Turlock City Council
March 25, 2025

71 NOTE 8 – NET POSITION AND FUND BALANCES (Continued)

B. Fund Balances

Governmental fund balances represent the net current assets of each fund. Net current assets generally represent a fund’s cash, receivables, and deferred ou tflows of resources, less its liabilities and deferred inflows of resources. Portions of a fund’s balance may be restricted, committed, or assigned for future expenditure.

The City’s fund balances are classified based on spending const raints imposed on the use of resources. For programs with multiple funding sources, the City prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and Unassigne d. Each category in the following hierarchy is ranked according to the degree of spending constraint:

Nonspendable represents balances set aside to indicate items do not represen t available, spendable resources even though they are a component of assets. Assets not expected to be converted to cash, such as prepaids, notes receivable, and property held for resal e, are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed, or assigned, then nonspendable amounts are required to be presented as a component of the applicable category.

Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation that requires the resource s to be used only for a specific purpose.

Encumbrances and nonspendable amounts subject to restrictions a re included along with spendable resources.

Committed fund balances have constraints imposed by resolution of the Cit y Council that may be altered only by formal action of the City Council. Encumbrances and nonspendable amounts subject to council commitments are included along with spendable resources.

Assigned fund balances are amounts constrained by the City’s intent to b e used for a specific purpose, but are neither restricted nor committed. Intent is ex pressed by the City Council or its designee and may be changed at the discretion of the City Counc il or its designee, the City Manager.

This category includes encumbrances; nonspendables, when it is the City’s intent to use proceeds or collections for a specific purpose; and residual fund balances, if any, of Special Revenue and Capital Projects Funds that have not been restricted or committed.

Unassigned fund balance represents residual amounts that have not been res tricted, committed, or assigned. This includes the residual General Fund balance and r esidual fund deficits, if any, of other governmental funds.

72 NOTE 8 – NET POSITION AND FUND BALANCES (Continued)

B. Fund Balances (Continued)

Capital
Projects Fund
Former Gas Tax/ Other
General LMI Housing Street Facility Governmental
Fund Balance Classifications Fund Fund Improvement ARPA Fees Funds Tot al Nonspendable:

Items not in spendable form:

Prepaids 1,758,303 $ - $ - $ - $ - $ - $ 1,758,303$ Loans receivable 5,058 - - - - - 5,058 Due from developers 20,041 - - - 267,243 - 287,284 Leases receivable 5,837 - - - - - 5,837 Total Nonspendable Fund Balances 1,789,239 - - - 267,243 - 2,056,482 Restricted for:

Low and moderate income housing - 2,338,527 - - - 5,171,766 7,510,293 Capital expenditures - - 20,720,823 - 14,308,248 - 35,029,071 Assessment districts - - - - - 21,415,140 21,415,140 Resource conservation - - - - - 1,292,744 1,292,744 Public safety - - - - - 887,028 887,028 Sports facilities - - - - - - - Development impact fees - - - - - 75,551 75,551 Total Restricted Fund Balances - 2,338,527 20,720,823 - 14,308,248 28,842,229 66,209,827 Committed to:

Public safety 1,671,749 - - - - 158,197 1,829,946 Tourism 1,599,584 - - - - - 1,599,584 Capital expenditures - - - - - 27,217,574 27,217,574 Total Committed Fund Balances 3,271,333 - - - - 27,375,771 30,647,104 Assigned to:

Compensated absences 536,270 - - - - - 536,270 Total Assigned Fund Balances 536,270 - - - - - 536,270 Unassigned:

General Fund 46,217,730 - - - - - 46,217,730 Other governmental fund deficits - - - (2,612,681) - (146) (2,612,827) Total Unassigned Fund Balances 46,217,730 - - (2,612,681) - (146) 43,604,903 Total Fund Balances 51,814,572 $ 2,338,527 $ 20,720,823 $ (2,612,681) $ 14,575,491 $ 56,217,854 $ 143,054,586 $ Special Revenue Funds

C. Emergency/Contingency Reserve

The City established a General Fund Emergency/Contingency Reser ve with Resolution 2011-123.

The required balance of the Emergency/Contingency Reserve is $6 ,500,000, which is reported within the unassigned fund balance of the General Fund.

D. Fund Balance/Net Position Deficits

The following funds had deficit fund balances or net position as of June 30, 2023:

Amount
Major Governmental Fund:

ARPA 2,612,681 $
Nonmajor Governmental Fund:

Home ARP 146
Nonmajor Enterprise Fund:

SRWA Operations 372,608
Internal Service Funds:

Information Technology 1,094,913

The deficit in the ARPA Special Revenue Fund will be eliminated when the unearned revenue is recognized upon the completion of the capital projects funded by the ARPA grant.

The deficit in the Home ARP Special Revenue Fund will be eliminated by future revenues.

The deficit in SRWA Operations E nterprise Fund were primarily d ue to the recognition of the net pension liability, total OPEB liability and related deferred ou tflows/inflows of res ources. The City will fund the liabilities over time through annual contributions to cure the deficits.

73 NOTE 8 – NET POSITION AND FUND BALANCES (Continued)

D. Fund Balance/Net Position Deficits (Continued)

The deficits in the Information Technology and Engineering Internal Service Funds were primarily due to the recognition of the net pension liability, total OPEB liability and related deferred outflows/inflows of resources. The City will fund the liabilities over time thro ugh annual contributions to cure the deficits.

NOTE 9 – PENSION PLANS

A. Plan Descriptions and Su mmary of Balances by Plan

The City has two defined benefit pension plans, one Miscellaneo us Plan and one Safety Plan (Fire and Police) (the Plans). The Miscellaneous Plan is an Agent Mul tiple-Employer Plan and the Safety Plan is a Cost-Sharing Multiple-Employer Plan. Benefit provisio ns under the Plans are established by State statute and City Ordinance . All qualified permanent and p robationary employees are eligible to participate in the Plan for which they are an eligible member b ased on their employment position with the City.

Both Plans are administered by the California Public Employees’ Retirement System (CalPERS) which acts as a common investment and administrative agent for its participating member employers.

CalPERS issues publicly available reports that include a full d escription of the pension plans regarding benefit provisions, a ssumptions, and membership infor mation that can be found on the CalPERS website.

For purposes of measuring the net pension liability and deferre d outflows/inflows of resources related to pensions, and pension expense, information about the fiducia ry net position of the Miscellaneous and Safety Plans and additions to/deductions from the Plans’ fi duciary net position have been determined on the same basis as they are reported by the CalPER S Financial Office. For this purpose, benefit payments (including refunds of employee contri butions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

Below is a summary of the deferred outflows of resources, net p ension liability, and deferred inflows of resources by Plan:

Net Pension
Liability/
Deferred Proportionate Deferred
Outflows of Share of Net Inflows of
Resources Pension Liability Resources
Miscellaneous 16,264,164 $ 52,628,361 $ 2,649,797 $ Safety (Fire and Police) 23,742,794 47,369,022 4,070,025 Total 40,006,958 $ 99,997,383 $ 6,719,822 $

Each Plan is discussed in detail below.

74 NOTE 9 – PENSION PLANS (Continued)

B. Miscellaneous Plan

Benefits Provided – CalPERS provides service ret irement and disab ility benefits, annual cost of living adjustments, and death benefits to Plan members, who mus t 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 eligib le to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disabil ity benefits after 10 years of service.

The death benefit is one of the following: the Basic Death Bene fit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjust ments for each plan are applied as specified by the Public Employees’ Retirement Law. The Public E mployees Pension Reform Act of 2013 (PEPRA), Assembly Bill 340, i s applicable to employees new to CalPERS and hired after December 31, 2012.

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

Tier 1 PEPR A
Prior to On or after
Hire Date January 1, 2013 January 1, 2013
Benefit Formula 2.7%@55 2.0%@62
Benefit Vesting Schedule 5 years service 5 years service Benefit Payments Monthly for life Monthly for life
Retirement Age 50-67 52-67
Monthly Benefits, as a Percentage
of Eligible Compensation 2.0% to 2.7% 1.0% to 2.5%
Required Employee Contribution Rates 8.000% 6.250%
Required Employer Contribution Rates 10.060% 10.060%
Required UAL Contribution
Miscellaneous
$4,649,211

Beginning in fiscal year 2016, CalPERS collects employer contri butions for the Plan as a percentage of payroll for the normal cost portion as noted in the rates ab ove and as a dollar amount for contributions toward the unfunded accrued liability (UAL). The dollar amounts are billed on a monthly basis or the City can elect a lump sum payment option. The City’s required contribution for the UAL in the Miscellaneous Plan was $4,649,211 for the year-ended June 3 0, 2023, which was made under the lump sum payment option.

Employees Covered – As of the June 30, 2021 actuarial valuation date and the June 30, 2022 measurement date, the following employees were covered by the benefit terms for the Plan:

June 30, 2022 June 30, 2021
Inactive employees or beneficiaries currently receiving benefits 282 273 Inactive employees entitled to but not yet receiving benefits 3 41 327 Active employees 207 198
Total 830 798
Miscellaneous

75 NOTE 9 – PENSION PLANS (Continued)

B. Miscellaneous Plan (Continued)

Contributions – Section 20814(c) of the California Public Employees’ Retireme nt Law requires that the employer contribution rates for all public employers be det ermined on an annual basis by the actuary and shall be effective on the July 1 following notice o f a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS.

The actuarially determined rate is the estimated amount necessa ry 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 be tween the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as Plan member contribution requirements a r e c l a s s i f i e d a s P l a n m e m b e r contributions.

Net Pension Liability – The City’s net pension liability for the Miscellaneous Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of June 30, 2022, using an annual actuarial valuation as of June 30, 2021, rolled forward to June 30, 2022, using standard update procedures. A s ummary of principal assumptions and methods used to determine the net pension liability is shown in Note 9D below.

Changes in the Net Pension Liability – The changes in the net p ension liability for the Miscellaneous Plan follows:

Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability/(Asset)
Balance at June 30, 2021 165,069,706 $ 131,724,344 $ 33,345,362 $ Changes in the year:

Service cost 2,467,656 - 2,467,656 Interest on the total pension liability 11,365,458 - 11,365,458 Differences between actual and
expected experience (3,623,085) - (3,623,085) Changes in assumptions 5,861,672 - 5,861,672 Changes in benefit terms - - - Plan to Plan resource movement - - - Contribution - employer - 5,886,502 (5,886,502) Contribution - employee - 1,052,686 (1,052,686) Net investment income (loss) - (10,068,430) 10,068,430 Administrative expenses - (82,056) 82,056 Benefit payments, including refunds of
employee contributions (7,650,663) (7,650,663) - Other miscellaneous income/expense - - - Net changes 8,421,038 (10,861,961) 19,282,999 Balance at June 30, 2022 173,490,744 $ 120,862,383 $ 52,628,361 $ Increase (Decrease)

76 NOTE 9 – PENSION PLANS (Continued)

B. Miscellaneous Plan (Continued)

Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The following presents the net pension liability for the Plan, calculated using the di scount rate for the 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:

1% Decrease 5.90%
Net Pension Liability 76,790,628 $
Current Discount Rate 6.90%
Net Pension Liability 52,628,361 $
1% Increase 7.90%
Net Pension Liability 32,814,405 $

Pension Expense and Deferred Outflows/Inflows of Resources Related to Pensions – For the year ended June 30, 2023, the City recognized pension expense of $(906,817). At June 30, 2023, the City reported deferred outflows/inflows of resources related to pensions for the Plan from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to measurement date 6,540,569$ - $ Differences between actual and expected experience - (2,649,797) Changes in assumptions 3,840,406 -
Net differences between projected and
actual earnings on Plan investments 5,883,189 - Total 16,264,164 $ (2,649,797) $

$6,540,569 reported as deferred ou tflows of resources related t o contributions subsequent to the measurement date will be recognize d as a reduction of the net p ension liability in the year ended June 30, 2024. Other amounts re ported as deferred outflows of r esources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Year Ended Annual
June 30 Amortization
2024 1,380,224 $
2025 1,493,949
2026 375,582
2027 3,824,043
2028 -
Thereafter -

Actuarial assumptions and information regarding the discount rate are discussed in Note 9D below.

77 NOTE 9 – PENSION PLANS (Continued)

C. Safety Plan

The City’s Safety Plan is part of the public agency cost-sharin g multiple-employer defined benefit pension plan (PERF C), which is administered by CalPERS. PERF C consists of a miscellaneous pool and a safety pool (also referred to as “risk pools”), whic h are comprised of individual employer miscellaneous and safety rate pl ans, respectively. Individual e mployers may sponsor more than one miscellaneous and safety rate plan. The employer participates i n one cost-sharing multiple-employer defined benefit pension plan regardless of the number of rate p lans the employer sponsors. The City sponsors four rate plans (two fire and two police) within the safety risk pool.

Benefits Provided – CalPERS provides service ret irement and disab ility benefits, annual cost of living adjustments, and death benefits to Plan members, who mus t 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 eligib le to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disabil ity benefits after 10 years of service.

The death benefit is one of the following: the Basic Death Bene fit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjust ments for each plan are applied as specified by the Public Employees’ Retirement Law. PEPRA, Assem bly Bill 340, is applicable to employees new to CalPERS and hired after December 31, 2012.

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

Tier 1 PEPR A
Prior to On or after
Hire Date January 1, 2013 January 1, 2013
Benefit Formula 3.0%@50 2.7%@57
Benefit Vesting Schedule 5 years service 5 years service Benefit Payments Monthly for life Monthly for life
Retirement Age 50-55 50-57
Monthly Benefits, as a Percentage
of Eligible Compensation 3.0% 2.0% to 2.7%
Required Employee Contribution Rates 9.000% 13.000%
Required Employer Contribution Rates 23.750% 12.780%
Required UAL Contribution $ 1,350,866 $ 5,084 Safety - Fire

Tier 1 PEPR A
Prior to On or after
Hire Date January 1, 2013 January 1, 2013
Benefit Formula 3.0%@50 2.7%@57
Benefit Vesting Schedule 5 years service 5 years service Benefit Payments Monthly for life Monthly for life
Retirement Age 50-55 50-57
Monthly Benefits, as a Percentage
of Eligible Compensation 3.0% 2.0% to 2.7%
Required Employee Contribution Rates 9.000% 13.000%
Required Employer Contribution Rates 27.110% 12.780%
Required UAL Contribution $ 2,001,301 $ 2,338 Safety - Police

78 NOTE 9 – PENSION PLANS (Continued)

C. Safety Plan (Continued)

Beginning in fiscal year 2016, CalPERS collects employer contributions for the cost-sharing plan as a percentage of payroll for the normal cost portion as noted in t he rates above and as a dollar amount for contributions toward the UAL. The dollar amounts are billed on a monthly basis or can be paid in a lump sum at a reduced amount. The City elected to make the lump sum contributions, and the required contribution for the UAL was $3,359,589 in fiscal year 2023, as shown in the table above.

Contributions – Section 20814(c) of the California Public Employees’ Retireme nt Law requires that the employer contribution rates for all public employers be det ermined on an annual basis by the actuary and shall be effective on the July 1 following notice o f a change in the rate. Funding contributions for the Safety Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amoun t necessary to finance the costs of benefits earned by employees during the year, with an additiona l amount to finance any unfunded accrued liability. The City is required to contribute the diffe rence between the actuarially determined rate and the contribution rate of employees.

For the year ended June 30, 2023, the employer contributions to the Safety Plan were $5,799,503.

Pension Liability, Pension Expens e, and Deferred Outflows/Inflo ws of Resources Related to Pensions – For purposes of measuring the net pension liability and deferre d outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Safety Plan and additions to/deductions from the Safety Pla n’s fiduciary net position have been determined on the same basis as they are reported by the CalPER S Financial Office. For this purpose, benefit payments (including refunds of employee contri butions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

As of June 30, 2023, the City reported a net pension liability for its proportionate share of the net pension liability of the Safety Plan of $47,369,022.

The City’s net pension liability for the Safety Plan is measure d as the proportionate share of the net pension liability. The net pension liability of the Safety Plan is measured as of June 30, 2022, and the total pension liability for the Safety Plan used to calculate t he net pension liability was determined by an actuarial valuation as of June 30, 2021, rolled forward to J une 30, 2022, using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plan relative t o the projected contributions of all participating employers, actuaria lly determined. The City’s pro portionate share of the net pension liability for the Safety Plan as of June 30, 2022 and 2021, was as follows:

Safety
(Fire and Police)
Proportion - June 30, 2021 0.67%
Proportion - June 30, 2022 0.61%
Change - Increase (Decrease) (0.06%)

79 NOTE 9 – PENSION PLANS (Continued)

C. Safety Plan (Continued)

For the year ended June 30, 2023, the City recognized pension e xpense of $(1,248,678) for the Safety Plan. At June 30, 2023, the City reported deferred outfl ows of resources and deferred inflows of resources related to pensions for the Safety Plan from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to measurement date 5,799,503$ - $ Differences between actual and expected experience 1,960,432 (514,390) Differences in actual and proportional contribution - - Changes in assumptions 4,776,231 -
Change in employer's proportion and differences
between the employer’s contributions and the
employer’s proportionate share of contributions 3,726,397 (3,555,635) Net differences between projected and actual earnings
on plan investments 7,480,231 -
Total 23,742,794 $ (4,070,025) $

$5,799,503 reported as deferred ou tflows of resources related t o contributions subsequent to the measurement date will be recognize d as a reduction of the net p ension liability in the year ended June 30, 2024. Other amounts re ported as deferred outflows of r esources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Year Ended Annual
June 30 Amortization
2024 4,151,319 $
2025 3,319,925
2026 1,838,986
2027 4,563,036
2028 -
Thereafter -

Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate – The following presents the City’s proportionate share of the net pension liability for the Safety Plan as of the measurement date, calculated using the discount rate for the Safety Plan, as well as what the City’s proportionate share of the net pension liabilit y 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:

Safety
1% Decrease 5.90%
Net Pension Liability 71,117,641 $
Current Discount Rate 6.90%
Net Pension Liability 47,369,022 $
1% Increase 7.90%
Net Pension Liability 27,959,890 $

Actuarial assumptions and information regarding the discount rate are discussed in Note 9D below.

80 NOTE 9 – PENSION PLANS (Continued)

D. Information Common to the Miscellaneous and Safety Plans

Actuarial Assumptions – For the measurement period ended June 30, 2022, the total pen sion liabilities were determined by rolling forward the June 30, 202 1 total pension liability. The June 30, 2021 total pension liabilities were based on the following actuarial methods and assumptions:

Miscellaneous and Safety (Fire and Police)
Valuation Date June 30, 2021
Measurement Date June 30, 2022
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:

Discount Rate 7.15%
Inflation Rate 2.500%
Payroll Growth 2.750%
Projected Salary Increase (1)
Investment Rate of Return 7.15% (2)
Mortality Derived using CalPERS Membership
Data for all Funds (3)
Post Retirement Benefit Increase The lesser of contract cost of living adjustment (COLA) or 2.50% until Purchasing Power
Protection Allowance floor on Purchasing Power
applies, 2.50% thereafte
r
(1) Depending on age, service and type of employment
(2) Net of pension plan investment expenses, including inflation (3) The mortality table used was developed based on CalPERS’ specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre- retirement and post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumption report from December 2017 that can be found on the CalPERS website.

The underlying mortality assumptions and all other actuarial as sumptions used in the June 30, 2021 valuation were based on the results of a December 2017 actuaria l experience study for the period 1997 to 2015. Further details of the Experience Study can be fo und on the CalPERS website under Forms and Publications.

Discount Rate – The discount rate used to mea sure the total pension liabiliti es for the Plans was

7.15%. The projection of cash fl ows used to determine the disco unt rate for the Plans assumed that contributions from all plan members in the Public Employees Ret irement Fund (PERF) will be made at the current member contributi on rates and that contributions from employers will be made at statutorily required rates, actua rially determined. Based on th ose assumptions, the Plans’ fiduciary net positions were projected to be available to make all projec ted future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liabilities.

The long-term expected rate of return on pension plan investmen ts was determined using a building- block method in which expected future real rates of return (exp ected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

81 NOTE 9 – PENSION PLANS (Continued)

D. Information Common to the Miscellaneous and Safety Plans (Co ntinued)

In determining the long-term expected rate of return, CalPERS t ook into account both short-term and long-term market return expecta tions as well as the expected pe nsion fund cash flows. Using historical returns of all the funds’ asset classes, expected co mpound (geometric) returns were calculated over the short-term (first 10 years) and the long-te rm (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same pres ent value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and ad justed to account for assumed administrative expenses.

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

Asset Class (a)
Assumed Asset
Allocation
Real Return
Years 1-10 (b)
Real Return
Years 11+ (c)
Public Equity 50.00% 4.80% 5.98%
Fixed Income 28.00% 1.00% 2.62%
Inflation Assets 0.00% 0.77% 1.81%
Private Equity 8.00% 6.30% 7.23%
Real Estate 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% -0.92%
Total 100.00%
(a) In the CalPERS Annual Comprehensive Financial Report, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-Term Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities. (b) An expected inflation of 2.00% used for this period. (c) An expected inflation of 2.92% used for this period.

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

NOTE 10 – POST-EMPLOYMENT HEALTH CARE BENEFITS

A. Defined Benefit Other Post- Employment Benefit (OPEB) Plan

Plan Description – The City administers a single employer defined benefit (implici t subsidy) post- employment health care plan pursuant to negotiated Memoranda of Understanding (MOU) and Schedules of Benefit (Schedule) with its employee bargaining un its. No assets have been accumulated in a trust for the payment of benefits that meets t he criteria in paragraph 4 of GASB Statement No. 75.

82 NOTE 10 – POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued)

A. Defined Benefit Other Post-Em ployment Benefit (OPEB) Plan (Continued)

The City offers medical, dental and vision benefits to its empl oyees, retirees, and their dependents.

However, the City does not pay for the cost of retiree health p remiums. The MOUs and Schedule are as follows:

Management/Confidential Employees covered by the Management and/or Confidential Employees Schedule of Benefits and Employees covered by Turlock Management Association - Public Safety MOU
Miscellaneous Employees covered by Turlock City Employees Associ ation MOU Police Employees covered by Turlock Associated Police Officers M OU Fire Employees covered by Turlock Firefighters Local #2434 MOU

In general, employees are required to retire from the City and be members of their respective covered group for 10-15 years to be eligible to receive a benefit from their respective plan. The retiree has the option to continue on the City’s self-insured health plan (and pay 100% of the premium for continued participation), to become a member of a non-City group plan, or to purchase an individual health insurance policy. For retirees who choose to remain on the City’s health plan, this eligibility terminates when the retiree becomes eligible for Medicare benefits, reache s age 65, is deceased, or chooses to voluntarily leave the plan, whi chever comes first. Spousal elig ibility requirements vary with each employment plan. The City currently has 16 retirees who have ch osen to remain on the City’s health plan post-employment.

Funding Policy – The City pays the expenses for the plan on a pay-as-you-go ba sis and the retirees that participate in the plan pay the premiums on a monthly basis.

Employees Covered by Benefit Terms – Membership in the plan consisted of the following at the valuation date of July 1, 2021:

Valuation Date
July 1, 2021
Active employees 319 $
Inactive employees or beneficiaries currently receiving benefit payments 16 Inactive employees entitled to but not yet receiving benefit payments - Total 335$

83 NOTE 10 – POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued)

A. Defined Benefit Other Post-Em ployment Benefit (OPEB) Plan (Continued)

Total OPEB Liability Actuarial Methods and Assumptions – The City’s total OPEB liability was measured as of June 30, 2023, and the total OPEB liability used to calculate the total OPEB liability was determined by an actuarial valuation dated July 1, 2021, th at was rolled forward using standard update procedures to determine the total OPEB liability as of J une 30, 2023, based on the following actuarial methods and assumptions:

Actuarial Assumptions
Valuation Date July 1, 2021
Measurement Date June 30, 2023
Actuarial Cost Method Entry Age
Actuarial Assumptions:

Discount Rate 4.13%
Inflation 2.63%
Payroll Growth 3.00%
Mortality Rate RP 2014 Mortality Table projected to 2024 with S cale BB Healthcare Trend Rate 8% in 2020 and will decline to 4.5% in 202 5 and later years

The underlying mortality assumptions were based on the RP 2014 Mortality Table Projected to 2024 with Scale BB and all other actuarial assumptions used in the J uly 1, 2019 valuation were based on the results of a July 1, 2019 actuarial valuation.

