Budget and Audit Committee
February 27, 2024

City of Sacramento
Budget and Audit Committee Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-00350 2/27/2024 Discussion Item 5.

Fiscal Year 2022/23 Annual Comprehensive Financial Report (ACFR) File ID: 2024-00350
Location: Citywide
Recommendation: Pass a Motion: 1) accepting the Fiscal Year (FY) 2022/23 Annual Comprehensive Financial Report (ACFR); and 2) and forwarding to the City Council for approval.

Contact: Osvaldo Lopez, Finance Manager, (916) 808-4740, [email protected]; Peter Coletto, Finance Director, (916) 808-5416, [email protected], Department of Finance Presenter: Osvaldo Lopez, Finance Manager, (916) 808-4740, Department of Finance Attachments:
1-Description/Analysis
2-Resolution
3-FY2022/23 ACFR
4-FY2022/23 Auditor’s Letter on ACFR
5-FY2022/23 Auditor’s Report on Internal Control Over Financial Reporting Description/Analysis
Issue Detail: The City’s FY2022/23 ACFR presents the City’s financial condition and the results of activities for the fiscal year that ended June 30, 2023. The independent public accounting firm Macias, Gini & O’Connell LLP has audited the ACFR financial statements, as required by the Sacramento City Charter section 117.

Overview of Report
The City prepared the ACFR to present financial information in a standard format prescribed by the Government Finance Officers Association. The ACFR is organized as follows:
· An Introductory Section with a transmittal letter summarizing economic conditions, budget initiatives and other information.
· A Financial Section which begins with Management’s Discussion and Analysis

File ID: 2024-00350 2/27/2024 Discussion Item 5.
(MD&A), a narrative overview, analysis of the financial statements, and comments on the City’s financial outlook. The basic financial statements follow the MD&A and report the financial position and the results of the operations of the City as a whole, and the financial performance of the City’s major funds. Footnotes to the financial statements are included to provide additional information. Finally, combining fund financial statements are presented to provide additional financial details of the City’s activities. · A Statistical Section with selected financial, demographic, and operating trend information.

In FY2022/23 the City implemented four new accounting and financial reporting standards issued by the Governmental Accounting Standards Board (GASB) in the ACFR:
· Statement No. 91, Conduit Debt Obligations
· Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements
· Statement No. 96, Subscription-Based Information Technology Arrangements · Statement No. 99, Omnibus 2022
General Fund FY2022/23 Financial Results
The following schedule summarizes the FY2022/23 net budgetary results which resulted in $5 million in resources above budget:

FY2022/23 General Fund Summary $ in 000s
Major Tax Revenues
Property 2,238$
Sales (1,120)
Utility user 1,364
Real property transfer 442
Other taxes (BOT/TOT) 295
Subtotal Major Tax Revenue 3,219
Department operations 573
Other Citywide revenue/expenditure results 5,333
Unrealized investments fair market loss (2,963)
Purchase order encumbrances (1,076)
Unassigned Fund Balance 1 5,086$
1 FY2022/23 Unassigned Fund Balance as represented in this chart reflects the General Fund activities/results for the current fiscal year and does not include unassigned fund balance from prior fiscal year of $.4 million. The total unassigned fund balance for General Fund as of 6/30/2023, including new and previous resources, was approximately $5.5 million. General Fund for FY2022/23 was combined with fund 1003 ARPA reinvestment Fund, this fund also carried an unassigned amount of $5.7 million (see page 24 of the ACFR for additional

File ID: 2024-00350 2/27/2024 Discussion Item 5.
information).

Revenues
Total General Fund revenue exceeded the FY2022/23 Approved Budget as amended by $23.3 million. Tax revenue was $3.2 million higher than the budget projections, a variance of 1%.

Property taxes ended higher than projected by $2.2 million, the result of increases in market value and activity. Other taxes, including sales and use tax, property transfer, utility user, business operations, and transient occupancy taxes ended higher than projected by $1 million.

Intergovernmental revenue was $9.4 million higher than the budget projection mainly due to more federal reimbursement for fire emergency medical services. Charges for services were $3.4 million higher than the budget projection due to higher-than-expected auto dealership share revenue. Please refer to page 32 of the ACFR for the budget to actual comparison.

The General Fund Economic Uncertainty Reserve (EUR) for the General Fund increased from $61.3 million to $72.5 million as of June 30, 2023.

Expenditures
Most operating departments ended FY2022/23 within their budgeted operating expenditure authority.

The Convention and Cultural Services, Fire and Youth, Parks, and Community Enrichment departments were the only exceptions. Details on departments’ year-end results are provided in the chart below.

File ID: 2024-00350 2/27/2024 Discussion Item 5.

Departments that had significant variances between budget and year-end results have provided the following explanations:

Community Development - Positive results are primarily due to a combination of labor savings from vacant positions, reimbursement from staff charging projects, and service and supply savings.

Finance - Positive results are primarily due to higher-than-expected revenue related to unclaimed property and savings from vacant positions.

Fire - Negative results are primarily due to unexpected overtime in excess of labor savings.

Public Works - Positive results are primarily due to higher than anticipated revenue associated with parking enforcement and parking meter collections and labor savings due to vacancies.

Measure U Fund FY2022/23 Financial Results
The following schedule summarizes the FY2022/23 net budgetary results which resulted in $1.9 million in resources above budget:

FY2022/23 Measure U Fund Summary $ in 000s
Measure U sales taxes (1,785)$
Department operations 2,835
Other Citywide revenue/expenditure results 1,685
Unrealized investments fair market loss (815)
Purchase order encumbrances (363)
Unassigned Fund Balance 1 1,557$
2 FY2022/23 Unassigned Fund Balance as represented in this chart reflects the Measure U Fund activities/results for the current fiscal year and does not include unassigned fund balance from prior fiscal year. The total unassigned fund balance for Measure U fund as of 6/30/2023, including new and previous resources, was approximately $2.6 million.

Revenues
Total Measure U Fund revenues fell short of the FY2022/23 Approved Budget as amended by $1.8 million. The negative revenue variance was due to lower than anticipated retail transactions due to inflationary price increases.

The Economic Uncertainty Reserve (EUR) for the Measure U Fund increased from $1.05 million to $1.77 million as of June 30, 2023.

Expenditures
All operating departments ended FY2022/23 within their budgeted operating expenditure

File ID: 2024-00350 2/27/2024 Discussion Item 5.
authority. Details on departments’ year-end results are provided in the chart below. Only departments that received Measure U funding are included in the chart.

Department
Results
($ in 000s)
Mayor/Council 98$
City Manager 1,698
City Attorney -
Community Development 935
Community Response -
Convention and Cultural Services 6
Fire -
Human Resources (26)
Information Technology -
Youth, Parks, and Community Enrichment -
Police 124
Total Results 2,835$
Departments that had significant variances between budget and year-end results have provided the following explanations:

City Manager - Positive results are primarily due labor savings from vacant positions and service and supply savings.

Community Development - Positive results are primarily due to a combination of labor savings from vacant positions, reimbursement from staff charging projects and service and supply savings.

Auditor’s Letter to the City Council
The auditor’s letter to the City Council is additional communication required by audit standards which conveys that there were no difficulties encountered performing the audit or disagreements between the auditors and City staff. The letter also includes information about significant estimates and footnote disclosures included in the financial statements. Refer to attachment 4 for additional information.

Policy Considerations: This report is required by the City Charter, federal and state grant requirements, and bond covenants.

Economic Impacts: None.

File ID: 2024-00350 2/27/2024 Discussion Item 5.

Environmental Considerations: Not applicable.

California Environmental Quality Act (CEQA): This action is not a project subject to CEQA because it involves only organizational or administrative activities that will not result in direct or indirect physical changes in the environment (CEQA Guidelines §15378(b)(5)).

Sustainability: Not applicable.

Commission/Committee Action: None.

Rationale for Recommendation: It is in the best interest of the City to accept the FY2022/23 ACFR and the auditor’s letter to the City Council for the following reasons:
· The annual audit is required by section 117 of the Sacramento City Charter, federal and state grant requirements, and bond covenants.
· The public accounting firm of Macias Gini & O’Connell LLP has audited the City’s FY2022/23 financial statements and has rendered its unmodified opinion that the financial statements are fairly presented in accordance with generally accepted accounting principles.
· The auditor’s letter to the City Council reflects no significant audit issues or disagreements with management in connection with this audit.

Financial Considerations: General Fund and Measure U budgetary results for the fiscal year that ended June 30, 2023, resulted in one-time resources in the amount of approximately $8.1 million.

The City is currently projecting a substantial structural deficit in future fiscal years. The $8.1 million is a one-time resource and can be utilized to partially offset the projected FY2024/25 budget deficit.

Local Business Enterprise (LBE): No goods or services are being purchased under this report.

RESOLUTION NO.

Adopted by the Sacramento City Council
FISCAL YEAR 2022/23 ANNUAL COMPREHENSIVE FINANCIAL REPORT

BACKGROUND
A. The City’s Fiscal Year (FY) 2022/23 Annual Comprehensive Financial Report (ACFR) was prepared to present the City’s financial condition and the results of its activities for the fiscal year ended June 30, 2023. The ACFR financial statements were audited, as required by the City Charter, by an independent public accounting firm.

B. The public accounting firm of Macias Gini & O’Connell LLP audited the City’s FY 2022/23 financial statements and rendered its unmodified opinion that the financial statements are fairly presented in accordance with generally accepted accounting principles.

C. The General Fund’s budgetary results and Measure U Fund’s budgetary results for the fiscal year ended June 30, 2022, provided $8.1 million in one-time resources.

D. The auditor’s letter to the City Council reflects no significant audit issues or disagreements with management in connection with this year’s audit.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:

Section 1. The City Council accepts the FY2022/23 Annual Comprehensive Financial Report, attached hereto as Exhibit A.

Section 2. The City Council accepts the auditor’s letter to the City Council dated, December 19, 2023, attached hereto as Exhibit B.

Section 3. Exhibit A and B are part of this resolution.

Table of Contents:

Exhibit A Annual Comprehensive Financial Report
Exhibit B Auditor’s letter to City Council
CityofSacramento.org
Annual Comprehensive
Financial Report
FISCAL YEAR ENDED JUNE 30, 2023

CITY OF SACRAMENTO, CALIFORNIA
City of Sacramento

California

Annual Comprehensive
Financial Report

Fiscal Year Ended June 30, 2023

Prepared by the Department of Finance,
Accounting Division

Peter Coletto, Finance Director
Osvaldo Lopez, Finance Manager

Supervising Financial Analysts

Emily Hsia Jennifer Gilbertson Ra y Tang

Senior Accountant Auditors

Sharina Bali Thomas Keegan Rona Mao
Doreen Chia
Svetlana Donkova
Bilal Malik
Susan Nazari
Juliana Wong

CITY OF SACRAMENTO, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT

For the Fiscal Year Ended June 30, 2023

TABLE OF CONTENTS

INTRODUCTORY SECTION (Unaudited) PAGE

Letter of Transmittal .............................................................................................................................................. i Organization Chart ............................................................................................................................................... v Directory of City Officials ..................................................................................................................................... vi GFOA Certificate ................................................................................................................................................. vii

FINANCIAL SECTION

Independent Auditor’s Report .............................................................................................................................. 1 Management’s Discussion and Analysis (Required Supplementary Information - Unaudited) ........................ 5

BASIC FINANCIAL STATEMENTS

Government-wide Financial Statements:

Statement of Net Position ............................................................................................................................. 19 Statement of Activities ................................................................................................................................... 20 Fund Financial Statements:

Balance Sheet - Governmental Funds ......................................................................................................... 24 Reconciliation of the Balance Sheet to the Statement of Net Position – Government al Funds ............................................................................................................................... 27 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ............. 28 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities – Governmental Funds ............................................... 31 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Budgetary Basis) with Budget to GAAP Reconciliation – General Fund .......................................................................................................................................... 32 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Budgetary Basis) with Budget to GAAP Reconciliation – Measure U Fund ...................................................................................................................................... 33 Statement of Net Position – Proprietary Funds ............................................................................................ 34 Statement of Revenues, Expenses and Changes in Net Position – Proprietary Funds ............................ 38 Statement of Cash Flows – Proprietary Funds ............................................................................................ 40 Statement of Fiduciary Net Position – Fiduciary Funds ............................................................................... 44 Statement of Changes in Fiduciary Net Position – Fiduciary Funds ........................................................... 45 Notes to the Basic Financial Statements ........................................................................................................... 47

REQUIRED SUPPLEMENTARY INFORMATION (Unaudited)

Schedule of Changes in Net Pension Liability and Related Ratios – CalPERS Miscellaneous Plan ........... 116 Schedule of Contributions – CalPERS Miscellaneous Plan ........................................................................... 118 Schedule of Changes in Net Pension Liability and Related Ratios – CalPERS Safety Plan ........................ 120 Schedule of Contributions – CalPERS Safety Plan ........................................................................................ 122 Schedule of Changes in Net Pension Liability and Related Ratios – Sacramento City Employees’ Retirement System ..................................................................................... 124 Schedule of Contributions – Sacramento City Employees’ Retirement System ........................................... 126 Schedule of Changes in Net OPEB Liability and Related Ratios ................................................................... 128 Schedule of Contributions – OPEB ................................................................................................................. 129

CITY OF SACRAMENTO, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT

For the Fiscal Year Ended June 30, 2023

TABLE OF CONTENTS, Continued

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES PAGE

Other Governmental Funds

Combining Balance Sheet .............................................................................................................................. 131 Combining Statement of Revenues, Expenditures and Changes in Fund Balances………….……………..132

Other Special Revenue Funds:

Combining Ba lance Sheet .................................................................................................... 134 Combining Statement of Revenues, Expendi tures and Changes in Fund Balances ......... 136 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual, Transportation and Development Special Revenue Fund ..... 138 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual, Culture and Leisure Special Revenue Fund .......................... 139 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual, Parks and Recreation Special Revenue Fund ....................... 140 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual, CCOMWP Special Revenue Fund ......................................... 141 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual, Special Districts Special Revenue Fund ................................ 142 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual, Cal EPA Special Revenue Fund ............................................. 143

Other Debt Service Funds:

Combining Ba lance Sheet .................................................................................................... 146 Combining Statement of Revenues, Expendi tures and Changes in Fund Balances ......... 148

Other Capital Projects Funds:

Combining Ba lance Sheet .................................................................................................... 152 Combining Statement of Revenues, Expendi tures and Changes in Fund Balances ......... 154

Permanent Funds:

Combining Balance Sheet .................................................................................................... 157 Combining Statement of Revenues, Expendi tures and Changes in Fund Balances ......... 158

Other Proprietary Funds

Other Enterprise Funds:

Combining Statement of Net Position .................................................................................. 160 Combining Statement of Revenues, Exp enses and Changes in Net Position ................... 163 Combining Statemen t of Cash Flows ................................................................................... 164

Water Fund:

Combining Schedule of Net Position .................................................................................... 168 Combining Schedule of Revenues, Expens es and Changes in Net Position .................... 172 Combining Schedule of Cash Flows .................................................................................... 174

Wastewater Fund:

Combining Schedule of Net Position .................................................................................... 180 Combining Schedule of Revenues, Expens es and Changes in Net Position .................... 184 Combining Schedule of Cash Flows .................................................................................... 186

CITY OF SACRAMENTO, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT

For the Fiscal Year Ended June 30, 2023

TABLE OF CONTENTS, Continued

Other Proprietary Funds P A G E

Community Center Fund:

Combining Schedule of Net Position .................................................................................... 192 Combining Schedule of Revenues, Expens es and Changes in Net Position .................... 194 Combining Schedule of Cash Flows .................................................................................... 196

Internal Service Funds:

Combining Statement of Net Position .................................................................................. 202 Combining Statement of Revenues, Exp enses and Changes in Net Position ................... 205 Combining Statemen t of Cash Flows ................................................................................... 206

Custodial Funds:

Combining Statement of Fiduciary Net Position .................................................................. 209 Combining Statement of Changes in Fiduciary Net Position .............................................. 210

STATISTICAL SECTION (Unaudited)

Net Position by Component – Last Ten Fiscal Years........................................................................ 212 Changes in Net Position – Last Ten Fiscal Years ............................................................................. 214 Fund Balances, Governmental F unds – Last Ten Fiscal Years ....................................................... 220 Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years ................................... 222 Tax Revenues by Source, Government al Funds – Last Ten Fiscal Years ...................................... 224 Assessed Value and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years .......... 225 Direct and Overlapping Property Ta x Rates – Last Ten Fiscal Years .............................................. 226 Principal Property Taxpayers – Curr ent Fiscal Year and Nine Years Ago ....................................... 227 Property Tax Levies and Collections – Last Ten Fiscal Years ......................................................... 228 Ratios of Outstanding Debt by Type – Last Ten Fiscal Years .......................................................... 230 Ratios of Net General Bonded Debt Outstanding – Last Ten Fiscal Years ..................................... 232 Direct and Overlapping Governmental Activities Debt – As of June 30, 2023 ................................. 233 Legal Debt Margin – Last Ten Fiscal Years ...................................................................................... 234 Pledged-Revenue Coverage – Last Ten Fiscal Years ...................................................................... 236 Demographic and Economic Statistics for Sacramento County – Last Ten Years .......................... 238 Principal Employers – Current Fiscal Year and Nine Years Ago ...................................................... 239 Successor Agency Trust Fund – Assessed Value of Taxable Property – Last Ten Fisc al Years .......................................................................................................... 240 Successor Agency Trust Fund – Top 10 Parcels Appealing Assessed Valuation - At Risk of Reduction - As of June 30, 2023 ......................................................................... 244 Successor Agency Trust Fund – Principal Property Taxpayers – Current Fiscal Year and Nine Years Ago ............................................................................ 255 Successor Agency Trust Fund – Debt Coverage Analysis –
Last Ten Fisc al Years .......................................................................................................... 266 Full-time Equivalent Employees by F unction/Program – Last Ten Fiscal Years ............................. 271 Operating Indicators by Function/Program – Last Ten Fiscal Years ............................................... 272 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years ........................................... 273 Miscellaneous Statistics - Current Fiscal Year and Nine Years Ago ................................................ 274 Introductory
Section

Howard Chan
City Manager
City Hall
915 I Street, Fifth Floor
Sacramento, CA 95814-2604
916-808-5704

December 19, 2023

Honorable Mayor and City Council
Residents of the City of Sacramento
City of Sacramento, California:

Dear Mayor, Members of the City Council, and Residents of the City of Sacramento:

We are pleased to present the Annual Comprehensive Financial Report (ACFR) for the City of
Sacramento, California (City) for the fiscal year ended June 30, 2023. Article IX of the City Charter and federal and state law requires that the City issue an annual report on its financial position and activity, and that the report be audited by an independent firm of certified public accountants.

Macias Gini & O’Connell LLP, a national certified public accounting firm, performed the audit for the fiscal year ended June 30, 2023. Their unmodified (“clean”) opinion has been included as the first component of the financial section of the ACFR.

Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal controls that have been established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable rather than absolute assurance that the financial statements are free of any material misstatements.

Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this transmittal letter and should be read in conjunction with it.

PROFILE OF THE CITY

The City of Sacramento, capital of the State of California, was established in 1849. The sixth largest city in California based on population, Sacramento also serves as the seat of Sacramento County government. The State of California Department of Finance estimated the population on January 1, 2023, at 518,161 for the City and 1,572,453 for the County. Encompassing approximately 100 square miles, the City is located in the northern section of California’s Central Valley at the confluence of the Sacramento and American rivers. i
Sacramento is a charter city operating under a Council-Manager form of government. The City provides a full range of municipal services in cluding police, fire, emergency medical response, water, wastewater, storm drainage, solid waste, construction and maintenance of streets and parks, community development, recreational and cultural activities, economic development, and administrative services.

REPORTING ENTITY

This ACFR presents the financial status of the City and its four component units. Component units are separate legal entities included in this report due to significant operational or financial relationships with the City as defined below:

 Sacramento City Financing Authority (SCFA) and Sacramento Public Financing Authority (SPFA) are entities created to issue debt to finance City projects.

The financial statements for these entities are reported on a blended basis as part of the primary government because the boards are composed of all City Councilmembers.

 Sacramento City Employees’ Retirement System (SCERS) , a single employer pension plan for certain City employees and retirees, is reported as a fiduciary component unit. The SCERS pension plan was closed to new enrollment of employees in 1977.

BUDGET INFORMATION

The City Charter requires that the City Manager submit a proposed budget to the City Council at least 60 days prior to the start of each fiscal year. Once approved by City Council, the annual budget serves as the foundation for the City‘s financial planning, control and reporting. Budgetary control is maintained at the department level by fund. Budgetary control for multi-year projects is maintained at the individual project level by fund. The City Manager is authorized to administratively amend department budgets during the year for transactions up to $250 thousand without City Council approval. Additional budgetary information can be found in Note 1 to the financial statements and on the City’s website.

LOCAL ECONOMY

The regional economy and employment base continue its long-term transition from a state government concentration to a diverse economic base including health care providers, high-tech manufacturers, software development companies, biotechnology and medical research laboratories, food processors, and medical equipment manufacturers. The region is also a transportation hub served by air cargo airports, an international airport, a deep-water shipping port, two major interstate freeways, freight and passenger rail lines, and an extensive regional commuter bus and light-rail system. These key industries interface with Sacramento’s service, hospitality, and government employers.
ii
While the regional economy continues to expand, the City is closely monitoring key economic indicators as the pace of economic growth may be slowing and economists are warning of increased odds of an economic downturn. The local labor market remains robust, but unemployment has increased with the June 2023 unemployment rate for the Sacramento metropolitan area increasing to 4.4% compared to 3.4% a year earlier. As the Federal Reserve has significantly increased interest rates to combat inflation, the City is closely monitoring changes in the housing market and consumer spending. Major revenue sources, including property tax and sales tax, continue to grow, however the rate of growth has slowed in recent months. Balancing the City’s increased costs of doing business, slowing revenue growth, and risk of recession are key priorities for the coming Fiscal Year.

B

UDGET INITIATIVES AND LONG-TERM FINANCIAL PLANNING
The FY2023/24 Operating, and Capital Improvem ent Program (CIP) Budgets were approved on June 13, 2023, and total approximately $1.5 billion from all funding sources. The Approved Budget provides for ongoing funding for the Department of Community Response to continue to implement the City’s response to homelessness, continued funding for the affordable housing fee waiver program, the launch of the Fire Department’s Single Role program which will create more effective career pathways and the establishment of the voter approved Children’s Fund project as required by Measure L, additional contributions to the Economic Uncertainty Reserve, and includes adjustments required to realize efficiencies and to provide funding necessary to deliver programs and services in the coming fiscal year.

The CIP Budget totals $107.4 million and provides funding to 106 projects in all program areas in various geo
graphic areas of the City, including $14.5 million in G/MU Funds. It also provides funding to address deferred maintenance on City assets. The CIP also provides estimates for strategic investments in capital assets over the next five Fiscal Years. As part of the Budget, the City provides a five-year Operating Budget forecast as a long-term financial planning tool.

The financial forecasts presented in the FY2023/24 Budget are based on in-depth analysis and review of Department revenues to
ensure that the forecast is based on the most current
information available relative to economic indicators and estimated levels of recovery.

RELEVANT FINANCIAL POLICIES
The City maintains a General Fund Economic Uncertainty Reserve (EUR) for the purpose of bridging a gap between projected revenue and expenditures during periods of significant revenue declines and/or expenditure growth and to ensure the City has adequate resources in case of emergency or unforeseen events. Pursuant to Counc il’s adopted policy, the City w ill maintain an EUR at a
minimum of 10% of budgeted General Fund revenues and will seek to achieve and maintain a General Fund EUR equal to two months of regular on-going General Fund expenditures, including transfers (i.e., 17% of General Fund expenditures).

On June 12, 2019, the EUR Policy was amended to include Measure U resources in determining the annual set aside
amount necessary to maintain a minimum General Fund/Measure U Fund (G/MU) reserve level of 10%. Further, the policy includes a goal of achieving and maintaining the value of two months of regular ongoing G/MU expenditures in the reserve. The current EUR balance is $74 million, which is approximately 10% of FY2022/23 G/MU revenues. The EUR is reported
in the ACFR as committed fund balance in the General Fund and the Measure U Fund. iii

AWARDS AND ACKNOWLEDGEMENTS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting t o the City for its ACFR for the fiscal year ended June 30, 2022. This marks the 35th consecutive year the City has received this award.

The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports.

To receive this award, the City published an easily readable and efficiently organized ACFR. The report satisfied accounting principles generally accepted in the United States of America and applicable legal requirements. We believe this ACFR also meets the requirements of the program, and we will be submitting it to the GFOA to determine its eligibility for the certificate.

The Department of Finance, Accounting Division in particular, takes great pride in the preparation of the ACFR. The professionalism, commitment, and effort of each employee of the Accounting Division have made this report possible. We also want to thank the other employees in the Finance Department and other City Departments who contributed to the preparation of this report.

Finally, we thank the Mayor and City Council for their continuing interest and support in planning and conducting the City's financial operations in a responsible manner, consistent with the City's mission to protect, preserve and enhance the quality of life for present and future generations.

Respectfully submitted,
ward Chan
City Manager
�� Peter Coletto
Finance Director
o�urJ
Osvaldo Lopez
Finance Manager
iv
Mayor/Council
City Treasurer
John Colville
City Attorney
Susana Alcala Wood
City Clerk
Mindy Cuppy
City Auditor
Jorge Oseguera
Office Public Safety Accountability
LaTesha Watson
City Manager
Howard Chan
Police
Kathy Lester, Chief
Youth, Parks & Community
Enrichment (YPCE)
Jackie Beecham
Fire
Chris Costamagna, Chief
Finance
VACANT
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Darin Arcolino
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Mario Lara
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Leyne Milstein
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amento Marina
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Organization Chart as of June 30, 2023
Center for Sacramento History
Crocker Art Museum
Fairytale Town
Metropolitan Arts Commission
Old Sacramento Historic District
Sacramento Convention Center
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Office or Program
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VACANT
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v

City of Sacramento
Directory of City Officials
June 30, 2023

Darrell Steinberg
Mayor

Lisa Kaplan
Councilmember, District 1
Caity Maple
Councilmember, District 5

Sean Loloee
Councilmember, District 2
Eric Guerra
Vice Mayor, District 6

Karina Talamantes
Councilmember, District 3
Rick Jennings, II
Councilmember, District 7

Katie Valenzuela
Councilmember, District 4
Mai Vang
Mayor Pro Tempore, District 8

Howard Chan
City Manager

Susana Alcala Wood
City Attorney
Mindy Cuppy
City Clerk
John Colville
City Treasurer

vi
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Sacramento
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2022
Executive Director/CEO
vii

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viii
Financial
Section
www.m
gocpa.com Macias Gini & O’Connell LLP
500 Capitol Mall, Suite 2200
Sacramento, CA 95814
1 Independent Auditor’s Report
To th
e Honorable Mayor and Members of the
City Council of the City of Sacramento, California
Re
port on the Audit of the Financial Statements
Op
inions
We h
ave audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Sacramento, California (City), as of and for the fiscal 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 accompanying 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 C ity, as of June 30, 2023 , and the respective changes in financial position, and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund and Measure U Special Revenue Fund for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America.

Ba
sis for Opinions
We co
nducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States ( Government Auditing Standards). 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.

Em
phasis of Matter
As di
scussed in Note 1 to the financial statements, effective July 1, 2022, the City adopted the provisions of Governmental Accounting Standards Board Statements No. 91, Conduit Debt Obligations, No. 94, Public-Private and Public -Public Partnerships and Availability Payment Arrangements , No. 96, Subscription-Based Information Technology Arrangements , and No. 99 Omnibus 2022. Our opinions are not modified with respect to this matter.

Re
sponsibilities of Management for the Financial Statements Th
e City’s 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. 2 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 C ity’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.

A
uditor’s Responsibilities for the Audit of the Financial Statements Ou
r 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 GAAS 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.

I
n performing an audit in accordance with GAAS and Government Auditing Standards, we:
• E
xercise 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.

W
e 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.

R
equired Supplementary Information
Acco
unting principles generally accepted in the United States of America require that the management ’s discussion and analysis, the schedule of changes in net pension liability and related ratios – CalPERS Miscellaneous Plan, the schedule of contributions – CalPERS Miscellaneous Plan, the schedule of changes in net pension liability and related ratios – CalPERS Safety Plan, the schedule of contributions – CalPERS Safety Plan, the schedule of changes in net pension liability and related ratios – Sacramento City Employees’ Retirement System, the schedule of contributions – Sacramento City Employees’ Retirement System, the schedule of changes in net OPEB liability and related ratios, and the schedule of contributions – OPEB, as listed in the table of contents, 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 3 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 GAAS, 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.

Supp
lementary 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 combining and individual fund financial statements and schedules 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 GAAS. In our opinion, the combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Othe
r Information
Th
e Ci ty’s management is responsible for the other information included in the annual comprehensive financial report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

In c
onnection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Ot
her Reporting Required by Government Auditing Standards In
accordance with Government Auditing Standards , we have also issued our report dated December 19, 2023, on our consideration of the C ity’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 solely 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 the effectiveness of the City’s 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 the C ity’s internal control over financial reporting and compliance.

Sac
ramento, California
December 19, 2023

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4 City of Sacramento
Management’s Discussion and Analysis
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2023

This section of the City’s Annual Comprehensive Financial Report presents a narrativ e overview and analysis of the City’s financial activities for the fiscal year ended June 30, 2023. City management recommends this information be read in conjunction with the transmittal letter located in the introductory section, and with the City’s financial statements which follow this discussion.

FINANCIAL HIGHLIGHTS
 The City’s total government-wide net position increas ed by $82 million in fiscal year 2023, a 3.1 percent incr
ease.
 The City’s General Fund revenues were $20 million higher than final budgeted amounts primarily due to prop
erty and utility user taxes, Voluntary Rate Range Program and Ground Emergency Medical Transportation Program revenues received by the City’s Fire Department, commercial solid waste franchise fees, and parking meter revenues.
 The City’s General Fund budgetary expenditures, which includes open encumbrances, were $149 million lower than final bud
geted amounts. Most of the General Fund departments reported favorable operating expenditure budget variances and capital outlay expenditures were less than budgeted amounts by $52 million due to the multi-year nature of capital projects. Unspent mult i-year project budgets are carried over to the subsequent fiscal year.
 On a GAAP basis, the City’s General Fund expenditures exceeded revenue and other financing sources (uses) by $4 million
in fiscal year 2023 primarily due to increases in public safety labor costs, increases in pensi on co
sts, and the loss of one-time grant funding from the prior year.  The City received $112 million of American Rescue Plan Act (ARPA) funding in fiscal years 2021 and 2022. In September 2021, the City Council approved an ARPA Framework and Priorities. The framework provid es funding
for: small businesses and commercial corridor revitalization; homelessness and housing; yo uth, workfo
rce training, and gang prevention programs; arts and creative economy; and addressing organizational need
s. As of June 30, 2023, $6 million of ARPA reinvest ment available funding remains after factorin g in budg
etary encumbrances and carryovers.

OVERVIEW OF THE FINA

NCIAL STATEMENTS
The City’s Annual Comprehensive Financial Report co nsists of four main components: (1) management’s discussion and analysis, (2) the basic financial statement s, (3) required supplementary information, and (4) combining nonmajor fund financial statements. The basic financial statements include two kinds of statements that present different views of the City, the government-wide and the fund financial statements.  The government-wide financial statements provide both long-term and short-term information about the City’s ove
rall financial status.
 The fund financial statements focus on individual parts of the City government, reporting the City’s operations in more d
etail than the government-wide statements.

The ba
sic financial statements also include notes that provide additional information essential to understanding the data contained in the government-wide and fund financial statements. The statements and notes are followed by the Schedules of Changes in Net Pension Liability and Related Ratios and Schedules of Contributions for the City’s pension plans along with the Schedule of Changes in Net Other Postemployment Benefits (OPEB) Liability and Related Ratios and Schedule of Contributions for the City’s OPEB pl an, which are requi red supplementary information. In addition to these required elements, we have included combining statements and schedules that provide details about the City’s other governmental funds, other enterprise funds, the Water enterprise fund, the Wastewater enterprise fund, the Community Center enterprise fund, internal service funds, and custodial funds, each of which is presented in a column in the basic financial statements. 5 City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2023

Government-wide Financial Statements

The government-wide statements report information about the City using accounting methods like those used by private-sector companies. The statement of net position includes all the City’s assets and liabilities, as well as any deferred outflows or inflows of resources. The statement of activities in cludes all current year revenues and expenses regardless of when cash is received or paid. These government-wide stat ements report the City’s net position and how the City’s net position has changed during the fiscal year. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial health of the City is improving or deteriorating.

The government-wide financial statements of the City are divided as follows:

 Governmental activities - Most of the City’s basic services are included here, such as police; fire; public works; community development; youth, parks, and community enrichment; and general government. Taxes and state and federal grants finance most of these activities.

 Business-type activities - Certain services provided by the City are funded by customer fees. Among these are the City’s utility services, convention center, and off-street parking facilities.

Fund Financial Statements

A fund is a group of related accounts that is used to main tain control over resources that have been segregated for specific activities or objectives. Fund financial st atements provide more detailed information about the City’s largest funds, not the City as a whole.

The City has three types of fund financial statements:

 Governmental funds - Governmental fund statements tell how general government services such as police, fire, and public works, among others, were financed in t he short-term as well as what remains for future spending. Most of the City’s basic services are included in governmental funds, which focus on (1) short-term inflows and outflows of spendable resources, and (2) the remaining year-end balances available for spending.

Because this information does not encompass the additional long-term focus of the government-wide statements, reconciliations that explain the relationship (or di fferences) between governmental funds and governmental activities follow the governmental fund statements.

 Proprietary funds - Services for which customer fees are inte nded to finance the costs of operations are generally reported in proprietary funds. Proprietary fund statements, like the gov ernment-wide statements, provide short-term and long-term financial information about the activities the City operates like businesses, such as utility services, parking facilities, convention center, etc.

 Fiduciary funds - Fiduciary fund statements provide information about the financial relationships in which the City acts solely as a trustee or custodian for the benef it of others, to whom the resources belong. The City is the trustee, or fiduciary, for a closed pension plan. It is also responsible for other assets held for bonded assessment and community facilities di stricts and investment trust fund s, reported as custodial funds.

Investment trust funds can only be used for the trust benef iciaries in accordance with trust agreements. The City elected to serve as the successor agency for its former redevelopment agency, which was dissolved by state law. The successor agency activity is accounted for in a private-purpose trust fund. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All the City’s fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position. The City excludes thes e activities from the government-wide financial statements because the City cannot use these resources to finance its operations.

6 City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2023

FINANCIAL ANALYSIS OF THE GOVERNMENT-WIDE STATEMENTS

This section provides analysis of the government-wide financial statements including long-term and short-term information about the City’s overall financial condition. The following table addresses the financial results of the City as a whole.

Total
Percent
2023 2022 2023 2022 2023 2022 Change
Current and other assets 1,397 $ 1,307 $ 590$ 564 $ 1,987 $ 1,871 $ 6.2% Capital assets 1,868 1,875 1,837 1,850 3,705 3,725 -0.5% Total assets 3,265 3,182 2,427 2,414 5,692 5,596 1.7%
Deferred outflows of resources 399 190 57 31 456 221 106.3% Long-term liabilities 2,066 1,534 1,114 1,082 3,180 2,616 21.6% Other liabilities 104 84 43 44 147 128 14.8%
Total liabilities 2,170 1,618 1,157 1,126 3,327 2,744 21.2% Deferred inflows of resources 105 397 22 64 127 461 -72.5% Net position
Net investment in
capital assets 1,347 1,370 952 938 2,299 2,308 -0.4%
Restricted 456 394 81 48 537 442 21.5%
Unrestricted (414) (407) 272 269 (142) (138) -2.9%
Total net position 1,389$ 1,357 $ 1,305$ 1,255 $ 2,694 $ 2,612 $ 3.1% Note (1) FY22 amounts have not been restated for GASB 96 which was implemented in 2023.

