Vernon City Council
January 21, 2025

City of Vernon
Vernon, California
Independent Auditors’ Reports and
Basic Financial Statements
For the Year Ended June 30, 2024

City of Vernon
Basic Financial Statements
For the Year Ended June 30, 2024
Table of Contents
Page
INTRODUCTORY SECTION (UNAUDITED):

Letter of Transmittal ............................................................................................................................................ i FINANCIAL SECTION:

Independent Auditor’s Report on the Audit of the Financial Statements ........................................................... 1 Management’s Discussion and Analysis (Required Supplementary Information) (Unaudited) ....................... 5 Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position ............................................................................................................................ 20 Statement of Activities ................................................................................................................................ 22 Fund Financial Statements:

Governmental Fund Financial Statements:

Balance Sheet ........................................................................................................................................ 29 Reconciliation of the Governmental Fund Balance Sheet
to the Government-Wide Statement of Net Position ...................................................................... 30 Statement of Revenues, Expenditures, and Changes in Fund Balance ................................................. 31 Reconciliation of the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balance to the Government-Wide Statement of Activities ................................................................................................................... 32 Proprietary Fund Financial Statements:

Statement of Net Position ..................................................................................................................... 34 Statement of Revenues, Expenses, and Changes in Net Position ......................................................... 37 Statement of Cash Flows ....................................................................................................................... 38 Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Position ..................................................................................................... 43 Statement of Changes in Fiduciary Net Position .................................................................................. 44 Notes to the Basic Financial Statements ............................................................................................................ 49 City of Vernon
Basic Financial Statements
For the Year Ended June 30, 2024
Table of Contents (Continued)
Page
Required Supplementary Information:

Budgetary Comparison Schedules:

General Fund ............................................................................................................................................... 95 Notes to the Budgetary Comparison Schedule ............................................................................................ 97 Schedule of Changes in Net Pension Liability and Related Ratios – Miscellaneous Plan ................................. 98 Schedule of Changes in Net Pension Liability and Related Ratios – Safety Plan ........................................... 100 Schedule of the City's Proportionate Share of the Net Pension Liability and Related Ratios – Safety Plan ............................................................................................................... 103 Schedule of the City’s Contributions – Pensions ............................................................................................. 104 Schedule of Changes in Net Other Postemployment Benefits Liability and Related Ratios ........................... 108 Schedule of Contributions – Other Postemployment Benefits......................................................................... 110 4305 Santa Fe Avenue, Vernon, CA, 90058
CityofVernon.org
Honorable Mayor and Members of the City Council
City of Vernon, California
In accordance with the Charter of the City of Vernon (City) and State Law, we are pleased to present the Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2024. The purpose of this report is to provide the City Council, residents, general public, and interested parties with a broad financial outlook of the City, as measured by the financial activity and operational achievements of its various funds, as well as to comply with State law.

Responsibility for both the accuracy of the data and the completeness, and fairness of the presentation, including disclosures, rests with the City’s management. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner that fairly represents the financial position and operational results of the City.

Additionally, to the best of our knowledge, there are no untrue statements or omissions of material fact within the financial statements. All disclosures necessary to enable the reader to gain a maximum understanding of the City’s financial activities have been included.

The City is required to issue annually a report on its financial position and activity, and that an independent firm of certified public accountants audit the report. As such, the ACFR is prepared in accordance with generally accepted accounting principles (GAAP) and using the guidelines set forth by the Governmental Accounting Standards Board (GASB). This year’s audit was completed by The Pun Group LLP, Certified Public Accountants and Business Advisors, and an unmodified (“clean”) opinion was issued on the City’s financial statements for the fiscal year ended June 30, 2024. The independent auditor’s report is found in the front of the financial section of the ACFR.

Management’s Discussion and Analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative overview and analysis of the basic financial statements. This transmittal letter is designed to complement and read in conjunction with the MD&A.

City of Vernon Profile
As one of the few full-service cities in California, the City of Vernon has much to offer. Since it was founded in 1905, Vernon has maintained a business-friendly environment, thus allowing the City to remain one of Southern California’s prime locations for industry of all types. Within its 5.2 square mile boundary, Vernon houses more than 1,800 businesses that employ approximately 55,000 people from nearby communities throughout the Greater Los Angeles Area. These include food and agriculture, apparel, steel, plastics, logistics, home furnishing companies and soon a new data center, serving as a vital economic engine in the region.

Vernon is a charter city and operates under the Council-Manager form of government. The five-member City Council is elected at-large to serve 5-year terms. The Mayor and Mayor Pro Tem position is rotated annually among Council Members in order of election. The City Council

is the legislative authority of the City and sets the policies under which the City operates. The City Council provides leadership through policy development regarding the current practices and future direction of the City. The City Council appoints the City Administrator and the City Attorney, as well as members of the City’s commissions. The City Administrator is responsible for overseeing City employees who implement all the City's programs, services, and projects.

Vernon is a prime location for businesses as it is located just south of downtown Los Angeles, close to LAX, the Ports of Los Angeles and Long Beach, and in close proximity to major transportation hubs. The City provides a one-stop-shop for land use services with expedient inhouse plan reviews and permitting, integrated fire inspections and health department approvals, and an unmatched suite of quality utility services to fulfill all business needs.

Additionally, the City continues to make strides in developing its community relationships.

Through seasonal community outreach events, it connects with Vernon residents and those residents in neighboring communities in the southeast region. The City circulates a Resident Newsletter quarterly and is also active on its social media platforms, focusing on dissemination of information that is relevant to the community and ensuring that its population is well-informed on City matters. By forging these connections with community members, the City is confident that the bi-directional conversations that result will allow it to better serve the needs of its constituents.

Local Economy
While the California economy has effectively recovered from the pandemic recession of 2020, in most business sectors there are still signs of stress in the overall economic outlook. Global economies continue to grapple with high, sticky inflation, and volatile interest rates that are putting pressure on the housing market, car sales and other parts of the economy. Other factors that may impact current growth patterns and domestic budget spending are major labor strikes, the intense geo-political conflicts with Ukraine and Israel, and the November 2024 election results that could lead to new tariff policies on industrial supplies and equipment and may affect the price of goods for businesses and consumers. Despite all the named uncertainties, economic forecasts for the US economy remain resilient with renewed confidence in consumer spending and relatively low unemployment that has safeguarded the economy from recession.

Inflation continues to be one of the most challenging obstacles global economies have attempted to overcome. The Fed has taken an aggressive stance in combating inflation by raising the federal funds target rate from 0.25% in March 2022 to 4.75% as of November 2024.

The inflation rate met a 40-year high of 9.1% in 2022 but tapered off to 2.7% in November 2024.

The rate is still higher than the Federal Reserve’s target of 2% inflation rate for the US economy.

As the Federal Reserve continues with its current strategy of interest rate cuts, the economy is still experiencing slow job growth and households are still grappling with higher costs of goods and services. The pace of rate cuts through next year will be a good indicator of an improved overall economy and inflation.

California’s economy continues to expand but at a slower pace than the national economy.

California’s second quarter 2024 GDP growth rate, on an annual basis, of 2.8% is two percentage points lower than the national growth rate, following a year when its annual growth rate was 3.7% and exceeded the national rate. Between January 2020 (just before COVID) and September 2024 prices increased by approximately 20% with food, rent for primary residence, and gasoline prices rising well above this. As of October 2024, the State’s unemployment rate was 5.3%, which is the third highest of any state and higher than the national average of 4.1% for the same period. Job growth within California also appears to be slowing, partly due to the State’s labor shortage, negative population growth, and high housing costs. If these conditions continue to persist, this may further impede the State’s long-term economic growth by causing consumers to make tradeoffs in household spending budgets. While Governor Newsom recently proposed the first State budget in two years that will not have a deficit, the recent natural disasters in Los Angeles County and threat of potential funding cuts from the incoming presidential administration could erase these positive estimates and would likely continue economic uncertainty for local governments where they must continue to implement unfunded State mandates. Economists are forecasting stronger but still limited growth at the State level in 2025 and 2026.

The relative health of the City’s finances can be attributed to five (5) successive fiscal years of focused attention on improving the alignment of ongoing expenditures with ongoing revenues.

While the City has enjoyed positive financial health in the recent past, it is essential to implement all available measures to safeguard against potential economic downturns that could impinge upon the City’s primary revenue sources: sales, parcel, and utility users tax. Given the ongoing national economic challenges, including continuing inflation, constrained supply in the goods, services, and labor markets, and market volatility, the City must proactively enhance revenues and improve operational efficiency to prevent impact from future slowdowns in the economy.

The City’s annual obligated costs, such as contract costs, insurance, pension obligations, and unfunded mandates, continue to rise over time and compete against other budget priorities.

The largest obligated costs include pension costs related to the CalPERS Unfunded Accrued Liability (UAL). The UAL mainly fluctuates due to investment returns and changes in the discount rate. CalPERS recently announced net return of 9.3% for FY 2023-24. When factoring in CalPERS’ discount rate of 6.8% and the 2023-24 preliminary return of 9.3%, the estimated funded status now stands at 75% as of June 30, 2024, which is an increase from 71.4% at June 30, 2023. The recent gain and loss, change in the discount rate, and assumption changes have led to variable funding status, which directly impacts the City’s pension costs and overall budget strategies; the City will continue to monitor this issue closely.

The City has also embarked on several key studies that may affect future budgetary planning.

In August 2023, the City Council approved Vernon Public Utilities’ (VPU’s) long-term rate strategy, which included reasonable electric growth estimates, reinforced our commitment to competitive base rates, and a stable Energy Cost Adjustment Billing Factor. In August 2024 Council approved the Vernon Public Utilities Financial Reserves Policy that supports overall

financial strategy and managing of financial risks, ensuring that we can navigate future challenges and make necessary investments while continuing to provide reliable and affordable services. The City is currently conducting a comprehensive fee study to review the City’s overall user and regulatory fee structure, basis of fees, and cost recovery. The study is expected to be completed by early 2025 in time for the next annual budget cycle and any approved changes will be incorporated in the next budget.

FY 2024-25 Operating Budget
The budget reflects tempered optimism, the current global and local economies continue to face new and ongoing challenges that lead us to reevaluate spending strategies, The City’s future economic health will be dependent on growing and maintaining healthy reserves through fiscally conservative budgets and polices, planning for economic opportunities, and maintaining its strong financial position through prudent, long-range policy decisions and sound fiscal management. The City will continue to monitor key economic indicators, sources of revenue, and spending levels as part of its sound, conservative fiscal approach. The City will continue to build on the successes and achievements realized in the current year and remains committed to serving its customers. The City’s main revenue sources, consisting of sales and use taxes, parcel taxes and utility users taxes have all sustained steady growth this year despite the current financial woes. As the City moves into fiscal year (FY) 2024-25, we are optimistic about continued growth but have applied conservative budgeting principles during the budget development process based on analysis of historical performance and trends, as well as industry, economic, and news reports. The City will continue to monitor key economic indicators, sources of revenue, and spending levels as part of its sound, conservative fiscal approach.

Long Term Financial Planning
Under the direction of the Mayor and City Council, City management identifies the priorities that shape the path leading into the City’s future. City initiatives are reevaluated regularly, and new goals are frequently vetted to ensure that City efforts are consistent with the priorities of our policy body and the community. The City strives each year to better fulfill its mission of delivering outstanding municipal services that are responsive, comprehensive, and beneficial to the entire community by continuing its tradition of fostering innovation, ingenuity, and opportunity within its operations. City staff remains focused on actions that achieve the primary goals of tending to the public’s needs, building neighborhood connections, and governing for results that strengthen our community. The City’s dedication to improvement and modernization has created an environment where City of Vernon residents and businesses are informed and able to collaborate with staff, voice their concerns, and have access to a plethora of information on the City and their chosen topic(s) of interest. As these relationships flourish, businesses, and residents alike are able to enjoy all that Vernon has to offer while also participating in guiding Vernon down its path into the future. Below are major ongoing initiatives that will contribute to the growth and overall improvement of the City.

1. Vernon has the ability and flexibility to realign its services to meet the needs of new and emerging businesses, as well as existing businesses, to cultivate economic development, working with individual businesses to understand and respond to their needs in a manner that benefits both the community and the business. The City’s Good Governance and Reform initiatives provide a tangible demonstration of the overarching commitment to sound governance and best business practices.

2. Based upon the City’s electricity enterprise debt service schedule, there will be a significant reduction in debt service starting in FY 2028-29. With input from business and residential communities, the City continues to evaluate its position and initiatives to ensure that electric rates remain competitive and that infrastructure needs are being addressed.

3. The City has two major tax revenue streams that are facing expiration in June 2028. The Special Safety Parcel Tax and the Utility Users Tax, approved by voters in 2018, generate approximately $14.6 million annually in revenues that support general services, including public safety, street and park maintenance. Extension of these two measures is imperative for the City’s future financial well-being. City staff will be working to present a ballot measure in 2026 to address this need.

4. The inherent governance challenges in the City, due to a very small residential population, continue to be addressed by its residents, businesses, Chamber of Commerce, and City Council. Over the past 5 years, the public has become much more engaged in the political process and continues to keep a watchful eye on all important issues facing the City. The disincorporation controversy raised by Assembly Bill 46 in 2011 has been addressed with the whole-hearted adoption of key reforms and comprehensive implementation of best practices in all City operations. There are several projects underway which will potentially increase Vernon’s residential population.

5. The State of California Joint Legislative Audit Committee (JLAC) is no longer pursuing the disincorporation of the City. Vernon has addressed all outstanding JLAC recommendations effective July 2018. Emphatically committed to good governance and transparency, the City is proud of its success in satisfying each reform that JLAC recommended. As a result, the City moves forward with clear, concise, and comprehensive policies and procedures that uphold best practices.

6. The shutdown of the Exide recycled battery plant operation has been and will continue to be under State of California oversight. The Department of Toxic Substances Control is entirely responsible for monitoring the site and all related cleanup on a continual basis. The State of California has established funding for the Exide plant cleanup effort collected through a fee on each battery recycled along with any restitution from Exide which remains a global company. There is no direct impact on City operations and Exide does not pose a concern to existing Vernon businesses.

7. Vernon’s electric rates remain competitive, and in many cases, lower than adjacent municipal and investor-owned utilities. However, in many respects, Vernon’s electric utility services continue to outperform its neighboring peers thanks to a higher reliability rating and greater customer satisfaction. In fact, VPU is a three-time recipient of the RP3 Diamond Level Award, the highest reliability award from the American Public Power Association (APPA), which reflects our continued investment in utility infrastructure and commitment to safety and workforce development.

8. Since the purchase of Malburg Generating Station (MGS), Vernon Public Utilities is optimizing the operating profile for operational savings, revenue growth and continued coordination with the CAISO to prevent statewide rolling blackouts and requests to run MGS when energy is needed most across the electric grid. Since 2016, Vernon Public Utilities has maintained its Reliable Public Power Provider designation from the APPA for its excellence in reliability and, as noted above, has earned the highest designation at Diamond Level for three consecutive terms.

9. Over the last several years, the City has pursued a clean commerce growth strategy. In mid2026, a new data center is scheduled to commence commercial operations in Vernon, bringing high-demand energy needs while reducing traffic congestion and vehicle emissions and replacing legacy customers who have relocated their operations. At full capacity, the data center demand is estimated to be 33 MW of continually connected load in Fiscal Year 2025-26. Our pre-planned commitment to provide capital improvement investments of critical infrastructure in our transmission and distribution networks has been key to meeting the operational needs of this new industry in Vernon. VPU and the City have the unique ability to get these new development projects to market in the shortest time possible.

Financial and Internal Controls
Management of the City is responsible for establishing and maintaining internal controls designed to ensure that the assets of the government are protected from loss, theft, or misuse, and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with U.S. generally accepted accounting principles. Internal controls are designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management.

This report consists of management’s representations concerning the finances of the City. As a result, management assumes full responsibility for the completeness and reliability of all the information presented in this report. Management asserts that, to the best of their knowledge and belief, this financial report is complete and reliable in all material respects.

Single Audit
The City is legally required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1984 and the U.S. Office of Management and Budget Uniform Guidance, Audits of State and Local Governments, if total federal grant expenditures exceed $750,000 in a single year. Throughout the course of FY 2023-24, the City expended federal funds in excess of the $750,000 threshold, and therefore the City is subject to Single Audit requirements.

Budgetary Controls
The City maintains budgetary controls to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of all governmental funds and proprietary funds are included in the annual appropriated budget. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the departmental level.

Spending Limitation
Management foresees no problem for several years in complying with the spending limitation under the Gann Initiative passed by the California voters in 1979, which created Article XIIIB of the State Constitution. The City's independent auditors have attested to the accuracy of the computation of the spending limitations for the current period, which indicated that the City’s tax proceeds are substantially under the established Gann Limit and are not expected to reach that limit in the foreseeable future.

Independent Audit
The City requires an annual audit by independent certified public accountants, the auditing firm, The Pun Group LLC, was selected to audit the City’s accounting records. The auditor’s report on the basic financial statements, combined and individual fund statements, and schedules is included in the financial section of this report.

Acknowledgements
The preparation of this annual comprehensive financial report was made possible by the staff of the Finance department, the City Manager’s office, Department Heads and assigned staff, and the expertise of the City’s auditors, The Pun Group LLP. Each member of this team has our sincere appreciation.

In closing, without the leadership and support of the City Council, the preparation and results presented within this report would not have been conceivable. Their steadfast leadership has made possible the implementation of the City’s important, innovative concepts in fiscal management discussed herein.

Respectfully submitted,
Gigi Decavalles-Hughes
Interim Finance Director
py ,
Gi i D ll H h
200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
of the City of Vernon
Vernon, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Vernon, California (the “City”), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2024, and the respective changes in financial position, and where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (“GAAS”), and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (“Government Auditing Standards”). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant requirements relating to out audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Responsibility of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

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

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

2 Auditors’ Responsibility 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 auditors’ report that includes our opinions.

Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we:
 exercise professional judgment and maintain professional skepticism throughout the audit.  identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.  evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.

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

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, the Budgetary Comparison Schedule, the Schedule of Changes in Net Pension Liabilities and Related Ratios – Miscellaneous Plan and Safety Plan, the Schedule of Proportionate Share of the Net Pension Liabilities and Related Ratios – Safety Plan, the Schedule of Contributions – Pensions, the Schedules of Changes in Net Other Postemployment Benefits Liability and Related Ratios, and the Schedules of Contributions – Other Postemployment Benefits be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by Government Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the Required Supplementary Information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

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

3 Other Information
Management is responsible for the other information included in the annual report. The other information comprises the Introductory Section but does not include the basic financial statements and our auditors' report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

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

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 15, 2025 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Santa Ana, California
January 15, 2025
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City of Vernon, California
Management’s Discussion and Analysis (Unaudited)
June 30, 2024
5 As management of the City of Vernon (“the City”), we offer readers of the financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2024.

OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements comprise three components: (i) government-wide financial statements, (ii) fund financial statements, and (iii) notes to the basic financial statements.

Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private-sector business.

The statement of net position presents information on all of the City's total assets and deferred outflows of resources and total liabilities and deferred inflows of resources, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, and health services. The business-type activities of the City is administered by the Vernon Public Utilities which consists of the Electric, Gas, Water, and Fiber Optics utilities.

The government-wide financial statements include not only the City of Vernon (known as the primary government), but also blended component units. Certain blended component units, although legally separate entities are, in substance, part of the primary government’s operations and are included as part of the primary government. Fiduciary funds are not presented in the government-wide financial statements as the resources are not available to support City programs.

Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2024
6 Governmental funds
Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The City adopts an annual appropriated budget for its General Fund. A budgetary comparison schedule has been provided for the General Fund.

Proprietary funds
The City’s proprietary funds consist of enterprise funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its Vernon Public Utilities which consists of the Electric, Gas, Water, and Fiber Optics utilities.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Vernon Public Utilities.

Fiduciary funds
Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support City programs. The accounting used for fiduciary funds is much like that used for proprietary funds.

Notes to the basic financial statements
The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2024
7 GOVERNMENT-WIDE FINANCIAL ANALYSIS
City’s Net Position
The table below summarizes the government-wide Statement of Net Position as of June 30, 2023 and June 30, 2024, and is as follows:

City of
Vernon Net
Position
June 30, 2024 and 2023
Overtime, net position may serve as a useful indicator of a city's financial position. At June 30, 2024, the City’s net position was $416.2 million, an increase of $78.4 million over the net position of $337.8 million at June 30, 2023.

The largest portion of the City's net position ($375.1 million) is its investment in capital assets (e.g., land, buildings, infrastructure, and equipment, right-to-use assets, etc.), net of related debt. The City uses capital assets to provide services to residents; consequently, these assets are not available for future spending. This category of net position increased mainly from the construction of ongoing, or nearly completed projects such as the city-wide tree well project, Electrical service upgrades, Well and Reservoir rehabilitation, and upgrading the existing fiber optics network system.

The City's restricted net position totals $40.9 million. Restricted net position represents resources that are subject to external restrictions on how they may be used, such as debt. The remaining balance of $142,729 represents the unrestricted net position.