Discount Rate – The discount rate used to measure the total OPEB liability was 4.09%, the single rate of return that, when applied to all projected benefit paym ents, results in an actuarial present value of projected benefit payments equal to the total of the a ctuarial present value of projected benefit payments calculated using a yield or index rate for 20- year, tax-exempt general obligation municipal bonds with an average rating of AA/ Aa or higher (S&P Municipal 20 Year High Grade Rate Index).

Changes in Assumptions – The discount rate was modified from 2.10% to 4.09% and the infl ation rate was modified from 0.60% to 2.59%.

84 NOTE 10 – POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued)

A. Defined Benefit Other Post-Em ployment Benefit (OPEB) Plan (Continued)

Changes in Total OPEB Liability – The changes in the total OPEB liability follows:

Total OPEB
Liability
Balance at July 1, 2022 8,088,077 $
Changes Recognized for the Measurement Period:

Service cost 794,568
Interest on the total OPEB liability 363,300
Changes in benefit terms -
Differences between expected and actual experience (17,761) Changes of assumptions (53,252)
Contributions from the employer -
Net investment income -
Administrative expenses -
Benefit payments (180,804)
Net changes 906,051
Balance at June 30, 2023 8,994,128 $

Sensitivity of the Total OPEB Liability to Changes in the Discount Rate and Healthcare Cost Trend Rates – The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a dis count rate that is 1-percentage-point lower or 1-percentage-point higher than the current discount rate:

Discount Rate -1% Discount Rate Discount Rate +1%

3.13% 4.13% 5.13%
10,474,561$ 8,994,128 $ 7,782,619 $ Total OPEB Liability/(Asset)

The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower (7.0% decreasing to 3.50%) or 1-percentage-point higher ( 9.0% decreasing to 5.50%) than the current healthcare cost trend rates:

Healthcare Cost
1% Decrease Trend Rates 1% Increase

7.00% Decreasing
to 3.50%

8.00% Decreasing
to 4.50%

9.00% Decreasing
to 5.50%
7,711,565$ 8,994,128 $ 10,474,561 $ Total OPEB Liability/(Asset)

85 NOTE 10 – POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued)

A. Defined Benefit Other Post-Em ployment Benefit (OPEB) Plan (Continued)

OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB – For the year ended June 30, 2023, the City rec ognized OPEB expense of $(212, 475). At June 30, 2023, the City reported deferred outflows/inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between actual and expected experience 71,835$ (5,690,461)$ Changes in assumptions 1,882,191 (7,177,358) Net differences between projected and actual earnings
on plan investments - -
Total 1,954,026 $ (12,867,819) $

Deferred outflows/inflows of resources related to OPEB will be recognized as part of OPEB expense as follows:

Year Ended Annual
June 30 Amortization
2024 (1,189,539) $
2025 (1,189,539)
2026 (1,189,539)
2027 (1,189,539)
2028 (1,189,539)
Thereafter (4,966,098)

B. Defined Contribution OPEB Plans

Plan Description – The City has post-employment healthcare defined contribution pl ans in place pursuant to negotiated Memoranda of Understanding (MOU) and Sch edules of Benefits (Schedule) with its employee bargaining units. The City’s funding obligati on for each plan is defined within the respective MOU or Schedule and is a specified percentage of pay roll. The plans and the City’s funding obligation for each plan are as follows:

Management/Confidential Employees covered by the Management and/ or Confidential Employees Schedule of Benefits

2.5% of base salary
Management/Confidential Employees covered by Turlock Management Association - Public Safety MOU
3% of base salary
Miscellaneous Employees covered by Turlock City
Employees Association MOU

2.0% of base salary
Police Employees covered by Turlock Associated
Police Officers MOU
3% of salary plus
3% of benefits (1)
Fire Employees covered by Turlock Firefighters
Local #2434 MOU
4% of salary plus
4% of benefits
(1) Effective 7/1/2021, benefits are calculated based on 56% of base salary.

The administration of benefits for each plan rests with the ind ividual plan administrators. The administrator for the Management/Confidential, Police Managemen t, and Miscellaneous plans is ICMA. The respective bargaining unit representatives administer the benefits for the Police and Fire plans.

86 NOTE 10 – POST-EMPLOYMENT HEALTH CARE BENEFITS (Continued)

B. Defined Contribution OPEB Plans (Continued)

For the Police and Fire plans, the City remits the contribution s as required by the respective MOU to each plan following each pay period. These plans have establish ed irrevocable trusts for their respective plan assets. As noted above, the plans’ trustees are responsible for the development of benefit levels that can be sustai ned from the contributions rec eived as well as the general plan administration. The City does not have any responsibility for nor involvement in these activities. Under the terms of the Police and Fire MOUs, the City is obligated to make current year contributions to the respective trusts based on the 3% and 4% of salary and benefit costs for Police and Fire, respectively. Management believes the City has no obligation to make any additional contributions to the trusts beyond the above amounts, and therefore there is no unfunded actuarial accrued liability the City is obligated to fund.

There are no vesting requirements to be eligible to use these f unds post-employment. The benefit can only be used to purchase post- employment health insurance. The retiree has the option to continue on the City’s self-insured health plan (and pay the 10 0% of the premium for continued participation), to become a member of a non-City group plan, or to purchase an individual health insurance policy. The benefit can then be used to provide assis tance with paying the monthly premium, as discussed in Note 10A above.

Contributions to each plan during fiscal year 2022-2023 were as follows:

Plan Contributions
Management/Confidential 143,834 $
Miscellaneous 220,572
Police 352,201
Fire 204,975

NOTE 11 – OTHER POST-EMPLOYMENT BENEFITS

A. Deferred Compensation Plans

City employees may defer a portion of their compensation under a City sponsored Deferred Compensation Plans created in accordance with Internal Revenue Code Sections 401 and 457.

Under the plans, participants are not taxed on the deferred por tion of their compensation until distributed to them; distributions may be made only at terminat ion, retirement, or death, or in an emergency as defined by the plans.

The plans are part of the public agency agent multiple-employer defined contribution plans that are administered by Mission Square Retirement (formerly ICMA RC). B enefit provisions under the plans are established by Cit y resolution. The City has no liability f or any losses incurred by the plans and does not participate in any gains, but does have the duty of du e care that would be required of an ordinary prudent investor. The City has a contract with Mission Square Retirement to manage and invest the assets of the plans. The administrator pools the ass ets of the plans with those of other participants and does not make separate investments for the Cit y. The assets in the plans are the sole property of the participants or their beneficiaries. Since the assets held under the plans are not the City’s property and are not subject to claims by general cr editors of the City, they have been excluded from these financial statements. The plans require inv estments to be stated at fair market value and it requires all gains and losses on plan investments to accrue directly to participant accounts. A summary of eligibility and employer contribution re quirements for the City’s plans are shown below by bargaining unit:

87 NOTE 11 – OTHER POST-EMPLOYMENT BENEFITS (Continued)

A. Deferred Compensati on Plans (Continued)

TCEA

Employees with Less than 15 Year s of Service – Match of up to 0 .5% of the employee’s base salary each pay period in which the employee contributes to the 401a Plan.

Employees with More than 15 Years of Service – Match of up to 1 .0% of the employee’s base salary each pay period in which the employee contributes to the 401a Plan. The increase in the City’s match is effective the 1st day of the month following the employee’s 15th anniversary.

Employees that waive the City’s medical insurance receive $475 per month to the RHS 457 Plan.

TAPO

Employees that waive the City’s medical insurance receive $475 per month to the RHS 457 Plan.

Fire

Employees that waive the City’s medical insurance receive $475 per month to the RHS 457 Plan.

TMAPS

2.5% of base salary for each pay period, provided the employee contributes 6.0% of base salary to the 401a Plan. Employees that waive the City’s medical insuranc e receive $475 per month to the RHS 457 Plan.

Confidential (Unrepresented)

0.5% of base salary for each pay period, provided the employee contributes 0.5% of base salary to the 401a Plan. Employees that waive the City’s medical insuranc e receive $475 per month to the RHS 457 Plan.

Management (Unrepresented)

Directors – 3.5% of base salary for each pay period, provided t he employee contributes 3.5% of base salary to the 401a Plan.

Managers – 2.5% of base salary for each pay period, provided th e employee contributes 2.5% to the 401a Plan.

Employees that waive the City’s medical insurance receive $475 per month.

The City’s required contributions for the year ended June 30, 2023, totaled $503,550.

NOTE 12 – RISK MANAGEMENT

The City maintains the Self-Insurance Internal Service Fund to account for and finance its risks of loss.

Under this program, the City is self-insured for workers’ compensation and employee health care.

The City uses a reinsurance agreement to reduce its exposure to large losses under the workers’ compensation program. Reinsurance permits recovery of a portion of losses from reinsurers, although it does not discharge the primary li ability of the City as direct insurer of the risks reinsured. The City does not report reinsured risks as liabilities unless it is probable that those risks will not be covered by reinsurers. Premiums paid to rei nsurers during the year ended J une 30, 2023, were $222,247, and the City’s deductible under the policy is $1.250 million, with coverage up to the statutory limit.

88 NOTE 12 – RISK MANAGEMENT (Continued)

The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disast ers. The City participates in the Central San Joaquin Valley Risk Management Authority (CSJVRMA), a publi c entity risk pool currently operating as a common risk management and insurance program for 54 cities . The purpose of CSJVRMA is to spread the adverse effect of losses among the members and to pu rchase excess insurance as a group, thereby reducing its expense. The City participates in the following pooled coverages through CSJVRMA:

Type of Coverage (Deductible) Coverage Limits
Liability ($100,000) 29,500,000 $
Automobile - for vehicles with values less than $25,000 ($500) 2 5,000

Effective July 1, 2021, the liability coverage declined from $39,000,000 to $29,500,000.

The City contributes its pro rata share of anticipated losses t o a pool administered by CSJVRMA. Should actual losses among participants be greater than the anticipate d losses, the City will be assessed its pro rata share of that deficiency. Conversely, if the actual losses are less than anticipated, the City will be refunded its pro rata share of t he excess. The City paid CSJVRMA premiums of $1,635,321 for coverage during the year ended June 30, 2023, and did not receive any fi scal year 2023 retrospective refunds. In addition, in fiscal year 2023, the City was invoiced for prior year payments for the previous five years in the amount of $21,251. Settled claims have not exceeded commerc ial excess liability coverage in any of the past three fiscal years.

In addition to the coverage through CSJVRMA, the City has purch ased the commercial policy coverage for property, vehicles, and contractors equipment with various sublimits up to $100,000,000:

Type of Coverage (Deductible)
Property, excluding flood ($25,000)
Property, flood ($100,000)
Vehicles ($5,000)
Fire Engines ($10,000)
Equipment ($2,500)

All unpaid claims that were probable liabilities that occurred prior to the year end and that were estimated based on actuarial studies or hist orical data were recorded in accordance with accounting principles generally accepted in the United States of America.

Fiscal Year Claims
For the Year Ended Claims Payable and Changes Claims Claims Payable June 30 July 1 in Estimates Payments June 30
2021 2,519,875$ 4,985,693 $ (5,008,376) $ 2,497,192 $ 2022 2,497,192 5,792,618 (5,759,151) 2,530,659 2023 2,530,659 6,295,030 (6,309,637) 2,516,052

NOTE 13 – COMMITMENTS AND CONTINGENCIES

A. Litigation

As of June 30, 2023, the City is a party to various lawsuits. T here are certain personal injury lawsuits that have been denied by the City Council. The outcome and even tual liability to the City, if any, in these cases is not known at this time. After reviewing these la wsuits with legal counsel, management estimates that the potential claims against the City, not cover ed by insurance, resulting from such litigation would not materially affect the financial statements of the City.

89 NOTE 13 – COMMITMENTS AND CONTINGENCIES (Continued)

B. Federal and State Grant Programs

The City participates in several Federal and State grant progra ms. These programs are subject to audit by the City’s independent accountants in accordance with the provisions of the federal Single Audit Act, as amended and applicable State requirements. No cos t disallowances have been proposed as a result of audits completed to date; however, thes e programs are still subject to further examination by the grantors and the amount, if any, of expendit ures which may be disallowed by the granting agencies cannot be determined at this time. The City e xpects such amounts, if any, to be immaterial.

C. Stanislaus Regional Water Authority

The City of Turlock and City of Ceres formed a joint powers aut hority, the Stanislaus Regional Water Authority (SRWA), in order to develop and finance the Regional Surface Water Supply Project (RSWSP). The project consists of the construction of a water tr eatment plant (WTP) and associated facilities with the capacity to treat up to 30 million gallons per day (MGD) of surface water from the Tuolumne River, of which 20 MGD would be available to the City of Turlock. The water will be provided by Turlock Irrigation District (TID). The RSWSP is als o expected to include a system of pipelines to transport the water to the project participants. T he environmental review process for the RSWSP and related terminal facilities for each Project Participant is complete.

On June 29, 2020, the SRWA awarded a design-build contract for the project to CH2M Hill Engineers, Inc., for an amount not to exceed $195,400,357, which includes all project components except the individual Project Participants’ terminal facilities. The RSWSP will be constructed in phases with the first phase anticipated to begin in the Fall of 2020. Construct ion is anticipated to be completed and the WTP operational in mid to late 2023.

In furtherance of the RSWSP, on February 2, 2020, the SRWA, the Project Participants, and TID entered into a Regional Surface Water Supply Phase 3 Project De sign and Construction Funding Agreement. Pursuant to the agreement, the City of Turlock will be entitled to 66.7% of the capacity of the RSWSP and the City of Ceres will be entitled to the remaining 33.3%.

The RSWSP project is expected to cost a total of $266,949,332. The City’s share of the total project is expected to be $180,448,813. The City expects $23,278,615 in grant funds and $157,170,198 of State Revolving Loan Funds or other outside financing for its s hare of the project. The City’s investment in the project at June 30, 2023, was $39,477,968.

Additional information regarding this project can be found at www.stanrwa.com. Financial statements for the SRWA can be obtained from the City at 156 South Broadway, Suite 270, Turlock, CA 95380.

90 NOTE 13 – COMMITMENTS AND CONTINGENCIES (Continued)

D. Construction and Other Commitments

The City had the following outstanding significant commitments at June 30, 2023:

Projects Amount
Stanislaus Regional Water Authority 911,290 $
Water Improvements 1,522,352
Sewer Improvements 1,905,618
Other Contracts 2,087,357
Well Rehabilitation Services 950,947
Improvements - Road Rehabilitation 347,822
Housing 14,259
Roads - Measure A 33,957
Arsenic Mitigation and ICF Treatment 5,384
PCE Monitoring/Remediation 49,313
Drinking Water Chlorination Project 86,746
Various Bus, Vehicle, and Equipment Purchases 45,965
Traffic Signals 48,734
Transit Center 361,476
Columbia Pool 279,458

NOTE 14 – REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES

A. Redevelopment Dissolution

On December 29, 2011, the Californi a Supreme Court upheld Assem bly Bill x1 26 (the Bill) that provides for the dissolution of all redevelopment agencies in t he State of California. This action impacted the reporting entity of the City that previously had r eported a redevelopment agency within the reporting entity of the City as a blended component unit.

The Bill provides that upon diss olution of a redevelopment agen cy, either the entity creating the redevelopment agency or another unit of local government will a gree to serve as the “successor agency” to hold the assets until they are distributed to other units of state and/or local government. By Resolution No. 2012-009 adopted on January 10, 2012, pursuant t o Health and Safety Code Section 34173, the City Council declared that the City would act in a s pecial limited capacity as Successor Agency for the dissolved Turlock Redevelopment Agency, effective February 1, 2012.

On July 1, 2018, the duties of the Turlock Oversight Board tran sferred to a new Stanislaus Countywide Consolidated Oversi ght Board, which will now be resp onsible for overseeing the winddown affairs of all successo r agencies in the County, inclu ding the Successor Agency to the Turlock Redevelopment Agency (the Successor Agency).

After enactment of the law, which occurred on June 28, 2011, re development agencies in California could not enter into new projects, obligations, or commitments. Subject to the control of a newly established oversight board, rem aining assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments).

The Bill directs the California State Controller (SCO) to revie w the proprietary of any transfers of assets between redevelopment agencies and other public bodies that occurred after January 1, 2011.

If the public body that received such transfers is not contract ually committed to a third party for the expenditure or encumbrance of those assets, the SCO is required to order the available assets to be transferred to the public body designated as the successor agency by the Bill.

91 NOTE 14 – REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES (Continued)

A. Redevelopment Dissolution (Continued)

In accordance with the timeline set forth in the Bill (as modif ied by the California Supreme Court on December 29, 2011) all redevelopment agencies in California wer e dissolved and ceased to operate as legal entities on February 1, 2012. Prior to that date, the final seven months of activity of the Turlock Redevelopment Agency continued to be reported in the go vernmental funds of the City. After the date of dissolution, the assets and activities of the disso lved Turlock Redevelopment Agency are reported in a fiduciary fund (private-purpose trust fund) in th e City’s financial statements. Included in prior year Turlock Redevelopment Agency financial statements wa s the Downtown Improvement Project Fund. This fund was originally established to account f or the construction of infrastructure improvements in the City’s downtown core. This project was fund ed with the proceeds of the 1999 Revenue Bonds along with sewer, water, and street funds. The re sidual monies in this fund after the completion of the project represented excess funds contributed by the sewer, water, and street funds.

Management decided to leave these residual funds in this fund t o provide a source of funds for future repairs. This fund is presented as a nonmajor fund in the governmental fund combining statements.

The activities of the Successor Agency are reported in the Succ essor Agency to the Redevelopment Agency Private-Purpose Trust Fund as the activities are under t he control of the Oversight Board.

The City provides administrative services to the Successor Agen cy to wind down the affairs of the former Turlock Redevelopment Agency.

Assembly Bill (AB) 1484 required the Successor Agency to complete two due diligence reviews – one for the low and moderate income housing assets of the Successor Agency (Housing DDR), and a second for all other balances of the Successor Agency (Non-Hous ing DDR). The due diligence reviews are to calculate the balance of unencumbered balances a s of June 30, 2012, available to be remitted to the County for disbursement to taxing entities. The Successor Agency submitted both due diligence reviews to the State Department of Finance for review and approval. The Department of Finance did not initially approve the Housing DDR, which indicated that the Successor Agency had no funds available for distributi on, and the State made adjustment s to the Housing DDR and instead made a demand for the return of funds totaling $1,001,062, which were held by the City’s Former LMI Housing Fund. The City remitted that amount to the County in De cember 2012. The Department of Finance did not initially approve the Non-Housing DDR, which in dicated that the Successor Agency had no funds available for distribution, and although the State made adjustments to the Non-Housing DDR, the adjusted balance still i ndicated that there were no fu nds available for distribution. The Successor Agency received its Finding of Completion in April 20 13, which means it can now utilize bond proceeds for projects consistent with the original bond covenants.

Cash and investments of the Successor Agency as of June 30, 202 3, are discussed in Note 3.

Information presented in the following footnotes represents oth er assets and liabilities of the Successor Agency as of June 30, 2023.

B. Long-Term Obligations

Current Year Transactions and Balances

The following bonds are obligations of the Authority payable fr om and secured by loan payments made by the former Turlock Redevelopment Agency. The bonds are secured by the tax increment revenues of the former Turlock Redevelopment Agency and have be en transferred to the Successor Agency. With the dissolution of the Turlock Redevelopment Agenc y discussed above, tax increment is no longer distributed, and instead the Successor Agency rece ives payments from the County’s Redevelopment Property Tax Trust Fund (RPTTF) that are to be us ed to fund debt service on the bonds, with no distinction betwe en housing and non-housing reve nues. In addition, under the provisions of the laws dissolving the Turlock Redevelopment Age ncy, the Successor Agency only receives the funds necessary to fulfill its approved enforceable obligations.

92 NOTE 14 – REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES (Continued)

B. Long-Term Obligations (Continued)

Current Year Transactions and Balances (Continued)

The outstanding balances as of June 30, 2023, are as follows:

Original Issue Balance Balance Due Within Due in More
Amount June 30, 2022 Retirements June 30, 2023 One Year Than One Yea r General Obligation Revenue Bonds:
2016 Tax Allocation Refunding Bonds 35,740,000$ 31,080,000 $ 1,210,000 $ 29,870,000 $ 1,270,000 $ 28,600,000 $ Add: Unamortized Bond Premium - 2,384,843 137,587 2,247,256 - 2,247,256 Total Successor Agency Debt 35,740,000 $ 33,464,843 $ 1,347,587 $ 32,117,256 $ 1,270,000 $ 30,847,256 $

2016 Successor Agency Tax Allocation Refunding Bonds

In November 2016, the Successor A gency issued Tax Allocation Re funding Bonds, Series 2016, in the amount of $35,740,000. The proceeds from the bonds were to be used to refund the outstanding balance of the 1999 Revenue Bonds, 2006 Tax Allocation Revenue Bonds, and 2011 Tax Allocation Revenue Bonds. The bonds bear interest rates of 2.0 – 5.0%. Int erest on the bonds is payable semi- annually March 1 and September 1 and principal is due annually on each September 1 through 2039.

Events of default on the 2016 Bonds include failure to make any debt service payment by the due date or failure to perform the other agreements or covenants re quired in the Indenture of Trust not cured within 30 days’ notice to the Successor Agency. Under suc h event of default, as defined by the bond documents, the Trustee may, upon the written request of th e bondholders, of not less than a majority in aggregate principal amount of the outstanding Bonds at the time, shall, by notice in writing to the Successor Agency, declare the principal of all of the 20 16 Bonds then outstanding, and the interest accrued thereon, to be due and payable immediately. Th is provision is subject to the condition that if, at any time after the principal of the 2016 Bonds have been declared due and payable, and before any judgement o r decree has been entered or obtained the Successor Agency can remedy the default by paying all amounts due and payable. A t that time, the bondholders of at least a majority in aggregate principal amount of the 2016 Bond s, then outstanding, can by written notice to the Successor Agency and to the Trustee, rescind and annul such declaration and its consequences. The Successor Agency can prepay the 2016 Bonds at any time by paying the prescribed prepayment premium as for in the 2016 Bond documents.

Bond Issuance Costs, Original I ssue Discounts, and Premiums and Deferred Charge on Refunding

For private-purpose trust fund types, bond premiums and discoun ts are deferred and amortized over the life of the bonds using the effective interest method. Bond s payable are reported net of the applicable bond premium or discount. Any differences between pr oprietary refunded debt and the debt issued to refund it, called a gain or loss on refunding, i s amortized over the remaining life of either the refunded debt or the refunding debt, whichever is sh orter. The gain or loss is reported as a deferred inflow or outflow of resources, as applicable. Bond is suance costs, other than prepaid insurance, are expensed in the year incurred.

