Ad-Hoc Stadium Audit Committee - Regular Meeting

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Absolutely. Thank you so much, Ken. Alright. Roll call of council member.

Listen.

Council member Gonzales does not seem to be here yet. We're hoping when he comes in, they'll make a note. And, I am here as much as I'm ever here. Wonderful. Thank you so much for being here. I know this is the week you wanted to be doing all this. No. It's not. Alright. Consent calendar. The only action we have on here is the minutes from the last meeting of June 12. Any consent? To approve. Motion to approve. I will need to second that. All in favor? Aye. Aye. That appears to be unanimous. Wow.

Thank you. Alrighty. Public presentations. We do have the doors open here. Is there anyone online who would like to say anything?

No one in the public that's online.

K. Because I'm not able to see that, and, there was no one else here. They all slept in. They knew how much fun this would be. No. I'm teasing. Alright. General business. The overview of Santa Clara Stadium Authority fiscal year annual finance statements and audio audit results presentation by KPMG. And I'm Oh, am I looking oh, I'm looking at the wrong I turned two pages. Oh, dear. I got confused. There we go. Yes. I did. I turned the other one. There you go. I told you I haven't had a lot of sleep. I came from Salt Lake Street. Yeah.

I I went so what I remember doing. Okay. A review of the draft city audited annual comprehensive financial report and audited Silicon Valley power report, SVP, and financial statements for fiscal year ending June 30. That sounds like what I prepped for. Thank you.

Great. Thank you. Thank you, chair Hardy and committee members. Appreciate this afternoon's engagement on this item. This is the time of year where we're presenting our our annual comprehensive financial report. Wanted to take the time to thank Lin Lam and Lin Feng here. They've done a lot of the work on the the thick doc doc documents before you. And the item before you, the the committee is scheduled to hear this today. And then what our recommendation, if if the committee chooses to do so, is to forward this to the city council on December 9. Just overview here slide.

Because of our great staff, we've had thirty three years of GFOA achievement and excellence for this report. So we we a long time standing here. Amaz and Associates has completed the audit of the ACFR as well as the Silicon Valley Power financial statements. It does cover the fiscal year ending 06/30/2025, and we also do comparative data to your comparison, which includes 2324. Our goal and every goal in an audit is an unmodified or a clean opinion to be expressed by the auditors, in this case, Mays.

And then, of course, just from transparency perspective, these reports will be available on our finance web page available for the public to review as part of the potential meeting on the ninth with the council. And so with that, I wanted to turn it over. Amy Myers, our auditor, and she's been before the committee many times before and and wanted to turn it over to her to lead us through Thanks. The discussion point on on today's item.

Okay. Great.

Let let the minutes I apologize, Amy. Just a second. Let the minutes show that a council member, Gonzales, has joined us at 01:07. Thank you for being here.

Alright. Is

it okay if I share my screen, or am I are you gonna run the slides?

I was gonna run the slide, Amy.

Okay. That's fine. Okay. Alright. So welcome, everyone. Glad to be here. Yes. And so we are presenting the draft today. We're we're it's hot off the presses, and so we're gonna wrap up a few just a few audit things, and the report has to go through what we call our second review, and that'll happen. Hopefully, this week, we'll have results back early next week, and, hopefully, they'll find nothing. So then there won't be any changes. We don't anticipate there to be any changes to the numbers that that part of the audit work is done. We're just wrapping up everything. So I'm kind of off script, Lynn. I put that somewhere else in my in my thoughts, but I wanted to kinda start that way because it is unusual for us to bring a draft to this time.

So, yes, we're gonna go over the audit reports, the results of the audit, some key financial highlights for the fiscal year, memorandum on internal control, required communications, and then the results of the agreed upon procedures reports. Alright. Next. So an independent an audit is an independent verification that the city's financial statements are materially correct or fairly present the financial position of the city's funds. So we audit the city as a whole, and that is housed in the statement of net position and the statement of activities that can be found on pages. Oh my goodness. My own notes aren't even there. There we go. Page 29. On page 29 oh, nope.

Not yet. This is a long I've I talked long on this one little simple slide. And so those are so that's the all of the city's funds activities into two columns, governmental activities and business type activities. So we opine on that as a whole, which is we call that the entity wide statements. And then major funds individually, which are the major governmental funds, the city of which the city has two, and then the major enterprise funds.

And then the other funds that are not considered major, and there's a mathematical calculation that determines whether a fund is major or nonmajor, but the city can elect to report funds as major. You can't elect to not report a fund as major if it mathematically qualifies. The major funds can be found on page 34 for the governmental funds of the ACFR and page 44 for the enterprise funds. We opine on those individually, and then what we say is and all nonmajor funds in aggregate. So nonmajor funds are in aggregate as far as our audit opinion.

So anything that's in the back of the report in the supplemental section where you have your combining statements for the the other funds in the report. Our audit was conducted in accordance with, auditing standards generally accepted in The United States Of America as well as government auditing standards. Alright. Slide four. And if you have any questions along the way, please don't hesitate to stop me.

So we have a total of eight documents that we'll be issuing. You know, again, we this is all draft, so this is what we propose to issue the the we audit the city as a whole. Again, the annual comprehensive financial report or ACFR, Silicon Valley Power, which is the electric fund, the basic financial statements. This year, the the city was subject to a transportation development act audit, which is the MTC grants you get for bike paths and other improvements in those similar improvements. And then we also issue we will audit the single audit, which is the audit of the federal award programs.

We usually come back to you in the spring for that audit because that has a different reporting deadline of 03/31/2026. So that'll start either later this year or after the beginning of in in the '26. Still can't get used to saying 2026. I feel like I just started saying 2025, and so that'll happen with that other reporting deadline. And then other reports we issue on the next slide, we've also got a a bond compliance letter for San Jose Santa Clara Clean Water Financing Authority and two agreed upon procedures reports related to investment policy compliance and the GAN limit, or the appropriations limit calculation. Alright. Next. Oh, I guess not next. Sorry. I have my notes.

And did I skip a slide? Sorry. Hold on.

Yes. That was just

My notes I think my notes are off on my own on my own slides. Well, we'll get there. This will work. So so the results of the audit, the draft results as we're calling them. So we do propose to issue an unmodified or clean opinion. We're through enough of our audit work that we can tell the wrap up and the open questions, you know, that city staff have answered, and we've gotta go back through a few of them and wrap up on our side. We don't anticipate any changes to the numbers. The numbers have stopped moving, and, again, it's just wrapping up our audit work on our side. So we propose to issue unmodified or clean opinions, which is the highest highest level of assurance that we can provide. You'll notice that there are some we call them mod they're not called modifications, excuse me, adjustments to the audit opinion.

One related to in our opinion, we refer to other entities that we do not audit. So we do not audit, the the stadium authority. We incorporate the audit from KPMG's audit into the city's audit. We we do not audit SCSA, and so our audit opinion refers to the those auditors. And then also the net the investment in joint venture that's reported in Silicon Valley Power and also in the wastewater fund or the sewer fund.

Those investments in joint venture and there's sorry. There's also one in the governmental activities for the Silicon Valley Animal Control Authority. You have these investment in joint ventures. We are not the auditor for any of the those that are related to the electric authority or excuse me, electric fund or the sewer fund, SJSE. So those balances are based on the results of those their auditors.

That's why we make reference. Even though you also have an investment in joint venture for Silicon Valley Animal Control Authority or SEBACA, we are our firm does audit that entity. That's why you don't see a reference to to the other auditors for that firm because we are the auditors. So those investment joint ventures, you know, they include the SJSC Clean Water Pollution Control Plant and Clean Water Financing Authority and the Northern California Power Agency or NCPA, among others. There are three others as well. So the net oh, sorry. Emphasis of a matter. So our opinion this year does include emphasis of a matter. There are three components to it this year. One is for the adjustment for the implementation of GASB statement one zero one.