Activities Activities Government
City of Sacramento
Summary of Net Position
As of June 30, 2023 and 2022(1)
(in millions)
Governmental Business-type Total Primary

Analysis of net position

As noted in the financial highlights, total net position of the primary government increased by $82 million in fiscal year 2023. Total assets and total liabilities increased by $96 million and $583 million, respectively. Deferred outflows of resources increased $235 million and deferred inflows of resources decreased $334 million.

The following analysis of governmental and business-type ac tivities provides more detailed information for these changes.

Governmental activities

Current and other assets increased $90 million primarily due to increases in cash and receivables. Cash increased by $71 million in the governmental funds from higher -than-expected tax and intergovernmental revenues.

Receivables increased $30 million primarily due to a $15 million increase in intergovernmental reimbursement receivables for operating and capital grants and $9 million of new housing and Cannabis CORE loans issued in the current year. These increases were offset by a $10 million decrease in prepaid items related to the recognition of previous grant advances as expenses in fiscal year 2023.

Capital assets of governmental activities decreased $7 million due to current year depreciation offset by continuing development and improvements. Capital asset additions include the Bell Avenue Complete Street Rehab project, Del Rio Trail project, Downtown Mobility project, and t he Community Center Theater Renovation project. More detailed information about the City’s capital assets is presented in Note 4 to the financial statements. 7 City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2023

Deferred outflows of resources increased $209 million primarily due to a $204 million increase in deferred outflows related to pensions. The increase in deferred outflows related to pensions was mainly driven by an increase in net differences between projected and actual earnings and changes in assumptions. More detailed information about pension plans is presented in Note 8 to the financial statements.

Long-term liabilities increased $532 million primarily due to a $495 million increase in net pension liability, $22 million increase in accrued claims and judgments related to the City’s Risk Management Internal Service Fund, and $10 million of new long-term liabilities with the implementation of GASB Statement No. 96. Net pension liability increased due to worse than expected investment earnings during the measurement year and changes of assumptions. More detailed information about long-term liabilities is presented in Note 7 to the financial statements.

Other liabilities increased $20 million primarily due to accounts payable for various capital projects and unearned revenue related to the Railyard Rehabilitation and MLK Library Renovation capital grant projects.

Deferred inflows of resources decreased $292 million primarily due to a $252 million decrease in deferred inflows related to pensions and a $38 million decrease in deferred inflows related to OPEB. The decrease in deferred inflows related to pensions and OPEB was mainly driven by a decrease in deferred inflows for net differences between projected and actual earnings. More detailed information about pension and OPEB plans is presented in Notes 8 and 9 to the financial statements.

Restricted net position, representing amounts that must be used in accordance with external restrictions, increased $62 million primarily due to increases in restrictions for capital projects, public works programs, and economic development programs.

Business-type activities

Current and other assets of business-type activities increased $26 million primarily due to an increase in cash and receivables provided by operational activities.

Capital assets decreased $13 million due to current year depreciation offset by continuing development and improvements. Capital asset additions include the Convention Center expansion project, McKinley Park Combined Sewer System Storage project, I Street CWTP Sewer Repair project, and the Fruitridge Drain Replacement project.

More detailed capital asset information is presented in Note 4 to the financial statements.

Deferred outflows of resources increased $26 million due to a $26 million increase in deferred outflows related to pensions. The increase in deferred outflows related to pensions was mainly driven by an increase in net differences between projected and actual earnings and changes in assumptions. More detailed information about pension plans is presented in Note 8 to the financial statements.

Long-term liabilities increased $32 million primarily due to a $67 million increase in net pension liability offset by $35 million of payments on existing debt obligations and amortization of bond premiums. More detailed information is presented in Note 7 to the financial statements.

Deferred inflows of resources decreased $42 million primarily due to a $35 million decrease in deferred inflows related to pensions and a $5 million decrease in deferred inflows related to OPEB. The decrease in deferred inflows related to pensions and OPEB was mainly driven by a dec rease in deferred inflows for net differences between projected and actual earnings. More detailed information about pension and OPEB plans is presented in Notes 8 and 9 to the financial statements.

8 City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2023

Total
Percent
2023 2022 2023 2022 2023 2022 Change
Revenues
Program revenues:

Charges for services 209 $ 213 $ 366 $ 328$ 575$ 541$ 6.3% Operating grants and contributions 80 234 1 2 81 236 -65.7% Capital grants and contributions 135 111 18 17 153 128 19.5% General revenues:

Property taxes 228 211 - - 228 211 8.1% Utility users tax 70 66 - - 70 66 6.1% Local sales taxes 130 133 - - 130 133 -2.3% Other taxes 52 61 31 27 83 88 -5.7% Unrestricted:

Sales taxes shared state revenue 115 115 - - 115 115 0.0% Investment earnings (loss) 12 (28) 4 (24) 16 (52) -130.8% Miscellaneous 13 15 - - 13 15 -13.3% Total revenues 1,044 1,131 420 350 1,464 1,481 -1.1% Expenses
General government 209 228 - - 209 228 -8.3% Police 258 215 - - 258 215 20.0% Fire 201 165 - - 201 165 21.8% Public works 137 116 - - 137 116 18.1% Convention and cultural services 29 21 - - 29 21 38.1% Youth, parks, community enrichment 81 68 - - 81 68 19.1% Community development 67 64 - - 67 64 4.7% Community response 20 11 - - 20 11 N/A Library 24 23 - - 24 23 4.3% Interest on long-term debt 26 19 - - 26 19 36.8% Water - - 117 102 117 102 14.7% Wastewater - - 35 31 35 31 12.9% Storm drainage - - 48 41 48 41 17.1% Solid waste - - 78 63 78 63 23.8% Community center - - 33 29 33 29 13.8% Parking - - 13 11 13 11 18.2% Child development - - 6 6 6 6 0.0% Total
expenses 1,052 930 330 283 1,382 1,213 13.9% Revenue over (under) expenses (8) 201 90 67 82 268 -69.4% Transfers 40 26 (40) (26) - - - Change in net position 32 227 50 41 82 268 -69.4% Net position, beginning of year 1,357 1,130 1,255 1,214 2,612 2,344 11.4% Net position, end of year 1,389$ 1,357$ 1,305$ 1,255$ 2,694$ 2,612$ 3.1% Note (1) FY22 amounts have not been restated for GASB 96 which was implemented in 2023.

Activities Activities Government
City of Sacramento
Changes in Net Position
For the Fiscal Years Ended June 30, 2023 and 2022(1)
(in millions)
Governmental Business-type Total Primary

9 City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2023

Analysis of the changes in net position

Total government-wide revenues of the primary government decreased $ 17 million, a 1.1 percent decrease compared to the prior fiscal year, and total expenses increased $169 million, a 13.9 percent increase compared to the prior fiscal year. These changes are discussed in more detail below.

Governmental activities

Total revenues for governmental activities decreased $87 million, a 7.7 percent decrease compared to the prior fiscal year. Total expenses increased $122 million, a 13.1 percent increase compared to the prior fiscal year.

Transfers in primarily consist of in-lieu taxes paid by t he business-type activities to the General Fund. Transfers out primarily consist of parking program support transfer red out from the General Fund and program support to cover lost impact fees for various funds transferred out from the General Fund and Measure U Fund.

Revenue

Operating grants and contributions revenue decreased $154 million primarily due to  funding the City received for the ARPA program and Sacramento Emergency Rental A ssistance program in fiscal year 2022 that was not received in fiscal year 2023.

Capital grants and contributions increased by $24 million during fiscal year 2023 compared to fiscal year 2022.

This was mainly due to an increase in revenue associat ed with special tax bond issuances. In fiscal year 2023, $23 million of Community Facilities District (CFD) special tax bonds were issued, compared to $3 million in fiscal year 2022.

Property tax revenue increased $17 million due to cont inued increases in Sacramento area commercial and residential real estate property assessed valuations.

Other taxes decreased $9 million primarily due to an $8 million decrease in property transfer tax. The decrease was due to a slowdown in the real estate market caused by factors such as housing availability and increasing mortgage rates.

The increase of $40 million in investment earnings is mainly attributable to a decrease in the loss in fair value of Pool A investment holdings. The cost of Pool A investm ent holdings exceeded the fair value by $77 million as of June 30, 2023, compared to $69 million as of June 30, 2022. This $8 million loss was allocated among governmental and business-type activities, with a small portion allocated to non-City Pool A participants as well.

In fiscal year 2022, Pool A investment holdings recognized an overall loss of $70 million.

Expenses

Total governmental activities expenses increased $122 million primarily due to increases in department functional expenses. Police and Fire expenses increased a combined $79 million mainly due to pension expense associated with a change of actuarial assumptions and projected earnings coming in much lower than expected on the net pension liability valuation date. Public works expenses increased $21 million due to increased costs for pavement and concrete maintenance, replacement of traffic sign s and signals, and unforeseen costs related to the 2023 winter storms. Youth, parks, communi ty enrichment expenses increased $13 million due to facilities operating closer to pre-COVID levels and unforeseen costs rela ted to the 2023 winter storms. Convention and cultural services expenses increased $8 million due to full re-opening of all facilities and increased events allowing for operations to return closer to pre-COVID levels. Community response expenses increased $9 million due to fiscal year 2023 being the first full fiscal year of operations. T hese increases were offset by a $19 million decrease in general government expenses. This decrease was mostly related to the conclusion of the Emergency Rental Assistance program that began as a response to the COVID-19 pandemic.

10 City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2023

Business-type activities

Total revenues for business-type activities increased $70 million, a 20 percent increase compared to the prior fiscal year. Total expenses for business-type activities increased $47 million, a 16.6 percent increase. Transfers out primarily consist of in-lieu taxes paid by the business-type activities to the General Fund. Transfers in primarily consist of water, wastewater, and parking program support received from the General Fund and Measure U Fund.

Revenue

Charges for services increased $38 million primarily d ue to $20 million of new storm drainage property fee revenues. Ballot election results for the storm drainage pro perty fee were certified and approved by City Council in April 2022 and the new fee took effect in July 2022. Storm drainage and solid waste rates also increased during the current fiscal year.

Other tax revenues increased $4 million due to an increase in TOT revenue as travel and hotel occupancy are on the rise.

Investment earnings increased by $28 million mainly due to a decrease in the loss in fair value of Pool A investment holdings.

Expenses

Water expenses increased $15 million primarily due to an $8 million increase in labor and pension expense.

Pension expense increased due to a change of actuarial assumptions and projected earnings coming in much lower than expected on the net pension liability valuation date. There were increases in labor and pension expense across other business-type ac tivities for this same reason. There was also a $5 million increase in services and supplies expense associated with Fairbairn Water Treatment Plant legal and consulting fees, implementation of a new inventory module, Accelerated Water Meter projec t noncapitalized costs, and an increase in vehicle replacements. Vehicle purchases and replacements are recognized as expenditures and expenses in governmental and enterprise funds when charged by the City’s Fleet Management Fund, an internal service fund.

The vehicles are then capitalized in the Fleet Management Fund.

Wastewater expenses increased $4 million primarily du e to an increase of $3 million in labor and pension expenses.

Storm Drainage expenses increased $7 million due to in creases of $3 million in labor and pension expense and $4 million in services and supplies expense. The increase in services and supplies expense was primarily due to an increase in vehicle replacements.

Solid Waste expenses increased $15 million primarily due to a $12 million increase in services and supplies expense. The increase in services and supplies expense was primarily due to an increase in vehicle purchases and replacements and the implementation of new organic waste services for residential customers in July 2022.

Community Center expenses increased $4 million due to increases in labor and pension expenses, as well as an increase in events with a full year of Community Center operations.

11 City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2023

FINANCIAL ANALYSIS OF THE FUND STATEMENTS

Funds are accounting devices the City uses to keep track of specific sources of funding and spending for particular purposes. The fund financial statements focus on individual parts of City government, reporting City operations in more detail than the government-wide statements.

Governmental Funds

The City’s governmental funds provide information on near-term inflows, outflows, and balances of spendable resources. Total revenues for governmental funds decreased $85 million compar ed to the prior fiscal year. Total expenditures decreased $16 million compared to the prior fiscal year. Net other financing sources decreased $19 million compared to the prior fiscal year. These changes are discussed in more detail below.

General Fund

Total General Fund revenue increased $33 million compared to the prior fiscal year. Tax revenues increased by $11 million primarily due to an increase in property taxes associated with an increase in the assessed value of properties. Interest, rents, and concessions increased $20 million, primarily due to a decrease in the fair value loss related to the General Fund’s share of Pool A holdings. In fiscal year 2023, the General Fund recognized a $3 million loss in fair value in relation to Pool A holdings, compared to a $20 million loss in fair value in fiscal year 2022.

Total General Fund expenditures increased $125 million compared to the prior fiscal year. Expenditures in Police and Fire departments increased $131 million in total ma inly due to the use of $112 million of one-time ARPA funding within the operating grant funds for public safety pa yroll costs in fiscal year 2022, as well as an increase in labor, OPEB, and pension costs. Public works expendi tures increased $5 million primarily due to unforeseen costs related to the 2023 winter storms. These increases were offset by a $20 million decrease in capital outlay expenditures, which can fluctuate from year to year due to timing and the multi-year nature of capital projects. The General Fund’s largest capital outlay expenditures during the fiscal year consisted of expenditures for Fire Station #14, fire apparatus and ambulances, police safety equipm ent, and the issuance of long-term liabilities for IT subscriptions.

General Fund Budgetary Highlights

The City Council revised the budget throughout the fisc al year with revenue and appropriation adjustments and the use of committed fund balance after the original budget was adopted.

After accounting for these budget adjustments, General Fund revenues were $20 million higher than final budgeted amounts. Collection of various taxes exceeded the budget by $3 million primarily due to increases in property taxes and utility user taxes. Intergovernmental revenue exceeded budget by $9 million primarily due to Voluntary Rate Range Program and Ground Emergency Medical Transportation Program revenues received by the City’s Fire Department. Charges for services exceeded the budget by $3 million primarily due to commercial solid waste franchise fees and parking meter revenues.

General Fund budgetary expenditures were $149 million lower than final budgeted amounts. Most of the General Fund departments reported favorable operating expenditure budget variances primarily due to labor savings and labor reimbursements from grants and other funds. Capital outlay expenditures were less than budgeted amounts by $52 million due to the multi-year nature of capital projects. Unspent multi-year project budgets, as well as other unspent City Council approved program budgets, are carried over to the subsequent fiscal year.

12 City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2023

Measure U Fund

Measure U Fund revenue and expenditures increased by $1 million and $25 million, respectively. Tax revenue decreased $3 million as retail and e-commerce sales decli ned and came in lower than expected. This was offset by an increase of $4 million in interest revenue primarily due to a decrease in the fair value loss related to the Measure U Fund’s share of Pool A holdings. General Government expenditures increased $7 million primarily due to an increase in budgeted spending for community-orient ed programs such as the Women and Family Shelter project, development of the La Familia Opportunity Center, gang prevention and intervention programs, and youth programs. Police expenditures incr eased $4 million due to an increase in labor, OPEB, and pension cost.

Community response expenditures increased $6 million primarily due to an increase in community cleanup and homeless and mental health services provided. Utilities expenditures increased by $4 million as the utility rate assistance program was previously budgeted in the General Fund. Citywide and community support expenditures increased by $4 million as well due to realignment of budgeted expenditures between Measure U and the General Fund.

2015 Golden 1 Center Lease Revenue Bond Fund

2015 Golden 1 Center Lease Revenue Bond Fund revenue increased $2 million primarily due to a decrease in fair value loss associated with fiscal agent investment holdings.

Other Governmental Funds

Other governmental fund revenues increased by $88 million primarily due to revenue increases of $58 million for special revenue funds and $30 million for capital projects funds. The increase in special revenue funds revenue is primarily due to the following:

 The Operating Grants Fund recognized $48 million of revenue as a special revenue fund in the current fiscal year. In the prior year, the Operating Grants Fund was classified as a major fund and presented separately.
 $4 million increase in the Special Districts Fund mainly due to an increase in assessment levies from the Citywide Landscaping and Lighting Assessment Distri ct, the Sacramento Tourism Marketing District, Sacramento Tourism Infrastructure District, and the library services parcel tax.

The increase in capital projects funds revenue is primarily due to the following:

 $7 million increase in the Transportation and Development Fund mainly due to $4 million received from the California Department of General Services (CA DGS) for their fair share contribution to the I-5 Subregional Corridor Mitigation Fee Program for the Richards Boulevard Office Complex. Interest revenue also increased $2 million prim arily due to a decrea se in the fair value loss re lated to the Transportation and Development Fund’s share of Pool A holdings.
 $8 million increase in the Capital Grants Fund mainly due to Bell Avenue Complete Street and Railyard Rehabilitation projects.
 $20 million increase in the Special Districts Fund mainly due to the difference in special tax bonds issued. $23 million of revenue was recognized in fiscal year 2023 with the issuance of the Railyards CFD No. 2018-01 Improvements Area IA1 Special Tax Bonds, Se ries 2022. $3 million of revenue was recognized in fiscal year 2022 with the issuance of the Delta Shores CFD 2019-01 Improvement Area No. 2, Series 2022 Special Tax Bonds.
 $6 million decrease in the Financing Plans Fund primarily due to one-time $11 million adjustments to the Railyards On-Site Infrastructure Credits Trust Ac count for improvements that became the financial responsibility of the developer in fiscal year 2022. This was offset by $5 million received in fiscal year 2023 from the CA DGS for their fair share contribution to the River District Financing Plan for the Richards Boulevard Office Complex.

13 City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2023

Other governmental fund expenditures increased by $34 million primarily due to an increase of $62 million in expenditures for special revenue funds, offset by a dec rease of $28 million in expenditures for capital projects funds. The increase in special revenue funds expenditures is primarily due to the following:

 The Operating Grants Fund recognized $53 million of ex penditures as a special revenue fund in the current fiscal year. In the prior year, the Operating Grants Fund was classified as a major fund and presented separately.
 Transportation and Development Fund expenditures increased $3 million due to increases in public works expenditures.

The decrease in capital projects funds expenditures is primarily due to the following:

 $59 million decrease in the Financing Plans Fund due to a decrease in expenditures for community development and capital outlay and a decrease in redemption of financing plan fee credits.  $21 million increase in the Capital Grants Fund due to increases in expenditures associated with the Railyard Rehabilitation, Downtown Mobility, Bell Avenue Complete Street Rehabilitation, and Convention Center Expansion projects.
 $10 million increase in the Transportation and Development Fund due to increases in expenditures associated with the Del Paso B oulevard, West El Camino Rehabilit ation, Northgat e Neighborhood Resurfacing, and 34
th Street Rehabilitation projects.

$12 million of financing plan fee credits were issued in fiscal year 2023, in comparison to $52 million in fiscal year 2022. $6 million of Delta Shores financing plan fee credits and $6 million of North Natomas financing plan fee credits were issued in the current year. More detailed fee credit information is presented in Note 7 to the financial statements.

Enterprise Funds

The City’s enterprise fund financial statements provide the same type of information as the government-wide financial statements but in greater detail. Total operating revenues increased $38 million and operating expenses increased $49 million compared to the prior fiscal year. Net nonoperating revenues (expenses) increased $33 million and capital contributions increased $2 million compared to the prior fiscal year. These changes are discussed in more detail below.

Water Fund

Water Fund operating expenses increased $16 million primarily due to an $8 million increase in pension expense that fluctuates due to a variety of actuarial factors affecting net pension liability and an increase in $5 million in services and supplies expense due to an increase in vehicle replacements and legal and consulting fees. Net nonoperating expenses decreased $16 million primarily due to a decrease in the loss in fair value related to the Water Fund’s share of Pool A investment holdings.

Wastewater Fund

Wastewater Fund operating expenses increased $5 million mainly due to a $3 million increase in pension expense.

Net nonoperating expenses decreased by $3 million primarily due to a decrease in the loss in fair value related to the Wastewater Fund’s share of Pool A investment holdings. Developer fees and capital contributions increased $3 million in association with the Emergency Combined Wastewater Treatment Plant Sewer Repair project.

14 City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2023

Storm Drainage Fund

Storm Drainage Fund operating revenues increased by $19 million primarily due to a new storm drainage property fee charged to residential and commercial property owners beginning July 2022. Operating expenses increased $7 million due to a $3 million increase in pension expen se and a $4 million increase in services and supplies expense. Most of the increase in services and supplie s expense is associated with an increase in vehicle replacements.

Solid Waste Fund

Solid Waste Fund operating revenues increased $12 million primarily due to an increase in service accounts with the addition of new development and homes, as well as rate adjustments effective April 2022 and January 2023.

Operating expenses increased $15 million primarily due to increases in pension expense, vehicle replacements, and disposal services with the implementation of the new organic waste disposal service in July 2022.

Community Center Fund

Community Center Fund operating revenues increased $4 million and operating expenses increased $4 million.

The Convention Center Complex was open for events partway through fiscal year 2022. Fiscal year 2023 was the first full year of operations since the temporary closure, leading to an incr ease in both operating revenues and expenses. Net nonoperating revenue increased by $8 million due to an increase in TOT revenue of $4 million, as hotel stays and travel increased, and an increase in interest and investment revenue of $4 million, mainly due to a decrease in the loss in fair value related to the Community Center’s share of Pool A investment holdings.

Other Enterprise Funds

Other Enterprise Funds consist of the activities of the City’s Parking and 4 th R Child Development Funds. Total operating revenues increased by $4 million. 4 th R saw an increase of $1 million of revenue due to an increase in enrollment in fiscal year 2023. Parking saw an increase of $3 million of revenue due to an increase in events in Downtown Sacramento, as well as increased enforcement and metered hours. Net transfers decreased by $4 million due to decreases in budgeted program support received from the General Fund as operations continue to rebound from the economic effects of COVID-19.

15 City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2023

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

As of June 30, 2023, the City had invested $3.7 billion in a broad range of capital assets, including land, buildings, vehicles, parks and park improvements, roads, bridges, and water, wastewater and storm drainage transmission and distribution systems. Current year capital asset additions, net of deletions, of $123 million were offset by current year depreciation/amortization expense of $143 million, resulting in a net decrease in capital assets of $20 million.

2023 2022 2023 2022 2023 2022
Capital assets not being depreciated
Land 220 $ 220 $ 49 $ 49 $ 269 $ 269 $ Easements 2 2 - - 2 2 Construction in progress 278 270 453 445 731 715 Depreciable capital assets:

Buildings and improvements 403 412 259 284 662 696 Equipment 11 12 101 105 112 117 Software 1 1 8 9 9 10 Vehicles 96 94 - - 96 94 Transmission and distribution system 3 4 963 956 966 960 Roadway network 519 547 - - 519 547 Streetlight network 173 173 - - 173 173 Parks and park improvements 149 138 - - 149 138 Lease and IT subscription assets, net 13 2 4 2 17 4 Total capital assets 1,868$ 1,875 $ 1,837 $ 1,850 $ 3,705 $ 3,725 $ Note (1) FY22 amounts have not been restated for GASB 96 which was implemented in 2023.

Activities Activities
Total Primary
City of Sacramento
Capital Assets
As of June 30, 2023 and 2022(1)
(net of depreciation, in millions)
Governmental Business-Type
Government

This year's major capital asset additions include:

 $7 million for the Downtown Mobility Project,
 $5 million for the Community Center Theater Renovation Project,  $5 million for the Bell Ave Complete Street Rehabilitation Project,  $4 million for the Del Rio Trail Project,
 $4 million for the Railyards Rehabilitation Project,
 $4 million for the Emergency CWTP Sewer Repair,
 Other capital project additions in progress including the I Street CWTP Sewer Repair Project, the Del Paso Blvd Road Diet Project, the Convention Center Expansion Project, and the HSIP 8 Traffic and Pedestrian Signals Project. Many other capital projects were completed during the year and transferred from construction in progress to the appropriate capital asset categories.

The City has $124 million in commitments for contracts awarded but not completed as of June 30, 2023. The major contracts outstanding are $3 million for installation of motor-controlled valves and drainage systems as part of the Ground Water Flush-to-Waste project; $3 million for City wide cleanup services; $3 million for replacement of lighting system and relocation of HVAC system in Ballr oom B at the SAFE Credit Union Convention Center; $3 million for management of the Safeground camping and parking at Miller Park; $3 million for the Bikeway improvements on P, Q, 9th, 10th, 19t h, and 21st Streets, and conversion fr om one-way to two-way traffic on 5th Street and I Street; $2 million for the construction of a Class I bike trail along the Sacramento Southern Railroad between Sutterville Road and Meadowview Road; and $35 m illion for the purchase of vehicles, primarily for the replacement refuse trucks and garbage trucks.
16 City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2023

During fiscal year 2023, the City implemented GASB Statement No. 96, Subscription-Based Information Technology Arrangements , which introduced the recognition of right-t o-use IT subscription assets as capital assets. The City has various noncancellable subscription arrangements for the right-to-use IT software valued at $14 million, net of accumulated amortization as of June 30, 2023.

More detailed information about the City's capital assets and lease and IT subscription assets is presented in Notes 4 and 6 to the financial statements.

Long-term Debt

The following table summarizes the City’s outstanding debt (excluding other long-term liabilities):
2023 2022 2023 2022 2023 2022
Revenue and other bonds, net 443$ 460 $ 765 $ 794 $ 1,208 $ 1,254 $ Notes payable 16 17 137 143 153 160 Total outstanding debt 459$ 477 $ 902 $ 937 $ 1,361 $ 1,414 $ City of Sacramento
Outstanding Debt
As of June 30, 2023 and 2022
(in millions)
Activities Activities Government
Governmental Business-Type Total Primary

Total outstanding debt for governmental activities and business-type acti vities decreased $18 million and $35 million, respectively, due to principal payments on existing obligations and amortization of bond premiums.

More detailed information about the City’s long-term liabilities is presented in Note 7 to the financial statements.

Credit rating

The following table summarizes the City’s bonded debt rati ngs (nr designates not rated) at June 30, 2023, as determined by S&P Global Ratings (S & P), Moody’s Investors Service, Inc. (Moody’s), and Fitch Ratings (Fitch):

Bond issues: S & P Moody’s Fitch

 2006 Capital Improvement Revenue Bonds, Series B AA- Aa3 nr  2006 Capital Improvement Revenue Bonds, Series E AA- Aa3 nr  2013 Water Revenue Bonds AA nr AA-  2013 Wastewater Revenue Bonds AA nr AA  2015 Refunding Revenue Bonds AA-/AA Aa3 nr  2015 Lease Revenue Bonds (Golden 1 Center) AA- nr A+  2017 Water Revenue Bonds AA nr AA-  2018 TOT Revenue Bonds, Senior Series A&B nr A1 nr  2018 TOT Revenue Bonds, Subordinate Series C nr A2 nr  2019 Wastewater Revenue Bonds AA nr AA  2019 STID Assessment Revenue Bonds nr A2 nr  2020 Water Revenue Refunding Bonds AA nr AA-  2020 Wastewater Revenue Refunding Bonds AA nr AA

17 City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2023

The City’s issuer credit rating as of June 30, 2023 is AA with a stable outlook from S&P, Aa2 with a stable outlook from Moody’s, and AA with a stable outlook from Fitch. T he issuer credit rating is an assessment of the City’s creditworthiness and capacity to meet financial commitment s as they come due without regard to the terms of a specific debt instrument. The ratings and stable outlook determination are based on a multitude of factors for each of the rating agencies. Highlights include: the City’s improved economic condition, as demonstrated by the steady rise in assessed values, in combination with the City’s operating surpluses driving the growing reserve balances; the City’s continued growth despite the pandemic-driv en effects on the regional economy; and the City’s tight budget management, adequate expenditure flexibility, moderate long-term liabilities, and strong reserves relative to the City’s moderate revenue volatility.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET

Economic Factors

The City has seen continued recovery from the fiscal impacts of the COVID-19 pandemic, but its financial condition is now affected by higher inflation and interest rates than in the past decade, leading to slower projected economic growth. Housing demand remains higher than supply in the region, but home sales have slowed considerably over the past year as prices and interest rates have reduced demand. Homelessness and the need to increase services, shelter capacity, and housing is one of the biggest issues the City faces.

Next Year’s Budget

General Fund budget appropriations for fiscal year 2024 are $628.2 million, an increase of 5.4 percent compared to the fiscal year 2023 approved budget. In addition to the allocation of resources for several priority initiatives, the approved budget appropriations include a $3.1 million contribution to the City ’s Economic Uncertainty Reserve (EUR). This contribution is intended to maintain the minimum EUR level for the General Fund and Measure U Fund as required by adopted City policy.

City Council adopted a balanced budget for fiscal year 2024 based on strategic use of one-time resources and available fund balance.

CONTACTING THE CITY’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens , taxpayers, customers, investors, and creditors with a general overview of the City’s finances, and to demonstrate the City’s accountability for the money it receives. If you have questions about this report, need additional financial information, or would like to obtain component unit financial statements, contact the City of Sacramento Depa rtment of Finance, Accounting Division, 915 I Street, Fourth Floor, Sacramento, CA, 95814, or visit the City’s web page at http://www.cityofsacramento.org. 18 Government-wide
Financial
Statements
City of Sacramento
Statement of Net Position
June 30, 2023
(in thousands)
Governmental Business-type
Activities Activities Total
ASSETS
Cash and investments 959,538$ 417,327$ 1,376,865$ Receivables, net 391,919 81,583 473,502 Internal balances 4,870 (4,870) -
Inventories - 1,673 1,673
Prepaid items 7,322 233 7,555
Restricted cash and investments 33,806 94,936 128,742 Intangible assets - 104 104
Land and other capital assets not being depreciated/amortized 500,396 502,271 1,002,667 Other capital assets, net of depreciation/amortization 1,367,657 1,334,830 2,702,487 Total assets 3,265,508 2,428,087 5,693,595

DEFERRED OUTFLOWS OF RESOURCES
Loss on refunding of debt 2,198 9,262 11,460 Pensions 366,365 43,431 409,796
OPEB 30,029 4,031 34,060
Total deferred outflows of resources 398,592 56,724 455,316

LIABILITIES
Payables 91,605 39,239 130,844
Unearned revenue 12,436 3,698 16,134 Long-term liabilities:

Due within one year 68,949 35,372 104,321 Due in more than one year 1,997,141 1,079,041 3,076,182 Total liabilities 2,170,131 1,157,350 3,327,481

DEFERRED INFLOWS OF RESOURCES
Service concession arrangement 5,801 - 5,801
Gain on refunding of debt - 303 303
Pensions 2,431 660 3,091
OPEB 67,072 11,746 78,818
Leases 29,379 9,775 39,154
Total deferred inflows of resources 104,683 22,484 127,167

NET POSITION
Net investment in capital assets 1,346,924 952,381 2,299,305 Restricted for:

Capital projects 260,988 58,741 319,729 Debt service 1,086 - 1,086
Public works programs 39,396 - 39,396
Economic development programs 72,326 - 72,326 Other programs 71,766 22,020 93,786 Trust and endowments:

Expendable 10,331 - 10,331
Nonexpendable 586 - 586
Unrestricted (414,117) 271,835 (142,282) Total net position 1,389,286$ 1,304,977$ 2,694,263$ Primary Government
The notes to the basic financial statements are an integral part of this statement. 19 City of Sacramento
Statement of Activities
For the Fiscal Year Ended June 30, 2023
(in thousands)
Functions/Programs
Primary government:

Governmental activities:

General government 229,455 $ (20,826) $ 27,839 $ 33,632 $ 219 $ (146,939) $ Police 257,552 - 12,438 7,399 75 (237,640)
Fire 200,767 - 49,582 2,314 - (148,871)
Public works 137,292 - 57,100 16,983 84,125 20,916 Convention and cultural services 29,053 - 12,831 6,954 729 (8,539) Youth, parks, and community enrichment 80,719 - 13,319 2,818 9,232 (55,350) Community development 67,398 - 35,562 889 40,806 9,859 Community response 20,314 - - - - (20,314)
Library 24,416 - - 9,200 - (15,216)
Interest on long-term debt 26,259 - - - - (26,259) Total governmental activities 1,073,225 (20,826) 208,671 80,189 135,186 (628,353) Business-type activities:

Water 109,740 7,267 135,399 515 7,543 26,450
Wastewater 32,874 2,541 44,809 - 6,449 15,843
Storm drainage 45,355 2,876 61,120 37 4,077 17,003 Solid waste 73,031 4,807 87,753 360 - 10,275
Community center 31,008 1,908 13,889 - - (19,027) Parking 11,049 1,427 16,978 - - 4,502
Child development 6,339 - 5,592 273 - (474)
Total business-type activities 309,396 20,826 365,540 1,185 18,069 54,572 Total primary government 1,382,621$ - $ 574,211 $ 81,374$ 153,255$ (573,781)$ Program Revenues
Operating
Grants and
Contributions
Capital
Charges for
ServicesExpenses
Operating Grants and
Contributions
Net (Expense)
Revenue
Indirect
Allocation
Expenses
The notes to the basic financial statements are an integral part of this statement.

20 City of Sacramento
Statement of Activities
For the Fiscal Year Ended June 30, 2023
(in thousands)
Changes in net position:

Net (expense) revenue (628,353) $ 54,572 $ (573,781) $ General revenues:

Taxes:

Property taxes 228,337 - 228,337
Utility user taxes
69,529 - 69,529
Local sales tax
130,485 - 130,485
Property transfer tax
11,776 - 11,776
Business operations tax
31,554 - 31,554
Transient occupancy tax
6,227 31,294 37,521
Other taxes
2,417 - 2,417
Unrestricted sales taxes shared state revenue
115,343 - 115,343
Unrestricted investment earnings
11,711 4,399 16,110
Unrestricted miscellaneous 13,377 - 13,377
Loss on sale of capital assets
- (74) (74)
Transfers 40,152 (40,152) -
Total general revenues and transfers 660,908 (4,533) 656,375 Changes in net position 32,555 50,039 82,594
Net position, beginning of year 1,356,731 1,254,938 2,611,669 Net position, end of year 1,389,286$ 1,304,977$ 2,694,263$ Primary Government
Total
Governmental
Activities
Business-type
Activities
The notes to the basic financial statements are an integral part of this statement.

21 THIS PAGE INTENTIONALLY LEFT BLANK
22 Fund Financial
Statements

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23 City of Sacramento
Governmental Funds
Balance Sheet
June 30, 2023
(in thousands)

2015 Golden 1 Center
Measure U Lease Revenue
Fund Bond Fund
ASSETS
Cash and investments held by City 301,629$ 72,686$ 7,044$ Cash and investments held by fiscal agent - - - Receivables, net:

Taxes 34,266 22,955 - Accounts 29,042 154 2,025 Loans 1,561 - 135,147 Intergovernmental 4,079 - - Leases 27,226 - - Interest 1,504 312 30 Prepaid items 756 16 - Restricted assets:

Cash and investments held by City - - - Cash and investments held by fiscal agent - - 17,951 Total assets 400,063$ 96,123$ 162,197$

LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities:

Accounts payable 19,373 $ 7,615 $ - $ Accrued payroll 21,007 2,155 - Due to other funds - - - Deposits 160 - - Unearned revenue 892 - - Advances from other funds 1,562 - - Total liabilities 42,994 9,770 - Deferred inflows of resources:

Unavailable revenue 7,107 - 135,147 Leases 25,483 - - Total deferred inflows of resources 32,590 - 135,147 Fund balances:

Nonspendable:

Prepaid items 756 16 - Leases 1,743 - - Permanent fund principal - - - Restricted:

Capital projects - - - Debt service - - 17,951 Public works programs - - - Economic development programs - - - Other programs - - - Committed:

Economic uncertainty 72,534 1,773 - Capital projects 58,540 23,197 - Debt service - - 9,069 Fire programs 14,999 - - Housing trust fund 1,000 600 - OPEB 6,072
457 -
Set-aside for FY24 Budget 26,500 4,000 - Other programs 131,163 56,310 - Assigned:

Debt service - - 30 Unassigned 11,172 - - Total fund balances 324,479 86,353 27,050 Total liabilities, deferred inflows of resources
and fund balances 400,063$ 96,123$ 162,197$ Fund
General
The notes to the basic financial statements are an integral part of this statement.