Total net position increased by $78.4 million from an excess of revenues over expenses. This net increase was reflected by an increase of $58.5 and $21.7 in unrestricted net position net investment in and capital assets respectively and a decrease of $1.9 million in restricted net position. The excess of revenues over expenses will be analyzed in conjunction with the Statement of Activities. 2024 2023 2024 2023 2024 2023
Assets:

Current and other assets $ 51,022,969 $ 47,272,062 $ 220,601,582 $ 189,058,515 $ 271,624,551 $ 236,330,577 Restricted assets 6,636,473 2,824,858 31,852,647 36,427,615 38,489,120 39,252,473 Capital assets 159,189,173 162,262,242 457,552,315 465,066,379 616,741,488 627,328,621 Total assets 216,848,615 212,359,162 710,006,544 690,552,509 926,855,159 902,911,671 Deferred Outflows of Resources
Deferred outflows related to pensions 47,429,249 48,056,290 13,425,619 14,399,006 60,854,868 62,455,296 Deferred outflows related to OPEB liability 2,234,060 3,906,490 632,386 1,170,494 2,866,446 5,076,984 Deferred amount on bond refunding - 1,529,380 1,731,362 1,529,380 1,731,362 Total deferred outflows of resources 49,663,309 51,962,780 15,587,385 17,300,862 65,250,694 69,263,642 Liabilities:

Current liabilities 7,772,412 7,167,000 73,762,315 76,168,309 81,534,727 83,335,309 Long term liabilities 147,607,543 138,346,981 334,159,365 395,093,373 481,766,908 533,440,354 Total liabilities 155,379,955 145,513,981 407,921,680 471,261,682 563,301,635 616,775,663 Deferred Inflows of Resources
Deferred inflows related to pensions 4,076,117 6,073,932 1,153,810 1,819,920 5,229,927 7,893,852 Deferred inflows related to OPEB liability 2,947,177 4,639,817 834,246 1,390,219 3,781,423 6,030,036 Deferred inflows related to Leases 3,605,976 3,704,545 - 3,605,976 3,704,545 Total deferred outflows of resources 10,629,270 14,418,294 1,988,056 3,210,139 12,617,326 17,628,433 Net Position:

Net investment in capital assets 158,365,002 161,850,189 216,779,121 191,510,736 375,144,123 353,360,925 Restricted 6,636,474 5,750,277 34,263,566 37,049,052 40,900,040 42,799,329 Unrestricted (deficit) (64,498,777) (63,210,799) 64,641,506 4,821,762 142,729 (58,389,037) Total net position $ 100,502,699 $ 104,389,667 $ 315,684,193 $ 233,381,550 $ 416,186,892 $ 337,771,217 Governmental Activities Business-type Activities Totals City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2024
8 Following is a summary of the government-wide Statement of Activities which illustrates the City’s overall $73.0 million increase in net position resulting from program expenses being less than total program and general revenues. A discussion regarding significant changes in revenues and expenses follows the table below.

City of Vernon
Statement of Activities
Years ended June 30, 2024 and 2023
2024 2023 2024 2023 2024 2023
Revenues:

Program revenues
Charges for services $ 12,841,057 $ 12,528,733 $ - $ - $ 12,841,057 $ 12,528,733 Vernon public utilities - - 225,563,403 262,570,096 225,563,403 262,570,096 Operating and capital grants and contributions 2,895,236 1,670,481 300,000 - 3,195,236 1,670,481 General revenues
Taxes 41,928,129 43,386,468 - 41,928,129 43,386,468
Sales and Use Tax 15,313,556 16,485,569 - 15,313,556 16,485,569 Investment income (loss) 1,761,202 414,374 7,742,117 4,711,672 9,503,319 5,126,046 Rental income 590,750 519,373 - 590,750 519,373
Other revenues 1,244,916 2,072,655 - 1,244,916 2,072,655 Gain (loss) on the sale of land and assets - 67,582 (285,027) (989,157) (285,027) (921,575) Total revenues 76,574,846 77,145,235 233,320,493 266,292,611 309,895,339 343,437,846 Expenses:

Governmental activities
General government 17,991,092 15,151,873 - 17,991,092 15,151,873 Public safety 42,898,755 17,615,641 - 42,898,755 17,615,641 Public works 17,164,673 13,266,854 - 17,164,673 13,266,854 Health services 2,717,133 1,523,844 - 2,717,133 1,523,844 Interest on long-term debt 31,748 1,487 - 31,748 1,487
Business-type activities - - - -
Vernon public utilities - 155,994,875 214,840,383 155,994,875 214,840,383 Total expenses 80,803,401 47,559,699 155,994,875 214,840,383 236,798,276 262,400,082 Change in net position before transfers (4,228,555) 29,585,536 77,325,618 51,452,228 73,097,063 81,037,764 Transfers:

Interfund transfers 341,587 491,542 (341,587) (491,542) - - Net Transfers 341,587 491,542 (341,587) (491,542) - -
Change in net position (3,886,968) 30,077,078 76,984,031 50,960,686 73,097,063 81,037,764 Net position - beginning of year 104,389,667 74,312,589 238,700,162 182,420,864 343,089,829 256,733,453 Net position - end of year $ 100,502,699 $ 104,389,667 $ 315,684,193 $ 238,700,162 $ 416,186,892 $ 337,771,217 Governmental Activities Business-type Activities Totals City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2024
9 Government-wide revenues decreased by $33.5 to $309.9 million. The majority of this decrease resulted from a decrease of $37.0 million Vernon Public Utilities charges for services due to the loss of customers, and an increase of $4.4 million in Investment Income partially due to interest income derived from the City’s investment portfolio performing better as compared to prior year due to the rise in interest rates.

Operating and capital grants increased by $1.5 million as compared to the prior year, as the City actively sought out grant opportunities with the flattening and decline in revenues. The remaining changes include a decrease of $1.5 million and $1.2 million in taxes and sales and use tax respectively.

The most significant portion of the City's general revenue came from sales and use taxes, parcel taxes, and utility user taxes which accounted for 19.9%, 21.0% and 16.8% of total general fund revenue respectively. Charges for services accounted for 16.7% of total revenue. Additionally, 7.3% was received from business license taxes, 6.6% from property taxes, and the remaining 11.6% was from other taxes, rental income, grants, and investment income. Vernon Public Utilities (VPU) accounted for

72.8% of the City’s total revenue while VPU’s investment income accounted for 3.1% of the City’s total revenue.

Government-wide expenses of all the City programs and services decreased by $25.6 million to $236.8 million. Governmental Activities increased by $33.2 million while the Business Type Activities decreased by $58.8 million. Expenses include adjustments for depreciation, long-term debt, and pension costs. The net decrease in Government-wide expenses is spread across the City's programs with an increase in Public Safety services by $25.3 million, General Government by $2.8 million, and Public Works by $3.9 million each and a decrease in VPU expenses by $58.8 million. Interest Expense is now presented on a separate line item at $0.6 million and is attributed to long-term debt and leases/subscription liabilities.

Vernon Public Utilities accounted for 65.9% of the total costs, General Government for 7.6%, Public Safety for 18.1%, Public Works for 7.2%, and Health for 1.1%. Interest Expense accounts for a minimal amount of the remaining expenses.

Governmental activities decreased by $4.2 million before transfers to the increase in net position resulting from expenses exceeding revenues.

Revenues of governmental activities report a net decrease over the prior year of $570,389, to $76.6 million. The increase is attributed to a $1.5 million decrease in taxes, $1.2 million decrease in sales and use tax, while investment income increased by $1.2 million and operating and capital grants increased by $1.2 million.

Expenses of governmental activities increased by a net $33.2 million. Expenses include adjustments for depreciation, long-term debt, and pension costs. The net decrease is spread across the City's programs with Police increasing by $25.3 million, Public Works increasing by $3.9, General Government increasing by $2.8 million each, Health services increasing by $1.2 million and interest expense experienced a very negligible change.

City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2024
10 The following two charts show the source and use of funds for Governmental Activities:

Property taxes
7%
Parcel taxes
21%
Utility users taxes
17%
Franchise taxes
3%
Business license taxes
7%
Sales and use taxes
20% Other Taxes
0%
Investment income
2%
Rental Income
1%
Other revenues
2%
Operating Grants
2%
Capital
Grants
1% Charges for
services
17%
Governmental Activities
Revenue by Source
FY 2024
General Government
22%
Public Safety
53%
Public Works
21%
Health Services
4%
Interest and Fiscal
Charges
0%
Governmental Activities
Expenses by Function
FY 2024
City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2024
11 Business-type activities consists of the Electric, Gas, Water and Fiber Utilities Enterprise Funds. The total net position at the end of the year was $315.7 million as compared to $238.7 million at the end of the prior year. This represents an increase in net position of $77.0 million. The increase can largely be attributed to the purchase of Malburg Generating Station and the end of the PPTA agreement which has resulted in savings. Other factors include lowered Transmission firm expenses from Cal ISO and higher investment income.

Revenues of $233.3 million consist of charges for services. This is a decrease of $33.5 million over the prior year's total revenue of $266.3 million. The decrease can be attributed to the loss of several large customers.
-
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
(In Millions)
Vernon Public Utilities
Business-type Activities- Revenues and Expenses
Years ended June 30, 2024 and 2023
2024 Revenues
2024 Expenditures
2023 Revenues
2023 Expenditures
City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2024
12 FINANCIAL ANALYSIS OF THE GOVERNMENTAL FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements.

Governmental funds
The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, the nonspendable, restricted, committed, assigned, and unassigned fund balances may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.

At the end of the current fiscal year, the City's governmental funds reported a combined ending fund balances of $49.3 million an increase of $7.3 million from the prior year. Approximately 0.40% of the total fund balance amount, $199 thousand, constitutes nonspendable fund balance, which are amounts that are not in a spendable form or are required to be maintained intact. Approximately 13.47% of the total fund balance amount, $6.6 million, constitutes restricted fund balance, which are amounts that can be spent only for specific purposes stipulated by external resource providers, constitutionally, or through enabling legislation. Approximately 26.38% of the total fund balance amount, $13 million, constitutes committed fund balance, which are amounts that the City Council set aside for various reserves. The remainder of the fund balance amount, $29.5 million is an unassigned fund balance to indicate that it is the residual classification that is not contained in the other classifications.

The General Fund is the operating fund of the City. At the end of the current fiscal year, the total fund balance was $49.3 which represents 60.99% of the total expenditures for the year.

Proprietary funds
The City's proprietary funds provide the same type of information found in the government-wide financial statements but in more detail.

Unrestricted net position for the Vernon Public Utilities at the end of the year amounted to a balance of $4.8 million. The total increase in net position for the Vernon Public Utilities was $77.0 million. Other factors concerning the finances of these funds have already been addressed in the discussion of the City's business-type activities.

City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2024
13 GENERAL FUND AND BUDGETARY HIGHLIGHTS
For the current year, the General Fund’s total positive variance between the final budgeted amounts and the actual amount of change in fund balance was $14.2 million. The key reasons for this variance were due to lower actual expenditures than projected of approximately $13.3 million.

For the current year, the General Fund’s total positive variance between the final budgeted estimated revenues and actual revenues was $262 thousand. The main reason for the variance, was that intergovernmental revenues came in lower than expected by $2.4 million offset by an increase in investment revenue by $761 thousand, fines, forfeitures and penalties by $519 thousand, other revenue by $490 thousand and special assessments by $343 thousand.

For the current year, the General Fund’s total positive variance between the final budgeted amount and the actual amount for expenditures was $13.3 million. The key reasons for this variance were due to higher appropriations than actual expenditures of $9.2 million in capital outlay and related professional services of $2.4 million in public works as well as a reduction in professional services of $725 thousand in general government and $800 thousand in health.

CAPITAL ASSET AND DEBT ADMINISTRATION
Capital assets
The City's investment in capital assets for its governmental and business-type activities as of June 30, 2024, amounts to $616.7 million (net of accumulated depreciation). This investment in capital assets includes land, construction in progress, building, utility system improvements, machinery and equipment, infrastructure such as roads, and intangible assets such as environmental emission credits. The decrease in capital assets of $10.6 million is mainly due to city-wide tree well project, Gateway Arch Project, Electrical service upgrades, Well and Reservoir rehabilitation, and upgrading the existing fiber optics network system. For additional information see Note 5 of this report.

Outstanding debt
As of June 30, 2024, the following debt remains outstanding:
 $34,530,000 City of Vernon Electric System Revenue Bonds, 2008 Taxable Series A  $2,865,000 City of Vernon Electric System Revenue Bonds, 2012 Taxable Series B  $41,075,000 City of Vernon Electric System Revenue Bonds, 2015 Taxable Series A  $19,305,000 City of Vernon Electric System Revenue Bonds, 2020 Series A  $109,700,000 City of Vernon Electric System Revenue Bonds, 2021 Taxable Series A  $42,495,000 City of Vernon Electric System Revenue Bonds, 2022 Taxable Series A  $13,810,000 City of Vernon Water System Revenue Bonds, 2020 Taxable Series A  $802,325 City of Vernon agreement with the Water Replenishment District of Southern California
City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2024
14 The City of Vernon Electric System Revenue Bonds, 2008 Taxable Series A were issued to provide funds to (i) finance the cost of certain capital improvements to the City’s Electric System, (ii) fund a deposit to the Debt Service Reserve Fund, and (iii) to pay costs of issuance of the 2008 Bonds.

The City of Vernon Electric System Revenue Bonds, 2012 Taxable Series B were issued to provide funds to (i) refund the $28,680,000 aggregate principal amount of 2009 Bonds maturing on August 1, 2012, (ii) to pay a portion of the Costs of the 2012 Project, and (iii) to pay costs of issuance of the 2012 Taxable Series B Bonds.

The City of Vernon Electric System Revenue Bonds, 2015 Taxable Series A were issued to provide funds to (i) refund a portion of the Outstanding Electric System Revenue Bonds, 2009 Series A; (ii) finance the costs of certain capital improvements to the City’s Electric System by reimbursing the Electric System for the prior payment of such costs from the Light and Power Fund; (iii) fund a deposit to the Debt Service Reserve Fund; and (iv) pay costs of issuance of the 2015 Bonds.

The City of Vernon Electric System Revenue Bonds, 2020 Series A were issued to provide funds to (i) finance the acquisition and construction of certain capital improvements to the Electric System of the City, (ii) to refund all of the City’s outstanding Electric System Revenue Bonds, 2009 Series A, and (iii) to pay costs of issuance of the 2020 Bonds.

The City of Vernon Electric System Revenue Bonds, 2021 Series A were issued to provide funds: (i) to pay the costs of the acquisition by the City of Vernon of a 134-megawatt natural gas-fired generating facility located within the city limits on land owned by the City, together with certain related electrical interconnection facilities and other assets, property, and contractual rights, (ii) to fund a deposit to the Debt Service Reserve Fund in satisfaction of the Debt Service Reserve Requirement, and (iii) to pay costs of issuance of the 2021 Bonds.

The City of Vernon Electric System Revenue Bonds, 2022 Series A were issued to (i) refund and defease all the City’s outstanding Electric System Revenue Bonds, 2012 Series A and a portion of the City’s outstanding Electric System Revenue Bonds, 2012 Taxable Series B and (ii) to pay costs of issuance of the 2022 Bonds.

The City of Vernon Water System Revenue Bonds, 2020 Series A were issued to provide funds to (i) finance the acquisition and construction of certain capital improvements to the Water System of the City, (ii) purchase a municipal bond debt service reserve insurance policy for deposit in the Reserve Fund in satisfaction of the Reserve Requirement, and (iii) to pay costs of issuance of the 2020 Bonds.

As of June 30, 2024, the ratings on all Electric System Revenue Bonds of the City were A-/Stable by S&P and Baa1/Stable by Moody’s. The rating on Water System Revenue Bonds is A-/Stable by S&P and not rated by Moody’s.

Additional information on the City's long-term debt can be found in Note 6 of this report.

City of Vernon, California
Management’s Discussion and Analysis (Unaudited) (Continued) June 30, 2024
15 ECONOMIC FACTORS AND NEW YEAR’S BUDGET AND RATES
Local and state economies continual growth throughout fiscal year 2023-24 has tapered due to prolonged historical high inflation and the increased interest rates by the Federal Reserve. Cities continue to be challenged in forecasting the economy and preparing the budget for the next fiscal year.

The City’s revenues while the cost of goods and services continue to increase in response to volatile economic changes. In response, these factors were considered in preparing the City and VPU’s budget for fiscal year 2024-25.
 The City developed a conservative spending plan addressing City Council and community priorities while focusing on operations at full capacity, deferring maintenance and capital projects while still focused on delivering quality core municipal services.  VPU continues to respond to inflation and supply chain issues, including higher energy, natural gas, materials and supplies, chemicals, and construction costs to maintain generation, transmission, and distribution infrastructure to continue to provide exceptionally reliable service.
 In support of the City’s business development plans, VPU continues to collaborate with City staff to attract new businesses and industries to Vernon, especially in the development of green commerce. VPU continues to implement its five-year capital plan as well as VPU’s multi-year rate strategy which was approved by the City Council in August 2023. As part of managing VPU’s operating expenses, VPU strives to optimize the operations of the Malburg Generating Station, which continues to result in additional saving for the City.

REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Finance at the City of Vernon, 4305 Santa Fe Avenue, Vernon, California, 90058. 16 This page intentionally left blank.

BASIC FINANCIAL STATEMENTS
17 This page intentionally left blank.
18 GOVERNMENT-WIDE FINANCIAL STATEMENTS
19 Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:

Cash and cash equivalents $ 143,348,120 22,598,489 $ 165,946,609 $ Investments 32,869,966 20,516,708 53,386,674
Accounts receivable, net 12,799,174 353,423 13,152,597
Taxes receivable - 3,198,238 3,198,238
Interest receivable 216,721 - 216,721
Notes and loans receivable - 18,300 18,300
Other receivables - 455,967 455,967
Accrued unbilled revenue 25,257,794 - 25,257,794
Internal balances 700 (700) -
Lease receivable - due within one year - 69,439 69,439
Prepaid items 796,891 181,003 977,894
Inventory - 569,092 569,092
Total current assets 47,390,867 215,858,458 263,249,325 Noncurrent assets:

Restricted cash and investments 31,852,647 6,636,473 38,489,120 Lease receivable, due in more than one year 3,632,102 - 3,632,102 Prepaid items 956,471 - 956,471
Deposits 3,786,653 - 3,786,653
Capital assets:

Capital assets, not being depreciated 65,698,012 72,191,942 137,889,954 Capital assets, being depreciated, net 92,546,409 385,201,081 477,747,490 Intangible assets, being amortized, net 944,752 159,292 1,104,044 Total capital assets, net 159,189,173 457,552,315 616,741,488 Total noncurrent assets 169,457,748 494,148,086 663,605,834 Total assets 710,006,544 216,848,615 926,855,159

DEFERRED OUTFLOWS OF RESOURCES
Pension related items 13,425,619 47,429,249 60,854,868
Other postemployment benefits related items 632,386 2,234,060 2,866,446 Deferred charges on refunding 1,529,380 - 1,529,380
Total deferred outflows of resources 15,587,385 49,663,309 65,250,694 City of Vernon
Primary Government
June 30, 2024
Statement of Net Position
See accompanying Notes to the Basic Financial Statements. 20 Governmental Business-Type
Activities Activities Total

LIABILITIES
Current liabilities:

Accounts payable 11,336,852 2,907,026 14,243,878
Accrued wages and benefits 320,900 581,370 902,270
Accrued interest payable 6,220,663 14,923 6,235,586
Unearned revenue - 798,511 798,511
Customer deposits payable 605,173 481,221 1,086,394
Subscription liabilities - due within one year 36,537 414,175 450,712 Compensated absences - due within one year 924,506 432,655 1,357,161 Claims and judgments - due within one year 1,650,680 - 1,650,680 Bonds payable - due within one year - 54,670,000 54,670,000 Note payable - due within one year 139,535 - 139,535
Total current liabilities 7,772,412 73,762,315 81,534,727 Noncurrent liabilities:

Subscription liabilities - due in more than one year 37,912 393,260 431,172 Compensated absences - due in more than one year 1,849,012 865,310 2,714,322 Claims and judgments - due in more than one year 1,595,392 - 1,595,392 Bonds payable - due in more than one year - 291,757,421 291,757,421 Note payable - due in more than one year 802,325 - 802,325 Net pension liability 37,505,550 132,497,440 170,002,990 Net other postemployment benefits liability 3,190,847 11,272,439 14,463,286 Total noncurrent liabilities 147,607,543 334,159,365 481,766,908 Total liabilities 407,921,680 155,379,955 563,301,635

DEFERRED INFLOWS OF RESOURCES
Pension related items 1,153,810 4,076,117 5,229,927
Other postemployment benefits related items 834,246 2,947,177 3,781,423 Lease - 3,605,976 3,605,976
Total deferred inflows of resources 1,988,056 10,629,270 12,617,326

NET POSITION
Net investment in capital assets 158,365,002 216,779,121 375,144,123 Restricted:

Debt service 31,509,213 - 31,509,213
Assembly Bill 1890 2,754,353 - 2,754,353
Employee flexible spending account - 26,666 26,666
Street improvements - 4,166,878 4,166,878
Asset forfeiture funds - 445,013 445,013
Drug abuse program - 5,341 5,341
Metropolitan transit authority - 44,870 44,870
Safe clean water program - 1,947,706 1,947,706
Unrestricted (deficit) (64,498,777) 64,641,506 142,729
$ 315,684,193 100,502,699 $ 416,186,892 $
City of Vernon
Total net position
Primary Government
June 30, 2024
Statement of Net Position (Continued)
See accompanying Notes to the Basic Financial Statements. 21 Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Governmental Activities:

General government $ 9,300,800 17,991,092 $ 12,311 $ - $ Public safety 172,455 42,898,755 1,279,673 -
Public works 17,164,673 2,695,710 650,721 952,531
Health services 2,717,133 672,092 - -
Interest and fiscal charges 31,748 - - -
Total governmental activities 12,841,057 80,803,401 1,942,705 952,531 Business-type Activities:

Electric 131,898,916 201,709,947 - 300,000
Gas 14,739,449 14,091,453 - -
Water 9,259,134 8,385,081 - -
Fiber optics 971,429 502,869 - -
Total business-type activities 225,563,403 155,994,875 - 300,000 Total primary government $ 238,404,460 236,798,276 $ 1,942,705 $ 1,252,531 $ Program Revenues
City of Vernon
Statement of Activities
For the Year Ended June 30, 2024
See accompanying Notes to the Financial Statements.
22 Governmental Business-Type
Functions/Programs Activities Activities Total
Governmental Activities:

General government $ - (8,677,981) $ (8,677,981) $
Public safety - fire (41,446,627) - (41,446,627)
Public safety - police (12,865,711) - (12,865,711)
Economic development - (2,045,041) (2,045,041)
Interest and fiscal charges (31,748) - (31,748)
Total governmental activities - (65,067,108) (65,067,108) Business-type Activities:

Electric 70,111,031 - 70,111,031
Gas (647,996) - (647,996)
Water 874,053 - 874,053
Fiber optics (468,560) - (468,560)
Total business-type activities 69,868,528 - 69,868,528
Total primary government 69,868,528 (65,067,108) 4,801,420 General revenues and transfers:

General revenues:

Taxes:

Property taxes 5,110,322 - 5,110,322
Parcel taxes 16,188,174 - 16,188,174
Utility users taxes 12,925,358 - 12,925,358
Franchise taxes 2,109,962 - 2,109,962
Business license taxes 5,579,556 - 5,579,556
Sales and use taxes 15,313,556 - 15,313,556
Other taxes 14,757 - 14,757
Total taxes - 57,241,685 57,241,685
Investment income 1,761,202 7,742,117 9,503,319
Rental income 590,750 - 590,750
Other income 1,244,916 - 1,244,916
Loss on disposal of capital assets - (285,027) (285,027) Total general revenues 7,457,090 60,838,553 68,295,643
Transfers (341,587) 341,587 -
Changes in net position 76,984,031 (3,886,968) 73,097,063 Net position - beginning of year, as restated (Note 12) 238,700,162 104,389,667 343,089,829 Net position - end of year $ 315,684,193 100,502,699 $ 416,186,892 $ Net (Expenses) Revenues and
Changes in Net Position
City of Vernon
Statement of Activities (Continued)
For the Year Ended June 30, 2024
See accompanying Notes to the Financial Statements.
23 This page intentionally left blank.
24 FUND FINANCIAL STATEMENTS
25 This page intentionally left blank.
26 GOVERNMENTAL FUND FINANCIAL STATEMENTS
27 This page intentionally left blank.
28 General
Fund
ASSETS
Cash and cash equivalents $ 22,598,489
Investments 20,516,708
Accounts receivable, net 353,423
Taxes receivable 3,198,238
Lease receivable 3,701,541
Notes and loans receivable 18,300
Other receivables 455,967
Inventories and prepaid items 181,003
Restricted assets:

Restricted cash and investments 6,636,473
Total assets $ 57,660,142

LIABILITIES, DEFERRED INFLOW OF

RESOURCES, AND FUND BALANCE
Liabilities:

Accounts payable $ 2,907,026
Accrued wages and benefits 581,370
Unearned revenue 798,511
Deposits payable 481,221
Due to other funds 700
Total liabilities 4,768,828
Deferred inflow of resources:

Leases 3,605,976
Total deferred inflow of resources 3,605,976
Fund Balance:

Nonspendable 199,303
Restricted for:

Employee Flexible Spending Account 26,666
Street improvements 4,166,878
Asset forfeiture funds 445,013
Drug Abuse Program 5,341
Metropolitan Transit Authority 44,870
Safe Clean Water Program 1,947,706
Committed 13,000,000
Unassigned 29,449,561
Total fund balance 49,285,338
Total liabilities, deferred inflow of
resources, and fund balance $ 57,660,142
City of Vernon
Balance Sheet
Governmental Fund
June 30, 2024
See accompanying Notes to the Basic Financial Statements. 29 Total Fund Balances - Total Governmental Funds $ 49,285,338 Amounts reported for governmental activities in the statement of net position are different because:

Nondepreciable assets 65,698,012 $
Depreciable assets, net 92,546,409
Intangible assets, net 944,752 159,189,173
47,429,249
Net pension liability (132,497,440)
(4,076,117)
2,234,060
Net OPEB liabilities (11,272,439)
(2,947,177)
(807,435)
(14,923)
(2,773,518)
(3,246,072)
Net position of governmental activities $ 100,502,699
Amount reported in government-wide statement of position:

City of Vernon
Reconciliation of the Governmental Fund Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2024
Capital assets used in governmental activities are not current financial resources and therefore are not reported in governmental funds. Those assets consist of:

Claims payable
Net pension liabilities and the related deferred outflows of resources and deferred inflows of resources are not due and payable in the current period or not available for current expenditures and are not reported in the governmental fund financial statements:

Pension related deferred outflows of resources
Pension related deferred inflows of resources
Net other postemployment benefits liability and the related deferred outflows of resources and deferred inflows of resources are not due and payable in the current period or not available for current expenditures and are not reported in the governmental fund financial statements:

OPEB related deferred outflows of resources
OPEB related deferred inflows of resources
Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period and, accordingly are not reported as fund liabilities. All liabilities, both current and long-term are reported in the Statement of Net Position. Those liabilities consist of:

Compensated absences
Subscription liability
Accrued interest payable
See accompanying Notes to the Basic Financial Statements. 30 General
Fund
REVENUES:

Taxes $ 61,722,511
Special assessments 1,953,748
Licenses, and permits 2,458,751
Fines, forfeitures, and penalties 666,116
Intergovernmental 1,279,673
Investment earnings 1,761,202
Charges for services 5,294,834
Rent income 590,750
Other revenues 847,261
Total revenues 76,574,846
EXPENDITURES:

Current:

General government 15,760,583
Public safety 36,572,961
Public works 11,672,875
Health services 2,523,805
Capital outlay 3,541,210
Debt service:

Principal retirement 508,169
Interest and fiscal charges 16,825
Total expenditures 70,596,428
REVENUES OVER EXPENDITURES 5,978,418
OTHER FINANCING SOURCES:

Transfer in 341,587
Proceeds from sale of capital asset 70,003
Issuance of debt 903,551
Total other financing sources 1,315,141
NET CHANGE IN FUND BALANCE 7,293,559
FUND BALANCE:

Beginning of year 41,991,779
End of year $ 49,285,338
For the Year Ended June 30, 2024
Governmental Fund
Statement of Revenues, Expenditures, and Change in Fund Balance City of Vernon
See accompanying Notes to the Basic Financial Statements. 31 Net change in fund balances - total governmental funds: $ 7,293,559 Amounts reported for governmental activities in the Statement of Activities are different because:

Capital outlay expenditures 3,555,210 $
Net effect on disposal of capital assets (782,317)
Depreciation and amortization expense (5,886,486)
Transfer of capital assets from Water Enterprise Fund to the governmental activities. 40,524 (3,073,069) Change in compensated absences 12,955
Change in claims payable 700,742
Pension expense, net of pension contribution made after measurement date (9,766,926) OPEB expense, net of OPEB contribution made after measurement date 1,356,076 Interest expense (14,923)
Issuance of long-term debt (903,551)
Principal repayment of long-term debt 508,169
Change in net position of governmental activities $ (3,886,968) Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds:

City of Vernon
in Fund Balance to the Government-Wide Statement of Activities For the Year Ended June 30, 2024
Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those capital assets is allocated over the estimated useful lives as depreciation expense. This is the amount by which capital expenditures exceeded depreciation in the current period:

Reconciliation of the Governmental Fund Statement of Revenues, Expenditures, and Change See accompanying Notes to the Basic Financial Statements. 32 PROPRIETARY FUND FINANCIAL STATEMENTS
33 Nonmajor
Electric Gas Water (Fiber Optics)
Fund Fund Fund Fund Total
ASSETS
Current assets:

Cash and investments $ 16,258,268 115,622,939 $ 11,070,299 $ 396,614 $ 143,348,120 $ Investments 246,139 24,215,847 8,407,980 - 32,869,966
Accounts receivable, net 668,881 10,888,312 1,197,167 44,814 12,799,174 Interest receivable - 216,631 90 - 216,721
Accrued unbilled revenue 947,384 22,289,345 2,021,065 - 25,257,794 Due from other funds - 700 - - 700
Prepaid items - 791,171 5,720 - 796,891
Inventory - 569,092 - - 569,092
Total current assets 18,120,672 174,594,037 22,702,321 441,428 215,858,458 Noncurrent assets:

Restricted cash and investments 31,831,023 - 21,624 - 31,852,647 Advances to other funds 33,219,430 - - - 33,219,430
Prepayment to Southern California Public
Power Authority 956,471 - - - 956,471
Deposits - 3,786,653 - - 3,786,653
Capital assets:

Capital assets, not being depreciated 65,255,673 - 6,936,269 - 72,191,942 Capital assets, being depreciated, net 353,039,747 14,027,252 16,460,107 1,673,975 385,201,081 Intangible assets, being amortized, net 159,292 - - - 159,292 Total capital assets 418,454,712 14,027,252 23,396,376 1,673,975 457,552,315 Total noncurrent assets 14,027,252 488,248,289 23,418,000 1,673,975 527,367,516 Total assets 32,147,924 662,842,326 46,120,321 2,115,403 743,225,974

DEFERRED OUTFLOW OF RESOURCES
Pension related items 10,797,601 813,690 1,801,182 13,146 13,425,619 Other postemployment benefits related items 508,599 38,327 84,841 619 632,386 Deferred charges on refunding - 1,529,380 - - 1,529,380 Total deferred outflow of resources $ 852,017 12,835,580 $ 1,886,023 $ 13,765 $ 15,587,385 $ (Continued)
City of Vernon
Statement of Net Position
Proprietary Funds
June 30, 2024
Business-Type Activities
Enterprise Funds
See accompanying Notes to the Basic Financial Statements. 34 Nonmajor
Electric Gas Water (Fiber Optics)
Fund Fund Fund Fund Total

LIABILITIES
Current liabilities:

Accounts payable $ 141,565 10,131,900 $ 830,205 $ 233,182 $ 11,336,852 $ Accrued wages and benefits 14,780 289,388 16,732 - 320,900 Accrued interest payable - 5,988,903 231,760 - 6,220,663 Customer deposits 13,558 397,627 193,988 - 605,173
Subscription liabilities, due within one year - 36,537 - - 36,537 Compensated absences, due within one year 8,773 384,050 39,557 275 432,655 Bonds payable, due within one year - 54,395,000 275,000 - 54,670,000 Note payable, due within one year - - 139,535 - 139,535 Total current liabilities 178,676 71,623,405 1,726,777 233,457 73,762,315 Noncurrent liabilities:

Advances from other funds 28,745,823 - - 4,473,607 33,219,430 Subscription liabilities, due in more than one year 37,912 - - - 37,912 Compensated absences, due in more than one year 17,544 768,099 79,115 552 865,310 Bonds payable, due in more than one year - 277,449,748 14,307,673 - 291,757,421 Note payable, due in more than one year - - 802,325 - 802,325 Net pension liability 2,273,110 30,163,971 5,031,749 36,720 37,505,550 Net other postemployment benefits liability 193,389 2,566,250 428,084 3,124 3,190,847 Total noncurrent liabilities 31,229,866 310,985,980 20,648,946 4,514,003 367,378,795 Total liabilities 31,408,542 382,609,385 22,375,723 4,747,460 441,141,110

DEFERRED INFLOWS OF RESOURCES
Pension related items 927,956 69,929 154,795 1,130 1,153,810 Other postemployment benefits related items 670,945 50,561 111,923 817 834,246 Total deferred inflows of resources 120,490 1,598,901 266,718 1,947 1,988,056

NET POSITION
Net investment in capital assets 193,435,827 14,027,252 7,642,067 1,673,975 216,779,121 Restricted for:

Debt service - 31,497,914 11,299 - 31,509,213
Assembly Bill 1890 - 2,754,353 - - 2,754,353
Unrestricted (deficit) (12,556,343) 63,781,526 17,710,537 (4,294,214) 64,641,506 Total net position $ 1,470,909 291,469,620 $ 25,363,903 $ (2,620,239) $ 315,684,193 $

(Concluded)
Business-Type Activities
Enterprise Funds
City of Vernon
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2024
See accompanying Notes to the Basic Financial Statements. 35 This page intentionally left blank.
36 Nonmajor
Electric Gas Water (Fiber Optics)
Fund Fund Fund Fund Total
OPERATING REVENUES:

Charges for services $ 14,091,453 201,709,947 $ 9,259,134 $ 502,869 $ 225,563,403 $ Total operating revenues 14,091,453 201,709,947 9,259,134 502,869 225,563,403 OPERATING EXPENSES:

Cost of sales 14,034,561 98,104,480 7,097,861 700,524 119,937,426 Depreciation and amortication expense 704,888 23,352,859 708,447 270,905 25,037,099 Total operating expenses 14,739,449 121,457,339 7,806,308 971,429 144,974,525 OPERATING INCOME (647,996) 80,252,608 1,452,826 (468,560) 80,588,878 NONOPERATING REVENUES (EXPENSES):

Investment income 6,041,671 648,183 928,649 4,427 7,622,930 Net increase in fair value of investments 118,048 1,139 - - 119,187 Interest expense (10,441,577) - (538,249) - (10,979,826) Loss on disposal of assets (278,800) - (6,227) - (285,027) Total nonoperating revenues (expenses) 649,322 (4,560,658) 384,173 4,427 (3,522,736)

INCOME BEFORE CONTRIBUTIONS
AND TRANSFERS 1,326 75,691,950 1,836,999 (464,133) 77,066,142 CAPITAL CONTRIBUTIONS AND TRANSFERS:

Capital contributions 300,000 - - - 300,000
Capital contributions to the City of Vernon - - (40,524) - (40,524) Transfers in - 20,304 - - 20,304
Transfers out - (341,587) (20,304) - (361,891)
Total capital contributions and transfers - (21,283) (60,828) - (82,111) CHANGE IN NET POSITION 1,326 75,670,667 1,776,171 (464,133) 76,984,031 NET POSITION:

Beginning of year, as restated (Note 12) 215,798,953 1,469,583 23,587,732 (2,156,106) 238,700,162 End of year 291,469,620 $ 1,470,909 $ 25,363,903 $ (2,620,239) $ 315,684,193 $ City of Vernon
Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds
Enterprise Funds
For the Year Ended June 30, 2024
Business-Type Activities
See accompanying Notes to the Basic Financial Statements. 37 Nonmajor
Electric Gas Water (Fiber Optics)
Fund Fund Fund Fund Total
CASH FLOWS FROM OPERATING ACTIVITIES:

Cash receipts from customers and users 197,670,410 $ 13,692,058 $ 8,499,943 $ 491,108 $ 220,353,519 $ Cash paid to suppliers for goods and services (82,959,998) (12,834,837) (5,202,325) (461,217) (101,458,377) Cash paid to employees for services (13,860,976) (1,060,322) (2,061,020) (15,000) (16,997,318) Net cash provided by (used in) operating activities (203,101) 100,849,436 1,236,598 14,891 101,897,824

CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:

Transfer to City - (341,587) - - (341,587)
Receipt from other funds 715,961 - 18,247 36 734,244
Payment to other funds (2,953,813) (659,281) (110,329) (47,851) (3,771,274) Net cash (used in) noncapital financing activities (659,281) (2,579,439) (92,082) (47,815) (3,378,617)

CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:

Acquisition of capital assets (14,951,769) (59,340) (1,758,167) (665,779) (17,435,055) Principal paid on long-term debt (51,874,082) - (404,535) - (52,278,617) Interest paid on long-term debt (17,875,462) - (562,850) - (18,438,312) Net cash (used in) capital and related
financing activities (59,340) (84,701,313) (2,725,552) (665,779) (88,151,984) CASH FLOWS FROM INVESTING ACTIVITIES:

Payment to acquire investments (23,554,565) (245,000) (8,408,124) - (32,207,689) Receipt from matured investments - 29,144,009 - - 29,144,009 Interest received 648,183 6,404,739 937,631 4,427 7,994,980 Net cash provided by (used in )
investing activities 403,183 11,994,183 (7,470,493) 4,427 4,931,300 Net increase (decrease) in cash and
cash equivalents (518,539) 25,562,867 (9,051,529) (694,276) 15,298,523 CASH AND CASH EQUIVALENTS:

Beginning of year 16,776,807 121,891,095 20,143,452 1,090,890 159,902,244 End of year $ 16,258,268 147,453,962 $ 11,091,923 $ 396,614 $ 175,200,767 $ CASH AND CASH EQUIVALENTS:

Cash and cash equivalents 115,622,939 $ 16,258,268 $ 11,070,299 $ 396,614 $ 143,348,120 $ Restricted cash and investment - 31,831,023 21,624 - 31,852,647 Total cash and cash equivalents $ 16,258,268 147,453,962 $ 11,091,923 $ 396,614 $ 175,200,767 $ NONCASH ITEMS:

Capital contributions 300,000 $ - $ - $ - $ 300,000 $
(Continued)
Business-Type Activities
Enterprise Funds
City of Vernon
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2024
See accompanying Notes to the Basic Financial Statements. 38 Nonmajor
Electric Gas Water (Fiber Optics)
Fund Fund Fund Fund Total

INCOME (LOSS) TO NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES:

Operating income (loss) 80,252,608 $ (647,996) $ 1,452,826 $ (468,560) $ 80,588,878 $ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization 23,352,859 704,888 708,447 270,905 25,037,099 Change in assets and liabilities:
(Increase) decrease in accounts receivable 2,704,179 (477,243) (253,650) (11,761) 1,961,525 (Increase) decrease in accrued unbilled revenue (5,058,193) 77,848 (505,541) - (5,485,886) (Increase) decrease in inventories and prepaid items 4,708,157 - (1,390) - 4,706,767 (Increase) decrease in customer deposits (1,685,523) - - - (1,685,523) (Increase) decrease in deferred outflows
of resources related to pensions 905,897 47,069 19,827 594 973,387 (Increase) decrease in deferred outflows
of resources related to OPEB 442,777 31,644 63,189 498 538,108 Increase (decrease) in accounts payable (3,921,798) 88,023 (449,363) 222,499 (4,060,639) Increase (decrease) in accrued wages and benefits (80,385) (6,326) (15,140) - (101,851) Increase (decrease) in deposits payable (12,870) - (42,900) - (55,770) Increase (decrease) in compensated absences 148,015 (16,533) 16,206 293 147,981 Increase (decrease) in net pension liabilities 608,351 99,378 433,034 2,021 1,142,784 Increase (decrease) in OPEB liabilities (504,342) (32,444) (49,686) (481) (586,953) Increase (decrease) in deferred inflows
of resources related to pension (551,273) (38,864) (75,366) (607) (666,110) Increase (decrease) in deferred inflows
of resources related to OPEB (459,023) (32,545) (63,895) (510) (555,973) Total adjustment 444,895 20,596,828 (216,228) 483,451 21,308,946 Net cash provided by (used in)
operating activities $ (203,101) 100,849,436 $ 1,236,598 $ 14,891 $ 101,897,824 $ (Concluded)
Proprietary Funds
City of Vernon
Statement of Cash Flows (Continued)
For the Year Ended June 30, 2024
Enterprise Funds
Business-Type Activities
See accompanying Notes to the Basic Financial Statements. 39 This page intentionally left blank.
40 FIDUCIARY FUND FINANCIAL STATEMENTS
41 This page intentionally left blank.
42 Private-Purpose Custodial
Trust Fund Fund
Successor Southeast Water
Agency Trust Coalition Joint
Fund Powers Authority
ASSETS
Cash and investments $ 200,822 4,677,597 $
Accounts receivable 15,000 -
Total assets 215,822 4,677,597

LIABILITIES
Current liabilities:

Accounts payable 5,779 240,671
Bond interest payable - 246,563
Bonds payable, due within one year 3,445,000 -
Noncurrent liabilities:

Bonds payable, due in more than one year 14,720,000 -
Total liabilities 5,779 18,652,234

NET POSITION (DEFICIT)
Restricted for other governments (13,974,637) $ 210,043 $ City of Vernon
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2024
See accompanying Notes to the Basic Financial Statements. 43 Private-Purpose Custodial
Trust Fund Fund
Successor Southeast Water
Agency Trust Coalition Joint
Fund Powers Authority
ADDITIONS:

Redevelopment property tax trust fund $ - 5,188,992 $
Member contributions 44,000 -
Investment income 8,108 1,568
Total additions 45,568 5,197,100
DEDUCTIONS:

Contractual services 36,930 -
Professional fees 10,844 242,921
Policy board compensation 4,500 -
Administrative expenses - 803,603
Meeting expense 4,957 -
Interest expense - 758,094
Total deductions 57,231 1,804,618
Change in net position (11,663) 3,392,482
NET POSITION :

Beginning of year 221,706 (17,367,119)
End of year $ 210,043 (13,974,637) $
City of Vernon
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Year Ended June 30, 2024
See accompanying Notes to the Basic Financial Statements. 44 45

NOTES TO THE BASIC FINANCIAL STATEMENTS
46 This page intentionally left blank.

City of Vernon
Index to the Notes to the Basic Financial Statements
For the Year Ended June 30, 2024
47 Note 1 – Summary of Significant Accounting Policies ....................................................................................... 49 A. Financial Reporting Entity ................................................................................................................... 49 B. Basis of Accounting and Measurement Focus ..................................................................................... 49 C. Cash, Cash Equivalents and Investments ............................................................................................. 51 D. Fair Value Measurement ...................................................................................................................... 52 E. Interfund Transactions. ........................................................................................................................ 52 F. Inventories and Prepaid Items .............................................................................................................. 52 G. Lease Receivables ................................................................................................................................ 53 H. Capital Assets ....................................................................................................................................... 53 I. Deferred Outflows and Inflows of Resources ...................................................................................... 54 J. Unearned and Unavailable Revenue .................................................................................................... 54 K. Compensated Absences ........................................................................................................................ 55 L. Claims Payable ..................................................................................................................................... 55 M. Lease Liabilities ................................................................................................................................... 55 N. Subscription Liabilities ........................................................................................................................ 55 O. Long-Term Debt .................................................................................................................................. 56 P. Pensions. .............................................................................................................................................. 56 Q. Other Postemployment Benefits (“OPEB”) ......................................................................................... 57 R. Property Taxes ..................................................................................................................................... 57 S. Net Position and Fund Balances .......................................................................................................... 58 T. Use of Estimates................................................................................................................................... 59 U. Implementation of New GASB Pronouncements ................................................................................ 59 Note 2 – Cash and Investments ............................................................................................................................ 59 A. Deposits ................................................................................................................................................ 60 B. Investments .......................................................................................................................................... 61 C. Local Agency Investment Fund (“LAIF”) ........................................................................................... 61 D. Fair Value Measurement ...................................................................................................................... 61 E. Risk Disclosures ................................................................................................................................... 62 Note 3 – Lease Receivables ................................................................................................................................... 63 Note 4 – Interfund Transactions .......................................................................................................................... 64 A. Due From/To Other Funds ................................................................................................................... 64 B. Advances To/From Other Funds .......................................................................................................... 64 C. Interfund Transfers ............................................................................................................................... 64 Note 5 – Capital Assets .......................................................................................................................................... 65 A. Governmental Activities ...................................................................................................................... 65 B. Business-Type Activities .................................................................................................................... 66 Note 6 – Long-Term Liabilities ............................................................................................................................ 67 A. Governmental Activities ...................................................................................................................... 67 B. Business-Type Activities .................................................................................................................... 68 C. Fiduciary Funds ................................................................................................................................... 74 D. Expense Stabilization Fund .................................................................................................................. 75 E. Right to Accelerate Upon Default ........................................................................................................ 75 F. Credit Rating ........................................................................................................................................ 75 City of Vernon
Index to the Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2024
48 Note 7 – Compensated Absences .......................................................................................................................... 75 Note 8 – Risk Management ................................................................................................................................... 76 Note 9 – Pension Plan ............................................................................................................................................ 77 A. General Information about the Pension Plan ....................................................................................... 77 B. Net Pension Liability ........................................................................................................................... 79 C. Changes in the Net Pension Liability ................................................................................................... 81 D. Pension Expense, Deferred Outflows and Inflows of Resources Related to Pensions ........................ 83 Note 10 – Other Postemployment Benefits (“OPEB”) ....................................................................................... 84 A. General Information about the OPEB Plan .......................................................................................... 84 B. Net OPEB Liability .............................................................................................................................. 86 C. Changes in Net OPEB Liability ........................................................................................................... 87 Note 11 – Net Investments in Capital Assets ....................................................................................................... 88 Note 12 – Prior Period Adjustments .................................................................................................................... 89 Note 13 – Southern California Public Power Authority .................................................................................... 89 A. Take or Pay Contract ............................................................................................................................ 89 B. Power Purchase Commitments ............................................................................................................ 90 Note 14 – Commitment and Contingencies ......................................................................................................... 91 City of Vernon
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024
49 Note 1 – Summary of Significant Accounting Policies
The basic financial statements of the City of Vernon, California, (the “City”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as applied to governmental agencies. The Governmental Accounting Standards Board (“GASB”) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the significant policies:

A. Financial Reporting Entity
The City was incorporated on September 16, 1905 under the general laws of the State of California. Effective July 1, 1988, the City became a Charter City. The City operates under a Council-City Administrator form of government. Five Vernon citizens make up the Vernon City Council and each is elected to a five-year term of office. The Mayor position is rotated annually among City Council Members in order of election. The City provides full services to its citizens, including: public safety, public utilities, planning and zoning, and health services.

The financial statements include the financial activities of the City of Vernon, the primary government, and its fiduciary component units which include the Vernon Redevelopment Successor and Southeast Water Coalition.

The City had no discretely presented component units.

B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. City resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

The Government-Wide Financial Statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. On an accrual basis, revenue from sales taxes is recognized in the period in which the taxable sale takes place. Revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the City must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the City on a reimbursement basis. Fiduciary activities are not included in these statements.

Certain types of transactions are reported as program revenues for the City in three categories:
 Charges for services
 Operating grants and contributions
 Capital grants and contributions
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
50 Note 1 – Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued) Governmental Fund Financial Statements
A Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balance are presented for governmental fund. Accompanying schedules are presented to reconcile and explain the differences in fund balance as presented in these statements, to the net position presented in the government-wide financial statements.

Governmental fund is accounted for on a spending or “current financial resources” measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Change in Fund Balance presents increases (revenue and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both “measurable” and “available” to finance expenditures of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred. However, debt service expenditures, expenditures related to compensated absences, claims and judgments, pension and other post-employment benefits are recorded only when payment is due.

Revenues are recorded when received in cash, except those revenues subject to accrual are recognized when due.

Property taxes, taxpayer-assessed tax revenues (e.g., franchise taxes, sales taxes, motor vehicle fees, etc.), net of estimated refunds and uncollectible amounts, and intergovernmental revenues associated with the current fiscal period are all considered susceptible to accrual and so have been recognized as revenues of the current fiscal period to the extent normally collected within the availability period, as defined above.

The City reports one major governmental fund:
 The General Fund is the City's primary operating fund. It is used to account for all financial resources of the general government, except those required to be accounted for in another fund.

Proprietary Fund Financial Statements
Proprietary funds are accounted for using the “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Net Position presents increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned, while expenses are recognized in the period in which the liability is incurred.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Electric, Gas, Water, and Fiber Optics Enterprise Funds are charges to customers for sales and services. Operating expenses for the proprietary funds include the costs of sales and services, administrative expenses and depreciation on capital assets.

All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
51 Note 1 – Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued) Proprietary Fund Financial Statements (Continued)
The City reports the following major proprietary funds:
 Electric Enterprise Fund - accounts for the operation and maintenance of the City's electric utility plant.

Revenues for this fund are primarily from charges for services.  Gas Enterprise Fund - accounts for the operation and maintenance of the City's gas utility plant. Revenues for this fund are primarily from charges for services.
 Water Enterprise Fund - accounts for the operation and maintenance of the City's water utility plant.

Revenues for this fund are primarily from charges for services.

The City also reports a fiber optics nonmajor proprietary fund to account for the maintenance and operation of the City’s fiber optics utility plant.

Fiduciary Fund Financial Statements
Fiduciary fund financial statements include a Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position. The City’s fiduciary funds represent custodial funds and private purpose trust funds. Both custodial funds and the private purpose trust funds are accounted for on the full accrual basis of accounting where the assets associated with the activity are controlled by the City and the assets are not derived 1) solely from the government’s own-source revenues or 2) from government-mandated nonexchange transactions or voluntary nonexchange transactions.

The City reports the following two fiduciary funds:

Vernon Redevelopment Successor Agency Private-Purpose Trust Fund - The Successor Agency for the former Vernon Redevelopment Agency (the “Successor Agency”) was established on February 1, 2012 in accordance to the Assembly Bill X1 26 that provides for the dissolution of all redevelopment agencies in the State of California. Effective February 1, 2012, successor agencies in California will only be allocated revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated. The activities of the Successor Agency are reported in a fiduciary fund (private-purpose trust fund) in the financial statements of the City.

Custodial Funds - To account for assets and activities related to the Southeast Water Coalition Joint Powers Agreement.

C. Cash, Cash Equivalents and Investments
The City’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. The City pools the main operating cash account. Cash in excess of current requirements is invested and reported as investments. It is the City's intent to hold investments until maturity. However, the City may, in response to market conditions, sell investments prior to maturity in order to improve the quality, liquidity or yield of the portfolio. Interest earnings are apportioned among funds each month based on ending cash and investment balances of each fund.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
52 Note 1 – Summary of Significant Accounting Policies (Continued) C. Cash, Cash Equivalents and Investments (Continued)
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. 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. In determining the amount, the City uses the market approach, one of the three acceptable valuation techniques. Market approach uses prices generated for identical or similar assets or liabilities.

D. Fair Value Measurement
U.S. GAAP defines fair value, establishes a framework for measuring fair value and establishes disclosure about fair value measurement. Investments, unless otherwise specified at fair value in the financial statements, are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Levels of inputs are as follows:

 Level 1 – Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
 Level 2 – Inputs, other than quoted prices included in Level 1, that are observable for the assets or liabilities through corroboration with market data at the measurement date.  Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the assets or liabilities at the measurement date.

E. Interfund Transactions
Outstanding short-term borrowing between funds are reported as “due from/to other funds”. Interfund loans are reported as advances to and from other funds and are eliminated upon consolidation. Advances to other funds are presented as nonspendable in General Fund’s fund balance to indicate that they are not in a spendable form. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances." F. Inventories and Prepaid Items
Inventories within the various fund types consist of materials and supplies which are valued at cost on a first-in, first-out basis. Reported expenditures reflect the consumption method of recognizing inventory-related expenditures.

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

A nonspendable fund balance has been reported in the governmental fund to show that inventories and prepaid items do not constitute “available spendable resources,” even though they are a component of current assets.

The City made a prepayment to Southern California Public Power Authority (“SCPPA”) for the City’s share of SCPPA’s payoff of the Hoover Center and Air Slots debt. This prepaid amount is amortized over the life of the debt based on the annual debt services obligation. See Note 13 for further information regarding SCPPA.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
53 Note 1 – Summary of Significant Accounting Policies (Continued) G. Lease Receivable
The City is a lessor for leases of land and recognizes lease receivables and deferred inflows of resources in the financial statements. Variable payments based on future performance or usage of the underlying asset are not included in the measurement of the lease receivable.

At the commencement of a lease, the lease receivable is measured at the present value of payments expected to be received during the lease term. The City established a threshold of $15,000 for lease receivables. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflows of resources are initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflows of resources are recognized as revenue over the life of the lease term in a systematic and rational method.

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) lease term, and (3) lease receipts.  The City uses incremental borrowing rate (IBR) provided by the financial institution at July 1, 2021 for existing leases or the current rate at the time a new lease is executed.  The lease term includes the noncancelable period of the lease plus any option periods that are likely to be exercised.
 Lease receipts included in the measurement of the lease receivable 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 resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.

H. Capital Assets
In the government-wide and proprietary fund financial statements, capital assets are recorded at cost where historical records are available and at an estimated original cost where no historical records exist. Donated capital assets are valued at their acquisition value. Capital assets include intangible assets with indefinite lives and public domain (infrastructure) general capital assets consisting of certain improvements including water wells, pumping stations, electric generation, transmission, and distribution improvements assets. The capitalization threshold for all capital assets is $5,000. Capital assets used in operations are depreciated using the straight-line method over their estimated useful lives in the government-wide and proprietary funds statements.

Capital assets used in operations are depreciated over their estimated useful lives using the straight-line method.

The lives used for depreciation purposes are as follows:

Assets Years
Infrastructures 10-50
Utility Plant and Buildings 25-50
Improvements 10-20
Right-to-use equipment 3
Machinery and equipment 3-35
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
54 Note 1 – Summary of Significant Accounting Policies (Continued) H. Capital Assets (Continued)
Maintenance and repairs are charged to operations when incurred. Betterments and major improvements, which significantly increase values, change capacities or extend useful lives, are capitalized. Upon sale or retirement of capital assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the changes in net financial position.

The governmental fund financial statements do not present capital assets. Instead, capital assets purchases are reported as capital outlay expenditures or other functional expenditures such as public works. As such, capital assets are shown as a reconciling item in the Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position.

The City established a threshold to recognize right‐to‐use assets, including lease assets or subscription-based information technology arrangement (“SBITA”) assets (“subscription assets”), in the government‐wide financial statements and proprietary fund financial statements for right-to-use asset over $15,000.

Lease assets are recorded at the amount of the initial measurement of the lease liabilities and adjusted by any lease payments made to the lessor at or before the commencement of the lease term, less any lease incentives received from the lessor at or before the commencement of the lease term along with any initial direct costs that are ancillary charges necessary to place the lease assets into service. Lease assets are amortized using the straight-line method over the shorter of the lease term or the useful life of the underlying asset, unless the lease contains a purchase option that the City has determined is reasonably certain of being exercised. In this case, the lease asset is amortized over the useful life of the underlying asset.

Subscription assets are recorded at the amount of the initial measurement of the SBITA liabilities (“subscription liabilities”) and adjusted by any subscription payments to the SBITA vendor at or before the commencement of the subscription term, less any incentives received from the SBITA vendor at or before the commencement of the subscription term along with subscription implementation costs. Subscription assets are amortized over the shorter of the subscription term or the useful life of the underlying IT assets.

I. Deferred Outflows and Inflows of Resources
The statement of net position reports separate sections for deferred outflows of resources and deferred inflows of resources, when applicable.

Deferred Outflows of Resources represents consumption of net assets that applies to future periods.

Deferred Inflows of Resources represents acquisition of net assets that applies to future periods.

J. Unearned and Unavailable Revenue
Unearned revenue is reported for transactions for which revenue has not yet been earned. Typical transactions recorded as unearned revenues are grant revenues received in advance.

In the governmental fund financial statements, unavailable revenue is reported when transactions have not yet met the revenue recognition criteria based on the modified accrual basis of accounting. The City reports unavailable revenue when an asset is reported in governmental fund financial statements but the revenue is not available.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
55 Note 1 – Summary of Significant Accounting Policies (Continued) K. Compensated Absences
Accumulated vacation is accrued when incurred in the government-wide, proprietary and fiduciary fund financial statements. A liability for accrued vacation is recorded in the governmental fund only to the extent that such amounts have matured (i.e., as a result of employee resignations and retirements). Upon termination of employment, the City will pay the employee all accumulated vacation leave at 100% of the employee’s base hourly rate.

L. Claims Payable
When it is probable that a claim liability has been incurred at year-end and the amount of the loss can be reasonably estimated, the City records the estimated loss, net of any insurance coverage, under its self- insurance program.

Claims payable, which includes an estimate for incurred but not reported (“IBNR”) claims, is recorded in the General Fund.

M. Lease Liabilities
The City recognizes lease liabilities with an initial, individual value of $15,000 or more with a lease term greater than one year in the government-wide and proprietary fund financial statements. Variable payments based on future performance of the lessee or usage of the underlying asset are not included in the measurement of the lease liability.

At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made.

Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments.  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 State generally uses its estimated incremental borrowing rate as the discount rate for leases.
 The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability 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 any lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability.

N. Subscription Liabilities
The City recognizes subscription liabilities with an initial, individual value of $15,000 or more with a subscription term greater than one year in the government-wide and proprietary fund financial statements. Variable payments based on future performance of the City or usage of the underlying asset are not included in the measurement of the subscription liability.

At the commencement of a subscription, the City initially measures the subscription liability at the present value of payments expected to be made during the lease term. Subsequently, the subscription liability is reduced by the principal portion of subscription payments made.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
56 Note 1 – Summary of Significant Accounting Policies (Continued) N. Subscription Liabilities (Continued)
Key estimates and judgments related to subscription include how the City determines (1) the discount rate it uses to discount the expected v payments to present value, (2) subscription term, and (3) subscription payments.  The City uses incremental borrowing rate provided by the financial institution at July 1, 2022 for existing subscription or the current rate at the time a new subscription is executed.  The subscription term includes the noncancellable period of the SBITA. Subscription payments included in the measurement of the subscription liability are composed of fixed payments.

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

O. Long-Term Debt
In the government-wide financial statements and proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the appropriate activities. Bonds payable are reported net of the applicable bond premium or discount. Debt issuance costs except for any portion related to prepaid insurance were recognized as expense in the period incurred. Premium or discount not considered as part of the reacquisition price was amortized over the life of the bond.

The governmental fund financial statements do not present long-term liabilities. Consequently, long-term debt is shown as a reconciling item in the Reconciliation of the Governmental Funds Balance Sheet to the GovernmentWide Statement of Net Position.

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

General Fund is used to liquidate pension liabilities for governmental fund.

The following timeframes are used for pension reporting:

Valuation Date June 30, 2022
Measurement Date June 30, 2023
Measurement Period July 1, 2022 to June 30, 2023
Gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized straight-line over 5 years. All other amounts are amortized straight-line over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
57 Note 1 – Summary of Significant Accounting Policies (Continued) Q. Other Postemployment Benefits (“OPEB”)
For the purpose of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s OPEB Plan and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, the OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value, except for money market investments, which are reported at amortized cost.

General Fund is typically used to liquidate OPEB liabilities for governmental funds.

The following timeframes are reported OPEB reporting:

Valuation Date June 30, 2022
Measurement Date June 30, 2023
Measurement Period July 1, 2022 to June 30, 2023
Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time. The first amortized amounts are recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. The amortization period differs depending on the sources of gain or loss. The difference between projected and actual earnings is amortized on a straight-line basis over 5 years. All other amounts are amortized on a straight-line basis over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) at the beginning of the measurement period.

R. Property Taxes
The County of Los Angeles levies, collects and apportions property taxes for all taxing jurisdictions within the County. Property taxes are determined by applying approved rates to the properties’ assessed values. The County remits property taxes applicable to the City less an applicable to the City less an administrative fee throughout the year.

Under California law, property taxes are assessed and collected by the counties for up to 1% of assessed property value, plus other increases approved by the voters. Property taxes collected are pooled and then allocated to the cities based on complex formulas. Property taxes are assessed, collected and allocated by Los Angeles County throughout the fiscal year. The following are key dates pertaining to property taxes:

January 1
July 1 to June 30
November 1 and February 1
December 10 and April 10
Lien Date
Levy Date
Due Dates
Delinquent Dates
Property taxes receivable for the governmental fund types, which have been remitted within 60 days subsequent to year end, are considered measurable and available and recognized as revenues. All other property taxes are offset by deferred property tax inflows of resources and, accordingly, have not been recorded as revenue. Taxes are considered past due on the above delinquent dates, at which time the applicable property is subject to lien, and penalties and interest are assessed.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
58 Note 1 – Summary of Significant Accounting Policies (Continued) S. Net Position and Fund Balances
In the Government-Wide Financial Statements and proprietary fund financial statements, net position is classified as follows:

Net Investment in Capital Assets – This component of net position consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of retention payable and debt that are attributable to the acquisition, construction, or improvement of those assets, and related deferred outflows and inflows of resources, net of unspent debt proceeds.

Restricted – This component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets.

Unrestricted – This component of net position is the amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position.

When expenses are incurred for purposes for which both restricted and unrestricted components of net position are available, the City’s policy is to apply the restricted component of net position first, then the unrestricted component of net position as needed.

In the Governmental Fund Financial Statements, fund balances are classified as follows:

Nonspendable – Nonspendable fund balances are items that cannot be spent because they are not in spendable form, such as prepaid items and inventories, or items that are legally or contractually required to be maintained intact, such as principal of an endowment or revolving loan funds.

Restricted – Restricted fund balances encompass the portion of net fund resources subject to externally enforceable legal restrictions. This includes externally imposed restrictions by creditors, such as through debt covenants, grantors, contributors, laws or regulations of other governments, as well as restrictions imposed by law through constitutional provisions or enabling legislation.

Committed – Committed fund balances encompass the portion of net fund resources, the use of which is constrained by limitations that the government imposes upon itself at its highest level of decision making, normally the governing body, and that remain binding unless removed in the same manner. The City Council is considered the highest authority for the City. Adoption of a resolution by the City Council is required to commit resources or to rescind the commitment.

Unassigned – This amount is for any portion of the fund balances that do not fall into one of the above categories. The General Fund is the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it is not appropriate to report a positive unassigned fund balance amount. However, in governmental funds other than General Fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund.

The City establishes encumbrance to record the amount of purchase orders, contracts, and other obligations, which have not yet been fulfilled, cancelled or discharged. Encumbrances outstanding at year end do not constitute expenditures or liabilities. Encumbrances outstanding at year-end are reported as a component of committed fund balance. Unencumbered appropriations lapse at year-end.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
59 Note 1 – Summary of Significant Accounting Policies (Continued) S. Net Position and Fund Balances (Continued)
When expenditures are incurred for purposes for which all restricted, committed, assigned and unassigned fund balances are available, the City’s policy is to apply in the following order, except for instances wherein an ordinance specifies the fund balance:
 Restricted
 Committed
 Assigned
 Unassigned
T. Use of Estimates
The preparation of the basic financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

U. Implementation of New GASB Pronouncements
In June 2022, GASB issued Statement No. 100, Accounting Changes and Error Corrections – an Amendment of GASB Statement No. 62. The primary objective of this Statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. Application of this statement did not have a significant effect on City’s fiscal year ending June 30, 2024.

Note 2 – Cash, Cash Equivalents, and Investments
The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds.

Certain restricted funds which are held and invested by independent outside custodians through contractual agreements are not pooled. These restricted funds include cash and investments with fiscal agents.

The City had the following cash, cash equivalents, and investments at June 30, 2024:

Fiduciary
Fund
Governmental Business-Type Statement of
Activities Activities Net Position Total
Cash and equivalents $ 22,598,489 $ 143,348,120 $ 4,878,419 $ 170,825,028 Investments 20,516,708 32,869,966 53,386,674 -
Restricted cash and investments 6,636,473 31,852,647 - 38,489,120 Total cash and investments $ 208,070,733 49,751,670 $ 4,878,419 $ 262,700,822 $ Government-Wide
Statement of Net Position
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
60 Note 2 – Cash, Cash Equivalents, and Investments (Continued) The City’s cash and investments at June 30, 2024, in more detail:

Cash and cash equivalents:

Cash on hand 2,000 $
Deposits with financial institutions 74,772,325
Local Agency Investment Fund 668,410
Money Market Funds 102,018,764
Total cash and cash equivalents 177,461,499
Investments:

US Treasury Bills 9,864,900
Municipal bonds 633,920
U.S. Government Sponsored Enterprise Securities 35,009,816 Negotiable Certificates of Deposit 7,878,040
Total investments 53,386,676
Investments with fical agents:

Money Market Funds 31,852,647
Total $ 262,700,822
A. Deposits
The carrying amounts of the City’s demand deposits were $74,772,325 at June 30, 2024. Bank balances at that date were $72,892,792, the total amount of which was collateralized or insured with accounts held by the pledging financial institutions in the City’s name as discussed below.

The California Government Code requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name.

The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation (“FDIC”). The City did not waive the collateral requirement for deposits insured by FDIC.

The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investment balances.

Interest income from cash and investments with fiscal agents is credited directly to the related fund.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
61 Note 2 – Cash, Cash Equivalents, and Investments (Continued) B. Investments
Under the provisions of the City’s investment policy, and in accordance with California Government Code, the following investments are authorized:

Maximum Maximum
Maximum Percentage Investments in
Authorized Investment Type Maturity Allowed1 One Issuer United States Treasury Bills, Bonds and Notes 5 Years None None United States Government Sponsored Agency Securities 5 Years None None Local Agency Bonds 5 Years None None
California State and Local Agency Bonds 5 Years 30% None Negotiable Certificates of Deposit 5 Years 30% None
Corporate Notes 5 Years 30% None
Non-Government issued Mortgage-backed pass-through
securities, collateralized Mortgage obligations and Asset-backed securities
5 Years 20% None
Repurchasement Agreement 1 year None None
Banker's Acceptance Notes 180 Days 40% 30%
Commercial Paper 270 Days 25% 10% of the issuer outstanding paper Reverse Repurchase Agreements 92 Days 20% None
Mutual Funds N/A 20% 10% of the issuer outstanding paper Local Agency Investment Fund (LAIF) N/A None None
N/A - Not Applicable
1 Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.

C. Local Agency Investment Fund (“LAIF”)
The City is a participant in LAIF which is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. As of June 30, 2024, the City had $668,410 invested in LAIF.

The fair value of the City’s portion in the pool is the same as the value of the pool shares and reported at amortized cost.

D. Fair Value Measurement
At June 30, 2024, investments are reported at fair value. The following table presents the fair value measurements of investments on a recurring basis and the levels with GASB 72 fair value hierarchy in which the fair value measurements fall at June 30, 2024:

Quoted Prices in Active Significant
Market for Identical Other Observable
Investment Type Assets (Level 1) Inputs (Level 2) Uncategorized Total U.S. Treasury bills $ 9,864,900 $ - $ - $ 9,864,900
Municipal bonds - 633,920 - 633,920
U.S. Government Sponsored
Enterprise Securities - 35,009,816 - 35,009,816
Negotiable Certificates of Deposit* 7,878,040 - - 7,878,040 Investments with fiscal agents:

Money Market Funds - - 31,852,647 31,852,647
Total $ 9,864,900 $ 43,521,776 $ 31,852,647 $ 85,239,323 *
Priced based on significant obervable inputs.