It changed the method for calculating the compensated absences liability. It takes it's a different perspective of sick leave, and usually vacation is what it is. Everyone can take their vacation, and they they leave the city. They get paid out for their accrued but unpaid vacation. But when it comes to components like sick leave, they can have different payout components based on either vesting schedules or MOU components and requirements.

The old rules were that you would do it based on those vesting schedules. If there was a 50% payout upon termination or something along those lines, then that's what the accrual would be. Now the rules have changed. So effective 07/01/2024, compensated absences are recorded based on whether they're expected to be used. So the balance as of the end of the fiscal year, you know, beginning and ending, that's why we have a restatement or an adjustment to the beginning balance, is that liability at the that's expected to be paid or, excuse me, used or paid in cash.

That component is about the used. So some employees may never take a payout at the end, but if they use their sick leave along the time, that balance that's earned at the end of the year gets recorded as the liability. So that's there's an increase in the compensated absences liability this year, and that gets recorded as we call it as an adjustment. I keep using the word restatement. There There was a GASB pronouncement that went into effect last year that changed the terminology to adjustments, corrections, and things like that, and but I still use the the old language of restatement.

So that was one adjustment that you'll see. Then the second is an adjustment for a change in accounting policy related to unavailable revenue for loans receivable. It's oh, it doesn't affect the fund level. So the housing successor fund, which is where, what, 99% of your loans are housed in the housing successor special revenue fund, the activity your day to day process for loans receivable doesn't change. But moving from the fund level statements to the entity wide statements, city staff had a change in accounting policy for how unavailable revenue is treated at the entity wide level for a certain component of the loans.

And so that's why there's an adjustment of about $25,000,000 in net position at the entity wide level for that. And then the third adjustment is a restatement that was in the stadium authority's financial statements that has to be again, since it's a fund in the city's financial statements, that gets rolled into the financial statements of the city as well. Let's see. Then next slide. I must have fallen asleep when I wrote my notes. My page my slide references are all I didn't add a slide. I don't know what the heck I did. Okay. So the next page is the the next discussion is management's discussion and analysis. So both reports, both the the ACFR and the Silicon Valley Power report include management's discussion and analysis.

So even though city staff prepares both reports, they prepare all of the reports. That's a good place for you. They prepare that document as well, and that's a good place to go for that summary of what happened during the year and why things fluctuated and went up and down. So it's a great place to start. I always say I want you to read the whole report, but if you're gonna start somewhere, start at the MD and A.

And then you'll notice one little strange difference between the the two is Silicon Valley Power's report in the tables of the the balances in the MD and A. It includes three years, and that's required because Silicon Valley Power's financial statements are comparative. And so because the comparative financial statements that include June 3025 compare and and '24 in the MD and A, because of that two year comparative, you're required to show three years of balances in the MD and A. Okay. Next slide. Alright. So some key financial highlights. This this first part is just kind of pointing you to different places in the report. Again, management's discussion analysis in the ACFR, page five. Then the basic financial statements, those start on page 28.

And that really I didn't even talk about that earlier as I got myself all out of my notes. The basic financial statements is the part that we audit. So the annual comprehensive financial part report includes the basic financial statements in the minute in the middle that start with our audit opinion and go all the way back to the supplementary information. And then they are accompanied by an introductory section on the front and statistics statistical section on the back of the you know, in the back of the report. So three main big components.

We audit the middle. We do not audit or opine on the statistical section or the introductory section. Of course, we read through them just to make there's make sure there's nothing in those sections that contradicts our audit work, but we don't opine on them. Then the notes to the basic financial statements start on page 59, and they're, you know, they're an integral part of the ACFR, and you wanna read those as well because they give you a lot of good information on the significant balances and transactions that happened during the fiscal year. Alright.