24 City of Sacramento
Governmental Funds
Balance Sheet
June 30, 2023
(in thousands)
Other Total
Governmental Governmental
Funds Funds
ASSETS
Cash and investments held by City 434,045$ 815,404$ Cash and investments held by fiscal agent 11 11 Receivables, net:

Taxes 6,970 64,191 Accounts 20,099 51,320 Loans 26,227 162,935 Intergovernmental 64,022 68,101 Leases 4,005 31,231 Interest 958 2,804 Prepaid items 13 785 Restricted assets:

Cash and investments held by City 10,322 10,322 Cash and investments held by fiscal agent 5,533 23,484 Total assets 572,205$ 1,230,588$

LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities:

Accounts payable 25,911 $ 52,899 $ Accrued payroll 72 23,234 Due to other funds 3,633 3,633 Deposits 3,379 3,539 Unearned revenue 11,341 12,233 Advances from other funds 20,413 21,975 Total liabilities 64,749 117,513 Deferred inflows of resources:

Unavailable revenue 62,797 205,051 Leases 3,896 29,379 Total deferred inflows of resources 66,693 234,430 Fund balances:

Nonspendable:

Prepaid items 13 785 Leases 109 1,852 Permanent fund principal 578 578 Restricted:

Capital projects 282,956 282,956 Debt service 4,968 22,919 Public works programs 21,885 21,885 Economic development programs 72,326 72,326 Other programs 79,938 79,938 Committed:

Economic uncertainty - 74,307 Capital projects 677 82,414 Debt service 918 9,987 Fire programs - 14,999 Housing trust fund - 1,600 OPEB 8 6,537 Set-aside for FY23 Budget - 30,500 Other programs 19,952 207,425 Assigned:

Debt service 2,026 2,056 Unassigned (45,591) (34,419) Total fund balances 440,763 878,645 Total liabilities, deferred inflows of resources
and fund balances 572,205$
1,230,588$
The notes to the basic financial statements are an integral part of this statement.

25 THIS PAGE INTENTIONALLY LEFT BLANK
26 City of Sacramento
Governmental Funds
Reconciliation of the Balance Sheet to the Statement of Net Position June 30, 2023
(in thousands)
Fund balances - total governmental funds 878,645$
Amounts reported for governmental activities in the statement of net position are different because:

Revenue and other resources not available to liquidate
liabilities of the current period are not recognized in the funds. 205,051 Prepaid bond insurance represents costs associated with the issuance of long-term debt which are amortized over the period the debt is outstanding.

The costs are reported as expenditures of the current period in the governmental funds. 171
Capital assets used in governmental activities are not current financial resources and therefore, are not reported in the funds:

Governmental capital assets 3,603,208
Less: accumulated depreciation/amortization (1,831,529) 1,771,679
Certain current liabilities are not due and payable in the current period and therefore, are not reported in the funds. Those liabilities consist of the following:

Interest payable (5,007)
Deferred outflows and inflows of resources are not recognized in the current period and therefore, not reported in the governmental funds.

Deferred outflows related to pensions 361,097
Deferred outflows related to OPEB 29,529
Deferred inflows related to pensions (2,358)
Deferred inflows related to OPEB (65,525)
Loss on refunding of debt 2,198
324,941
Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore, are not reported in the funds.

Accrued compensated absences (50,318)
Accrued claims and judgments (3,835)
Financing plan fee credits (80,394)
Net pension liability (1,134,159)
Net OPEB liability (165,449)
Pollution remediation obligations (997)
Revenue and other bonds payable, net (443,396)
Notes payable (16,385)
Lease liabilities (1,157)
IT subscription liabilities (10,151)
(1,906,241)
Internal service funds are used by management to charge the costs of certain activities, such as insurance and fleet, to individual funds.

The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. 120,047 Net position of governmental activities 1,389,286$
The notes to the basic financial statements are an integral part of this statement. 27 City of Sacramento
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances For the Fiscal Year Ended June 30, 2023
(in thousands)
2015 Golden 1 Center
General Measure U Lease Revenue
Fund Fund Bond Fund
Revenues:

Taxes 450,650$ 130,485$ -$
Intergovernmental 23,623 - -
Charges for services 117,069 - -
Fines, forfeits, and penalties 9,112 - -
Interest, rents, and concessions 5,785 465 1,986
Community service fees - - -
Assessment levies 498 - -
Contributions and donations 1 - -
Miscellaneous 449 - -
Total revenues 607,187 130,950 1,986
Expenditures:

Current:

General government 69,337 18,811 -
Police 220,744 7,897 -
Fire 180,249 9,011 -
Public works 19,766 1,161 -
Convention and cultural services 5,538 3,628 -
Youth, parks, and community enrichment 3,218 39,843 -
Community development 32,077 10,791 -
Community response 8,897 10,783 -
Library - 14,272 -
Utilities 67 4,445 -
Citywide and community support 53,564 5,191 -
Capital outlay 25,810 5,997 -
Debt service:

Principal 3,927 350 4,005
Interest and fiscal charges 62 7 8,110
Total expenditures 623,256 132,187 12,115
Excess (deficiency) of revenues over
(under) expenditures (16,069) (1,237) (10,129)
Other financing sources (uses):

Transfers in 46,167 630 9,900
Transfers out (39,178) (3,606) -
Issuance of long-term debt 5,549 768 -
Proceeds from sale of capital assets - - -
Total other financing sources (uses) 12,538 (2,208) 9,900 Changes in fund balances (3,531) (3,445) (229)
Fund balances, beginning of year 328,010 89,798 27,279
Fund balances, end of year 324,479$ 86,353$ 27,050$
The notes to the basic financial statements are an integral part of this statement.

28 City of Sacramento
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances For the Fiscal Year Ended June 30, 2023
(in thousands)
Other Total
Governmental Governmental
Funds Funds
Revenues:

Taxes 16,153$ 597,288$
Intergovernmental 120,661 144,284
Charges for services 21,964 139,033
Fines, forfeits, and penalties 338 9,450
Interest, rents, and concessions 9,326 17,562
Community service fees 31,251 31,251
Assessment levies 60,085 60,583
Contributions and donations 25,339 25,340
Miscellaneous 868 1,317
Total revenues 285,985 1,026,108
Expenditures:

Current:

General government 55,313 143,461
Police 6,635 235,276
Fire 2,960 192,220
Public works 39,739 60,666
Convention and cultural services 12,470 21,636
Youth, parks, and community enrichment 12,023 55,084
Community development 18,160 61,028
Community response - 19,680
Library 9,200 23,472
Utilities 350 4,862
Citywide and community support - 58,755
Capital outlay 88,711 120,518
Debt service:

Principal 13,872 22,154
Interest and fiscal charges 19,048 27,227
Total expenditures 278,481 1,046,039
Excess (deficiency) of revenues over
(under) expenditures 7,504 (19,931)
Other financing sources (uses):

Transfers in 34,998 91,695
Transfers out (7,105) (49,889)
Issuance of long-term debt 11,739 18,056
Proceeds from sale of capital assets - -
Total other financing sources (uses) 39,632 59,862
Changes in fund balances 47,136 39,931
Fund balances, beginning of year 393,627 838,714
Fund balances, end of year 440,763$ 878,645$
The notes to the basic financial statements are an integral part of this statement.

29 THIS PAGE INTENTIONALLY LEFT BLANK
30 City of Sacramento
Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities
For the Fiscal Year Ended June 30, 2023
(in thousands)
Changes in fund balances - total governmental funds 39,931$ Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlay as expenditures. In the statement of activities, however, the cost of those assets is allocated over their estimated useful lives as depreciation/amortization expense.

Capital outlay 47,648
Depreciation/amortization expense (75,490)
(27,842)
Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds:

Infrastructure dedications 10,632
Long-term debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position.

Issuance of long-term debt (18,056)
Principal repayments on long-term debt 22,154
4,098
Revenue and other resources not available to liquidate
liabilities of the current period are not recognized in governmental funds.

Revenue in the statement of activities is not limited by availability, so certain revenues need to be reduced by the amounts that were unavailable at the beginning of the year and increased by the amounts that were unavailable at the end of the year. This adjustment records a net increase in revenues - unavailable revenues at the end of the year were greater than beginning unavailable revenues by this amount. 6,405
Some expenses reported in the statement of activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds.

Accrued compensated absences (4,154)
Accrued claims and judgments 969
Pension expense (38,792)
Other postemployment benefits 34,553
Pollution remediation (401)
Interest 60
Amortization of prepaid bond insurance (17)
Amortization of bond premium 1,136
Amortization of gain/loss on refunding (219)
(6,865)
Capital assets transferred from governmental activities to business-type activities are reported as transfers in the statement of activities. The transfers are not reported in the governmental funds as the amount did not involve the transfer of financial resources. (1,069)
Internal service funds are used by management to charge the costs of certain activities, such as insurance and fleet, to individual funds. The net expense of the internal service funds is reported with the governmental activities. 7,265
Change in net position of governmental activities 32,555$ The notes to the basic financial statements are an integral part of this statement. 31 City of Sacramento
General Fund
Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Non-GAAP Budgetary Basis)
with Budget to GAAP Reconciliation
For the Fiscal Year Ended June 30, 2023
(in thousands)
Actual Actual
Amounts - Budget Amounts -
Budgetary Variance with to GAAP GAAP
Final Basis Final Budget Reconciliation Basis
Revenues:

Taxes 439,918 $ 447,430 $ 450,650 $ 3,220$ -$ 450,650$ Intergovernmental 11,531 14,203 23,623 9,420 - 23,623 Charges for services 106,643 113,667 117,069 3,402 - 117,069 Fines, forfeits and penalties 7,082 7,356 9,112 1,756 - 9,112 Interest, rents, and concessions 2,969 3,760 5,785 2,025 - 5,785 Assessment levies 74 74 498 424 - 498
Contributions and donations - 1 1 - - 1
Miscellaneous 1,049 242 449 207 - 449
Total revenues 569,266 586,733 607,187 20,454 - 607,187 Expenditures:

Current:

Mayor/Council 9,897 12,570 5,747 6,823 (69) 5,678 City Auditor 1,108 1,317 1,286 31 - 1,286
City Manager 49,098 75,346 26,059 49,287 (10,201) 15,858 City Attorney 12,144 17,593 11,319 6,274 (263) 11,056 City Clerk 2,850 2,683 2,193 490 (5) 2,188
City Treasurer 1,675 1,692 1,172 520 - 1,172 Finance 8,806 8,902 8,513 389 9 8,522
Information technology 17,581 20,042 18,749 1,293 (15) 18,734 Human resources 9,117 9,881 5,267 4,614 (424) 4,843 Subtotal - General government 112,276 150,026 80,305 69,721 (10,968) 69,337 Police 220,468 228,141 220,782 7,359 (38) 220,744 Fire 163,407 174,203 180,282 (6,079) (33) 180,249 Public works 18,801 22,966 20,008 2,958 (242) 19,766 Convention and cultural services 12,565 14,065 5,957 8,108 (419) 5,538 Youth, parks, and community enrichment 1,900 4,054 3,219 835 (1) 3,218 Community development 38,694 38,527 32,697 5,830 (620) 32,077 Community response 21,988 14,623 11,962 2,661 (3,065) 8,897 Utilities 339 164 67 97 - 67 Citywide and community support 72,222 59,566 53,566 6,000 (2) 53,564 Capital outlay 61,234 74,603 22,738 51,865 3,072 25,810 Debt service:

Principal - 3,927 3,927 - - 3,927 Interest and fiscal charges - 29 62 (33) - 62 Total expenditures 723,894 784,894 635,572 149,322 (12,316) 623,256 Excess (deficiency) of revenues over
(under) expenditures (154,628) (198,161) (28,385) 169,776 12,316 (16,069) Other financing sources (uses):

Transfers in 38,345 45,848 46,167 319 - 46,167
Transfers out (28,724) (39,694) (39,178) 516 - (39,178) Issuance of long-term debt - - - - 5,549 5,549
Total other financing sources (uses) 9,621 6,154 6,989 835 5,549 12,538 Changes in fund balance (145,007) (192,007) (21,396) 170,611 17,865 (3,531) Fund balance, beginning of year 328,010 328,010 328,010 - - 328,010 Fund balance, end of year 183,003$ 136,003 $ 306,614 $ 170,611 17,865$ 324,479$ Budgeted Amounts
Original
The notes to the basic financial statements are an integral part of this statement. 32 City of Sacramento
Measure U Fund
Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Non-GAAP Budgetary Basis)
with Budget to GAAP Reconciliation
For the Fiscal Year Ended June 30, 2023
(in thousands)
Actual Actual
Amounts - Budget Amounts -
Budgetary Variance with to GAAP GAAP
Final Basis Final Budget Reconciliation Basis
Revenues:

Taxes 135,769$ 132,270 $ 130,485$ (1,785)$ -$ 130,485$ Interest, rents, and concessions - - 465 465 - 465 Total revenues 135,769 132,270 130,950 (1,320) - 130,950 Expenditures:

Current:

General government 46,942 42,585 28,251 14,334 (9,440) 18,811 Police 8,788 8,798 8,169 629 (272) 7,897
Fire 9,899 9,780 9,011 769 - 9,011
Public works 2,113 1,705 1,336 369 (175) 1,161
Convention and cultural services 5,368 4,860 3,660 1,200 (32) 3,628 Youth, parks, and community enrichment 43,809 42,890 39,829 3,061 14 39,843 Community development 14,095 14,405 11,334 3,071 (543) 10,791 Community response 19,152 20,693 17,961 2,732 (7,178) 10,783 Library 14,272 14,272 14,272 - - 14,272
Utilities 4,773 4,773 4,445 328 - 4,445
Citywide and community support 6,382 6,053 5,191 862 - 5,191 Capital outlay 20,147 27,251 6,594 20,657 (597) 5,997 Debt service:

Principal - 350 350 - - 350 Interest and fiscal charges - 7 7 - - 7 Total expenditures 195,740 198,422 150,410 48,012 (18,223) 132,187 Excess (deficiency) of revenues over
(under) expenditures (59,971) (66,152) (19,460) 46,692 18,223 (1,237) Other financing sources (uses):

Transfers in - 630 630 - - 630
Transfers out (250) (3,606) (3,606) - - (3,606)
Issuance of long-term debt - - - - 768 768
Total other financing sources (uses) (250) (2,976) (2,976) - 768 (2,208) Changes in fund balance (60,221) (69,128) (22,436) 46,692 18,991 (3,445) Fund balance, beginning of year 89,798 89,798 89,798 - - 89,798 Fund balance, end of year 29,577$ 20,670 $ 67,362 $ 46,692$ 18,991$ 86,353$ Budgeted Amounts
Original
The notes to the basic financial statements are an integral part of this statement. 33 City of Sacramento
Proprietary Funds
Statement of Net Position
June 30, 2023
(in thousands)
Solid Waste
Fund
ASSETS
Current assets:

Cash and investments held by City 198,644 $ 58,007 $ 60,542 $ 46,872 $ Cash and investments held by fiscal agent 98 11 - -
Receivables, net:

Taxes - - - -
Accounts 21,333 11,953 10,635 12,747 Loans - - 49 -
Intergovernmental 628 1,010 1,014 - Leases 60 - - 155
Interest 1,149 294 263 208
Due from other funds - - - -
Inventories 1,204 70 399 -
Prepaid items 202 - 3 -
Intangible asset, current portion - - - -
Total current assets 223,318 71,345 72,905 59,982 Noncurrent assets:

Restricted assets:

Cash and investments held by City 66,191 10,220 621 884 Cash and investments held by fiscal agent 3,499 413 - - Advances to other funds - - - -
Leases receivable 780 - 1,441
Loans receivable - - 873 -
Intangible assets - - - -
Capital assets:

Land 2,899 1,138 17,885 1,133 Buildings and improvements 168,160 58,531 11,805 32,153 Machiner
y and equipment 116,264 5,891 18,605 12,437 Vehicles - - - -
Transmission and distribution system 925,200 247,351 442,413 - Construction in progress 58,384 7,131 8,035 1,957 Software 3,491 3,447 3,747 2,772 Easements 134 - 157 -
Leased land - - - -
Leased building - - 177 -
Leased equipment 184 - - -
IT subscriptions 722 188 165 91
Less: accumulated depreciation/amortization (399,595) (103,165) (248,820) (37,047) Total noncurrent assets 946,313 231,145 255,663 15,821 Total assets 1,169,631 302,490 328,568 75,803

DEFERRED OUTFLOWS OF RESOURCES
Loss on refunding of debt 7,041 2,221 - - Pensions 18,265 4,800 5,882 7,391 OPEB 1,377 461 563 902
Total deferred outflows of resources 26,683 7,482 6,445 8,293 Business-type Activities - Enterprise Funds
Fund Fund
Storm
Water Wastewater Drainage
Fund
The notes to the basic financial statements are an integral part of this statement.

34 City of Sacramento
Proprietary Funds
Statement of Net Position
June 30, 2023
(in thousands)
ASSETS
Current assets:

Cash and investments held by City
Cash and investments held by fiscal agent
Receivables, net:

Taxes
Accounts
Loans
Intergovernmental
Leases
Interest
Due from other funds
Inventories
Prepaid items
Intangible asset, current portion
Total current assets
Noncurrent assets:

Restricted assets:

Cash and investments held by City
Cash and investments held by fiscal agent
Advances to other funds
Leases receivable
Loans receivable
Intangible assets
Capital assets:

Land
Buildings and improvements
Machinery and equipment
Vehicles
Transmission and distribution system
Construction in progress
Software
Easements
Leased land
Leased building
Leased equipment
IT subscriptions
Less: accumulated depreciation/amortization
Total noncurrent assets
Total assets

DEFERRED OUTFLOWS OF RESOURCES
Loss on refunding of debt
Pensions
OPEB
Total deferred outflows of resources
Community Other
Center Enterprise
Fund Funds
30,266$ 22,887 $ 417,218 $ 143,427 $ - - 109 696
3,567 - 3,567 -
4,391 767 61,826 5,020
- - 49 -
- - 2,652 -
- 351 566
173 78 2,165 516
- - - 3,883
- - 1,673 -
8 20 233 6,366
- 8 8 -
38,405 24,111 490,066 159,908 5,985 - 83,901 -
7,123 - 11,035 -
- - - 26,595
- 7,664 9,885 -
- - 873 -
- 96 96 -
20,071 5,825 48,951 -
113,040 63,538 447,227 7,454
4,913 6,235 164,345 543 - - - 213,142
- - 1,614,964 -
369,525 7,997 453,029 495
46 32 13,535 256
- - 291 -
- 1,978 1,978
- - 177 35
- - 184 -
76 767 2,009 165
(73,938) (
47,024) (909,589) (125,716)
446,841 47,108 1,942,891 122,969 485,246 71,219 2,432,957 282,877 - - 9,262 -
3,538 3,555 43,431 5,268 371 357 4,031 500
3,909 3,912 56,724 5,768 Total
Activities -
Internal
Service
Business-type Activities - Enterprise Funds
Governmental
Funds
The notes to the basic financial statements are an integral part of this statement. (continued)

35 City of Sacramento
Proprietary Funds
Statement of Net Position
June 30, 2023
(in thousands)
Solid
Waste
Fund

LIABILITIES
Current liabilities:

Accounts payable 4,017 15,396 1,253 2,034 Due to other funds - - - -
Accrued payroll 1,228 356 477 511
Accrued compensated absences 291 79 80 97
Interest payable 3,033 613 29 36
Liability for landfill postclosure - - - 298
Deposits 5 - - -
Unearned revenue 1,588 - 417 -
Accrued claims and judgments 54 88 79 214
Lease liabilities - - 35 -
IT subscription liabilities 296 75 66 30
Revenue and other bonds payable, net 16,876 2,374 - 1,320 Notes payable 3,502 - 98 -
Total current liabilities 30,890 18,981 2,534 4,540 Noncurrent liabilities:

Accrued compensated absences 3,658 1,136 1,688 1,554 Advances from other funds - - - -
Water fee credits 96 - - -
Wastewater fee credits - 8,450 - -
Net OPEB liability 10,764 4,046 4,520 15,116 Accrued claims and judgments - - - -
Li
ability for landfill postclosure - - - 3,442
Lease liabilities - - 73 -
IT subscription liabilities 127 38 33 30
Revenue and other bonds payable, net 324,927 54,235 - 9,022 Notes payable 131,466 - 1,746 -
Net pension liability 52,893 16,513 33,185 23,819 Total noncurrent liabilities 523,931 84,418 41,245 52,983 Total liabilities 554,821 103,399 43,779 57,523

DEFERRED INFLOWS OF RESOURCES
Gain on refunding of debt - - - 157
Pensions 242 81 109 108
OPEB 3,871 1,184 1,795 3,765 Leases 795 - - 1,576
Total deferred inflows of resources 4,908 1,265 1,904 5,606

NET POSITION
Net investment in capital assets 412,265 156,089 251,841 3,103 Restricted for:

Capital projects 50,060 8,681 - - Other programs - 223 20,950 847
Unrestricted 174,260 40,315 16,539 17,017 Total net position 636,585$ 205,308$ 289,330$ 20,967$ Business-type Activities - Enterprise Funds
Drainage
Fund Fund Fund
Water Wastewater
Storm
(continued) The notes to the basic financial statem ents are an integral part of this statement.

36 City of Sacramento
Proprietary Funds
Statement of Net Position
June 30, 2023
(in thousands)

LIABILITIES
Current liabilities:

Accounts payable
Due to other funds
Accrued payroll
Accrued compensated absences
Interest payable
Liability for landfill postclosure
Deposits
Unearned revenue
Accrued claims and judgments
Lease liabilities
IT subscription liabilities
Revenue and other bonds payable, net
Notes payable
Total current liabilities
Noncurrent liabilities:

Accrued compensated absences
Advances from other funds
Water fee credits
Wastewater fee credits
Net OPEB liability
Accrued claims and judgments
Liability for landfill postclosure
Lease liabilities
IT subscription liabilities
Revenue and other bonds payable, net
Notes payable
Net pension liability
Total noncurrent liabilities
Total liabilities

DEFERRED INFLOWS OF RESOURCES
Gain on refunding of debt
Pensions
OPEB
Leases
Total deferred inflows of resources

NET POSITION
Net investment in capital assets
Restricted for:

Capital projects
Other programs
Unrestricted
Total net position
Community Other
Center Enterprise
Fund Funds
5,660 2,750 31,110 6,579 250 - 250 -
182 293 3,047 347
38 29 614 80
1,255 39 5,005 -
- - 298 -
- 72 77 -
1,257 436 3,698 203
4 9 448 35,693
- 111 146 8
25 49 541 54
7,914 1,241 29,725 -
- - 3,600 -
16,585 5,029 78,559 42,964 503 783 9,322 1,130
4,620 - 4,620 -
- - 96 -
- - 8,450 -
237 1,461 36,144 4,877
- - - 99,152
- - 3,442 -
1,651 1,724 -
25 668 921 55
339,097 8,567 735,848 -
- - 133,212 -
10,604 12,868 149,882 18,800
355,086 25,998 1,083,661 124,014 371,671 31,027 1,162,220 166,978 - 146 303 -
60 60 660 73
412 719 11,746 1,547
- 7,404 9,775 -
472 8,329 22,484 1,620
102,356 26,727 952,381 93,219 - - 58,741 -
- - 22,020 -
14,656 9,048 271,835 26,828 117,012$ 35,775$ 1,304,977$ 120,047$
Total Funds
A
ctivities -
Internal
Service
Governmental
Business-type Activities - Enterprise Funds
The notes to the basic financial statements are an integral part of this statement.

37 City of Sacramento
Proprietary Funds
Statement of Revenues, Expenses
and Changes in Net Position
For the Fiscal Year Ended June 30, 2023
(in thousands)
Storm
Wastewater Drainage Solid Waste
Fund Fund Fund
Operating revenues:

Charges for services:

User fees and charges 135,304$ 43,072$ 59,836$ 87,347$ Rents and concessions 59 - - 181
Charge to other agencies for contract services - 1,737 1,284 - Miscellaneous 36 - - 225
Total operating revenues 135,399 44,809 61,120 87,753 Operating expenses:

Employee services 43,243 13,148 16,709 19,308
Services and supplies 29,477 15,337 20,422 56,769
Depreciation/amortization 30,481 5,300 11,035 1,223
Insurance premiums - - - -
Claims and judgments 20 - - 265
Total operating expenses 103,221 33,785 48,166 77,565 Operating income (loss) 32,178
11,024 12,954 10,188
Nonoperating revenues (expenses):

Interest and investment revenue (loss) 2,008 188 (298) 413 Transient occupancy taxes - - - -
Revenue from other agencies 515 - 37 360
Insurance and other claim recoveries - - - -
Interest expense (13,763) (1,630) (65) (273)
Amortization of bond prepaid insurance (23) - - -
Gain (loss) on disposition of capital assets - (223) 149 - Total nonoperating revenues (expenses) (11,263) (1,665) (177) 500 Income before capital contributions and transfers 20,915 9,359 12,777 10,688 Capital contributions 8,230 6,597 4,311 -
Transfers in 1,201 2,397 42 339
Transfers out (14,537) (4,767) (4,601) (9,572)
Changes in net position 15,809 13,586 12,529 1,455
Total net position, beginning of year 620,776 191,722 276,801 19,512 Total net position, end of year 636,585$ 205,308$ 289,330$ 20,967$ Business-type Activities - Enterprise Funds
Fund
Water
The notes to the basic financial statements are an integral part of this statement.

38 City of Sacramento
Proprietary Funds
Statement of Revenues, Expenses
and Changes in Net Position
For the Fiscal Year Ended June 30, 2023
(in thousands)
Governmental
Activities -
Other Internal
Enterprise Service
Funds Total Funds
Operating revenues:

Charges for services:

User fees and charges 2,659 $ 21,461 $ 349,679 $ 130,797 $ Rents and concessions 11,230 1,047 12,517 - Charge to other agencies for contract services - - 3,021 - Miscellaneous - 62 323 117 Total operating revenues 13,889 22,570 365,540 130,914 Operating expenses:

Employee services 6,753 9,336 108,497 12,994 Services and supplies 10,710 7,567 140,282 35,386 Depreciation/amortization 1,321 1,614 50,974 16,383 Insurance premiums - - - 14,416 Claims and judgments 7 - 292 45,738 Total operating expenses 18,791 18,517 300,045 124,917 Operating income (loss) (4,902) 4,053 65,495 5,997 Nonoperating revenues (expenses):

Interest and investment revenue (loss) 1,480 608 4,399 900 Transient occupancy taxes 31,294 - 31,294 - Revenue from other agencies - 273 1,185 21 Insurance and other claim recoveries - - - 737 Interest expense (14,125) (298) (30,154) (10) Amortization of bond prepaid insurance - - (23) - Gain on disposition of capital assets - - (74) 205

Total nonoperating revenues (expenses) 18,649 583 6,627 1,853 Income before capital contributions and transfers 13,747 4,636 72,122 7,850 Capital contributions - - 19,138 - Transfers in 2,718 5,934 12,631 422 Transfers out (9,825) (10,550) (53,852) (1,007) Changes in net position 6,640 20 50,039 7,265 Total net position, beginning of year 110,372 35,755 1,254,938 112,782 Total net position, end of year 117,012$ 35,775$ 1,304,977$ 120,047$ Community
Center
Fund
Business-type Activities - Enterprise Funds
The notes to the basic financial statements are an integral part of this statement.

39 City of Sacramento
Proprietary Funds
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2023
(in thousands)
Storm
Water Wastewater Drainage Solid Waste
Fund Fund Fund Fund
Cash flows from operating activities:

Receipts from customers and users 133,304 $ 43,313 $ 58,004 $ 85,421 $ Receipts from interfund services provided - - - -
Payments to suppliers (29,399) (15,626) (21,008) (57,149) Payments to employees (42,009) (12,671) (16,227) (19,406) Claims and judgments paid (43) (74) (64) (309)
Net cash provided by (used for) operating activities 61,853 14,942 20,705 8,557 Cash flows from noncapital financing activities:

Transient occupancy taxes - - - -
Transfers in from other funds 1,201 2,397 42 338 Transfers out to other funds (14,005) (4,721) (4,601) (9,464) Collections on interfund loans - - - -
Loans made to other funds - - - -
Interfund loan repayments - - - -
Intergovernmental revenue received 338 - 37 360
Net cash provided by (used for) noncapital financing activities (12,466) (2,324) (4,522) (8,766) Cash flows from capital and related financing activities:

Acquisition and construction of capital assets (9,912) (8,053) (2,965) (772) Proceeds from sale of capital assets - - 149 959 Proceeds from issuance of debt 107 - - - Principal payments on capital debt (20,897) (1,980) (95) (1,105) Interest payments on capital debt (15,104) (1,882) (66) (464) Principal payments on lease liabilities - - (34) -
In
terest payments on lease liabilities - - (1) -
Principal payments on IT subscription liabilities (299) (75) (66) (31) Interest payments on IT subscription liabilities - - - Transfers in from other funds - - - -
Transfers out to other funds (532) (46) - (109)
Capital contributions received 3,524 5,964 - - Receipts from leases 48 - - 153
Collection of interest from leases 11 - - 24
Loan repayments received - - 47 -
Cash reimbursement for fee credits - (1,509) - -
Net cash used for capital and related financing activities (43,054) (7,581) (3,031) (1,345) Cash flows from investing activities:

Collection (loss) of interest and investment revenue 1,600 77 (420) 327 Net increase (decrease) in cash and cash equivalents 7,933 5,114 12,732 (1,227) Cash and cash equivalents, beginning of year 260,499 63,537 48,431 48,983 Cash and cash equivalents, end of year 268,432$ 68,651$ 61,163$ 47,756$ Business-type Activities - Enterprise Funds
The notes to the basic financial statements are an integral part of this statement.

40 City of Sacramento
Proprietary Funds
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2023
(in thousands)
Cash flows from operating activities:

Receipts from customers and users
Receipts from interfund services provided
Payments to suppliers
Payments to employees
Claims and judgments paid
Net cash provided by (used for) operating activities
Cash flows from noncapital financing activities:

Transient occupancy taxes
Transfers in from other funds
Transfers out to other funds
Collections on interfund loans
Loans made to other funds
Interfund loan repayments
Intergovernmental revenue received
Net cash provided by (used for) noncapital financing activities Cash flows from capital and related financing activities:

Acquisition and construction of capital assets
Proceeds from sale of capital assets
Proceeds from issuance of debt
Principal payments on capital debt
Interest payments on capital debt
Principal payments on lease liabilities
Interest payments on lease liabilities
Principal payments on IT subscription liabilities
Interest payments on IT subscription liabilities
Transfers in from other funds
Transfers out to other funds
Capital contributions received
Receipts from leases
Collection of interest from leases
Loan repayments received
Cash reimbursement for fee credits
Net cash used for capital and related financing activities Cash flows from investing activities:

Collection (loss) of interest and investment revenue
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of
year
Community Other
Center Enterprise
Fund Funds Total
10,355$ 21,601 $ 351,998 $ - $
-
- - 207,868
(
9,052) (6,857) (139,091) (126,505) (6,951) (9,343) (106,607) (12,986) (8) (
6) (
504) (
21,911)
(5,656) 5,395 105,796 46,466
30,725 - 30,725 -
- 5,934 9,912 -
(
9,825) (1,750) (44,366) (
961)
- - - 2,687
- - - (
18,633)
(250) - (
250) -
- 273 1,008 21
20,650 4,457 (
2,971) (16,886)
(6,925) (2,237) (30,864) (20,868) - - 1,108 881
- - 107 -
(
6,395) (1,040) (31,512) (411)
(15,318) (440) (
33,274) (
11)
- (
108) (
142) (
14)
- (26) (
27) -
(
26) (
50) (
547) (
56)
- (
7) (
7) -
2,718 - 2,718 422
- (
8,800) (
9,487) (
46)
- - 9,488 -
- 244 445 -
- 89 124 -
- - 47 -
- - (
1,509) -
(
25,946) (12,375) (93,332) (20,103) 1,432 523 3,539 682
(
9,520) (2,000) 13,032 10,159
52,894 24,887 499,231 133,964
43,374$ 22,887$ 512,263$ 144,123$
Governmental
Activities -
Internal
Service
Funds
Business-type Activities - Enterprise Funds
The notes to the basic financial statements are an integral part of this statement. (continued)

41 City of Sacramento
Proprietary Funds
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2023
(in thousands)
Reconciliation of cash and cash equivalents
to the Statement of Net Position:

Cash and investments held by City 198,644 $ 58,007 $ 60,542 $ 46,872 $ Cash and investments held by fiscal agent 98 11 - -
R
estricted cash and investments held by City 66,191 10,220 621 884 Restricted cash and investments held by fiscal agent 3,499 413 - - T
otal cash and cash equivalents, end of year 268,432$ 68,651$ 61,163$ 47,756$ Reconciliation of operating income (loss) to net
cash provided by operating activities:

Operating income (loss) 32,178$ 11,024$ 12,954$ 10,188$ Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities:

Depreciation/amortization expense 30,037 5,029 10,707 1,039 Amortization of intangible assets 444 271 328 184
Nonoperating claims and judgments - - - -
C
hanges in assets, liabilities, and deferred outflows and inflows of resources:

Accounts receivable, net (1,650) (1,496) (3,401) (2,169) Intergovernmental receivables - - 160 -
Inv
entories (41) (
33) (
8) -
Pr
epaid items (6) - (
2) -
Ac
counts payable 125 (256) (
89) (
82)
Ac
crued payroll 306 157 121 9 Accrued compensated absences 95 183 166 (89) Ac
crued claims and judgments (23) (
74) (
64) (
44)
L
iability for landfill closure - - - (
298)
Deposits - - (
487) -
U
nearned revenue (290) - 125 -
W
ater fee credits (96) - - -
N
et pension liability and related deferred outflows/inflows of resources 2,430 681 877 1,064 Net OPEB liability and related deferred outflows/inflows of resources (1,597) (544) ( 682) (
1,082)
Deferred inflows related to leases (59) - - ( 163)
Net cash provided by (used for) operating activities 61,853$ 14,942$ 20,705$ 8,557$ Noncash investing, capital and financing activities:

Contributions of capital assets 4,241$ 648$ 4,311$ -$ Amortization of bond premium and discount 1,721 339 - 160
Am
ortization of bond loss on refunding (524) (
116) - -
Am
ortization of bond gain on refunding - - - 26
Am
ortization of bond prepaid insurance (23) - - -
Inc
rease in prepaid items for capital assets - - - -
C
apital asset acquisitions on accounts payable 523 709 277 23 Loss on disposition of capital assets - 223 - -
F
ee credit reimbursement accounts payable - 2,322 - -
Wa
ter
Fund
Wastewater Drainage Solid Waste
Fund Fund Fund
Storm
Business-type Activities - Enterprise Funds
(continued) The notes to the basic financial statem ents are an integral part of this statement.

