTAL FUNDS (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2023 60 Capital Project Fund Debt Service Fund
Development
Impact Fees Measure C
Streets Capital
Project
General Debt
Service
Total Non-major
Governmental
Funds
ASSETS
Cash and investments 780,090 $ 463,518 $ - $ 502,426 $ 3,274,467 $ Interest receivable 3,551 2,376 - 2,587 208,789
Due from other governments - 96,055 124,856 - 1,121,260 Notes receivable - - - - 275,000
Land held for resale - - - - 276,743
Total assets 783,641 $ 561,949 $ 124,856 $ 505,013 $ 5,156,259 $ LIABILITIES AND FUND BALANCE Liabilities:
Accounts payable and accrued expenses - $ 7,940 $ 84,579 $ - $ 151,225 $ Due to other funds - - 66,737 - 66,737
Unearned revenues - - - - 35,000
Total liabilities - 7,940 151,316 - 252,962
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - - - - 469,237
Total deferred inflows of resources - - - - 469,237
Fund BalanceNonspendable:
Land held for resale - - - - 276,743
Restricted:
Low-income housing activities - - - - 71,776
Circulation improvements - 554,009 - - 2,453,325
Capital improvement projects 783,641 - - - 1,153,663
Debt service - - - 505,013 505,013
Unassigned - - (26,460) - (26,460)
Total fund balance 783,641 554,009 (26,460) 505,013 4,434,060 Total liabilities, deferred inflows of resources, and fund balance $ 561,949 783,641 $ 124,856 $ 505,013 $ 5,156,259 $ Special Revenue Funds
CITY OF ORANGE COVE
COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGE IN FUND BALANCE
NON-MAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023
61 Low-Moderate
Housing Asset Streets Measure O Gas Tax
Revenues
Taxes - $ - $ 266,521 $ - $
Intergovernmental - - - 457,842
Licenses, permits and impact fees - - - -
Interest and rent - 1,285 - 4,781
Total revenues - 1,285 266,521 462,623
Expenditures
Current:
General government - - - -Public safety - - 265,976 -Public works - - - 186,731Planning and development - - - - Capital outlay - 27,921 53,719 34,690
Debt service:
Principal - - - 1,089Interest and other charges - - - - Total expenditures - 27,921 319,695 222,510
Revenue over/(under) expenditures (26,636) - (53,174) 240,113Other financing sources/(uses) Operating transfers in/(out) - net - (2,244) - -
Total other financing sources/(uses) - (2,244) - -
Change in Fund Balance (28,880) - (53,174) 240,113Fund Balance Beginning of year 71,776 29,418 53,174 380,110
End of year 71,776 $ 538 $ - $ 620,223 $
Special Revenue Funds
CITY OF ORANGE COVE
COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGE IN FUND BALANCE
NON-MAJOR GOVERNMENTAL FUNDS (CONTINUED)
FOR THE YEAR ENDED JUNE 30, 2023
62 Community
Development Traffic Congestion Local Transportation SB2 Revenues
Taxes - $ - $ - $ - $
Intergovernmental 79,328 - 467,963 -
Licenses, permits and impact fees - - - -
Interest and rent - - 4,593 -
Total revenues 79,328 - 472,556 -
Expenditures
Current:
General government 120,649 - - -
Public safety - - - -
Public works - - 115,567 -
Planning and development 972 - - -
Capital outlay - 10,758 15,753 -
Debt service:
Principal - - - -
Interest and other charges - - - -
Total expenditures 121,621 10,758 131,320 -
Revenue over/(under) expenditures (10,758) (42,293) 341,236 - Other financing sources/(uses)
Operating transfers in/(out) - net (7,685) - 80,911 -
Total other financing sources/(uses) (7,685) - 80,911 - Change in Fund Balance (10,758) (49,978) 422,147 -
Fund Balance
Beginning of year 696,743 10,758 856,408 -
End of year 646,765 $ - $ 1,278,555 $ - $
Special Revenue Funds
CITY OF ORANGE COVE
COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGE IN FUND BALANCE
NON-MAJOR GOVERNMENTAL FUNDS (CONTINUED)
FOR THE YEAR ENDED JUNE 30, 2023
63 Capital Project Fund Debt Service Fund
Development
Impact Fees Measure C Streets Capital Project General Debt Service Total Non-major
Governmental
Funds
Revenues
Taxes - $ - $ - $ 141,305 $ 407,826 $
Intergovernmental - 402,480 57,591 - 1,465,204
Licenses, permits and impact fees 58,975 - - - 58,975
Interest and rent 8,483 5,677 - 6,179 30,998
Total revenues 67,458 408,157 57,591 147,484 1,963,003
Expenditures
Current:
General government - - - - 120,649
Public safety - - - - 265,976
Public works - 291,106 - - 593,404
Planning and development - - - 1,320 2,292
Capital outlay - - 4,312 - 147,153
Debt service:
Principal - 1,089 - 85,000 87,178
Interest and other charges - - - 39,500 39,500
Total expenditures - 292,195 4,312 125,820 1,256,152
Revenue over/(under) expenditures 115,962 67,458 53,279 21,664 706,851 Other financing sources/(uses)
Operating transfers in/(out) - net (1,608) (22,104) (8,622) - 38,648 Total other financing sources/(uses) (1,608) (22,104) (8,622) - 38,648 Change in Fund Balance 93,858 65,850 44,657 21,664 745,499 Fund Balance
