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HomeMy WebLinkAbout1/13/2026 Item 7a, Jackson and Malicoat - Staff Agenda CorrespondenceCity of San Luis Obispo, Council Memorandum City of San Luis Obispo Council Agenda Correspondence DATE: January 13, 2026 TO: Mayor and Council FROM: Emily Jackson, Director of Finance Prepared By: Debbie Malicaot, Deputy Director of Finance/City Controller VIA: Whitney McDonald, City Manager SUBJECT: ITEM 7a - FY 2024-25 ACCEPTANCE OF THE ANNUAL COMPREHENSIVE FINANCIAL REPORT, FEDERAL SINGLE AUDIT REPORT AND TRANSPORTATION DEVELOPMENT ACT REPORT FOR FISCAL YEAR 2024-25. Staff received the following questions regarding the Fiscal Year 2024-25 Annual Comprehensive Financial Report (ACFR). The questions are below with staff’s response shown in italics: 1) On page 215 of the report, there is a table showing Risk Management in two places…restricted and committed? Why are there line items for this in two places for different amounts? (See below.) Acceptance of the Annual Comprehensive Financial Report, Federal Single Audit Report and Transportation Development Act Report for Fiscal Year 2024-25 Page 2 The amount that is restricted for Risk Management represents City funds held in trust accounts by the City’s third-party administrators in their role managing liability and workers' compensation claims. The amount that is committed represents that portion of the General Fund that has been set aside in the Insurance Fund for the City’s self-insured retention for liability and workers' compensation claims. Both amounts are intended to provide for risk management activities, however the committed balance is held directly in the City’s primary bank account/investments and the restricted amount is held in separate accounts that the third -party administrators manage. 2) In the same table, can you explain what the Economic Development Tenant Improvement is ($608k)? Funding for tenant improvements was assigned via Resolution No. 11203, using funding that arose from passage of Local Revenue Measure in November 2020. Originally intended to be used for tenant improvements in the downtown area, this money has since been used to fund Economic Development initiatives like the Buy Local Bonus program. The balance at June 30, 2025, of $608,000 is expected to be drawn down entirely in the 2025-27 Financial Plan. 3) Also, noted is Storm-Related Reimbursements ($909,090). Is this reimbursements from FEMA? If so, why is this number different than the $1.02m noted on page 240 of the packet (in the ACFR)? The $909,090 represents FEMA reimbursements received during Fiscal Year 2024-25 that staff intends to utilize for continued storm related projects and repairs. The $1.02 million includes additional reimbursements received in the prior fiscal year that were not assigned for this purpose and contributed to unassigned fund balance in the prior fiscal year. 4) On page 464 of the packet, the Single Audit Report talks about the Payroll Module Implementation, the issues noted with its set up, and the work being done to correct the issues. It states that we are working with a contractor to correct the issues. It states that testing of a new, corrected system was occurring in June and fully implemented in October. Does this mean that the payroll issue has been corrected to date, so there are no longer issues related to this finding? In other words, in next year’s audit, this issue will no longer be one? Staff believe that this finding has now been resolved by implementation of the configuration changes that took place in October 2025 and , therefore, this finding should no longer appear next year. Acceptance of the Annual Comprehensive Financial Report, Federal Single Audit Report and Transportation Development Act Report for Fiscal Year 2024-25 Page 3 5) The table on page 11 (215 of 525) of the 7.A. Annual Financial Report shows $2M for the Section 115 Trust. Is the City allocating that funding to the trust? The City Council adopted a work task related to establishment of a Section 115 Trust under the Fiscal Sustainability Major City Goal in the 2019-21 Financial Plan. The trust was established in early 2023 and prior to its establishment, $2 million was assigned in the General Fund to be deposited to the Trust upon its establishment. The City has not made an initial contribution to the Trust, and deposit into the trust is pending further discussion with the City Council. The $2 million remains assigned for this purpose, pending Council direction.