Measurement Input
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
62 Note 2 – Cash, Cash Equivalents, and Investments (Continued) E. Risk Disclosures
Interest Rate Risk - As a means of limiting its exposure to fair value losses arising from rising interest rates, the City’s investment policy limits investments to a maximum maturity of five years. At June 30, 2024, the City had the following investment maturities:
1 Year 1 Year to 3 Years to
Investment Type or Less 3 Years 5 Years Total
U.S. Treasury bills $ 9,864,900 $ - $ 9,864,900 - $
Municipal bonds - - 633,920 633,920
U.S. Government Sponsored
Enterprise Securities 4,960,600 30,049,216 - 35,009,816 Negotiable Certificates of Deposit 1,233,058 2,692,363 3,952,619 7,878,040 Investments with fiscal agents:

Money Market Funds 31,852,647 - 31,852,647 -
Total $ 47,911,205 $ 2,692,363 $ 34,635,755 $ 85,239,323 Remaining Maturity
Credit Risk – Generally, Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual rating, by Standard and Poor’s and Moody’s at June 30, 2024 for each investment type:

Fair Value Minimum Not Required
at Legal to be
Investment Type June 30, 2024 Rating AAA Other Rated
U.S. Treasury bills $ 9,864,900 N/A $ 9,864,900 $ - $ - Municipal bonds 633,920 AAA 633,920 - -
U.S. Government Sponsored
Enterprise Securities 35,009,816 AAA 35,009,816 - -
Negotiable Certificates of Deposit 7,878,040 N/A 7,878,040 - - Investments with fiscal agents:

Money Market Funds 31,852,647 AAA 31,852,647 - -
Total $ 85,239,323 $ 77,361,283 $ 7,878,040 $ -
N/A - Not Required
Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer excluding a 10% limitation on commercial papers, mutual funds, and money market mutual funds and a 30% limitation on bankers’ acceptances. The City’s investment policy places no limit on the amount of debt proceeds held by a bond trustee that the trustee may invest in one issuer that is governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
63 Note 2 – Cash, Cash Equivalents, and Investments (Continued) E. Risk Disclosures (Continued)
Custodial Credit Risk
The Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of a third party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of the third party. At June 30, 2024, none of the City’s deposits or investments were exposed to custodial credit risk.

Note 3 – Lease Receivables
Lease receivable consist of agreements with others for the right–to–use of the underlying assets for land owned by the City. The lease expires in January 2061. The incremental borrowing rate used was 2.01%. For the year ended June 30, 2024, the City recognized $98,569 in lease revenue and $74,905 in interest revenue for General Fund. The outstanding receivables are in the amounts of $3,701,541 for General Fund.

The future required payments for these leases, including interest, are as follows:

Year Ending
June 30, Principal Interest Total
2025 69,439 $ $ 73,524 $ 142,963
2026 70,847 72,115 142,962
2027 72,284 70,678 142,962
2028 73,751 69,212 142,963
2029 75,247 67,716 142,963
2030-2034 399,761 315,053 714,814
2035-2039 441,988 272,826 714,814
2040-2044 488,675 226,138 714,813
2045-2049 540,294 174,519 714,813
2050-2054 597,366 117,448 714,814
2055-2059 660,466 54,347 714,813
2060-2061 211,423 3,021 214,444
Total $ 3,701,541 $ 1,516,597 $ 5,218,138
Governmental Activities
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
64 Note 4 – Interfund Transactions
A. Due From/To Other Funds
At June 30, 2024, the City had the following due from/to other funds:

Due From
Other Funds
Proprietary
Fund
Electric
Due to Other Funds Enterprise Fund
Governmental Fund
General Fund 700 $
The interfund balances resulted from borrowing of cash for temporary purposes. All balances are expected to be reimbursed within the subsequent year.

B. Advances To/From Other Funds
At June 30, 2024, the City had the following advances:

Gas Fiber Optics
Advances to Other Funds Enterprise Fund Enterprise Fund Total Proprietary Fund
Electric Enterprise Fund 28,745,823 $ 4,473,607 $ 33,219,430 $ Advances from Other Funds
Proprietary Funds
The advances between the Electric Enterprise Fund and the Gas and Fiber Optics Enterprise Funds do not accrue interest due to the nature of the City’s operational relationship and capital projects funded by the Electric Enterprise Fund that benefit all City operations. On November 6, 2012, the City adopted Resolution No. 2012-215 extending the repayment term of the advance from 15 months to a period of over 10 years.

C. Interfund Transfers
At June 30, 2024, the City had the following interfund transfers:

Transfers In
Governmental
Fund
General
Tranfers Out Fund
Proprietary Fund
Electric Enterprise Fund $ 341,587
The Electric Enterprise Fund transfer of $341,587 to the General Fund was for the reimbursement of general governmental services.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
65 Note 5 – Capital Assets
A. Governmental Activities
A summary of changes in the capital assets for the governmental activities for the year ended June 30, 2024 is as follows:

Balance Balance
July 1, 2023 Additions Deletions Transfers June 30, 2024 Capital assets, not being depreciated:

Land $ 63,569,108 $ (750,908) - $ $ 62,818,200 - $
Construction in progress 2,846,677 760,552 (727,417) - 2,879,812 Total capital assets, not being depreciated 66,415,785 760,552 (750,908) (727,417) 65,698,012 Capital assets, being depreciated:

Buildings and improvements 16,960,832 44,461 - 17,005,293 - Improvements Other Than Buildings 12,280,450 - 135,600 - 12,416,050 Machinery and equipment 18,296,565 1,065,522 (2,292,445) 17,069,642 - Infrastructure 160,621,501 766,307 642,531 - 162,030,339 Total capital assets, being depreciated 208,159,348 1,876,290 (2,292,445) 778,131 208,521,324 Less accumulated depreciation for:

Buildings and improvements (10,012,274) (415,571) - (10,427,845) - Improvements Other Than Buildings (6,952,881) (375,621) - (7,328,502) - Machinery and equipment (13,487,274) (963,460) 2,261,036 (12,189,698) - Infrastructure (82,334,625) (3,684,055) (10,190) - (86,028,870) Total accumulated depreciation (112,787,054) (5,438,707) 2,261,036 (115,974,915) (10,190) Total capital assets, being depreciated, net 95,372,294 (3,562,417) (31,409) 767,941 92,546,409 Intangible assets, being amortized
Right-to-use lease assets 56,857 - - 56,857 -
Right-to-use subscription assets 606,013 918,368 - 1,524,381 - Total intangible assets, being amortized 662,870 918,368 - 1,581,238 - Less accumulated amortization for:

Right-to-use lease assets (50,540) (6,317) - (56,857) - Right-to-use subscription assets (138,167) (441,462) - (579,629) - Total accumulated amortization (188,707) (447,779) - (636,486) - Total intangible assets, being amortized, net 474,163 470,589 - 944,752 - Governmental activities capital assets, net $ 162,262,242 $ (2,331,276) $ (782,317) $ 159,189,173 40,524 $ Depreciation and amortization expense was charged to functions of the governmental activities for the year ended June 30, 2024 as follows:

General government $ 833,769
Public safety 256,101
Public works 4,763,668
Health 32,948
Total depreciation and amortization expense $ 5,886,486 City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
66 Note 5 – Capital Assets (Continued)
B. Business-Type Activities
A summary of changes in the capital assets for the business-type activities for the year ended June 30, 2024 is as follows:

Balance Balance
July 1, 2023 Additions Deletions Transfers June 30, 2023 Capital assets, not being depreciated:

Electric utility - Land $ 13,193,594 $ - $ - $ 13,193,594 - $ Water utility - Water 467,640 - - 467,640 -
Electric utility - Intangibles - Environmental credits 4,050,644 142,236 (160,763) 4,032,117 - Electric utility - Construction in progress 46,593,725 1,569,419 (133,182) - 48,029,962 Water utility - Construction in progress 10,643,631 1,401,036 (5,576,038) - 6,468,629 Fiber Optic utility - Construction in progress 266,172 437,340 (703,512) - - Total capital assets, not being depreciated 75,215,406 3,550,031 (160,763) (6,412,732) 72,191,942 Capital assets, being depreciated:

Electric utility - Production plant 212,821,719 384,106 - 213,205,825 - Electric utility - Transmission plant 3,616,464 (43,519) - 3,572,945 - Electric utility - Distribution plant 279,609,429 12,671,247 (827,808) 291,452,868 - Electric utility - General plant 9,961,395 388,781 (31,079) 167,776 10,486,873 Water utility plant 26,707,369 357,132 (685,145) 5,490,730 31,870,086 Gas utility plant 27,185,791 59,340 - 27,245,131 -
Fiber Optic utility plant 3,916,539 228,439 703,512 - 4,848,490 Total capital assets, being depreciated 563,818,706 14,089,045 (1,587,551) 6,362,018 582,682,218 Less accumulated depreciation for:

Electric utility - Production plant (33,668,388) (14,294,111) - - (47,962,499) Electric utility - Transmission plant (2,520,742) (73,858) 43,179 (2,551,421) - Electric utility - Distribution plant (100,170,962) (8,490,036) 710,111 (107,950,887) - Electric utility - General plant (6,786,111) (444,635) 31,079 (14,290) (7,213,957) Water utility plant (15,404,929) (708,447) 678,917 24,480 (15,409,979) Gas utility plant (12,512,991) (704,888) - (13,217,879) - Fiber Optic utility plant (2,903,610) (270,905) - (3,174,515) - Total accumulated depreciation (173,967,733) (24,986,880) 1,463,286 (197,481,137) 10,190 Total capital assets, being depreciated, net 389,850,973 (10,897,835) (124,265) 6,372,208 385,201,081 Intangible assets, being amortized
Right-to-use subscription assets 209,511 - - 209,511 -
Total intangible assets, being amortized 209,511 - - 209,511 - Less accumulated amortization for:

Right-to-use subscription assets (50,219) - - (50,219) - Total accumulated amortization (50,219) - - (50,219) -
Total intangible assets, being amortized, net 159,292 - - 159,292 - Business-type activities capital assets, net $ 465,066,379 $ (7,188,512) $ (285,028) $ (40,524) $ 457,552,315 City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
67 Note 5 – Capital Assets (Continued)
B. Business-Type Activities (Continued)
Depreciation and amortization expense was charged to functions of the business-type activities for the year ended June 30, 2024 as follows:

Electric Fund $ 23,352,859
Gas Fund 704,888
Water Fund 708,447
Fiber Optic Fund 270,905
Total depreciation and amortization expense $ 25,037,099 Note 6 – Long-Term Liabilities
A. Governmental Activities
A summary of changes in long-term liabilities for governmental activities for the year ended June 30, 2024 is as follows:

Balance Balance Due within Due in More
July 1, 2023 Additions Deletions June 30, 2024 One Year Than One Year Governmental Activities:

Lease liabilities $ 6,347 $ (6,347) - $ $ - $ - $ -
Subscription liabilities 405,706 903,551 (501,822) 807,435 414,175 393,260 Compensated absences 2,786,473 1,531,299 (1,544,254) 2,773,518 924,506 1,849,012 Claims and judgments 3,946,814 410,974 (1,111,716) 3,246,072 1,650,680 1,595,392 Total governmental activities $ 7,145,340 $ 2,845,824 $ (3,164,139) $ 6,827,025 $ 2,989,361 $ 3,837,664 Lease liabilities
On July 17, 2021, the City entered into a lease agreement with MRC Smart Technology Solutions for equipment in the amount of $290,000. The lease agreement has 36 payments of $2,116 with an interest rate of 0.46%. The lease liabilities was fully paid at June 30, 2024.

Subscription liabilities
The City entered into subscription agreements with various vendors for software. The agreements expire from March 34, 2025 to June 30, 2028 with interest rates ranging from 2.15% to 3.76%.

The future annual subscription payments are as follows:

Year Ending
June 30, Principal Interest Total
2025 414,175 $ 25,011 $ 439,186 $
2026 195,288 12,058 207,346
2027 97,582 5,694 103,276
2028 100,390 2,887 103,277
Total 807,435 $ 45,650 $ 853,085 $
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
68 Note 6 – Long-Term Liabilities (Continued)
A. Governmental Activities (Continued)
Compensated Absences
The compensated absences are liquidated by the General Fund. At June 30, 2024, compensated absences were in the amount of $2,773,518. Refer to note 7 for more information of these liabilities.

Claims and Judgments
Refer to Note 8 for more information on claims and judgments.

B. Business-Type Activities
The following is a summary of changes in long-term liabilities for business-type activities for the year ended June 30, 2024:

Balance Balance Due within Due in More
July 1, 2023 Additions Deletions June 30, 2024 One Year Than One Year Business-Type activities
Public Borrowings:

Revenue Bonds:
2008 Taxable Revenue Bonds - Series A - Electric 36,870,000 $ - $ (1,120,000) $ 35,750,000 $ 1,220,000 $ 34,530,000 $ 2012 Taxable Revenue Bonds - Series B - Electric 5,340,000 - (1,170,000) 4,170,000 1,305,000 2,865,000 2015 Taxable Revenue Bonds - Series A - Electric 89,180,000 - (23,520,000) 65,660,000 24,585,000 41,075,000 2020 Taxable Revenue Bonds - Series A - Electric 19,305,000 - - 19,305,000 - 19,305,000 2021 Taxable Revenue Bonds - Series A - Electric 153,435,000 - (21,335,000) 132,100,000 22,400,000 109,700,000 2022 Taxable Revenue Bonds - Series A - Electric 52,070,000 - (4,690,000) 47,380,000 4,885,000 42,495,000 2020 Taxable Revenue Bonds - Series A - Water 14,350,000 - (265,000) 14,085,000 275,000 13,810,000 Total Revenue Bonds 370,550,000 - (52,100,000) 318,450,000 54,670,000 263,780,000 Unamortized Premiums/(Discounts):
2008 Taxable Revenue Bonds - Series A - Electric (1,962) - 131 (1,831) - (1,831) 2012 Taxable Revenue Bonds - Series B - Electric (53,190) - 16,797 (36,393) - (36,393) 2015 Taxable Revenue Bonds - Series A - Electric (741,124) - 355,739 (385,385) - (385,385) 2020 Taxable Revenue Bonds - Series A - Electric 6,177,255 - (438,622) 5,738,633 - 5,738,633 2021 Taxable Revenue Bonds - Series A - Electric 19,449,520 - (5,784,588) 13,664,932 - 13,664,932 2022 Taxable Revenue Bonds - Series A - Electric 9,447,039 - (947,247) 8,499,792 - 8,499,792 2020 Taxable Revenue Bonds - Series A - Water 516,753 - (19,080) 497,673 - 497,673 Total Unamortized Premiums/(Discounts) 34,794,291 - (6,816,870) 27,977,421 - 27,977,421 Total Public Offering 405,344,291 - (58,916,870) 346,427,421 54,670,000 291,757,421 Direct Borrowing:

Water Replenishment District Note Payable 1,081,395 (139,535) - 941,860 139,535 802,325 Total Direct Borrowing 1,081,395 (139,535) - 941,860 139,535 802,325 Subscription liabilities 113,531 - (39,082) 74,449 36,537 37,912 Compensated absences 1,149,984 945,752 (797,771) 1,297,965 432,655 865,310 Total business-Type activities $ 407,575,670 $ 1,059,283 $ (59,893,258) $ 348,741,695 $ 55,278,727 $ 293,462,968 City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
69 Note 6 – Long-Term Liabilities (Continued)
B. Business-Type Activities (Continued)
$43,765,000 Electric System Revenue Bonds (2008 Taxable Series A) The bonds are special obligation bonds which are secured by an irrevocable pledge of electric revenues payable to bondholders. Under the Bond Indenture of Trust, interest and principal on the bonds are payable from Net Revenues (or Revenues less Operation and Maintenance Expenses) and/or amounts in the Light and Power Enterprise (as those terms are defined in the Indenture of Trust). The City of Vernon Electric System Revenue Bonds, 2008 Taxable Series A were issued to provide funds to (i) finance the cost of certain capital improvements to the City’s Electric System, (ii) fund a deposit to the Debt Service Reserve Fund, and (iii) to pay costs of issuance of the 2008 Bonds. The total unpaid balance as of June 30, 2024, was $35,750,000.

The future annual debt service requirements for the Taxable Revenue Bonds, Series 2008A are as follows:

Year Ending
June 30, Principal Interest Total
2025 1,220,000 $ 3,018,526 $ 4,238,526 $
2026 1,330,000 2,909,004 4,239,004
2027 1,450,000 2,789,603 4,239,603
2028 1,580,000 2,659,464 4,239,464
2029 1,720,000 2,517,729 4,237,729
2030-2034 11,215,000 9,975,782 21,190,782
2035-2039 17,235,000 3,955,480 21,190,480
Total 35,750,000 $ $ 27,825,588 $ 63,575,588
$35,100,000 Electric System Revenue Bonds (2012 Taxable Series B) On January 10, 2012, the City issued Electric System Revenue Bonds, 2012 Series B, in the amount of $35,100,000.

During the fiscal year ended 2022, a portion of the Electric System Revenue Bonds were refunded with the issuance of the Electric System Revenue Bonds 2022 Series A. The bonds are special obligation bonds which are secured by an irrevocable pledge of electric revenues payable to bondholders. Under the Bond Indenture of Trust, interest and principal on the bonds are payable from Net Revenues (or Revenues less Operation and Maintenance Expenses) and/or amounts in the Light and Power Enterprise (as those terms are defined in the Indenture of Trust). The City of Vernon Electric System Revenue Bonds, 2012 Taxable Series B were issued to provide funds to (i) refund the $28,680,000 aggregate principal amount of 2009 Bonds maturing on August 1, 2012, (ii) to pay a portion of the Costs of the 2012 Project, and (iii) to pay costs of issuance of the 2012 Taxable Series B Bonds. The total unpaid balance as of June 30, 2024, was $4,170,000.

The future annual debt service requirements for the Taxable Revenue Bonds, Series 2012B are as follows:

Year Ending
June 30, Principal Interest Total
2025 1,305,000 $ 225,269 $ 1,530,269
2026 1,390,000 140,181 1,530,181
2027 1,475,000 47,938 1,522,938
Total 4,170,000 $ 413,388 $ 4,583,388 $
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
70 Note 6 – Long-Term Liabilities (Continued)
B. Business-Type Activities (Continued)
$111,720,000 Electric System Revenue Bonds (2015 Taxable Series A) The bonds are special obligation bonds which are secured by an irrevocable pledge of electric revenues payable to bondholders. Under the Bond Indenture of Trust, interest and principal on the bonds are payable from Net Revenues (or Revenues less Operation and Maintenance Expenses) and/or amounts in the Light and Power Enterprise (as those terms are defined in the Indenture of Trust). The City of Vernon Electric System Revenue Bonds, 2015 Taxable Series A were issued to provide funds to (i) refund a portion of the Outstanding Electric System Revenue Bonds, 2009 Series A; (ii) finance the costs of certain capital improvements to the City’s Electric System by reimbursing the Electric System for the prior payment of such Costs from the Light and Power Fund; (iii) fund a deposit to the Debt Service Reserve Fund; and (iv) pay costs of issuance of the 2015 Bonds. The total unpaid balance as of June 30, 2024, was $65,660,000.

The future annual debt service requirements for the Taxable Revenue Bonds, Series 2015A are as follows:

Year Ending
June 30, Principal Interest Total
2025 24,585,000 $ 2,530,618 $ 27,115,618 $
2026 25,780,000 1,341,193 27,121,193
2027 15,295,000 370,904 15,665,904
$ 4,242,715 65,660,000 $ 69,902,715 $
$71,990,000 Electric System Revenue Bonds (2020 Series A) The bonds are special obligation bonds which are secured by an irrevocable pledge of electric revenues payable to bondholders. Under the Bond Indenture of Trust, interest and principal on the bonds are payable from Net Revenues (or Revenues less Operation and Maintenance Expenses) and/or amounts in the Light and Power Enterprise (as those terms are defined in the Indenture of Trust). The City of Vernon Electric System Revenue Bonds, 2020 Series A were issued to provide funds to (i) finance the acquisition and construction of certain capital improvements to the Electric System of the City, (ii) to refund all the City’s outstanding Electric System Revenue Bonds, 2009 Series A, and (iii) to pay costs of issuance of the 2020 Bonds. The total unpaid balance as of June 30, 2024, was $19,305,000.

The future annual debt service requirements for the Taxable Revenue Bonds, Series 2020A are as follows:

Year Ending
June 30, Principal Interest Total
2025 - $ 965,250 $ 965,250 $
2026 - 965,250 965,250
2027 - 965,250 965,250
2028 - 965,250 965,250
2029 1,525,000 927,125 2,452,125
2030-2034 8,885,000 3,378,875 12,263,875
2035-2038 8,895,000 917,375 9,812,375
Total 19,305,000 $ $ 9,084,375 $ 28,389,375
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
71 Note 6 – Long-Term Liabilities (Continued)
B. Business-Type Activities (Continued)
$183,815,000 Electric System Revenue Bonds (2021 Series A) In December 2021, the City of Vernon issued 2021A Electric System Revenue Bonds in the amount of $183,815,000 (i) to pay the costs of the acquisition by the City of Vernon of a 134-megawatt natural gas-fired generating facility located within the City limits on land owned by the City, together with certain related electrical interconnection facilities and other assets, property, and contractual rights; (ii) to fund a deposit to the Debt Service Reserve Fund in satisfaction of the Debt Service Reserve Requirement; and (iii) to pay costs of issuance of the 2021 bonds.

The bonds bear interest rates between 4.00%-5.00% that are payable on a semi-annual basis on April 1 and October 1, commencing April 1, 2022. The bonds are special obligation bonds which are secured by an irrevocable pledge of electric revenues payable to bondholders. The total unpaid balance as of June 30, 2024, was $132,100,000.

