Title
Fiscal Year (FY) 2024/25 Annual Comprehensive Financial Report (ACFR)
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FileID
File ID: 2026-00453
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Location
Location: Citywide
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Recommendation
Recommendation: Adopt a Resolution: 1) accepting the Fiscal Year (FY) 2024/25 Annual Comprehensive Financial Report (ACFR); and 2) accepting the auditor’s letter to the City Council.
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Contact
Contact: Osvaldo Lopez, Finance Manager, (916) 808-4740, olopez@cityofsacramento.org; Peter Coletto, Finance Director, (916) 808-5416, pcoletto@cityofsacramento.org; Department of Finance
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Presenter
Presenter: None
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Attachments
Attachments:
1-Description/Analysis
2-Resolution
3-Exhibit A - Annual Comprehensive Financial Report
4-Exhibit B - Auditor’s letter to City Council
5-FY2024/25 Auditor’s Report on Internal Control Over Financial Reporting
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Description/Analysis
IssueDetail
Issue Detail: The City’s FY2024/25 Annual Comprehensive Financial Report (ACFR) presents the City’s financial condition and the results of activities for the fiscal year that ended June 30, 2025. The independent public accounting firm Macias, Gini & O’Connell LLP has audited the ACFR financial statements, as required by the Sacramento City Charter section 117.
Overview of Report
The City prepared the ACFR to present financial information in a standard format prescribed by the Government Finance Officers Association. The ACFR is organized as follows:
• An Introductory Section with a transmittal letter summarizing economic conditions, budget initiatives and other information.
• A Financial Section which begins with Management’s Discussion and Analysis (MD&A), a narrative overview, analysis of the financial statements, and comments on the City’s financial outlook. The basic financial statements follow the MD&A and report the financial position and the results of the operations of the City as a whole, and the financial performance of the City’s major funds. Footnotes to the financial statements are included to provide additional information. Finally, combining fund financial statements are presented to provide additional financial details of the City’s activities.
• A Statistical Section with selected financial, demographic, and operating trend information.
In FY2024/25 the City implemented two new accounting and financial reporting standards issued by the Governmental Accounting Standards Board (GASB) in the ACFR:
• Statement No. 101, Compensated Absences.
• Statement No. 102, Certain Risk Disclosures.
General/Measure U Fund Combined FY2024/25 Financial Results
The combined FY2024/25 net budgetary results for the General/Measure U Fund resulted in $7.7 million in available fund balance:
|
Category |
Performance vs Budget ($s in 000s) |
|
Operating Results |
$2.8 |
|
Investments Fair Market Gain |
$12.0 |
|
TOTAL |
$14.8 |
|
9/9 Council Action - SPOA Arbitration Costs |
($7.1) |
|
GRAND TOTAL |
$7.7 |
Major Tax Revenues were above budget by $4.5M driven by Property Tax, Sales and Use Tax, Measure U Sales Tax, Business Operations Tax, and Transient Occupancy Tax results. This helped offset below budget results from the Utility Users Tax and Real Property Transfer Tax.
Major Tax Revenues (millions)
|
Tax |
FY2022/23 Actual |
FY2023/24 Actual |
FY2024/25 Actual |
FY2024/25 Amended Budget |
FY2024/25 vs Budget |
|
Property Tax |
$216.2 |
$229.7 |
$239.9 |
$237.6 |
$2.3 |
|
Sales and Use Tax |
$115.3 |
$112.4 |
$112.8 |
$111.5 |
$1.3 |
|
Measure U Sales Tax |
$130.5 |
$134.3 |
$134.7 |
$133.2 |
$1.5 |
|
Utility Users Tax |
$69.5 |
$64.1 |
$70.3 |
$70.4 |
($0.1) |
|
Business Operations Tax (BOT) |
$31.6 |
$33.4 |
$31.8 |
$31.4 |
$0.4 |
|
Real Property Transfer Tax |
$11.8 |
$10.4 |
$11.4 |
$12.4 |
($1.0) |
|
Transient Occupancy Tax |
$6.2 |
$6.9 |
$7.0 |
$6.9 |
$0.1 |
|
TOTAL |
$581.1 |
$591.2 |
$607.8 |
$603.4 |
$4.5 |
Interest, rents, and concessions revenues were positive versus budget as interest rates remained elevated versus prior year leading to higher interest income on the Treasury Pool.
City operations were negative versus budget primarily due to higher expenses in the Fire Department.
The fair market gain on investments is a reversal of fair market losses the City incurred in fiscal years. When the Federal Reserve increased interest rates, the market value of the City’s investment portfolio decreased, creating unrealized losses. These unrealized losses need to be accounted for during year end per Governmental Accounting Standards Board requirements, which decreased year end results in previous fiscal years. As the City effectively managed its cash flow and did not have to sell these assets and recognize the losses, and the securities have matured and the City invested those funds in higher yield securities, the City can now repay itself for the unrealized losses.