42 City of Sacramento
Proprietary Funds
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2023
(in thousands)
Reconciliation of cash and cash equivalents
to the Statement of Net Position:

Cash and investments held by City
Cash and investments held by fiscal agent
Restricted cash and investments held by City
Restricted cash and investments held by fiscal agent
Total cash and cash equivalents, end of year
Reconciliation of operating income (loss) to net
cash provided by operating activities:

Operating income (loss)
Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities:

Depreciation/amortization expense
Amortization of intangible assets
Nonoperating claims and judgments
Changes in assets, liabilities, and deferred outflows and inflows of resources:

Accounts receivable, net
Intergovernmental receivables
Inventories
Prepaid items
Accounts payable
Accrued payroll
Accrued compensated absences
Accrued claims and judgments
Liability for landfill closure
Deposits
Unearned revenue
Water fee credits
Net pension liability and related deferred outflows/inflows of resources Net OPEB liability and related deferred outflows/inflows of resources Deferred inflows related to leases
Net cash provided b
y (used for) operating activities
Noncash investing, capital and financing activities:

Contributions of capital assets
Amortization of bond premium and discount
Amortization of bond loss on refunding
Amortization of bond gain on refunding
Amortization of bond prepaid insurance
Increase in prepaid items for capital assets
Capital asset acquisitions on accounts payable
Loss on disposition of capital assets
Fee credit reimbursement accounts payable
30,266$ 22,887 $ 417,218 $ 143,427 $
-
-
109 696
5,985
-
83,901 -
7,123 -
11,035 -
43,374$ 22,887$ 512,263$ 144,123$
(4,902)$ 4,053$ 65,495$ 5,997$
1,321 1,606 49,739 16,366
-
8 1,235 17
-
- - 876
(
3,972) (53) (
12,741) 5
- - 160 -
- - (
82) -
(7
) (
8) (
23) 222
1,665 718 2,081 49
(
12) (
24) 557 18
(
61) (
35) 259 (
95)
(1) (
6) (
212) 22,951
- - (
298) -
- (
430) (
917) -
438 74 347 (
25)
- - (96) -
321 470 5,843 677
(
446) (
418) (
4,769) (592)
- (
560) (
782) -
(5,656)$ 5,395$ 105,796$ 46,466$
-$ -$ 9,200$ -$
1,259 151 3,630 -
- - (
640) -
- 24 50 -
- - (
23) -
- - - 1,671
770 188 2,490 3,038 - - 223 -
- - 2,322 -
In
ternal
Governmental
Activities -Business-type Activities - Enterprise Funds Service
Total
Center Enterprise
Fund Funds Funds
Community Other
The notes to the basic financial statements are an integral part of this statement.

43 City of Sacramento
Fiduciary Funds
Statement of Fiduciary Net Position
June 30, 2023
(in thousands)
Pension Private-Purpos e Investment Pool Othe r
Trust Trust Custodial Custodial
Fund Fund Fund Funds
ASSETS
4,414$ 10,912$ 128,727$ 152,082$
- 20,983 - 4,995
- 130 - -
Cash and investments held by City
Cash and investments held by fiscal agent
Prepaid items
Receivables, net:

Interest 926 - 411 572
Intergovernmental - 616 - -
Special assessments - - - 681
Investments, at fair value:

Corporate bonds/notes 50,763 - - -
Equities 19,163 - - -
Exchange traded funds 147,933 - - -
Mortgage loans 274 - - -
Municipal bonds/notes 22,449 - - -
U.S. agencies 1,129 - - -
U.S. Treasury bonds 2,971 - - -
Restricted assets:

Cash and investments held by City - - - 5,251 - - - 23,394
- 3,555 - -
Cash and investments held by fiscal agent
Loans receivable
Capital assets:

Land - 3,353 - -
Buildings and improvements - 102 - -
Less: accumulated depreciation - (36) - -
Total assets 250,022 39,615 129,138 186,975

DEFERRED OUTFLOWS OF RESOURCES
Loss on refunding of debt - 848 - -

LIABILITIES
Accounts payable 3 1- -
Benefits payable 53 - - -
Due to bondholders - - - 49,380 Interest payable - 236 - -
Contracts payable - 18,687 - -
Bonds payable - 30,935 - -
Notes payable - 152,114 - -
Total liabilities 56 201,973 - 49,380

NET POSITION
Held in trust for:

Restricted for pensions 249,966 - - -
Redevelopment dissolution - (161,510) - -
Held for external pool participants - - 129,138 137,595 Total net position (deficit) 249,966$ (161,510)$ 129,138$ 137,595$ The notes to the basic financial statements are an integral part of this statement. 44 City of Sacramento
Fiduciary Funds
Statement of Changes in Fiduciary Net Position
For the Fiscal Year Ended June 30, 2023
(in thousands)
Pension Private-Purpos e Investment Pool Othe r
Trust Trust Custodial Custodial
Fund Fund Fund Funds
Additions:

Deposits - $ -$ 104,488$ 3,591$
Property taxes - 27,112 - -
Special assessments - - - 18,443
Capital contributions - - - 7,032
Other income - 6 - -
Contributions:

Employees 3 - - -
Investment income:

From investment activities:
17,525 - (1,095) (1,180)

3,411 788 2,480 3,504
Net appreciation (depreciation) in fair value of investments Interest
Dividends 3,356 - - -
Total investment income 24,292 788 1,385 2,324
Investment expenses:
30 - 297 - Banking, interest, and fiscal agent expenses Professional services 969 - - -
Total investment expenses 999 - 297 -
Net income from investment activities 23,293 788 1,088 2,324 Total additions 23,296 27,906 105,576 31,390
Deductions:
27,501 - - -
- - 99,397 9,779
- 9,192 - -
- 10,893 - -
- 176 - -
- - - 24,120
- - - 1,985
- 732 - -
Benefit payments
Withdrawals
Interest expense
Other enforceable obligation payments
Loan forgiveness
Paid to bondholders
Administrative expenses
Loss on disposal of capital asset
Depreciation expense
- 3 - -
Total deductions 27,501 20,996 99,397 35,884
Changes in net position (4,205) 6,910 6,179 (4,494)
Net position (deficit), beginning of year 254,171 (168,420 ) 122,959 142,089 Net position (deficit), end of year 249,966$ (161,510)$ 129,138$ 137,595$ The notes to the basic financial statements are an integral part of this statement. 45 THIS PAGE INTENTIONALLY LEFT BLANK
46 Notes to the Basic
Financial
Statements
City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)
NOTE 1 – SU

MMARY OF SIGNIFICANT ACCOUNTING POLICIES

DEFINITION OF REPORTING ENTITY
The City of Sacramento (City) was incorporated in 1849 under th e laws of the State of California. Sacramento is a charter city and operates under a City Council – City Manager form of government. The City provides a full range of municipal services including police, fire, water, wa stewater, storm drainage, so lid waste, construction and maintenance of streets, planning and zoning, code enforcement, parks, recreation programs, and cultural activities.

These basic financial statements present the financial status of the City and its component units, which are included in the City’s reporting entity because of the significance of their operational or financial relationships with the City.

Blended Component Units
The Sacramento City Financing Authority (SCFA) is a joint exercise of powers ent ity created by the City and the former Redevelopment Agency of the City of Sacramento to facilitate the financing and refinancing of public capital facilities. Most of the debt of the SC FA is backed by the City’s General Fund. The SCFA is governed by the City Council.

The Sacram
ento Public Financing Authority (SPFA) is a joint exercise of powers entity created by the City and the Housing Authority of the City of Sacramento (Housing Authority) to facilitate the financing and refinancing of public capital facilities. The debt of the SPFA is backed by the City. The SPFA is governed by the City Council.

Fiduciary Component Unit
Sacramento City Employees’ Retirement System (SCERS) is a single employer pension plan sponsored and administered by the City for City employees, except p ublic safety employees, hired before January 29, 1977 and public safety employees who retired with SCERS benefits before December 30, 1989. Under provisions of the City Charter, SCERS is managed by the Administration, Investment and Fiscal Management Board (the SCERS Board), consisting of the City Manager, City Director of Finance, City Treasurer and two residents of the City appointed by the City Council. Duties of the SCERS Board include the adoption of investment standards for SCERS, the establishment of contribution rates, the adm inistration and investment of funds, the selection of investment advisors, the crediting of interest, and any action relating to the fiscal management of SCERS. Stand- alone financial statements may be obtained at https://www.cityofsacramento.org/Finance/Accounting/Reporting.

AC

COUNTING POLICIES
The financial statements of the City have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP)
as applied to governmental agencies. The Governmental
Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant accounting policies of the City are described below.

Governmental Accounting Standards Implemented During the Fiscal Year Ended June 30, 2023 GASB Statement No. 91 – In May 2019, the GAS
B issued Statement No. 91, Conduit Debt Obligations . The objectives of this statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. The provisions in Statement 91 are effective for fiscal years beginning after December 15, 2021. The applicable provisions were implemented July 1, 2022, and did not have a material impact on the financial statements. See note 7 for more information.

GASB Statement No. 94 – In March 2020, GASB issued Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The primary objective of this statement is to improve financial reporting by addressing issues related to public-private and public-public partnership arrangements. The provisions in Statement 94 are effective for fiscal years beginn ing after June 15, 2022. The applicable provisions were implemented July 1, 2022, and did not have a material impact to the financial statements. 47 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Governmental Accounting Standards Implemented During the Fiscal Year Ended June 30, 2023 (Continued)

GASB Statement No. 96 – In May 2 020, GASB issued Statement No. 96, Subscription-Based Information Technology Arrangements. This statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements for government end users. The provisions in Statement 96 are effective for fiscal years beginning after June 15, 2022. The applicable provisions were implemented July 1, 2022, and as a result, the City has restated IT subscription assets and liabilities for certain City funds, as well as governmental and business-type activities. There was no restatement of beginning net position. See note 6 for more information.

GASB Statement No. 99 – In April 2022, GASB issued Statement No. 99, Omnibus 2022. The objectives of this statement are to enhance comparability in accounting and fi nancial reporting and to improve the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB Statement s and (2) accounting and financial reporting for financial guarantees. The provisions of paragraphs 11 through 25 of Statement 99 are effective for fiscal years beginning after June 15, 2022.

The applicable provisions of paragraphs 11 through 25 were implemented and did not have a material impact to the financial statements. The provisions of paragraphs 4 through 10 of Statement 99 are effective for fiscal years beginning after June 15, 2023. The City has not determined the effect of implementing paragraphs 4 through 10 of this statement.

Upcoming Governmental Accounting Standards Implementation

The City is currently analyzing its accounting and financial reporting practices to determine the potential impact on the financial statements of the following GASB Statements:

GASB Statement No. 100 – In June 2022, GASB issued Statement No. 100, Accounting Changes and Error Corrections – an amendment of GASB Statement No. 62. The objective of this statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. The provisions in Statement 100 are effective for fiscal years beginning after June 15, 2023. The City has not determined the effect of implementing this statement.

GASB Statement No. 101 – In June 2022, GASB issued Statement No. 101, Compensated Absences. The objective of this statement is to better meet the info rmation needs of financial st atement users by updating the recognition and measurement guidance for compensated ab sences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. The provisions in Statement 101 are effective for fiscal years beginning after December 15, 2023. The City has not determined the effect of implementing this statement.

Government-wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all the non-fiduciary activities of the pr imary government and its component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely significantly on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the City is financially accountable.

The statement of activities demonstrates the degree to whic h the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Certain indirect costs are allocated to expens es and capital assets of governmental and business-type activities. At the government-wide level, citywide and community support expenses/expenditures within the General Fund are allocated to City departments. Utilities expenditures within the General Fund is allocated to public works. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital r equirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. 48 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Government-wide and Fund Financial Statements (Continued)

As a general rule the effect of interfund activity has been removed from the government-wide financial statements.

Internal service fund activity has been eliminated from the statement of activities. The effect of interfund services provided and used between functions, such as the sale of water from the Water Fund to the General Fund, has not been eliminated in the statement of activities. The City’s payments in lieu of taxes from its enterprise funds to the General Fund are reported as interfund transfers.

The accounts of the City are organi zed on the basis of funds. A fund is a separate accounting entity with a self- balancing set of accounts. Each fund was established for the purpose of accounting for specific activities in accordance with applicable regulations, restrictions, or limitations. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary f unds, even though fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liab ility is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements have been met.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accountin g. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fisc al period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Property taxes, sales taxes, utility user taxes, interg overnmental revenue, special assessments, charges for services, and investment income associated with the curr ent fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of t he current fiscal period. A ll other revenue items are considered to be measurable and available only when cash is received by the City.

The City reports the following major governmental funds:

The General Fund is the City’s primary operating fund and accounts for all financial resources of the general government, except those required to be accounted for in another fund.

The Measure U Fund was established to account for t he temporary half-cent sales tax approved by voters on November 6, 2012. On November 6, 2018, Sacramento voters approved a new version of the City’s Measure U sales and use tax eliminating the sunset provision and raising it from half-cent to one cent. The one cent sales and use tax was effective April 1, 2019.

The 2015 Golden 1 Center Lease Revenue Bond Fund accounts for debt service activities related to financing a portion of construction costs of a multi-purpose entertainment and sports complex located in the downtown area of Sacramento.

49 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)

The City reports the following major enterprise funds:

The Water Fund accounts for the operation and maint enance of the City’s water treatment and water transmission and distribution systems.

The Wastewater Fund accounts for the operation and maintenance of the City’s wastewater system.

The Storm Drainage Fund accounts for the operation and maintenance of the City’s surface drainage system.

The Solid Waste Fund accounts for the collection and disposal of refuse throughout the City and for landfill closure.

The Community Center Fund accounts for the operation and maintenance of the City’s Community Center, including the theater and exhibit halls.

Additionally, the City reports the following fund types:

Internal Service Funds account for the financing of fl eet and risk management services to other departments on a cost reimbursement basis.

The Pension Trust Fund accounts for the assets held on behalf of the Sacramento City Employees’ Retirement System (SCERS) for pension benefit payments to qualified employees.

The Private-Purpose Trust Fund accounts for the assets received by the Successor Agency from the City’s former redevelopment agency in order to liquidate its enforceable obligations, pursuant to Assembly Bill X1 26 which dissolved redevelopment agencies in California.

Custodial Funds account for assets held by the City as a custodian for individuals, private organizations, and other governments. The City's Custodial Funds include assets held by the City for bonded assessment and community facilities districts and Investment Trust Funds. Investment Trust Funds account for the net position held on behalf of investors, in the City's investment pool and individual accounts, who are not part of the City's financial reporting entity.

Amounts reported as program revenues include 1) charge s to customers or applicants for goods, services, or privileges provided, including fees, fines, and forfeitures, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Program revenues also include earnings on investments that are legally restricted for a specific program. Internally dedicated resources are reported as general revenues rather than as program revenue. Likewise, general revenues include all taxes.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise funds and internal service funds are charges to customers for sa les and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation and amortization on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

50 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)

When both restricted and unrestricted net position are available for use, it is the City’s practice to use restricted resources first followed by unrestricted resources as they are needed. When all fund balance types are available, it is the City’s practice to use restricted resources first, followed by committed, assigned, and unassigned resources as they are needed.

Permanent funds, commonly referred to as endowment f unds, are governmental funds used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support City programs. The City has received endowments for va rious programs, a list of which can be found in the Permanent Funds section of the Combining and Individual Fund Financial Statements and Schedules. The investments of donor-restricted endowments have $6,141 of net appreciation that is available for authorization for expenditures by the governing board. The corpus of permanent funds is reported as Nonspendable Fund Balance and investment earnings available for expenditure are reported as Restricted Fund Balance in the fund level financial statements, and as Restricted for Nonexpendable Trust and Endowments in the statement of net position.

Funds are spent in accordance with legal trust agreements and the City budget, subject to State law governing the spending of endowment fund investment earnings in California Probate Code Section 18504.

Budget Information

The City Manager submits a proposed budget to the City Council no later than 60 days prior to the commencement of the fiscal year. The City Council holds public hearings, modifies the City Manager’s recommendations, and adopts a final budget in June. The budget adoption resoluti on specifies that budgets will be controlled at the department level (e.g., police, fire, public works, parks and recreation etc.) by fund.

Annual budgets are adopted for the General Fund, Measure U Fund, the City/County Office of Metropolitan Water Planning (CCOMWP) Fund, the Cal EPA Fund, as well as certain activities within the Transportation and Development Fund, the Culture and Leisure Fund, the Parks and Recreation Fund, and the Special Districts Fund.

Annual budgets are also adopted for the enterprise and internal service funds, although they are not legally required. Multi-year project-length budgets are adopted for the General Fund, capital projects funds, and the Operating Grants Fund where appropriations remain authorized for each project until closed, irrespective of fiscal year. Expenditures are appropriated on a modified accr ual basis, except that co mmitments related to purchase orders are treated as expenditures in the year of commitment.

Budgets are modified throughout the year when the tax bas e changes, fees are modified, new revenue sources are identified, or programs are changed. The City Manag er is authorized to administratively amend department budgets during the year for transactions up to $250 wit hout City Council approval. All other appropriation adjustments during the year require City Council approval. Unencumbered annual budget appropriations lapse at fiscal year-end. The City honors contracts represented by year-end encumbrances and the appropriations carried over provide authority to complete these transactions in future years. Multi-year project-length budget appropriations are automatically carried over into the next fiscal year.

Financial Statements Elements

Fair Value Measurement – The City categorizes the fair value m easurements of its inve stments based on the hierarchy established by GAAP. The fair value hierarchy, which has three levels, is based on the valuation inputs used to measure an asset’s fair value: Level 1 inputs are quoted prices in active markets for identical assets, Level 2 inputs are significant other observable inputs, and Level 3 inputs are significant unobservable inputs.

51 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial Statements Elements (Continued)

Property Taxes - Article XIII of the California Constitution (Proposition 13) limits ad valorem taxes on real property to one percent of value plus taxes necessary to pay indebt edness approved by voters prior to July 1, 1978. The Article also established the 1975/76 as sessed valuation as the base and limit s annual increases to the cost-of- living, not to exceed two percent, for each year thereafte r. Property may also be reassessed to full market value after a sale, transfer of ownership, or completion of new construction. The State is prohibited under the Article from imposing new ad valorem, sales, or transactions taxes on real property. Local governments may impose special taxes (except on real property) with the approval of two-thirds of the qualified electors.

Property taxes are levied annually by the Sacramento County Assessor on July 1 and become a lien on property on the preceding January 1. Taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively.

The City participates in an alternative method of distribution of property tax levies and assessments known as the “Teeter Plan”. The State Revenue and Taxation Code allows counties to distribute secured real property, assessment and supplemental property taxes on an accrual ba sis resulting in full payment to cities each fiscal year. Any subsequent delinquent payments and related penalties and interest during a fiscal year will revert to the County. The Teeter Plan payment, which includes 95% of the outstanding accumulated delinquency, is included in property tax revenue. Under the Teeter Plan code, 5% of the delinquency must remain with the County as a reserve for Teeter Plan funding.

Receivables and Payables – Property taxes, sales taxes, utility user taxes, and other taxes, related to the current fiscal year are accrued as revenue and accounts receivable and considered available if received within 60 days of year end.

Federal and State grants are considered receivable and accrued as revenue when all eligibility requirements have been met under the accrual basis of accounting in the government-wide statement of net position. The amount recognized as revenue under the modified accrual basis of accounting is limited to the amount that is deemed measurable and available as described above.

Long-term loans receivable reported in the governmental fund statements are recorded with offsetting unavailable revenue because the amounts will not be received within 60 days after fiscal year-end. Long-term loans receivable reported in the proprietary fund statements, as well as long-term loans reported in the government-wide statements, are not offset by unava ilable revenue. Unbilled utility revenue earned is recognized as revenue and accounts receivable in the enterprise funds.

Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.”

Inventories and Prepaid Items
- Inventories in the proprietary funds are stated at cost and consist of expendable materials and supplies. Inventories are expensed when consumed using the first-in, first-out (FIFO) method.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items, using the consumption method, in both government-wide and fund financial statements.

52 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial Statements Elements (Continued)

Restricted Assets - Certain proceeds of debt issues, as well as ce rtain resources set aside for their repayment, are classified as restricted assets on the statements of net position and balance sheets because their use is limited by applicable bond covenants. Unspent developer impact fees are classified as restricted assets on the statements of net position for the Water and Wastewater enterprise funds.

Capital Assets - Capital assets are reported in the applicable governmental or business-type activities column in the government-wide financial statements, as well as the proprietary funds and fiduciary funds financial statements.

Capital assets are recorded at the lower of actual hist orical cost or acquisition value (as of the date donated for contributed assets) although for certain older assets estimated historical costs are used.

Capital assets are depreciated using the straight-line method over the following estimated useful lives:

Building and improvements Primarily 15 to 70 years
Transmission and distribution system Primarily 15 to 100 years Machinery, vehicles and equipment Primarily 5 to 30 years Software Primarily 5 to 20 years
Roadway network Primarily 20 to 70 years
Streetlight network Primarily 40 to 50 years
Park and park improvements Primarily 15 to 30 years

It is the policy of the City to capitalize all land, buildings and improvements, equipment, and infrastructure assets, except assets costing less than $20, unless a federal funding source is utilized. All capital assets in excess of $5 financed by a federal funding source are capitalized. The City also capitalizes all intangible capital assets, primarily easements and software, except assets costing less than $100, unless a federal funding source is utilized. Costs of capital assets sold or retired (and related amounts of accumulated depreciation/am ortization) are eliminated from the accounts in the year of sale or retirement and the resulting gain or loss is included in the operating statement of the related proprietary fund, governmental activities, and business-type activities. In governmental funds, the sale of general capital assets is included in the statement of revenues, expenditures and changes in fund balances as proceeds from sale.

The Crocker Art Museum’s collection of works of art, hel d in trust by the City, has not been reported in these financial statements. The City has elected not to report the collection because it meets the three criteria for waiving capitalization: the collection is held for reasons other than financial gain; the collection is protected, kept unencumbered, cared for, and preserved; and the collection is subject to an organizational policy requiring that the proceeds from sales of collection items be used to acquire other items for the collection.

The intangible right-to-use lease and IT subscription assets are also reported as capital assets. Refer to the Lease and IT subscription section of Note 1 for further information.

Deferred Outflows/Inflows of Resources - In addition to assets, the statement of net position reports a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net assets that applies to future periods and will not be recognized as an expense/expenditure until then. The City has three items, deferred outflows related to loss on refunding of debt, pensions, and OPEB, which qualify for reporting in this category.

In addition to liabilities, the statement of net position reports a separate section for deferred inflows of resources.

This separate financial statement element represents an acquisition of net assets that applies to future periods and will not be recognized as revenue until then. The City has five items recognized in the statement of net position:
deferred inflows related to gain on refunding of debt, service concession arrangement revenue, pensions, OPEB, and leases. In addition, there is one item recognized in the governmental funds, unavailable revenue, which qualifies for reporting in this category.

53 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial Statement Elements (Continued)

Compensated Absences - Benefit qualified employees accrue vaca tion, sick, and holiday benefits. A full-time employee may accumulate up to sixty days of vacation. Sick leave vests and may be accumulated until retirement.

An employee with sixty or more days of accumulated sick leave at the end of a calendar year may elect to receive a 25% payment of any unused sick leave earned in the pr evious calendar year. The amount of sick leave paid is deducted from the employee’s total accumulation. Upon retirement, employees with a minimum of 20 years of City service, excluding SCERS employees, have the option of converting their sick leave accumulation into CalPERS service credit hours, or receiving a cash payment of one- third of the accumulated sick leave. The City accrues expected cash payments of accumulated sick leave at fiscal year-end. Employees who leave the City and are not retiring forfeit any remaining sick leave.

Employees receive 14 holidays per calendar year. Employees accrue all or a portion of these 14 days during the year depending on their job classification. Classifications that accrue all 14 days get pai d in cash throughout the year whenever their holiday leave balances exceed the 14 days total. All other employees accrue one or two days of “floating” holiday time, depending on the bargaining unit, throughout the year in conjunction with their remaining twelve holidays. Employees who accrue “floating” holiday time get paid annually in January for any calendar year- end balance greater than eight hours.

All hourly employees have the option of being compensated for their overtime pay with compensatory time off (CTO). Depending on the employee’s CTO plan, the employee may accrue a maximum of 80, 120 or 160 hours of CTO. The employee’s applicable labor agreement or the City Council’s resolution for unrepresented employees determines the maximum accruable number of CTO hours.

All compensated absences are accr ued when earned in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements.

Unearned Revenue - Unearned revenue in accrual-based statements arises when resources are received by the City before it has a legal claim to them (i.e., when grant monies are received prior to incurring qualified expenditures).

Long-term Obligations - In the government-wide and proprietary and fiduciary fund financial statements, long- term debt and other long-term obligations are reported as liabilities in the applicable st atement of net position.

Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Gains and losses on debt refunding are deferred and amortized over the shorter of the remaining life of the old debt or the life of the new debt using the straight-line method. B onds payable are reported net of bond premium or discount. Bond issuance costs, except prepaid bond insurance which is deferred and amortized, are reported as expenditures/expenses when incurred.

In the fund financial statements, governmental fund ty pes 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 report ed 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.

54 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial Statement Elements (Continued)

Fund Balance - In the fund financial statements, governmental funds report fund classifications that comprise a hierarchy based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Nonspendable fund balances include amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact.

Amounts that are restricted to specific purposes, either by a) constraints placed on the use of resources by creditors, grantors, contributors, or laws or regulati ons of other governments or b) imposed by law through constitutional provisions or enabling legislation, are classified as restricted fund balances. Amounts that can only be used for specific purposes pursuant to constraints impos ed by the City Council through a resolution, which is the highest form of decision authority, are classified as committed fund balances. Amounts that are constrained by the City Council’s intent to be used for specific purpos es through a resolution, but are neither restricted nor committed, are classified as assigned fund balances. Negati ve fund balance in governmental funds and residual fund balance in the General Fund, after determining the fund balance classifications described above, is reported as unassigned fund balance. The General Fund is the only fund that can report a positive unassigned fund balance amount.

The City’s Economic Uncertainty Reserve (Reserve) is a stabilization arrangement in the General Fund and Measure U Fund reported as committed fund balance. The adopted Reserve goal is to achieve a reserve equal to 10% of annual General Fund and Measure U revenues and a target reserve equal to two months of regular ongoing General Fund and Measure U expenditures, including transfers. The City Manager may recommend a release from the Reserve when the gap between projected revenue and expenditures is greater than $1,000 in the proposed budget. Additions and releases from the Reserve must be approved by City Council by resolution.

Statement of Cash Flows - For purposes of the statement of cash flows, cash equivalents are defined as investments with original maturities of 90 days or less, which are readily convertible to known amounts of cash.

The City considers all pooled cash and investments (consisting of cash and investments and restricted cash and investments) held by the City as cash and cash equiva lents because the pool is used essentially as a demand deposit account from the standpoint of the funds. The City also considers all non-pooled cash and investments (consisting of cash with fiscal agent and restricted cash and investments held by fiscal agent) as cash and cash equivalents because investments meet the criteria for cash equivalents defined above.

Use of Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.

Pensions - For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) and Sacramento Employees’ Retirement System (SCERS) Plans and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS and SCERS, respectively. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

55 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial Statement Elements (Continued)

Other Postemployment Benefits (OPEB) - For purposes of measuring the net OPEB liability and deferred outflows/inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s CalPERS Plan and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

Leases, City as a Lessee, and IT Software Subscriptions - The City is a lessee in various noncancellable leases of land, buildings, and equipment. The City also has noncancellable subscription arrangements for the right-to-use information technology software (IT subscriptions). For leases and IT subscriptions with a maximum possible term of 12 months or less at commencement, the City recogni zes expenses/expenditures based on the provisions of the agreements. For all other leases and IT subscriptions, the City recognizes a lease or IT subscription liability and an intangible right-to-use lease or IT subscription asset in the statement of net position.

At lease or IT subscription commencement, the City measures the lease or IT subscrip tion liability at the present value of fixed payments expected to be made during the lease or subscription term. Subsequently, lease and IT subscription liabilities are reduced by the principal porti on of payments made. The lease or IT subscription asset is initially measured at the initial amount of the lease or IT subscription liability, plus any initial direct costs ancillary to placing the underlying asset into service and paym ents made at or before the lease or IT subscription commencement date, less any incentives received. Subsequently, lease and IT subscription assets are amortized into depreciation and amortization expense on a straight-line basis over the shorter of the lease or subscription term or the useful life of the underlying asset. If the Ci ty is reasonably certain of exercising a purchase option contained in a lease or IT subscription agreement, the lease or IT subscription asset will be amortized over the useful life of the underlying asset. It is the policy of the City to capitalize all leased land, buildings, and equipment, except those with less than $20 of fixed payments expected to be made dur ing the lease term, unless a federal funding source is utilized. The City also capitalizes all IT subscription assets, except those with less than $100 of fixed payments expected to be made during the IT subscrip tion term, unless a federal funding source is utilized.

All lease and IT subscription assets in excess of $5 financed by a federal funding source are capitalized. These same thresholds are used in the recognition of lease and IT subscription liabilities.

Leases, City as a Lessor - The City is a lessor in various noncancellable leases of land, buildings, and equipment.

For leases with a maximum possible term of 12 months or less at commencement, the City recognizes revenues based on the provisions of the lease agreement. For all other leases, the City recognizes a lease receivable and a deferred inflow of resources related to leases in the statement of net position and governmental fund balance sheet.

At lease commencement, the City measures the lease receivable at the present value of fixed payments expected to be received during the lease term. Subsequently, lease receivables are reduced by the principal portion of lease payments received. The deferred inflow of resources related to leases is initially measured at the initial amount of the lease receivable. Subsequently, the deferred inflow of resources related to leases is amortized into lease revenue on a straight-line basis over the term of the agreement. It is the policy of the City to recognize lease receivables and deferred inflow of resources related to leases for all leased out land, buildings, and equipment, except leases with less than $20 of fixed payments expected to be received during the lease term.

56 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial Statement Elements (Continued)

Other Lease and IT Software Subscription Considerations - Key estimates and judgments include the City’s determination of the discount rate used to calculate the present value of the lease or IT subscription, lease or IT subscription terms, lease or IT subscription payments, and lease receipts. The City generally uses its estimated incremental borrowing rate as the discount rate for leases and IT subscriptions unless the rate charged is explicitly stated or known. The City’s incremental borrowing rate for leases and IT subscriptions is based on the estimate of interest rates that the City would be charged for borrowing lease and IT subscription amounts during the term of the agreement. The City uses an incremental borrowing rate of between 0.316% and 3.16%. The agreement term includes noncancellable periods of lease and IT subscr iption arrangements, plus any additional periods covered by an option to extend for which it is reasonably certain to be exercised or an option to terminate for which it is reasonably certain to not be exercised. Periods in which both parties to the agreement have a unilateral option to terminate (or if both parties must agree to extend) are excluded from the lease and IT subscription term. Receipts and payments are evaluated by the City to determine if they should be included in the measurement of lease receivables and lease or IT subscription liabilities, including receipts and payments that require a determination of whether they are reasonably certain of being made, such as residual value guarantees, purchase options, termination penalties, and other receipts and payments.

The City monitors changes in circumstances that ma y require remeasurement of lease and IT subscription agreements. When certain changes occur that are expected to significantly affect the value of the lease or IT subscription, the amounts are remeasured and adjusted.

57 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS

The following is a summary of cash and investments at June 30, 2023:

Government-wide
Statement of
Net Position
Fiduciary Funds
Statement of Fiduciary
Net Position Total
Cash and investments 1,386,779 $ 566,795 $ 1,953,574 $ Restricted cash and investments 118,828 28,645 147,473 Total 1,505,607$ 595,440$ 2,101,047$

Under the authority of the Sacramento City Charter, the Sacramento City Council, by Resolution 2023-0208, has delegated its investment authority to the City Treasurer. The City Treasurer manages th e City’s investments in accordance with the City’s investment policy, which was last reaffirmed by the City Council on June 20, 2023. The City’s investment policy requires compliance with the California Government Code for investments of public funds.

The City’s investment policy also provides limits on rate anticipation, arbitrage, and other swap investments.

SCERS pension trust fund investments are managed by the SCERS Board pursuant to an investment policy adopted by the SCERS Board and approved by the City Council by Resolution 2023-0207. Investment standards adopted by the SCERS Board were last approved by the City Council on June 20, 2023. The investment policy allows the SCERS Board to invest in fixed income and equity securities deemed prudent. Pursuant to the investment policy, the SCERS Board annually allocates the funds to different investment groups. For fiscal year 2023, the asset allocations consisted of the following: 32.5% Fixed Income securities, 32.5% Large Cap Growth stocks, 30% Equity Income stocks and 5% International stocks. The investment policy allows for up to 5% variance from these approved allocation levels to provide flexibility to investment activities without altering the risk profile of the SCERS portfolio.

58 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

The table below identifies the investment types that are authorized for public funds of the City by the California Government Code. The table also identifies certain prov isions of the California Government Code 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
Minimum
Rating
Local agency bonds 5 years* None None None
U.S. Treasury obligations 5 years* None None None
U.S. agency securities 5 years* None None None
Supranational securities 5 years 30% None AA
Bankers' acceptances 180 days 40% 30% None
Commercial paper 270 days 25% 10% A1/P1
Negotiable certificates of deposit 5 years 30% None None Repurchase agreements 1 year None None None
Reverse repurchase and 92 days 20% of base value None None securities lending agreements of portfolio
Medium term notes (bank notes and 5 years* 30% None
A
corporate bonds)
Mutual funds N/
A 20% 10% Aaa
Money market mutual funds N/ A 20% 10% Aaa
Collateralized bank deposits 5 years None None None
Mortgage pass-through securities 5 years 20% None
AA
Joint Powers Authority pool N/A None None None
County pooled investment N/A None None None
Local Agency Investment Fund (LAIF) N/ A None None None

*The City investment policy allows these investments to have maximu m maturities of 5 years, plus not more than 30 days. Such ap proved maturity extensions are authorized by California Government Code section 53601.

The table above does not address the investments held by the SCERS pension trust fund. The SCERS Board was established by the City Charter to maintain and manage investments of this system, including but not limited to the adoption of investment standards and t he administration and investment of t he funds. The statutory authority for the SCERS Board is created in Sacramento City Charter Section 383. Allowable investments are governed by the SCERS investment policy and are different than those prescribed by the City’s investment policy.

The table above also does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City or other trust funds.

The table above also does not address investments of equities held by permanent funds that are governed by the provisions of the trust agreements.

59 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

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 its fair value is to changes in market interest rates. The City’s investment policy limits interest rate risk by requiring compliance with the California Government Code for investments of public funds, as described in detail above. One of the ways that the City and SCERS manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturing evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Information about the sensitivity of the fair values of the City’s and SCERS’ investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following tables that show the distribution of the investments by maturity. The remaining maturity of the City’s and SCERS’ investments included in the tables below are based on the stated maturity dates of the individual investments, except in the case of variable rate investments where the maturity date is the next reset date. Variable rate securities are investments with terms that provide for the adjustment of interest rates on specified dates based on predefined mathematical formulas. The fair value of such investments can reasonably be expected to be affected at each interest rate reset date.

The City’s cash and investments by maturities as of June 30, 2023 are as follows:

Cash and Investment Type No Maturity Under 1 1-5 Over 5 Total Bank deposits 87,175$ - $ -$ -$ 87,175$ Corporate bonds/notes - 61,639 413,875 207 475,721 Equities 5,082 - - - 5,082 Exchange traded funds 1,943 - - - 1,943 Investment Trust of California (CalTRUST) - 119,982 58,488 - 178,470 Local Agency Investment Fund (LAIF) - 2,350 - - 2,350 Municipal bonds/notes - 29,860 65,534 - 95,394 Money market mutual funds - 60,342 - - 60,342 Negotiable certificates of deposit - 273,913 32,573 - 306,486 Supranational securities - 15,448 14,049 - 29,497 U.S. agency securities - 97,219 463,327 - 560,546 U.S. Treasury bills - 19,895 - - 19,895 U.S. Treasury notes - 11,087 17,963 - 29,050 Total Cash and Investments 94,200$ 691,735$ 1,065,809$ 207$ 1,851,951$

Remaining Maturity in Years

The $207 of corporate bonds/notes with remaining maturities longer than five years are held by other trust funds. The $5,082 of equities and $1,943 of exchange traded funds are also held by other trust funds. Allowable investments of these other trust funds are not governed by the City’s investment policy. Investment discretion is given to the City Treasurer and funds are invested to meet objectives based on the agreements in place for these other trust funds.

