Each year an audit of the City’s financial statements (CAFR) is performed by a firm of Independent Certified Public Accountants in conformity with Generally Accepted Audit Standards (GAAS).

The CAFR is a report that covers all funds of the City and is prepared in accordance with Generally Accepted Accounting Principles (GAAP). It is considered a general-purpose report, as its contents are intended to meet the needs of a broad range of user groups.

The auditors have issued an unmodified opinion and the City received positive feedback from the auditors for the work performance and reports prepared by the Accounting Division. Such an opinion reflects the auditors’ belief that the basic financial statements contained in these reports present fairly the financial position of the City of Fairfield (see attached Auditors’ Report).

A good summary of the financial condition of the City is contained in the transmittal letter and the Management’s Discussion and Analysis (MD&A) of the CAFR, as well as in the City’s Popular Annual Financial Report (PAFR) for FY 2018-19, the latter being a summary of the CAFR and included as an attachment to this report. Additional supporting information related to the financial statements can be found in the notes to the financial statements of the CAFR. The following represents key financial positions and highlights of the City’s major funds:

General Fund: The fund balance increased from the prior year to the current year by $20.1 million to a balance of $47.7 million. This increase was mainly due to higher than budgeted, sales, Measure P, and property taxes (revenues exceeded the budget by $8 million). Expenditure savings related to staffing vacancies also contributed to an increase in fund balance. And lastly, $12.6 million of this increased fund balance represents funding from the City Council approved Pension Stabilization Fund, which is a sub-fund of the General Fund ($5.3 is restricted related to a Pension Trust Fund and $7.3 is committed in the Pension Stabilization Fund). During FY 2018-19, in accordance with the Pension Funding Policy, the City Council approved transferring $22 million of funds in the Pension Obligation Debt Service Fund (previously accumulated to potentially call the 2011 Series of Pension Obligation Bonds) to the Pension Stabilization Fund for purposes of prepaying a portion of the City’s Unfunded Actuarial CalPERS Liability ($10 million in FY 2018-19), as well as establishing a Section 115 Pension Trust Fund ($5 million).

CalPERS and Net Pension Liability: As of June 30, 2019, the City’s combined total Net Pension Liability (NPL) is approximately $179 million, an increase of $3.6 million (2%) over the prior fiscal year. The NPL is a result of comparing total Pension Plan Assets of $451 million to the total pension liability of $630 million, which reflects that approximately 72% of the pension liability has been funded through June 30, 2018, the date of the most recent pension actuarial report provided by CalPERS. This compares to a 71% funding level in the prior year.

Of the total NPL, $15 million was allocated to the Water Fund; $6 million to the North Bay Regional Water Treatment Plan (NBR) Fund; and $2 million to the Transit Fund based upon Full-Time Equivalent Employees (FTEs) allocated to these funds. The remaining NPL relates to the General Fund and other governmental funds ($156 million) and is accounted for in the Government-Wide Statement of Net Position. The Net Pension Liability (and CalPERS Plan) is discussed in greater detail in footnote #12 on pages 75-80.

Internal Service Fund Liabilities: As shown in the transmittal letter, the table below shows some of the key liabilities of the internal service funds and their associated levels of funding: