The purpose of this report is to submit the Fiscal Year Ended June 30, 2016 Consolidated Annual Financial Report (CAFR) to the City Council for their acceptance. The report can be located in PDF form on the City’s website at http://www.ci.union-city.ca.us/departments/administrative-services/financial-reports.  Staff rcommends approval of the proposed resolution accepting the FY 2015-16 CAFR.

Each year the City is required to conduct an audit of its financial records and transactions.  The City’s CAFR, or annual audit for the fiscal year ended June 30, 2016 is presented here.  The CAFR reports the financial activities of each fund maintained by the City.  The CAFR was prepared by Badawi & Associates, Certified Public Accountants, in their fifth year of a five year contract.  This contract was recently extended by City Council action for a period of two years.

The audit, committee consisting of Mayor Carol Dutra-Vernaci and Councilmember Lorrin Ellis, met with City staff and Ahmed Badawi of Badawi & Associates to review the June 30, 2016 CAFR on March 2, 2017.  A presentation was given covering various aspect of the CAFR including, fund balance, OPEB and pension liabilities and overall fiscal health of the City.  Based on the audit of the fiscal year ended June 30, 2016, Badawi and Associates issued the following opinion:

“In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activates, the business-type activities, each major fund and the aggregate remaining fund information of the City, as of June 30, 2016 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.”

In the General Fund, the primary operating account of the City, expenditures and other financing uses exceeded revenues and other financing sources by $1,264,158 (pg 172).  This amount, referred to as the net change in fund balance, is deducted from the prior year restated fund balance of $51,054,160 to arrive at the June 30, 2016 fund balance of $49,790,002 (pg 172).  Per the June 30, 2016 CAFR the fund balance is classified as follows:

• $320,044 - Prepaid items

• $522,730 - Loans receivable

• $34,903,166 – Restricted in the form of assets (Mostly RDA property)

• $6,611,311 – Assigned by City Council action in the form of economic contingency, capital improvement set aside, litigation and compensated absences.  Most of these items have been set aside for a considerable length of time and should be brought back to the City Council for either reconfirmation of their assigned purpose or to be reclassed to unassigned fund balance. For purposes of general fiscal discussions $6,097,347 of this balance is considered to be part of the unassigned fund balance.

• $7,432,751 – Unassigned

Based on the above the available fund balance at June 30, 2016 is 13,530,098.

There is no fiscal impact associated with the acceptance of this resolution.

It is recommended that the City Council accept the Comprehensive Annual Financial Repot for the fiscal year ended June 30, 2016.