60 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

Interest Rate Risk (Continued)

SCERS’ cash and investments by maturities as of June 30, 2023 are as follows:

Cash and Investment Type No Maturity Under 1 1-5 Over 5 Total City of Sacramento Investment Pool -$ 4,414$ - $ -$ 4,414$ Corporate bonds/notes - - 11,301 39,462 50,763 Equities 19,163 - - - 19,163 Exchange traded funds 147,933 - - - 147,933 Mortgage loans - 274 - - 274 Municipal bonds/notes - - 6,793 15,656 22,449 U.S. agency securities - - 4 1,125 1,129 U.S. Treasury bonds - - 1,519 1,452 2,971 Total Cash and Investments 167,096$ 4,688$ 19,617$ 57,695$ 249,096$

Remaining Maturity in Years

Investments in callable securities are investments tha t, although having clearly defined maturities, allow for the issuer to redeem or call such securities earlier than their respective maturity dates. The investor must then replace the called securities with investments that may have lower yields than the original securities. The fair values of the callable securities held by the City and SCERS at June 30, 2023, by investment type, are as follows:

Investment Type City SCERS
Corporate bonds/notes 127,022$ 8,091$
Municipal bonds/notes 8,053 3,181
Negotiable certificates of deposit 14,117 -
Supranational securities 5,549 -
U.S. agency securities 504,791 361
659,532$ 11,633$

61 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)
Credit Risk

Generally, credit risk is the risk that an issuer of an inve stment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization.

The City’s investment policy limits credit risk by requiring compliance with the California Government Code for the purchase of investments with public funds, as described in detail above. Obligations of the U.S. Government are not considered to have credit risk and do not require disclosure of credit quality. The S & P Global Ratings (S & P) credit ratings of the City and SCERS investments subject to credit risk as of June 30, 2023 are as follows:

Investment Type S & P City SCERS
City of Sacramento Investment Pool not rated -$ 4,414$ Corporate bonds/notes A 400,162 13,730 AA 63,188 5,065
AAA 8,580 -
BBB 385 31,964
not rated 3,406 4
Investment Trust of California (CalTRUST) not rated 178,470 - Local Agency Investment Fund (LAIF) not rated 2,350 - Municipal bonds/notes A 1,194 3,986 AA 64,625 12,096
AAA 8,162 -
not rated 21,413 6,367
Money market mutual funds AAA 60,342 - Negotiable certificates of deposit A 273,872 - AA 14,521 -
not rated 18,093 -
Supranational securities AAA 29,497 - U.S. agency securities AA 545,192 860 not rated 15,354 -
Total 1,708,806$ 78,486$

The $385 in corporate bonds/notes rated BBB are held by other trust funds.

As of June 30, 2023, the City held notes issued by the Bank of Montreal that are not rated by S & P but are rated A2 by Moody’s Investors Service. The notes have a fair value of $3,406 as of June 30, 2023.

62 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)
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. As of June 30, 2023, the City did not hold investments in an individual issuer exceeding 5% of total investments (other than U.S. Treasury securities, mutual funds, and external investment pools).

As of June 30, 2023, SCERS held the following investm ents in individual issuers exceeding 5% of total SCERS investments and net position (other than U.S. Treasury securities, mutual funds, and external investment pools):
iShares Russell 1000 Value ETF 37,327$
Technology Select Sector SPDR Fund (ETF) 17,979
Healthcare Select SPDR Fund (ETF) 15,065

Custodial Credit Risk

Custodial credit risk for deposits is the risk that, in the ev ent of the failure of a depository financial institution, the City or SCERS will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The California Government Code has provisions for financial institutions that limit custodial credit risk for deposits. Financial institutions are required to secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law. 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. The City’s financial institutions also have insurance through the Federal Deposit Insurance Corporation (FDIC). The City’s investment policy has no additional provisions for limiting custodial credit risk for deposits. All SCERS cash and cash equivalents are held with the City of Sacramento Investm ent Pool and SCERS is not exposed to custodial credit risk for deposits.

The custodial credit risk for investments is the risk tha t, in the event of the failure of the counterparty to a transaction, the City or SCERS will not be able to recover the value of its investment or collater al securities that are in the possession of another part y. 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; however, it is the practice of the City Treasurer that all City investments are insured, registered or held by the Treasurer’s custodial agent in the City’s name. All SCERS investment s registered or held with the custodial agent are in SCERS’ name.

63 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

Fair Value Measurement and Application

The City and SCERS categorize fair va lue measurements within the fair va lue hierarchy established by GAAP.

The hierarchy is based on the valuation inputs used to measure the fair value of the asset. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows:

Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the City and SCERS have the ability to access.

Level 2 – Inputs to the valuation methodology include:

 Quoted prices for similar assets or liabilities in active markets;  Quoted prices for identical or similar assets or liabilities in inactive markets;  Inputs other than quoted pric es that are observable for the asset or liability; and  Inputs that are derived principally from or corrob orated by observable market data by correlation or other means.

Level 3 – Inputs to the valuation me thodology are unobservable and significant to the fair value measurement.

Unobservable inputs reflect the City’s and SCERS’ own assumptions about the inputs market participants would use in pricing the asset or liability (including assumpti ons about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the City’s and SCERS’ own data.

The asset’s level within the hierarchy is based on the lowest level of 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. The determination of what constitutes observable re quires judgment by management. City and SCERS management consider observable data to be that market data, which is readily available, regularly distributed or updated, reliable, and verifiable, not proprietary, and provided by multiple independent sources that are actively involved in the relevant market. The categorization of an investment within the hierarchy is based upon the relative observability of the inputs to its fair val ue measurement and does not necessarily correspond to City and SCERS management’s perceived risk of that investment.

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety ar e categorized based on the lowest level input that is significant to the valuation. Assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.

The money market mutual funds held by the City pool and outside the City pool are at $1 net asset value per share.

The total net asset value of these at June 30, 2023 was $26,192 and $34,150, respectively, with $0 unfunded commitments. The redemption frequency is daily and redemption notice period of intra-daily. This type of investment primarily invests in short-term U.S. Treasury and government agency securities (including repurchase agreements collateralized by U.S. Treasury and government agency securities).

Deposits and withdrawals in governmental investment pools, such as LAIF and CalTRUST for the City and the City of Sacramento Investment Pool for SCERS, are made on the basis of $1 and not fair value. Accordingly, the City’s measured fair value of its proportionate share in these types of investments is based on uncategorized inputs not defined as a Level 1, Level 2, or Level 3 input.

64 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

Fair Value Measurement and Application (Continued)

The City’s treasury pools’ asset market prices are derived from closing bid prices as of the end of business day as supplied by ICE Data Services, Inc. Where prices are not available from generally recognized sources, the securities are priced using a yield-based matrix system to arrive at an estimated fair value. Prices that fall between data points are interpolated. Nonnegotiable FDIC-insured bank certificates of deposit are priced at par.

The following is a description of the valuation methods and assumptions used by the City and SCERS to estimate the fair value of its investments:

 When available, quoted prices are used to determine fair value. When quoted prices in active markets are available, investments are classified within Level 1 of the fair value hierarchy.  For investments classified within Level 2 of the fair value hierarchy, the City’s and SCERS’ custodians generally use a multi-dimensional relational mode l. Inputs to their pricing models are based on observable market inputs in active markets. The inputs to the pricing models are typically benchmark yields, reported trades, broker-dealer quotes, issuer spreads and benchmark securities, among others.  SCERS holds one investment measured using Level 3 inputs, a Mortgage Loan. The Mortgage Loan is reported using the income approach. The value of the Mortgage Loan is materially close to the Discounted Cash Flow, therefore the book value is reported.

There have been no changes in the methods and assu mptions used at June 30, 2023. The methods described may produce a fair value calculation that may not be indicati ve of net realizable value or reflective of future fair values. City and SCERS management believe its valuati on methods are appropriate and consistent with other market participants. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

65 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

Fair Value Measurement and Application (Continued)

The City has the following recurring fair value measurements as of June 30, 2023:

Investments by Fair Value Level
Balance at
June 30, 2023
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Corporate bonds/notes 448,751$ - $ 448,751$ - $ Equities 5,082 5,082 - - Exchange traded funds 1,943 1,943 - - Municipal bonds/notes 95,394 - 95,394 - Negotiable certificates of deposit 293,267 - 293,267 - Supranational securities 29,497 - 29,497 - U.S. agency securities 559,713 - 559,713 - U.S. Treasury bills 19,895 19,895 - - U.S. Treasury notes 17,963 17,963 - - Total Investments by Fair Value Level 1,471,505 44,883 $ 1,426,622$ - $ Investments Measured at Net Asset Value
Money market mutual funds 26,192
Investments Uncategorized
Investment Trust of California (CalTRUST) 178,470
Local Agency Investment Fund (LAIF) 2,350
Total Investments Uncategorized 180,820
Total Investments Held by City 1,678,517
Investments Held by Fiscal Agent by Fair Value Level
Corporate bonds/notes 26,970 - $ 26,970$ - $ Negotiable certificates of deposit 13,219 - 13,219 -

U.S. agency securities 833 - 833 - U.S. Treasury notes 11,087 11,087 - - Total Investments Held by Fiscal Agent by
Fair Value Level 52,109 11,087$ 41,022$ - Investments Held by Fiscal Agent Measured at Net Asset
Value
Money market mutual funds 34,150
Total Investments Held by Fiscal Agent 86,259
Total Investments 1,764,776
Total Bank Deposits 87,175
Total Cash and Investments 1,851,951$
Fair Value Measurements on a Recurring Basis Using

66 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

Fair Value Measurement and Application (Continued)

SCERS has the following recurring fair value measurements as of June 30, 2023:

Investments by Fair Value Level
Balance at
June 30, 2023
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Corporate bonds/notes $ 50,763 -$ 50,763 $ - $ Equities 19,163 19,163 - - Exchange traded funds 147,933 147,933 - - Mortgage loans 274 - - 274 Municipal bonds/notes 22,449 - 22,449 - U.S. agency securities 1,129 - 1,129 - U.S. Treasury bonds 2,971 2,971 - - Total Investments by Fair Value Level 244,682 $ 170,067 $ 74,341 $ 274 Investments at Fair Value not Subject to
Fair Value Hierarchy
City of Sacramento Investment Pool 4,414
Total Cash and Investments 249,096 $
Fair Value Measurements on a Recurring Basis Using

City Sponsored Investment Pool

As part of the City’s total cash and investments portfolio, the City Treasurer manages an investment pool, which includes both internal and external investors. The pool is not registered with the Securities and Exchange Commission as an investment company. The City Treasure r is granted authority for managing the pool by City Charter Section 73 and City Council ordinances and resolution s. Monthly, the City Trea surer reports investment activity to the Council for review.

The fair value of investments is det ermined monthly. Participants’ shares sold and redeemed are determined by the daily cash balance deposited in the pool (the value of its pool shares). The value of the pool shares is based upon amortized cost in day-to-day operations but is adjust ed to the fair value at year-end. The investments are reported at fair value. The value of the shares is supported by the value of the unde rlying investments. External participants, including various joint powers agencies, co mprise 7.95% of pool participation. The City Sponsored Investment Pool excludes activities of the pension trust fund, the Sacramento Housing and Redevelopment Agency (SHRA), and funds held by fiscal agents.

The City Treasurer also manages external individual in vestment accounts for SHRA and the Sacramento Public Library Authority Hurst Trust.

67 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

City Sponsored Investment Pool (Continued)

The following represents a condensed statement of net position and changes in net position for the City Sponsored Investment Pool and external individual investment accounts as of June 30, 2023:

Fair Value
Adjusted
Cost
Interest
Rates
Maturity
Dates
Corporate bonds/notes 447,045$ 484,702$ 0.45-5.55% 07/23-03/27 Deposits 87,115 87,115 2.97%-3.00% N/A Investment Trust of California (CalTRUST) 178,470 178,470 3.44-5.07% N/A Local Agency Investment Fund (LAIF) 2,350 2,350 3.17% N/A Municipal bonds/notes 95,394 100,653 0.37-5.49% 07/23-06/27 Money market mutual funds 26,192 26,192 0.01-4.51% N/A Negotiable certificates of deposit 293,267 295,541 0.49-5.44% 07/23-06/26 Supranational securities 29,497 31,389 0.37-3.00% 09/23-11/26 U.S. agency securities 559,713 601,427 0.40-6.00% 07/23-12/27 U.S. Treasury bills/notes 37,858 39,765 0.37-4.97% 07/23-02/26 Total cash and investments in City sponsored investment pool and external individual investment accounts 1,756,901$ 1,847,604$

A summary of cash and investments as of June 30, 2023 is as follows:

External
City Sponsored Individual Investment
Investment Pool Accounts Total
Statement of Net Position:

Cash and investments at fair value 1,619,842 $ 137,059 $ 1,756,901 $ Interest receivables 5,174 536 5,710 Net position 1,625,016 $ 137,595 $ 1,762,611 $ Equity of internal pool participants 1,495,878 $ - $ 1,495,878$ Equity of external pool participants 129,138 137,595 266,733 Total equity 1,625,016 $ 137,595 $ 1,762,611 $ Statement of Changes in Net Position:

Net position at July 1, 2022 1,542,041 $ 142,089 $ 1,684,130 $ Net change in investments by pool participants 82,975 (4,494) 78,481 Net position at June 30, 2023 1,625,016 $ 137,595 $ 1,762,611 $

68 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

Participation in External Investment Pools

The City is a voluntary participant in the California Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Local Investment Advisory Board (Board). The Board consists of five members as designated by state stat ute. The balance available fo r withdrawal is based on the accounting records maintained by the LAIF, which are recorded on an amortized cost basis, which is different from the fair value of the City’s position in the LAIF pool. As of June 30, 2023, the City’s investment in LAIF is $2,350.

The total amount invested by all public agencies in LAIF at that date is $25,677,325. LAIF is part of the California Pooled Money Investment Account (PMIA), which at June 30, 2023 had a balance of $176,442,053. Of that amount,

97.22% is invested in non-derivative financial products, and 2.78% is invested in derivative financial products.

The City is also a voluntary participant in the Investment Trust of California (CalTRUST), which is a Joint Powers Authority governed by a Board of Trustees made up of local treasurers and investment officers. The Board of Trustees sets overall policy for CalTRUST and selects and supervises the activities of the Investment Manager and other agents. As of June 30, 2023 , the City’s investment in CalTRUST is $178,470, of which $48,598 was invested in the Liquidity funds pool, $71,384 in the Short-term pool, and $58,488 in the Medium-term pool. Amounts that may be withdrawn from CalTRUST are based upon the fund’s assets valued using the amortized cost method.

Amounts that may be withdrawn from the Short-term and Medium-term pools are based on the net asset value per share and the number of shares held by participants in each pool.

69 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 3 – RECEIVABLES

Receivables as of June 30, 2023, were as follows:

Taxes Accounts Loans
Inter-
govern-
mental Leases Interest Total
Governmental activities
General Fund 34,266$ 29,042$ 1,561$ 4,079$ 27,226$ 1,504 $ 97,678$ Measure U Fund 22,955 154 - - - 312 23,421 2015 Golden 1 Center
Lease Revenue Bond Fund - 2,025 135,147 - - 30 137,202 Other governmental funds 6,970 20,099 32,028 64,022 4,005 958 128,082 Internal service funds - 5,020 - - - 516 5,536 64,191$ 56,340$ 168,736 $ 68,101$ 31,231$ 3,320 $ 391,919$ Amounts not scheduled for
collection during the
subsequent year -$ -$ 159,272$ 10,533$ 28,734$ -$ 198,539$ Business-type activities
Water Fund -$ 21,333$ -$ 628$ 840$ 1,149 $ 23,950$ Wastewater Fund - 11,953 - 1,010 - 294 13,257 Storm Drainage Fund - 10,635 922 1,014 - 263 12,834 Solid Waste Fund - 12,747 - - 1,596 208 14,551 Community Center Fund 3,567 4,391 - - - 173 8,131 Other enterprise funds - 767 - - 8,015 78 8,860 3,567$ 61,826$ 922$ 2,652 $ 10,451$ 2,165 $ 81,583$

Included in the Accounts Receivable amounts above ar e allowances for doubtful accounts of $26,835 in governmental activities and $977 in business-type activities.

Included in the Loans Receivable amount related to other governmental funds above is the present value of the installment payments under the golf service concession arrangement of $5,801, reported with the associated deferred inflow in the government-wide statement of net position.

The Golden 1 Center was sold to the Sacramento Kings under the terms of the Arena Management, Operations and Lease Agreement during the fiscal year ended June 30, 2017. The agreed-upon minimum lease payments to be received from the Kings was $389,414 over 35 year s. Total minimum lease payments have since gone up to $405,324 over 35 years in accordance with the agreement ’s annual fee escalation tied to the Consumer Price Index. The present value of these minimum lease paym ents discounted at 5.674% is $145,930 and the current loan receivable balance as of June 30, 2023 is $135,147. Payments from the Sacramento Kings will be used to fund the payment of debt service related to the Golden 1 Center 2015 lease revenue bonds.

70 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 4 – CAPITAL ASSETS

Summary

The following is a summary of capital assets as of June 30, 2023:

Business-
Governmental type
Activities Activities Total
Capital assets not being depreciated/amortized
Land 220,493$ 48,951$ 269,444$ Easements 2,348 291 2,639 Construction in progress 277,555 453,029 730,584 Total capital assets not being depreciated/amortized 500,396 502,271 1,002,667 Depreciable/amortizable capital assets
Buildings and improvements 720,704 447,227 1,167,931 Equipment 81,327 164,345 245,672 Software 6,413 13,535 19,948 Vehicles 215,921 - 215,921 Transmission and distribution system 4,777 1,614,964 1,619,741 Roadway network 1,732,078 - 1,732,078 Streetlight network 294,256 - 294,256 Parks and park improvements 252,708 - 252,708 Total depreciable/amortizable capital assets 3,308,184 2,240,071 5,548,255 Less accumulated depreciation/amortization for:

Buildings and improvements (317,712) (188,384) (506,096) Equipment (70,155) (63,034) (133,189) Software (5,486) (5,727) (11,213) Vehicles (119,934) - (119,934) Transmission and distribution system (1,358) (651,678) (653,036) Roadway network (1,213,304) - (1,213,304) Streetlight network (121,358) - (121,358) Parks and park improvements (104,249) - (104,249) Total accumulated depreciation/amortization (1,953,556) (908,823) (2,862,379) Depreciable/amortizable capital assets, net 1,354,628 1,331,248 2,685,876 Lease and IT subscription assets, net (Note 6) 13,029 3,582 16,611 T
otal capital assets, net 1,868,053$ 1,837,101$ 3,705,154$

Refer to Note 6 for more detailed information on lease and IT subscription asset activity and amortization expense by function.
71 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 4 – CAPITAL ASSETS (Continued)

Governmental Activities

Governmental capital asset activity for the fiscal year ended June 30, 2023 was as follows:

Beginning
Balance,
As Restated⁽1⁾ Increases Decreases
Transfers
In/Out
Ending
Balance
Capital assets not being depreciated/amortized
Land 219,585 $ 908 $ - $ -$ 220,493$ Easements 2,348 - - - 2,348 Construction in progress 270,374 40,038 (32,857) - 277,555 492,307 40,946 (32,857) - 500,396 Depreciable/amortizable capital assets
Buildings and improvements 715,677 5,027 - - 720,704 Equipment 80,479 848 - - 81,327 Software 6,413 - - - 6,413 Vehicles 206,885 19,520 (10,484) - 215,921 Transmission and distribution system 4,777 1,069 - (1,069) 4,777 Roadway network 1,723,815 12,251 (3,988) - 1,732,078 Streetlight network 287,938 6,318 - - 294,256 Parks and park improvements 233,996 18,712 - - 252,708 Total depreciable/amortizable capital assets 3,259,980 63,745 (14,472) (1,069) 3,308,184 Less accumulated depreciation/amortization for:

Buildings and improvements (303,772) (13,940) - - (317,712) Equipment (67,909) (2,246) - - (70,155) Software (5,134) (352) - - (5,486) Vehicles (113,423) (16,328) 9,817 - (119,934) Transmission and distribution system (1,271) (87) - - (1,358) Roadway network (1,176,858) (40,434) 3,988 - (1,213,304) Streetlight network (114,556) (6,802) - - (121,358) Parks and park improvements (95,831) (8,418) - - (104,249) Total accumulated depreciation/amortization (1,878,754) (88,607) 13,805 - (1,953,556) Depreciable/amortizable capital assets, net 1,381,226 (24,862) (667) (1,069) 1,354,628 Lease and IT subscription assets, net (Note 6) 9,812 3,217 - - 13,029 Governmental activities capital assets, net 1,883,345$ 19,301$ (33,524)$ (1,069)$ 1,868,053$ Depreciation/amortization expense was charged to functions as follows:

General government 4,741$
Police 881
Fire 755
Public works 50,259
Convention and cultural services 3,872
Youth, parks, and community enrichment 10,653
Community development 160
Library 944
Capital assets held by the City's internal service funds are charged to the functions based on their usage of assets 16,342 Total governmental activities depreciation/amortization expense 88,607 $ (1) The June 30, 2022 beginning balance of governmental activities has been restated to reflect the IT subscription assets requ ired by GASB Statement No. 96 in the amount of $8,259.

Total capital assets not being
depreciated/amortized

72 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 4 – CAPITAL ASSETS (Continued)

Business-type Activities

Business-type capital asset activity for the fiscal year ended June 30, 2023 was as follows:

Beginning
Balance,
As Restated⁽1⁾ Increases Decreases
Transfers
In/Out
Ending
Balance
Capital assets not being depreciated/amortized
Land 48,951 $ - $ - $ - $ 48,951 $ Easements 291 - - - 291 Construction in progress 444,855 26,456 (18,282) - 453,029 494,097 26,456 (18,282) - 502,271 Depreciable/amortizable capital assets
Buildings and improvements 464,915 2,778 (20,466) - 447,227 Equipment 162,097 2,248 - - 164,345 Software 13,535 - - - 13,535 Transmission and distribution system 1,571,737 42,158 - 1,069 1,614,964 Total depreciable/amortizable capital assets 2,212,284 47,184 (20,466) 1,069 2,240,071 Less accumulated depreciation/amortization for:

Buildings and improvements (180,680) (7,704) - - (188,384) Equipment (56,647) (6,387) - - (63,034) Software (4,833) (894) - - (5,727) Transmission and distribution system (616,214) (35,464) - - (651,678) Total accumulated depreciation/amortization (858,374) (50,449) - - (908,823) Depreciable/amortizable capital assets, net 1,353,910 (3,265) (20,466) 1,069 1,331,248 Lease and IT subscription assets, net (Note 6) 3,339 243 - 3,582 Business-type activities capital assets, net 1,851,346$ 23,434$ (38,748)$ 1,069 $ 1,837,101$ Depreciation/amortization expense was charged to functions as follows:

Water 30,258$
Wastewater 5,261
Storm drainage 10,965
Solid waste 1,218
Community center 1,317
Parking 1,369
Child development 61 (2)
Total business-type activities depreciation/amortization expense 50,449$ (1) The June 30, 2022 beginning balance of business-type activities has been restated to reflect the IT subscription assets req uired by GASB Statement No. 96, in the amount of $1,249.
(2) $8 of depreciation/amortization expense reported in the Other Enterprise Funds is related to the amortization of the Regenc y Park joint-use agreement and is not recognized within this note or Note 6.

Total capital assets not being
depreciated/amortized

73 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 5 – PAYABLES

Payables as of June 30, 2023, were as follows:

Vendors Employees Interest Deposits Total
Governmental activities
General Fund 19,373 $ 21,007 $ 38 $ 160 $ 40,578 $ Measure U Fund 7,615 2,155 2 - 9,772 - - 3,531 - 3,531 Other governmental funds 25,911 72 1,436 3,379 30,798 Internal service funds 6,579 347 - - 6,926 Total governmental activities 59,478$ 23,581$ 5,007$ 3,539$ 91,605$ Business-type activities
Water Fund 4,017$ 1,228$ 3,033$ 5$ 8,283$ Wastewater Fund 15,396 356 613 - 16,365 Storm Drainage Fund 1,253 477 29 - 1,759 Solid Waste Fund 2,034 511 36 - 2,581 Community Center Fund 5,660 182 1,255 - 7,097 Other enterprise funds 2,750 293 39 72 3,154 Total business-type activities 31,110$ 3,047$ 5,005$ 77$ 39,239$ 2015 Golden 1 Center Lease
Revenue Bond Fund

Included in the Interest Payable amount related to 2015 Golden 1 Center Lease Revenue Bond Fund above is the interest payable accrual of $3,531, reported in the government-wide statement of net position.

Included in the Interest Payable amount related to other governmental funds above is the interest payable accrual for other debt service funds of $1,434, reported in the government-wide statement of net position.

Included in the Interest Payable amount related to the General Fund, Measure U Fund, and Other Governmental Funds above is the interest payable associated with lease and IT subscription liabilitie s of $42, reported in the government-wide statement of net position.

74 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 6 – LEASES AND IT SUBSCRIPTION ARRANGEMENTS

City as a Lessee and IT Software Subscriber

As discussed in Note 1, the City is a lessee for vari ous noncancellable leases of land, buildings, and equipment.

The City also has noncancellable subscription arrangem ents for the right-to-use information technology software (IT subscriptions). Leases of land have initial terms of 10 to 50 years, and contain one or more renewal provisions, generally in 5 or 10-year periods. Leases of buildings and equipment have initial terms of 3 to 10 years, and contain one or more renewal provisions, generally in 1 or 5-year periods. IT subscription arrangements have initial terms of 1 to 5 years, and contain one or more renewal provisions, generally in 1 to 5-year periods. The City’s lease and IT subscription arrangements generally do not include te rmination options reasonably certain to be exercised by either party to the arrangement or restrictive financial or other covenants. The City’s lease and IT subscription arrangements do not contain any material residual value guarantees.

A summary of lease and IT subscription asset activity for the fiscal year ended June 30, 2023 is as follows:

Beginning
Balance,
As Restated Increases Decreases
Ending
Balance
Governmental activities
Lease assets:

Land 188 $ - $ - $ 188 $ Buildings 1,789 - - 1,789 Total lease assets 1,977 - - 1,977 Less accumulated amortization for:

Lease assets:

Land (6) (6) - (12) Buildings (418) (418) - (836) Total accumulated amortization (424) (424) - (848) 1,553 (424) - 1,129 IT subscription assets 8,259 6,483 - 14,742 Less accumulated amortization - (2,842) - (2,842) IT subscription assets, net 8,259 3,641 - 11,900 9,812$ 3,217$ -$ 13,029$ Busi ne ss-type a ctivi tie s
Lease assets:

Land 1,978$ -$ -$ 1,978$ Buildings 177 - - 177 Equipment 184 - - 184 Total lease assets 2,339 - - 2,339 Less accumulated amortization for:

Lease assets:

Land (122) (123) - (245) Buildings (35) (35) - (70) Equipment (92) (37) - (129) (249) (195) - (444) 2,090 (195) - 1,895 IT subscription assets 1,249 760 - 2,009 Less accumulated amortization - (322) - (322) IT subscription assets, net 1,249 438 - 1,687 3,339$ 243$ -$ 3,582$ Governmental activities lease and IT
subscription assets, net
Total accumulated amortization
Business-type activities lease and IT
subscription assets, net
Lease assets, net
Lease assets, net

75 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 6 – LEASES AND IT SUBSCRIPTION ARRANGEMENTS (Continued)

City as a Lessee and IT Software Subscriber (Continued)

Amortization expense for lease and IT subscription assets was charged to functions as follows:

Lease Assets
IT Subscription
Assets Total
General Government 69 $ 586 $ 655 $ Police 72 1,204 1,276
Fire 144 645 789
Public works 42 92 134 Convention and cultural services 56 19 75 Youth, parks, and community enrichment 41 37 78 Community development - 257 257 Community response - 2 2 Total amortization expense 424 $ 2,842 $ 3,266 $ Lease Assets
IT Subscription
Assets Total
Water 37$ 186 $ 223 $
Wastewater - 39 39
Storm Drainage 35 35 70 Solid waste - 5 5
Community Center - 4 4 Parking 123 53 176
Total amortization expense 195 $ 322 $ 517 $ Gov ernmental Activ ities
Business-type Activities

A summary of changes in the related lease and IT subscription liabilities for the fiscal year ended June 30, 2023 is as follows:

Beginning
Balance,
As Restated Increases Decreases
Ending
Balance
Governmental activities
Lease liabilities 1,643 $ - $ (478) $ 1,165 $ IT subscription liabilities 8,259 6,483 (4,482) 10,260 Total 9,902 $ 6,483 $ (4,960) $ 11,425 $ Business-type activities
Lease liabilities 2,012 $ - $ (142) $ 1,870 $ IT subscription liabilities 1,249 760 (547) 1,462 Total 3,261 $ 760 $ (689) $ 3,332 $

The June 30, 2022 beginning balance of governmental activities and business-type activities have been restated to reflect the IT subscription assets and IT subscription liabilities required by GASB Statement No. 96.

Governmental activities IT subscription assets and IT subscription liabilities have been restated in the amount of $8,259. Business-type activities IT subscription assets an d IT subscription liabilities have been restated in the amount of $1,249.

76 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 6 – LEASES AND IT SUBSCRIPTION ARRANGEMENTS (Continued)

City as a Lessee and IT Software Subscriber (Continued)

Future minimum lease and IT subscription payments are as follows:

Fiscal Year
Ending June 30, Principal Interest Principal Interest
2024 289 $ 11 $ 4,062 $ 139 $ 2025 195 10 3,138 95 2026 137 9 1,114 52 2027 64 8 467 40 2028 46 7 435 30 2029 - 2033 262 25 1,044 32 2034 - 2038 74 10 - - 2039 - 2043 32 7 - - 2044 - 2048 35 4 - - 2049 - 2053 31 1 - - Totals 1,165 $ 92 $ 10,260 $ 388 $

Fiscal Year
Ending June 30, Principal Interest Principal Interest
2024 146 $ 28 $ 541 $ 21 $ 2025 150 26 303 14 2026 154 25 50 8 2027 120 24 51 7 2028 43 22 51 7 2029 - 2033 142 106 268 23 2034 - 2038 155 93 198 5 2039 - 2043 169 78 - - 2044 - 2048 185 63 - - 2049 - 2053 202 45 - - 2054 - 2058 221 26 - - 2059 - 2063 183 6 - - Totals 1,870$ 542$ 1,462$ 85$ Lease Payments IT Subscription Payments
Lease Payments IT Subscription Payments
Governmental Activities
Business-type Activities

Variable lease and IT subscription payments - Variable lease and IT subscription payments, other than those that are fixed in substance, are excluded from the measurement of the lease and IT subscription liability. Such amounts are recognized as expense/expenditures in the period in which the obligation for those payments is incurred.

Certain land leases require the City to make variabl e lease payments based on a percentage of gross revenue.

These amounts are generally determined quarterly or annually. The amount recognized as expense/expenditures for variable lease payments not include d in the measurement of lease liabilities was $376 during the fiscal year ended June 30, 2023. The City also leases land from the State Lands Commission and subleases this land to various lessees. Each year, the City pays a percenta ge of gross revenues to the State Lands Commission. The City recognized $241 of expense associated with the leased land from the State Lands Commission during the fiscal year ended June 30, 2023.

77 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)
NOTE 6 – LEASES AND IT
SUBSCRIPTION ARRANGEMENTS (Continued)
City as a Lessee and IT Software Subscriber (Continued) Certain vehicle leases require the City to make va riable lea se payments based on usage. These amounts are generally determined monthly. The amount recognized as expense/expenditures for variable lease payments not included in the measurement of lease liabilities was $677 during the fiscal year ended June 30, 2023.

Certain IT subscription arrangements require the City to make variable subscription payments based on the number of user licenses or transactions processed. The amount recognized as expens e/expenditures for variable subscription payments not included in the measurement of IT subscription liabilities was $1,042 during the fiscal year ended June 30, 2023. $777 was associated with variable IT subscription arrangements based on the number of user licenses and $265 was associated with IT va riable subscription arrangements based on the number of transactions processed.

City as a Lessor
As discussed in Note 1, the City is a lessor for various non-cancellable leases of land, buildings, and equipment.

Lease
s of land have initial terms of 3 to 50 years, and co ntain one or more renewal provisions, generally in 5 or 10-year periods. Leases of buildings and equipment have initial terms of 3 to 45 years, and contain one or more renewal provisions, generally in 1 or 5-year periods. T he City’s lease arrangements do not contain any material residual value guarantees.

Future minimum lease payments receivable are as follows:

Fisc
al Year
Ending June 30, Principal Interest Principal Interest
2024 2,497$ 467$ 566$ 230$
2025 2,302 404 636 149
2026 2,103 375 669 141
2027 2,080 346 686 132
2028 2,103 318 693 123
2029 - 2033 9,345 1,152 2,734 485
2034 - 2038 6,250 583 1,678 312
2039 - 2043 2,680 235 1,800 168
2044 - 2048 507 143 989 39
2049 - 2053 581 97 - -
2054 - 2058 658 42 - -
2059 - 2063 125 1 - -
Totals 31,231$ 4,163$ 10,451$ 1,779$ Governmental Activities Business-type Activities
78 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 6 – LEASES AND IT SUBSCRIPTION ARRANGEMENTS (Continued)

City as a Lessor (Continued)

Lease related revenue recognized during the fiscal year ended June 30, 2023, excluding variable lease receipts, is as follows:

Variable lease receipts - Variable lease receipts, other t han those that are fixed in substance, are excluded from the measurement of the lease receivable. Such amounts are recognized as lease revenue in the period in which it is earned.

Certain leases require the lessee to make variable lease payments based on a percentage of gross receipts. These amounts are determined monthly, quarterly, or annually as noted in the lease arrangement. The amount recognized as revenue for variable lease receipts not included in the measurement of lease re ceivables was $4,495 during the fiscal year ended June 30, 2023.

Governmental
Activities
Business-type
Activities
Lease revenue 2,643$ 735$
Interest revenue 456 163
79 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)
NOTE 7 – LO

NG-TERM LIABILITIES
Activity
The following is a summary of changes in long-term liabilities at June 30, 2023. Certain long-term liabilities provide financi
ng to both governmental and business-type activities.