Slide nine. So some key highlights for fiscal twenty five for the act for our city's assets, exceeded liabilities. Now this is in total across governmental activities and your enterprise or business type activities. $3,100,000,000 is your net position for the year, and that net position increased by $404,000,000. And that's after those adjustments I mentioned earlier that you could see a table of the adjustments on note 18, adjustments or restatements, or $443,000,000 before those adjustments.

Pension liabilities decreased this year. Not a big you know, in the grand scheme of your numbers in the report, not a huge change for for Santa Clara, but I just wanted to mention because there's there have been some big swings, from year to year over the last few years. And so it at June 3025, which is based on a measurement date of June 3024, your liabilities had decreased $17,000,000. So it you know, the the big swing at June 3024 were investment excuse me. CalPERS investment balances were higher, which meant the net pension liabilities went down.

Then your outstanding long term debt increased by a $101,000,000 comprised of the million dollar repayment in the governmental funds, $27,000,000 in normal repayments in the enterprise funds, your normal debt service principal payments, and then the issuance of the electric revenue bonds. And the general funds fund balance increased 60,000,000 excuse me, 60,000,000 to $241,000,000 at the end of the year, primarily due to sales taxes and $17,000,000 from interest income. There were, you know, higher interest rates throughout fiscal twenty five resulted in higher interest or investment income balances. Right? The next slide is gonna show you the general fund components.

So of that 241,000, excuse me, million dollar balance, it is comprised of some categories called non spendable. So those are assets that you can't they're not spendable in cash. It's supplies, inventory, prepaids, and leases receivable. Restricted in excuse me. Restricted balances of 39,800,000.0 comprised of grants, you know, unspent grant funds, donations, and pension the pension rate stabilization fund, that is restricted.

And restricted means outside parties, third parties, not restrict. The city can reserve or commit or assign balances, but city cannot restrict balances itself. And so those are third party restrictions on the balance. Committed, assigned, unassigned, you can see they're committed for land sale reserve, historical preservation, about the same as the prior year, and assigned balances are your encumbrances at year end. And then, unassigned is a $163,000,000.

That also includes the budget stabilization reserve and capital projects reserve that don't qualify as moving up into those other categories, but they are a component of the unassigned balance. Right? So also included, is our memorandum on internal control. So as part of our audit, we test the internal controls of the city to verify that day to day practices are in line with approved policies and recorded transactions are recorded in accordance with generally accepted accounting principles. So that means that on a sample basis, we test trace transactions to source documents for areas including revenue, disbursements, payroll, capital assets, and long term debt.

And then we also test the year end balances on the statement of net position and balance sheets. From network, if there are matters to report, they are included in our memorandum on internal control in any one of three categories, material weaknesses, significant deficiency, or other matters. So from the city's audit, I'm gonna talk in two pieces here. For the city's audit, just the city ignoring the stadium authority. From our audit work, we had no material weaknesses to report.

Because the stadium authority is a component or is a component of the city and gets pulled into the city's financial statements, any of its material weaknesses or significant efficiencies get incorporated into it into our memorandum on internal control. So there was there were or was was or were a material material weaknesses to report because there was a material weakness in the stating authority audit. So that's why you'll see that in the back of the memorandum on internal control in a separate section that says provided by other auditors. So from the city's audit, so I'm gonna speak just on on our audit results, we did we didn't have any material weakness to report, but we did have one new other matter to report related to the Mission City Memorial Park, the cemetery. We did what we call a cash collection review, looking at what their procedures and processes were over over collections and documentation.

And so we could see that, you know, there's documentation, there is paperwork, there is there is support, but it's about it's about documenting who did what and when, and those are the pieces that we're missing. You know, signing off that things were reviewed and approved and and dating so you can tell that it's current, it's on time, and and who's actually doing that so you can really see the segregation of duties in the process. And then we had two matters. So it was only current year comment. Then we also had in the back is the current status of prior year comments, and we had two that were repeats or, you know, the implementation is in process, one related to the review of manual fee calculations so that city has made changes effective 07/01/2025.