Beginning of year 717,791 460,151 (71,117) 483,349 3,688,561 End of year 783,641 $ 554,009 $ (26,460) $ 505,013 $ 4,434,060 $ Special Revenue Funds
COMPLIANCE SECTION
BRYANT L. JOLLEY
CERTIFIED PUBLIC ACCOUNTANTS Bryant L. Jolley C.P.A.
Ryan P. Jolley C.P.A.
Darryl L. Smith C.P.A.
Luis A. Perez C.P.A.
Lan T. Kimoto
INDEPENDENT AUDITOR’S 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 To the Honorable Mayor and City Council
City of Orange Cove, 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 States the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Orange Cove (the City) as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise City's basic financial statements, and have issued our report thereon dated April 20, 2026.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the 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 the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.
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. We consider the deficiencies described in items 2023- 01 through 2023-02 to be material weaknesses.
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. We consider the deficiencies described in the accompanying schedule of findings and questioned costs as items 2021-03 through 2023-04 to be significant deficiencies.
65 Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’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 determination of financial statement amounts. 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.
City of Orange Cove, CA Response to Findings
City of Orange Cove, California’s response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. The City’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
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 result of that testing, and not to provide an opinion on the effectiveness of the City'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 City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
April 20, 2026
901 “N” STREET, SUITE 104 FIREBAUGH, CALIFORNIA 93622 PHONE 559.659.3045 FAX 559.659.0615 BRYANT L. JOLLEY
CERTIFIED PUBLIC ACCOUNTANTS Bryant L. Jolley C.P.A.
Ryan P. Jolley C.P.A.
Darryl L. Smith C.P.A.
Luis A. Perez C.P.A.
Lan T. Kimoto
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR
EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE
REQUIRED BY THE UNIFORM GUIDANCE
To the Honorable Mayor and City Council
City of Orange Cove, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited City of Orange Cove (the “City”), California’s compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2023. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.
In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2023.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program.
Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s federal programs.
67 Auditor’s Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole.
In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.
68 The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance.
Accordingly, this report is not suitable for any other purpose.
April 20, 2026
69 CITY OF ORANGE COVE
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2023
Federal Grantor/Pass-through Grantor/Program Title
Federal Assistance
Listing Number
Agency or Pass-through
Number
Federal
Expenditures
U.S Department of Transportation
Passed through from the California Department of Transportation Highway Planning and Construction 20.205 CML-5301(024) 3,218 $ U.S. Department of Housing and Urban Development
Passed through from the State Department of Housing and Community Development Community Development Block Grant 14.218 CDBG-CV1 00002 107,512
14.218 CV2BA-00007 13,138
U.S. Department of Economic Development Administration
Direct award:
Investments for Public Works and Economic Development Facilities 11.300 07-01-07532 9,249 U.S. Department of Federal Emergency Management Agency
Passed through from the County of Fresno
Homeland Security Grant Program 97.067 HSGP-SHSP 78,889 U.S. Department of Treasury
Passed through from the California Department of Finance COVID-19 Coronavirus State and Local Fiscal Recovery Funds 21.027 N/A 1,302,407 Total Federal Expenditures $ 1,514,413
70 CITY OF ORANGE COVE
NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023
Note 1 – Significant Accounting Policies
The accompanying Schedule of Expenditures of Federal Awards (SEFA) presents the activity of all federal award programs of the City of Orange Cove, California (the City). Federal awards received directly from federal agencies as well as federal awards passed through other nonfederal agencies, primarily the State of California, are included in the SEFA. The City’s reporting entity is defined in Note 1 to the City’s basic financial statements.