Although Measure U is a General Purpose tax, the City’s financial statements separate the General Fund and Measure U and more detail on each fund is below:
General Fund FY2024/25 Financial Results
The following schedule summarizes the FY2024/25 net budgetary results for the General Fund:
1 FY2024/25 Unassigned Fund Balance as represented in this chart reflects the General Fund activities/results for the current fiscal year plus unassigned fund balance from prior fiscal year of $22.6 million that was not used due to budget savings with vacancies. The total unassigned fund balance for General Fund as of 6/30/2024, including new and previous resources, was approximately $23.0 million. General Fund for FY2024/25 was combined with fund 1003 ARPA reinvestment Fund, and fund 1004 Measure L Children fund, fund 1003 also carried an unassigned amount of $4.5 million (see page 24 of the ACFR for additional information).
2 The main cause of the variance in Citywide revenues/expenditure results is that salary savings are budgeted centrally, but the actual savings are reflected in the departmental results.
Revenues
Total General Fund revenue exceeded the FY2024/25 Approved Budget as amended by $26.1 million. Tax revenue was $3.0 million higher than the budget projections, a variance of 1%. Property Taxes ended higher than projected by $2.3 million, the result of increases in market value and activity. Other Taxes, including Sales and Use Tax, Property Transfer, Utility User, Business Operations, and Transient Occupancy Taxes ended lower than projected by $.7 million. Intergovernmental revenue was $25.0 million higher than the budget projection mainly due to more federal reimbursement for fire emergency medical services. Charges for services were $24.0 million lower than the budget projection due to lower-than-expected Fire emergency transportation fee revenue. Please refer to page 32 of the ACFR for the budget to actual comparison.
Expenditures
Most operating departments ended FY2024/25 within their budgeted operating expenditure authority. The City Attorney and Fire departments were the only exceptions. Details on departments’ year-end results are provided in the chart below.
Departments that had significant variances between budget and year-end results have provided the following explanations:
Community Development - Positive results are primarily due to labor savings from vacant positions.
Finance - Positive results are primarily due to labor savings from vacant positions and better than expected revenue associated with unclaimed property.
Fire - Negative results are primarily due to payroll costs including overtime, mainly in the Fire Suppression division.
Police - Positive results are primarily due to labor savings from vacant positions.
Measure U Fund FY2024/25 Financial Results
The following schedule summarizes the FY2024/25 net budgetary results which resulted in negative $15.3 million in fund balance:
1 FY2024/25 Unassigned Fund Balance as represented in this chart reflects the Measure U Fund activities/results for the current fiscal year.
Revenues
Total Measure U Fund departmental revenues were higher than the FY2024/25 Approved Budget as amended by $3.9 million. The positive revenue variance was due to higher than anticipated retail transactions and higher than anticipated interest revenue due to better-than-expected interest rates.
Expenditures
Most operating departments ended FY2024/25 within their budgeted operating expenditure authority. The Mayor/Council and Convention and Cultural Services departments were the only exceptions. Details on departments’ year-end results are provided in the chart below. Only departments that received Measure U funding are included in the chart.
Departments that had significant variances between budget and year-end results have provided the following explanations:
City Manager - Positive results are primarily due to labor savings from vacant positions and service and supply savings.
Community Development - Positive results are primarily due to labor savings from vacant positions and service and supply savings.
Police - Positive results are primarily due to labor savings from vacant positions.
At the end of FY2024/25, the General/Measure U Economic Uncertainty Reserve totaled $76.4 million, 9% of General Fund revenues and $7.5 million below the minimum balance per Council policy. There were no contributions during this fiscal year.
Auditor’s Letter to the City Council
The auditor’s letter to the City Council is additional communication required by audit standards which conveys that there were no difficulties encountered performing the audit or disagreements between the auditors and City staff. The letter also includes information about significant estimates and footnote disclosures included in the financial statements. Refer to attachment 4 for additional information.
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PolicyConsiderations
Policy Considerations: This report is required by the City Charter, federal and state grant requirements, and bond covenants.
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EconomicImpacts
Economic Impacts: None.
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EnvironmentalConsiderations
Environmental Considerations:
California Environmental Quality Act (CEQA): This action is not a project subject to CEQA because it involves only organizational or administrative activities that will not result in direct or indirect physical changes in the environment (CEQA Guidelines §15378(b)(5)).
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Sustainability
Sustainability: Not applicable.
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Commission/Committee Action
Commission/Committee Action: None.
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RationaleforRecommendation
Rationale for Recommendation: It is in the best interest of the City to accept the FY2024/25 ACFR and the auditor’s letter to the City Council for the following reasons:
• The annual audit is required by section 117 of the Sacramento City Charter, federal and state grant requirements, and bond covenants.
• The public accounting firm Macias Gini & O’Connell LLP has audited the City’s FY2024/25 financial statements and has rendered its unmodified opinion that the financial statements are fairly presented in accordance with generally accepted accounting principles.
• The auditor’s letter to the City Council reflects no significant audit issues or disagreements with management in connection with this audit.
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FinancialConsiderations
Financial Considerations: General Fund and Measure U budgetary results for the fiscal year that ended June 30, 2025, resulted in one-time resources in the amount of approximately $7.7 million. This amount includes $12.0 million related to recovery of unrealized fair market loss on investments. The City is currently projecting a substantial structural deficit in future fiscal years. The $7.7 million is a one-time resource and consistent with Council adopted policy can be utilized to partially offset the projected FY2026/27 budget deficit.
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LocalBusinessEnterprise
Local Business Enterprise (LBE): No goods or services are being purchased under this report.
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