The future annual debt service requirements for the Taxable Revenue Bonds, Series 2021A are as follows:

Year Ending
June 30, Principal Interest Total
2025 22,400,000 $ 6,325,000 $ 28,725,000 $
2026 23,530,000 5,190,875 28,720,875
2027 31,255,000 3,917,875 35,172,875
2028 54,915,000 2,059,375 56,974,375
Total $ 17,493,125 132,100,000 $ 149,593,125 $
$52,070,000 Electric System Revenue Bonds (2022 Series A) In December 2021, the City of Vernon issued 2022A Electric System Revenue Bonds in the amount of $52,070,000 to refund the 2012A Electric System Revenue Bonds, a portion of the 2012B Electric Revenue Bonds, and provide for the costs of issuing the bonds.

Under the Bond Indenture of Trust, interest and principal on the bonds are payable from Net Revenues (or Revenues less Operation and Maintenance Expenses) and/or amounts in the Light and Power Enterprise (as those terms are defined in the Indenture of Trust). The City of Vernon Electric System Revenue Bonds, 2022 Series A were issued to (i) refund and defease all of the City’s outstanding Electric System Revenue Bonds, 2012 Series A and a portion of the City’s outstanding Electric System Revenue bonds, 2012 Taxable Series B and (ii) pay costs of issuance of the 2022 Bonds.

The bonds bear interest rates between 4.00%-5.00% that are payable on a semi-annual basis beginning February 1 and August 1, commencing on August 1, 2022. The bonds are special obligation bonds which are secured by an irrevocable pledge of electric revenues payable to bondholders. The total unpaid balance as of June 30, 2024, was $47,380,000.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
72 Note 6 – Long-Term Liabilities (Continued)
B. Business-Type Activities (Continued)
$52,070,000 Electric System Revenue Bonds (2022 Series A) (Continued) The future annual debt service requirements for the Taxable Revenue Bonds, Series 2022A are as follows:

Year Ending
June 30, Principal Interest Total
2025 $ 4,885,000 $ 2,246,875 $ 7,131,875
2026 5,130,000 1,996,500 7,126,500
2027 5,405,000 1,733,125 7,138,125
2028 950,000 1,574,250 2,524,250
2029 1,000,000 1,525,500 2,525,500
2030-2034 5,825,000 6,803,125 12,628,125
2035-2039 7,475,000 5,149,125 12,624,125
2040-2042 16,710,000 1,281,000 17,991,000
Total $ 22,309,500 47,380,000 $ 69,689,500 $
$14,840,000 Water System Revenue Bonds (2020 Series A)
The bonds are special obligation bonds which are secured by an irrevocable pledge of water revenues payable to bondholders. Under the Indenture of Trust dated May 6, 2020, interest and principal on the bonds are payable from Net Revenues (or Revenues less Operation and Maintenance Expenses) and/or amounts in the Water Enterprise (as those terms are defined in the Indenture of Trust). The total unpaid balance as of June 30, 2024, was $14,085,000.

The future annual debt service requirements for the Taxable Revenue Bonds, Series 2020A are as follows:

Year Ending
June 30, Principal Interest Total
2025 $ 275,000 $ 549,350 $ 824,350
2026 542,475 - 542,475
2027 542,475 - 542,475
2028 542,475 - 542,475
2029 542,475 - 542,475
2030-2034 1,985,000 2,365,000 4,350,000
2035-2039 2,180,000 1,834,625 4,014,625
2040-2044 2,680,000 1,354,550 4,034,550
2045-2049 3,180,000 829,325 4,009,325
2050-2051 3,785,000 198,713 3,983,713
Total $ 9,301,463 14,085,000 $ 23,386,463 $
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
73 Note 6 – Long-Term Liabilities (Continued)
B. Business-Type Activities (Continued)
Water Replenishment District Note Payable – Direct Borrowing In May 2019, the City entered into an agreement with Water Replenishment District of Southern California (WRD) for assistance with the construction of a new groundwater well or rehabilitation of an existing groundwater well.

The promissory note is unsecured and has a no interest basis for an amount not to exceed $1,500,000. As of June 30, 2022, WRD has disbursed all of the funds under the agreement to the City. The note is payable in quarterly principal payments commencing September 1, 2020, in an amount which, together with all quarterly payments, will be sufficient to fully amortize the principal balance of the note by the maturity date of April 1, 2031. The total unpaid balance as of June 30, 2024, was $941,860.

Upon an event of default, WRD may declare any or all of the outstanding and unpaid principal balance immediately due and payable, without presentment, demand, protest, notice of protest, notice of acceleration or of intention to accelerate or any other notice, declaration or act of any kind, all of which are hereby expressly waived by the City.

The future annual debt service requirements are as follows:

Year Ending
June 30, Principal Interest Total
2025 139,535 $ - $ 139,535 $
2026 139,535 - 139,535
2027 139,535 - 139,535
2028 139,535 - 139,535
2029 139,535 - 139,535
2030-2031 244,185 244,185 -
Total $ 941,860 $ 941,860 - $
Compensated Absences
The balance outstanding at June 30, 2024, was $1,297,965. See note 7 for details.

Subscription liabilities
The City entered into subscription agreements with various vendors for software. The agreement expires October 18, 2026 with an interest rate of 3.76%.

The future annual subscription payments are as follows:

Year Ending
June 30, Principal Interest Total
2025 36,537 $ 2,802 $ 39,339 $
2026 37,912 1,427 39,339
Total 74,449 $ 4,229 $ 78,678 $
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
74 Note 6 – Long-Term Liabilities (Continued)
C. Fiduciary Funds
The following long-term obligations were approved by California State Department of Finance as enforceable obligations and were considered as accounting liabilities in accordance with GAAP.

Balance Balance Due within Due in More
July 1, 2023 Additions Deletions June 30, 2024 One Year Than One Year Fiduciary Activities:

Public Offering
2022 Tax Allocation Refunding
Bonds 21,330,000 $ - $ (3,165,000) $ 18,165,000 $ 3,445,000 $ 14,720,000 $ 2022 Taxable Tax Allocation Refunding Bonds
In July 2022, the Successor Agency of the former Redevelopment Agency of the City issued the 2022 Taxable Tax Allocation Refunding Bonds in the amount of $21,330,000 to a current refunding of the City’s 2005 Industrial Redevelopment Project Tax Allocation Bonds and 2011 Industrial Redevelopment Project Tax Allocation Bonds.

The current refunding resulted in a saving in debt service payments of $11,666,099 and an economic gain of $2,387,082.

The bonds bear interest at rates between 3.489% and 4.431%. Interest on the bonds is payable annually on each March 1 and September 1. Principal payments are due in annual installments ranging from $3,165,000 to $4,030,000, commencing September 1, 2023 through September 1, 2028. The bonds are not subject to redemption prior to maturity. The refunding revenue bonds debt service payments will be made from the debt service funds.

The annual debt service requirements for the Taxable Tax Allocation Refunding Bonds are as follows:

Year Ending
June 30, Principal Interest Total
2025 3,445,000 $ 677,008 $ 4,122,008 $
2026 3,625,000 543,802 4,168,802
2027 3,820,000 395,560 4,215,560
2028 4,030,000 230,814 4,260,814
2029 3,245,000 71,893 3,316,893
Total 18,165,000 $ 1,919,077 $ 20,084,077 $
The 2022 Taxable Tax Allocation Refunding Bonds are secured by the Pledged Tax Revenues deposited in the Redevelopment Property Tax Trust Fund. The pledged tax revenues are to be used solely for the repayment of principal and interest on the bonds until they are paid in full through September 1, 2028 and are not available for other purposes during the duration that the bonds are outstanding. The total principal and interest remaining is approximately $20,084,077. Management expects that pledged tax revenues will be sufficient to make future principal and interest payments on the bonds.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
75 Note 6 – Long-Term Liabilities (Continued)
D. Expense Stabilization Fund
The City maintains an Expense Stabilization Fund held by a Trustee in such amounts, at such times and from sources as shall be determined by the City in its sole discretion. In the event of default under the Indenture shall have occurred and is continuing, the Trustee shall transfer all moneys in the fund to the debt service funds as provided in the Indenture. Moneys on deposit in this fund may be withdrawn by the City at any time when no event of default exists under the Indenture. As of June 30, 2024, this fund has a balance of $42,427,616.

E. Right to Accelerate Upon Default
Notwithstanding anything contrary in the Indenture or in the Bonds, upon the occurrence of an Event of Default, the Trustee may, with the consent of each Credit Provider whose consent is required by a Supplemental Indenture or a Credit Support Agreement, and shall, at the direction of the Owners of a majority in principal amount of Outstanding Bonds (other than Bonds owned by or on behalf of the City) by written notice to the City, declare the principal of the Outstanding Bonds and the interest thereon to be immediately due and payable, whereupon such principal and interest shall, without further action, become and be immediately due and payable.

F. Credit Rating
As of June 30, 2024, the ratings on all Electric System Revenue Bonds are Baa1 stable by Moody’s and A- stable by S&P and the ratings on all Water System Revenue Bonds are A- by S&P.

Note 7 – Compensated Absences
Under certain circumstances and according to the negotiated labor agreements, City employees are allowed to accumulate annual leave. The annual leave amount is accrued and accounted for as compensated absences in the government-wide and proprietary fund statements.

The following is a summary of compensated absences payable transactions for the year ended June 30, 2024:

Balance Balance Due within Due in More
July 1, 2023 Additions Deletions June 30, 2024 One Year Than One Year Governmental activities:

Compensated absences $ 2,786,473 $ 1,531,299 $ (1,544,254) $ 2,773,518 $ 924,506 $ 1,849,012 Business-type activities
Compensated absences $ 1,149,984 $ 945,752 $ (797,771) $ 1,297,965 $ 432,655 $ 865,310 The General Fund is used to liquidate the compensated absences for governmental activities. The Enterprise Funds are used to liquidate the compensated absences for business-type activities.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
76 Note 8 – Risk Management
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 disasters. The City utilizes insurance policy(s) to transfer these risks. Each policy has either self-insured retention or deductible, which are parts of our Risk Financing Program. There have been no significant settlements or reductions in insurance coverage during the past three fiscal years.

Starting in Fiscal 2010, the City chose to establish the Risk Financing Program in the General Fund, whereby assets are set aside for claim-litigation settlements associated with the above-mentioned risks up to their self-insured retentions or policy deductibles. Athens Administrators Inc. is the City’s Third-Party Administrator for workers’ compensation program and they provide basic services for general liability claims and litigation.

A summary of the insurance limits for fiscal year 2024 are as follows:

Insurance Type Program Limits Deductible/SIR (Self-Insured Retention) 1st Excess Liability $5,000,000 $2 Million
$3 Million Law Enforcement
2nd Excess Liability $5,000,000 $5,000,000
3rd Excess Liability $5,000,000 $10,000,000
4th Excess Liability $5,000,000 $15,000,000
Excess Workers Compensation $50,000,000 $1,000,000
Excess Liability - Malburg Generating Station $100,000,000 - $1.5 Million Presumptive Loss
Property - Power Generating $100,000,000 Various
Property - Residential $7,950,653 $2,500
Property - Municipal $59,614,930 $25,000
Property - Malburg Generating Station $200,000,000 -
Commercial Property/EQ and FL $50,000,000 -
Government Crime $1,000,000 $25,000
Premise Pollution/Environmental Impairment $5,000,000 $25,000 $5,000,000 per Claim $50,000 Utility Locs.
$100,000 Natural Gas Pipeline
Cyber Liability $5,000,000 $100,000
Auto Physical Damage $10,000,000 $5,000
Residential Property Insurance $7,950,653 $2,500
Terrorism $100 Million Property Terrorism $0
$5 Million Terrorism Liability
$5 Million Active Shooter
Special Events $2,000,000 $1,000,000 Each Occurrence
Changes in the balances of claims liabilities during the past three years are as follows:

Current Year Current Year
Balance at Claims and Changes Claim Balance at
Year Ended July 1 in Estimates Payments June 30
June 30, 2022 3,409,372 $ 2,831,928 $ (1,300,568) $ 4,940,732 $ June 30, 2023 4,940,732 1,529,740 (2,523,658) 3,946,814 June 30, 2024 3,946,814 410,974 (1,111,716) 3,246,072
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
77 Note 9 – Pension Plan
A. General Information about the Pension Plan
On October 1, 2020, the City transferred its fire department operations to Los Angeles County, California. The City's full-time safety (police and fire personnel) employees were converted from the City's agent multipleemployer defined benefit pension plan to a cost-sharing defined benefit pension plan during the fiscal year ended June 30, 2021.

Plan Description
The City contribution to the California Public Employees Retirement System (“CalPERS”), an agent multipleemployer defined benefit pension plan for miscellaneous employees and a cost-sharing multiple-employer defined benefit plan for safety employees. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and City ordinance. A full description of the pension plan regarding number of employees covered, benefit provisions, assumptions (for funding, but not accounting purposes), and membership information are listed in the June 30, 2022 Annual Actuarial Valuation Report. This report and CalPERS’ audited financial statements are publicly available reports that can be obtained at CalPERS’ website under Forms and Publications.

Benefits Provided
CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions under both plans are established by State Statute and City Resolution as follows:

Classic PEPRA
Prior to On or After
Hire date January 1, 2013 January 1, 2013
Benefit formula 2.7% @ 55 2% @ 62
Benefit vesting schedule 5 years service 5 years service Benefit payments Monthly for life Monthly for life
Retirement age 50 yrs 52 yrs
Monthly benefits, as a % of eligible
compensation

2.0%-2.7%,
50 yrs - 55 yrs,
respectively

1.0%-2.0%,
52 yrs - 62 yrs,
respectively
Required employee contribution rate (FY23-24) 8.00% 7.00% Required employer contribution rate (FY23-24) 13.17% 13.17% Required employer contribution rate (FY22-23) 11.50% 11.50% Miscellaneous
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
78 Note 9 – Pension Plan (Continued)
A. General Information about the Pension Plan (Continued) Benefits Provided (Continued)
Classic PEPRA
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 yrs 50 yrs
Monthly benefits, as a % of eligible 3%, 50 yrs
Required employee contribution rate (FY23-24) 9.00% 14.50% Required employer contribution rate (FY23-24) 27.40% 19.78% Required employer contribution rate (FY21-22) 23.39% 20.70% Safety

2.0% - 2.7%
50 yrs - 57 yrs,
respectively
Participants are eligible for non-industrial disability retirement if they become disabled and have at least 5 years credited service. There is no special age requirement. The standard non-industrial disability retirement benefit is a monthly allowance equal to 1.8 percent of final compensation, multiplied by service years.

Industrial disability benefits are not offered to miscellaneous employees. The City provides industrial disability retirement benefits to safety employees only. The industrial disability retirement benefit is a monthly allowance equal to 50 percent of final compensation.

An employee's beneficiary may receive the basic death benefit if the employee becomes deceased while actively employed. The employee must be actively employed with the City to be eligible for this benefit. An employee's survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this basic death benefit. The basic death benefit is a lump sum in the amount of the employee's accumulated contributions, where interest is currently credited at 6.0 percent per year, plus a lump sum in the amount of one month's salary for each completed year of current service, up to a maximum of six months’ salary. For purposes of this benefit, one month's salary is defined as the member's average monthly full-time rate of compensation during the 12 months preceding death. Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree's designated survivor(s), or to the retiree 's estate.

Benefit terms provide for annual cost-of-living adjustments to each employee's retirement allowance. Beginning the second calendar year after the year of retirement, retirement and survivor allowances will be annually adjusted on a compound basis up to 2 percent.

Employees Covered by Benefit Terms
At June 30, 2022, the valuation date, the following employees were covered by the benefit terms:

Miscellaneous Safety
Active employees 167 42
Transferred and terminated employees 189 131
Retired employees and beneficiaries 215 297
Total 571 470
Plans
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
79 Note 9 – Pension Plan (Continued)
A. General Information about the Pension Plan (Continued) Contributions
Section 20814(c) of the California Public Employees’ Retirement Law (“PERL”) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

B. Net Pension Liability
Actuarial Methods and Assumption Used to Determine Total Pension Liability The June 30, 2022 valuation was rolled forward to determine the June 30, 2023 total pension liability, based on following actuarial methods and assumptions:

Actuarial Cost Method
Actuarial Assumptions:

Discount Rate
Inflation
Salary Increases
Mortality Rate Table(1)
Post Retirement Benefit Increase
Derived using CalPERS’ Membership Data for all Funds.
(1)The mortality table used was developed based on CalPERS-specific data. The rates incorporate Generational Mortality to capture ongoing mortality improvement using 80% of Scale MP 2020 published by the Society of Actuaries. For more details, please refer to the 2021 experience study report that can be found on the CalPERS website.

Entry Age Normal

6.90%

2.30%
Varies by Entry Age and Service
The lesser of contract COLA or 2.30% until Purchasing
Power Protection. Allowance floor on purchasing power
applies, 2.30% thereafter.

Change of Assumptions
There were no assumption changes in 2023.

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

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
80 Note 9 – Pension Plan (Continued)
B. Net Pension Liability (Continued)
Long-term Expected Rate of Return (Continued)
The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated and, combined with risk estimates, are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return.

The expected real rates of return by asset class are as follows:

Asset Class1
Assumed Asset
Allocation Real Return1,2
Global Equity - Cap-weighted 30.00% 4.54%
Global Equity - Non-Cap-weighted 12.00% 3.80%
Private Equity 13.00% 7.28%
Treasury 5.00% 0.27%
Mortgage-backed Securities 5.00% 0.50%
Investment Grade Corporates 10.00% 1.56%
High Yield 5.00% 2.27%
Emerging Market Debt 5.00% 2.48%
Private Debt 5.00% 3.57%
Real Assets 15.00% 3.21%
Leverage -5.00% -0.59%
100.00%
1 An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021 Asset Liability Management study.

Discount Rate
The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected 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 liability.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
81 Note 9 – Pension Plan (Continued)
C. Changes in the Net Pension Liability
The following table shows the changes in net pension liability for the City’s Miscellaneous Plan recognized over the measurement period.

Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability/(Asset)
(a) (b) (c) = (a) - (b)
Balance at June 30, 2022 (Valuation Date) 206,177,959 $ 149,582,501 $ 56,595,458 $ Changes Recognized for the Measurement Period:

Service cost 3,851,696 - 3,851,696
Interest on the total pension liability 14,444,637 - 14,444,637 Changes of benefit terms 127,916 - 127,916
Changes of assumptions - - -
Difference between expected and actual experience 6,082,464 - 6,082,464 Net plan to plan resource movement - - -
Contributions from the employer - 6,946,728 (6,946,728) Contributions from employees - 1,454,329 (1,454,329)
Net investment income - 9,159,309 (9,159,309)
Benefit payments, including refunds
of employee contributions (9,943,241) (9,943,241) -
Administrative expense - (109,996) 109,996
Net Changes during July 1, 2022 to June 30, 2023 14,563,472 7,507,129 7,056,343 Balance at June 30, 2023 (Measurement Date) 220,741,431 $ 157,089,630 $ 63,651,801 $ Increase (Decrease)
Proportionate Share of Net Pension Liability and Pension Expense The following table shows the City’s safety plan’s proportionate share of the risk pool collective net pension liability over the measure period.

Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(a) (b) (c) = (a) - (b)
Balance at 6/30/22 (Valuation Date) 307,584,651 $ 206,457,603 $ 101,127,048 $ Balance at 6/30/23 (Measurement Date) 314,080,530 207,729,341 106,351,189 Net Changes during 2022-2023 6,495,879 1,271,738 5,224,141 Increase (Decrease)
The following is the approach established by the plan actuary to allocate the net pension liability and pension expense to the individual employers within the risk pool. (1) In determining a cost-sharing plan’s proportionate share, total amounts of liabilities and assets are first calculated for the risk pool as a whole on the valuation date (June 30, 2022). The risk pool’s fiduciary net position (“FNP”) subtracted from its total pension liability (“TPL”) determines the net pension liability (“NPL”) at the valuation date.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
82 Note 9 – Pension Plan (Continued)
C. Changes in the Net Pension Liability (Continued)
Proportionate Share of Net Pension Liability and Pension Expense (Continued) (2) Using standard actuarial roll forward methods, the risk pool TPL is then computed at the measurement date (June 30, 2023). Risk pool FNP at the measurement date is then subtracted from this number to compute the NPL for the risk pool at the measurement date. For purposes of FNP in this step and any later reference thereto, the risk pool’s FNP at the measurement date denotes the aggregate risk pool’s FNP at June 30, 2023 less the sum of all additional side fund (or unfunded liability) contributions made by all employers during the measurement period (2022-2023).
(3) The individual plan’s TPL, FNP and NPL are also calculated at the valuation date. TPL is allocated based on the rate plan’s share of the actuarial accrued liability. FNP is allocated based on the rate plan’s share of market value assets.
(4) Two ratios are created by dividing the plan’s individual TPL and FNP as of the valuation date from (3) by the amounts in step (1), the risk pool’s total TPL and FNP, respectively. (5) The plan’s TPL as of the Measurement Date is equal to the risk pool TPL generated in (2) multiplied by the TPL ratio generated in (4). The plan’s FNP as of the Measurement Date is equal to the FNP generated in (2) multiplied by the FNP ratio generated in (4) plus any additional side fund (or unfunded liability) contributions made by the employer on behalf of the plan during the measurement period. (6) The plan’s NPL at the Measurement Date is the difference between the TPL and FNP calculated in (5).

Deferred outflows of resources, deferred inflows of resources, and pension expense are allocated based on the City’s share of net pension liability at the end of measurement date.

The City’s proportionate share of the net pension liability was as follows:

Safety Plan
June 30, 2022 0.8755%
June 30, 2023 0.8525%
Change - Increase (Decrease) -0.0230%
Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the plans as of the measurement date, calculated using the discount rate of 6.90%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (5.90%) or 1 percentage-point higher (7.90%) than the current rate:

Discount Rate Current Discount Discount Rate
- 1% (5.90%) Rate (6.90%) + 1% (7.90%)
Miscellaneous Plan 95,069,706 $ 63,651,801 $ 37,966,651 $ Safety Plan 149,437,450 $ 106,351,189 $ 71,125,106 $
Plan's Net Pension Liability/(Asset)
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
83 Note 9 – Pension Plan (Continued)
C. Changes in the Net Pension Liability (Continued)
Pension Plan Fiduciary Net Position
Detailed information about the plan’s fiduciary net position is available in the separately issued CalPERS financial report.

D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2024, the City recognized pension expense in the amounts of $13,258,831 and $14,515,049 for the miscellaneous plan and safety plan, respectively.