So during 2025, there was still a few problems, but very, I think city staff did a calculation, and the errors that were noted was something like $440 or something really close to that across all the permits. So we're not talking significant errors during fiscal twenty five, but it's something new processes and procedures are being put in place effective July 1. And then a repeat item related to the timely submission of procurement part excuse me, pro card supporting documentation, the credit cards. And so and we're still working on fine tuning this one because it sounds like possibly some of the the city's policy or excuse me, procedures may have changed since we made this this recommendation in the past. And then the report also includes new upcoming governmental accounting standards board pronouncements that may affect the city's financial statements going forward.

The list has actually gotten shorter at the moment. I don't wanna jinx us by saying they're gonna issue a parcel of new, new statements, but there's currently only two down the pipeline that are, coming up in the next couple years. Then also finally, also in that report is the current status of the stadium authority's prior year significant deficiency, and that we understand that that was implemented. So they only have the the current year mature weakness that's outstanding. That was a lot.

Any

That's the SBL license. Right?

Yeah. That's what I was saying. That's how we handled the SBL defaults.

Was it? Yeah.

Yeah. Okay.

Yes. Yeah. It's probably not new use. You've already had the results of that that audit, so it's not new. We just are we're required to incorporate it into the city's audit results as well. Okay. Then next slide. The next document in your packet is the required communications. So we are required to make certain communications to you even more than me just rambling on to you here. Things such as changes in accounting policies.

So there were no changes in accounting accounting policies other than what we've already talked about. The implementation of statement one zero one related to the accounting for compensated absences and accounting for the unavailable revenue related to loans and the statement of deposition. There was also another GASB pronouncement that was effective in '25, but it didn't affect the city's financial statements, and that was statement one zero two relating certain related to certain risk disclosures, relating to disclosing vulnerabilities due to concentrations or constraints. Like, if you were constrained on raising taxes for some particular component or you had one major vendor that if the vendor went away or, excuse me, customer, the customer went away and it would affect the city dramatically. Those are the types of examples that need to be added to the disclosures, and we didn't nothing needed to be added to the financial statements for that.

Alright. And the next slide. So we also had no unusual transactions or controversial or emerging areas. Another component is accounting estimates. So the financial statements are that frozen point in time at June 30.

So there are estimates included in the financial statements, and so we're required to point them out because the actual results could vary from those estimates at that June. Significant accounting estimates include pension and OPEB liabilities, the fair value of investments because that's the fair value on June 30 if it were to change dramatically on July 1. Accounting rules do not require that the fair value be adjusted as of June 30 if there were changes. Investments in joint ventures, those are an estimate. Depreciation on assets, leases receivable and related deferred inflows, and leases payable, and intangible right to use assets, subscription assets and liabilities, compensated absences.

Again, that's a big estimate. Landfill closure liability and claims payable. We're happy to report we had no disagreements with management, and we have I think I think I might have left off. Oh, there we go. It's there. So we have no material adjustments to report other than we did have one material adjustment of $5,200,000 to the Santa Clara housing successor special revenue fund. It was material to that fund. When we do our materiality calculations, it's by individual major funds and then nonmajors in aggregate. So the adjustment was not material to the city as a whole, but to that specific fund, it was related to a a proposed section.

I made a note of that. Can you please explain that? What was that discrepancy of about $5,200,000?

Yes. So so city staff had intended to make a correction to prior year to a prior year loan. And then after we talked about it for, you know, kind of understanding what had happened in the past and and what because something like, the loan started receiving payments, and so they thought that something needed to change based on how it needed how it had been recorded in the past. And then after we talked about it, it's such an unusual loan. It's it has to and this is why we didn't see it as a a control weakness.

You know? Sometimes if there's an a material adjustment, we may then consider it a control weakness. But when we're talking through this particular loan, it was the oh my goodness. Freebird. Freebird loan that there was no cash that changed hands back when that loan was issued because the city issued a loan to the developer, and then the developer used the loan proceeds, but no cash went through the loan proceeds to prepay a lease.