Beginning
Balance, Ending Due Within
GOVERNMENTAL ACTIVITIES: As Restated Additions Reductions Balance One Year Revenue and Other Bonds, Direct Placements:
2016 Lease Financing 6,065$ - $ (505)$
5,560$
515$
Revenue and Other Bonds, Public Offerings:
2006 Capital Improvement Revenue Bonds, Series B 38,805 - (1,670) 37,135 1,770 2006 Capital Improvement Revenue Bonds, Series E 78,062 - (5,549) 72,513 5,375 2015 Refunding Revenue Bonds 68,015 - (3,735) 64,280 3,925 2015 Lease Revenue Bonds - Golden 1 Center 254,565 - (4,005) 250,560 4,165 Subtotal, revenue and other bonds, public offerings 439,447 - (14,959) 424,488 15,235 Direct Borrowing Notes Payable:
1985 Marina Phase I 1,175 - (62) 1,113 65
1985 Marina Phase II 1,880 - (84) 1,796 86
2008 Sacramento Marina South Basin 13,647 - (171) 13,476 280 Subtotal, direct borrowing notes payable 16,702 - (317) 16,385 431 Plus deferred amounts:

Issuance premiums 14,484 - (1,136) 13,348 1,136
Subtotal, debt governmental activities 476,698 - (16,917) 459,781 17,317 Other Long-term Liabilities:

Accrued claims and judgments 116,698 45,723 (23,741) 138,680 39,528 Accrued compensated absences 47,469 48,298 (44,239) 51,528 3,665 Lease liabilities 1,643 - (478) 1,165 289
IT subscription liabilities 8,259 6,483 (4,482) 10,260 4,062 Net OPEB liability 161,715 30,236 (21,625) 170,326 - Net pension liability 657,912 606,780 (111,733) 1,152,959 - Pollution remediation obligations 596 874 (473) 997 130 Financing plan fee credits:

Delta Shores 39,909 5,601 (650) 44,860 -
Jacinto Creek 1,003 152 - 1,155 25
North Natomas 28,028 5,980 (1,144) 32,864 3,508
Park Development 1,559 6 (50) 1,515 425
Willowcreek 49 - (49) - -
Subtotal, other long-term liabilities 1,064,840 750,133 (208,664) 1,606,309 51,632 Total governmental activities 1,541,538$ 750,133$ (225,581)$ 2,066,090$ 68,949$ 80 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)
NOTE 7 – LO
NG-TERM LIABILITIES (Continued)
Activity (Continued)
Beginning
Balance, Ending Due Within
BUSINESS-TYPE ACTIVITIES: As Restated Additions Reductions Balance One Year Revenue and Other Bonds, Public Offerings:
2006 Capital Improvement Revenue Bonds, Series E 92,277$ -$ (6,411)$ 85,866$ 6,750$
Water Revenue Bonds, Series 2013 15,960 - (5,065) 10,895 5,315
Water Revenue Bonds, Series 2017 49,215 - (960)
48,255 1,010
Water Revenue Refunding Bonds, Series 2020 183,485 - (2,050) 181,435 2,080
Wastewater Revenue Bonds, Series 2013 1,570 - (765)
805 805
Wastewater Revenue Bonds, Series 2019 25,120 - (880) 24,240 925
Wastewater Revenue Refunding Bonds, Series 2020 27,105 - (335) 26,770 340
2015 Refunding Revenue Bonds 20,425 - (2,145)
18,280 2,250
2018 TOT Revenue Bonds, Senior Series A 195,815 - - 195,815 - 2018 TOT Revenue Bonds, Senior Series B 12,610 - (4,215) 8 ,395 4,370
2018 TOT Revenue Bonds, Subordinate Series C 64,540 - (1,265) 63 ,275 1,325
2019 STID Assessment Revenue Bonds 48,740 - (915) 47 ,825 960
Subtotal, revenue and other bonds, public offerings 736,862 - (25,006) 711 ,856 26,130
Direct Borrowing Notes Payable:

California Department of Public Health 5,864 - (495) 5 ,369 507
California Infrastructure and Economic
Development Bank (I-Bank) 1,939 - (95) 1,844 98
Drinking Water State Revolving Fund 135,408 107 (5,91 6) 129,599 2,995
Subtotal, direct borrowing notes payable 143,211 107 (6,506) 136,812 3,600 Less deferred amounts:

Issuance premiums 57,350 - (3,633) 53
,717 3,595
Subtotal, debt, business type activities 937,423 107 (35,145) 902,385 33,325 Other Long-term Liabilities:

Accrued compensated absences 9,677 8,962 (8,703) 9,936 614 Lease liabilities 2,012 - (142) 1
,870 146
IT subscription liabilities 1,249 761 (54
8) 1,462 541
Net OPEB liability 35,090 4,104 (3,050) 36,144 - Net pension liability 82,679 82,271 (15,068) 149,882 - Accrued claims and judgments 660 - (212) 448
448
Water fee credits 192 - (96) 96 -
Wastewater fee credits 10,772 - (2,322) 8
,450 -
Liability for landfill postclosure 4,038 - (298) 3
,740 298
Subtotal, other long-term liabilities 146,369 96,098 (30,439) 212,028 2,047 Total business-type activities 1,083,792 96,205 (65,584) 1,114,413 35,372 Total long-term liabilities 2,625,330$ 846,338$ (291,165)$ 3,180,503$ 104,321$ The June
30, 2022 beginning balance of governmental activities and business-type activities have been restated to reflect the IT subscription liabilities required by GASB Statement No. 96, in the amounts of $8,259 and $1,249, respectively.
81 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)
NOTE 7 – LONG
-TERM LIABILITIES (Continued)
The following is a list of long-term debt issues outstanding at June 30, 2023, including the amount of original debt issuance, a description of the debt issue, and disclosure of pledged revenue.

Revenue and Other Bonds
Issued Amount
$55,235
$186,950
$215,19
5 $30,855
2006 Capital Improvement Revenue Bonds, Series B (Taxable) Authorized and issued June 15, 2006, due in annual installments of $720 to $3,760 through December 1, 2036, bearing interest rates of 5. 4% to 5.8%. Net proceeds of $50,692 are being utilized for the purpose of financing certain publ ic capital improvements and redevelopment projects including an arts rehearsal building, Pocket Area Library and other capital projects within the City of Sacramento. The debt is secured by collateral of real property situated in the City of Sacramento, the indenture contains a provision that in the event of a default and upon written request of the bond holders, the outstanding principal and any accrued interest may be due and payable immediately.
2006 Capital Improvement Revenue Bonds, Series E (Refunding) Authorized and issued December 12, 2006, due in annual installments of $402 to $8,570 through December 1, 2033, bearing interest rates of 4% to 5.25%. Net proceeds of $216,661 plus cash of $13,441 have been utilized for the purpose of establishing an irrevocable escrow to defease $218,000 principal amount of the outstanding 2001 Capital Improvement Revenue Bonds and a portion of the outstanding 2002 and 2003 Capital Improvement Revenue Bonds, and the associated liabilities have been removed from the governmental and business-type activities columns of the statement of net position. The debt is secured by collateral of real property situated in the City of Sacramento, the indenture contains a provision that in the event of a default and upon written request of the bond holders, the outstanding principal and any accrued interest may be due and payable immediately.
2013 Water Revenue Bonds
Authorized and issued March 2013, due in annual installments of $9,731 to $14,018 through fiscal year 2043, bearing interest rates of 1% to 5%, for the purpose of financing the costs of improvements to the City’s municipal water system. In May 2020, the City issued 2020 Water Revenue Refunding Bonds to defease and refund $166,405 of the outstanding 2013 Water Revenue Bonds. The refunded principal of $166,405 is scheduled for redemption September 1, 2023. Remaining amount due in annual installments of $5,717 to $ 5,720 through fiscal year 2025, bearing interest rate of 5%. The debt is secured by the pledge of, and payable solely from, the Trust Estate, which consists primarily of all system net revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $11,438 as of June 30, 2023. Current year principal and interest paid was $5,720 and water fee revenue was $135,399.
2013 Wastewater Revenue Bonds
Authorized and issued June 2013, due in annual installments of $951 to $1,958 through fiscal year 2043, bearing interest rates of 3% to 5%, for the purpose of financing the costs of improvements to the City’s wastewater system. In July 2020, the City issued 2020 Wastewater Revenue Refunding Bonds to defease and refund $24,835 of the outstanding 2013 Wastewater Revenue Bonds. The refunded principal of $24, 835 is scheduled for redemption September 1, 2023. Remaining amount due in annual installments of $822 to $ 825 through fiscal year 2024, bearing interest rate of 5%. The debt is secured by a pledge of, and payable solely from, the Trust Estate, which consists primarily of all system net revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $825 as of June 30, 2023. Current year principal and interest paid was $824 and wastewater fee revenue was $44,809.
82 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 7 – LONG-TERM LIABILITIES (Continued)

Revenue and Other Bonds (Continued)

Issued Amount

$183,380

$272,870

$9,115

$52,610

$195,815
2015 Refunding Revenue Bonds
Authorized and issued October 1, 2015, due in annual installments of $5,120 to $24,773 through December 1, 2037, bearing interest rates of 3% to 5%. Net proceeds of $205,778 plus cash of $28,165, together with certain proceeds of the Tax Allocation Bonds, were utilized to establish an irrevocable escrow to defease $257,630 pr incipal amount of outstanding 2002 Capital Improvement Revenue Bonds, 2003 Capital Improvement Revenue Bonds, 2005 Refunding Revenue Bonds, 2006 Capital Improvement Revenue Bonds, Series A, 2006 Capital Improvement Revenue Bonds, Series C, and pay costs of issuance. The refunded liabilities have been removed from the associated fund an d government-wide financial statements. The debt is secured by collateral of real property situated in the City of Sacramento. The indenture contains a provision that in the event of a default and upon written request of the bond holders, the outstanding principal and any accrued interest may be due and payable immediately.

2015 Lease Revenue Bonds – Golden 1 Center
The bonds were originally issued on August 13, 2015, in the aggregate principal amount of $299,995, to pay for a portion of the acquisi tion and construction of the multi-purpose entertainment and sports center (the Golden 1 Center) in downtown Sacramento. On the fixed rate conversion date, October 6, 2015, $27,125 principal amount of the bonds were cancelled.

The bonds are due in annual installments of $7,229 to $18,379 through fiscal year 2050, bearing interest of 2.5% to 5.6%. The debt is secured by collateral of the Golden 1 Center and other improvements made to the associated parcel of land.

2016 Lease Financing – H Street Theater Complex (Direct Placement) The City delivered its 2016 Lease Financing on January 26, 2016, due in annual installments of $668 to $1,010 through fiscal year 2033, bearing interest at 2.8%. Bond proceeds of $9,115, together with cash of $3,471 were utilized to establish a prepayment fund to refund $12,010 aggregate principal, plus interest, and pay the costs of issuance of the outstanding Sacramento Regional Arts Facilities 2002 Certificates of Participation. The debt is secured by lease rental payments from the California Musical Theatre.

2017 Water Revenue Bonds
Authorized and issued June 2017, due in annual installments of $1,805 to 3,379 through fiscal year 2048, bearing interest rate of 4% to 5%, for the purpose of financing the costs of improvements to the City’s municipal water system. The debt is secured by the pledge of, and payable solely from, the Trust Estate, which consists primarily of all system net revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $84,422 as of June 30, 2023. Current year principal and interest paid was $3,377 and water fee revenue was $135,399.

2018 Transient Occupancy Tax (TOT) Revenue Bonds, Senior Series A Authorized September 2018, issued November 2018, due in annual installments of $5,711 to $14,482 through fiscal year 2048, bearing an interest rate of 5%, for the purpose of financing the costs of renovating the City’s Convention Center, Community Center Theater, and Memorial Auditorium, as well as other projects eligible for TOT funding. The debt is secured by the pledge of, and payable solely from, TOT revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $353,118 as of June 30, 2023.

Current year interest paid was $9,791 and TOT revenue was $31,294. Principal payments begin June 2025.

83 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 7 – LONG-TERM LIABILITIES (Continued)

Revenue and Other Bonds (Continued)

Issued Amount

$20,610

$66,890

$25,960

$50,465

2018 Transient Occupancy Tax (TOT) Revenue Bonds, Senior Series B (Taxable) Authorized September 2018, issued November 2018, due in annual installments of $441 to $4,690 through fiscal year 2025, bearing interest rates of 3.5% to 3.9%, for the purpose of financing the costs of renovating the City’s Convention Center, Community Center Theater, and Memorial Auditorium, as well as other projects eligible for TOT funding. The debt is secured by the pledge of, and payable solely from, TOT revenues and trustee accounts held under the indenture. Total principal and interest remaini ng to be paid on the bonds is $8,870 as of June 30, 2023. Current year principal and interest paid was $4,689 and TOT revenue was $31,294.

2018 Transient Occupancy Tax (TOT) Revenue Bonds, Subordinate Series C Authorized September 2018, issued November 2018, due in annual installments of $1,951 to $4,495 through fiscal year 2048, bearing an interest rate of 5%, for the purpose of financing the costs of renovating the City’s Convention Ce nter, Community Center Theater, and Memorial Auditorium, as well as other projects eligible for TOT funding. The debt is secured by the pledge of, and payable solely from, TOT revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $112,237 as of June 30, 2023.

Current year principal and interest paid was $4,492 and TOT revenue was $31,294.

2019 Wastewater Revenue Bonds
Authorized March 2019, issued April 2019, due in annual installments of $1,157 to $2,119 through fiscal year 2040, bearing an interest rate of 5%, for the purpose of financing the costs of improvements to the City’s wastewater s ystem. The debt is secured by a pledge of, and payable solely from, the Trust Estate, which consists primarily of all system net revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $35,981 as of June 30, 2023. Current year principal and interest paid was $2,114 and wastewater fee revenue was $44,809.

2019 Sacramento Tourism Infrastructure District (STID) Assessment Revenue Bonds Authorized July 2019, issued August 2019, due in annual installments of $1,469 to $2,744 through fiscal year 2050, bearing interest rates of 4% to 5%, for the purpose of financing an additional Ballroom in the Sacramento Conv ention Center and other capital improvement projects. The debt is secured by the pledge of, and payable solely from, STID revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $74,005 as of June 30, 2023. Current year principal and interest paid was $2,741 and STID fee revenue was $3,619.

84 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)
NOTE 7 – LONG
-TERM LIABILITIES (Continued)
Revenue and Other Bonds (Continued)
Issued Amount
$188,390
$27,970
2020 Water Refunding Revenue Bonds
Authoriz
ed April 2020, issued May 2020, due in annual installments of $6,976 to $12,701 through fiscal year 2043, bearing interest rates of 1% to 3%. Net proceeds of $188,390, together with City contribution of $1,005 and bond reserve fund release of $4,248, were utilized to establish an irrevocable escrow to defease $166,405 principal amount of outstanding 2013 Water Revenue Bonds and pay costs of issuance. The refunded liabilities have been removed from the Water Fund and government-wide financial statements and are scheduled for redemption September 1, 2023. The debt is secured by the pledge of, and payable solely from, the Trust Estate, which consists primarily of all system net revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $242,522 as of June 30, 2023. Current year principal and interest paid was $6,981 and water fee revenue was $135,399.
2020 Wastewater Refunding Revenue Bonds
Authorized April 2020, issued July 2020, due in annual installments of $925 to $1,752 through fiscal year 2043, bearing interest rates of 0. 5% to 2.5%. Net proceeds of $27,970, together with City contribution of $401 and bond reserve fund release of $580, were utilized to establish an irrevocable escrow to defease $24,835 prin cipal amount of outstanding 2013 Wastewater Revenue Bonds and pay costs of issuance. The refunded liabilities have been removed from the Wastewater Fund and government-wide financial statements and are scheduled for redemption September 1, 2023. The debt is secured by the pledge of, and payable solely from, the Trust Estate, which consists primarily of all system net revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $34,135 as of June 30, 2023. Current year principal a nd interest paid was $924 and wastewater fee revenue was $44,809.
85 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 7 – LONG-TERM LIABILITIES (Continued)

Notes Payable

Issued Amount

$2,220

$3,229

$10,477

$10,000

$2,975

$173,142

1985 Sacramento Marina Note Payable, Phase I
Authorized July 1985, issued November 1985, refinanced August 1998, to the California Department of Boating and Waterways, due in annual installments of $20 to $82 through August 2030, bearing an interest rate of 4.5%, for the purpose of financing the expansion of the Sacramento Marina. The debt is secured by collateral of the Sacramento Marina.

1985 Sacramento Marina Note Payable, Phase II
Authorized July 1985, issued September 1987, refinanced August 1998, to the California Department of Boating and Waterways, due in annual installments of $27 to $150 through August 2037, bearing an interest rate of 4.5%, for the purpose of financing the expansion of the Sacramento Marina. The debt is secured by collateral of the Sacramento Marina.

2008 Sacramento Marina Note Payable, South Basin
Authorized February 2005, the City had made loan draws of $9,000 plus accrued interest of $1,477 through June 30, 2013, from the Califor nia Department of Boating and Waterways (DB&W), for the purpose of constructing the South Basin Improvements at the Sacramento Marina. Principal and interest was due in 30 annual installments of $204 to $662, through August 2041, bearing an interest rate of 4.6%. The City had made no principal payments and only a portion of interest payments on this loan since 2013, and had been working with the DB&W on a loan restructure. Effective August 2019, the DB&W and the City executed a formal agreement to restructure this loan. After restructuring, the maturity dates of previously matured principal and interest amounts have been extended and are no longer past due. The note still bears an interest rate of 4.6% and principal and interest are due in annual installments of $500 to $1,698, through August 2041. The debt is secured by collateral of the Sacramento Marina.

California Department of Public Health
Authorized September 2009 for the installati on of approximately 13,000 water meters. The note, with a 2.5% interest rate, will be repaid over 20 years, through 2033, with annual principal and interest payments of approximately $639. The City pledged future Water Enterprise Fund revenue to repay the note. Current year water fee revenue was $135,399.

California Infrastructure and Economic Development (I-Bank) Authorized in December 2007, due in annual principal and interest installments from $163 to $155 through August 2038, bearing an interest rate of 3.17%, for the purpose of financing the purchase and construction of the Basin 31 Det ention Basin. The City pledged future storm drainage fee revenue to repay the note. The not e is payable solely from the storm drainage fee revenue through August 2038. Total principal and interest remaining to be paid on the note is $2,364. Current year principal and interest paid was $161 and storm drainage fee revenue was $61,120. The loan agreement contains a prov ision that in the event of a default, the principal of the loan and accrued interest on all unpaid installments would be due immediately.

Drinking Water State Revolving Fund (DWSRF)
Authorized in May 2017, the DWSRF has agreed to fund the City’s Accelerated Meter Installation and Pipe Replacement Program. Under the agreement, the City is to pay for project costs upfront and the DWSRF is to reimburse the City with loan amounts not to exceed $173,142. Construction began in October 201 7 with an end date of June 2022. The final reimbursement request deadline is June 2023. The note will be repaid over a 20-year period beginning July 2022, bearing an interest rate of 1.7%. Annual principal and interest payments will be approximately $8,240 afte r the final claim and reimbursement. The City has pledged future water fee revenues and the restricted reserve fund to repay the note. Current year water fee revenues were $135,399. The amount claimed and reimbursed to the City as of June 30, 2023 was $138,448.
86 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)
NOTE 7 – LO
NG-TERM LIABILITIES (Continued)
Other Long-term Liabilities
Accrued claims and judgements – Estimated liabilities of the City’s workers’ compensation, auto, and general liability self-insurance programs administered through the Risk Management Internal Service Fund. The first year of salary continuation in the City’s workers’ compensation program is accrued and paid by the City’s General Fund, enterprise funds, and internal service funds.

Lease and IT subscription liabilities – The City has entered into various agreements for the intangible right-to-use lease and IT subscription assets. Lease and IT subscription liabilities are recorded at the present value of future fixed payments for the remaining term of the agreements. Lease liabilities are reported in accordance with GASB Statement No. 87. IT subscription liabilities are reported in accordance with GASB Statement No. 96. Refer to Note 1 and Note 6 for more detailed information.

Compensated absences – Estimated amounts due to employees for earned, but unused, compensated absence accounts, including leave balances for vacation, sick, holiday and compensated time off. Compensated absences are generally liquidated by the City’s General Fund, enterprise funds, and internal service funds.

Net OPEB liability (other postemployme nt benefits) – Net liability for retir ee medical benefits accounted for and reported in accordance with G ASB Statement No. 75. The net OPEB liability is $170,326 and $36,144 for governmental activities and business-type activities, respectively, at June 30, 2023. The net liability is liquidated by the fund that has recorded the liabili ty. Governmental activities net OPEB liability is liquidated primarily by the General Fund and business-type activities net OPEB liability is liquidated by the respective enterprise fund. Refer to Note 9 for more detailed information.

Pollution remediation obligations – Estimated liabilities to address the current or potenti al detrimental effects of existing pollution by participating in pollution remediation activities.

Financing plan fee credits – Issued to developers as consideration for infrastructure and other capital improvements constructed on behalf of the City within the scope of the Delta Shores, North Natomas, Jacinto Creek and other development impact fee programs. Credits are redeemable from or against future impact fees assessed within the geographic boundaries of the finance plan.

Water fee credits – Issued to developers as consideratio n for infrastructure constructed on behalf of the City.

Credits are redeemable from or against future water development impact fees.

Wastewater fee credits – Issued to developers as consideration for infrastructure constructed on behalf of the City.

Credits are redeemable from or against future wastewater development impact fees.

Liability for landfill closure – Estimated post-closure maintenance and monitoring costs for the closed landfill sites.

Net pension liability – The net pension liability is $1,152,959 and $149,882 for governmental activities and business-type activities, respectively, at June 30, 2023. The net liability is liquidated by the fund that has recorded the liability. Governmental activities net pension liability is liquidated primarily by the General Fund and business- type activities net pension liability is liquidated by the respective enterprise fund. Refer to Note 8 for more detailed information.
87 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 7 – LONG-TERM LIABILITIES (Continued)

Future Debt Service Requirements

The following tables disclose the annual debt service requirements for the City’s long-term debt outstanding as of June 30, 2023.

Annual debt service requirements of governmental activities to maturity are as follows :

Fiscal Year
Ending June 30, Principal Interest Principal Interest
2024 515 $ 154 $ 15,235 $ 22,911 $ 2025 535 140 15,971 22,079 2026 545 124 16,847 21,203 2027 565 109 17,784 20,279 2028 580 92 18,751 19,318 2029-2033 2,820 204 106,927 80,554 2034-2038 - - 76,650 54,689 2039-2043 - - 52,985 38,414 2044-2048 - - 69,670 21,702 2049-2050 - - 33,668 2,874 Subtotals 5,560 823 424,488 304,023 Plus: Issuance premiums - - 13,348 - Totals 5,560 $ 823 $ 437,836 $ 304,023 $ Revenue and Other Bonds,
Direct Placements
Revenue and Other Bonds,
Public Offerings

Fiscal Year
Ending June 30, Principal Interest
2024 431 $ 751 $
2025 474 733
2026 547 710
2027 572 685
2028 599 659
2029-2033 3,563 2,848
2034-2038 4,675 1,946
2039-2042 5,524 677
Totals 16,385 $ 9,009 $
Direct Borrowing
Notes Payable

88 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 7 – LONG-TERM LIABILITIES (Continued)

Future Debt Service Requirements (Continued)

Annual debt service requirements of business-type activities to maturity are as follows:

Fiscal Year
Ending June 30, Principal Interest Principal Interest
2024 26,130 $ 29,644 $ 3,600 $ 1,295 $ 2025 27,309 28,460 6,689 2,304 2026 28,443 27,309 6,809 2,184 2027 29,596 26,143 6,931 2,061 2028 30,824 24,915 7,055 1,937 2029-2033 164,728 104,558 36,902 7,731 2034-2038 133,865 74,394 37,270 4,478 2039-2043 156,915 44,977 31,556 1,218 2044-2048 108,805 16,621 - - 2049-2050 5,241 237 - - Subtotals 711,856 377,258 136,812 23,208 Plus: Issuance premiums 53,717 - - - Totals 765,573$ 377,258$ 136,812$ 23,208$ Revenue and Other Bonds,
Public Offerings
Direct Borrowing
Notes Payable

Arbitrage

The Tax Reform Act of 1986 instituted certain arbitrage re strictions with respect to the issuance of tax-exempt bonds after August 31, 1986. Arbitrage regulations deal with the investment of all tax-exempt bond proceeds at an interest yield greater than the interest yield paid to bondholders. Generally, all interest paid to bondholders can be retroactively rendered taxable if applicable rebates are not reported and paid to the U.S. Department of Treasury at least every five years. During the current year, the City performed calculations of excess investment earnings on various bonds and determined the liability to be zero at June 30, 2023.

Special Assessment Debt

Total matured and unmatured bonds outstanding related to special assessment and special tax districts are $229,248 at June 30, 2023. The City acts as an agent for t he property owners in collecting special assessments, forwarding the collections to bondholders and initiating foreclosure proceedings, when appropriate. The City is not liable for repayment of the special district bonds, and accordingly, they are not reflected in the accompanying basic financial statements. Cash held on deposit and corresponding amounts payable for the districts are reported in the Custodial Funds.

Conduit Debt

Outstanding obligations related to redevelopment ag ency revenue bonds total $126,550 at June 30, 2023. The redevelopment agency bonds were issued by the Sacramento City Financing Authority to finance redevelopment activities and to refund certain other obligations of the redevelopment agency. The City has a limited commitment and is not liable for repayment of these bonds, and accordingly, they are not reflected in the accompanying basic financial statements.
89 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 8 – PENSION PLANS

Defined Benefit Plan Description

The City of Sacramento provides defined retirement benefits through the California Public Employees’ Retirement System (CalPERS) and the Sacramento City Employees’ Retirement System (SCERS). CalPERS is an agent multiple-employer public employee defined benefit pensi on plan. SCERS is a single-employer defined benefit pension plan.

As of June 30, 2023, the City reported total net pension liability, deferred outflows of resources and deferred inflows of resources for the CalPERS (Miscellaneous and Safety Plans) and SCERS plans as follows:

Net Pension
Liability
Deferred Outflows
of Resources
Deferred Inflows
of Resources

Miscellaneous Plan 478,883$ 151,217$ 2,115$ Safety Plan 812,117 256,305 976 SCERS 11,841 2,274 - Total 1,302,841$ 409,796$ 3,091$

For the fiscal year ended June 30, 2023, the City recognized total pension expense of $177,695 for CalPERS and SCERS plans.

CalPERS

All full-time and certain part-time City employees hir ed after January 28, 1977 and City safety employees, regardless of date of hire, are eligible to participate in CalPERS. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and their beneficiaries. Copies of CalPERS’ annual financial report may be obtained from the CalPERS Executive Office at 400 Q Street, Sacramento, CA 95814. A separate report for the City’s plan within CalPERS is not available.

General Information about the Pension Plan

Plan Description – All qualified permanent and probationary employee s are eligible to participate in the City’s separate Safety (police and fire) and Miscellaneous (all other) Plans, agent multiple-employer defined benefit pension plans administered by the CalPERS, which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Safety and Miscellaneous Plans (the Plans) are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisio ns, assumptions and membership information that can be found on the CalPERS website at http://www.calpers.ca.gov.

Benefits Provided – CalPERS provides retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 or 52, depending on the pl an, with statutorily reduced benefits. All members are eligible for non- duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

90 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 8 – PENSION PLANS (Continued)

General Information about the Pension Plan (Continued)

The Plans’ provisions and benefits in effect at June 30, 2023, are summarized as follows:

Classic PEPRA
Hire Date
Prior to
January 1, 2013
On or after
January 1, 2013
Formula 2% @ 55 2% @ 62
Benefit vesting schedule 5 years of service 5 years of service Benefit payments monthly for life monthly for life
Retirement age 50-63 52-67
Monthly benefits, as a % of annual salary 1.4% to 2.4% 1.0% to 2.5% Required employee contribution rates 7.13% 8.00%
Required employer contribution rates 25.43% 25.43%
Classic PEPRA
Hire Date
Prior to
January 1, 2013
On or after
January 1, 2013
Formula 3% @ 50 2.7% @ 57
Benefit vesting schedule 5 years of service 5 years of service Benefit payments monthly for life monthly for life
Retirement age 50 50-57
Monthly benefits, as a % of annual salary 3.0% 2.0% to 2.7% Required employee contribution rates 10.22% 13.00%
Required employer contribution rates 54.33% 54.33%
Miscellaneous
Safety

Employees Covered – At June 30, 2021, the most recent valuation date, the following employees were covered by the benefit terms for each Plan:

Miscellaneous Safety
Inactive employees or beneficiaries currently receiving benefits 3,258 1,412 Inactive employees entitled to but not yet receiving benefits 4,533 469 Active employees 2,572 1,341
Total 10,363 3,222

Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on July 1 following notice of a change in 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 rates of employees. For the fisc al year ended June 30, 2023, the contributions for the miscellaneous and safety plans were $51,544 and $81,076, respectively.

91 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 8 – PENSION PLANS (Continued)

Net Pension Liability

The City’s net pension liability for each Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of each of the Plans is measured as of June 30, 2022, using an annual actuarial valuation as of June 30, 2021, roll ed forward to June 30, 2022. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

Actuarial Assumptions – The total pension liabilities in the June 30, 2021 actuarial valuations were determined using the following actuarial assumptions:

Miscellaneous Safety
Valuation Date June 30, 2021 June 30, 2021
Measurement Date June 30, 2022 June 30, 2022
Actuarial Cost Method Entry-Age Normal
Cost Method
Entry-Age Normal
Cost Method
Actuarial Assumptions:

Discount Rate 6.90% 6.90%
Inflation 2.30% 2.30%
Payroll Growth 2.80% 2.80%
Projected Salary Increase 3.3% - 14.2% (1) 3.3% - 14.2% (1) Investment Rate of Return 7.00% (2) 7.00% (2)
Mortality 2021 CalPERS
Experience Study
2021 CalPERS
Experience Study
(1) Depending on age, service and type of employment
(2) Net of pension plan investment expenses, including inflation

The discount rate used to measure the total pension liability was 6.90% for each Plan, a decrease from the previous

7.15%, the inflation rate used was 2.30%, a decrease from the previous 2.50%, and the payroll growth rate used was 2.80%, an increase from the previous 2.75%.

The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2021 valuation were based on the results of a November 2021 CalPERS experience study for the period of 2001 to 2019. Further details of the Experience Study c an be found on the CalPERS website at https://www.c alpers.ca.gov/docs/forms- publications/calpers-experience-study-2021.pdf.

92 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 8 – PENSION PLANS (Continued)

Net Pension Liability (Continued)

Discount Rate – The discount rate used to measure the total pension liability was 6.90% for each Plan. The projection of cash flows used to deter mine the discount rate assumed that contributions from plan members will be made at current member contribution rates and contributions from employers will be made at statutorily required rates. Based on those assumptions, each pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the l ong-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expec ted 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, CalPERS took into account both short-term and long-term market return expectations. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points.

The table below reflects expected real rates of return by asset class.

Asset Class
Assumed Asset
Allocation Real Return (1,2)
Global Equity - Cap-weighted 30% 4.54%
Global Equity - Non-Cap-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 Asset Liability Management study.

93 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 8 – PENSION PLANS (Continued)

Net Pension Liability (Continued)

Changes in the Net Pension Liability – The changes in the Net Pension Liability for each Plan for the measurement date of June 30, 2022 are as follows:

Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability
Balance at June 30, 2022 1,558,069 $ 1,316,345 $ 241,724 $ Changes in the year:

Service cost 34,966 - 34,966 Interest on the total pension liability 110,101 - 110,101 Changes of assumptions 58,232 - 58,232 (3,289) - (3,289)
Plan to Plan resource movement - (2) 2 Contributions - employer - 47,273 (47,273) Contributions - employee - 16,052 (16,052) Net investment income - (99,652) 99,652 (69,665) (69,665) -
Administrative expense - (820) 820 Net changes 130,345 (106,814) 237,159 Balance at June 30, 2023 1,688,414 $ 1,209,531 $ 478,883 $ Safety Plan:

Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability
Balance at June 30, 2022 2,236,651 $ 1,754,154 $ 482,497 $ Changes in the year:

Service cost 51,608 - 51,608 Interest on the total pension liability 158,263 - 158,263 Changes of assumptions 80,583 - 80,583 4,868 - 4,868
Plan to Plan resource movement - 2 (2) Contributions - employer - 74,645 (74,645) Contributions - employee - 25,718 (25,718) Net investment income - (133,570) 133,570 (108,473) (108,473) -
Administrative expense - (1,093) 1,093 Net changes 186,849 (142,771) 329,620 Balance at June 30, 2023 2,423,500 $ 1,611,383 $ 812,117 $ Totals of both Miscellaneous and Safety Plans 4,111,914$ 2,820,914 $ 1,291,000 $ Benefit payments, including refunds
of employee contributions
Increase (Decrease)
Benefit payments, including refunds
of employee contributions
Difference between expected and
actual experience
Difference between expected and
actual experience

94 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 8 – PENSION PLANS (Continued)

Net Pension Liability (Continued)

Sensitivity of the Net Pension Liabilit y to Changes in the Discount Rate – The following presents the net pension liability of the City for each Plan, calculated us ing the discount rate for each Plan, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1- percentage point higher than the current rate:

Miscellaneous Safety Total
1% Decrease 5.90% 5.90% 5.90%
Net Pension Liability 719,154$ 1,158,763$ 1,877,917$ Current Discount Rate 6.90% 6.90% 6.90%
Net Pension Liability 478,883$ 812,117$ 1,291,000$ 1% Increase 7.90% 7.90% 7.90%
Net Pension Liability 281,831$ 529,631$ 811,462$

Pension Plan Fiduciary Net Position – Detailed information about each pension plans’ fiduciary net position is available in the separately issued CalPERS financial reports.

Pension Expense and Deferred Outflows/Inflows of Resources Related to Pensions

For the fiscal year ended June 30, 2023, the City recognized pension expense of $68,467 and $106,149 for the Miscellaneous and Safety Plans, respectively. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Pension contributions subsequent to
measurement date 51,544 $ - $ 81,076$ - $ 132,620$ - $ Changes of assumption 37,435 - 65,379 (976) 102,814 (976) Differences between actual and expected experience 1,069 (2,115) 28,562 - 29,631 (2,115) Net differences between projected and actual
earnings on plan investments 61,169 - 81,288 - 142,457 - Total 151,217$ (2,115)$ 256,305$ (976)$ 407,522$ (3,091)$ Miscellaneous Plan Safety Plan Total

The amount of $132,620 reported as defe rred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of t he net pension liability in the fiscal year ended June 30, 2024. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized as increases (decreases) in pension expense as follows:

Fiscal Year Ending
June 30, Miscellaneous Plan Safety Plan Total
2024 30,542 $ 41,604 $ 72,146 $ 2025 24,518 35,444 59,962 2026 4,468 24,696 29,164 2027 38,030 67,672 105,702 2028 - 4,837 4,837 Total 97,558 $ 174,253 $ 271,811 $

95 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 8 – PENSION PLANS (Continued)

SCERS

The City reports SCERS as a pension trust fund. SCERS issues a publicly available financial report that includes financial statements and required supplementary info rmation. The financial report may be obtained at https://www.cityofsacramento.org/Finance/Accounting/Reporting. The following is a summary of significant accounting policies:

Basis of Accounting – SCERS’ financial statements are prepared using the accrual basis of accounting.

City and member contributions are recognized in the period in which the contributions are due. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan.

Method Used to Value Investments – Investments are reported at fair value, except mortgage loans which are reported at amortized cost. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates.

General Information about the Pension Plan

Plan Description – The SCERS is a closed defined benefit pension plan. It has not accepted new members since January 28, 1977. All full-time, non-safety employees hired before January 29, 1977, are eligible to participate in SCERS.

Benefits Provided – SCERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries based on the plan that they belong to. SCERS has the following plans:

Charter Section 399 Plan – This defined benefit plan was established effective January 1, 1977 to provide retirement, disability and death benefits. Active mem bers contribute at a rate based upon entry age and type of employment. The benefits for this plan are based on the average monthly compensation times years of service times benefit factor, but no larger than 75% of final average earnings. Employees may retire at age 70, or age 50 and 5 years of service.

Equal Shares Plan – This defined benefit plan was establis hed July 1, 1970 to provide retirement, disability and death benefits to all City employees electing coverage at that date and to all employees who were hired from that date through January 1, 1977. The benefits for this plan are based on the average monthly compensation times years of service times benefit factor, but no larger than 75% of final average earnings. Employees may retire at age 70, or age 50 and 5 years of service.

Charter Section 175 Plan – This defined benefit plan was established in 1953 to provide for retirement, disability and death benefits at a lower amount than the successor Equal Shares Plan. The benefits for this plan are based on the average monthly compensation times years of service times benefit factor. For retirement after age 65 with 20 years of service, benefit is minimum of $60 per month. Employees may retire at age 70, or age 55 and 20 years of service.

An employee who leaves City service may withdraw his or her contributions, plus any accumulated interest under all the retirement and disability benefit plans described above.

96 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 8 – PENSION PLANS (Continued)

General Information about the Pension Plan (Continued)

Benefit factors at sample ages for benefit plans described above are as follows:

Retirement Age Charter Section 175
Charter Section 399
and Equal Shares
50 N/A 1.10%
55 1.10% 1.75%
60 1.67% 2.40%
65 2.44% 2.40%

Employees Covered – At June 30, 2023, the following employees were covered by the benefit terms for each Plan:

Charter
Section 399
Equal
Shares
Charter
Section 175 Total
Inactive members or beneficiaries receiving benefits 712 27 35 774 Inactive members entitled to but not yet receiving benefits 4 - 1 5 Active plan members 1 - - 1 Total plan members 717 27 36 780 Cost-of-living Adjustment – This adjustment, established in 1969, provides for annual retirement benefit increases of up to 3% of normal benefits based on a corresponding rise in the consumer price index. Cost-of- living benefits are payable to retirees and beneficiaries of all of the above plans after one year of retirement.