As of measurement date of June 30, 2023, the City has deferred outflows and deferred inflows of resources related to pensions as follows:

Deferred Outflows Deferred Inflows
of Resources of Resources
Contribution made after measurement period 7,482,220 $ - $ Changes of assumptions 2,017,442 -
Difference between expected and actual experience 4,204,647 - Net difference between projected and actual earning
on pension plan investments 7,489,615 -
Total $ 21,193,924 $ -
Miscellaneous Plan
Deferred Outflows Deferred Inflows
of Resources of Resources
Contribution made after measurement period 9,074,009 $ - $ Changes of assumptions 6,206,798 -
Difference between expected and actual experience 7,808,138 (668,459) Net difference between projected and actual earning
on pension plan investments 14,554,131 -
Adjustment due to differences in proportions 1,353,981 (1,098,502) Difference between City contributions and
proportionate share of contributions 663,887 (3,462,966) Total 39,660,944 $ (5,229,927) $
Safety Plan
The amounts above are net of outflows and inflows recognized in the 2022-2023 measurement period expense.

The expected average remaining service lifetime (“EARSL”) is calculated by dividing the total future service years by the total number of plan participants (active, inactive, and retired). The EARSL for the Miscellaneous Plan and the Safety Plan risk pool for the 2022-23 measurement period is 3.2 and 3.8 years, which was obtained by dividing the total service years of 1,824 and 600,538 (the sum of remaining service lifetimes of the active employees) by 571 and 160,073 (the total number of participants: active, inactive, and retired), respectively.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
84 Note 9 – Pension Plan (Continued)
D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions (Continued) $7,482,220, and $9,074,009 reported as deferred outflows of resources related to pensions for miscellaneous plan and safety plan, respectively, resulting from the City’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability and collectively net pension liability, respectively, in the year ending June 30, 2025.

Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in the future pension expense as follows:

Measurement Period
Ending June 30 Miscellaneous Safety
2024 5,417,260 $ $ 7,725,596
2025 2,776,545 5,637,959
2026 5,300,164 11,587,220
2027 217,735 406,233
Total $ 13,711,704 $ 25,357,008
Deferred Outflows/(Inflows) of Resources
Note 10 – Other Postemployment Benefits (“OPEB”)
A. General Information about the OPEB Plan
Plan Description
The City administers a single-employer defined benefit post-employment healthcare plan (the “Plan”). Dependents are eligible to enroll, and benefits continue to surviving spouses.

Benefits Provided
Generally, the City will provide a postemployment benefit plan for the employee only to those who retire at age sixty (60) or later with twenty (20) years of continuous uninterrupted service up to the age of sixty-five (65).

Alternatively, employees who retire before the age of sixty (60) with twenty (20) years of continuous uninterrupted service, will be permitted to pay their medical and dental premium cost and upon reaching the age of sixty (60), the City will pay the premium for the medical and dental plans until they reach the age of sixty-five (65).

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
85 Note 10 – Other Postemployment Benefits (“OPEB”) (Continued) A. General Information about the OPEB Plan (Continued)
Benefits Provided (Continued)
Resolution 2011-129 provided lifetime medical benefits to Police Management employees and their spouses, who have been employed as sworn safety personnel for a minimum of twenty (20) years and a minimum of ten (10) years of that service have been with the City of Vernon. Resolution 2011-127 sets forth the MOU of the Vernon Police Officers’ Benefit Association, provided lifetime medical benefits to those employees and their spouses, who have been employed as sworn safety personnel for a minimum of twenty (20) years and a minimum of ten (10) years of that service has been with the City of Vernon. Resolution 2012-217 granted specific retiree medical benefits to employees who retire during the 2012-2013 fiscal year in order to provide an incentive for early retirement whereby the City authorized the payment of medical and dental insurance premiums for eligible retiring employees and their eligible dependents with at least ten (10) years of service plus 5% for each additional full year of service above the ten (10) years of service, and that this offer be extended as an option to safety and safety management groups, at their discretion, in addition to the related options provided in the Vernon Firefighters Association MOU and the Vernon Police Officers’ Benefit Association MOU. Resolution 2013-06 declared that the retiree medical benefits which had not been a vested right for employees will continue to be nonvested right for employees who continue to be employed by the City on or after July 1, 2013, but will become a vested right for those who retire during the 2012-2013 fiscal year. The City’s plan is considered a substantive OPEB plan and the City recognizes cost in accordance with GASB Statement No 75. The City may terminate its unvested OPEB in the future.

Eligibility
All of the Plan’s employees became participants in accordance with a negotiated Memorandum of Understanding (“MOU”) as negotiated by each group or bargaining unit. In order to receive benefits, eligible employees must meet the minimum requirements defined in their MOU. At June 30, 2022 valuation date, the following numbers of participants were covered by the benefit terms:

Active plan members 209
Inactive plan members currently receiving benefits 128
Inactive plan members entitled to but not receiving benefits 15 Total 352
Contributions
The City has established an irrevocable OPEB trust with assets dedicated to paying future retiree medical benefits.

The City intends to contribute 100% or more of the actuarially determined contribution for the explicit subsidy liability only. The portion of the liability due to the implicit subsidy is not prefunded but is paid as benefits come due.

For the year ended June 30, 2024, the City contributed $1,375,874 to the trust, paid $1,844,564 for retiree premiums, resulting in a total contribution of $3,220,438.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
86 Note 10 – Other Postemployment Benefits (“OPEB”) (Continued) B. Net OPEB Liability
The OPEB liability was measured as of June 30, 2023, and total liability used to calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2022.

Significant Actuarial Assumptions Used for Total OPEB Liability The total OPEB liability, measured as of June 30, 2023, was determined using the following actuarial assumptions:

Actuarial Cost Method
Actuarial Assumptions:

Asset Valuation Method
Inflation
Salary Increases
Long Term return on Assets
Discount Rate
Mortality Improvement
Healthcare Trend

2.80% wage inflation plus seniority, merit, and promotion salary increases based on CalPERS Expenditure Study and Review of Actuarial Assumptions published in November
Entry-age normal, level percent of pay
Market value of assets

5.10%

6.00%

2.30%
CalPERS 2021 Experience Study; Project with MP Scale
Based on 2022 Getzen model with in inflation rate of 6.50% non-Medicare / 5.40% Medicare decreasing gradually to an ultimate rate of 3.73% by 2075
Change in assumptions
In 2023, there were no change in assumptions.

Discount Rate
The discount rate used to measure the total OPEB liability was 6.00%. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan's fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

Expected Long-Term Rates of Return
Long-term
Target Expected Real
Asset Class Allocation Rate of Return
Global Equity 49.00% 6.80%
Fixed Income 23.00% 3.70%
Global Real Estate (REITs) 20.00% 6.00%
Treasury Inflation Protected Securities (TIPS) 5.00% 2.80% Commodities 3.00% 3.40%
Total 100.00%
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
87 Note 10 – Other Postemployment Benefits (“OPEB”) (Continued) C. Changes in Net OPEB Liability
The following presents the changes in the net OPEB liability for the governmental activities’ Retiree Health Plan:

Total OPEB Plan Fiduciary Net Net OPEB
Liability Position Liability
(a) (b) (c) = (a) - (b)
Balance at June 30, 2022 27,325,673 $ 10,939,568 $ 16,386,105 $ Changes Recognized for the Measurement Period:

Service Cost 442,832 - 442,832
Interest on the total OPEB liability 1,618,949 1,618,949 - Differences between expected and actual experience (141,690) - (141,690) Employer contributions including implicit subsidy 3,110,741 - (3,110,741) Investment income - 735,506 (735,506)
Benefit payments (1,070,866) (1,070,866) -
Impicit subsidy credit (501,182) (501,182) -
Administrative expenses - (3,337) 3,337
Net Changes during July 1, 2022 to June 30, 2023 348,043 2,270,862 (1,922,819) Balance at June 30, 2023 (Measurement Date) $ 27,673,716 $ 13,210,430 $ 14,463,286 Increase (Decrease)
Sensitivity of the Net OPEB Liability to Change in the Discount Rate 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 discount rate that is 1 percentage-point lower (5.00 percent) or 1percentage- point higher (7.00 percent) than the current discount rate:

Discount Rate Current Discount Discount Rate
-1% (5.00%) Rate (6.00%) +1 % (7.00%)
$ 17,577,048 $ 14,463,286 $ 11,847,863
Plan's Net OPEB Liability
Sensitivity of the Total OPEB Liability to Changes in the Health Care 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 healthcare cost trend rates that are 1 percentage-point lower or 1 percentage-point higher than the current healthcare cost trend rates:

Healthcare Cost Healthcare Cost Healthcare Cost
Trend Rate - 1% Trend Rate Trend Rate + 1%
$ 13,145,601 $ 14,463,286 $ 15,751,638
Plan's Net OPEB Liability
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
88 Note 10 – Other Postemployment Benefits (“OPEB”) (Continued) C. Changes in Net OPEB Liability (Continued)
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the measurement period ended June 30, 2023, the City recognized OPEB expense of $613,236. At June 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Contribution made after measurement period $ 1,347,657 $ - Changes in assumptions 642,560 (1,386,970)
Difference between expected and actual experience 71,412 (2,394,453) Net difference between projected and actual earning on
OPEB plan investments 804,817 -
Total $ 2,866,446 $ (3,781,423)
The $1,347,657 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2023 measurement date will be recognized as a reduction of the net OPEB liability during the year ending June 30, 2025.

Other amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized as expense as follows:

Measurement Deferred
Period Outflows/(Inflows)
Ending June 30 of Resources
2024 $ (1,966,320)
2025 (264,453)
2026 289,233
2024 (193,030)
2028 (98,238)
Thereafter (29,826)
Total $ (2,262,634)
Note 11 – Net Investment in Capital Assets
The investment in capital assets for governmental activities, business-type activities, and enterprise funds is calculated as follows:

Governmental Business-Type
Activities Activities Electric Gas Water Fiber Optics
Total capital assets, net $ 457,552,315 159,189,173 $ 418,454,712 $ 14,027,252 $ $ 23,396,376 $ 1,673,975 Unspent capital debt proceed 343,434 - 333,109 10,325 - - Deferred loss on refunding debt 916,388 - 916,388 - - - Retention payable (16,736) (240,101) - (240,101) - -
Capital related debt (807,435) (241,792,915) (226,268,382) (15,524,533) - - Net investment in capital assets $ 216,779,121 158,365,002 $ 193,435,827 $ 14,027,252 $ $ 7,642,067 $ 1,673,975 Enterprise Funds
City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
89 Note 12 – Prior Period Adjustments
The beginning net position was restated to reflect correction of error on prepaid items as follows:

Proprietary
Governmental Wide Fund
Business-type Electric
Activities Enterprise Fund
Beginning, as previously reported 233,381,550 $ 210,480,341 $ Prepaid items 5,318,612 5,318,612
Beginning, as restated 238,700,162 $ 215,798,953 $
Note 13 – Southern California Public Power Authority
The Southern California Public Power Authority (the “SCPPA”) was formed in 1980 as a not for profit joint powers agency. SCPPA is currently comprised of 11 Southern California cities and an irrigation district. The SCPPA’s purpose is planning, financing, acquiring, constructing, and operating of projects that generate or transmit electric energy for sale to its participants. The joint powers agreement has a term expiring in 2030 or such later date as all bonds and notes of SCPPA and interest thereon have been paid in full or adequate provisions for payments have been made. A copy of SCPPA’s audited financial statements can be reviewed on their website at www.scppa.org or can be obtained by written request at 1160 Nicole Ct Glendora, CA 91740.

A. Take or Pay Contract
The SCPPA’s interest of entitlements in natural gas generation, and transmission projects are jointly owned with other utilities. Under these arrangements, a participating member has an undivided interest in a utility plant and is responsible for its proportionate share of the costs of construction and operation and is entitled to its proportionate share of the energy, available transmission capacity, or natural gas produced. Each joint plant participant, including the SCPPA, is responsible for financing its share of construction and operating costs. The City has the following “take or pay” contract with the SCPPA:

Palo Verde Project
The SCPPA purchases a 5.91% interest in the Palo Verde Nuclear Generating Station (the “Station”), a nuclearfired generating station near Phoenix, Arizona, from Salt River Project Agricultural Improvement and Power District, and a 6.55% share of the right to use certain portions of the Arizona Nuclear Power Project Valley Transmission System. The City has a 4.9% entitlement share of the SCPPA’s interest in the station.

Between 1983 and 2008, the SCPPA issued $3.266 billion in debt of Power Project Revenue Bonds for the Station to finance the bonds and the purchase of the SCPPA’s share of the Station and related transmission right. The bonds are not obligations of any member of the SCPPA or public agency other than the SCPPA. Under a power sales contract with the SCPPA, the City is obliged on a “take or pay” basis for its proportionate share of power generated, as well as to make payments for its proportionate share of the operating and maintenance expenses of the Station, debt service on the bonds and any other debt, whether or not the project or any part thereof or its output is suspended, reduced or terminated. The City took its proportionate share of the power generated and its proportionate share of costs during the fiscal year 2024 was $3,339,783. The City expects no significant increases in costs related to its nuclear resources.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
90 Note 13 – Southern California Public Power Authority (Continued) B. Power Purchase Commitments
The SCPPA has entered into power purchase agreements with project participants. These agreements are substantially “take-and-pay” contracts where there may be other obligations not associated with the of energy. The City has entered into power purchase agreements with the SCPPA related to the following projects:

Astoria 2 Solar Project
On July 23, 2014, the SCPPA entered into a power purchase agreement with Recurrent Energy for solar energy from the Astoria 2 Solar Project. SCPPA is entitled to 35 MW of photovoltaic generating capacity from commercial operation to December 31, 2021 and 45 MW of generating capacity from January 1, 2022 until the expected expiration date of December 31, 2036. The commercial operation date was December 2016. Power and Water Resources Pooling SCPPA, Lodi, Corona, Moreno Valley, and Rancho Cucamonga, are each buying the output of a separate portion of the facility, which is located in Kern County, California. SCPPA has purchase options in the 10th, 15th, and 20th Contract Years. The project is forecasted to start at a capacity factor of 31% with a 0.5% annual degradation. ACES Power Marketing is the third-party scheduling coordinator for the project. The City contracted to purchase 57.1429% until December 31, 2021, and 66.6667% thereafter, of the output. The City’s proportionate share of costs for fiscal year 2024 was $5,132,242.

Puente Hills Landfill Gas-to-Energy Project
On June 25, 2014, the SCPPA entered into a power purchase agreement with County Sanitation District No. 2 of Los Angeles County for 46 MW of the electric generation from a landfill gas to energy facility, located at Whittier, California. The project began deliveries to the SCPPA on January 1, 2017 for a term of 10 years. The City contacted to purchase 23.2558% of the output. The City’s proportional share of the costs during fiscal year 2024 was $2,921,584.

Antelope DSR 1 Solar Project
On July 16, 2015, the SCPPA, entered into a power purchase agreement with Antelope DSR 1, LLC for 50 MW solar photovoltaic generating capacity from the Antelope DSR 1 Solar Facility. The facility is located near Lancaster, California, and commercial operation occurred on December 16, 2016 for a term of 20 years. The City’s proportionate share of costs during fiscal year 2024 was $3,090,085.

Hoover Dam Hydroelectric Power Plant
The Hoover Dam Hydroelectric Power Plant is located on the Arizona-Nevada border, approximately 25 miles southeast of Las Vegas. This hydropower plant is part of the larger Hoover Dam facility, which was completed in 1935 and controls the flow of the Colorado River. The Hoover Dam facility consists of 17 generating units and two service generating units with a total installed capacity of 2,080 MW. In 1987, Vernon entered a power purchase agreement to purchase 22 MW of firm capacity from the Western Area Power Administration. SCPPA and other contractor allocations of Hoover power have been extended for 50 years beyond the power purchase agreement’s original expiration in 2017, which now expires in 2067. The City’s proportionate share of costs during fiscal year 2024 was $616,011.

City of Vernon
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2024
91 Note 13 – Southern California Public Power Authority (Continued) B. Power Purchase Commitments (Continued)
Desert Harvest 2 REC Solar PV Project
On December 17, 2020, SCPPA executed a power purchase agreement with EDF Renewables for 70 MW of solar PV capacity from the Desert Harvest 2 Solar PV project. The project is a fixed-tilt PV system that interconnects at the Marketplace substation and is located on 1,200 acres of Bureau of Land Management land in Desert Center, California. The REC + Index agreement serves the cities of Anaheim, Burbank, and Vernon. VPU is entitled to

17.14 percent of the Project’s output or about 12 MW. This power purchase agreement, which expires at the end of 2045, only provides renewable energy credits (RECs). The City’s proportionate share of costs during fiscal year 2024 was $319,879.

Sapphire Solar Project
On January 17, 2023, the SCPPA, entered into a power purchase agreement with EDF Renewables North America for 39 MW solar power and up to approximately 19.7 MW of battery storage with associated green attributes through the Sapphire Solar Project for a projected annual amount of $6,665,000 over a 20-year term. The expected start date of the project is December 31, 2025.

Daggett Solar PV and BESS Project
The Daggett Solar plus BESS project is a single‑axis tracker 65 MW solar with a 33 MW 4‑hour Lithium‑Ion BESS.

The commercial operation date was December 12, 2023. The project, located in the City of Daggett in San Bernardino County, is a portion of an approximately 482 MW solar PV facility. The project is being developed by Clearway Energy Group and is owned by Daggett Solar Power 2 LLC.

On June 24, 2022, SCPPA executed a PPA for 65 MW for the cities of Vernon and Cerritos. The PPA entitles VPU to 60 MW of solar PV output and 30 MW of energy storage. The commercial operation date was December 12, 2023. The power purchase agreement expires on December 31, 2044. The City’s proportionate share of costs during fiscal year 2024 was $5,003,685.

Note 14 – Commitment and Contingencies
Contract with Los Angeles County Fire Department
The City contracted with the County of Los Angeles (“LA County”) for Fire services on May 20, 2020, setting forth terms and conditions under which LA County will provide fire protection, paramedic, and incidental services in the City for the next ten years. The City is to pay LA County the annual fee on a monthly basis. During the initial five-year period, the annual fee limitation shall not exceed 4% per fiscal year, during the sixth year of the agreement the annual fee limitation shall be the average of the preceding four years’ percentage increases plus 1%. During the seventh year of the agreement and each subsequent fiscal year, the annual fee limitation shall be the average of the immediate preceding five years’ percentage increases in the Annual Fee of 1%. Additionally, there are conversion costs that will be paid in 36 equal monthly payments. The agreement shall remain in effect for a minimum of 10 years, subsequently it will be renewed for one-year period. Either party may terminate this agreement any time after the expiration of the initial 10-year period term upon one year’s written notice. The contract costs for the year ended June 30, 2024 was totaled $16,888,861.
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REQUIRED SUPPLEMENTARY INFORMATION
(UNAUDITED)
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94 Original Final Variance with
Budget Budget Actual Final Budget
REVENUES:

Taxes $ 61,556,809 61,556,809 $ 61,722,511 $ $ 165,702
Special assessments 1,611,000 1,611,000 1,953,748 342,748 Licenses and permits 2,310,400 2,310,400 2,458,751 148,351 Fines, forfeitures, and penalties 147,200 147,200 666,116 518,916 Intergovernmental 3,701,500 3,701,500 1,279,673 (2,421,827) Investment earnings 1,000,000 1,000,000 1,761,202 761,202 Charges for services 5,079,213 5,079,213 5,294,834 215,621 Rent income 550,000 550,000 590,750 40,750
Other revenues 357,000 357,000 490,261 847,261
Total revenues 76,313,122 76,313,122 76,574,846 261,724 EXPENDITURES:

Current:

General government 16,851,203 17,246,458 15,760,583 1,485,875 Public safety 36,787,985 37,007,985 36,572,961 435,024
Public works 13,373,378 13,673,378 11,672,875 2,000,503 Health services 3,233,257 3,253,257 2,523,805 729,452
Capital outlay 12,702,629 9,660,850 3,541,210 9,161,419 Debt service:

Principal retirement - - 508,169 (508,169)
Interest and fiscal charges - - 16,825 (16,825)
Total expenditures 83,883,707 79,906,673 70,596,428 13,287,279

EXCESS (DEFICIENCY) OF REVENUES OVER
(UNDER) EXPENDITURES (7,570,585) (3,593,551) 5,978,418 13,549,003 OTHER FINANCING SOURCES:

Transfer in 635,600 635,600 341,587 (294,013)
Proceeds from sale of capital asset - - 70,003 70,003
Issuance of debt - - 903,551 903,551
Total other financing sources 635,600 635,600 1,315,141 679,541 NET CHANGE IN FUND BALANCE $ (6,934,985) (2,957,951) $ 7,293,559 14,228,544 $ FUND BALANCE:

Beginning of year 41,991,779
End of year $ 49,285,338
City of Vernon
Required Supplementary Information (Unaudited)
Budgetary Comparison Schedule - General Fund
For the Year Ended June 30, 2024
95 This page intentionally left blank.
96 City of Vernon
Required Supplementary Information (Unaudited)
Notes to the Budgetary Comparison Schedule
For the Year Ended June 30, 2024
Budgetary Information
The City adheres to the following general procedures in establishing its annual budget, which is reflected in the accompanying General Fund budgetary comparison schedule.

Encumbrances outstanding at year-end do not constitute expenditures or liabilities. Encumbrances outstanding at year-end are reported as committed fund balance for subsequent year expenditures through City Council action. Unencumbered appropriations lapse at year-end.

An annual budget is adopted by the City Council that provides for the general operation of the City. The budget includes authorized expenditures and estimated revenues of the General Fund.

The budget is adopted on a modified accrual basis and formally integrated into the accounting system and employed as a management control device during the year.

Excess expenditures over appropriations are financed by beginning fund balance. The final budgeted amounts used in the accompanying General Fund budgetary comparison schedule include any amendments made during the fiscal year 2024. Encumbrances carried forward from the prior year are reflected in the original budget.