And so now that the loan receivable, they're starting to make payments on that. And so the thought was, well, the loan must need to be you know, there it it should be accounted for differently. And we realized that it does need to be accounted for differently than all the other loans, but not in the manner that that city staff originally thought in making that in trying to make that correction. And after we talked about it, we agreed that the correction they were proposing was not needed. It's just going to be oddly treated differently than all the other loans receivable because it has that weird component of there was no the city did not write a check for that loan, but you do have an asset and an unearned revenue line that that's gonna start amortizing at different different rates based on the, treatment of that loan receivable.

It's it's it's a weird transaction. So that was the we again, we didn't see it as a control weakness. It sparked good conversation. We had a few meetings about it to figure out the best way to to treat it. Is that did that answer it? I feel like I just mucked up that question even more. That

That's fine. I'll go into detail later. Okay. Alright. So the loan was never dispersed, and we started getting the payments back.

Correct. Yeah. The it was dispersed in the form of the the, recipient prepaying a loan. So you could've you could've traded checks, but checks were not traded. You know? It was it just happened on paper. And so that's the confusing part back in, I think, was '22, I think, when it happened. You know, it could have been grossed up in the matter of, you know, Citi writes the developer a check for the loan receivable, and then the developer writes the Citi a check for the to prepay the lease.

Mhmm.

But the cash didn't there was no exchange of checks, and so that's the unusual part. So in the at the end of the day, that loan gets treated differently than all the other loans in the fund because normally, when a loan is issued and you do write a check, you write a check, you get a loan receivable, but then the city records it as a loan receivable offset with unavailable revenue. And when you write the check, it gets expensed as a, you know, a cost to the fund. Because this one didn't have cash involved, there was never an expense or it it there was an expense in revenue, but it got grossed up back then, you know, back in '22. And so when the payments start coming in, the offset, it's not the loan is actually not offset with unavailable revenue, and that was the confusing part.

It's in you have two transaction. You have a prepaid lease, and you have a loan receivable. And so they're not even though they they started at the same time, they're completely different transactions, and that's the the part that was confusing. So now you have this unearned revenue from the lease prepayment that's going to be amortized over the life of the lease, which I believe is something like eighty nine years. And then you have a loan receivable that is gonna start receiving payments. And so as cash comes in, it just reduces the loan receivable that does not go through the income statement.

Yeah. Amy, if I could add, it's typically, it's a pair. Right? But then there's no pair. There it should be two pair, but it's only one pair now. Because there's really no cash transaction, so then we're shrinking it to just that one pair of receivable and interest. Yeah.

Yes. No wonder they got confused. Yes. Yes. Oh, they're tough.

Yeah. It's it's hard when you have those ones that are one off, and they're different than you know, you have a $100,000,000 of loans in that fund, but you have this one loan of $5,000,000 that's different than all the rest. So that's the the strange piece.

Good luck. Yeah.

Alright. And we can always continue to circle back on it once it you know, you process it a little bit, and it's hopefully, it'll it'll make sense eventually. Then uncorrected misstatements. So we during our audit, if we find any differences along the way, we either propose them as an audit adjustment or a correction, or we accumulate them on a schedule we call our uncorrected or past adjustments to make sure that they don't accumulate to become something material that needs to be recorded, and we haven't we did not. And we have no no no miss no uncorrected misstatements to report to you.

They didn't elevate to that point of needing to be reported. Alright. The next oh, and we had no disagreements with management. Happy to. We may have been disagreeing along the way with that restatement of the loan, but once we all figured it out, we were we we agreed. Yes.

Ken's laughing. So yeah. And alright.

Then agreed upon procedures. So after the ACFR and Silicon Valley power report, we also have agreed upon procedures reports that we work on. One is related to investment policy compliance. We complete some specific step steps that the city has requested related to compliance with the investment policy, and we had no exceptions from that work. And then the GAN or appropriations limit calculation, we test the city's calculation to the supporting documents from the the state, and we had no exceptions in that report as well.