The cost-of-living adjustment was 3% for fiscal year 2023. Members contribute to this adjustment at a rate of 1% of their normal retirement contributions. The City is required to fund all costs in excess of members’ contributions and investment earnings.

Social Security Adjustments – For members participating in Social Security, their benefit will be adjusted at the later of age 62 or actual retirement age. The amount of the adjustment is one half of the primary insurance amount (PIA) from Social Security, multiplied by the ratio of the sum of salary earned from the City to the sum of salary from all sources used in the calculation of the Social Security amount. The member’s benefit under SCERS plus the amount received from Social Security cannot be less than the member’s benefit under SCERS calculated with no reductions at the time of retirement. The City applies this offset to service retirees, not to disabled retirees.

Contributions – The City Charter grants the authority to establish and amend the contribution requirements of the City and active employees to the SCERS Board. The SCERS Board establishes rates based on actuarially determined rates recommended by an independent actuary. 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 accrual liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees . For the fiscal year ended June 30, 2023, the average active employee contribution rate was 2.91% of annual pa y. For the fiscal year ended June 30, 2023, the City’s annual required and actual contribution was zero.

97 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 8 – PENSION PLANS (Continued)

Net Pension Liability

The City’s net pension liability for SCERS was measured as of June 30, 2023, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date.

Actuarial Assumption – The total pension liability in the June 30, 2023 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 2.50%
Salary increase 2.50% CPI Plus 0.5% merit, average
Discount rate 6.00%

Mortality rates for service retirements and beneficia ries were based on CalPERS 2000-2019 Mortality Table projected for future mortality improvement utilizing Society of Actuaries Scale MP-2021. Mortality rates for disability retirements were based on CalPERS 2000-2019 Mortality Table for non-work related Disabled Retirees for Miscellaneous and CalPERS 2000-2019 Mortality Table for work-related Disabled Retirees for Safety. Both tables were projected for future mortality improvement utilizing Society of Actuaries Scale MP-2021.

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 returns, net of pension plan investment expense and inflation) are developed for ea ch major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class Target Allocation
Long-Term Expected
Real Rate of Return
Fixed Income 35.0% 3.9%
Large Cap Growth 30.0% 7.5%
Equity Income 30.0% 7.5%
International Equity 5.0% 7.7%
Total 100.0%

Discount Rate – The discount rate used to measure the total pension liability was 6%. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the current contribution rate and that City contributions will be made at rates equal to the difference between actuarially determined contributions rates and the employee rate. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected fu ture benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

98 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 8 – PENSION PLANS (Continued)

Net Pension Liability (Continued)

Changes in the Net Pension Liability – The changes in the Net Pension Liability for the SCERS Plan for the measurement date of June 30, 2023 is as follows:

Total Pension
Liability
Plan Fiduciary Net
Position
Net Pension
Liability (Asset)
Balance at June 30, 2022 270,541 $ 254,171 $ 16,370 $ Changes in the year:

Service cost 5 - 5 Interest on the total pension liability 15,407 - 15,407 Differences between expected and actual
experience 3,355 - 3,355 Contribution - employee - 3 (3) Net investment income - 23,293 (23,293) Benefit payments, including refunds of
employee contributions (27,501) (27,501) - Net changes (8,734) (4,205) (4,529) Balance at June 30, 2023 261,807$ 249,966$ 11,841$ Increase (Decrease)

Change of assumptions and changes in experience affecting the measurement of the Total Pension Liability since the prior measurement date – There were no assumption changes. The overall experience loss was due to a cost of living increase greater than expected, but this was offset by more deaths than expected.

Sensitivity of the Net Pension Liabilit y to Changes in the Discount Rate – The following presents the net pension liability of the City for the SCERS plan, calculated using the discount rate for the SCERS Plan, as well as what the City’s net pension liability (asset) would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

1% decrease
(5%)
Current
Discount Rate
(6%)
1% increase
(7%)
SCERS net pension liability (asset) 31,642$ 11,841$ (5,551)$

Pension Plan Fiduciary Net Position – Detailed information about the pension plan’s fiduciary net position is available in the Basic Financial Statements section of this report and the separately issued SCERS financial report that may be obtained at https://www.cityofsacramento.org/Finance/Accounting/Reporting.

99 City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 8 – PENSION PLANS (Continued)

Pension Expense and Deferred Outflows/Inflows of Resources Related to Pensions

For the fiscal year ended June 30, 2023, the City recognized pension expense of $3,079 attributable to the SCERS plans. At June 30, 2023, the City reported deferred outflows of resources related to pensions from the following sources:

Deferred
Outflows of
Resources
Net differences between projected and actual
earnings on plan investments 2,274$

Amounts reported as deferred outflows of resources re lated to pensions will be recognized as increases (decreases) in pension expense as follows:

Fiscal Year Ending
June 30,
Deferred
Outflows
of Resources
2024 (1,127) $
2025 (3,098)
2026 8,271
2027 (1,772)
Total 2,274$

Defined Contribution Plan

The City also provides defined contribution retirement benefits through the City’s 401(a) Money Purchase Plan (the 401(a)). The 401(a) is administered by Nationwide. The 401(a) provisions and contribution requirements are established and may be amended by City Council. Unre presented exempt and certain represented employees may elect to participate. Participating employees of the aforementioned groups are required to contribute 5% and 2%, and the City contributes 4% and 2%, respectively, of covered salary. For the fiscal year ended June 30, 2023, employees contributed $5,163 and the City contributed $4,263 to the 401(a).

NOTE 9 – OTHER POSTEMPLOYMENT BENEFITS (OPEB)

General Information

Plan Description – The City provides contributions for postempl oyment medical, dental and vision benefits to employees who retire directly from the City and t heir dependents through an agent-multiple employer defined benefit OPEB plan (OPEB Plan) through CalPERS. The postemployment health, dental, and vision care employer contributions range from $0 to $899.39 per month per participant, which covers between 0% and 100% of the benefit cost, depending on the choice of plan and number of dependents. Participants have the choice of enrolling in one of several health plans, one of two dental plans, and one of two vision plans. To be eligible for the City paid benefits, the employee must have been employed with the City by a certain hire date, retire with a minimum of ten full years of active City service and be 50 years of age. Participants with a minimum of twenty years of service are eligible for 100% of the maximum benefit. Participants wi th more than fifteen years but less than twenty years of service are eligible for 75% of the maximum benefit. Participants with more than ten years but less than fifteen years of service are eligible for 50% of the maximum benefit. The eligibility of the City’s postemployment health contributions has been eliminated for employees hired after a certain date dependent upon the employee’s labor agreement. The postemployment health, dental and vision care contributions are defined by labor agreements and resolutions approved by the City Council. The City does not issue a separate stand-alone financial report for its OPEB plan.

100
City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 9 – OTHER POSTEMPLOYMENT BENEFITS (OPEB) (Continued)

General Information (Continued)

In addition, the City established an irrevocable trust to pre-fund the other benefits with the California Employers’ Retiree Benefit Trust (CERBT). The CERBT financial statements and additional reports can be obtained from the CalPERS website www.calpers.ca.gov.

Employees Covered – At June 30, 2021, the most re cent valuation date, the following current and former employees were covered by the benefit terms under the OPEB Plan:

Inactive employees or beneficiaries currently receiving benefits 3,399 Inactive employees entitled to but not yet receiving benefits 280 Active employees 3,561
Total 7,240

Contributions – The plan and its contribution requirements are established by memorandums of understanding with the applicable employee bargaining units and ma y be amended by agreements between the City and the bargaining units. The City is mainly funding the OPEB Plan on a pay-as-you-go basis. However, the City Council has authorized the City Manag er to establish an OPEB trust fund with CalPERS that the City pre-funds with budgetary savings. Contributions recognized by the OPEB plan from the employer for the fiscal year ended June 30, 2023 were $23,167.

Net OPEB Liability

The City’s net OPEB liability is measured as the total OPEB liability, less the OPEB plan’s fiduciary net position.

The net OPEB liability is measured as of June 30, 2022, using an annual actuarial valuation as of June 30, 2021, rolled forward to June 30, 2022. A summary of principa l assumptions and methods used to determine the net OPEB liability is shown below.

Actuarial Assumptions – The total OPEB liability in the June 30, 2021 actuarial valuation was determined using the following actuarial assumptions:

Valuation Date June 30, 2021
Measurement Date June 30, 2022
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:

Discount Rate 6.25%
Inflation 2.50%
Salary Increases 2.75%
Investment Rate of Return 6.25%
Healthcare cost trend rate Non-Medicare - 6.5% for 2023, decreasing to

3.75% for 2076.

Medicare (Non-Kaiser) - 5.65% for 2023,
decreasing to 3.75% for 2076.

Medicare (Kaiser) - 4.6% for 2023, decreasing
to 3.75% in 2076.

Mortality and pre-retirement turnover assumptions were developed based on CalPERS’ specific data. For further details, please refer to the 2021 Experience Study based on CalPERS’ demographic experience during fiscal years 2000 to 2019. The 2021 Experience Study Report may be accessed on the CalPERS website www.calpers.ca.gov under Forms and Publications.

101
City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 9 – OTHER POSTEMPLOYMENT BENEFITS (OPEB) (Continued)

Net OPEB Liability (Continued)

Discount Rate – The discount rate used to measure the tota l OPEB liability was 6.25% for the OPEB Plan. The projection of cash flows used to determine the discount rate assumed an annual trust contribution of $1,500, which is lower than the City’s annual trust contribution average for the previous five fiscal years. Based on this assumption, the OPEB Plan’s fiduciary net position was proj ected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on the OPEB Plan investments was applied to all periods of projected benefit pa yments to determine the total OPEB liability.

The long-term expected real rate of return on the OPEB Plan investments was determined using stochastic modeling based on expected real rate of return, standard deviation, correlation coefficients, and target allocation for each major asset class. The resulting real rate of retu rn for the portfolio at the 50% confidence level is then adjusted for assumed long-term inflation and investment expenses to produce the long-term expected rate of return for the portfolio. The target asset allocation and most recent best estimates of geometric real rates of return for each major asset class are summarized in the following table:

Asset Class Target Allocation
Long Term Expected
Real Rate of Return
Global Equity 49% 4.56%
Fixed Income 23% 1.56%
Treasury Inflation-Protected Securities (TIPS) 5% -0.08% Commodities 3% 1.22%
Real Estate Investment Trusts (REITs) 20% 4.06%
Total 100%

Changes in the Net OPEB Liability – The changes in the net OPEB liabilit y for the OPEB Plan as of June 30, 2023 are as follows:

Total OPEB
Liability
Plan Fiduciary
Net Position
Net OPEB
Liability
Balance at June 30, 2022 271,612 $ 74,807 $ 196,805$ Changes in the year:

Service cost 5,259 - 5,259 Interest on the total OPEB liability 16,803 - 16,803 - - -
Changes of assumptions - - - Contributions - employer - 24,675 (24,675) Contributions - employee - - - Net investment income - (12,256) 12,256 (16,048) (16,048) -
Administrative expense - (22) 22 Net changes 6,014 (3,651) 9,665 Balance at June 30, 2023 277,626$ 71,156$ 206,470$ Increase (Decrease)
Benefit payments
Difference between expected and
actual experience

102
City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 9 – OTHER POSTEMPLOYMENT BENEFITS (OPEB) (Continued)

Net OPEB Liability (Continued)

Sensitivity of the Net OPEB Liability to Changes in the Discount Rate – The following presents the City's net OPEB liability, as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current discount rate:

1% decrease
(5.25%) Current Rate (6.25%)
1% increase
(7.25%)
Net OPEB liability 239,057 $ 206,470 $ 179,043 $ Discount Rate

Sensitivity of the Net OPEB liability to Changes in the Healthcare Cost Trend Rates – The following presents the City's net OPEB liability, as well as what the net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage point lower or 1-percentage point higher than the current healthcare cost trend rates:
1% Decrease in
Current Trend Rate Current Trend Rate
1% Increase in
Current Trend Rate
Net OPEB liability 182,355$ 206,470$ 235,622$ Healthcare Cost Trend Rate

OPEB Plan Fiduciary Net Position – Detailed information about the O PEB Plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB – For the fiscal year ended June 30, 2023, the City recognized OPEB expense (income) of $(16,747). At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Employer contributions subsequent to
measurement date 23,167$ - $
Changes of assumption 2,734 40,818
Differences between actual and expected experience - 38,000 Net differences between projected and actual
earnings on plan investments 8,159 -
Total 34,060 $ 78,818 $

103
City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 9 – OTHER POSTEMPLOYMENT BENEFITS (OPEB) (Continued)

Net OPEB Liability (Continued)

The amount of $23,167 reported as deferred outflows of resources related to OPEB resulting from the OPEB Plan contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30, 2024. Other amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized as decreases in OPEB expense as follows:

Fiscal Year Ending
June 30,
Deferred
Outflows (Inflows)
of Resources
2024 (29,661)$
2025 (24,730)
2026 (9,002)
2027 (2,258)
2028 (2,274)
Total (67,925)$

NOTE 10 – FUND BALANCE AND NET POSITION AND EXCESS OF EXPENDITURES OVER

APPROPRIATIONS

At June 30, 2023, the government-wide statement of net position reported restricted net position of $456,479 in governmental activities. Of this amount, $55,022 is restricted for enabling legislation.

The Capital Grants Fund, a capital projects fund, had a deficit fund balance of $15,376 as of June 30, 2023. The deficit represents grant expenditures unreimbursed by granting agencies within the 60-day period of availability for which corresponding revenues have not been recognized. Th e deficit will be recovered upon receipt of grantor reimbursements.

The 4th R Child Development Fund, an enterprise fund, had a deficit net position of $3,339 as of June 30, 2023. It is anticipated that this deficit will be funded by future operating subsidies.

The Risk fund, an internal service fund, had a deficit net position of $261 as of June 30, 2023. It is anticipated that this deficit will be funded by future operating subsidies.

For the fiscal year ended June 30, 2023, General Fund expenditures for the Fire Department exceeded appropriations by $6,079. The overspending was funded by revenue collected in excess of budgeted amounts.

For the fiscal year ended June 30, 2023, Culture and Leisure Fund expenditures for convention and cultural services exceeded appropriations by $101
. The overspending was funded by revenue collected in excess of budgeted amounts.

For the fiscal year ended June 30, 2023, Parks and Re creation Fund expenditures for capital outlay exceeded appropriations by $122. The overspending was funded by revenue collected in excess of budgeted amounts.

For the fiscal year ended June 30, 2023, City/County Office of Metropolitan Water Planning special revenue fund expenditures for general government services exceeded ap propriations by $3,351 and debt service by $55. The overspending was funded by revenue collected in excess of budgeted amounts.

For the fiscal year ended June 30, 2023, Special Dist ricts Fund expenditures for general government services exceeded appropriations by $841 and convention and cultural services by $3,890. This overspending was funded by revenue collected in excess of budgeted amounts.
104
City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)
NOTE 11 – INTE

RFUND TRANSACTIONS
Interfund Transfers
Interfund transfers report the nonre ciprocal contribution of resources from one fund to another. The following is a summary of transfers for the fiscal year ended June 30, 2023:

Description Transfers In Transfers Out Net Transfers
Governmental activities:

General Fund Debt service 309 $ (17,176)$ (16,867)$ General Fund In-lieu tax transfers 36,914 - 36,914 General Fund Program support 8,944 (22,002) (13,058) Measure U Fund Program support 630 (3,606) (2,976)
2015 Golden 1 Center
Lease Revenue Bond Fund Debt service 9,900 - 9,900 Other Governmental Funds Debt service 18,184 (5,248) 12,936 Other Governmental Funds Program support 16,814 (1,857) 14,957 Internal Service Funds Debt service 422 (46) 376
Internal Service Funds Program support - (961) (961)
Adjustment for transfer of
capital assets
Transfer of capital
assets - (1,069) (1,069)
Total governmental activities 92,117$ (51,965)$ 40,152$ Business-type activities:

Water Fund Debt service -$ (34)$ (34)$
Water Fund In-lieu tax transfers - (14,006) (14,006)
Water Fund Program support 1,201 (497) 704 Wastewater Fund Debt service - (46) (46)
Wastewater Fund In-lieu tax transfers - (4,721) (4,721) Wastewater Fund Program support 2,397 - 2,397 Storm Drainage Fund Debt service - (74) (74)
Storm Drainage Fund In-lieu tax transfers - (4,503) (4,503) Storm Drainage Fund Program support 42 (24) 18 Solid Waste Fund Debt service - (108) (108)
Solid Waste Fund In-lieu tax transfers - (9,464) (9,464) Solid Waste Fund Program support 339 - 339 Community Center Fund Debt service 2,718 - 2,718 Community Center Fund In-lieu tax transfers - (2,470) (2,470) Community Center Fund Program support - (7,355) (7,355) Other Enterprise Funds Debt service - (8,800) (8,800)
Other Enterprise Funds In-lieu tax transfers - (1,750) (1,750) Other Ente
rprise Funds Program support 5,934 - 5,934 Adjustment for transfer of
capital assets
Transfer of capital
assets 1,069 - 1,069
Total business-type activities 13,700$ (53,852)$ (40,152)$ 105
City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)
NOTE 11 – I
NTERFUND TRANSACTIONS (Continued)
Interfund Balances
Interfund balances report lending transactions between fun ds. The following is a summary of interfund balances as of June 30, 2023:

Interfund
Receivables Payables Balances
General Fund - $
(1,562)$ (1,562)$
Other Governmental Funds - (24,046)
(24,046)
Internal Service Funds 30,478 - 30,478$
Total governmental activities 30,478 (25,608) 4,870
Community Center Fund - (4,870)
(4,870)
Total business-type activities - (4,870) (4,870)
Total 30,478$ (30,478)$ -$
$30,47
8 was loaned by the City’s internal service funds to cover short-term operating deficits (approximately $7,667) and to assist in the development of community resources (approximately $22,811). Included in the $30,478 of interfund loans is $10,283 that is not expected to be repaid within one year. $3,633 was borrowed by the Capital Grants Fund and the CCOMWP Special Revenue Fund for short-term loans. $5,413 was borrowed by the Culture and Leisure Fund for the Haggin Oaks renovation project and operating deficit. $4,870 was borrowed by the Community Center Fund for operational requirements. $1,562 was borrowed by the General Fund for the acquisition of Habitat Conservation Plan mitigation lands by the Natomas Basin Conservancy.
$15,000 was borrowed by the Economic Development Special Revenue Fund for Stockton Boulevard Housing Development Program.
106
City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)
NOTE 12 – RISK

MANAGEMENT
The City is exposed to various risks of loss related to t he following: worker’s compensation; torts, including errors and omissions; employment practices; theft of, damage to , and destruction of assets; and natural disasters, for which the City self-insures and/or carries commercial insurance. Earthquake damage is not included in the property insurance coverage carried by the City.

The Risk Management Internal Service Fund self-insures the first $2,000 of each workers’ compensation claim.

Excess worker’s compensation insurance is purchased through the Public Risk Innovation, Solutions, and Management (PRISM) member directed risk sharing pool and it provides statutory coverage over the City’s $2,000 self-insured retention. The fund self-insures the first $2,000 of liability claims plus claim costs that exceed excess coverage. PRISM provides $40,000 in excess general and auto liability claims coverage, with a $2,000 loss corridor deductible, for claims over the City’s self-insured retention.

Liabilities are estimated based on recommendations from an independent actuarial evaluation. Liabilities are based on the estimated ultimate cost of settling claims, including effects of inflation and other social and economic factors.

The estimated liability is then discounted by the City’s expected rate of return and anticipated timing of cash outlays to determine the present value of the liability. For the fiscal year ended June 30, 2023, the expected rate of return was 3%. Settled claims have not exceeded insurance coverage for each of the past three fiscal years.

All funds of the City participate in the program and make payments to the Risk Management Internal Service Fund based on estimates of the amounts needed to pay operating costs, insurance premiums, and prior and current year claims. At June 30, 2023, the Risk Management Internal Service Fund had a net position of $(261).

Liabilities are reported when it is probable that a loss has occurred, and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not repor ted (IBNR). The result of the process to estimate the claims liability is not an exact amount as it depends on many complex factors, such as inflation, changes in legal doctrines, economic and social factors, and trends in damage awards. Accordingly, claims are reevaluated periodically to consider the effects of these factors. The estimate of the claims liability also includes amounts for incremental claim adjustment expenses related to specific claims and other claim adjustment expenses regardless of whether allocated to specific claims. Estimated recoveries, for example from salvage or subrogation, are another component of the claim liability estimate.

Changes in the Risk Management Internal Service F und’s claims liability for the past two fiscal years are summarized as follows:
2023 2022
Accrued claims and judgments, July 1 111,816$ 102,410$ Incurred claims and adjustment expenses 45,723 30,617 Claim payments (22,751) (21,211)
Accrued claims and judgments, June 30 134,788$ 111,816$ 107
City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 13 – COMMITMENTS AND CONTINGENCIES

Commitment of Enterprise Fund Revenues

Revenue of the Water Enterprise Fund is pledged to the payment of principal and interest on the California Department of Public Health Note Payable; the Drinki ng Water State Revolving Fund Note Payable; the Water Revenue Bonds, Series 2013; the Water Revenue Bonds, Series 2017 and the Water Revenue Refunding Bonds, Series 2020. Revenue of the Wastewater Enterprise Fund is pledged to the payment of principal and interest on the Wastewater Revenue Bonds, Series 2013; the Wast ewater Revenue Bonds, Series 2019 and Wastewater Revenue Refunding Bonds, Series 2020. Revenue of the Storm Drainage Enterprise Fund is pledged to the payment of principal and interest on the California Infrastructure and Economic Development Bank Note Payable.

Transient Occupancy Tax (TOT) revenue of the Community Center Fund is pledged to the payment of principal and interest on the 2018 TOT Revenue Bonds, Senior Series A, B and Subordinate Series C. Revenue of the Sacramento Tourism Infrastructure District (STID) Fund is pledged to the payment of principal and interest on the 2019 Sacramento Tourism Infrastructure District (STID) Assessment Revenue Bonds. See Note 7 for more detailed information.

Construction and Other Commitments

The City has commitments of $123,518 for contracts awarded but not completed as of June 30, 2023. The following table shows the distribution of those commitments among major and non-major funds.

Governmental Activities: Business-type Activities:

General Fund 8,165$ Water Fund 14,785$
Measure U 19,203 Wastewater Fund 2,777
Other governmental funds 30,876 Storm Drainage Fund 2,673 Internal service funds 35,561 Solid Waste Fund 3,580 Community Center Fund 5,438
Other enterprise funds 460
Total governmental activities 93,805$ Total business-type activities 29,713$

The major contracts outstanding are $3,067 for installation of motor-controlled valves and drainage system as part of the Ground Water Flush-to-Waste project; $3,061 fo r Citywide cleanup service; $2,766 for replacement of lighting system and relocation of HVAC system in Ballroom B at the SAFE Credit Union Convention Center; $2,651 for management of the Safeground camping and parking at Miller Park; $2,624 for the Bikeway improvements on P, Q, 9 th, 10th, 19th, and 21 st Streets, and conversion from one-way to two-way traffic on 5 th Street and I Street; $2,383 for the construction of a Class I bike trail along the Sacramento Southern Railroad between Sutterville Road and Meadowview Road; and $35,269 for the purchase of vehicles, primarily for the repl acement of refuse trucks and garbage trucks.

Contingent Liabilities

The City participates in various f ederal, state, and local grant programs , primarily including Homeless Housing, Assistance and Prevention (HHAP) an d California Creative Corps Programs. These programs are subject to financial and compliance audits by the grantors or their representatives. The audits of these programs for earlier years and the fiscal year ended June 30, 2023 have not been completed in all cases; accordingly, final determination of the City’s compliance with applicable grant requirements may be established at some future date.

The amount, if any, of expenditures which may be disallo wed by the granting agencies cannot be determined at this time. The City believes any such claims would be immaterial to the City’s financial position at June 30, 2023.

Receipt of these grant revenues is not assured in the future.

108
City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 13 – COMMITMENTS AND CONTINGENCIES (Continued)

Litigation

Various claims and lawsuits are pending against the City. As discussed in Note 12, the City is primarily self-insured and has accrued a liability for estimated claims outstanding. Although the outcome of these claims and lawsuits is not presently determinable, management, after consultation with legal counsel, is of the opinion that final outcome of these matters will not have a material adverse effect on the financial condition of the City.

Landfill Post Closure Care Cost

The City has several landfill sites which have stopped accepting waste, have been covered, and are closed. State and federal laws and regulations require that the City perform certain maintenance and monitoring functions at these sites after closure. The most recent department study estimated that $4,336 was required for future post closure monitoring costs as of June 30, 2021. The estima te was based on actual cost for the FY18, FY19 and FY20 and may change due to inflation or deflation, technology, or applicable laws and regulations. The estimated liability was amortized to $3,740 on June 30, 2023.

Pollution Remediation Obligations

A pollution remediation obligation is an obligation to address the current or potential detrimental effects of existing pollution by participating in pollution remediation activi ties. The City is responsib le for pollution remediation activities at several sites that have soil contaminated with petroleum, hydrocarbons, and/or metals. Regulatory agencies providing oversight of the City’s pollution remediation obligations and activities include the State of California Regional Water Quality Control Board, the State of California Depar tment of Toxic Substance Control, the Sacramento County Department of Environmental Management, and the State of California Department of Public Health. The estimated obligation was $596 at June 30, 2022 and $997 at June 30, 2023. Pollution remediation outlays totaled approximately $473 for the fiscal year ended June 30, 2023. Pollution remediation obligations are measured based on outlays expected to be incurred to settle all estimable remediation efforts.

Pollution remediation obligations are measured at the cu rrent value of reasonable and supportable assumptions about future events that may affect the eventual settlement of the obligations. Pollution remediation obligations are measured using the expected cash flow technique, which measures the ob ligation as the sum of probability- weighted amounts in a range of possible cash flows. Estimates are based on all currently available information, as well as the facts and circumstances of each situation, but may change due to price changes, changes in laws or regulations, changes in remediation technologies, or as additional information become available. There are no estimated recoveries from other parties that are inclu ded in the calculation of the City’s pollution remediation obligations.

NOTE 14 – JOINT VENTURES AND JOINTLY GOVERNED ORGANIZATIONS

JOINT VENTURES

Aggie Square Public Financing Authority

The City is a participant with UC Davis and Wexford Science and Technology in the Aggie Square Public Financing Authority, formed in April 2021. As of June 30, 2023, the Aggie Square boa rd is made up of three City appointed council members and two members of the public. Aggie Squa re is a project located at Stockton Boulevard and Second Avenue in Sacramento, mostly on property owned by UC Davis. It would expand the university’s Sacramento campus, creating a state- of-the-art hub for research, inno vation, and education. The proposed agreement between the City, UC Davis and Wexford Science and Technology includes inclusive economic development measures that reflect community priorities, including creation of an affordable housing fund prioritizing local residents for entry-level and higher-wage jobs and prov iding training pathways to those jobs; and improving biking, walking and transit access around the UC Davis Sacramento campus on Stockton Boulevard.

109
City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 14 – JOINT VENTURES AND JOINTLY GOVERNED ORGANIZATIONS (Continued)

Sacramento Housing and Redevelopment Agency

The City is a participant with the County of Sacramen to in the Sacramento Housing and Redevelopment Agency (SHRA). SHRA is a stand-alone agency governed by the County Board of Supervisors over County housing activities and the City Council over City housing activiti es. Although the City does not have an equity interest in SHRA, it does have an ongoing financial interest. Based upon the approval process for activities of the Housing Authority of the City of Sacramento (H ousing Authority), the City has the ability to directly influence SHRA to undertake projects for the ci tizenry of the City. Because the City’s primary government does not have an equity interest in SHRA, SHRA’s financial information is not included in these financial st atements. Separately issued financial statements may be obtained from the Sacramento Housing and Redevelopment Agency, 801 12 th Street,
Sacramento, California, 95814.

SHRA administered the redevelopment agencies of the City and County until February 1, 2012. In 2011 the California Legislature enacted AB 1x 26, which coupled with a subsequent decision of the State Supreme Court, resulted in the dissolution of redevelopment agencies. Upon the dissolution of the redevelopment agency, the City elected to become the successor agency for the non-hou sing redevelopment agency activities. More information can be found in Note 15 – Successor Agency Trust Fund. The City designated the Housing Authority as the local authority to retain the housing assets and functions previously performed by the redevelopment agency, and the Housing Authority affirmatively elected pursuant to Heal th and Safety Code Section 34176 that it would serve as the “Successor Housing Agency” to the former redevelopment agency.

Sacramento Public Library Authority

The City is a participant with the County of Sacramento and the cities of Citrus Height s, Elk Grove, Galt, Isleton and Rancho Cordova in the Sacramento Public Library Authority (Library), a joint powers agency created to provide library services to the residents of the participating municipalities. The Library is governed by a board made up of five County appointees and various numbers of appointees from each city, depending upon population. As of June 30, 2023, five of seventeen members of the Library boar d were appointed by the City. The current joint powers agreement was effective beginning July 1, 2007. After June 30, 2010, any party may wi thdraw from the Library upon no less than one year’s written notice. Upon withdrawal a party shall retain ownership of those capital facilities to which it holds title. The City is committed to fund annual contributions to operate library branches in the City.

The City’s Measure U Fund contributions for the fiscal year ended June 30, 2023, were $14,272. In addition, the City paid cost reimbursements and program support of $97 to the Library during the same period. The City also contributed the use of its library facilities to the Library. In order to provide funding for additional services and hours in City libraries, the City levies and passes through to the Library a parcel tax which totaled $9,200 for the fiscal year ended June 30, 2023. Financial statements may be obtained from the Sacramento Public Library Authority, 828 I Street, Sacramento, California, 95814.

Sacramento Regional Fire/EMS Communication Center

The City is a participant with the Sacramento Metropolitan Fire District and other local fire agencies in the Sacramento Regional Fire/EMS Communication Center (SRFECC), a fire dispatch center. SRFECC provides fire protection and emergency medical service dispatching for 1,000 square miles and 1.3 million residents in Sacramento and Placer Counties. The City provided $4,892 of support to SRFECC during the fiscal year ended June 30, 2023. Financial statements may be obtained from the Sacramento Regional Fire/EMS Communication Center, 10230 Systems Parkway, Sacramento, California, 95827.

Northern California Regional Public Safety Training Authority

The City is a participant with the County of Sacramento, the Los Rios Community College District and the Regional Fire and Rescue Authority in the Northern California Regional Public Safety Training Authority (NCRPSTA) which operates the Northern California Regional Public Safe ty Training College located at McClellan Park. During the fiscal year ended June 30, 2023, the City provided $502 of annual support to the NCRPSTA. Payments for rent and training during the fiscal year ended June 30, 2023 were $38. Financial statements may be obtained from the NCRPSTA Administrative Offices, 2409 Dean Street, Suite 119, McClellan, California, 95652.

110
City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 14 – JOINT VENTURES AND JOINTLY GOVERNED ORGANIZATIONS (Continued)

JOINTLY GOVERNED ORGANIZATIONS WITH RELATED PARTY TRANSACTIONS

The City participates in several jointly governed organiza tions for which it appoints a minority of board members.

The City may also provide minor financial support or hav e other financial transactions with these organizations, but it does not have a financial interest in or responsi bility to the organizations. The following organizations had financial transactions with the City during the fiscal year ended June 30, 2023:

The City provided $134 in annual support and $210 in project/program expenses to the Regional Water Authority.

The City provided $232 in annual support to the Sacramento Central Groundwater Authority.

The City received $232 of administration fees from t he Sacramento Area Flood Control Agency (SAFCA) for collecting and transmitting permitting fees. The City also participates in several cost-sharing agreements with SAFCA for individual projects related to flood control. The City’s portion of the costs for these projects is remitted directly to SAFCA or other suppliers of services.

The City received $79 in Workforce Investment Act grants from the Sacramento Employment and Training Agency.

NOTE 15 – SUCCESSOR AGENCY TRUST FUND

On December 29, 2011, the California Supreme Court upheld Assembly Bill x1 26 (“the Bill”) which dissolved all redevelopment agencies in the State of California. Succes sor agencies are allocated property tax revenue in an amount necessary to pay the 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.

In accordance with the timeline set forth in the Bill, a ll redevelopment agencies in the State of California were dissolved and ceased to operate as legal entities as of February 1, 2012.

On January 31, 2012, the City elected to be appointed as Redevelopment Agency Successor Agency (RASA) of the City of Sacramento for the non-housing assets and liabilities of the former Redevelopment Agency (RDA). The City Council elected not to serve as the successor agency for the RDA’s housing assets and functions, but instead designated the City’s Housing Authority to serve as the successor housing agency.

Prior to February 1, 2012, California Redevelopment Law provided tax increment financing as a source of revenue to redevelopment agencies to fund redevelopment activities. Once a redevelopment area was adopted, the RDA could only receive tax increment to the extent that it could show on an annual basis that it has incurred indebtedness that must be repaid with tax increment. Due to the nature of redevelopment financing, the RDA’s liabilities exceeded its assets. Therefore, RASA historically carried a deficit, which was expected to be reduced as future tax increment revenues were received and used to repay its outstanding long-term debt. This deficit was transferred to the RASA on February 1, 2012. At June 30, 2023, RASA has a deficit net position of $161,510 which will be eliminated with future property tax revenue distributions from the Redevelopment Property Tax Trust Fund administered by the County Auditor-Controller.

111
City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)

NOTE 15 – SUCCESSOR AGENCY TRUST FUND (Continued)

On December 31, 2015, the DOF completed the review of R ASA’s Long-Range Property Management Plan (LRPMP). DOF approved the use or disposition of all t he properties listed in the LRPMP. The approved LRPMP will govern the disposition and use of all the real property assets of the former redevelopment agency.

As of June 30, 2023, contracts payable of $18,687 reported in the private-purpose trus t fund are allocations of SHRA’s OPEB and pension unfunded liabilities for the former redevelopment agency employees.

Capital Assets

The following is a summary of changes in capital assets for the fiscal year ended June 30, 2023:

Beginning
Balance Increases Decreases
Ending
Balance
Capital assets not being depreciated
Land 4,969 $ - $ (1,616) $ 3,353 $ Depreciable capital assets
Buildings and improvements 141 - (39) 102 Less accumulated depreciation for:

Buildings and improvements (48) (3) 15 (36) Depreciable capital assets, net 93 (3) (24) 66 Total capital assets, net 5,062 $ (3) $ (1,640)$ 3,419 $

112
City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)
NOTE 15 – S
UCCESSOR AGENCY TRUST FUND (Continued)
Long-term Debt
The following is a summary of changes in long-term d ebt for the fiscal year ended June 30, 2023:

Beginni ng Ending D ue W ithin
Balance Additions Reductions Balance One Year
Revenue Bonds:
201 5 Tax Allocation Refunding Bonds TE, Series A 33,871$ - $ ( 2,936)$ 30,935$ 2,870$
Notes Payable:
2003 Del Paso TE TABS, Series A 5,730 24 (1 ) (499) 5,255 1,020 2005 Merged Downtown TE, Series A 1 33,81 0 534 (1 ) (9,839) 124,505 15,815 2005 Oak Park TE, Series A 3,070 9 (1 ) (1 ,035) 2,044 - 2006 65th Street TX Master Lease, Series B 2,950 - (125) 2,825 135 2006 North Sacramento TX Master Lease, Series B 3,445 - (150) 3,295 155 2006 Stockton Blvd Master Lease 1 ,947 - (154) 1,793 141 2008 BOA Public Capital Corporation 1 ,307 - (204) 1,103 210 2009 Army Depot TX Swap 2,373 - (103) 2,270 108 2009 River District TX Swap 2,222 - (97) 2,125 101 City of Sacramento CIEDB - Utilities/Detention Basin 969 - (47) 922 49 Globe Mills 2,048 - (361) 1,687 384
North Sacramento CIEDB Loan 2,487 - (145) 2,342 150 Stockton Blvd CIEDB Loan 2,070 - (122) 1,948 126 Subtotal, notes payable 1 64,428 567 (12,881) 152,114 18,394 Total, long-term debt 1 98,299$ 567$ (15,817)$ 183,049$ 21 ,264$ (1) Change in accreted value is recorded as an adjustment of Notes Payable.

