Oxnard receives favorable opinion on its full annual financial report


Mayor John Zaragoza (Photo by Chris Frost)

Oxnard – The Finance and Governance Committee received its full annual summary report from the auditors Eadie & Payne at the meeting on Tuesday January 11.

Eden Casareno presented the item to the committee, and she said the company had completed the Town of Oxnard’s financial statements by June 30, 2021.

“It’s six months into the fiscal year,” she said.

The city received a clean notice for June 30, 2021.

“What an unqualified opinion means is that the financial statements presented to you and to the public are presented fairly in all material respects in accordance with accounting principles generally expected in the United States of America”, she said. “Our opinion is based on the audit procedure we performed from May or June to December.”

She said it is also based on a report provided by the Oxnard Housing Authority auditor.

In 2020, the city’s assets and outflows totaled approximately $3 billion. This has grown to around $90 million in 2021.

“Over $70 million of this increase represents increased cash and investments,” she said. “There is also an increase of more than $20 million in receivables.”

She said liabilities and privileged entries increased by $58 million, from $845 million to $903 million.

“The largest increases in liabilities came from pensions, OPEBs (other post-employment benefits) and self-insurance claims,” she said.

The city’s net position increased by approximately $32 million.

“The restricted net position increased by $3 million, while the unrestricted net position increased by approximately $50 million,” Casareno said. “Net investments and fixed assets showed a decrease.”

Property taxes, sales taxes, and service fees provided the city with its three main sources of revenue.

“Public safety, general government and culture, recreation and libraries are the city’s largest expenditures,” she said. “Overall, city government revenue increased in 2021 by $39 million. This represents about 18% of the city’s previous total annual revenue.

She said city spending increased by $89 million, or 38% of the city’s total spending the previous year.

The only corporate fund where expenses exceed revenues is the Environmental Resources Fund.

“It’s something you have to watch,” she said. “In 2020, he also had a deficit.”

Mayor John Zaragoza said he thinks it may be because the city bought capital equipment.

Environmental Resources’ revenues were $46.7 million and expenses were $50.2 million, which could be explained by lower selling prices for recycled materials.

Eadie & Payne’s Hong Nguyen reviewed the general fund and said that with expenses in 2021 before transfers, there was a significant increase in revenue compared to 2020.

“Spending was down slightly from 2020,” she said. “Total revenue is largely made up of taxes, service fees and other items. When you compare 2021 to 2020, there is a significant increase in your tax category. It rose to $144 million in fiscal 2021 from $119 million the year before. These are largely increases due to property tax bases and significantly the new Measure E sales tax. In service charges you actually see a decrease, largely due the transfer of the golf activity to a corporate fund, as well as the reduction of the pandemic.

She said that in 2021 there was $23 million in service fees, and in 2021 there was about $18 million.

“Public safety is the biggest slice of the pie in general fund group spending, which is pretty consistent with the prior year,” she said. “Then you have culture, recreation and library services which is the second largest expense in 2021. There is $18 million in expenses. The general government has expenditures of $17 million. Both were down from the previous year.

She said that the general fund group is made up of several funds, including fund 101, fund 104, half-cent tax, measure O and measure 105. Street maintenance constitutes the majority of the general fund group.

“Overall, there is a positive net fund balance of $19.8 million at the end,” she said. “However, you will see Fund 101 has a negative deficit balance of approximately $3.3 million,” Nguyen said. “The reason for this is that in 2021, in particular, due to the other sources and uses of funding, and the transfers specifically out of Fund 101, Fund 104 and Fund 105 in fiscal year 2021, due to the transfer / refund of the IUF coin back to commercial activities. Water, Wastewater and Environmental Resources will receive, in total, approximately $36.5 million in IUF expense reimbursement. Since this settlement was determined in fiscal year 2021, all of this has been recognized.

Zaragoza asked why the golf course is still considered a general fund expense and not a corporate fund.

“The golf course was transferred to become a corporate fund at the start of the fiscal year,” Nguyen said. “That $1.23 million is actually made up of year-to-date earnings for fiscal year 2020. If you look at the 2020 financials, they also have positive operating earnings. This $1.2 million represents the transfer of accumulated revenue and money from the golf course to the corporate fund.

Nguyen reviewed critical audit matters with the committee, including allowances for bad debts, pensions and OPEBs, self-insurance claims payable, deficit expenses and accrued expenses.

“All the figures, we would like them to be perfect and exact; however, there are estimates involved when preparing the financial statements, which is not unusual,” she said. “The standard accounting estimates that you will find in these financial statements are allowances for bad debts. These relate to the collectability of accounts receivable.

She noted that critical information includes deficit fund balances, prior period adjustments, pension and OPFB expenditures, liabilities, contingencies and subsequent expenditures.

“These are usually rare, but in the current year they happen due to new accounting statements,” she said. “The new accounting provisions relate to GASBE 84, which is the presentation of fiduciary activities. With the new accounting standards, certain changes were necessary, and we must present them to you in the adjustment notes for the previous period.

This story will continue on January 21.


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