Alright. And with that, I wanna thank the finance staff for all their all their help. We ask a lot of questions and ask for a lot of documentation along the way, and they're always very responsive and really keep the audit moving along and appreciate their help.

Well, I'm gonna say I it's good to hear that because, Ken and Lynn, we appreciate you. We that you take so such good care of our finances and are so responsive to questions because you're That one loan, that's weird. And I can appreciate trying to explain that and go over because we are not only a full service city, we have a lot of moving parts. Okay. And it gets complicated.

Very.

Are there any other specific questions? I know I I was joking that this was a good way to solve insomnia was to reason. But there were there were more interesting parts than others. But, yeah, trying to put this all together, and I appreciate that that it looks like we're in a good position. And, yes, please rush.

So I don't know what page is this. Right? You know, we get 5% from the SVP revenue.

Right.

The number, I didn't match. I know in our city's revenues, have taken, I think, under taxes, some 30 plus million dollar, but that number doesn't match the total revenue or 700, whatever number SVP total revenue was. What was the difference? Like, I I forgot. I know there's so many pages. I forgot to note down the page number. But that number in our finances is not matching the 5% off.

So great great question. Maybe I'll start, big picture, and then if Lynn has any comments, happy to have her chime in as well. So

And and just to update, within the Silicon Valley power, there are multiple revenues. I'm only taking into the revenue, which is coming from the our silk residential, industrial, and, like, not the resale of our, bulk resale of our electricity. So

it's a great question. So I think, two things. One is, as you pointed out, certain line items qualify for the 5% and certain ones don't. So depending on which line items you're looking at, it might be different. And then there might also be timing differences as well. Some of the invoices, you know, revenue were accruing those those invoices, and so there might be a timing of terms of how we're calculating that 5% versus the accruals. I don't know, Lynn, if you have anything else you'd add or confirm. Or

Exactly what you say because the contribution due is calculated based on the cash. It's not based on the billing. So we always bill them. When you see the revenue on the statement, it's based on the billing. We may not receive the cash yet.

Okay. But we book as per the cash.

We calculate the contribution due based on the cash, but the revenue reported on the statement is based on the billing.

Yeah. Yeah.

So if there's a bad debt Yeah. There is a not be incorporated into the city's 5%. Exactly.

Yeah. There's a timing difference here.

Okay. Accrual basis, cash basis.

Based on the cash basis. Yeah.

Okay. Got it. And that might be the difference. Yeah. That sounds like the

where the difference would be.

Yeah. I think that's the biggest difference. And like you said, there's a few revenue sources that are excluded as well.

Mhmm. Right.

Yep.

Often a tiny Yeah. Issue. Yeah. I'm working about that. Any questions?

I just wanna appreciate the staff's time and the auditor's time as well to look into this, and it's always it's always great when when you agree or, you know, there's no there's no issues. Like, everything went well with the audit. Don't Support and everything from our status is good.

Last thing we want is a bunch of red flags.

I have enough audits like that. I don't need

I always tease Ken. If he's smiling, then I'm okay. I can see that. Yeah. It's not.

If he looks worried, then I don't sleep no matter how many times I go over those reports. I will say I there were little things that I thought, oh, I did not realize that we need but they weren't accounting issues. It was just really good to go through and see all of our the things we're involved in and how that money moves around and what comes in and what goes out. And I so I'm a lot of my notes have to do with questions about how we handle things, not so much the money. Because, like I said, I feel better because it's unfair.

It's always the calming one. So the recommendation is for us to accept this audited report and the report for SVP. Now I wanted to understand. So we have the report read thus from SVP, but it was not audited by them. Correct?

We do audit SVP. We don't audit the

I think the stadium ones that you okay. That's what I wanted to understand because I was like, both of them were in here and at a mall. Okay.

I'll move to accept the city

court. Okay.

I'll second with some comments. I'll make

Yeah.

Please. So look at the numbers. It looks nice. Our one of the unfunded pension liability has reduced. That's a good thing.

I do.