Note 2 – Basis of Accounting
The accompanying SEFA is presented using the modified accrual basis of accounting for grants accounted for in the governmental fund types and the accrual basis of accounting for grants accounted for in the proprietary fund types, as described in Note 1 to the City’s basic financial statements. The information in the SEFA is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Therefore, some amounts presented in, or used in the preparation of, the SEFA may differ from amounts presented in the basic financial statements.
Note 3 – Assitance Listing Numbers
The Assistance Listing Numbers included in the accompanying SEFA were determined based on program name, review of grant contract information, and the Office of Management and Budget’s Catalog of Federal Domestic Assistance.
Note 4 – Relationship to the Financial Statements
Expenditures of federal awards are reported in the City’s basic financial statements as expenditures/expenses in the General Fund, nonmajor special revenue funds, nonmajor capital project funds, and the enterprise funds.
Note 5 – Indirect Cost Rate
The City did not elect to use the 10% de minimus cost rate as covered in 2 CFR §200.414.
CITY OF ORANGE COVE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
FOR THE YEAR ENDED JUNE 30, 2023
71 A. Summary of Auditor’s Results
Financial Statements
Type of auditor’s report issued: Unmodified
Internal control over financial reporting:
Material weaknesses identified? Yes No
Significant deficiencies identified that are
not considered to be material weaknesses? Yes None reported Non-compliance material to financial
statements noted? Yes No
Federal Awards
Internal control over major programs:
Material weaknesses identified? Yes No
Significant deficiencies identified that are
not considered to be material weaknesses? Yes None reported Type of auditor’s report issued on compliance for
major programs: Unmodified
Any audit findings disclosed that are required to
be reported in accordance with 2 CFR
200.516(a)? Yes No
Identification of Major Programs
Assistance Listing Number Name of Federal Program or Cluster
21.027 COVID-19 Coronavirus State and Local Fiscal
Recovery Funds
Dollar threshold used to distinguish between
Type A and Type B programs: $750,000
Auditee qualified as low-risk auditee? Yes No
CITY OF ORANGE COVE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
FOR THE YEAR ENDED JUNE 30, 2023
72 B. Findings – Financial Statements Audit
2023-01 Year-End Closing Process (Material Weakness)
Condition: As described in the California State Controllers “2015 Internal Control Guidelines” an effective internal control system and timely financial reporting of all financial activity provides reasonable assurance for the safeguarding of assets, the reliability of financial information, and compliance with laws and regulations.
Criteria: The City’s year-end financial closing process was not timely, complete or accurate. The lack of a complete and proper close resulted in numerous audit adjustments and significant delays in completing the annual audit.
Cause: The City’s Finance Director, who also serves as the City Manager, oversees the closing of the City’s general ledger while balancing the duties as City Manager. In addition to these responsibilities, there were numerous other financial statement, compliance, and control environment matters to resolve that were inherited from accounting errors and decisions made in previous fiscal years. Additionally, during the closing process, the City’s accounting department lost experienced staff positions, which had to be replaced with new staff requiring significant training. Lastly, the City has had significant disruptions as a result of the COVID-19 pandemic.
Effect: Various areas of the financial statements, including fund balance/net position, governmental and enterprise accounts receivable, accounts payable, unavailable revenue, and revenue were materially misstated, which required journal entries to be posted subsequent to receiving the City’s final trial balance.
Recommendation: We recommend that the City perform the following steps in order to address the matters described above:
Create a closing checklist to assist with the preparation of audit schedules that are complete, accurate, and reconcile to the City’s general ledger account balances. Additionally, ensure that a system is in place to allow the City to perform this in a timely matter.
Provide additional assistance to the Finance Department through the hiring of additional competent personnel. Provide additional training in accounting specific to governmental entities to Finance Department staff in order to ensure that they are current with all financial accounting and reporting requirements as directed by the Governmental Accounting Standards Board.
Management’s Response: See client’s corrective action plan as listed in the table of contents.
CITY OF ORANGE COVE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
FOR THE YEAR ENDED JUNE 30, 2023
73 B. Findings – Financial Statements Audit (continued) 2023-02 Bank Reconciliations (Material Weakness)
Condition: Cash was not reconciled to the general ledger on a monthly basis. Bank statements accumulated for several months before they were reconciled to the appropriate general ledger accounts.