93 NOTE 14 – REDEVELOPMENT AGENCY DISSOLUTION AND SUCCESSOR AGENCY ACTIVITIES (Continued)

B. Long-Term Obligations (Continued)

Debt Service Requirements

Debt service requirements are shown below for all long-term debt:

For the Year
Ending June 30, Principal Interest
2024 1,270,000 $ 1,180,757 $
2025 1,335,000 1,115,632
2026 1,400,000 1,047,257
2027 1,470,000 975,506
2028 1,545,000 900,131
2029-2033 8,955,000 3,251,357
2034-2038 10,815,000 1,428,147
2039-2040 3,080,000 75,600
Total 29,870,000 9,974,387 $
Add: Unamortized
Bond Premium 2,247,256
Net Long-Term Debt 32,117,256$
Refunding Bonds
2016 Tax Allocation

C. Commitments and Contingencies

State Approval of Enforceable Obligations

The Successor Agency prepares a Recognized Obligation Payment S chedule (ROPS) annually that contains all proposed expenditures for the subsequent twelve-mo nth period. The ROPS is subject to the review and approval of the Oversight Board as well as the State Department of Finance. Although the State Department of Finance may not question items included on the ROPS in one period, they may question the same items in a future period and disallow associated activities. The amount, if any, of current obligations that may be denied by the State Departme nt of Finance cannot be determined at this time. The City expects such amounts, if any, to be immaterial.

NOTE 15 – LEASES

A. Policies

A lease is defined as a contract that conveys control of the ri ght to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets incl ude buildings, land, vehicles, and equipment. The City recognizes lease receivables or liabilities with an initial, individual value of $100,000 or more.

Lessee – The City does not have any noncancellable leases of nonfinanc ial assets as of June 30, 2023. If there were such leases outstanding, the City would rec ognize a lease liability and an intangible right‐to-use lease asset (lease asset) in the government‐wide financial statements.

94 NOTE 15 – LEASES (Continued)

A. Policies (Continued)

At the commencement of a lease, t he City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequentl y, the lease liability is reduced by the principal portion of lease payments made. The lease asset i s initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight‐line basis over its useful life.

Key estimates and judgments related to leases include how the C ity determines (1) the discount rate it uses to discount the expected lease payments to present valu e, (2) lease term, and (3) lease payments as follows:

• The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for leases.
• The lease term includes the noncancellable period of the leas e. • Lease payments included in the measurement of the lease liabi lity are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.

The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occu r that are expected to significantly affect the amount of the lease liability.

Lease assets are reported with other capital assets and lease l iabilities are reported with long-term debt on the Statement of Net Position.

Lessor – The City is a lessor for noncancellable leases of communicati on sites. The City recognizes a lease receivable and a deferred inflow of resources in the go vernment‐wide and fund financial statements.

At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subs equently, the lease receivable is reduced by the principal portion of lease payments received. Th e deferred inflow of resources is initially measured as the initial amount of the lease receivabl e, adjusted for lease payments received at or before the lease commencement date. Subsequently, the def erred inflow of resources is recognized as revenue over the life of the lease term.

Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) leas e term, and (3) lease receipts as follows:

• The City uses its estimated incremental borrowing rate as the discount rate for leases. • The lease term includes the noncancellable period of the leas e. • Lease receipts included in the measurement of the lease recei vable is composed of fixed payments from the lessee.

The City monitors changes in circumstances that would require a remeasurement of its lease, and will remeasure the lease receivable and deferred inflows of resource s if certain changes occur that are expected to significantly affect the amount of the lease receivable.

95 NOTE 15 – LEASES (Continued)

B. Leases Receivable

The balances related to leases receivable and deferred inflows of resources as of June 30, 2023, were:

Deferred
Leases Inflows of
Leases Receivable (Lessor) Receivable Resources
General Fund
Communication Site Lease 494,860 $ 480,409 $
Nonmajor Governmental Funds
Communication Site Lease 234,732 223,806
Total 729,592 $ 704,215 $

Communication Site Leases – The City leases various locations to third parties for the pr ovisions of mobile/wireless communications services. During the year ended June 30, 2023, the City had two leases with original lease terms ranging from 10 to 30 years, including the optional extension periods, and as of June 30, 2023, the leases had 10-30 years remaining. The City recognized $40,716 in lease revenue and $11,174 in interest revenue during the curren t fiscal year related to these leases.

Also, the City has deferred infl ows of resources associated wit h these leases that will be recognized as revenue over the lease term.

NOTE 16 – EXCESS OF EXPENDITURES OVER APPROPRIATIONS

For the year ended June 30, 2023, expenditures exceeded appropriations as follows:

Expenditures Amount
General Fund
Community development 3,757,962 $
Debt Service:

Principal 91,565
Interest and fiscal charges 59,849

NOTE 17 – SUBSEQUENT EVENTS

In compliance with accounting standards, management has evaluat ed events that have occurred after year-end to determine if these events are required to be disclo sed in the basic financial statements.

Events were considered through Ja nuary 21, 2025, which is the d ate of issuance of the City’s independent auditor’s report.

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97 REQUIRED SUPPLEMENTARY INFORMATION

98 CITY OF TURLOCK

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS

MISCELLANEOUS AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN LAST 10 YEARS*
FOR THE YEAR ENDED JUNE 30, 2023

Measurement Date 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 Total Pension Liability
Service cost 2,252,227 $ 2,145,944 $ 2,113,775 $ 2,535,894 $ 2,556,275 $ Interest 8,152,132 8,394,010 8,879,576 9,300,013 9,710,969 Differences between expected and
actual experience - (2,796,579) 704,751 188,828 254,403 Changes in assumptions - (2,114,962) - 7,890,713 (567,581) Changes in benefits - - - - - Benefit payments, including refunds of
employee contributions (4,197,372) (4,620,913) (5,141,794) (5,431,662) (6,138,941) Net change in total pension liability 6,206,987 1,007,500 6,556,308 14,483,786 5,815,125 Total pension liability - beginning 109,667,670 115,874,657 116,882,157 123,438,465 137,922,251 Total pension liability - ending (a) 115,874,657$ 116,882,157 $ 123,438,465 $ 137,922,251 $ 143,737,376 $ Plan Fiduciary Net Position
Contributions - employer 2,650,159 $ 2,832,416 $ 3,259,415 $ 3,684,085 $ 3,783,927 $ Contributions - employee 1,031,498 1,042,224 1,027,004 1,109,929 1,133,810 Net investment income (loss) 12,514,268 1,937,886 438,577 9,502,918 7,974,175 Benefit payments, including refunds of
employee contributions (4,197,372) (4,620,913) (5,141,794) (5,431,662) (6,138,941) Plan to Plan resource movement - 78,472 622 (25) (230) Administrative expense - (94,994) (51,446) (123,941) (144,433) Other miscellaneous income/expense - - - - (274,281) Net change in plan fiduciary net position 11,998,553 1,175,091 (467,622) 8,741,304 6,334,027 Plan fiduciary net position - beginning 71,240,464 83,239,017 84,414,108 83,946,486 92,687,790 Plan fiduciary net position - ending (b) 83,239,017$ 84,414,108 $ 83,946,486 $ 92,687,790 $ 99,021,817 $ Net pension liability (a)-(b) 32,635,640$ 32,468,049 $ 39,491,979 $ 45,234,461 $ 44,715,559 $ Plan fiduciary net position as a percentage
of the total pension liability 71.84% 72.22% 68.01% 67.20% 68.89% Covered payroll 13,044,287 $ 12,730,821 $ 13,052,557 $ 13,771,230 $ 13,489,574 $ Net pension liability as a percentage of
covered payroll 250.19% 255.03% 302.56% 328.47% 331.48%

Notes to Schedule:

Benefit changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30. This applies for voluntar y benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a Golden Handshakes).

Changes in assumptions: GASB St atement No. 68 paragraph 68 stat es that the long-term expected rate of return should be determined net of pension plan investment expense, but without reduction for pension plan administrative expense. In 2017, the accounting discount r ate reduced from 7.65 percent to 7.15 percent. In 2018, 2019, 2020 and 2021, there were no changes. I n 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, am ounts reported were based on the 7.5 percent discount rate. All other a ssumptions for the June 30, 2 014 measurement date were the same as those used for the June 30, 2015 and 2016 measurement dates.

* Fiscal year 2015 was the first year of implementation.

99 CITY OF TURLOCK
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS (Continued)

MISCELLANEOUS AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN LAST 10 YEARS*
FOR THE YEAR ENDED JUNE 30, 2023

Measurement Date 6/30/2019 6/30/2020 6/30/2021 6/30/2022 Total Pension Liability
Service cost 2,302,531 $ 2,484,703 $ 2,350,368 $ 2,467,656 $ Interest 10,263,211 10,837,530 11,195,286 11,365,458 Differences between expected and
actual experience 2,064,432 2,271,043 (889,500) (3,623,085) Changes in assumptions - - - 5,861,672 Changes in benefits - - - - Benefit payments, including refunds of
employee contributions (6,823,311) (6,967,583) (7,756,380) (7,650,663) Net change in total pension liability 7,806,863 8,625,693 4,899,774 8,421,038 Total pension liability - beginning 143,737,376 151,544,239 160,169,932 165,069,706 Total pension liability - ending (a) 151,544,239$ 160,169,932 $ 165,069,706 $ 173,490,744 $ Plan Fiduciary Net Position
Contributions - employer 4,359,068 $ 4,919,630 $ 5,268,466 $ 5,886,502 $ Contributions - employee 1,157,716 1,038,613 1,037,625 1,052,686 Net investment income (loss) 6,592,102 5,279,682 24,922,527 (10,068,430) Benefit payments, including refunds of
employee contributions (6,823,311) (6,967,583) (7,756,380) (7,650,663) Plan to Plan resource movement - - - - Administrative expense (70,664) (146,949) (108,245) (82,056) Other miscellaneous income/expense 230 - - - Net change in plan fiduciary net position 5,215,141 4,123,393 23,363,993 (10,861,961) Plan fiduciary net position - beginning 99,021,817 104,236,958 108,360,351 131,724,344 Plan fiduciary net position - ending (b) 104,236,958$ 108,360,351 $ 131,724,344 $ 120,862,383 $ Net pension liability (a)-(b) 47,307,281$ 51,809,581 $ 33,345,362 $ 52,628,361 $ Plan fiduciary net position as a percentage
of the total pension liability 68.78% 67.65% 79.80% 69.67% Covered payroll 14,631,733 $ 14,259,962 $ 14,305,346 $ 13,785,790 $ Net pension liability as a percentage of
covered payroll 323.32% 363.32% 233.10% 381.76%

100

CITY OF TURLOCK

SCHEDULE OF CONTRIBUTIONS

MISCELLANEOUS AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN LAST 10 YEARS*
FOR THE YEAR ENDED JUNE 30, 2023

Fiscal Year Ended June 30 2015 2016 2017 2018 2019
Actuarially determined contribution 3,847,884$ 3,256,514 $ 3,684,324 $ 3,786,340 $ 4,359,068 $ Contributions in relation to the
actuarially determined contribution 3,847,884 3,256,514 3,684,324 3,786,340 4,359,068 Contribution deficiency (excess) -$ - $ - $ - $ - $ Covered payroll 12,730,821$ 13,052,557 $ 13,771,230 $ 13,489,574 $ 14,631,733 $ Contributions as a percentage
of covered payroll 30.22% 24.95% 26.75% 28.07% 29.79%
Valuation date 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 Fiscal Year Ended June 30 2020 2021 2022 2023
Actuarially determined contribution 4,919,630$ 5,268,460 $ 5,885,609 $ 6,540,569 $ Contributions in relation to the
actuarially determined contribution 4,919,630 5,268,460 5,885,609 6,540,569 Contribution deficiency (excess) -$ - $ - $ - $ Covered payroll 14,259,962$ 13,930,302 $ 12,586,207 $ 20,714,441 $ Contributions as a percentage
of covered payroll 34.50% 37.82% 46.76% 31.57%
Valuation date 6/30/2017 6/30/2018 6/30/2019 6/30/2020

Notes to Schedule:

Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry age normal
Amortization method Level percenta ge of payroll, closed Average remaining amortization period 15 years as of valuation date Asset valuation method Market value of assets
Inflation 2.75% for 2015 to 2019; 2.625% for 2020;
and 2.50% for 2021 to 2023
Salar
y increases Varies b y Entry Age and Service
Investment rate of return 7.50% for 2015 to 2018; 7.375% for 201 9; 7.25% for 2020; and 7.00% for 2021 to 2023, net of pension plan investment and administrative expenses, includes inflation.

Retirement age The probabilities of retirement are based on the CalPERS Experience Stud
y.

Mortality rate table The probabilit ies of mortality are based on the CalPERS Experience Study. Pre-retirement and post-retirement mortality rates include 20 years of projected mortality improvement using Scale AA published by the Society of Actuaries for 2015 to 2018. For 2019 to 2023, pre-retirement and post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Societ
y of Actuaries.
* Fiscal year 2015 was the first year of implementation.

101

CITY OF TURLOCK
SCHEDULE OF THE CITY’S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY SAFETY PLAN – COST-SHARING MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN LAST 10 YEARS*
FOR THE YEAR ENDED JUNE 30, 2023

Measurement Date 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 Proportion of the net pension liability 0.39% 0.53% 0.55% 0.55% 0.57% Proportionate share of the net pension liability 24,494,695$ 21,992,658 $ 28,313,359 $ 32,763,059 $ 33,256,276 $ Covered payroll 10,003,385$ 9,440,848 $ 9,870,904 $ 9,994,012 $ 10,781,820 $ Proportionate share of the net pension liability
as a percentage of covered payroll 244.86% 232.95% 286.84% 327.83% 308.45% Plan fiduciary net position as a percentage of
the total pension liability 79.82% 78.40% 74.06% 73.31% 75.26% Measurement Date 6/30/2019 6/30/2020 6/30/2021 6/30/2022 Proportion of the net pension liability 0.58% 0.60% 0.67% 0.61% Proportionate share of the net pension liability 36,264,853$ 40,115,075 $ 23,663,292 $ 47,369,022 $ Covered payroll 11,959,999$ 11,776,264 $ 11,203,500 $ 12,092,479 $ Proportionate share of the net pension liability
as a percentage of covered payroll 303.22% 340.64% 211.21% 391.72% Plan fiduciary net position as a percentage of
the total pension liability 75.26% 75.10% 88.29% 72.45%

* Fiscal year 2015 was the first year of implementation.

102

CITY OF TURLOCK

SCHEDULE OF CONTRIBUTIONS
SAFETY PLAN – COST-SHARING MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN LAST 10 YEARS*
FOR THE YEAR ENDED JUNE 30, 2023

Fiscal Year Ended June 30 2015 2016 2017 2018 2019
Actuarially determined contribution 3,951,824$ 2,633,557 $ 2,919,564 $ 3,335,223 $ 3,975,052 $ Contributions in relation to the
actuarially determined contribution 3,951,824 2,633,557 2,919,564 3,335,223 3,975,052 Contribution deficiency (excess) -$ - $ - $ - $ - $ Covered payroll 9,440,848$ 9,870,904 $ 9,994,012 $ 10,781,820 $ 11,959,999 $ Contributions as a percentage
of covered payroll 41.86% 26.68% 29.21% 30.93% 33.24%
Fiscal Year Ended June 30 2020 2021 2022 2023
Actuarially determined contribution 4,477,269$ 4,811,929 $ 5,308,585 $ 5,799,503 $ Contributions in relation to the
actuarially determined contribution 4,477,269 4,811,929 5,308,585 5,799,503 Contribution deficiency (excess) -$ - $ - $ - $ Covered payroll 11,776,264$ 11,203,500 $ 12,092,479 $ 12,634,141 $ Contributions as a percentage
of covered payroll 38.02% 42.95% 43.90% 45.90%

* Fiscal year 2015 was the first year of implementation.

103

CITY OF TURLOCK

SCHEDULE OF CHANGES IN THE TOTAL OTHER POST-EMPLOYMENT

BENEFITS (OPEB) LIABILITY AND RELATED RATIOS
LAST 10 YEARS*
FOR THE MEASUREMENT PERIOD ENDED JUNE 30

Measurement Date 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 Total OPEB Liability
Service Cost 1,155,061 $ 1,135,358 $ 638,020 $ 797,780 $ 581,088 $ 794,568 $ Interest 637,175 713,835 716,143 292,875 298,105 363,300 Changes of Benefit Terms - - - - - - Difference Between Expected and
Actual Experience (222,909) (55,000) (4,650,595) (105,340) (2,661,954) (17,761) Changes of Assumptions (600,396) 854,724 (3,897,028) 205,992 (3,559,711) (53,252) Benefit Payments (107,347) (231,516) (115,029) (91,631) (183,856) (180,804) Net Change in Total OPEB Liability 861,584 2,417,401 (7,308,489) 1,099,676 (5,526,328) 906,051 Total OPEB Liability - Beginning 16,544,233 17,405,817 19,823,218 12,514,729 13,614,405 8,088,077 Total OPEB Liability - Ending 17,405,817$ 19,823,218 $ 12,514,729 $ 13,614,405 $ 8,088,077 $ 8,994,128 $ Covered-Employee Payroll 24,603,348 $ 28,959,337 $ 28,058,863 $ 25,133,575 $ 24,299,988 $ 25,028,988 $ Total OPEB Liability as a Percentage of
Covered-Employee Payroll 70.75% 68.45% 44.60% 54.17% 33.28% 35.93%

Notes to Schedule:

Benefit changes: None.

Changes in assumptions: The discount rate was modified from 3.8 5% to 3.50% in 2019, from 3.50% to

2.20% in 2020, from 2.20% to 2.10% in 2021, from 2.10% to 4.09 in 2022, and from 4.09% to 4.13% in 2023. The inflation rate was also modified from 1.85% to 1.50% in 2019, from 1.50% to 0.70% in 2020, from 0.70% to 0.6% in 2021, from 0.6% to 2.59% in 2022, and from 2.59% to 2.63% in 2023.

* Fiscal year 2018 was the first year of implementation.

104
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105

SUPPLEMENTAL INFORMATION

106

CITY OF TURLOCK

COMBINING BALANCE SHEET

GENERAL FUND
JUNE 30, 2023

Total
General General
Purpose Measure A Fund
ASSETS
Cash and investments 30,970,724 $ 13,930,975 $ 44,901,699 $ Accounts receivable 8,894,448 2,336,873 11,231,321 Interest receivable 434,523 - 434,523 Due from developers 20,041 - 20,041 Loans receivable 5,058 - 5,058 Prepaids 3,193 1,755,110 1,758,303 Leases receivable 494,860 - 494,860 Total Assets 40,822,847 $ 18,022,958 $ 58,845,805 $

LIABILITIES
Accounts payable 3,398,695 $ 472,910 $ 3,871,605 $ Payroll payable 1,208,274 64,081 1,272,355 Unearned revenue 218,879 - 218,879 Deposits payable 994,122 - 994,122 Total Liabilities 5,819,970 536,991 6,356,961

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 193,863 - 193,863 Related to leases 480,409 - 480,409 Total Deferred Inflows of Resources 674,272 - 674,272

FUND BALANCES
Nonspendable 34,129 1,755,110 1,789,239 Restricted - - - Committed 3,271,333 - 3,271,333 Assigned 536,270 - 536,270 Unassigned 30,486,873 15,730,857 46,217,730 Total Fund Balances 34,328,605 17,485,967 51,814,572 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 40,822,847 $ 18,022,958 $ 58,845,805 $

107

CITY OF TURLOCK

COMBINING SCHEDULE OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES

GENERAL FUND
FOR THE YEAR ENDED JUNE 30, 2023

Total
General Intrafund General
Purpose Measure A Eliminations Fund

REVENUES
Taxes and assessments 32,882,082 $ - $ - $ 32,882,082$ Measure A sales tax - 15,247,244 - 15,247,244 Licenses and permits 5,476,400 - - 5,476,400 Fines, forfeitures, and penalties 105,216 - - 105,216 Use of money and property 604,271 - - 604,271 Intergovernmental 8,656,448 - - 8,656,448 Charges for current services 7,686,524 - - 7,686,524 Other revenue 145,312 300 - 145,612 Total Revenues 55,556,253 15,247,544 - 70,803,797

EXPENDITURES
Current:

General government 6,478,880 1,421,201 - 7,900,081 Public safety 33,345,016 2,732,431 - 36,077,447 Public ways and facilities/transportation 520,204 - - 520,204 Parks and recreation 2,661,332 (46,235) - 2,615,097 Community development 4,853,036 - - 4,853,036 Capital outlay 23,985 1,844,501 - 1,868,486 Debt service:

Principal 265,529 91,565 - 357,094 Interest and fiscal charges 72,783 59,849 - 132,632 Total Expenditures 48,220,765 6,103,312 - 54,324,077

EXCESS OF REVENUES
OVER EXPENDITURES 7,335,488 9,144,232 - 16,479,720

OTHER FINANCING SOURCES (USES)
Contributions from other funds 1,010,682 - - 1,010,682 Contributions from private-purpose trust 87,729 - - 87,729 Proceeds from sale of property 1,028 - - 1,028 Transfers in 6,982,164 - (3,324,634) 3,657,530 Transfers (out) (5,214,852) (6,154,465) 3,324,634 (8,044,683) Total Other Financing Sources (Uses) 2,866,751 (6,154,465) - (3,287,714) NET CHANGE IN FUND BALANCES 10,202,239 2,989,767 - 13,192,006 BEGINNING FUND BALANCES 24,126,366 14,496,200 - 38,622,566 ENDING FUND BALANCES 34,328,605 $ 17,485,967 $ - $ 51,814,572$

108

NONMAJOR GOVERNMENTAL FUNDS

The following provides a brief narrative for some the City’s mo re substantial nonmajor governmental funds.

Integrated Waste Management (AB939)
This fund is used to account for revenues received from recycli ng-related efforts. These revenues are used to fund recycling education programs as well as the City’s “Take-Pride-In-Turlock” community cleanup.

Development Impact Fees
Various development impact fee programs are accounted for in th is fund. These revenues are collected for and expended on infrastructure improvements designed to mit igate the effects of development throughout the City. These fees are separate and, in most cases , in addition to the impact fees described in the Facility Fee Fund. Not included in this fund are impact fees collected for sewer and/or water infrastructure improvements.

Equipment Replacement
The Equipment Replacement Fund accounts for monies set aside to fund the replacement of existing equipment (including computer related equipment) used by various City departments.

Lighting and Landscaping Assessment Districts
This fund accounts for the expenditure of revenues collected un der either the Landscaping and Lighting Act of 1972 or the Benefit Assessment Act of 1982. These acts p rovide a funding mechanism for the maintenance costs associated wi th various lighting, landscaping , and street improvements within the assessment districts formed under the respective act.

CDBG, State HOME Program, and Housing Stimulus Funds
This group of funds, when combined with the Stanislaus County H ousing Consortium (see major funds), accounts for the federal funding the City receives from various sources on an annual basis to assist in the preservation and production of affordable housing within the City.

Stanislaus County Housing Consortium
When combined with the CDBG, State HOME Program, and Housing St imulus Funds (see nonmajor funds), this fund accounts for the federal funding the City rec eives from various sources on an annual basis to assist in the preservation and production of affordabl e housing within the City. The consortium specifically is a collaboration of six cities in Stanislaus Cou nty and the County who together use Federal HOME monies to provide assistance for affordable housing within the County and the participating city jurisdictions.

Facility Fees Fund
The Facility Fees Fund accounts for the revenue and related expenditures as outlined in the City’s Capital Facilities Fee Improvement Program. These fees, which are charged to new developments, are designed to finance the roadway, police, fire, and general government in frastructure, facilities, and equipment needs throughout town which are the result of development within town.

North Turlock Master Plan
The North Turlock Master Plan Fund accounts for the collection and expenditure of development impact fees collected specifically within the master plan boundaries. Fees are collected to fund the cost of infrastructure – transportation, sewer, and storm drainage – improvements necessary due to development within the master plan area.

Airport
This fund accounts for grant revenues received from the State a nd Federal governments which are being expended to fund capital improvements at the Turlock Municipal Airport. The day-to-day operations of the airport and the capital improvement projects are under the cont rol of the Turlock Regional Aviation Association under a Facilities Management Agreement with the City of Turlock.

