City Council Agenda Report
TO: Mayor Clauzel and Members of the City Council
FROM: Fernando Ulloa, City Manager
BY: Kevin Williams,
MEETING DATE: May 6, 2025
ITEM NO: 7.2
SUBJECT: Accept the City of Patterson’s 2023-24 Financial Audit Report, 2023-24 Single Audit Report, 2023-24 Transportation Development Act Funds Financial Audit Report, 2023-24 Abandoned Vehicle Abatement Program Financial Audit Report.
RECOMMENDATION
Motion to Accept the City of Patterson’s 2023-24 Financial Audit Report, 2023-24 Single Audit Report, 2023-24 Transportation Development Act Funds Financial Audit Report, 2023-24 Abandoned Vehicle Abatement Program Financial Audit Report.
BACKGROUND
The City of Patterson publishes financial statements presented in conformance with Generally Accepted Accounting Principles (GAAP). The financial statements were audited by the independent public accounting firm of The Pun Group, LLP, whose unmodified opinion is included within the financial section of the report. The unmodified opinion indicates that the financial statements present fairly the financial position of the City of Patterson as of June 30, 2024, and the results of operations, in accordance with generally accepted accounting principles. As part of the audit, The Pun Group, LLP also reviewed and performed a test of the City’s internal accounting control procedures to determine if there are any material weaknesses or instances of non-compliance. Based on the audit, there is no instance of non-compliance.
All non-Federal entities that expend $750,000 or more of Federal awards in a year are required to obtain an annual audit to comply with both the Single Audit Act Requirements and Federal Government’s Office of Management and Budget (OMB) standards. The Single Audit has been completed and the independent auditors have indicated that the City of Patterson has no instance of non-compliance.
The City of Patterson’s 2023-24 financial report, 2023-24 Single Audit Report, 2023-24 Abandoned Vehicle Abatement Program financial report and 2023-24 Transportation Development Act Funds financial report are available on the City’s website and are attached to this staff report.
Representative of The Pun Group will be present to discuss the audit and answer questions.
ANALYSIS
Governmental funds. The focus of the City of Patterson’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Patterson’s financing requirements. Spendable fund balance may serve as a useful measure of a government’s net resources at the end of the fiscal year.
As of June 30, 2024, the City of Patterson’s governmental activities reported an ending net position of $105,143,380, an increase of 18% primarily due to an increase in charges for services in the amount of $3,784,298 and $2,424,744 in taxes.
The General Fund is the chief operating fund of the City of Patterson. At the end of the current fiscal year, the committed, assigned and unassigned fund balance of the general fund was $23,393,334, while total fund balance was $24,266,693. The general fund’s ending fund balance increased by $6.1 million compared to the prior year.
As a measure of the General Fund’s liquidity, it may be useful to compare only the committed, assigned, and unassigned fund balance to total fund expenditures. Committed, assigned and unassigned fund balance represents 77.07% of the total general fund expenditures for the year, most of which is committed or assigned to meet future long-term obligations. The key factors in the increase of General Fund’s fund balance as follows:
• Overall, General Fund revenues (including transfers in) increased from last year by $5.2 million or 18% and expenditures (including transfers out) increased by $2.9 million or 11% over the prior year. Tax related revenue increased by $2.4 million mainly due to a one time increase in Sales Tax revenue. Licenses and Permits increased by about $600 thousand and charges for services increased by about $700 thousand due to increases in development. • The overall increase in expenditures in the amount of $3.6 million or 13% was attributed mostly to increased capital outlay expenditures.
As of the end of the current fiscal year, the City of Patterson’s governmental funds reported combined ending fund balances of $115,731,725, an increase of $19 million in comparison with the prior year.
The city’s total governmental funds ending fund balances of $33,361,273 or 28.83% constitute committed, assigned and unassigned fund balance, which is available for spending at the government’s discretion within the guidelines of the funding sources. The remainder of the fund balance of $82,370,452 is either non-spendable or restricted for purposes imposed by creditors, grantors, contributors, laws, or regulations of other governments or through enabling legislation.
Proprietary funds. The City of Patterson’s proprietary funds include the Water, Sewer and Garbage funds. As of June 30, 2024, the City’s total ending net position of $48,012,963 decreased 1% primarily due to a decrease in capital grants and contributions in the amount of $5,181,105.
Water operating revenue increased by $680,487, and expenses increased by $354,623 in fiscal year 2024,
resulting in operating income of $1.5 million. The increase in revenue primarily generated from the increase in
newly adopted water rates in January 2024.
Sewer operating revenue increased by $748,197 and expenses increased by $12,344 in fiscal year 2024,
resulting in an operating deficit of $960,971. The increase in operating revenue primarily generated from the
increase in newly adopted sewer rate in July 2023.
Garbage operating revenue increased by $323,369 in fiscal year 2024. This increase in revenue resulted from
an increase in garbage rates of 4.9% and increase in the number of customers. Garbage operating expenses
increased by $693,936 primarily resulted from increasing operating costs related new customers and increasing
public outreach in compliance with Senate Bill 1383, which requires every jurisdiction to provide organic waste
collection services to all residents and businesses.
The Unrestricted net position of the Enterprise Funds at the end of the year resulted in a deficit of $2,325,327, an increase of $1,202,050 from the prior year. This change is primarily the result of the acquisition and construction of capital assets.
FISCAL IMPACT
Acceptance of these reports does not affect the City’s budget or its financial condition. The report merely reflects an audit of the City’s financial records at June 30, 2024.