As of June 30, 2023, accumulated accretion for the 2003 Del Paso TE TABS, Series A, is $3,437, and accumulated accretion for the 2005 Merged Downtown and Oak Park TE, Series A, is $74,872.

Future Debt Service Requirements
Annual debt service requirements to maturity are as follows:

F
iscal Year
Ending June 30, Principal Interest Principal Interest
2024 2,870$ 1,326$ 18,394$ 966$
2025 3,205 1,174 18,221 890
2026 1,320 1,061 20,609 810
2027 1,380 1,003 18,386 725
2028 1,435 942 17,990 650
2029-2033 10,630 3,395 77,335 2,276
2034-2038 7,685 462 18,144 565
Subtotal 28,525 9,363 189,079 6,882
Less: Unaccreted interest - - (36,965) -
Plus: Unamortized issuance premiums 2,410 - - - Total 30,935$ 9,363$ 152,114$ 6,882$
Revenue Bonds Notes Payable
113
City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2023
(dollar amounts expressed in thousands)
NOTE 16 – SERVICE CONCESSION ARRANGEMENT FOR CITY GOLF COURSES On July 1, 2019, the City entered into a service concession agreement with Morton Golf LLC (Morton) under which Morton operates and maintains City golf courses, collects user fees and remits a monthly payment for rent to the City. Morton pays the City minimum in stallment payments plus a percentage of gross revenues over the 15-year period. The present value of the installment payments was initially estimated to be $9,180. The City reports a loan receivable and deferred inflow of $5,801 in the government-wide statement of net position as of June 30, 2023.

NOTE 17 – SUBSEQUENT EVENT
On December 19, 2023, the City issued the 2023 Wa ter Revenue Refunding Bonds as authorized by City Resolution 2023-0345. The 2023 Water Revenue Refunding Bonds were issued at total par of $20,985 plus premium of $3,106. Net proceeds were used to establis h an irrevocable escrow to purchase and cancel certain 2020 Water Revenue Refunding Bonds through a tender offer. The refunding reduced total debt service payments by $3,990 and resulted in an economic gain of $2,529.
114
Required
Supplementary
Information

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115
City of Sacramento
Required Supplementary Information
Agent Multiple-Employer Defined Benefit Pension Plan
CalPERS Miscellaneous Plan
Schedule of Changes in Net Pension Liability and Related Ratios Last Ten Years* (in thousands)
2015 2016 2017 2018 2019
Total pension liability
Service cost 23,110$ 22,342$ 23,374$ 27,795$ 28,404$ Interest on the total pension liability 70,942 74,835 79,515 84,334 89,060 Changes of assumptions - (20,153) -
75,970 (7,898)
Differences between expected and actual experience - (8,865) (333) (838) 6,909 Benefit payments, including refunds of employee contributions (30,240) (34,390) (37,980) (42,305) (48,384) Net change in total pens ion liability 63,812 33,769 64,576 144,956 68,091 Total pension liability -- beginning 949,465 1,013,277 1,047,046 1,111,622 1,256,578 Total pension liability -- ending (a) 1,013,277$ 1,047,046$ 1,111,622$ 1,256,578$ 1,324,669$ Plan fiduciary net position
Contributions - employer 21,613$ 22,827$ 25,963$ 28,719$ 29,514$ Contributions - employee 11,670 11,302 11,991 12,190 12,634 Net investment income 118,326 18,047 4,260 91,481 76,768 Benefit payments, including refunds of employee contributions (30,240) (34,390) (37,980) (42,305) (48,384) Net plan to plan resource movement - (3,066) 531 74 (2) Administrative expense - (922) (496) (1,209) ( 1,413)
Other miscellaneous expense - - - - (2,683) Net change in fiduciary net position 121,369 13,798 4,269 88,950 66,434 Plan fiduciary net position -- beginning 678,261 799,630 813,428 817,697 906,647 Plan fiduciary net position -- ending (b) 799,630$ 813,428$ 817,697$ 906,647$ 973,081$ Net pension liability -- ending (a) - (b) 213,647$ 233,618$ 293,925$ 349,931$ 351,588$ Plan fiduciary net position as a percentage of the total pension liability 78.92% 77.69% 73.56% 72.15% 73.46%
Covered payroll ** 156,032$ 157,449$ 166,403$ 176,795$ 181,331$ Net pension liability as a percentage of covered payroll 136.93% 148.38% 176.63% 197.93% 193.89% Meas urement date June 30, 2014 June 30, 2015 June 30, 2016 June 30, 2017 June 30, 2018 Notes to the Required Supplementary Information
* Fiscal year 2015 was the first year of implementation, therefore, only nine years are shown. ** Covered payroll was restated during fiscal year 2016 to reflect the implementation of GASB 82.

Fiscal Year
116
City of Sacramento
Required Supplementary Information
Agent Multiple-Employer Defined Benefit Pension Plan
CalPERS Miscellaneous Plan
Schedule of Changes in Net Pension Liability and Related Ratios Last Ten Years* (in thousands)
2020 2021 2022 2023
Total pension liability
Serv ice cost 29,053$ 30,236$ 31,307$ 34,966$ Interest on the total pension liability 94,760 99,810 105,037 110,101 Changes of assumptions - - - 58,232
Differences between expected and actual experience 12,970 2,600 3,743 (3,289) Benefit payments, including refunds of employee contributions (53,695) (59,069) (63,352) (69,665) Net change in total pens ion liability 83,088 73,577 76,735 130,345 Total pension liability -- beginning 1,324,669 1,407,757 1,481,334 1,558,069 Total pension liability -- ending (a) 1,407,757$ 1,481,334$ 1,558,069$ 1,688,414$ Plan fiduciary net position
Contributions - employer 34,102$ 39,118$ 43,930$ 47,273$ Contributions - employee 14,289 15,018 15,899 16,052 Net investment income 64,092 51,632 244,522 (99,652) Benefit payments, including refunds of employee contributions (53,695) (59,069) (63,352) (69,665) Net plan to plan resource movement - - - (2)
Administrative expense (694) (1,454) (1,076) (820) Other miscellaneous expense 2 -
- -
Net change in fiduciary net position 58,096 45,245 239,923 (106,814) Plan fiduciary net position -- beginning 973,081 1,031,177 1,076,422 1,316,345 Plan fiduciary net position -- ending (b) 1,031,177$ 1, 076,422$ 1,316,345$ 1,209,531$ Net pension liability -- ending (a) - (b) 376,580$ 404,912$ 241,724$ 478,883$ Plan fiduciary net position as a percentage of the total pens ion liability 73.25% 72.67% 84.49% 71.64%
Covered payroll ** 185,823$ 195,700$ 203,030$ 206,537$ Net pension liability as a percentage of covered payroll 202.66% 206.90% 119.06% 231.86% Meas urement date June 30, 2019 June 30, 2020 June 30, 2021 June 30, 2022 Fiscal Year
117
City of Sacramento
Required Supplementary Information
Agent Multiple-Employer Defined Benefit Pension Plan
CalPERS Miscellaneous Plan
Schedule of Contributions
Last Ten Years* (in thousands)
2015 2016 2017 2018 2019
Actuarially determined contributions 22,711$ 26,156$ 30,084$ 26,947$ 33,664$ Contributions in relation to the actuarially determined contribution 22,711 26,156 30,084 26,947 33,664 Contribution deficiency (excess) -$ - $ - $ - $ - $
Covered payroll ** 157,449$ 166,403$ 176,795$ 181,331$ 185,823$ Contributions as a percentage of covered payroll 14.42% 15.72% 17.02% 14.86% 18.12% Notes to the Required Supplementary Information
Valuation date: 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry age normal cost method
Amortization method Level percentage of payroll
Asset valuation method 15 year smoothed fair value
Inflation 2.3%
Salary Increase 3.3% to 14.2% depending on age, service, and type of employment Investment rate of return 7.00% (net of administrative expenses) Retirement age 50 - 67 years
Mortality
* F
iscal year 2015 was the first year of implementation, therefore, only nine years are shown. ** Covered payroll was restated during fiscal year 2016 to reflect the implementation of GASB 82.

Ten year schedules of annual money-weighted rate of return on pension plan investments for CalPERS can be found in the Schedule of Investment Returns table within the separately issued CalPERS Basic Financial Statements available at: https://www.calpers.ca.gov/page/investments/about-investment-office/investment-financial-reports.

Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board, first used in the June 30, 2009 valuation
Fis cal Year
118
City of Sacramento
Required Supplementary Information
Agent Multiple-Employer Defined Benefit Pension Plan
CalPERS Miscellaneous Plan
Schedule of Contributions
Last Ten Years* (in thousands)
2020 2021 2022 2023
Actuarially determined contributions 39,797$ 43,941$ 47,627$ 51,544$ Contributions in relation to the actuarially determined contribution 39,797 43,941 47,627 51,544 Contribution deficiency (excess) -$ - $ - $ - $
C
overed payroll ** 195,700$ 203,030$ 206,537$ 221,355$ Contributions as a percentage of covered payroll 20.34% 21.64% 23.06% 23.29% Notes to the Required Supplementary Information
Valuation date: 6/30/2017 6/30/2018 6/30/2019 6/30/2020 Fis cal Year
119
City of Sacramento
Required Supplementary Information
Agent Multiple-Employer Defined Benefit Pension Plan
CalPERS Safety Plan
Schedule of Changes in Net Pension Liability and Related Ratios Last Ten Years* (in thousands)

2015 2016 2017 2018 2019
Total pension liability
Service cost 29,539$ 29,653$ 31,672$ 37,372$ 38,386$ Interest on the total pension liability 107,189 112,331 118,821 123,132 127,930 Changes of assumptions - (28,604) - 107,046 (17,242) Differences between expected and actual experience - (593) 14,398 (15,086) 3,954 Benefit payments, including refunds of employee contributions (66,215) (70,545) (74,572) (78,232) (82,999) Net change in total pension liability 70,513 42,242 90,319 174,232 70,029 Total pension liability -- beginning 1,447,520 1,518,033 1,560,275 1,650,594 1,824,826 Total pension liability -- ending (a) 1,518,033$ 1,560,275$ 1,650,594$ 1,824,826$ 1,894,855$ Plan fiduciary net position
Contributions - employer 27,935$ 30,798$ 36,001$ 40,609$ 41,588$ Contributions - employee 16,094 15,565 18,465 18,980 21,564 Net investment income 171,795 25,341 4,971 125,586 104,661 Benefit payments, including refunds of employee contributions (66,215) (70,545) (74,572) (78,232) (82,999) Net plan to plan resource movement - 1 - (74) (4) Administrative expense - (1,288) (697) (1,665) (1,922) Other miscellaneous expense - - - - (3,650) Net change in fiduciary net position 149,609 (128) (15,832) 105,204 79,238 Plan fiduciary net position -- beginning 994,493 1,144,102 1,143,974 1,128,142 1,233,346 Plan fiduciary net position -- ending (b) 1,144,102$ 1,143,974$ 1,128,142$ 1,233,346$ 1,312,584$ Net pension liability -- ending (a) - (b) 373,931$ 416,301$ 522,452$ 591,480$ 582,271$ Plan fiduciary net position as a percentage of the total pension liability 75.37% 73.32% 68.35% 67.59% 69.27%
Covered payroll ** 107,176$ 112,067$ 120,120$ 126,438$ 132,206$ Net pension liability as a percentage of covered payroll 348.89% 371.48% 434.94% 467.80% 440.43% Meas urement date June 30, 2014 June 30, 2015 June 30, 2016 June 30, 2017 June 30, 2018 Notes to the Required Supplementary Information
* Fiscal year 2015 was the first year of implementation, therefore, only nine years are shown. ** Covered payroll was restated during fiscal year 2016 to reflect the implementation of GASB 82.

Fis cal Year
120
City of Sacramento
Required Supplementary Information
Agent Multiple-Employer Defined Benefit Pension Plan
CalPERS Safety Plan
Schedule of Changes in Net Pension Liability and Related Ratios Last Ten Years* (in thousands)

2020 2021 2022 2023
Total pension liability
Serv ice cost 40,221$ 42,306$ 44,416$ 51,608$ Interest on the total pension liability 136,323 143,878 151,131 158,263 Changes of assumptions - - - 80,583 Differences between expected and actual experience 35,991 20,246 12,441 4,868 Benefit payments, including refunds of employee contributions (88,688) (95,642) (100,827) (108,473) Net change in total pens ion liability 123,847 110,788 107,161 186,849 Total pension liability -- beginning 1,894,855 2,018,702 2,129,490 2,236,651 Total pension liability -- ending (a) 2,018,702$ 2,129,490$ 2,236,651$ 2,423,500$ Plan fiduciary net position
Contributions - employer 49,875$ 58,584$ 67,242$ 74,645$ Contributions - employee 22,752 23,832 25,904 25,718 Net investment income 86,282 69,226 327,345 (133,570) Benefit payments, including refunds of employee contributions (88,688) (95,642) (100,827) (108,473) Net plan to plan resource movement - - - 2 Administrative expense (937) (1,947) (1,434) (1,093) Other miscellaneous expense 3 - - - Net change in fiduciary net position 69,287 54,053 318,230 (142,771) Plan fiduciary net position -- beginning 1,312,584 1,381,871 1,435,924 1,754,154 Plan fiduciary net position -- ending (b) 1 ,381,871$ 1,435,924$ 1,754,154$ 1,611,383$ Net pension liability -- ending (a) - (b) 636,831$ 693,566$ 482,497$ 812,117$ Plan fiduciary net position as a percentage of the total pension liability 68.45% 67.43% 78.43% 66.49%
Covered payroll ** 138,718$ 147,409$ 157,333$ 168,488$ Net pension liability as a percentage of covered payroll 459.08% 470.50% 306.67% 482.00% Meas urement date June 30, 2019 June 30, 2020 June 30, 2021 June 30, 2022 Fiscal Year
121
City of Sacramento
Required Supplementary Information
Agent Multiple-Employer Defined Benefit Pension Plan
CalPERS Safety Plan
Schedule of Contributions
Last Ten Years* (in thousands)

2015 2016 2017 2018 2019
Actuarially determined contributions 36,638$ 40,959$ 47,222$ 49,102$ 56,327$ Contributions in relation to the actuarially determined contribution 36,638 40,959 47,222 49,102 56,327 Contribution deficiency (excess) -$ - $ - $ - $ - $ Covered payroll ** 112,067$ 120,120$ 126,438$ 132,206$ 138,718$ Contributions as a percentage of covered payroll 32.69% 34.10% 37.35% 37.14% 40.61% Notes to the Required Supplementary Information
Valuation date: 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry age normal cost method
Amortization method Level percentage of payroll
Asset valuation method 15 year smoothed fair value
Inflation 2.3%
Salary Increase 3.3% to 14.2% depending on age, service, and type of employment Investment rate of return 7.00% (net of administrative expenses) Retirement age 50 - 67 years
Mortality
* Fiscal year 2015 was the first year of implementation, therefore, only nine years are shown. ** Covered payroll was restated during fiscal year 2016 to reflect the implementation of GASB 82.

Ten year schedules of annual money-weighted rate of return on pension plan investments for CalPERS can be found in the Schedule of Investment Returns table within the separately issued CalPERS Basic Financial Statements available at: https://www.calpers.ca.gov/page/investments/about-investment-office/investment-financial-reports.

Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board, first used in the June 30, 2009 valuation
Fis cal Year
122
City of Sacramento
Required Supplementary Information
Agent Multiple-Employer Defined Benefit Pension Plan
CalPERS Safety Plan
Schedule of Contributions
Last Ten Years* (in thousands)
2020 2021 2022 2023
Actuarially determined contributions 66,147$ 66,915$ 74,528$ 81,076$ Contributions in relation to the actuarially determined contribution 66,147 66,915 74,528 81,076 Contribution deficiency (excess) -$ - $ - $ - $ Covered payroll ** 147,409$ 157,333$ 168,488$ 166,726$ Contributions as a percentage of covered payroll 44.87% 42.53% 44.23% 48.63% Notes to the Required Supplementary Information
Valuation date: 6/30/2017 6/30/2018 6/30/2019 6/30/2020 Fiscal Year
123
City of Sacramento
Required Supplementary Information
Sacramento City Employees’ Retirement System,
a Single-Employer Defined Benefit Pension Plan
Schedule of Changes in Net Pension Liability and Related Ratios Last Ten Years* (in thousands)

2015 2016 2017 2018 2019
Total pension liability
Serv ice cost 131$ 103$ 96$ 92$ 66$ Interest on the total pension liability 23,134 23,416 22,759 20,877 20,095 Changes of assumptions 23,117 - (16,246) 862 (927) Differences between expected and actual experience (8,783) (1,173) (3,701) (2,457) 304 Benefit payments, including refunds of employee contributions (33,791) (32,683) (32,171) (31,583) (31,134) Net change in total pension liability 3,808 (10,337) (29,263) (12,209) (11,596) Total pension liability -- beginning 372,670 376,478 366,141 336,878 324,669 Total pension liability -- ending (a) 376,478$ 366,141$ 336,878$ 324,669$ 313,073$ Plan fiduciary net position
Contributions - employer 9,183$ 8,645$ 8,645$ 8,645$ 7,507$ Contributions - employee 82 146 63 55 49 Net investment income (loss) 13,375 7,799 26,803 20,982 18,537 Benefits payments, including refunds of employee contributions (33,791) (32,683) (32,171) (31,583) (31,134) Net change in fiduciary net position (11,151) (16,093) 3,340 (1,901) (5,041) Plan fiduciary net position -- beginning 312,414 301,263 285,170 288,510 286,609 Plan fiduciary net position -- ending (b) 301,263$ 285,170$ 288,510$ 286,609$ 281,568$ Net pension liability (asset)-- ending (a) - (b) 75,215$ 80,971$ 48,368$ 38,060$ 31,505$ Plan fiduciary net position as a percentage of the total pension liability 80.02% 77.89% 85.64% 88.28% 89.94%
Covered payroll ** 1,180$ 1,020$ 1,049$ 921$ 678$ Net pension liability (asset) as a percentage of covered payroll 6374.15% 7938.33% 4610.87% 4132.46% 4646.76% Meas urement date June 30, 2015 June 30, 2016 June 30, 2017 June 30, 2018 June 30, 2019 Notes to the Required Supplementary Information
* Fiscal year 2015 was the first year of implementation, therefore, only nine years are shown. ** Covered payroll was restated during fiscal year 2016 to reflect the implementation of GASB 82.

Fis cal Year
124
City of Sacramento
Required Supplementary Information
Sacramento City Employees’ Retirement System,
a Single-Employer Defined Benefit Pension Plan
Schedule of Changes in Net Pension Liability and Related Ratios Last Ten Years* (in thousands)

2020 2021 2022 2023
Total pension liability
Serv ice cost 49$ 18$ 6$ 5$ Interest on the total pension liability 19,363 18,342 16,098 15,407 Changes of assumptions (1,593) 2,673 218 - Differences between expected and actual experience (3,768) (6,349) 5 3,355 Benefit payments, including refunds of employee contributions (30,457) (28,992) (28,145) (27,501) Net change in total pension liability (16,406) (14,308) (11,818) (8,734) Total pension liability -- beginning 313,073 296,667 282,359 270,541 Total pension liability -- ending (a) 296,667$ 282,359$ 270,541$ 261,807$ Plan fiduciary net position
Contributions - employer 4,410$ 3,822$ 3,479$ -$ Contributions - employee 25 16 9 3 Net investment income (loss) 7,591 73,150 (32,305) 23,293 Benefits payments, including refunds of employee contributions (30,457) (28,992) (28,145) (27,501) Net change in fiduciary net position (18,431) 47,996 (56,962) (4,205) Plan fiduciary net position -- beginning 281,568 263,137 311,133 254,171 Plan fiduciary net position -- ending (b) 263,137$ 311,133$ 254,171$ 249,966$ Net pension liability (asse t)-- ending (a) - (b) 33,530$ (28,774)$ 16,370$ 11,841$ Plan fiduciary net position as a percentage of the total pension liability 88.70% 110.19% 93.95% 95.48%
Covered payroll ** 362$ 270$ 189$ 103$ Net pension liability (asset) as a percentage of covered payroll 9262.43% -10657.04% 8661.38% 11496.12% Meas urement date June 30, 2020 June 30, 2021 June 30, 2022 June 30, 2023 Fis cal Year
125
City of Sacramento
Required Supplementary Information
Sacramento City Employees’ Retirement System,
a Single-Employer Defined Benefit Pension Plan
Schedule of Contributions
Last Ten Years* (in thousands)

2015 2016 2017 2018 2019
Actuarially determined contributions 9,183$ 8,645$ 8,330$ 8,267$ 5,268$ Contributions in relation to the actuarially determined contribution 9,183 8,645 8,645 8,645 7,507 Contribution deficiency (excess) -$ -$ (315)$ (378)$ (2,239)$ Covered payroll ** 1,180$ 1,020$ 1,049$ 921 $ 678 $ Contributions as a percentage of covered payroll 778% 848% 824% 939% 1107% Notes to the Required Supplementary Information
Valuation date: 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry age normal
Amortization method Level dollar payments over 11 years, open period Asset valuation method 3 year smoothed fair value
Inflation 2.50%
Salary increases 2.5% CPI plus 0.5% merit
Investment rate of return 6.00%
Retirement age
Mortality
* Fiscal year 2015 was the first year of implementation, therefore, only nine years are shown. ** Covered payroll was restated during fiscal year 2016 to reflect the implementation of GASB 82.

Ten year schedules of annual money-weighted rate of return on pension plan investments for SCERS can be found in the Schedule of Investment Returns table within the separately issued SCERS Annual Financial Reports available at:
https://www.cityofsacramento.org/Fi nance/Accounting/Reporting.

Deferred vested members covered under Section 399 are assumed to retire at age 62; those covered under Section 175 are assumed to retire at age 65.

CalPERS 1997-2015 Mortality Tables with Scale MP-2020
Fis cal Year
126
City of Sacramento
Required Supplementary Information
Sacramento City Employees’ Retirement System,
a Single-Employer Defined Benefit Pension Plan
Schedule of Contributions
Last Ten Years* (in thousands)

2020 2021 2022 2023
Actuarially determined contributions 4,410$ 3,822$ 3,479$ - $ Contributions in relation to the actuarially determined contribution 4,410 3,822 3,479 - Contribution deficiency (excess) -$ - $ - $ - $ Covered payroll ** 362$ 270 $ 189 $ 103 $ Contributions as a percentage of covered payroll 1218% 1416% 1841% 0% Notes to the Required Supplementary Information
Valuation date: 6/30/2018 6/30/2019 6/30/2020 6/30/2021 Fiscal Year
127
City of Sacramento
Required Supplementary Information
Schedule of Changes in Net OPEB Liability and Related Ratios Last Ten Years* (in thousands)
2018 2019 2020 2021 2022 2023
Total OPEB liability
Service cost 11,872$ 11,052$ 9,931$ 5,809$ 5,919$ 5,259$ Interest on the total OPEB liability 15,313 16,612 18,106 19,582 19,968 16,803 Changes of benefit terms - - 383 - - -
Changes of assumptions (24,429) (30,845) (92,281) (4,097) 3,978 - Differences between expected and actual experience - - (28,948) - (40,332) - Benefit payments (12,565) (12,903) (14,890) (15,764) (15,625) (16,048) Net change in total OPEB liability (9,809) (16,084) (107,699) 5,530 (26,092) 6,014 Total OPEB liability -- beginning 425,766 415,957 399,873 292,174 297,704 271,612 Total OPEB liability -- ending (a) 415,957$ 399,873$ 292,174$ 297,704$ 271,612$ 277,626$ Plan fiduciary net position
Contributions - employer 21,605$ 21,072$ 18,406$ 24,598$ 21,687$ 24,675$ Contributions - employee 297 308 303 310 - -
Net investment income 2,034 2,156 2,432 1,064 15,311 (12,256) Benefit payments (12,565) (12,903) (14,890) (15,764) (15,625) (16,048) Administrative expense (10) (51) (8) (23) (21) (22)
Net change in fiduciary net position 11,361 10,582 6,243 10,185 21,352 (3,651) Plan fiduciary net position -- beginning 15,084 26,445 37,027 43,270 53,455 74,807 Plan fiduciary net position -- ending (b) 26,445$ 37,027$ 43,270$ 53,455$ 74,807$ 71,156$ Net OPEB liability -- ending (a) - (b) 389,512$ 362,846$ 248,904$ 244,249$ 196,805$ 206,470$ Plan fiduciary net pos ition as a percentage of the total OPEB liability 6.36% 9.26% 14.81% 17.96% 27.54% 25.63%
Covered-employee payroll 237,926$ 236,885$ 245,622$ 261,187$ 249,162$ 244,497$ Net OPEB liability as a percentage of covered payroll 163.71% 153.17% 101.34% 93.51% 78.99% 84.45% Meas urement date June 30, 2017 June 30, 2018 June 30, 2019 June 30, 2020 June 30, 2021 June 30, 2022 Notes to the Required Supplementary Information
* Fiscal year 2018 was the first year of implementation, therefore, only six years are shown.

Fis cal Year
128
City of Sacramento
Required Supplementary Information
OPEB Schedule of Contributions
Last Ten Years* (in thousands)
2018 2019 2020 2021 2022 2023
Actuarially determined contributions 36,393$ 34,454$ 36,155$ 25,548$ 26,879$ 22,407$ Contributions in relation to the actuarially determined contribution 21,072 18,406 24,598 21,687 24,675 23,167 Contribution deficiency (excess) 15,321 16,048 11,557 3,861 2,204 (760) Covered-employee payroll 236,885$ 245,622$ 261,187$ 249,162$ 244,497$ 242,374$ Contributions as a percentage of covered-employee payroll 8.90% 7.49% 9.42% 8.70% 10.09% 9.56% Notes to the Required Supplementary Information
Valuation date: 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry age normal cost method
Amortization method Level percentage of payroll over a closed rolling 16 year period Asset valuation method Investment gains and losses spread over 5 year rolling period Inflation 2.50%
Salary Increase 2.75%
Investment rate of return 6.25%
Healthcare cost trend rate
Mortality CalPERS 2000-2019 Experience Study
Mortality Improvement Mortality projected fully generational with Scale MP-2021 * Fiscal year 2018 was the first year of implementation, therefore, only six years are shown.

Non-Medicare - 6.5% for 2023, decreasing to 3.75% for 2076 Medicare (Non-Kaiser) - 5.65% for 2023, decreased to an ultimate rate of 3.75% in 2076 Medicare (Kaiser) - 4.6% for 2022, decreasing to an ultimate rate of 3.75% in 2076 Fiscal Year
129

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130

OTHER GOVERNMENTAL FUNDS

Other governmental funds are nonmajor funds reported in the other governmental funds column of the governmental funds financial statements and include:

OTHER SPECIAL REVENUE FUNDS are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. These funds are generally required by statute, charter, or ordinance to finance specific governmental functions. The individual funds are listed in the other special revenue funds section of the ACFR.

OTHER DEBT SERVICE FUNDS are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest, or that are being accumulated for principal and interest maturing in future years. The individual funds are listed in the other debt service funds section of the ACFR.

OTHER CAPITAL PROJECTS FUNDS are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for governmental capital assets. The individual funds are listed in the other capital projects funds section of the ACFR.

PERMANENT FUNDS are used to account for and report resources that are held by the City which are legally restricted to the extent that only earnings may be used for purposes that support City programs. The individual funds are listed in the permanent funds section of the ACFR.

City of Sacramento
Other Governmental Funds
Combining Balance Sheet
June 30, 2023
(in thousands)
Other Other Other Total
Special Debt Capital Other
Revenue Service Projects Permanent Governmental
Funds Funds Funds Funds Funds
ASSETS
Cash and investments held by City 187,210$ 2,901$ 237,243$ 6,691$ 434,045$ Cash and investments held by fiscal agent - 11 - - 11
Receivables, net:

Taxes 6,970 - - - 6,970
Accounts 3,935 7 16,157 - 20,099
Loans 26,227 - - - 26,227
Intergovernmental 28,898 11,174 23,950 - 64,022
Leases 1,070 2,935 - - 4,005
Interest 638 25 267 28 958
Prepaid items 13 - - - 13
Restricted assets:

Cash and investments held by City 191 - 10,131 - 10,322 Cash and investments held by fiscal agent - 5,533 - - 5,533 Total assets 255,152
$ 22,586$ 287,748$ 6,719$ 572,205$

LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities:

Accounts payable 12,779 $ - $ 13,132$ -$ 25,911$ Accrued payroll 72 - - - 72
Due to other funds 2,198 - 1,435 - 3,633
Deposits 2,623 756 - - 3,379
Unearned revenue 794 - 10,547 - 11,341
Advances from other funds 20,413 - - - 20,413
Total liabilities 38,879 756 25,114 - 64,749
Deferred inflows of resources:

Unavailable revenue 28,139 11,174 23,484 - 62,797
Leases 1,046 2,850 - - 3,896
Total deferred inflows of resources 29,185 14,024 23,484 - 66,693 Fund balances:

Nonspendable:

Prepaid items 13 - - - 13
Leases 24 85 - - 109
Permanent fund principal - - - 578 578
Restricted:

Capital projects 29,156 - 253,800 - 282,956
Debt service 191 4,777 - - 4,968
Public works programs 21,885 - - - 21,885
Economic development programs 72,326 - - - 72,326
Other programs 71,832 - 1,965 6,141 79,938
Co
mmitted:

Capital projects 677 - - - 677
Debt service - 918 - - 918
OPEB 8 - - - 8
Other programs 19,952 - - - 19,952
Assigned:

Debt service - 2,026 - - 2,026
Unassigned (28,976) - (16,615) - (45,591)
Total fund balances 187,088 7,806 239,150 6,719 440,763 Total liabilities, deferred inflows of resources
and fund balances 255,152$ 22,586$ 287,748$ 6,719$ 572,205$ 131
City of Sacramento
Other Governmental Funds
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2023
(in thousands)
Other Other Other Total
Special Debt Capital Other
Revenue Service Projects Permanent Governmental
Funds Funds Funds Funds Funds
Revenues:

Taxes 12,819 $ - $ 3,334 $ - $ 16,153$ Intergovernmental 64,340 629 55,692 - 120,661 Charges for services 21,941 - 23 - 21,964 Fines, forfeits and penalties 338 - - - 338 Interest, rents, and concessions 4,045 1,826 3,180 275 9,326 Community service fees 250 - 31,001 - 31,251 Assessment levies 59,811 - 274 - 60,085 Contributions and donations 687 - 24,652 - 25,339 Miscellaneous 22 - 846 - 868 Total revenues 164,253 2,455 119,002 275 285,985 Expenditures:

Current:

General government 54,280 - 851 182 55,313 Police 6,635 - - - 6,635 Fire 2,960 - - - 2,960 Public works 29,978 - 9,761 - 39,739 Convention and cultural services 12,470 - - - 12,470 Youth, parks, and community enrichment 11,849 - 174 - 12,023 C
ommunity development 15,576 - 2,584 - 18,160 Library 9,200 - - - 9,200 Utilities 350 - - - 350 Capital outlay 7,578 - 81,133 - 88,711 Debt service:

Principal 1,040 10,939 1,893 - 13,872 Interest and fiscal charges 1,019 9,448 8,581 - 19,048 Total expenditures 152,935 20,387 104,977 182 278,481 Excess (deficiency) of revenues over
(under) expenditures 11,318 (17,932) 14,025 93 7,504 Other financing sources (uses):

Transfers in 8,146 17,704 9,148 - 34,998 Transfers out (5,617) - (1,488) - (7,105) Issuance of long-term debt - - 11,739 - 11,739 Total other financing sources (uses) 2,529 17,704 19,399 - 39,632 Changes in fund balances 13,847 (228) 33,424 93 47,136

Fund balances, beginning of year 173,241 8,034 205,726 6,626 393,627 Fund balances, end of year 187,088$ 7,806$ 239,150$ 6,719$ 440,763$ 132

OTHER SPECIAL REVENUE FUNDS

Other special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. These funds are generally required by statute, charter, or ordinance to finance specific government functions. The following other special revenue funds have been classified as nonmajor funds:

TRANSPORTATION AND DEVELOPMENT FUND is used to account for the receipts of taxes and fees which are used to maintain and repair streets, bridges, and bikeways as well as for traffic safety and community development activities.

CULTURE AND LEISURE FUND is used to account for a variety of cultural arts and leisure activities. Programs in the Culture and Leisure Fund include the Sacramento Zoo, Fairytale Town, Art in Public Places, Old Sacramento Market, H Street Theatre, Golf, Marina, the Crocker Master Trust, the Winchester G. and Mary Alice Felt Endowment, Marcy Friedman Art in Public Places, and Arts and Culture.

PARKS AND RECREATION FUND is used to account for a variety of parks programs and recreation activities. Programs in the Parks and Recreation Fund include START, Special Program Donations, Ethel MacLeod Hart Trust, Land Park, and Quimby.

ECONOMIC DEVELOPMENT FUND is used to account for the receipts and disbursements of former redevelopment property tax revenues as well as the Brownfield Revolving Loan Program and the Sheraton Master Owner Participation Agreement (MOPA).

THE OPERATING GRANTS FUND is used to account for federal, state and other agency grants received for various specific purposes.

CCOMWP FUND is used to account for the revenue and expenditures associated with the City/County Office of Metropolitan Water Planning (CCOMWP). The CCOMWP was formed to develop the Water Forum Agreement with objectives to provide a reliable water supply for planned development to the year 2030 and to preserve the region’s Lower American River.

SPECIAL DISTRICTS FUND is used to account for a variety of programs that provide infrastructure maintenance and other services for specific areas of the City where special assessments or special taxes are levied.

The Special Districts Fund includes the Business Improvement Districts Program, the Landscaping and Lighting Districts Program, the Maintenance Benefit Area Program, and the Assessment District Maintenance Program.

CAL EPA FUND is used to account for the expenditures associated with the maintenance of the Joe Serna, Jr. California EPA Headquarters Building.

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City of Sacramento
Other Special Revenue Funds
Combining Balance Sheet
June 30, 2023
(in thousands)
Transportation Culture and Parks and Economic
and Development Leisure Recreation Development
Fund Fund Fund Fund
ASSETS
Cash and investments held by City 64,348$ 6,785$ 7,249$ 54,458$ Receivables, net:

Taxes - - - 6,970 Accounts 226 84 32 60 Loans - - - 26,227 Intergovernmental 1,273 - 81 - Leases - 748 322 - Interest 181 - 3 454 Prepaid items - - - - Restricted assets:

Cash and investments held by City - 191 - - Total assets 66,028$ 7,808$ 7,687$ 88,169$

LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities:

Accounts payable 1,294 $ 34 $ 82 $ 843 $ Accrued payroll - 15 25 - Due to other funds - - - - Deposits 1,875 163 - - Unearned revenue 725 22 - - Advances from other funds - 5,413 - 15,000 Total liabilities 3,894 5,647 107 15,843 Deferred inflows of resources:

Unavailable revenue 119 5 80 - Leases - 728 318 - Total deferred inflows of resources 119 733 398 - Fund balances:

Nonspendable:

Prepaid items - - - - Leases - 20 4 - Restricted:

Capital projects 22,268 15 3,079 - Debt service - 191 - - Public works programs 21,885 - - - Economic development programs - - - 72,326 Other programs - 1,365 4,179 - Committed:

Capital projects 154 523 - - OPEB - 8 - - Other programs 17,708 6
98 212 -
Unassigned - (1,392) (292) - Total fund balances (deficits) 62,015 1,428 7,182 72,326 Total liabilities, deferred inflows of resources
and fund balances 66,028$ 7,808$ 7,687$ 88,169$