109

CITY OF TURLOCK

COMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2023

Integrated
Waste
Asset Management Bicycle Sports
Forfeitures (AB939) Safety Facilities
ASSETS
Cash and investments 120,171 $ 1,331,377 $ 42,431 $ 2,580 $ Accounts receivable - - 203 70 Interest receivable - 4,898 - - Due from developers - - - - Loans receivable - - - - Leases receivable - - - 234,732 Total Assets 120,171 $ 1,336,275 $ 42,634 $ 237,382 $

LIABILITIES
Accounts payable 4,449 $ 41,861 $ - $ 1,038$ Payroll payable - 1,670 159 12,538 Deposits payable - - - - Unearned revenue - - - - Due to other funds - - - - Total Liabilities 4,449 43,531 159 13,576

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - Related to leases - - - 223,806 Total Deferred Inflows of Resources - - - 223,806

FUND BALANCES
Nonspendable - - - - Restricted - 1,292,744 - - Committed 115,722 - 42,475 - Unassigned - - - - Total Fund Balances 115,722 1,292,744 42,475 - Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 120,171$ 1,336,275 $ 42,634 $ 237,382 $

SPECIAL REVENUE FUNDS

110

CITY OF TURLOCK
COMBINING BALANCE SHEET (Continued)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2023

Development
Animal Fees Impact Equipment NW Triangle
Forfeiture Fees Replacement Plan Fee
ASSETS
Cash and investments 32,806 $ 4,845,697 $ 7,048,954 $ 324,554 $ Accounts receivable - - 27,944 - Interest receivable - 17,672 - 1,182 Due from developers - - - - Loans receivable - - - - Leases receivable - - - - Total Assets 32,806 $ 4,863,369 $ 7,076,898 $ 325,736 $

LIABILITIES
Accounts payable 1,697 $ - $ 111,972$ - $ Payroll payable - - 1,230 - Deposits payable - - - - Unearned revenue - - - - Due to other funds - - - - Total Liabilities 1,697 - 113,202 -

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - Related to leases - - - - Total Deferred Inflows of Resources - - - -

FUND BALANCES
Nonspendable - - - - Restricted 31,109 - - - Committed - 4,863,369 6,963,696 325,736 Unassigned - - - - Total Fund Balances 31,109 4,863,369 6,963,696 325,736 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 32,806 $ 4,863,369 $ 7,076,898 $ 325,736 $

SPECIAL REVENUE FUNDS

111

CITY OF TURLOCK
COMBINING BALANCE SHEET (Continued)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2023

Lighting and
Landscaping Downtown Northeast
Development Assessment Assessment Turlock
Benefit Districts District CFD #2
ASSETS
Cash and investments 676,107 $ 21,372,238 $ 16,446 $ 62,493 $ Accounts receivable - 41,603 - 13,058 Interest receivable 2,489 77,522 - - Due from developers - - - - Loans receivable - - - - Leases receivable - - - - Total Assets 678,596 $ 21,491,363 $ 16,446 $ 75,551 $

LIABILITIES
Accounts payable - $ 73,092$ - $ - $ Payroll payable - 19,577 - - Deposits payable - - - - Unearned revenue - - - - Due to other funds - - - - Total Liabilities - 92,669 - -

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - Related to leases - - - - Total Deferred Inflows of Resources - - - -

FUND BALANCES
Nonspendable - - - - Restricted - 21,398,694 16,446 75,551 Committed 678,596 - - - Unassigned - - - - Total Fund Balances 678,596 21,398,694 16,446 75,551 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 678,596$ 21,491,363 $ 16,446 $ 75,551 $

SPECIAL REVENUE FUNDS

112

CITY OF TURLOCK
COMBINING BALANCE SHEET (Continued)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2023

Stanislaus
State County
HOME Housing Housing
CDBG Program Stimulus Consortium
ASSETS
Cash and investments - $ 4,445,995$ 41,051 $ 279,667 $ Accounts receivable 449,344 - - 237,086 Interest receivable - 15,922 - - Due from developers - - - - Loans receivable 5,067,994 3,561,254 5,500 9,350,530 Leases receivable - - - - Total Assets 5,517,338 $ 8,023,171 $ 46,551 $ 9,867,283 $

LIABILITIES
Accounts payable 43,845 $ - $ - $ 18,154$ Payroll payable 5,476 - - 1,543 Deposits payable 3,600 - - 2,650 Unearned revenue - - - - Due to other funds 222,031 - - - Total Liabilities 274,952 - - 22,347

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 5,067,994 3,561,254 5,500 9,350,530 Related to leases - - - - Total Deferred Inflows of Resources 5,067,994 3,561,254 5,500 9,350,530

FUND BALANCES
Nonspendable - - - - Restricted 174,392 4,461,917 41,051 494,406 Committed - - - - Unassigned - - - - Total Fund Balances 174,392 4,461,917 41,051 494,406 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 5,517,338$ 8,023,171 $ 46,551 $ 9,867,283 $

SPECIAL REVENUE FUNDS

113

CITY OF TURLOCK
COMBINING BALANCE SHEET (Continued)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2023

Grant Traffic
Funds Safety Home ARP Facility Fees
ASSETS
Cash and investments 547,923 $ 100,084 $ - $ 14,291,406$ Accounts receivable 422,722 - 205,117 - Interest receivable - - - 52,914 Due from developers - - - 267,243 Loans receivable - - - - Leases receivable - - - - Total Assets 970,645 $ 100,084 $ 205,117 $ 14,611,563 $

LIABILITIES
Accounts payable 130,188 $ 69 $ - $ 36,072$ Payroll payable 9,551 - 644 - Deposits payable - - - - Unearned revenue 75,002 - - - Due to other funds - - 204,619 - Total Liabilities 214,741 69 205,263 36,072

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - Related to leases - - - - Total Deferred Inflows of Resources - - - -

FUND BALANCES
Nonspendable - - - 267,243 Restricted 755,904 100,015 - 14,308,248 Committed - - - - Unassigned - - (146) - Total Fund Balances 755,904 100,015 (146) 14,575,491 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 970,645$ 100,084 $ 205,117 $ 14,611,563 $

SPECIAL REVENUE FUNDS

114

CITY OF TURLOCK
COMBINING BALANCE SHEET (Continued)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2023

Street Downtown North
Capital Light Improvement Turlock
Improvement Installation Project Master Plan
ASSETS
Cash and investments 5,901,670 $ 150,960 $ 235,939 $ 2,243,737 $ Accounts receivable - - - - Interest receivable 22,038 556 - 8,262 Due from developers - - - - Loans receivable - - - - Leases receivable - - - - Total Assets 5,923,708 $ 151,516 $ 235,939 $ 2,251,999 $

LIABILITIES
Accounts payable 74,439 $ - $ - $ - $ Payroll payable - - - - Deposits payable - - - - Unearned revenue - - - - Due to other funds - - - - Total Liabilities 74,439 - - -

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - Related to leases - - - - Total Deferred Inflows of Resources - - - -

FUND BALANCES
Nonspendable - - - - Restricted - - - - Committed 5,849,269 151,516 235,939 2,251,999 Unassigned - - - - Total Fund Balances 5,849,269 151,516 235,939 2,251,999 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 5,923,708$ 151,516 $ 235,939 $ 2,251,999 $

CAPITAL PROJECTS FUNDS

115

CITY OF TURLOCK
COMBINING BALANCE SHEET (Continued)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2023

Turlock Total
North East Regional East Nonmajor
Turlock Industrial Tuolumne Governmental
Master Plan Park Master Plan Airport Funds
ASSETS
Cash and investments 3,631,605 $ 2,190,977 $ 6,500 $ 47,023 $ 69,990,391$ Accounts receivable - - - - 1,397,147 Interest receivable 13,589 8,035 - - 225,079 Due from developers - - - - 267,243 Loans receivable - - - - 17,985,278 Leases receivable - - - - 234,732 Total Assets 3,645,194 $ 2,199,012 $ 6,500 $ 47,023 $ 90,099,870$

LIABILITIES
Accounts payable - $ - $ - $ 275 $ 537,151$ Payroll payable - - - - 52,388 Deposits payable - - - - 6,250 Unearned revenue - - - - 75,002 Due to other funds - - - - 426,650 Total Liabilities - - - 275 1,097,441

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - 17,985,278 Related to leases - - - - 223,806 Total Deferred Inflows of Resources - - - - 18,209,084

FUND BALANCES
Nonspendable - - - - 267,243 Restricted - - - - 43,150,477 Committed 3,645,194 2,199,012 6,500 46,748 27,375,771 Unassigned - - - - (146) Total Fund Balances 3,645,194 2,199,012 6,500 46,748 70,793,345 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 3,645,194$ 2,199,012 $ 6,500 $ 47,023 $ 90,099,870$

CAPITAL PROJECTS FUNDS

116

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023

Integrated
Waste
Asset Management Bicycle Sports
Forfeitures (AB939) Safety Facilities

REVENUES
Taxes and assessments - $ - $ - $ - $ Licenses and permits - - 70 - Use of money and property - 15,941 - 3,669 Intergovernmental 60,693 18,115 - - Charges for current services - - - 196,574 Other revenue - - - - Total Revenues 60,693 34,056 70 200,243

EXPENDITURES
Current:

General government - 170,311 - - Public safety 19,046 - 5,991 - Public ways and facilities/transportation - - - - Parks and recreation - - - 801,010 Community development - - - - Capital outlay - - - - Total Expenditures 19,046 170,311 5,991 801,010

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 41,647 (136,255) (5,921) (600,767)

OTHER FINANCING SOURCES (USES)
Contributions of capital assets - - - - Contributions from private-purpose trust - - - - Proceeds from sale of property - - 410 - Transfers in - - - 622,102 Transfers (out) - - - (25,420) Total Other Financing Sources (Uses) - - 410 596,682 NET CHANGE IN FUND BALANCES 41,647 (136,255) (5,511) (4,085) BEGINNING FUND BALANCES 74,075 1,428,999 47,986 4,085 ENDING FUND BALANCES 115,722 $ 1,292,744 $ 42,475 $ - $

SPECIAL REVENUE FUNDS

117

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES (Continued)

NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023

Development
Animal Fees Impact Equipment NW Triangle
Forfeiture Fees Replacement Plan Fee

REVENUES
Taxes and assessments - $ - $ 82,926$ - $ Licenses and permits - - - - Use of money and property - 37,829 - 3,478 Intergovernmental - - 11,010 - Charges for current services 31,794 273,976 300,991 21,439 Other revenue - - 27,494 - Total Revenues 31,794 311,805 422,421 24,917

EXPENDITURES
Current:

General government - - 5,587 - Public safety 30,370 - 344,157 - Public ways and facilities/transportation - 31,684 1,125 1,665 Parks and recreation - - - - Community development - - 121,322 - Capital outlay - - 95,092 - Total Expenditures 30,370 31,684 567,283 1,665

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 1,424 280,121 (144,862) 23,252

OTHER FINANCING SOURCES (USES)
Contributions of capital assets - - - - Contributions from private-purpose trust - - - - Proceeds from sale of property - - - - Transfers in - - 995,214 - Transfers (out) - - (35,000) (251,330) Total Other Financing Sources (Uses) - - 960,214 (251,330) NET CHANGE IN FUND BALANCES 1,424 280,121 815,352 (228,078) BEGINNING FUND BALANCES 29,685 4,583,248 6,148,344 553,814 ENDING FUND BALANCES 31,109 $ 4,863,369 $ 6,963,696 $ 325,736 $

SPECIAL REVENUE FUNDS

118

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES (Continued)

NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023

Lighting and
Landscaping Downtown Northeast
Development Assessment Assessment Turlock
Benefit Districts District CFD #2

REVENUES
Taxes and assessments - $ 4,578,170$ - $ 1,068,086$ Licenses and permits - - - - Use of money and property 8,021 124,265 - 3,416 Intergovernmental - - - - Charges for current services - - - - Other revenue - - - - Total Revenues 8,021 4,702,435 - 1,071,502

EXPENDITURES
Current:

General government - - - 32,427 Public safety - - - - Public ways and facilities/transportation - 1,746,419 - - Parks and recreation - - - - Community development - - - - Capital outlay - - - - Total Expenditures - 1,746,419 - 32,427

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 8,021 2,956,016 - 1,039,075

OTHER FINANCING SOURCES (USES)
Contributions of capital assets - - - - Contributions from private-purpose trust - - - - Proceeds from sale of property - - - - Transfers in - - - - Transfers (out) - (53,140) - (1,039,075) Total Other Financing Sources (Uses) - (53,140) - (1,039,075) NET CHANGE IN FUND BALANCES 8,021 2,902,876 - - BEGINNING FUND BALANCES 670,575 18,495,818 16,446 75,551 ENDING FUND BALANCES 678,596 $ 21,398,694 $ 16,446 $ 75,551 $

SPECIAL REVENUE FUNDS

119

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES (Continued)

NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023

Stanislaus
State County
HOME Housing Housing
CDBG Program Stimulus Consortium

REVENUES
Taxes and assessments - $ - $ - $ - $ Licenses and permits - - - - Use of money and property - 55,376 - - Intergovernmental 1,514,523 - - 149,594 Charges for current services 41,460 - - 31,100 Other revenue 503,874 143,571 - 276,869 Total Revenues 2,059,857 198,947 - 457,563

EXPENDITURES
Current:

General government - - - - Public safety - - - - Public ways and facilities/transportation - - - - Parks and recreation - - - - Community development 2,451,116 3,795 - 675,612 Capital outlay - - - - Total Expenditures 2,451,116 3,795 - 675,612

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (391,259) 195,152 - (218,049)

OTHER FINANCING SOURCES (USES)
Contributions of capital assets - - - - Contributions from private-purpose trust 2,356 - - 2,769 Proceeds from sale of property - - - - Transfers in - - - - Transfers (out) (2,200) - - - Total Other Financing Sources (Uses) 156 - - 2,769 NET CHANGE IN FUND BALANCES (391,103) 195,152 - (215,280) BEGINNING FUND BALANCES 565,495 4,266,765 41,051 709,686 ENDING FUND BALANCES 174,392 $ 4,461,917 $ 41,051 $ 494,406 $

SPECIAL REVENUE FUNDS

120

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES (Continued)

NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023

Grant Traffic
Funds Safety Home ARP Facility Fees

REVENUES
Taxes and assessments - $ - $ - $ - $ Licenses and permits - - - - Use of money and property - - - 87,983 Intergovernmental 1,461,163 - - - Charges for current services - 60,500 205,112 1,989,392 Other revenue 82,827 - - - Total Revenues 1,543,990 60,500 205,112 2,077,375

EXPENDITURES
Current:

General government - - - 30,173 Public safety 596,289 39,282 - 232 Public ways and facilities/transportation - - - 1,006 Parks and recreation 749,307 - - - Community development 100,513 - 205,258 - Capital outlay 66,747 - - 2,542,718 Total Expenditures 1,512,856 39,282 205,258 2,574,129

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 31,134 21,218 (146) (496,754)

OTHER FINANCING SOURCES (USES)
Contributions of capital assets - - - 2,400,170 Contributions from private-purpose trust - - - - Proceeds from sale of property - - - - Transfers in 372,475 - - - Transfers (out) (181,041) - - - Total Other Financing Sources (Uses) 191,434 - - 2,400,170 NET CHANGE IN FUND BALANCES 222,568 21,218 (146) 1,903,416 BEGINNING FUND BALANCES 533,336 78,797 - 12,672,075 ENDING FUND BALANCES 755,904 $ 100,015 $ (146) $ 14,575,491$

SPECIAL REVENUE FUNDS

121

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES (Continued)

NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023

Street Downtown North
Capital Light Improvement Turlock
Improvement Installation Project Master Plan

REVENUES
Taxes and assessments - $ - $ - $ - $ Licenses and permits 24,881 - - - Use of money and property (33,302) 1,791 - 26,621 Intergovernmental - - - - Charges for current services - 1,247 - - Other revenue - - - - Total Revenues (8,421) 3,038 - 26,621

EXPENDITURES
Current:

General government - - - - Public safety - - - - Public ways and facilities/transportation 93,336 - 5,067 287 Parks and recreation - - - - Community development - - - - Capital outlay 421,758 - - - Total Expenditures 515,094 - 5,067 287

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (523,515) 3,038 (5,067) 26,334

OTHER FINANCING SOURCES (USES)
Contributions of capital assets - - - - Contributions from private-purpose trust - - - - Proceeds from sale of property - - - - Transfers in 5,657,755 - - - Transfers (out) - - - - Total Other Financing Sources (Uses) 5,657,755 - - - NET CHANGE IN FUND BALANCES 5,134,240 3,038 (5,067) 26,334 BEGINNING FUND BALANCES 715,029 148,478 241,006 2,225,665 ENDING FUND BALANCES 5,849,269 $ 151,516 $ 235,939 $ 2,251,999 $

CAPITAL PROJECTS FUNDS

122

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES (Continued)

NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023

Turlock Total
North East Regional East Nonmajor
Turlock Industrial Tuolumne Governmental
Master Plan Park Master Plan Airport Funds

REVENUES
Taxes and assessments - $ - $ - $ - $ 5,729,182$ Licenses and permits - - - - 24,951 Use of money and property 31,197 25,792 - - 392,077 Intergovernmental - - - - 3,215,098 Charges for current services 52,235 54,012 38,756 - 3,298,588 Other revenue - - - - 1,034,635 Total Revenues 83,432 79,804 38,756 - 13,694,531

EXPENDITURES
Current:

General government - - - - 238,498 Public safety - - - - 1,035,367 Public ways and facilities/transportation 5,907 4,801 5,582 964 1,897,843 Parks and recreation - - - - 1,550,317 Community development - - - - 3,557,616 Capital outlay - - - - 3,126,315 Total Expenditures 5,907 4,801 5,582 964 11,405,956

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 77,525 75,003 33,174 (964) 2,288,575

OTHER FINANCING SOURCES (USES)
Contributions of capital assets - - - - 2,400,170 Contributions from private-purpose trust - - - - 5,125 Proceeds from sale of property - - - - 410 Transfers in - - - - 7,647,546 Transfers (out) - - - (10,000) (1,597,206) Total Other Financing Sources (Uses) - - - (10,000) 8,456,045 NET CHANGE IN FUND BALANCES 77,525 75,003 33,174 (10,964) 10,744,620 BEGINNING FUND BALANCES 3,567,669 2,124,009 (26,674) 57,712 60,048,725 ENDING FUND BALANCES 3,645,194 $ 2,199,012 $ 6,500 $ 46,748 $ 70,793,345$

CAPITAL PROJECTS FUNDS

123

NONMAJOR ENTERPRISE FUNDS

Building and Safety
This fund accounts for the activities of the City’s Building Division. These activities include the issuance of building permits, checking building plans submitted for complia nce with applicable State and local codes (plan check), performing building inspection for construction projects in town, and providing assistance as needed to citizens with building-related questions/issues.

SRWA Operations
The Stanislaus Regional Water Aut hority (SRWA) operations fund accounts for the activities associated with operation and maintenance of the SRWA Surface Water Treatm ent Plant (WTP), which provides potable drinking water for the City of Turlock and the City of C e r e s . T h e W T P u s e s a c o n v e n t i o n a l treatment process using ozone as a primary disinfectant with so dium hypochlorite as the secondary disinfectant. The WTP treatment processes are designed and moni tored with stringent health standards to ensure compliance with the water quality standards establish ed by the California State Water Resources Control Board.

124

CITY OF TURLOCK

COMBINING STATEMENT OF NET POSITION

NONMAJOR ENTERPRISE FUNDS
JUNE 30, 2023

Total
Nonmajor
Building and SRWA Enterprise
Safety Operations Funds
ASSETS
Current assets:

Cash and investments (Note 3) - $ 74,520$ 74,520 $ Total current assets - 74,520 74,520 Noncurrent assets:

Capital assets being depreciated (Note 6) - 10,593 10,593 Total noncurrent assets - 10,593 10,593 Total Assets - 85,113 85,113

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions (Note 9) - 76,262 76,262 Related to OPEB (Note 10) - 13,831 13,831 Total Deferred Outflows of Resources - 90,093 90,093

LIABILITIES
Current liabilities:

Accounts payable - 44,973 44,973 Payroll payable - 29,547 29,547 Compensated absences (Note 1I) - 11,870 11,870 Total current liabilities - 86,390 86,390 Long-term liabilities:

Compensated absences (Note 1I) - 47,482 47,482 Total OPEB liability (Note 10) - 63,663 63,663 Net pension liability (Note 9) - 246,772 246,772 Total long-term liabilities - 357,917 357,917 Total Liabilities - 444,307 444,307

DEFERRED INFLOWS OF RESOURCES
Related to pensions (Note 9) - 12,425 12,425 Related to OPEB (Note 10) - 91,082 91,082 Total Deferred Inflows of Resources - 103,507 103,507 NET POSITION (Note 8)
Net investment in capital assets - 10,593 10,593 Unrestricted - (383,201) (383,201) Total Net Position - $ (372,608)$ (372,608) $

125

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENSES,

AND CHANGES IN FUND NET POSITION

NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED JUNE 30, 2023

Total
Nonmajor
Building and SRWA Enterprise
Safety Operations Funds

OPERATING REVENUES
Charges for services - $ 579,367$ 579,367 $ Total Operating Revenues - 579,367 579,367

OPERATING EXPENSES
Salaries, benefits, and insurance - 706,284 706,284 Contractual - 1,738 1,738 Supplies and maintenance - 222,817 222,817 Utilities - 1,133 1,133 Fleet expense - 2,760 2,760 Depreciation and amortization - 180 180 Other expenses - 15,312 15,312 Total Operating Expenses - 950,224 950,224 Operating Loss - (370,857) (370,857)

NONOPERATING REVENUES (EXPENSES)
Interest (expense) - (1,751) (1,751) Total Nonoperating Revenues (Expenses) - (1,751) (1,751) Loss Before
Contributions and Transfers - (372,608) (372,608) Contribution to other funds (531,405) - (531,405) Total Contributions and Transfers (531,405) - (531,405) Change in Net Position (531,405) (372,608) (904,013) NET POSITION - BEGINNING 531,405 - 531,405 NET POSITION - ENDING - $ (372,608)$ (372,608) $

126

CITY OF TURLOCK

COMBINING STATEMENT OF CASH FLOWS

NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED JUNE 30, 2023

Total
Nonmajor
Building and SRWA Enterprise
Safety Operations Funds

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers - $ 579,367$ 579,367 $ Payments to suppliers (141,274) (198,787) (340,061) Payments to employees and benefits (1,920,106) (293,536) (2,213,642) Other - - - Total Cash Flows from Operating Activities (2,061,380) 87,044 (1,974,336)

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Interfund receipts (payments) (531,405) - (531,405) Total Cash Flows from Noncapital Financing Activities (531,405) - (531,405)

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Acquisition of capital assets, net - (10,773) (10,773) Long-term debt payment - interest - (1,751) (1,751) Total Cash Flows from Capital and Related
Financing Activities - (12,524) (12,524)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest 3,502 - 3,502 Total Cash Flows from Investing Activities 3,502 - 3,502 Net Cash Flows (2,589,283) 74,520 (2,514,763) Cash and investments at beginning of period 2,589,283 - 2, 589,283 Cash and investments at end of period - $ 74,520$ 74,520 $ Reconciliation of Operating Income (Loss) to Total Cash Flows from Operating Activities:

Operating income (loss) - $ (370,857)$ (370,857) $ Adjustments to reconcile operating income (loss) to total cash flows from operating activities:

Depreciation and amortization - 180 180 Change in assets and liabilities:

Accounts payable (141,274) 44,973 (96,301) Payroll payable (15,228) 29,547 14,319 Compensated absences (38,472) 59,352 20,880 Deferred outflows/inflows and total OPEB liability (425,457) 140,914 (284,543) Deferred outflows/inflows and net pension liability (1,440,949) 182,935 (1,258,014) Cash Flows from Operating Activities (2,061,380) $ 87,044 $ (1,974,336)$ Business-Type Activities - Enterprise Funds

127

INTERNAL SERVICE FUNDS

Internal Service Funds are used to finance and account for serv ices or activities performed by one City department for the benefit of other City departments on a cost reimbursement basis.