Criteria: A strong system of internal controls and management review requires that bank reconciliations be performed on a timely basis.
Cause: The City hired an outside consultant to perform the bank reconciliations, however, this resulted in delays in rectifying any unreconciled differences. In addition, the demands placed on the Finance Director (loss of experienced staff, audit preparation, and other matters) prevented the timely completion of the bank reconciliation process.
Effect: By not reconciling the bank accounts to the general ledger on a monthly basis, errors or other problems might not be recognized and resolved on a timely basis.
Recommendation: Timely preparation of complete and accurate bank reconciliations is key to maintaining adequate internal control over cash. Bank reconciliations should be performed on all bank accounts in a timely manner after month-end. The bank reconciliations should be formally approved. Any discrepancies should be investigated, and all errors and omissions should be posted to the general ledger.
Management’s Response: See client’s corrective action plan as listed in the table of contents. 2023-03 Employee/Board Medical Reimbursements (Significant Deficiency) Condition: The City is not in line with its medical reimbursement policy.
Criteria: The City offers medical reimbursements for out-of-pocket costs to employees and officers who waive coverage through the City’s health plan. These reimbursements must not exceed the cost of the medical health plan’s annual premium per family member, per year. The City’s medical reimbursement policy states, “the City should have a uniform Claim Form that is completed for each request and should not make payment based on receipts only” Additionally, the policy also states, “the City should maintain a running total for each person to ensure the annual amount is not exceeded”.
Cause: The City’s latest medical reimbursement policy was implemented in 2011. Over the years, the City has had significant turnover which created difficulties in overseeing eligibility and enforcing the policy.
Effect: Of 4 reimbursements selected for testing:
4 reimbursements were approved using previously submitted documentation for the reimbursement of medical premiums
The City did not maintain a cumulative reimbursement log for any of the claimants tested.
CITY OF ORANGE COVE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
FOR THE YEAR ENDED JUNE 30, 2023
74 B. Findings – Financial Statements Audit (continued) 2023-03 Employee/Board Medical Reimbursements (Significant Deficiency) (continued) Recommendation: We recommend the City follow its medical reimbursement plan. Ensure all claimants remain eligible for reimbursement under the policy Create a medical reimbursement claim form with appropriate approvals that lists all requirements for reimbursement. This allows the claimant and approver to ensure all requisites are met prior to reimbursement. Ensure supporting documentation received from claimant is up-to-date and not previously submitted and is eligible under the City’s policy.
Maintain a log of annual reimbursements per claimant to ensure the total does not exceed the threshold as stated in the policy.
Management’s Response: See client’s corrective action plan as listed in the table of contents.
Finding 2023-004 Credit Card Authorization and Documentation (Significant Deficiency) Condition: During our audit, we noted the City’s process in ensuring credit card charges were approved and included supporting documentation was not effective. Our review of credit card charges found that charges made on the City’s credit cards did not always have supporting documentation or documented approvals.
Criteria: Per the City’s credit card policy, all credit card charges must include a receipt for all charges. Additionally, the City requires an expense and reimbursement report for all credit card charges.
Cause: The City had not enforced documentation or claim forms for the month tested as required by the City’s credit card policy.
Effect: Of the 2 months that were selected for testing, we found twelve transactions that did not have any supporting receipts or approval documentation.
Recommendation: We recommend the City actively monitor the use of credit cards and require all cardholders to submit receipts of all charges and indicate the nature of charges. Cardholders should be given no more than 30 days after the charge to submit their receipts. Documentation and a brief description of all transactions help detect any questionable charges paid via credit card.
Management’s Response: See client’s corrective action plan as listed in the table of contents.
CITY OF ORANGE COVE
STATUS OF PRIOR AUDIT FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2023
75 Summary Schedule of Prior Audit Findings
Finding 2022-001 Year-End Closing Process (Material Weakness) – Not implemented, see Finding 2023-001 Finding 2022-002 Bank Reconciliation (Material Weakness) – Not implemented, see Finding 2023-002 Finding 2022-003 Employee/Board Medical Reimbursements (Significant Deficiency) – Not implemented, see Finding 2023-003
Finding 2022-004 Credit Card Authorization and Documentation (Significant Deficiency) – Not implemented, see Finding 2023-004