The most recent financial reports for the fiscal year ending June 30, 2021, have been released by the last two cities. In the Bay Area’s Caltrans District 4, where there are 101 cities, each city is required to provide an Annual Comprehensive Financial Report (ACFR) for its residents. Unfortunately, not all cities adhere to timely reporting requirements.
Portola Valley and Sonoma are the two cities that recently published their ACFRs for the year ending June 30, 2021. This release comes at a time when the ACFRs for the fiscal year ending June 30, 2024, should also be available. Sonoma’s independent auditors completed their fieldwork on August 12, 2024, while Portola Valley’s fieldwork was finished on April 15, 2024, but approval for posting was delayed until November 25.
The delay in financial reporting, lasting over three years, reflects poorly on the priority placed on transparency by the city councils and management. Despite challenges posed by the COVID-19 lockdown, such extended delays cannot be solely attributed to this factor. Recent scrutiny by The Wall Street Journal has further highlighted the financial issues faced by these cities.
Portola Valley’s new finance director, Tony McFarland, cited challenges in recruiting and retaining finance staff as a significant reason for the delay. Efforts are now underway to complete audits for multiple fiscal years by September 2025, aiming to bring the cities’ financial status up to date.
With the release of audited financial statements, the cities can now be accurately ranked based on their financial health. Such rankings provide valuable insight into the fiscal viability of a city, with per capita figures serving as a useful metric for comparison.
As new ACFRs become available, it will be crucial to monitor whether cities like Oakland are improving, maintaining, or facing further financial challenges. A significant portion of cities currently exhibit positive financial indicators, while those with deficits may struggle during economic downturns.
Several cities have experienced notable improvements in their financial positions, with factors such as revenue surpluses and asset management contributing to their rankings. These developments underscore the importance of sound financial management practices in ensuring long-term stability and resilience in the face of economic uncertainties. The slight decrease in its unrestricted net deficit caused it to move up 16 places in the rankings.
The city of Santa Rosa saw a surplus of $88.5 million in revenues over expenditures, largely due to a $95.5 million settlement from PG&E related to the Tubbs fire. This led to a decrease in the city’s unrestricted net deficit by $80 million, resulting in a 10-place improvement.
Foster City had a surplus of $7.8 million in revenues over expenditures, but its unrestricted net position dropped by $80 million. This was due to borrowing $85 million for a levee project, spending $27 million during the fiscal year, and increasing restricted assets by $60.8 million, causing a drop of 19 places.
Los Altos had a surplus of $9.2 million in revenues over expenditures, but its unrestricted net position decreased by $17 million. This was attributed to moving $8.6 million into restricted assets, spending $21.1 million on capital assets with $10 million in related borrowings, and an increase in pension liabilities by $3.1 million, resulting in a drop of 16 positions.
Livermore experienced the largest drop, falling 22 places, with an increase in unrestricted net deficit of $44.4 million. Despite having $10 million in revenues over expenditures, the city moved $57.4 million into restricted assets, with $50 million allocated for affordable housing.
Napa had expenditures exceeding revenues by $12.7 million, contributing to a $17 million increase in its unrestricted net deficit. The city also moved $18.4 million into restricted assets, offset by a reduction in net investment in capital assets by $13.9 million, including the cancellation of a civic center project, leading to a drop of 13 places.
Benicia had $5.4 million in expenditures exceeding revenues and an increase in pension liabilities by $5.8 million, explaining the majority of the $12.6 million increase in its unrestricted net deficit and dropping 11 places.
Milpitas also dropped 11 places, with expenditures exceeding revenues by $4.5 million, moving $30.3 million into restricted assets, and an increase in the net investment of capital assets by $13.9 million, resulting in an increase in unrestricted net deficit of $48.7 million.
Redwood City dropped 11 places despite a surplus of $41.6 million in revenues over expenditures. The city moved $99.8 million into restricted assets, explaining most of the $67.8 million increase in its unrestricted net deficit, with the remainder from net borrowing and construction activities related to a veterans memorial and senior center building.
Reviewing the ACFR for your city is important as your residence may be your most valuable asset. The 2020 rankings can be found at the provided link. It is crucial for cities to release current financial statements for proper budgeting and financial management. Please rewrite this sentence for me.
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