The concept of major funds in accounting principles generally a ccepted in the United States of America does not apply to Internal Service Funds because, in general, t hey do not do business with outside parties. Accounting principles generally accepted in the United States of America require that, for the Statement of Activities, the net r evenues or expenses of each i nternal service fund be eliminated by netting them against the operations of the City department(s) w hich benefit(s) from the services the internal service fund provides. The Balance Sheet items are consolidated with the Governmental Funds in the Statement of Net Position.

The activities of Internal Service funds continue to be present ed separately in the Fund Financial Statements.

Equipment Pool
This fund accounts for repair and maintenance activities for al l City vehicles and large equipment as well as monies set aside for the replacement of vehicles used by City departments.

Self-Insurance
The Self-Insurance Fund accounts for the activities of the City ’s risk management and workers’ compensation, property/liability, and health (medical, dental, and vision) insurance programs.

Information Technology
This fund accounts for the costs incurred to maintain and enhan ce the City’s information technology systems.

Engineering
The Engineering Fund accounts for the cost of in-house Engineer ing services provided both to City departments involved in capital projects as well as to the deve lopment community external to City operations. The cost of services to the development community i s recovered through various permitting processes.

128

CITY OF TURLOCK

COMBINING STATEMENT OF NET POSITION

INTERNAL SERVICE FUNDS
JUNE 30, 2023

Equipment Self- Information
Pool Insurance Technology Engineering Total
ASSETS
Current assets:

Cash and investments 9,069,838 $ 9,889,339 $ 880,119 $ - $ 19,839,296$ Accounts receivable 1,761 531,131 - - 532,892 Interest receivable 3,911 39,985 - - 43,896 Due from other funds 426,650 - - - 426,650 Prepaids - - - - - Total current assets 9,502,160 10,460,455 880,119 - 20,842,734 Noncurrent assets:

Capital assets being depreciated 3,434,197 - 18,820 - 3,453,017 Total noncurrent assets 3,434,197 - 18,820 - 3,453,017 Total Assets 12,936,357 10,460,455 898,939 - 24,295,751

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions 343,467 - 587,001 - 930,468 Related to OPEB 21,580 - 45,516 - 67,096 Total Deferred Outflows of Resources 365,047 - 632,517 - 997,564

LIABILITIES
Current liabilities:

Accounts payable 111,750 640,039 18,730 - 770,519 Payroll payable 10,436 - 24,403 - 34,839 Due to other funds - - - - - Compensated absences 7,424 - 15,781 - 23,205 Total current liabilities 129,610 640,039 58,914 - 828,563 Long-term liabilities:

Claims liability - 2,516,052 - - 2,516,052 Compensated absences 29,698 - 63,124 - 92,822 Total OPEB liability 99,329 - 209,508 - 308,837 Net pension liability 1,111,408 - 1,899,446 - 3,010,854 Total long-term liabilities 1,240,435 2,516,052 2,172,078 - 5,928,565 Total Liabilities 1,370,045 3,156,091 2,230,992 - 6,757,128

DEFERRED INFLOWS OF RESOURCES
Related to pensions 55,959 - 95,635 - 151,594 Related to OPEB 142,110 - 299,742 - 441,852 Total Deferred Inflows of Resources 198,069 - 395,377 - 593,446

NET POSITION
Net investment in capital assets 3,434,197 - 18,820 - 3,453,017 Unrestricted 8,299,093 7,304,364 (1,113,733) - 14,489,724 Total Net Position 11,733,290 $ 7,304,364 $ (1,094,913) $ - $ 17,942,741$

129

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENSES,

AND CHANGES IN FUND NET POSITION

INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2023

Equipment Self- Information
Pool Insurance Technology Engineering Total

OPERATING REVENUES
Charges for services 686,046 $ 9,055,152 $ 1,725,537 $ - $ 11,466,735$ Other income 7,721 441,883 - - 449,604 Total Operating Revenues 693,767 9,497,035 1,725,537 - 11,916,339

OPERATING EXPENSES
Salaries, benefits, and insurance 534,921 9,660,951 645,899 - 10,841,771 Contractual 171,081 29,609 338,963 - 539,653 Supplies and maintenance 75,794 - 7,700 - 83,494 Utilities 33,352 - 16,794 - 50,146 Fleet expense 32,013 - 3,115 - 35,128 Depreciation and amortization 857,629 - 1,711 55,015 914,355 Other expenses 3,291 3,016 56,695 - 63,002 Total Operating Expenses 1,708,081 9,693,576 1,070,877 55,015 12,527,549 Operating Loss (1,014,314) (196,541) 654,660 (55,015) (611,210)

NONOPERATING REVENUES (EXPENSES)
Interest income 12,802 91,153 - - 103,955 Gain on disposal of capital assets 25,795 - - - 25,795 Total Nonoperating Revenues (Expenses) 38,597 91,153 - - 129,750 Loss Before
Contributions and Transfers (975,717) (105,388) 654,660 (55,015) (481,460) Capital contributions - connection/impact fees - - - - - Contributions from other funds - - - 4,285,539 4,285,539 Transfers in 4,232,648 - 56,866 - 4,289,514 Transfers (out) (5,413) - - - (5,413) Total Contributions and Transfers 4,227,235 - 56,866 4,285,539 8,569,640 Change in Net Position 3,251,518 (105,388) 711,526 4,230,524 8,088,180 NET POSITION - BEGINNING 8,481,772 7,409,752 (1,806,439) (4,230,524) 9,854,561 NET POSITION - ENDING 11,733,290 $ 7,304,364 $ (1,094,913) $ - $ 17,942,741$

130

CITY OF TURLOCK

COMBINING STATEMENT OF CASH FLOWS

INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2023

Equipment Self- Information
Pool Insurance Technology Engineering Total

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 704,395 $ 8,999,485 $ 1,725,537 $ - $ 11,429,417$ Payments to suppliers (268,184) 41,442 (406,517) (46,481) (679,740) Payments to employees and benefits (487,504) (9,660,951) (1,258,841) (3,490,935) (14,898,231) Other 7,721 441,883 - - 449,604 Total Cash Flows from Operating Activities (43,572) (178,141) 60,179 (3,537,416) (3,698,950)

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Interfund receipts (payments) 997,854 - - 3,537,416 4,535,270 Transfers in 4,232,648 - 56,866 - 4,289,514 Transfers out (5,413) - - - (5,413) Total Cash Flows from Noncapital Financing Activities 5,225,089 - 56,866 3,537,416 8,819,371

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Acquisition of capital assets, net (637,757) - (20,531) - (658,288) Proceeds from sale of capital assets - - - - - Total Cash Flows from Capital and Related
Financing Activities (637,757) - (20,531) - (658,288)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest 10,485 65,554 - - 76,039 Total Cash Flows from Investing Activities 10,485 65,554 - - 76,039 Net Cash Flows 4,554,245 (112,587) 96,514 - 4,538,172 Cash and investments at beginning of period 4,515,593 10,001,926 783,605 - 15,301,124 Cash and investments at end of period 9,069,838 $ 9,889,339 $ 880,119 $ - $ 19,839,296$ Reconciliation of Operating Income (Loss) to Total Cash Flows from Operating Activities:

Operating income (loss) (1,014,314) $ (196,541) $ 654,660 $ (55,015) $ (611,210) $ Adjustments to reconcile operating income (loss) to total cash flows from operating activities:

Depreciation and amortization 857,629 - 1,711 55,015 914,355 Change in assets and liabilities:

Accounts receivable 18,349 (55,667) - - (37,318) Accounts payable 47,347 88,674 16,750 (46,481) 106,290 Payroll payable 735 - 1,687 (30,413) (27,991) Compensated absences 9,957 - (66,059) (143,833) (199,935) Claims liability - (14,607) - - (14,607) Deferred outflows/inflows and total OPEB liability (11,290) - (58,329) (709,788) (779,407) Deferred outflows/inflows and net pension liability 48,015 - (490,241) (2,606,901) (3,049,127) Total Cash Flows from Operating Activities (43,572) $ (178,141) $ 60,179 $ (3,537,416)$ (3,698,950) $

131

CUSTODIAL FUNDS

Custodial funds are used to account for assets held by the City as an agent for individuals, private organizations, and other governments. The financial activities of these funds are excluded from the Government-Wide Financial Statem ents, but are presented in a se parate Fiduciary Fund Financial Statement. For the City of Turlock, the following agent activit ies are accounted for within the Custodial Funds:

Northwest Triangle Mello Roos Assessment District
This district was established as a funding mechanism to partial ly pay for the infrastructure improvements installed in the Monte Vista Cros sings shopping area. These imp rovements were in part funded with the proceeds of a bond issuance which is being retired through annu al assessments to the owners of the parcels within the district’s boundaries.

Turlock Property and Business Improvement District (PBID) #2 This is a successor district to one originally established to f und maintenance efforts in downtown Turlock.

The current district was established in June 2003 via a vote of the affected property owners. The district has a ten year life and extended annually, through annual asses sments, funds prescribed maintenance efforts within the district’s boundaries as well as promotional activities for the downtown area.

132

CITY OF TURLOCK

COMBINING STATEMENT OF FIDUCIARY NET POSITION

CUSTODIAL FUNDS
JUNE 30, 2023

Northwest Turlock
Triangle Property and
Mello Roos Business
Assessment Improvement
District District #2 Total
ASSETS
Cash and investments 349,722 $ 214,216 $ 563,938 $ Cash and investments with fiscal agent 106,932 - 106,932 Accounts receivable - 5,985 5,985 Interest receivable 1,135 - 1,135 Total Assets 457,789 220,201 677,990

LIABILITIES
Accounts payable - 153,007 153,007 Total Liabilities - 153,007 153,007

NET POSITION
Restricted for:

Other organizations 457,789 67,194 524,983 Total Net Position 457,789 $ 67,194 $ 524,983 $

133

CITY OF TURLOCK

COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

CUSTODIAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2023

Northwest Turlock
Triangle Property and
Mello Roos Business
Assessment Improvement
District District #2 Total

ADDITIONS
Assessments 292,890 $ 163,646 $ 456,536 $ Net investment income 7,524 - 7,524 Total Additions 300,414 163,646 464,060

DEDUCTIONS
Administration expense 26,059 - 26,059 Recipient payments - 153,007 153,007 Payments to bondholders 257,050 - 257,050 Total Deductions 283,109 153,007 436,116 NET CHANGE IN NET POSITION 17,305 10,639 27,944

NET POSITION
Beginning of year 440,484 56,555 497,039 End of year 457,789 $ 67,194 $ 524,983 $

134
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To the Honorable Members of the City Council
City of Turlock, California

We have 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 Turlock (the City) as of and for the fiscal year ended June 30, 2023. Professional standards require that we provide you with information about our responsibilities under auditi ng standards generally accepte d in the United States of America, Government Auditing Standards, and the Uniform Guidance, as well as certain information relat ed to the planned scope and timing of our audit. We have communicated such information in our letter to you dated July 1, 2024. Professional standards also require that we commu nicate to you the following information related to our audit.

Significant Audit Findings

Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropri ate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. During the fiscal year ended June 30, 2023, the City adopted Governmental Accounting Standards Board (GASB) Statement No. 91, Conduit Debt Obligations; GASB Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements; GASB Statement No. 96, Subscription-Based Information Technology Arrangements (SBITAs); and GASB Statement No. 99, Omnibus 2022. We noted no transactions entered into by the City during the fiscal year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.

Accounting estimates are an integral part of the financial stat ements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly se nsitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:

Management’s estimates used in establishing the fair value for investments, the useful lives of capital assets, the accrued compensated absences, the self-insu rance liability, the net pension liability and related deferred ou tflows and inflows of resource s, the net other post-employment benefit liabilities and related def erred outflows and inflows o f resources, and discount rate for the purpose of calculating the right -to-use lease and SBITA assets and the related liabilities. We evaluated the key factors and assumptions used to develop these estimates in determining that they are reasonable in relation to the financial statements taken as a whole.

Certain financial statement disclosures are particularly sensit ive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were:

• Note 9 – Pension Plans
• Note 10 – Post-Employm ent Healthcare Benefits
• Note 13 – Commitments and Contingencies

The financial statement disclosures are neutral, consistent, and clear.

Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with mana gement in performing and completing our audit.

Corrected and Uncorrected Misstatements

Professional standards require u s to accumulate all known and l ikely misstatements identified during the audit, other than those that are clearly trivial, and communica te them to the appropriate level of management. We detected no such misstatements during our audit.

Disagreements with Management

For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such dis agreements arose during the course of our audit.

Management Representations

We have requested certain representations from management that are included in the management representation letter dated January 21, 2025.

Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain sit uations. If a consultation involves application of an accounting principle to City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine t hat the consultant has all the r elevant facts. To our knowledge, there were no such consultations with other accountants.

Other Audit Findings or Issues
We generally discuss a variety of matters, including the applic ation of accounting principles and auditing standards, with management each year prior to retention as City ’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

Other Matters

We applied certain limited procedures to the Management’s and Discussion Analysis, Schedule of Changes in the Net Pension Liability and Related Ratios – Miscellaneous Agent Multiple-Employer Defined Benefit Pension Plan, Schedule of the City’s Proportionate Share of the Net Pension Liability – Safety Plan – Cost- Sharing Multiple-Employer Defined Benefit Pension Plan, Schedules of the City’s Pension Contributions, and Schedule of Changes in the City’s Total Other Post-Employment B enefits (OPEB) Liability and Related Ratios, which are required supplementary information (RSI) that supplement the basic financial statements.

Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI.

We were engaged to report on the combining and individual nonma jor fund financial statements and schedules, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evalua ted the form, content, and methods of preparing the information to determine that the information com plies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the un derlying accounting records used to prepare the financial statements or to the financial statements themselves.

Restriction on Use

This information is intended solely for the information and use of the City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
January 21, 2025

CITY OF TURLOCK, CALIFORNIA

SINGLE AUDIT REPORTS

FOR THE YEAR ENDED
JUNE 30, 2023

CITY OF TURLOCK, CALIFORNIA

SINGLE AUDIT REPORTS
FOR THE YEAR ENDED JUNE 30, 2023

TABLE OF CONTENTS

Page

Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ................................. 1

Independent Auditor’s Report on Compliance for Each Major Federal Program and on Internal Control over Compliance Required by the Uniform Guidance ................................ 3

Schedule of Expenditures of Federal Awards .................................................................................... 6

Notes to Schedule of Expenditures of Federal Awards ..................................................................... 8

Schedule of Findings and Questioned Costs ..................................................................................... 9

1 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Honorable Members of the City Council
City of Turlock, California

We have audited, in accordance with the auditing standards gene rally accepted in the United States of America and the standards applicable to financial audits contai ned in Government Auditing Standards issued by the Comptroller General of the United States, the fin ancial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Turlock, California (the City), as of and for the y ear ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated January 21, 2025.

Report on Internal Control Over Financial Reporting

In planning and performing our audit of the financial statement s, we considered the City’s internal control over financial reporting (internal control) as a basis for desi gning audit procedures that are appropriate in the circumstances for the purpo se of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Ci ty’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allo w management or employees, in the normal course of performing the ir assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that the re is a reasonable possibility that a material misstatement of the City’s financial statements will not be pre vented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combinati on of deficiencies, in internal control that is less severe than a material weakness, yet important eno ugh to merit attention by those charged with governance.

Our consideration of internal c ontrol was for the limited purpo se described in the first paragraph of this section and was not designed to i dentify all deficiencies in in ternal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We consider the deficiency as l isted on the Schedule of Material Weakness included as part of our separately issued Memorandum on Internal Control dated January 21, 2025, to be a material weakness, which is an integral part of our audit and should be read in conjunction with this report.

2 Report on Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Cit y’s financial statements are free from material misstatement, we performed tests of its compliance wit h certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on complian ce 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 a re required to be reported under Government Auditing Standards.

City’s Response to Findings

Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the findings identified in our audit and described in our se parately issued Memorandum on Internal Control dated January 21, 2025, which is an integral part of ou r audit and should be read in conjunction with this report. The city’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.

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. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Acc ordingly, this report is not suitable for any other purpose.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
January 21, 2025

3 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR

EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL

OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

To the Honorable Members of the City Council
City of Turlock, California

Report on Compliance for Each Major Federal Program

Opinion on Each Major Federal Program

We have audited the City of Turlock’s (the City) compliance wit h the types of compliance requirements identified as subject to audit in the U.S. Office of Management and Budget (OMB) Compliance Supplement that could have a direct and material effect on each of the Ci ty’s major federal programs for the year ended June 30, 2023. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

In our opinion, the City complied, in all material respects, wi th the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs identified in the summary of auditor’s results section of the a ccompanying schedule of findings and questioned costs for the year ended June 30, 2023.

Basis for Opinion on Each Major Federal Program

We conducted our audit of compliance in accordance with auditin g standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and t he audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).

Our responsibilities under those standards
and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of the City and to meet our o ther ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal deter mination of the City’s compliance with the compliance requirements referred to above.

Responsibilities of Management for Compliance

Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control o ver compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s federal programs.

4 Auditor’s Responsibilities for the Audit of Compliance

Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with auditing standards generally accept ed in the United States of A merica, Government Auditing Standards, and the Uniform Guidance will always detect material noncomplia nce when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepre sentations, or the override of internal control. Noncompliance with the compliance requirements referre d to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City ’s compliance with the requirements of each major federal program as a whole.

In performing an audit in accordance with auditing standards ge nerally accepted in the United States of America, Government Auditing Standards, and the Uniform Guidance, we:

• Exercise professional judgment and maintain professional skept icism throughout the audit. • Identify and assess the risks of material noncompliance, wheth er due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compl iance with the compliance requirements referred to above and performing such other proced ures as we considered necessary in the circumstances.
• Obtain an understanding of the Ci ty’s internal control over co mpliance relevant to the audit in order to design audit procedures that are appropriate in the ci rcumstances and to test and report on internal control over compliance in accordance with the Unif orm Guidance, but not for the purpose of expressing an opinion on the effectiveness of the Ci ty’s internal control over compliance. Accordingly, no such opinion is expressed.

We are required to communicate with those charged with governan ce regarding, among other matters, the planned scope and timing of the audit and any significant d eficiencies and material weaknesses in internal control over compliance that we identified during the audit.

Other Matters

The results of our auditing procedures disclosed an instance of noncompliance which is required to be reported in accordance with the Uniform Guidance and which are described in the accompanying Schedule of Findings and Questioned Costs as item SA2023-001. O ur opinion on each major federal program is not modified with respect to these matters.

Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the noncompliance findings identified in our compliance audit described in the accompanying Schedule of Findings and Questioned Costs. The City’s response was not s ubjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.

Report on Internal Control over Compliance

Our consideration of internal cont rol over compliance was for t he limited purpose described in the Auditor’s Responsibilities for t he Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as di scussed below, we did identify a certain deficiency in internal control over compliance that we consider to be a significant deficiency.

5 A deficiency in internal control over compliance exists when the design or o peration of a control over compliance does not allow management or employees, in the norma l course of performing their assigned functions, to prevent, or detect and correct, noncompliance wit h a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance i s a deficiency, or a combination of deficiencies, in internal contr ol over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis.

A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type o f compliance requirement of a federal program that is less severe than a material weakness in interna l control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiency in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as items SA2023-001 to be a significant deficiency.

Our audit was not designed for the purpose of expressing an opi nion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.

Government Auditing Standards require the auditor to perform limited procedures on the City’s response to the internal control over compliance finding identified in o ur audit described in the accompanying Schedule of Findings and Questioned Costs. The City’s response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance

We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate rema ining fund information of the City, as of and for the year ended June 30, 2023, and the related notes to the financial statements, wh ich collectively comprise the City’s basic financial statements. We issued our report thereon dated Januar y 21, 2025, which contained unmodified opinions on those financial statem ents. Our audit was conducted for the purpose of forming opinions on the financial statements that co llectively comprise the basic f inancial statements. The accompanying schedule of expenditures of federal awards is presented for pur poses of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relat es directly to the underlying accounting and other records used to prepare the basic financial statement s. The information has been subjected to the auditing procedures applied in the audit of the financial s tatements and certain additional procedures, including comparing and reconc iling such information directly t o the underlying accounting and other records used to prepare the basic financial statements or to th e basic financial statements themselves, and other additional procedures in accordance with auditing sta ndards generally accepted in the United States of America. In our opini on, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
January 31, 2025

The accompanying notes are an integral part of this schedule. 6 CITY OF TURLOCK, CALIFORNIA

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2023

Federal Grantor/ Assistance Pass-Throu gh
Pass-Through Grantor/ Listin g Grant Identifying Passed Through Federal Program Title Number Number to Subrecipients Expenditures U.S. Department of Housing and Urban Development:

Direct Programs:

Community Development Block Grants/State's Program
Program Expenditures 14.228 - $ 1,514,523$ Program Expenditures (Program Income) 14.228 65,800 772,074 Program Subtotal 65,800 2,286,597
HOME Investment Partnerships Program
Program Expenditures 14.239 - 110,034 Program Expenditures (Program Income) 14.239 - 560,000 Program Subtotal - 670,034
Total U.S. Department of Housing and Urban Development 65,800 2,956,631 U.S. Department of Justice:

Direct Programs:

Public Safety Partnership and Community Policing Grants 16.710 - 166,667 Edward Byrne Memorial Justice Assistance Grant Program 16.738 - 26,846 Total U.S. Department of Justice - 193,513 U.S. Department of Transportation:

Direct Programs:

Federal Transit Cluster (Note 4)
Federal Transit - Formula Grants
(Urbanized Area Formula Program) 20.507 - 3,124,033 Cluster Subtotal - 3,124,033
Passed through California Department of Transportation:

Highway Planning and Construction Cluster
Highway Planning and Construction (Federal-Aid Highway Program) Congestion Mitigation and Air Quality Improvement
Program (CMAQ) 20.205 CML-5165 - 810,526 Surface Transportation Program (STP) 20.205 RSTP-5165 - 846,480 Cluster Subtotal - 1,657,006
Passed through State of California Office of Traffic Safety:

Highway Safety Cluster
State and Community Highway Safety
Selective Traffic Enforcement Program (STEP) 20.600 PT22092 - 6,778 Selective Traffic Enforcement Program (STEP) 20.600 PT23185 - 17,701 Cluster Subtotal - 24,479

The accompanying notes are an integral part of this schedule. 7 CITY OF TURLOCK, CALIFORNIA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
FOR THE YEAR ENDED JUNE 30, 2023

Federal Grantor/ Assistance Pass-Throu gh
Pass-Through Grantor/ Listin g Grant Identifying Passed Through Federal Program Title Number Number to Subrecipients Expenditures U.S. Department of Transportation: (Continued)
Passed through State of California Office of Traffic Safety: (Continued) Minimum Penalties for Repeat Offenders for
Driving While Intoxicated 20.608 PT22092 - 11,830 Minimum Penalties for Repeat Offenders for
Driving While Intoxicated 20.608 PT23185 - 7,201 Program Subtotal - 19,031
Total U.S. Department of Transportation - 4,824,549 U.S. Department of Treasury
Direct Program:

COVID-19: Coronavirus State and Local
Fiscal Recovery Funds 21.027 - 2,859,392 Passed through California State Water Resources Control Board COVID-19: Coronavirus State and Local
Fiscal Recovery Funds 21.027 266737 - 213,898 Total U.S. Department of Treasury - 3,073,290 Total Expenditures of Federal Awards 65,800$ 11,047,983$

8 CITY OF TURLOCK, CALIFORNIA

NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2023

NOTE 1 – REPORTING ENTITY

The Schedule of Expenditure of Federal Awards (the Schedule) includes expenditures of federal awards for the City of Turlock, Californi a, (the City) and its component u nits as disclosed in the notes to the Basic Financial Statements.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements, regardless of the mea surement focus applied. All governmental funds are accounted for using the modified accrual basis of accounting. All proprietary funds and fiduciary funds are accounted for using the accrual basis of accounting. Expenditures of federal awards reported on the Schedule are recognized when incurred.

