Measure W
Public Safety Tax Fund
of the City of Stockton
Stockton, California
Independent Auditors’ Reports
and Financial Schedules
For the Years Ended June 30, 2023 and 2022
Attachment D
Attachment D
City of Stockton
Measure W Public Safety Tax Fund
For the Years Ended June 30, 2023 and 2022
Table of Contents
Page
Independent Auditors’ Report .................................................................................................................................... 1
Schedules of Revenues, Expenditures, and Change in Fund Balances........................................................................... 5
Notes to the Financial Schedules .................................................................................................................................... 6
Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Schedules Performed in Accordance with Government Auditing Standards .................................... 7
Attachment D
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Attachment D
200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
of City of Stockton
City of Stockton, California
Report on the Audit of the Financial Schedules
Opinion
We have audited the financial schedules of the Measure W Public Safety Tax Fund (the “Fund”) of the City of Stockton, California (the “City”) which comprise the schedules of revenues, expenditures and change in fund balance (the “Financial Schedules”) for the years ended June 30, 2023 and 2022, and the related notes to the Financial Schedules.
In our opinion, the financial schedules referred to above present fairly, in all material respects, the revenues, expenditures and change in fund balance of the Fund of the City, for the years ended June 30, 2023 and 2022 in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standard applicable to fi nancial audits contained in Governmental Auditing Standards , issued by the Comptroller General of the United States. Our responsibilities under tho se standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Schedules secti on of our report. We are required to be independent of the City and the Fund and to meet our other ethical responsibilities, in accordance w ith the relevant ethical requirements relating to our audit. We believe that the a udit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
As discussed in Note 1, the Financia l Schedules presents only the revenues, expenditures and change in fund balance of the Fund and do not purport to, and do not, present fairly the financial pos ition of the City of Stockton, California, as of June 30, 2023 and 2022, the changes in its financial position, or where a pplicable, its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Schedules
Management is responsible for the pr eparation and fair presentation of the Financial Schedules in accordance with accounting principles generally accepted in the United Stat es 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.
Attachment D
To the Honorable Mayor and the Members of the City Council of Stockton
Stockton, California
2 In preparing the Financial Schedules, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Fund’s ability to continue as a going concern for twelve months beyond the financial st atement date, including any currently known information that may raise substantial doubt shortly thereafter.
Auditors’ Responsibilities for the Audit of the Financial Schedules
Our objectives are to obtain reasonable assurance about whether the Financia l Schedules as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
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 auditing standards ge nerally accepted in the United States of America 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 ove rride 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.
In performing an audit in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal c ontrol relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal cont rol-related matters that we identified during the audit.
Attachment D
To the Honorable Mayor and Members of the City Council
of City of Stockton
City of Stockton, California
3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards , we have also issued our repor t dated March 13, 2024, on our consideration of the City’s internal control over the Fund’s 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 effec tiveness of the City’s internal control over Fund’s financial reporting or on compliance. That report is an integr al part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over the Fund’s financial reporting and compliance.
Santa Ana, California
March 13, 2024
Attachment D
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Attachment D
City of Stockton
Measure W Public Safety Tax Fund
Schedules of Revenues, Expenditures, and Change in Fund Balance For the Years Ended June 30, 2023 and 2022
See accompanying Notes to the Financial Schedules.
5 Police Fire Total Police Fire Total
REVENUES :
Tax es:
Sales - levied by City 8,289,088$ 8,289,088$ 16,578,176$ 7,412,488$ 7,412,487$ 14,824,975$ Investment income (loss) (39,929) (35,537) (75,466) (117,656) (105,558) (223,214) Total revenues 8,249,159 8,253,551 16,502,710 7,294,832 7,306,929 14,601,761 EXPENDITURES - PUBLIC S AFETY:
Payroll:
Salaries 2,964,944 2,901,296 5,866,240 2,535,835 2,668,447 5,204,282 Benefits 2,932,215 2,953,595 5,885,810 2,507,590 2,576,580 5,084,170 Total payroll 5,897,159 5,854,891 11,752,050 5,043,425 5,245,027 10,288,452 Equipment, services and supplies:
Tax collection fee 145,833 145,833 291,666 131,673 131,674 263,347 Liability insurance 223,043 226,697 449,740 187,751 205,684 393,435 Vehicle rental charges 405,671 182,776 588,447 367,539 191,852 559,391 Radio rental charges 36,305 28,566 64,871 31,295 24,623 55,918 Materials and services 128,240 4,169 132,409 206,999 16,783 223,782 Fuel charges 138,854 31,552 170,406 129,590 33,257 162,847 Capital outlay/equipment 10,462 102,294 112,756 - 877,809 877,809 Total equipment, services and sup plies 1,088,408 721,887 1,810,295 1,054,847 1,481,682 2,536,529 Total expenditures 6,985,567 6,576,778 13,562,345 6,098,272 6,726,709 12,824,981 NET CHANGE IN FUND BALANCES 1,263,592 1,676,773 2,940,365 1,196,560 580,220 1,776,780 FUND BALANCES, BEGINNING OF YEAR 5,510,580 4,463,098 9,973,678 4,314,020 3,882,878 8,196,898 FUND BALANCES, END OF YEAR 6,774,172$ 6,139,871 $ 12,914,043 $ 5,510,580 $ 4,463,098 $ 9,973,678 $ 2023 2022