Encumbrances, which are commitments related to executory contracts for goods and services, are recorded to assure effective budgetary control and accountability.
97 Fiscal year ended 2015 2016 2017 2018 2019
Measurement period 2013-14 2014-15 2015-16 2016-17 2017-18 Total pension liability
Service cost $ 1,962,270 1,955,694 $ 2,129,659 $ 2,432,788 $ 2,826,440 $ Interest 9,609,274 9,447,012 9,969,103 10,383,859 11,053,679 Changes in benefit terms - - - - -
Differences between expected and actual experience (9,700,904) - 1,046,363 (711,339) 3,059,775 Changes of assumptions - (2,466,126) - 9,321,776 (549,432) Benefit payments, including refunds of employee
contributions (2,388,449) (5,680,624) (5,748,657) (6,145,366) (6,166,082) Net change in total pension liability (6,438,372) 9,176,519 7,396,468 15,281,718 10,224,380 Total pension liability - beginning 137,516,564 128,340,045 131,078,192 138,474,660 153,756,378 Total pension liability - ending (a) $ 131,078,192 137,516,564 $ 138,474,660 $ 153,756,378 $ 163,980,758 $ Pension fiduciary net position
Contributions - employer 1,825,732 $ 2,340,002 $ 3,140,644 $ 3,629,603 $ 3,380,432 $ Contributions - employee 1,015,741 1,054,426 1,095,824 1,245,990 1,214,616 Net investment income 16,045,243 2,337,855 583,692 11,857,647 9,803,260 Benefit payments, including refunds of employee
contributions (2,388,449) (5,680,624) (5,748,657) (6,145,366) (6,166,082) Net plan to plan resources movement - 18 (780) 1,118 (296) Administrative expense (124,052) - (67,200) (161,327) (186,518) Other miscellaneous income/expense - - - - (354,202)
Net change in plan fiduciary net position (72,375) 16,498,267 (996,477) 10,427,665 7,691,210 Plan fiduciary net position - beginning
1 110,336,623 93,838,356 110,264,248 109,267,771 119,695,436 Plan fiduciary net position - ending (b) $ 110,264,248 110,336,623 $ 109,267,771 $ 119,695,436 $ 127,386,646 $ Plan net pension liability - ending (a) - (b) $ 20,813,944 27,179,941 $ 29,206,889 $ 34,060,942 $ 36,594,112 $ Plan fiduciary net position as a percentage 80.24% 84.12% 78.91% 77.85% 77.68% of the total pension liability
Covered payroll2
$ 11,708,057 11,084,188 $ 13,150,103 $ 13,440,076 $ 15,146,241 $ Plan net pension liability as a percentage of
covered payroll 245.21% 177.77% 222.10% 253.43% 241.61% 1 2
Notes to Schedule:

Includes one year’s payroll growth using 2.80% payroll growth assumption for fiscal year ended June 30, 2022 and 2023; 2.75% payroll growth assumption for fiscal years ended June 30, 2018-21; 3.00% payroll growth assumption for fiscal years ended June 30, 2014-17.

Benefit Changes: There were no changes in benefits.

Changes of Assumptions: There were no assumption changes in 2023. Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement dates 2017 through 2021, 7.65% for measurement dates 2015 through 2016, and 7.50% for measurement date 2014.

Additionally, CalPERS employees participate in various State of California agent pension plans and during Fiscal Year 2017-18, CalPERS recorded a correction to previously reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68).

For the Year Ended June 30, 2024
Last Ten Fiscal Years
California Public Employees' Retirement System Defined Pension Plan - Miscellaneous Plan City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios 98 Fiscal year ended 2020 2021 2022 2023 2024
Measurement period 2018-19 2019-20 2020-21 2021-22 2022-23 Total pension liability
Service cost $ 2,905,980 2,991,388 $ 2,735,636 $ 3,251,213 $ 3,851,696 $ Interest 11,863,069 12,502,379 13,153,255 13,576,496 14,444,637 Changes in benefit terms - - - - 127,916
Differences between expected and actual experience 1,316,307 3,767,030 1,777,340 73,961 6,082,464 Changes of assumptions - - - 6,500,648 -
Benefit payments, including refunds of employee
contributions (6,652,881) (7,720,453) (8,274,278) (11,569,889) (9,943,241) Net change in total pension liability 9,004,213 11,968,606 9,391,953 11,832,429 14,563,472 Total pension liability - beginning 175,949,364 163,980,758 184,953,577 194,345,530 206,177,959 Total pension liability - ending (a) $ 184,953,577 175,949,364 $ 194,345,530 $ 206,177,959 $ 220,741,431 $ Pension fiduciary net position
Contributions - employer 3,908,165 $ 4,501,532 $ 4,979,542 $ 5,956,560 $ 6,946,728 $ Contributions - employee 1,357,537 1,271,580 1,161,711 1,439,715 1,454,329 Net investment income 8,077,977 6,484,512 30,012,771 (12,217,103) 9,159,309 Benefit payments, including refunds of employee
contributions (6,652,881) (7,720,453) (8,274,278) (11,569,889) (9,943,241) Net plan to plan resources movement - - -
Administrative expense (188,889) (90,906) (138,188) (103,456) (109,996) Other miscellaneous income/expense 296 - - - -
Net change in plan fiduciary net position 4,348,282 6,600,188 27,741,558 (16,494,173) 7,507,129 Plan fiduciary net position - beginning 133,986,834 127,386,646 138,335,116 166,076,674 149,582,501 Plan fiduciary net position - ending (b) $ 138,335,116 133,986,834 $ 166,076,674 $ 149,582,501 $ 157,089,630 $ Plan net pension liability - ending (a) - (b) $ 46,618,461 41,962,530 $ 28,268,856 $ 56,595,458 $ 63,651,801 $ Plan fiduciary net position as a percentage 76.15% 74.79% 85.45% 72.55% 71.16% of the total pension liability
Covered payroll2
$ 15,399,491 15,996,725 $ 15,355,968 $ 15,913,917 $ 19,011,334 $ Plan net pension liability as a percentage of
covered payroll 262.32% 302.73% 184.09% 355.63% 334.81% For the Year Ended June 30, 2024
Last Ten Fiscal Years
California Public Employees' Retirement System Defined Pension Plan - Miscellaneous Plan (Continued) City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios (Continued) 99 Fiscal year 2015 2016 2017 2018 2019
Measurement period 2013-141 2014-15 2015-16 2016-17 2017-18 Total pension liability
Service cost $ 3,388,157 3,448,760 $ 3,454,025 $ 4,144,398 $ 4,414,740 $ Interest 15,255,372 15,777,736 16,325,879 16,898,830 17,691,261 Differences between expected and actual experience (2,400,883) - (2,430,394) (1,380,683) 2,008,618 Changes of assumptions - (3,878,396) - 14,134,794 (1,533,898) Benefit payments, including refunds of employee
contributions (9,639,123) (9,470,058) (9,736,302) (10,147,899) (10,992,416) Net change in total pension liability 3,416,556 9,065,009 7,613,208 23,649,440 11,588,305 Total pension liability - beginning 215,565,152 206,500,143 218,981,708 226,594,916 250,244,356 Total pension liability - ending (a) $ 218,981,708 215,565,152 $ 226,594,916 $ 250,244,356 $ 261,832,661 $ Pension fiduciary net position
Contributions - employer 3,234,539 $ 4,147,441 $ 5,116,412 $ 5,476,196 $ 6,109,373 $ Contributions - employee 1,092,012 1,167,329 1,222,561 1,212,646 1,302,308 Net investment income 24,855,525 3,525,241 760,559 17,760,401 14,666,919 Benefit payments, including refunds of employee
contributions (9,639,123) (9,470,058) (9,736,302) (10,147,899) (10,992,416) Net plan to plan resources movement - 24 780 (1,118) (431) Administrative expense (191,323) - (99,525) (237,068) (272,124) Other miscellaneous income/expense - - - - (516,768)
Net change in plan fiduciary net position (821,346) 19,542,953 (2,735,515) 14,063,158 10,296,861 Plan fiduciary net position - beginning 164,125,062 144,582,109 163,303,716 160,568,201 174,631,359 Plan fiduciary net position - ending (b) $ 163,303,716 164,125,062 $ 160,568,201 $ 174,631,359 $ 184,928,220 $ Plan net pension liability - ending (a) - (b) $ 55,677,992 51,440,090 $ 66,026,715 $ 75,612,997 $ 76,904,441 $ Plan fiduciary net position as a percentage 76.14% 74.57% 70.86% 69.78% 70.63% of the total pension liability
Covered payroll $ 12,740,785 12,510,920 $ 12,971,888 $ 13,879,896 $ 14,292,273 $ Plan net pension liability as a percentage of
covered payroll 411.16% 437.01% 509.00% 544.77% 538.08% 1 Notes to Schedule:

Measurement period 2019-20 (fiscal year 2021) was the first year the City's Safety Plan converted from an Agent Multiple Plan to a Cost Sharing Plan. Therefore, only six years are shown.

Benefit Changes: There were no changes in benefits.

Changes of Assumptions: In 2019, there were no changes. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate. In 2017, the discount rate was reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 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, amounts reported were based on the 7.5 percent discount rate.

For the Year Ended June 30, 2024
Last Ten Fiscal Years1
California Public Employees' Retirement System Defined Pension Plan - Safety Plan City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios 100
Fiscal year 2020
Measurement period 2018-19
Total pension liability
Service cost $ 4,287,003
Interest 18,414,262
Differences between expected and actual experience (364,199) Changes of assumptions -
Benefit payments, including refunds of employee
contributions (12,139,668)
Net change in total pension liability 10,197,398
Total pension liability - beginning 261,832,661
Total pension liability - ending (a) $ 272,030,059
Pension fiduciary net position
Contributions - employer $ 7,011,540
Contributions - employee 1,239,891
Net investment income 12,275,401
Benefit payments, including refunds of employee
contributions (12,139,668)
Net plan to plan resources movement -
Administrative expense (131,969)
Other miscellaneous income/expense 431
Net change in plan fiduciary net position 8,255,626
Plan fiduciary net position - beginning 184,928,220
Plan fiduciary net position - ending (b) $ 193,183,846
Plan net pension liability - ending (a) - (b) $ 78,846,213 Plan fiduciary net position as a percentage 71.02%
of the total pension liability
Covered payroll $ 13,737,311
Plan net pension liability as a percentage of
covered payroll 573.96%
For the Year Ended June 30, 2024
Last Ten Fiscal Years1
California Public Employees' Retirement System Defined Pension Plan - Safety Plan (Continued) City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios (Continued) 101
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102
Fiscal year 2021 2022 2023 2024
Measurement period 2019-20 2020-21 2021-22 2022-23
City's proportion of the net pension liability 1.33110% 1.70286% 1.47167% 1.42277% City's proportionate share of the net pension liability 88,682,300 $ 59,761,800 $ 101,127,048 $ 106,351,189 $ City's covered payroll 2 $ 7,618,673 11,770,766 $ 5,630,861 $ 5,788,525 $ City's proportionate share of the net pension liability as a percentage of its covered payroll 753.41% 784.41% 1795.94% 1837.28% Plan fiduciary net position as a percentage of
the total pension liability 69.13% 79.73% 67.12% 67.12% 1 Notes to Schedule:

Measurement period 2019-20 was the first year the City's Safety Plan was converted from an Agent Multiple Plan to a Cost Sharing Plan therefore only four years are shown.

Benefit Changes: There were no changes in benefits.

Changes of Assumptions: No change in 2023. Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement 2020 through 2021.

City of Vernon
Required Supplementary Information (Unaudited)
Schedule of the City's Proportionate Share of the Net Pension Liability and Related Ratios For the Year Ended June 30, 2024
Last Ten Fiscal Years1
California Public Employees' Retirement System Defined Pension Plan - Safety Plan 103
Fiscal year 2015 2016 2017 2018 2019
Actuarially determined contribution 2,340,002 $ 3,140,644 $ 3,629,603 $ 3,380,432 $ 3,908,165 $ Contributions in relation to the
actuarially determined contribution (2,340,002) (3,140,644) (3,629,603) (3,380,432) (3,908,165) Contribution deficiency (excess) - $ - $ - $ - $ - $
Covered payroll1 $ 13,150,103 11,708,057 $ 13,440,076 $ 15,146,241 $ 15,996,725 $ Contributions as a percentage of covered payroll 19.99% 23.88% 27.01% 22.32% 24.43% 1 Notes to Schedule:

Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry Age Actuarial Cost Method
Amortization method Level percentage of payroll
Asset valuation method Fair Market Value
Inflation 2.300%
Salary increases varies by entry age and service
Payroll Growth 2.800%
Investment rate of return
Retirement age
Mortality

6.8% Net of Pension Plan Investment and Administrative Expenses; includes Inflation.

The probabilities of Retirement are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.

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 80% of Scale MP-2020 published by the Society of Actuaries.

Includes on year's payroll growth using 2.80 percent payroll growth assumption for fiscal years ended June 30, 2022 and 2023; 2.75 percent payroll growth assumption for fiscal years ended June 30, 2018-2021; 3 percent payroll growth assumption for fiscal years ended June 30, 2014- 2017.

The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2023-24 were derived from the June 30, 2021 funding valuation report.

For the Year Ended June 30, 2024
Last Ten Fiscal Years
California Public Employees' Retirement System Defined Pension Plan - Miscellaneous Plan City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Contributions - Pensions
104
Fiscal year 2020 2021 2022 2023 2024
Actuarially determined contribution 4,501,532 $ 4,979,542 $ 5,956,560 $ 6,946,728 $ 7,482,220 $ Contributions in relation to the
actuarially determined contribution (4,501,532) (4,979,542) (5,956,560) 6,946,728 (7,482,220) Contribution deficiency (excess) - $ - $ - $ - $ - $
Covered payroll1 $ 14,803,225 15,827,780 $ 15,913,917 $ 19,011,334 $ 19,543,651 $ Contributions as a percentage of covered payroll 28.44% 33.64% 37.43% 36.54% 38.28% For the Year Ended June 30, 2024
Last Ten Fiscal Years
California Public Employees' Retirement System Defined Pension Plan - Miscellaneous Plan (Continued) City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Contributions - Pensions (Continued)
105
Fiscal year 2015 2016 2017 2018 2019
Actuarially determined contribution 4,147,441 $ 5,116,412 $ 5,476,196 $ 6,109,373 $ 7,011,540 $ Contributions in relation to the
actuarially determined contribution (4,147,441) (5,116,412) (5,476,196) (6,109,373) (7,011,540) Contribution deficiency (excess) - $ - $ - $ - $ - $
Covered payroll1 $ 12,971,888 12,740,785 $ 13,879,896 $ 14,292,273 $ 13,737,311 $ Contributions as a percentage of covered payroll. 32.55% 39.44% 39.45% 42.75% 51.04% 1 Notes to Schedule:

Methods and assumptions used to determine contribution rates:

Amortization method Level percentage of payroll
Discount rate 6.800%
Inflation 2.300%
Salary increases varies by entry age and service
Payroll Growth 2.800%
Retirement age
Mortality
Includes one year’s payroll growth using 2.80 percent payroll growth assumption for fiscal years ended June 30, 2022-24; 2.75 percent payroll growth assumption for fiscal years ended June 30, 2018-21; 3.00 percent payroll growth assumption for fiscal years ended June 30, 2014-17.

The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2023-24 were derived from the June 30, 2021 funding valuation report.

The probabilities of Retirement are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.

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 80% of Scale MP-2020 published by the Society of Actuaries.

For the Year Ended June 30, 2024
Last Ten Fiscal Years
California Public Employees' Retirement System Defined Pension Plan - Safety Plan City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Contributions - Pensions (Continued)
106
Fiscal year 2020 2021 2022 2023 2024
Actuarially determined contribution 7,834,050 $ 7,650,585 $ 8,258,888 $ 9,178,981 $ 9,074,009 $ Contributions in relation to the
actuarially determined contribution (7,834,050) (7,650,585) (8,258,888) (9,178,981) (9,074,009) Contribution deficiency (excess) - $ - $ - $ - $ - $
Covered payroll1 $ 7,618,673 11,770,766 $ 5,630,861 $ 5,788,525 $ 5,950,604 $ Contributions as a percentage of covered payroll. 66.56% 100.42% 146.67% 158.57% 152.49% For the Year Ended June 30, 2024
Last Ten Fiscal Years
California Public Employees' Retirement System Defined Pension Plan - Safety Plan (Continued) City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Contributions - Pensions (Continued)
107
Fiscal year 2018 2019 2020 2021
Measurement period 2016-171 2017-18 2018-19 2019-20
Total OPEB liability
Service cost 1,166,825 $ 1,204,747 $ 549,137 $ 565,922 $ Interest 1,879,025 2,063,052 1,641,230 1,699,197
Changes of benefit terms - - - (800,265)
Differences between expected and actual experience - (6,680,583) - 206,148 Changes of assumptions (770,716) (7,657,196) (124,861) 579,724 Benefit payments, including refunds of employee contributions (838,818) (1,006,087) (1,158,450) (1,222,538) Net change in total pension liability (12,076,067) 1,436,316 907,056 1,028,188 Total OPEB liability - beginning 37,355,851 35,919,535 25,279,784 26,186,840 Total OPEB liability - ending (a) $ 25,279,784 37,355,851 $ 26,186,840 $ 27,215,028 $ OPEB fiduciary net position
Contributions - employer 1,898,138 $ 2,065,407 $ 2,989,393 $ 3,915,406 $ Net investment income (2,049) 65,276 258,220 44,684
Benefit payments, including refunds of employee contributions (838,818) (1,006,087) (1,158,450) (1,222,538) Administrative expense (4) (808) (629) (2,563)
Other expenses - (1,400) - -
Net change in plan fiduciary net position 1,122,388 1,057,267 2,088,534 2,734,989 Plan fiduciary net position - beginning 1,057,267 - 2,179,655 4,268,189 Plan fiduciary net position - ending (b) $ 2,179,655 1,057,267 $ 4,268,189 $ 7,003,178 $ Plan net OPEB liability - ending (a) - (b) $ 23,100,129 36,298,584 $ 21,918,651 $ 20,211,850 $ Plan fiduciary net position as a percentage 2.83% 8.62% 16.30% 25.73% of the total OPEB liability
Covered-employee payroll $ 33,496,565 33,511,114 $ 35,182,647 $ 31,958,957 $ Plan net OPEB liability as a percentage of
covered-employee payroll 108.32% 68.96% 62.30% 63.24%
1 Historical information is presented only for measurement periods after GASB 75 was implement in fiscal year of 2016-17 (measurement period of 2017-18). Additional years of information will be displayed as it becomes available.

City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Changes in Net Other Postemployment Benefits Liability and Related Ratios For the Year Ended June 30, 2024
Last Ten Fiscal Years1
Other Postemployment Benefits ("OPEB") Plan
108
Fiscal year 2022 2023 2024
Measurement period 2020-21 2021-22 2022-23
Total OPEB liability
Service cost $ 365,851 303,057 $ 442,832 $
Interest 1,689,071 1,682,954 1,618,949
Changes of benefit terms (78,332) - -
Differences between expected and actual experience (677,446) (1,122,750) (141,690) Changes of assumptions 565,573 66,075 -
Benefit payments, including refunds of employee contributions (1,199,826) (1,483,582) (1,572,048) Net change in total pension liability (64,169) 174,814 348,043 Total OPEB liability - beginning 27,389,842 27,215,028 27,325,673 Total OPEB liability - ending (a) $ 27,325,673 27,389,842 $ 27,673,716 $ OPEB fiduciary net position
Contributions - employer 3,131,526 $ 3,022,275 $ 3,110,741 $ Net investment income 2,084,289 (1,612,431) 735,506
Benefit payments, including refunds of employee contributions (1,199,826) (1,483,582) (1,572,048) Administrative expense (2,903) (2,958) (3,337)
Other expenses - - -
Net change in plan fiduciary net position (76,641) 4,013,031 2,270,862 Plan fiduciary net position - beginning 11,016,209 7,003,178 10,939,568 Plan fiduciary net position - ending (b) $ 10,939,568 11,016,209 $ 13,210,430 $ Plan net OPEB liability - ending (a) - (b) $ 16,386,106 16,373,634 $ 14,463,286 $ Plan fiduciary net position as a percentage 40.22% 40.03% 47.74% of the total OPEB liability
Covered-employee payroll $ 25,376,320 31,702,877 $ 24,483,172 $ Plan net OPEB liability as a percentage of
covered-employee payroll 51.65% 64.57% 59.07%
Other Postemployment Benefits ("OPEB") Plan (Continued) City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Changes in Net Other Postemployment Benefits Liability and Related Ratios (Continued) For the Year Ended June 30, 2024
Last Ten Fiscal Years1
109
Fiscal year 2017 2018 2019 2020 2021
Actuarially determined contribution - $ 2,692,868 $ 2,692,898 $ 1,931,700 $ 1,538,693 $ Contributions in relation to the
actuarially determined contribution (1,898,138) (2,065,407) (2,989,393) (3,915,406) (3,131,526) Contribution deficiency (excess) (1,898,138) $ 627,461 $ (296,495) $ (1,983,706) $ (1,592,833) $ Covered-employee payroll $ 33,496,565 33,511,114 $ 35,182,647 $ 31,958,957 $ 31,702,877 $ Contributions as a percentage of covered-employee payroll. 5.66% 6.17% 8.50% 12.25% 9.88% 1 Notes to Schedule:

Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry Age Normal Cost Method
Amortization method Level percentage of payroll
Amortization period 30 years
Inflation 2.30%
Discount Rate 6.00%
Payroll Growth 2.80%
Healthcare trend rates 7.00%, trending down to 3.73%
Rate of return on assets 5.10%
The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2023-204 were derived from the June 30, 2020 funding valuation report.

Historical information is presented only for measurement periods after GASB 75 implementation in fiscal year of 2017-18 (measurement period of 2016-17). Additional years of information will be displayed as it becomes available.

City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Contributions - Other Postemployment Benefits For the Year Ended June 30, 2024
Last Ten Fiscal Years1
Other Postemployment Benefits ("OPEB") Plan
110
Fiscal year 2022 2023 2024
Actuarially determined contribution 1,538,693 $ 1,402,612 $ 1,375,874 $ Contributions in relation to the
actuarially determined contribution (2,933,295) (3,022,275) (3,110,741) Contribution deficiency (excess) (1,394,602) $ (1,708,329) $ (1,734,867) $ Covered-employee payroll $ 25,376,320 31,702,877 $ 24,483,172 $ Contributions as a percentage of covered-employee payroll. 9.25% 11.91% 12.71% City of Vernon
Required Supplementary Information (Unaudited)
Schedule of Contributions - Other Postemployment Benefits (Continued) For the Year Ended June 30, 2024
Last Ten Fiscal Years1
Other Postemployment Benefits ("OPEB") Plan (Continued) 111
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