NOTE 3 – INDIRECT COST ELECTION

The City has elected not to use the 10% de minimis indirect cos t rate allowed under the Uniform Guidance.

9 CITY OF TURLOCK, CALIFORNIA

SCHEDULE OF FINDINGS AND QUESTIONED COSTS
JUNE 30, 2023

SECTION I – SUMMARY OF AUDITOR’S RESULTS

Financial Statements:

Type of auditor's report issued Unmodified

Internal control over financial reporting:
• Material weakness (es) identified? X Yes No
• S ignificant deficiencies identified
not considered to be material weaknesses? Yes X No

Noncompliance material to financial statements noted? Yes X No

Federal Awards:

Internal control over major programs:
• Material weakness (es) identified? Yes X No
• S ignificant deficiencies identified
not considered to be material weaknesses? X Yes No

Type of auditor's report issued on compliance for
major programs: Unmodified

Any audit findings disclosed that are required to be

reported in accordance with the Uniform Guidance,
under 2 CFR §200.516? Yes X No

Identification of major programs:

Assistance Listing
Number(s) Name of Federal Program or Cluster

14.228

21.027

Community Development Block Grants/State's Program

COVID-19: Coronavirus State and Local Fiscal Recovery Funds

Dollar threshold used to distinguish between Type A
and Type B programs: $750,000

Auditee qualified as low-risk auditee? Yes X No

10 SECTION II – FINANCIAL STATEMENT FINDINGS

Our audit disclosed a material wea kness, but no instances of no ncompliance material to the basic financial statements. We have also issued a separate Memorandum on Internal Control dated January 21, 2025, which is an integral part of our audits and should be read in conjunction with this report.

SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

Finding Reference Number: SA2023-001 – Suspension and Debarmen t for Contracts and Subcontracts

Assistance Listing Numbers: 21.027
Assistance Listing Title: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of Treasury
Pass Through Entity: California State Water Resources Control Board Federal Award Identification Number: SLFRP4371 – 266737

Criteria: The Award Terms and Conditions in the City of Turlock’s (the Ci ty) Coronavirus Local Fiscal Recovery Funds Agreement with the U.S. Department of the Treasu ry requires that the City comply with Office of Management and Budget (OMB) Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), 2 CFR Part 180, including the requ irement to include a term or condition in all lower tier covered transactions (contracts and subcontracts described in 2 CFR Part 180, subpart B) that the award is subject to 2 CFR Part 180 and Treasury’s implementing regulation at 31 CFR Part 19. In addition, the OMB Compliance Supplement requires that prior to entering into subawards and contracts with award funds, recipients must verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded pursuant to 31 CFR section 19.300.

Condition: During the 2021 audit, the auditor selected 19 transactions for testing that included six different vendors where the City did not verify that the vendor s were not suspended, debarred, or otherwise excluded prior to entering into the agreements. The a uditor verified that C ity staff determined that as of April 8, 2024, none of the six vendors were on the e xclusions list on SAM.gov. The City subsequently has drafted an updated citywide procurement policy that includes the requirement to be compliant with 2 C.F.R Part 180 and was expected to be approved in March 2024 as part of the City’s corrective action plan. In conjunction with the updated procure ment policy, the purchasing department of the City will check for suspension and debarment for contracts and subcontracts as part of the request for proposal process and notify all departments to check vendors wh en utilizing Federal funds. However, the updated citywide procurement policy has not been approved as of January 29, 2025.

Cause: The delay in approving the updated citywide procurement policy was due to staff turnover issues.

Identification as a Repeat Finding: Yes, since 2021.

Effect: The City is not in compliance with the grant Award Terms and Conditions.

Recommendation: The City should approve and implement the updated citywide pro curement policy in accordance with the corrective action plan.

View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

11 SECTION IV – STATUS OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

Finding Reference Number: SA2022-001 – Suspension and Debarmen t for Contracts and Subcontracts

Assistance Listing Numbers: 21.027
Assistance Listing Title: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of Treasury
Pass Through Entity: California State Water Resources Control Board Federal Award Identification Number: SLFRP4371 – 266737

Criteria: The Award Terms and Conditions in the City’s Coronavirus Local Fiscal Recovery Funds Agreement with the U.S. Department of the Treasury requires tha t the City comply with OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonproc urement), 2 CFR Part 180, including the requirement to include a term or condition in all lower tier covered transactions (contracts and subcontracts described in 2 C FR Part 180, subpart B) that t he award is subject to 2 CFR Part 180 and Treasury’s implementing regulation at 31 CFR Part 19. In addition, the OMB Compliance Supplement requires that prior to entering into subawards and contracts wi th award funds, recipients must verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded pursuant to 31 CFR section 19.300.

Condition: We selected 19 transactions for testing that included six diffe rent vendors and understand that the City did not verify that the vendors were not suspende d, debarred, or otherwise excluded prior to entering into the agreements. We did note that City staff deter mined that as of April 8, 2024, none of the six vendors were on the exclusions list on SAM.gov.

Cause: We understand that staff are responsible for performing the sus pension and debarment reviews are no longer with the City and City staff cannot find documentation that it was performed.

Identification as a Repeat Finding: Yes, since 2021.

Effect: The City is not in compliance with the grant Award Terms and Conditions.

Recommendation: The City should develop procedures to ensure compliance with d ebarment and suspension provisions of the grant agreement prior to making di sbursements to vendors and retain documentation in the grant files.

View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Current Year Status: Partially implemented. Please see current year finding SA2023-001.

Finding Reference Number: SA2022-002 – Compliance with Grant Deadlines

Assistance Listing Number: 21.027
Assistance Listing Title: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of Treasury
Pass Through Entity: California State Water Resources Control Board Federal Award Identification Number: SLFRP4371 – 266737

Criteria: California Water and Wastewater Arrearage Payment Program Guide lines Appendix A, Section

6.2.1, Notification of Customer Bill Credits, requires that the City allocate Wastewater Arrearage Program payments as bill credits to customer accounts within 60 days of receiving payment or August 5, 2022.

Condition: The City calculated the customer arrearages and credits to be a pplied as of June 15, 2021, but did not apply the wastewater credits to the customer accounts until November 8, 2022.

12 Cause: We understand that the delay was caused by problems with applying the credits in the City’s new utility billing system and technical assistance was needed from the utility billing system vendor to complete the process. However, City staff could not provide doc umentation that the delay was communicated to the grantor.

Effect: The City is not in compliance with the terms and conditions of payment related to the required program deadlines of the California Arrearage Payment Programs. As a result, the City could have been required to return moneys to the grantor.

Recommendation: Although it does not appear that the grantor disallowed any of the program costs, the City must develop procedures to ensure compliance with grant aw ard terms and conditions of payment, including timely use of grant funds. In the event the City enco unters delays that affect timely compliance, the City should communicate with the grantor and retain documen tation of any such communications to show that they occurred timely and the grantor was aware of the delay.

View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Current Year Status: Implemented.

Finding Reference Number: SA2022-003 – Monitoring CDBG and HOM E Program Activities for Compliance with Program Rules and Regulations

Assistance Listing Number: 14.228, 14.239
Assistance Listing Title: Community Development Block Grants/State's Program HOME Investment Partnerships Program
Name of Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-19-MC-06-0039, B-20-MC-06-0039 M-18-DC-06-0240. M-20-DC-06-0240

Criteria: The State CDBG program is subject to Title I of the HCDA (42 US C 5301 et seq.) and implementing regulations at 24 CFR Part 570, Subpart I24, while CFR Part 92 details the various rules and regulations of the HOME Investment Partnerships (HOME) Prog ram. These regulations include specific program requirements fo r timing of activities, eligibl e and prohibited activities, project and subrecipient monitoring requirements, as well as other provisio ns. If the City does not adhere to the requirements of the implementing regulations both before disbur sement for eligible activities and on an ongoing basis to ensure continued compliance with the requireme nts of each program, costs incurred may be deemed ineligible and need to be returned to the grantor.

Condition: The City underwent a monitoring review by the grantor during fi scal year 2022 related to the fiscal year 2022 CDBG and HOME Programs, the results of which w ere issued in August 2022. The monitoring review results included two CDBG findings, four HOME findings and one HOME concern as follows:

• CDBG Findings:
o Incorrect identification of activity in the Integrated Disbursement & Information System (IDIS), which deemed the activity ineligible unless the City provided justification as necessary costs. o Lack of a current Residential Anti-Displacement and Relocation Assistance Plan • HOME
o Findings:
 Absence of dated signatures of all parties on the beneficiary w ritten agreement for the two IDIS projects and a lack of HOME program policies and procedure s to ensure written agreements include dated signatures of all parties.
 The absence of many federally required provisions in the City’s loan agreement with a property owner, including five components detailed in the monit oring letter that were missing from the agreement.

13  The amount of HOME funds invested in one IDIS project was not a t or below the applicable maximum per-unit HOME subsidy limit as required under 24 CFR Section 92.250(a). The limit was exceeded by $133,625.
 The City does not have comprehensive written policies and proce dures as required under HOME regulation 24 CFR Section 92.504(a), including Tenant Sele ction, Income Determination and Lease Compliance.
o Concern
 Section 3 Compliance – The City has selected “no” for the question, “Is this Activity Subject to Section 3?” in the IDIS system, although the budgets for many c onstruction and rehabilitation projects exceed the compliance threshold of $200,000.

In addition, the monitoring review included follow up on prior outstanding findings (two CDBG findings and five HOME findings) that had not yet been implemented and remain outstanding.

Cause: The City lacks or has not updated its CDBG and HOME policies an d procedures or did not follow those that do meet the requirements.

Effect: The City is not in compliance with the policies and procedures documentation and reporting requirements of the CDBG and HOME p rograms. As a result, the Ci ty is required to return $133,615 to the grant program.

Questioned Costs: We question costs in the amount of $133,615, but those costs we re incurred prior to fiscal year 2022.

Recommendation: The City must develop the required policies and procedures to ensure that all grant program activities are in compliance with the provisions of 24 CFR Part 570 and 24 CFR Part 92. And, the City should ensure that all outstanding findings and concerns are resolved with the grantor.

View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Current Year Status: Implemented.

Finding Reference Number: SA2022-004 – Documenting Payroll Costs Charged to Grant

Assistance Listing Number: 20.507
Assistance Listing Title: COVID-19 – Federal Transit Cluster – Formula Grants (Urbanized Area Formula Program)
Name of Federal Agency: Department of Transportation
Federal Award Identification Number: CA-2019-111-01, CA-2020-141-00

Criteria: 2 CFR Part 200.430(i), “Uniform Administrative Requirements, Co st Principles, and Audit Requirements for Federal Awards” requires that grantees adhere to the following, “Payroll systems must be based on records that accurately reflect the work performed” and “be supported by a system of internal controls that provides reasonable assurances that char ges are accurate, allowable, and properly allocated...” The payroll records must be a part of the officia l record, reflect the employee’s total activity and show if the specific activity of the person is being paid by more than one federal award.

Section 200.430(i)(viii) indicates that budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Feder al awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity actually performed, among other requirements.

Condition: We noted that the payroll costs for two employees were charged to the program based on a flat rate percentage of the pay roll and benefits costs, rather than based on the actual hours worked.

Although we understand the City started allocating a portion of those employee payroll costs in fourth quarter of fiscal year 2022 (all other employees are fully charged to the program) and the City reviews the

14 estimates periodically to ensure they were supported and did no t need adjustment, there is no formal documentation of the review and co nclusions reached. City staff did indicate that the allocations charged are much less than the actual time spent on the program, but again, no documentation was available.

Cause: We understand that grant program staff were not aware of the pa yroll documentation requirement.

Effect: The City is not in compliance with the payroll documentation re quirements set forth in 2 CFR Part 200.430(i).

Questioned Costs: We question costs in the amount of $11,820, representing the total amount of payroll charged to the grant for the two employees during fiscal year 2022.

Recommendation: The City should establish proce dures to ensure that payroll cos ts charged to the program are documented in accor dance with 2 CFR Part 200.430 fo r the federal transit program and all federal grant programs.

View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Current Year Status: Implemented.

INDEPENDENT ACCOUNTANT’S REPORT

ON APPLYING AGREED-UPON PROCEDURES

To the Honorable Mayor and Members of the City Council
City of Turlock, California

We have performed the procedures enumerated below on the Appropriations Limit Worksheet (Worksheet) of the City of Turlock, Califor nia, (the City), in determining the City’s compliance with the requirements of Section 1.5 of Article XIII-B of the California Constitution for the fiscal year ended June 30, 2023. The City’s management is responsible for the Worksheet.

The City has agreed to and acknowledged that the procedures per formed are appropriate to meet the intended purpose of these procedu res, which were suggested by t he league of California Cities and presented in their Article XIII-B Appropriations Limitation Uniform Guidelines, performed solely to assist you in meeting the requirements of S ection 1.5 of Article XIII-B of the California Constitu tion. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and m ay not meet the needs of all user s of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.

The procedures and associated results are as follows:

A. We obtained the Worksheet (Exhibit A to the Resolution) and determined that the 2022-2023 Appropriations Limit of $71,998,615 and annual adjustment factors were adopted by the Resolution of the City Council. We also determined that the population and inflation options were selected by a recorded vote of the City Council.

B. We recomputed the 2022-2023 Appropriations Limit by multiply ing the 2020-2021 Prior Year Appropriations Limit by the Tota l Growth Factor. We recomputed the Total Growth Factor by multiplying the population option by the inflation option.

C. For the Worksheet, we agreed the Per Capita Income Factor an d County Population Factor to California State Department of Fi nance Worksheets. The Workshee t did not include the City Population Factor.

We were engaged by the City to perform this agreed-upon procedu res engagement and conducted our engagement in accordance with atte station standards established by the American Institute of Certified Public Accountants. We were not engaged to, and did not, conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the Appropriations Limit – Worksheet Six. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

We are required to be independent of the City of Turlock and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.

This report is intended solely for the information and use of m anagement and the City Council and is not intended to be, and should not be, used by anyone other than those specified parties.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
January 21, 2025

CITY OF TURLOCK

MEMORANDUM ON INTERNAL CONTROL

FOR THE YEAR ENDED JUNE 30, 2023

CITY OF TURLOCK

MEMORANDUM ON INTERNAL CONTROL
FOR THE YEAR ENDED JUNE 30, 2023

Table of Contents

Page

Memorandum on Internal Control .................................................................................................. 1

Schedule of Material Weaknesses ..................................................................................................... 2

Schedule of Other Matters ................................................................................................................. 3

Status of Prior Year Material Weaknesses ........................................................................................ 6

Status of Prior Significant Deficiencies .............................................................................................. 7

1 MEMORANDUM ON INTERNAL CONTROL

To the City Council of the
City of Turlock, California

In planning and performing our audit of the basic financial statements of the City of Turlock (the City) as of and for the year ended June 30, 2023, in accordance with auditi ng standards generally accepted in the United States of America, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not fo r the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combi nation of deficiencies, in internal control, such that ther e is a reasonable possibility t hat a material misstatement of the entity’s financial statements will not be prevented, or detected and cor rected, on a timely basis. A significant deficiency is a deficiency, or a combinati on 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 c ontrol was for the limited purpo se described in the first paragraph and was not designed to identify all deficiencies in internal control t hat might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We identified a certain deficiency in internal control, described in the accompanying Schedule of Material Weaknesses as item 2023-001, that we consider to be a material weakness.

Government Auditing Standards require the auditor to perform limited procedures on the City’s response to the findings identified in our audit and described in the accompanying Schedule of Material Weaknesses.

The City’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.

This communication is intended solely for the information and use of management, the City Council, others within the City, and agencies and pass-through entities requiri ng compliance with Government Auditing Standards and is not intended to be, and should not be, used by anyone other than these specified parties.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
January 21, 2025

2 CITY OF TURLOCK

MEMORANDUM ON INTERNAL CONTROL

SCHEDULE OF MATERIAL WEAKNESSES

2023-001 Improper Revenue Recognition

In accordance with the Governmental Accounting Standards Board (GASB) Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions , revenue should be recognized when eligibility requirements, including time requirements, are met. Resources t ransmitted before the eligibility requirements are met should be reported as deferred revenues by the recipients, with certain exceptions.

The City of Turlock (the City) received American Rescue Plan Ac t (ARPA) funds prior to meeting the eligibility requirements that wer e properly recorded as Deferre d Revenue. However, in fiscal year 2023 some of these funds were improperly reclassed from Deferred Rev enue to Revenue in the amount of $2,612,681.

The misclassification of revenue from deferred revenue occurred due to a change in the process of how items are deemed as expensed w hen moved from the fund. Staff to ok the transfer of the $2,612,861 as reimbursement for expenses incurred in the project fund, however in this isolated case, the funds were only transferred to the project fund and not yet expended.

Overstated revenue from ARPA funds lead to an artificially created increase in net income (change in fund balance). This also resulted in inflated total revenues and fund balances.

The City must implement the following procedures to ensure proper revenue recognition:

1. Ensure no single individual has control over recording, appr oval, and reconciling revenue transactions.

2. Require dual authorization for revenue recognition, especial ly for large or complex transactions.

3. Implement tracking mechanisms to confirm grant eligibility requirements are met before revenue is recognized in compliance with GASB Statement No. 33.

4. Maintain proper documentation for each grant revenue source to support revenue recognized on financial statements.

5. If available, use specialized grant tracking systems to ensu re grant funds are recognized only after eligibility requirements are met.

Management’s Response:

Management acknowledges and agrees with the finding and further has developed the following procedure to ensure that this does not occur again. The City will now su bmit all council agenda items that transfer funds from the ARPA fund that are being done as project funding appropriations before expenditures are incurred to the Principal Account in charge of grant reporting to ensure that those items are not misclassified as revenue.

3 CITY OF TURLOCK

MEMORANDUM ON INTERNAL CONTROL

SCHEDULE OF OTHER MATTERS

NEW GASB PRONOUNCEMENTS OR PRONOUNCEMENTS NOT YET EFFECTIVE

The following comment represents new pronouncements taking affect in the next two years. We cite them here to keep you informed of developments:

EFFECTIVE FISCAL YEARS 2022, 2023, and 2024:

GASB Statement No. 99, Omnibus 2022

The objectives of this statement are to enhance comparability in accounting and financial reporting and to improve the consistency of author itative literature by addressi ng (1) practice issues that have been identified during implementation and application of certain GAS B Statements and (2) accounting and financial reporting for financial guarantees. The practice issues addressed by this statement are as follows:

• Classification and reporting of derivative instruments within the scope of Statement No. 53, Accounting and Financial Reporting for Derivative Instruments , that do not meet the definition of either an investment derivative instrument or a hedging derivative instrument. • Clarification of provisions in Statement No. 87, Leases, as amended, related to the determination of the lease term, classification of a lease as a short-term lease, re cognition and measurement of a lease liability and a lease asset, and identification of lease incentives. • Clarification of provisions in Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements (PPPs) , related to (a) the determination of the public-private and public-public partnership (PPP) term and (b) recognition and me asurement of installment payments and the transfer of the underlying PPP asset.
• Clarification of provisi ons in Statement No. 96, Subscription-Based Information Technology Arrangements, related to the subscription-based information technology arra ngement (SBITA) term, classification of an SBITA as a short-term SBITA, and recognition and measurement of a subscription liability.
• Extension of the period during which the London Interbank Offer ed Rate (LIBOR) is considered an appropriate benchmark interest rate for the qualitative evaluation of the effectiveness of an interest rate swap that hedges the interest rate risk of taxable debt. • Accounting for the distribution of benefits as part of the Supp lemental Nutrition Assistance Program (SNAP).
• Disclosures related to nonmonetary transactions.
• Pledges of future revenues when resources are not received by the pledging government. • Clarification of provisions in Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments , as amended, related to the focus of the government-wide financial statements.
• Terminology updates related to certain provisions of Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. • Terminology used in Statement No. 53 to refer to resource flows statements.

The requirements of this statem ent are effective for the variou s topics over fiscal years 2022, 2023, and 2024. Earlier application is encouraged and is permitted by individual topic.

4 EFFECTIVE FISCAL YEAR 2022/23:

GASB Statement No. 91 – Conduit Debt Obligations

The primary 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. This statement achieves those objectives by clarifying the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of the issuer; est ablishing standards for accounting and financial reporting of additional commitm ents and voluntary commitments e xtended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures.

GASB Statement No. 94 – Public-Private and Public-Public Part nerships 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 (PPPs). As used in this statement, a PPP is an arrangement in which a government (the transferor) contracts wi th an operator (a governmental or nongovernmental entity) to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset (the underlying PPP asset), for a period of time in an exchange or exchange-like transaction. Some PPPs meet the definition of a service concession arrangement (SCA), which GASB defines in this statement as a PPP in which (1) the operator collects and is compensated by fees from third parties; (2) the transferor d etermines or has the ability to modify or approve which services the operator is required to provide, to whom the operator is required to provide the services, and the prices or rates that can be charged for the s ervices; and (3) the transferor is entitled to significant residual interest in the service utility of the underlying PPP asset at the end of the arrangement.

This statement also provides guidance for accounting and financ ial reporting for availability payment arrangements (APAs). As defined in this statement, an APA is an arrangement in which a government compensates an operator for services that may include designing , constructing, financing, maintaining, or operating an underlying nonfinancial asset for a period of time in an exchange or exchange-like transaction.

GASB Statement No. 96 – Subscription-Based Information Technology Arrangements

This statement provides guidance on the accounting and financia l reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). This statement defines an SBITA; (2) establishes that an SBITA results in a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability; (3) provides the capitalization crit eria for outlays other than subscription payments, including implementation costs of an SBITA; and (4) requires note disclosures regarding an SBITA. To the extent relevant, the standards for S BITAs are based on the standards established in Statement No. 87, Leases, as amended.

EFFECTIVE FISCAL YEAR 2023/24:

GASB Statement No. 100 – Accounting Changes and Error Corrections—an Amendment of GASB Statement No. 62

The primary objective of this statement is to enhance accountin g and financial reporting requirements for accounting changes and error corrections to provide more unders tandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability.

Furthermore, this statement addresses how information that is affected by a change in accounting principle or error correction should be pr esented in required supplementa ry information (RSI) and supplementary
information (SI). For periods that are earlier than those inclu ded in the basic financial statements, information presented in RSI or SI should be restated for error corrections, if practicable, but not for changes in accounting principles.

5 EFFECTIVE FISCAL YEAR 2024/25:

GASB Statement No. 101 – Compensated Absences

The objective of this statement is to better meet the informati on needs of financial statement users by updating the recognition and measurement guidance for compensat ed absences. That objective is achieved by aligning the recognition and measurement guidance u nder a unified model and by amending certain previously required disclosures.

GASB Statement No. 102 – Certain Risk Disclosures

State and local governments face a variety of risks that could negatively affect the level of service they provide or their ability to meet obligations as they come due. Although governments are required to disclose information about their exposure to some of those risks, essent ial information about other risks that are prevalent among state and local governments is not routinely disclosed because it is not explicitly required.

The objective of this statement is to provide users of governme nt financial statements with essential information about risks related to a government’s vulnerabilities due to certain concentrations or constraints.

EFFECTIVE FISCAL YEAR 2025/26:

GASB Statement No. 103 – Financial Reporting Model Improvements

The objective of this statement is to improve key components of the financial reporting model to enhance its effectiveness in providing information that is essential for decision making and assessing a government’s accountability. This statement also addresses certain application issues.