Attachment D
City of Stockton
Measure W Public Safety Tax Fund
Notes to the Financial Schedules
For the Years Ended June 30, 2023 and 2022
6 Note 1 – Summary of Significant Accounting Policies
A. Description of Reporting Entity
The Measure W Public Safety Tax Fund (the “Fund”) of the City of Stockton, California (the “City”) accounts for the Measure W Taxes collected a nd spent for police and fire purposes. The Fund is included in the basic financial statements of the City. These financial schedules are intended to present only the revenues, expenditures and change in fund balance of the Fund of the City. It does not present fairly the financial position of the Fund or the City, nor the change in financial position of the City in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The accounting policies of the Fund conform to U.S. GAAP as they are applicable to governmental units. The Governmental Accounting Standards Board (the “GASB”) is the standard setting body for establishing governmental accounting and financial reporting principles. The more significant policies reflected in the financial schedules are summarized below.
B. Basis of Presentation, Measurement Focus and Basis of Accounting
The activities of the Fund are recorded in a special re venue fund and accounted for using the modified accrual basis of accounting. Special revenue funds are used to account for the proceeds of specific revenue sources (other than major capital projects) that are legally restricted to expenditures for specified purposes. Under the modified accrual basis of accounting, revenues are recognized wh en they become susceptible to accrual (i.e. both measurable and available). Measurable means that the amount of the transaction can be determined. Available means the funds are collectible within 90 days after y ear-end. Expenditures of governmental funds are generally recognized when the related fund liability is incurred.
C. Sales and Use Tax – Measure W
The people of the City approved Measure W on November 2, 2004, which authorized Ordinance No. 038-04 CS that added a new Part of Chapter 8 of the Stockton Muni cipal Code. This Ordinance provided authorization for an additional one-quarter of one percent transaction and use ta x, the proceeds of which shall be used to maintain current police and fire protection service levels and to contract with the State of California Department of Tax and Fee Administration to perform all functions incident to the administration and operation of the tax.
D. Allocation of Revenue and Expenditures between Police and Fire Department
Tax revenue collected is distributed evenly between th e Police and Fire Department. Investment expense and investment income are allocated between the Police and Fire Department based on balance reduced by expenditures incurred in each department during the year . All other expenditures are recorded based on actual amount incurred in respective department.
Attachment D
200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
REPORT ON INTERNAL CONTRO
L OVER FINANCIAL REPORTING AND ON COMPLIANCE AND
OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL SCHEUDLES PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Independent Auditors’ Report
To the Honorable Mayor and Members of the City Council
of the City of Stockton
City of Stockton, California
We have audited in accordance with the auditing standards generally accepted in the United States of America and the standard applicable to the fi nancial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the schedules of revenues, expenditures and change in fund balance (the “Financial Schedules”) of the Measure W Public Safe ty Tax Fund (the “Fund”) of the City of Stockton , California (the “City”), for the years ended June 30, 2023 and 2022, and the related notes to the Financial Schedules, and have issued our report thereon dated March 13, 2024. Our report contained an explanatory paragraph describing that the schedules only presents the revenues, expenditures and change in fund balance of the Fund and not the City.
Report on Internal Control Over Financial Reporting
In planning and performing our audits of the Financial Sche dules, we considered the City’s internal control over the Fund’s financial reporting (“internal control”) as a basis for designing the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the Financial Schedules, but not for the purpose of expressing an opinion on the effectiveness of City’s internal control over the Fund’s financial reporting. Accordingly, we do not express an opinion on the effectiveness of City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assi gned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatemen t of the Fund’s financial schedules will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over the Fund’s Financial Schedules was for the limited purpose described in the first paragraph of this section and was not designed to id entify all deficiencies in inte rnal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audits we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.
Attachment D
To the Honorable Mayor and Members of the City Council
of City of Stockton
City of Stockton, California
8 Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether th e Financial Schedules are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contr acts, and grant agreements, noncompliance with which could have a direct and material effect on the determina tion of Financial Schedules amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance as they relate to the Fund. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal c ontrol and compliance. Accordingly, this communication is not suitable for any other purpose.
Santa Ana, California
March 13, 2024
Attachment D