And we have around 65% of it coverage. Right? So that's a good part. Our investment returns are better, of course. Interest rates are high, so we are in the safer zone. So that's a good news. And, SVP revenue has increased quite a bit. That has contributed. I know 5% of that increase plus 6.5% of the growth has contributed to that. So those are the good points.

And, for '25 budget, I'm looking at city manager, there's a lot of savings Yes. Which has contributed $241,000,000 into the general fund, and I think budget stabilization fund and other stuff will also be increasing.

Yeah. At your December 5 meeting, we'll be coming to allocate savings from the senior year to various funds, including to various reserve accounts as well as other fund. And so you'll get that recommendation at your very next meeting.

So that's a good thing. Like, I know you saved around 30,000,000 last year, but but more than that this year. Yeah. But I know that that the savings which we can count on.

Totally. Yeah. And we actually had a meeting last week in this very room, I think, Friday, and we started that meeting by saying our budget is a bit of a mixed bag. Right? It is both true that we have a structural deficit, and at the end of the year, we've had significant savings. Important to know oftentimes, and this year will be true, those significant savings are made up of salary savings from vacant positions. As you know, we're recruiting, recruiting, recruiting. And so we don't anticipate that to continue in the in the long measure as well as increased revenue, some of of which has already been factored into your out years. Right? So we really need to look at that as onetime money versus ongoing money.

Does it like comments?

I will agree with that. I will say I just came from the national city National League of Cities and talked with a lot of very small cities and a lot of large ones. And in talking with them, we're in a much better place than a lot of large cities and small ones as far as percentage. And it made me feel much better about everything. So thank you very much. And, yes, I appreciate you considering that one time funds because you're right. It's from one time. It's not ongoing.

Funded positions.

Yes. We have to recognize that that is a reality. Okay. No other questions or comments? We will I will call the question. All in favor? Aye. Anyone opposed? There seems to be no abstentions. That is appears to be unanimous. Thank you so much all for all your work. I do appreciate it. I know I got a request for a another audit meeting for December 12. And, unfortunately, that is the day that I am running a that very afternoon, I am running a robotics tournament for 12 different teams, so I had to say no to that. So I don't know if anybody else received that. Just it was not to be mean.

I appreciate your flexibility on Yeah. Scheduling here and and value your time and engagement on on this topic. I know there's a lot of requests for audit meetings Yeah. Between David Nose who's working on the auditor's office side and our city staff side.

To let you know.

But but appreciate you being here. Appreciate the words of support in in in all you do. And and I'll be back on the ninth in front of council with this report as well as the budget report that the city manager touched on with some of the details. You know, some of the you know, I'll just comment where, you know, one of the areas of of outperformance was sales tax. And like you mentioned, many other cities are not in the position Santa Clara is in, and so we'll we'll bring back some reports. A lot of that is onetime in nature around equipment sales for data centers. And so we'll I'll talk in more detail about Yeah. You know, the performance and

Making that real clear. Yeah. I appreciate that. And if you still want something on the twelfth, I could do it earlier. It's just that that's it starts at 04:00. I'm

just kidding.

So if you could do it earlier, I had no schedule. I'll work with the mayor I think Melissa or in the mayor's office, and then I think that one might have been requested by David now. So we'll we'll work with David and I'm

just saying if

it could be and just find a time that works for

me. Normally, I'm okay. And and I have retired, so it's it's in the morning, especially, that I have all this extra time. I'm not gonna say I don't know what to do with it because I have figured out one thing. Take my alarm clock through it right now. I don't have to get up at six in the morning. Okay. Wonderful. So the fur so that's why it says future audit meetings will be scheduled at a later date, and I I just came in. So if we get another

Yeah. We'll look at schedules, and we'll Wonderful. Schedule that when it works.

And Wonderful. Do have the next one?

Well, this is always So thank you for everybody's time, and we will adjourn.

Thank you.

Thank you. Absolutely.

Appreciate it.

Well, no wonder it took me so many but my fingers were tired of wiping that. So many pages.