GASB Statement No. 104 – Disclosure of Certain Capital Assets

State and local governments are required to provide detailed information about capital assets in the notes to financial statements. Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments , requires certain information regarding capital assets to be presented by major class. The objective of this statement is to provide users of government financial statements with essential information about certain types of capital assets.

This statement also requires additional disclosures for capital assets held for sale. A capital asset is a capital asset held for sale if (a) the government has decided to pursue the sale of the capital asset and (b) it is probable that the sale w ill be finalized within one year of the financial statement date. Governments should consider relevant factors to evaluate the likelihood of the capital asset being sold within the established time frame. This statement requires that capital assets held for sale be evaluated each reporting period. Governments should disclose (1) the ending balance of c apital assets held for sale, with separate disclosure for historical cost and accumulated depreciation by major class of asset, and (2) the carrying amount of debt for which the capital assets held for sale are p ledged as collateral for each major class of asset.

6 CITY OF TURLOCK

MEMORANDUM ON INTERNAL CONTROL

STATUS OF PRIOR YEAR MATERIAL WEAKNESSES

2022-001 Timely and Accurate Year-End Close

As noted in prior year comment 2021-001, the year-end financial closing and preparation of the general ledger data should be completed timely and accurately. In addit ion, organizations should have a contingency plan in the event of staff turnover. Part of this p lan is ensuring there are staff resources available on short notice to fill in key functions. In the Fina nce Department, these resources need to be in place throughout the fiscal year to ensure accounting functions continue and allow time for analysis of account balances and activities.

During fiscal year 2021-22, the City experienced significant staff shortages due to staff departures and long- term leaves of absence that continued from fiscal year 2020-21. This put a strain on the City’s ability to maintain good internal controls, and to produce accurate and ti mely financial data. As a result, the year- end audit was adversely affected. The trial balance we received from the City for the audit was submitted to us in September 2023, which had been delayed due to the leng th of time it took to complete the fiscal year 2020-21 audit. In addition, during the audit, we discovere d and/or City staff proposed eighteen additional post-closing journal entries, including a number of material post-closing adjustment entries for audit for areas including fiscal agent cash and investments, lo ng-term debt refunding and issuance transactions, unearned revenue, as well as a restatement that affected utility revenue.

The above condition delayed the completion of the year-end closing process, which increased the risk that material errors or misstatements may go undetected by staff and corrections may not be made in a timely manner. Audit effort was substantially increased in response to these increased risks.

The City should analyze staff resources to determine what plans can or should be made to ensure that the financial data is processed properly and timely during staffing transitions. In addition, the City must develop procedures to ensure that accounts are analyzed throughout the fiscal year and after the year-end close to ensure that additional closing entries are not required prior to providing the general ledger for audit.

Current Year Status:

The City of Turlock has made significant improvement in timely and accurate year-end closing for the Fiscal Year 2022-2023. As a result, t he Fiscal Year 2022-2023 reports have been completed much sooner than the Fiscal Year 2021-2022 reports. The City’s management is fully aware of the situation and will continue to improve in this area.

7 CITY OF TURLOCK

MEMORANDUM ON INTERNAL CONTROL

STATUS OF PRIOR YEAR SIGNIFICANT DEFICIENCIES

2022-003 Inaccurate Customer Fees Charged

The rates charged in the City’s utility billing system should b e consistent with the City’s Fee Schedule approved by the City Council.

We tested twenty-five utility receipts and recalculated the water, sewer, and garbage service fees using the City’s fiscal year 2022 utility fee schedule. We were unable to recalculate the garbage or sewer fees charged to three customers as follows:

• One receipt dated January 26, 2022 – we calculated a garbage fe e of $595.42, but the customer was billed $507.45.
• One receipt dated March 7, 2022 – we recalculated a garbage fee of $601.20, but the customer was billed $724.30.
• One receipt dated March 11, 2022 – we recalculated a sewer service fee of $176.68, but the customer was billed $176.70.

Although the variance in the third receipt could be due to a rounding issue, City staff determined that rates in the utility billing system had not been updated for certain components of the garbage fees, which resulted in both over- and under-charging customers. The City collects the garbage fees on behalf of a third-party vendor, but the amounts charged to customers should still agree to the current rate schedule.

We understand the errors are due to staff oversight during the rate adjustment process, because the garbage fees have not been revised in a number of years.

City staff should immediately review all fee schedules in the utility billing system to ensure they are accurate and reflect the current fee structure approved by the City Council.

Current Year Status:

Implemented.

2022-004 Timely Preparation and Review Bank Reconciliations

Bank account reconciliations are one of the most important internal controls and the reconciliation cannot be considered complete until it has been reviewed and approved. To be an effective control, bank reconciliations and the associated review should be completed as soon as reasonably possible after each month-end, usually within thirty to forty-five days of the bank statement date.

We noted that the bank reconciliation for the months of May and June 2022 were not completed until October and November 2022, respectively.

We understand the delays experienced during the fiscal year wer e due to a staff shortage, which made it difficult to process the reconciliations timely.

By not completing and reviewing the bank reconciliations timely, accounting errors, misstatements, and/or unauthorized activities may not be identified or corrected in a timely manner and could continue to accumulate to amounts that cannot be identified and resolved.

The City must implement procedures to ensure the timely prepara tion and review of bank reconciliations throughout the fiscal year.

8 Current Year Status:

Implemented.

2022-005 Timely Review and Approval of Journal Entries

Journal entries should be prepared and reviewed in a timely manner for the period in which the entry is to be posted, in order to keep accounts up to date with the current information. In addition, to have a complete audit trail of the journal entry process, the dates of preparat ion and review should be documented for all journal entries.

We selected forty journal entries for testing of controls over the journal entry process and supporting documentation and noted four of t he journal entries were prepar ed from one to three months after the periods the entries were intended to adjust.

Two of the forty journal entries tested did not have evidence o f the date prepared and the date reviewed, which is typically indicated by date stamps used by the Finance Department. One of the two journal entries without a date stamp did have a date printed on the bottom of t he page that reflected when the journal voucher may have been prepared, however, no date of review was noted.

Without the timely preparation, review and approval of journal entries, there is an increased risk of unauthorized entries or an error going undetected, and interim financial reporting may be inaccurate.

We understand the delay in the preparation and review process w as due to the shortage of staff in the Finance Department.

The City should develop procedures to ensure that all journal entries are prepared, reviewed, approved and posted to the general ledger in a timely manner (generally within 30-45 days of the date of activity).

Current Year Status:

Implemented.

2021-004 Payroll Rotation of Duties

The Finance Department should ensure that there are resources available to be utilized on short notice to fill gaps in key positions. These resources need to be in place throughout the fiscal year to ensure accounting processes and procedures continue effectively.

In the current fiscal year, the Administrative Analyst was the only employee that could process the City’s payroll and there were no other employees that are fully traine d on the entire process. As a result, the Administrative Analyst could not take any vacation during the weeks when payroll was run.

We understand the lack of an alternate payroll processor was due to staff shortages.

If the Administrative Analyst was unavailable or out on leave, the City would have difficulty processing payroll.

The City should develop a plan to ensure there is always a backup employee that can process the City’s payroll in the event that the main processor becomes unavailable.

Current Year Status:

Implemented.

9 2021-005 Super-User Rights

A super-user is a special user account used for system administration. It has broad privileges that allow the employee to perform tasks that other users cannot. The super-us er’s privileges are unrestricted and can perform any available action on a system. Good internal control requires that employees with access to the City’s assets not have access to the City’s accounting records for the same assets. Therefore, accounting staff should not normally be allowed to have super-user rights in the City’s general ledger system.

We noted one Senior Accountant and one Accountant II are super- users in the City’s financial system, which includes unlimited access to the accounting system modules and security settings.

When accounting staff have super -user rights, unauthorized tran sactions could be processed without proper review and approval.

Due to the Information Technology Department’s limited availabi lity, Finance Department staff feels they need to have the ability to alter access levels for staff in case of an emergency.

The City should consider restricting super-user rights to as few employees as possible, preferably to those outside of the Finance Department, such as Information Technology personnel since they are not involved with processing or approving general ledger transactions. Until that is possible, the City should implement mitigating controls such as a review and approval of changes made to the system by the above employees.

Current Year Status:

Implemented.

2018-005 Develop a Funding Plan for the Engineering Internal Se rvice Fund Net Position Deficit

Fund activities should be monitored throughout the fiscal year to ensure resources are available to fund current year activities and plans should be established to eliminate any deficits that may have accumulated from prior year activity.

As of June 30, 2018, the Engineering Internal Service Fund reported an unrestricted net position deficit of $6.83 million, an increase of $780 thousand from the prior year , and the fund had a short-term payable to the Equipment Pool Internal Service Fund of $2.56 million.

We understand that the City had previously adopted fees and use r charges to allow the Engineering Division to recover 100% of its costs associated with the issua nce of certain permits and tasks. However, that only relates to current activities and does not work to reduce or eliminate the accumulated fund deficit.

Although $4.9 million of the fund’s deficit net position is rel ated to the long-term pension and other post- employment benefits (OPEB) liabilities, that leaves a remaining deficit of $1.9 million. And, we noted that the City’s amended fiscal year 2019 budget anticipates an increase to the deficit of $872 thousand. Although the fiscal year 2020 budget shows no planned change in the deficit, it includes a budgeted transfer of $295 thousand from the General Fund to achieve that goal.

In addition, the deficit in the fund has been present for at le ast the last six years, so it appears that the interfund payable will not be repaid within one year. The City should determine whether the short-term interfund loan should be converted to a long-term advance. And, any advance established should have clear repayment terms.

Update for June 30, 2019:

As of June 30, 2019, the Engineering Internal Service Fund repo rted an unrestricted net deficit of $6.78 million, a decrease of $50 thousand from the prior year, and th e fund had a short-term payable to the General Fund of $2.89 million.

10 Update for June 30, 2021:

As of June 30, 2021, the Engineering Internal Service Fund repo rted an unrestricted net deficit of $5.14 million, a reduction to the net deficit by $559 thousand from t he prior year, and the fund had a short-term payable to the General Fund of $2.13 million.

Update for June 30, 2022:

As of June 30, 2022, the Engineering Internal Service Fund repo rted an unrestricted net deficit of $4.2 million, a reduction to the net deficit by $915 thousand from t he prior year, and the fund had a short-term payable to the General Fund of $1.3 million.

The City must perform a review of the activities in the fund to determine if costs can be reduced or rates adjusted to eliminate the net position deficit and provide funds for repayment of the interfund borrowing. If the advance or short-term loan is not expected to be repaid wit hin a reasonable period of time, Generally Accepted Accounting Principles require that the interfund balances be reduced and the amount that is not expected to be repaid should be reported as a transfer from the fund that made the loan to the fund.

In addition, the City should determine whether it is appropriate to continue reporting the fund as an internal service fund, which is expected to recover its costs on an annu al basis. If the fund is not going to recover its costs on an annual basis, it should instead be reported as a component of the General Fund.

Current Year Status:

Implemented.

2018-008 Retention of Retiree Personnel Files to Support Pensio n and Other Post-Employment Benefits (OPEB) Census Data File

The City must maintain personnel records to ensure the accuracy of pension and OPEB census data files, census data should be reviewed for accuracy prior to being subm itted to the actuary, and census data in the actuarial reports should be reconciled to the City’s payroll records to ensure accuracy.

We selected fifty-three active and retiree personnel for the Ci ty’s OPEB plans for testing of eligibility to receive benefits and inclusion in the June 30, 2017 census data files based on various criteria, including newly eligible employees during the period to the census data, active employees and retirees in the census data, and active employees in the payroll register to trace to census data. During our testing, we noted that two former employee personnel files could not be located, and w e noted three active employees that appeared to be eligible to participate in the plan that were not included in the census data file.

The two missing personnel files could not be located by the Hum an Resources Department, because we understand they had been destroyed in a prior year in complianc e with the City’s records retention policy.

As for the active employees that were not included in the census data file, we understand that staff turnover in employees responsible for preparing the census data may have contributed to the error.

In response to our exceptions, City staff reviewed the census d ata file and payroll records as of June 30, 2017, and determined that there were twenty-eight individuals who should have been included in the census report because they departed from the City after July 1, 2017, and twenty-five individuals were incorrectly included in the census report because they had been hired after July 1, 2017.

Update for June 30, 2020:

We selected thirty-three active personnel of the City’s OPEB plans for testing of eligibility to receive benefits and inclusion in the June 30, 2019 census data files based on various criteria. During our testing, we noted that the gender information of two employees and hiring date of one employee in the census data do not agree to the information in their personnel files.

Update for June 30, 2021:

Actuarial valuations for OPEB are completed every two fiscal years, therefore the census data will be tested again during the fiscal year ended June 30, 2022.

11 Update for June 30, 2022:

In addition to testing other com ponents of the census data file for the June 30, 2022 measurement date, which was based on an actuarial valuation date of July 1, 2021, we selected five inactive/retirees for testing to supporting personnel/payroll records.

City staff was unable to locate documentation for a retired Fire Captain that showed that he was previously an employee of the City and a retiree eligible to receive OPEB benefits.

Although we were able to find a City Council proclamation on the web recognizing the former Fire Captain’s retirement from the City on a date that did agree with the census data file, the City should develop policies and procedures to retain certain employee data in the City’s pe rmanent records necessary to support the census data files during each reporting period.

Without proper review of the census data transmitted to the act uary, there is a risk of incorrect data being submitted which may affect the City’s actuarial data results.

The City must develop record keeping, review, and reconciliatio n procedures to ensure the pension and OPEB census data is supported, u p to date, and accurate. In the event the City records retention policy does not provide for retention of personnel files for retirees still receiving benefits, at a minimum, the policy should be revised to require the retention of personnel data to support the documentation of eligibility to receive the benefits.

Current Year Status:

Implemented.

ISAAC MORENO FINANCE DEPARTMENT
FINANCE DIRECTOR [email protected]

156 S. BROADWAY, SUITE 110 | TURLOCK, CALIFORNIA 95380 | PHONE 209-668-6071 | FAX 209-668-5576

SINGLE AUDIT/BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2023

CORRECTIVE ACTION PLANS

FINANCIAL STATEMENT FINDINGS - CURRENT YEAR

2023-001 Improper Revenue Recognition

 Fiscal Year of Initial Finding: 2023

 Name(s) of the contact person: Isaac Moreno, Finance Director

 Corrective Action Plan: Management acknowledges the auditor’s finding and in order to address the issue, has developed the following procedure to ensure that this does not occur again. The City of Turlock will now submit all council agenda items that transfer funds from the ARPA fund that are being done as project funding appropriations before expenditures are incurred, to the Principal Accountant in charge of grant reporting to ensure that those items are not misclassified as revenue.

 Anticipated Completion Date: 6/30/2025

TURLOCK PUBLIC FINANCING AUTHORITY

BASIC FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITOR’S REPORT

FOR THE FISCAL YEAR ENDED
JUNE 30, 2023

TURLOCK PUBLIC FINANCING AUTHORITY
JUNE 30, 2023

TABLE OF CONTENTS

Page

Financial Section:

Independent Auditor’s Report ............................................................................................................... 1

Basic Financial Statements:

Government-Wide Financial Statements:

Statement of N et Position ............................................................................................................... 5

Statement of Activities ...................................... .............................................................................. 6

Fund Financial Statements:

Proprietary Fund Financial Statements:

Statement of N et Position ........................................................................................................ 8

Statement of Revenues, Expense s, and Changes in Fund Net Position ................................ 9

Statement of C ash Flows ...................................................................................................... 10

Notes to the Basic Financial Statements ...................... ..................................................................... 11

Other Report:

Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters B ased on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...................................................... 17

FINANCIAL SECTION

1 INDEPENDENT AUDITOR’S REPORT

Honorable Members of the Board of Directors
Turlock Public Financing Authority
Turlock, California

Report on the Audit of the Financial Statements

Opinions

We have audited the accompanying financial statements of the bu siness-type activities and the major fund of the Turlock Public Finan cing Authority (the Authority), a component unit of the City of Turlock, California (the City), as of and for the fiscal year ended June 30, 2023, and the related notes to the basic financial statements, which collectively comprise the Authority’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above pres ent fairly, in all material aspects, the respective financial position of the business-type activities and the major fund of the Authority, as of June 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof for the fiscal year then ended in accordance with accounting princi ples generally accepted in the United States of America.

Basis for Opinions

We conducted our audit in accordance with auditing standards ge nerally accepted in the United States of America and the standards applicable to financial audits contai ned in Government Auditing Standards , issued by the Comptroller Genera l of the United States. Our res ponsibilities under those standards are further described in the Auditor’s Responsibilities for the Aud it of the Financial Statements section of our report. We are required to be independent of the Authority and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating t o our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presenta tion of the financial statements in accordance with accounting prin ciples generally accepted in the United States of America; and for the design, implementation, and maintenance of internal control rel evant to the preparation and fair presentation of financial statem ents that are free from materia l misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial dou bt about the Authority’s ability to continue as a going concern for twelve months beyond the financial state ment date, including any currently known information that may raise substantial doubt shortly thereafter.

2 Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in acc ordance with auditing standards generally 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 override of internal cont rol. Misstatements are considered material if there is a substantial likelihood that, individually or in t he 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 ge nerally accepted in the United States of America and Government Auditing Standards, we:

• Exercise professional judgment and maintain professional skept icism 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 respons ive to those risks. Such procedures include examining, on a test basis, evidence regardi ng the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the au dit in order to design audit procedures that are appropriate in the circumstances, but not f or the purpose of expressing an opinion on the effectiveness of the City’s internal control rel ating to the Authority. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and t he reasonableness of significant accounting estimates made by management, as well as evaluate th e overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or eve nts, considered in the aggregate, that raise substantial doubt about the Authority’s ability to c ontinue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governan ce regarding, among other matters, the planned scope and timing of the audit, significant audit fi ndings, and certain internal control-related matters that we identified during the audit.

Emphasis of a Matter
As discussed in Note 1, the component unit financial statements present only the Authority and are not intended to present fairly the financial position and the resul ts of operations of the City of Turlock in accordance with accounting principles generally accepted in the United States of America.

Required Supplementary Information

Management has omitted the Management’s Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presente d to supplement the basic financial statements. Such missing inform ation, although not a part of t he basic financial statements, is required by the Governmental Accounting Standards Board, who considers i t to be an essential part of financial reporting for placing the basic financial statements in an appr opriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.

3 Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated February 21, 2025, on our consideration of the City’s internal control over financial reporting relating to the Authority and on our tests of its compliance with certain provisions of l aws, regulations, contracts, and grant agreements and other matters. The purpose of that report is sol ely to describe the scope of our testing of internal control over financial reporting and compliance and th e 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 relating to the Authority. That report is an integral part of a n audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial repo rting and compliance relating to the Authority.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
February 21, 2025

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS

4 TURLOCK PUBLIC FINANCING AUTHORITY

STATEMENT OF NET POSITION

AND STATEMENT OF ACTIVITIES

The Statement of Net Position and the Statement of Activities s ummarize the Authority’s entire financial activities and financial position. They are prepared on the sam e basis as is used by most businesses, which means they include all the Authority’s assets, all its de ferred inflows/outflows of resources and all its liabilities, as well as all its revenues and expenses.

The Statement of Net Position reports the difference between th e Authority’s total assets and deferred outflows of resources and the Authority’s total liabilities and deferred inflows of resources, including all the Authority’s long-term debt. The Statement of Net Position summa rizes the financial position of all the Authority’s activities in a single column.

The Statement of Activities repo rts increases and decreases in the Authority’s net position. It is also prepared on the full accrual basis, which means it includes all the Authority’s revenues and all its expenses, regardless of when cash changes hands.

See accompanying notes to the basic financial statements. 5 TURLOCK PUBLIC FINANCING AUTHORITY

STATEMENT OF NET POSITION
JUNE 30, 2023

Business-Type
Activ ities
ASSETS
Investments with fiscal agent (Note 2) 3 $
Interest receivable 263,434
Leases receivable (Note 3) 20,134,287
Total Current Assets 20,397,724

LIABILITIES
Interest payable 263,434
Long-term debt (Note 4):

Due within one year 835,000
Due in more than one year 19,299,290
Total Liabilities 20,397,724
NET POSITION (Note 5)
Restricted -
Total Net Position - $

See accompanying notes to the basic financial statements. 6 TURLOCK PUBLIC FINANCING AUTHORITY

STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

Program Net (Expense)
Revenues Revenue and
Charges for Changes in
Functions/Programs Expenses Services Position
Business-Type Activities:

Water 827,868 $ 827,868 $ - $
Total 827,868 $ 827,868 $ -
General Revenues:

Interest income -
Total general revenues -
Change in net position -
Net position:

Beginning of year -
End of year - $

FUND FINANCIAL STATEMENTS

7 TURLOCK PUBLIC FINANCING AUTHORITY

FUND FINANCIAL STATEMENTS

Major funds are defined generally as having significant activities or balances in the current year. All of the Authority’s funds are major funds.

See accompanying notes to the basic financial statements. 8 TURLOCK PUBLIC FINANCING AUTHORITY

PROPRIETARY FUNDS

STATEMENT OF NET POSITION
JUNE 30, 2023

2017
Water Bonds Total
ASSETS
Investments with fiscal agent (Note 2) 3 $ 3 $ Interest receivable 263,434 263,434
Leases receivable (Note 3) 20,134,287 20,134,287
Total Assets 20,397,724 20,397,724

LIABILITIES
Current liabilities:

Interest payable 263,434 263,434
Bonds payable (Note 4) 835,000 835,000
Total Current Liabilities 1,098,434 1,098,434
Long-term liabilities:

Bonds payable (Note 4) 19,299,290 19,299,290
Total Liabilities 20,397,724 20,397,724
NET POSITION (Note 5)
Restricted - -
Total Net Position - $ - $

See accompanying notes to the basic financial statements. 9 TURLOCK PUBLIC FINANCING AUTHORITY

PROPRIETARY FUNDS

STATEMENT OF REVENUES, EXPENSES,

AND CHANGES IN FUND NET POSITION
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

2017
Water Bonds Total

OPERATING REVENUES
Lease revenue 827,868 $ 827,868 $
Total Operating Revenues 827,868 827,868

OPERATING EXPENSES
Interest expense 827,868 827,868
Total Operating Expenses 827,868 827,868
Operating Income (Loss) - -

NONOPERATING REVENUES (EXPENSES)
Interest income - -
Total Nonoperating Revenues (Expenses) - - Change in net position - -

BEGINNING NET POSITION - -
ENDING NET POSITION - $ - $

See accompanying notes to the basic financial statements. 10 TURLOCK PUBLIC FINANCING AUTHORITY

PROPRIETARY FUNDS

STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

2017
Water Bonds Total

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from City of Turlock 1,635,938 $ 1,635,938 $ Long-term debt payment - interest (840,938) (840,938) Cash Flows from Operating Activities 795,000 795,000

CASH FLOWS FROM NONCAPITAL AND

RELATED FINANCING ACTIVITIES
Payment to bond escrow agent - - Long-term debt payment - principal (795,000) (795,000) Cash Flows from Noncapital and
Related Financing Activities (795,000) (795,000) Net Cash Flows - -
Cash and Investments at Beginning of Year 3 3 Cash and Investments at End of Year 3$ 3 $ Reconciliation of Operating Income to Cash Flows
from Operating Activities:

Operating income - $ - $
Amortization of bond premium (156,901) (156,901) Change in assets and liabilities:

Interest receivable 9,441 9,441
Interest payable (9,441) (9,441)
Leases receivable 951,901 951,901
Cash Flows from Operating Activities 795,000 $ 795,000 $ NONCASH TRANSACTIONS:

Amortization of bond premium 156,901 $ 156,901 $

NOTES TO BASIC FINANCIAL STATEMENTS

11 TURLOCK PUBLIC FINANCING AUTHORITY

NOTES TO THE BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2023

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Organization and Purpose

The Turlock Public Financing Authority (the Authority) is a separate government entity whose purpose is to assist with the financing or refinancing of certain public capital improvements within the City. The Authority has the power to purchase bonds issued by any local a gency at public or negotiated sale and may sell such bonds to public or private purchasers at publ ic or negotiated sale. The Authority is controlled by the City and has the same governing body as the C ity, which also performs all accounting and administrative functions for the Authority. The Authority was created on December 15, 1998, pursuant to Article 1, Chapter 5, of Division 7 of Title 1 of the Government Code of the State of California as a Joint Powers Authority between the City and the former Turlock Redevelopment Agency.

The Authority is an integral part of the City, and the accompan ying financial statements are included as a component of the basic financial statements prepared by th e City. A component unit is a separate governmental unit, agency, or nonprofit corporation wh ich, when combined with all other component units, constitutes the reporting entity as defined in the City’s basic financial statements.

The component unit financial statements present only the Author ity and are not intended to present fairly the financial position and the results of operations of the City of Turlock in accordance with accounting principles generally accepted in the United States of America.

B. Basis of Presentation

The Authority’s Basic Component Unit Financial Statements are p repared in conformity with accounting principles generally accepted in the United States o f America. The Governmental Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America.

These standards require that the financial statements described below be presented.

Authority-Wide Statements

The Statement of Net Position and the Statement of Activities i nclude the financial activities of the overall Authority government. Eliminations have been made to mi nimize the double counting of internal activities.

The Statement of Activities presents a comparison between direc t expenses and program revenues for each function of the Authorit y’s governmental and business- type activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restricted to meeting the operational needs of a particular program and (c) fees, grants, and contributions that are restricted to financing the acquisition or construction of capital assets. Re venues that are not classified as program revenues, including interest income, are presented as general revenues.

The Authority-wide financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are re corded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.

12 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

B. Basis of Presentation (Continued)

Fund Financial Statements

The fund financial statements provide information about the Aut hority’s funds. Separate statements for each proprietary fund are presented. The emphasis of fund f inancial statements is on major individual governmental and enter prise funds, each of which is displayed in a separate column. The Authority considers all its funds to be major funds.

Proprietary Fund Financial Statements – Proprietary fund financial statements include a Statement of Net Position; a Statement of Revenues, Expenses, and Changes in Fund Net Position; and a Statement of Cash Flows. Proprie tary funds are accounted for us ing the economic resources measurement focus and the full ac crual basis of accounting. Acc ordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement o f Net Position. The Statement of Revenues, Expenses, and Changes in Fund Net Position presents i ncreases (revenues) and decreases (expenses) in total net position.

Operating revenues in the propri etary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as nono perating revenues. Operating expenses are those expenses that are essential to the primary o perations of the fund. All other expenses are reported as non-operating expenses.

C. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measu rement date. The Authority categorizes its fair value measurements within the fair value h ierarchy established by accounting principles generally accepted in the United States of America. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value i nto three levels based on the extent to which inputs used in measuring fair value are observable in the market.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are inputs – other than quoted prices included w ithin Level 1 – that are observable for an asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for an asset or liability.

If the fair value of an asset or liability is measured using in puts from more than one level of the fair value hierarchy, the measurement is considered to be based on t he lowest priority level input that is significant to the entire measurement.

D. Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estima tes and assumptions that affect the reported amounts of assets an d liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of re venues and expenses during the reporting period. Actual results could differ from those estimates.

NOTE 2 – INVESTMENTS HELD BY FISCAL AGENT

The Authority invests in individual investments and in investme nt pools. Individual investments are evidenced by specific identifiable pieces of paper called securities instruments, or by an electronic entry registering the owner in the records of the institution issuing the security, called the book entry system.

13 NOTE 2 – INVESTMENTS HELD BY FISCAL AGENT (Continued)

The Authority’s investments are carried at fair value, as requi red by accounting principles generally accepted in the United States of America. The Authority adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, and it includ es the effects of these adjustments in income for that fiscal year.

In accordance with accounting principles generally accepted in the United States of America, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost.

All other investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available.

A. Investments Authorized by Debt Agreements

In accordance with the Lease Revenue Bond Indentures of Trust, a Trustee holds the portion of bond proceeds established as reserves for debt service on these bond s. The California Government Code requires these funds to be invested in accordance with bond ind entures or State statutes. The table below identifies the investment types and their minimum credit ratings that are authorized for investments held by trustee and certain provisions of these deb t agreements. The bond indentures contain no limitations for the maximum investment in any one is suer or the maximum percentage of the portfolio that may be invested in any one investment type.

Authorized Investment Type
Maximum
Maturity
Minimum
Credit
Quality
Maximum
Percentage of
Portfolio
U.S. Treasury Notes, Bonds, and/or Bills 5 years N/A No maximum U.S. Government Sponsored Securities 5 years N/A No maximum State Obligations N/A A No maximum
Pre-refunded Municipal Obligations N/A AAA No maximum
Certificates of Deposit 30 days A-1 No maximum
Bankers' Acceptances 30 days A-1 No maximum
Commercial Paper 270 days A-1+ No maximum
State Local Agency Investment Fund N/A N/A LAIF limits
Repurchase Agreements 270 days A No maximum
Guaranteed Investment Contracts N/A AAA No maximum
Money Market Funds N/A Aam or Aam-G No maximum
Corporate Notes N/A
Two highest
rating categories No maximum
Negotiable Certificates of Deposit N/A N/A No maximum

B. Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment , the greater the sensitivity of its fair value to changes in market interest rates.

Information about the sensitivity of the fair values of the Aut hority’s investments to market interest rate fluctuations is provided by the following table that shows the distribution of the Authority’s investments by maturity:

12 Months
Investment Type or Less
Held by Fiscal Agent:

Money Market Mutual Funds (U.S. Securities) 3 $
3$

14 NOTE 2 – INVESTMENTS HELD BY FISCAL AGENT (Continued)

C. Credit Risk

Credit risk is the risk that an issuer of an investment will no t 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 actual rating as of June 30, 2023, for the Money Market Mutual Funds was AAAm as provided by Standard & Poor’s investment rating system. Money market mutual funds are available for withdrawal on demand and at June 30, 2023, have an average maturity of 23 days.

D. Fair Value Hierarchy

The Authority categorizes its fair value measurements within th e fair value hierarchy established by generally accepted accounting principles. The hierarchy is base d on the valuation inputs used to measure fair value of the assets. Level 1 inputs are quoted pri ces in an active market for identical assets; Level 2 inputs are signi ficant other observable inputs; and Level 3 inputs are significant unobservable inputs.

The Authority’s investment in money market funds is measured at amortized cost as of June 30, 2023.

NOTE 3 – LEASES RECEIVABLE FROM THE CITY OF TURLOCK

The Authority has recorded leases receivable pursuant to the le ase agreements between the Authority and the City in relation to the bonded indebtedness. The leases receivable along with investments held by fiscal agents secure the repayment of the different debt issues . The lease revenue is equal to the Authority’s debt service requirements and is used for that purpose. At June 30, 2023, the lease receivable was $20,134,287.

NOTE 4 – LONG-TERM DEBT

A. Current Year Activity

Following is a summary of the Authority’s long-term debt transa ctions during the fiscal year ended June 30, 2023:

Original Issue Balance Balance Current More Than
Amount June 30, 2022 Retirements June 30, 2023 Portion One Year Business-type Activities Debt:

Revenue Bonds:
2017 Water 22,405,000 $ 18,615,000 $ (795,000) $ 17,820,000 $ 835,000 $ 16,985,000 $ Add: Unamortized bond premium - 2,471,191 (156,901) 2,314,290 - 2,314,290 Total Business Type Activities 22,405,000$ 21,086,191 $ (951,901) $ 20,134,290 $ 835,000 $ 19,299,290 $

15 NOTE 4 – LONG-TERM DEBT (Continued)

B. 2017 Water Revenue Refunding Bonds

In June 2017, the Authority issued $22,405,000 in Water Revenue Bonds Series 2017 to finance improvements to the Water System, to advance refund the series 2008 Water Revenue Bonds and to pay costs of issuance of the 2017 Water Revenue Refunding Bonds . The defeased 2008 Water Revenue Bonds were called on April 30, 2018. The 2017 B Water R evenue Refunding Bonds, which carry coupon interest rates ranging from 4.00% - 5.25%, have se mi-annual principal and interest payments on the first of March through March 2038. Events of de fault on the 2017 Water Revenue Refunding Bonds include failure to make any debt service paymen t by the due date or failure to perform the other agreements or covenants required in the Maste r Installment Purchase Agreement (MIPA) between the Authority and the City not cured within sixt y days of notice to the City, which would accelerate repayment of the bonds. The Authority can prep ay the bonds at any time by paying the prescribed prepayment premium as set forth in the bond documents.

The annual debt service requirements are as follows:

Year Ending
June 30 Principal Interest Total
2024 835,000$ 801,187 $ 1,636,187 $
2025 880,000 759,437 1,639,437
2026 920,000 715,437 1,635,437
2027 970,000 669,437 1,639,437
2028 1,015,000 620,937 1,635,937
2029-2033 5,915,000 2,275,350 8,190,350
2034-2038 7,285,000 897,000 8,182,000 Total 17,820,000$ 6,738,785 $ 24,558,785 $

On April 12, 2023, S&P Global Ratings withdrew its ratings on t he bonds due to the City’s delay in issuing the audited financial statements.

C. Bond Issuance Costs, Original Is sue Discounts and Premiums and Deferred Charge on Refunding

For proprietary fund types, bond premiums and discounts are def erred and amortized over the life of the bonds using the effective interest method. Bonds payable ar e reported net of the applicable bond premium or discount. Any differences between proprietary refund ed debt and the debt issued to refund it, called a gain or loss on refunding, is amortized ove r the remaining life of either the refunded debt or the refunding debt, whichever is shorter. The gain or l oss on refunding is reported as a deferred inflow or outflow of resources, as applicable. Bond is suance costs, other than prepaid insurance, are expensed in the year incurred.

D. Pledged Revenues

The 2017 Water Revenue Refunding Bonds are secured by a pledge of lease revenues from the City of Turlock. The approximate amount of pledged revenues is the remaining debt service on the bonds, totaling $24,558,785 as of June 30, 2023. The pledge extends fo r the life of the bonds, until final maturity in 2038. For the year ended June 30, 2023, pledged lea se revenues recognized were $827,868, and principal and interest payments were $1,635,938.

16 NOTE 5 – NET POSITION

Net position is measured on the full accrual basis and is the e xcess of all assets and deferred outflows of resources over all liabilities an d deferred inflows of resource s. Net position is divided into two captions.

These captions apply only to net position, which is determined only for proprietary funds and at the Authority-wide level, and are described below:

Restricted for Debt Service – This amount represents funds required by bond covenants to be held by the Authority’s third-party trustee for future debt service payments.

Restricted for Capital Projects – This amount represents the un expended portion of debt which was issued to finance capital improvement projects.

NOTE 6 – SUBSEQUENT EVENTS

The Authority’s management has evaluated all events and transactions that occurred after June 30, 2023, and through February 21, 2025, the date the basic financial sta tements and accompanying notes to the basic financial statements were available to be issued. During this period, no events or transactions occurred that would require adjustment of the basic financial s tatements or disclosure in the accompanying notes.

OTHER REPORT

17 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Honorable Members of the Board of Directors
Turlock Public Financing Authority
Turlock, California

We have audited, in accordance with the auditing standards gene rally accepted in the United States of America and the standards applicable to financial audits contai ned in Government Auditing Standards issued by the Comptroller General of the United States, the fin ancial statements of the business-type activities and the major fund of the Turlock Public Financing Authority (the Authority), a component unit of the City of Turlock, California (the City), as of and for the fiscal year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements, and have issued our report thereon dated February 21, 2025.

Report on Internal Control Over Financial Reporting

In planning and performing our audit of the basic financial sta tements, we considered the City’s internal control over financial reporting (internal control) relating to the Authority as a basis for designing audit procedures that are appropriate in the circumstances for the pu rpose of expressing our opinions on the financial statements, but not f or the purpose of expressing an opinion on the effectiveness of the City’s internal control relating to the Authority. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control relating to the Authority.

A deficiency in internal control exists when the design or oper ation of a control does not allo w management or employees, in the normal course of performing the ir assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that the re is a reasonable possi bility that a material misstatement of the Authority’s basic financial statements 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 impor tant enough to merit attention by those charged with governance.

Our consideration of internal c ontrol was for the limited purpo se described in the first paragraph of this section and was not designed to i dentify all deficiencies in in ternal control that might be material weaknesses or significant deficie ncies. Given these limitation s, during our audit we did not identify any deficiencies in internal control that we consider to be materia l weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.

18 Report on Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Aut hority’s basic financial statements are free from material misstatement, we performed tests of the City ’s compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncomplian ce with which could have a direct and material effect on the basic financial statements. However, pr oviding an opinion on compliance with those provisions was not an objective of our audit and, accordi ngly, we do not express such an opinion.

The results of our tests disclosed no instances of noncomplianc e 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 Authority’s internal control or on compliance. This report is an integral part of a n audit performed in accordance with Government Auditing Standards in considering the Authority’s internal control and compliance .

Accordingly, this communication is not suitable for any other purpose.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
February 21, 2025

Honorable Members of the Board of Directors
Turlock Public Financing Authority
Turlock, California

We have audited the basic financial statements of the business- type activities and the major fund of the Turlock Public Financing Author ity (the Authority) as of and fo r the year ended June 30, 2023.

Professional standards require that we provide you with informa tion about our responsibilities under auditing standards generally accepted in the United States of A merica and Government Auditing Standards, as well as certain information related to the planned scope a nd timing of our audit. We have communicated such information in our letter to you dated July 1 , 2024. Professional standards also require that we communicate to you the following information related to our audit.

Significant Audit Matters

Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropri ate accounting policies. The significant accounting policies used by the Authority are described in Note 1 to the financial statements. The Authority adopted Governmental Accounting Standards Board (GASB ) Statement No. 91, Conduit Debt Obligations; GASB Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements; GASB Statement No. 96, Subscription-Based Information Technology Arrangements (SBITAs); and GASB Statement No. 99, Omnibus 2022, during the year ended June 30, 2023. We noted no transactions ent ered into by the Authority du ring the year for which there is a lack of authoritative guidance or consens us. All significant transactio ns have been recognized in the basic financial statements in the proper period.

The financial statement disclosures are neutral, consistent, and clear.

Difficulties Encountered in Performing the Audit

We encountered no significant difficulties in dealing with mana gement in performing and completing our audit.

Corrected and Uncorrected Misstatements
Professional standards require u s to accumulate all known and l ikely misstatements identified during the audit, other than those that are clearly trivial, and communica te them to the appropriate level of management. We identified no such misstatements during our audit.

Disagreements with Management

For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, t hat could be significant to the basic financial statements or the auditor’s report. We are pleased to report th at no such disagreements arose during the course of our audit.

Management Representations

We have requested certain representations from management that are included in the management representation letter dated February 21, 2025.

Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain sit uations. If a consultation involves application

of an accounting principle to the Authority’s basic financial s tatements or a determination of the type of auditor’s opinion that may be expr essed on those statements, ou r professional standards require the consulting accountant to check with us to determine that the co nsultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Other Audit Findings or Issues
We generally discuss a variety of matters, including the applic ation of accounting principles and auditing standards, with management each year prior to retention as the Authority’s auditors. However, these discussions occurred in the normal course of our professional r elationship and our responses were not a condition to our retention.

Restriction on Use

This information is intended solely for the information and use of the Board of Directors and Management of the Turlock Public Financing Authority, as well as the City Council and management of the City of Turlock, and is not intended to be, and should not be, used by anyone other than these specified parties.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
February 21, 2025

CITY OF TURLOCK

ABANDONED VEHICLE

ABATEMENT PROGRAM

INDEPENDENT AUDITOR’S REPORTS

AND FINANCIAL SCHEDULES

FOR THE YEARS ENDED
JUNE 30, 2023 AND 2022

CITY OF TURLOCK

ABANDONED VEHICLE ABATEMENT PROGRAM
FOR THE YEARS ENDED JUNE 30, 2023 AND 2022

TABLE OF CONTENTS

Page

Independent Auditor’s Report ............................................................................................................ 1

Financial Section:

Schedules of Revenues, Expenditures, and Changes in Fund Balan ce ..................................... 4

Notes to the Financial Schedules ............................. ................................................................... 5

Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Schedules Performed in Accordance with Government
Auditing Standards and the AVA Program Handbook .................................................................... 7

1 INDEPENDENT AUDITOR’S REPORT

To City Council of the
City of Turlock
Turlock, California

Report on the Audit of the Financial Schedules

Opinions

We have audited the accompanying Schedules of Revenues, Expendi tures, and Changes in Fund Balance (Schedules) of the City of Turlock, California, Abandoned Vehicle Abatement Program (Program) for the years ended June 30, 2023 and 2022, and the related not es to the financial schedules, which collectively comprise the Program’s financial schedules as listed in the table of contents.

In our opinion, the financial schedules referred to above prese nt fairly, in all material respects, the revenues, expenditures, and changes in fund balance of the Prog ram for the years ended June 30, 2023 and 2022, in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions

We conducted our audit in accordance with auditing standards ge nerally accepted in the United States of America and the standards applicable to financial audits contai ned in Government Auditing Standards , issued by the Comptroller General of the United States. Our re sponsibilities under those standards are further described in the Auditor’s Responsibilities for the Aud it of the Financial Schedules section of our report. We are required to be independent of the City of Turloc k and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Responsibilities of Management for the Financial Schedules

Management is responsible for the preparation and fair presenta tion of the financial schedules in accordance with accounting prin ciples generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control rel evant to the preparation and fair presentation of financial schedules that are free from material misstatement, whether due to fraud or error.

In preparing the financial schedules, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial dou bt about the Program’s ability to continue as a going concern for twelve months beyond the financial sched ule date, including any currently known information that may raise substantial doubt shortly thereafter.

Auditor’s Responsibility for the Audit of the Financial Schedules

Our objectives are to obtain reasonable assurance about whether the financial schedules 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

2 and therefore is not a guarantee that an audit conducted in acc ordance with auditing standards generally 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 override of internal cont rol. Misstatements are considered material if there is a substantial likelihood that, individually or in t he aggregate, they would influence the judgment made by a reasonable user based on the financial schedules.

In performing an audit in accordance with auditing standards ge nerally accepted in the United States of America and Government Auditing Standards, we:

• Exercise professional judgment and maintain professional skept icism throughout the audit. • Identify and assess the risks of material misstatement of the financial schedules, whether due to fraud or error, and design and perform audit procedures respons ive to those risks. Such procedures include examining, on a test basis, evidence regardi ng the amounts and disclosures in the financial schedules.
• Obtain an understanding of internal control relevant to the au dit in order to design audit procedures that are appropriate in the circumstances, but not f or the purpose of expressing an opinion on the effectiveness of the City of Turlock’s internal control relating to the Program.

Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and t he reasonableness of significant accounting estimates made by management, as well as evaluate th e overall presentation of the financial schedules.
• Conclude whether, in our judgment, there are conditions or eve nts, considered in the aggregate, that raise substantial doubt about the Program’s ability to con tinue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governan ce regarding, among other matters, the planned scope and timing of the audit, significant audit fi ndings, and certain internal control-related matters that we identified during the audit.

Required Supplementary Information

Management has omitted management’s discussion and analysis tha t accounting principles generally accepted in the United States of America require to be presente d to supplement the basic financial schedules. Such missing information, although not a part of the basic financial schedules, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial schedules in an appro priate operational, economic, or historical context. Our opinion on the basic financial schedules is not affected by this missing information.

Other Matters

As described in Note 1, the Schedules are intended to present o nly the results of operations of the Program. They do not purport to, and do not, present fairly the financial position of the City of Turlock as of June 30, 2023 and 2022, or changes in the City of Turlock’s fund balances for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated February 27, 2025, on our consideration of the City of Turlock’s internal co ntrol over financial reporting relating to the Program and on our tests of its compliance with certain provisi ons of laws, regulatio ns, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our

3 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 of Turlock’ s internal control over financial reporting or on compliance relating to the Program. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Turlock’s internal control over fina ncial reporting and compliance relating to the Program.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
February 27, 2025

See accompanying notes to the financial schedules.
4 CITY OF TURLOCK

ABANDONED VEHICLE ABATEMENT PROGRAM

SCHEDULES OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCE
FOR THE YEARS ENDED JUNE 30, 2023 AND 2022

2023 2022
Revenues:

Registration Fees 72,493 $ 48,148 $
Total Revenues 72,493 48,148
Expenditures:

Personnel 111,485 131,292
Services and Supplies 10,975 9,642
Total Expenditures 122,460 140,934
Net Change in Fund Balance (49,967) (92,786) Fund Balance (Deficit) at Beginning of Year (353,493) (260,707) Fund Balance (Deficit) at End of Year (403,460) $ (353,493) $

5 CITY OF TURLOCK

ABANDONED VEHICLE ABATEMENT PROGRAM

NOTES TO THE FINANCIAL SCHEDULES
FOR THE YEARS ENDED JUNE 30, 2023 AND 2022

NOTE 1 – SUMMARY SIGNIFICANT ACCOUNTING POLICIES

A. Abandoned Vehicle Abatement

The Abandoned Vehicle Abatement P rogram (Program) is a statewid e program administered by the California Highway Patrol (CHP). The City of Turlock (City) administers and operates the local vehicle abatement program pursuant to Section 22710 of the Vehicle Code , Turlock Municipal City Code Section 4-8.108 et seq., and the Stanislaus Council of Governme nts (StanCOG) Abandoned Vehicle Program and Plan. Section 9250.7 of the Vehicle Code establishe s the funding source for the abatement of abandoned vehicles by a county-based Service Autho rity (Authority), pursuant to the provisions of Section 22710 of the Vehicle Code. The Vehicle Co de imposes a service fee of one dollar ($1) on vehicles registered to an owner with an address in the county that establishes the Authority. This fee is paid to the Department of Motor Vehicles (DMV) at the time of registration or renewal of registration. The DMV, after deducting its administr ative costs, at least quarterly transmits the net amount collected to the State Controller’s Office (SCO) for deposit in the Abandoned Vehicle Trust Fund. All money in the fund is continuously appropriated to the State Controller’s Office (SCO) for allocation to an Authority that has an approved Program, an d for payment of the administrative costs of the SCO. StanCOG, the Au thority, distributes Program f unds to participating entities based on the allocation determined in the Vehicle Abatement Services Agreement.

The Schedules of Revenues, Expenditures, and Changes in Fund Ba lance (Schedules) of the City of Turlock Abandoned Vehicle Abatement Program (Program) have been prepared in conformity with accounting principles generally accepted in the United States o f America as prescribed by the Governmental Accounting Standards Board (GASB). The GASB is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the Program’s accounting policies are described below.

B. The Reporting Entity

The Schedules are intended to present the results of operations , and only those revenues and expenditures of the Program that are accounted for in the Gener al Fund of the City of Turlock (City).

They are not intended to present the financial position or results of operations of the City as a whole.

C. Basis Presentation, Basis o f Accounting, and Measure Focus

Basis of accounting refers to when revenues and expenditures/ex penses are recognized in the accounts and reported in the financial schedules.

Governmental funds are accounted for using the modified accrual basis of accounting and “current financial resources” measurement focus. Operating schedules of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expe nditures and other financing uses) in net current assets. Revenues ar e recognized in the accounting p eriod in which they become measurable and available. Available means collectible within th e current period or soon enough thereafter to be used to pay li abilities of the current period. The Program’s accrual period is generally 90 days after fiscal year end. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred.