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HomeMy WebLinkAboutItem 15 - Comprehensive Annual Financial Report for the Fiscal Year-Ended Jun 30, 2020Finance and Management Services www.santa-ana.org/finance Item # 15 or City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report February 2, 2021 TOPIC: Comprehensive Annual Financial Report for the Fiscal Year -Ended June 30, 2020 AGENDA TITLE: Receive and file — Fiscal Year 2019-20 Comprehensive Annual Financial Report, Related Audit Reports, and Measure X Agreed -Upon -Procedures Report RECOMMENDED ACTION Receive and file the following audited and separately issued reports for the 2019-20 Fiscal Year Ended June 30, 2020: 1. The Auditor's unmodified "clean" opinion letter for the Fiscal Year 2019-20 Audited Financial Statements included in the Comprehensive Annual Financial Report (CAFR) 2. Government Auditing Standards (GAS) Letter 3. Audit Committee Letter 4. Air Quality Management District (AQMD) Audited Financial Statements 5. The Auditor's report on the Appropriations Limit (GANN Limit) 6. The Auditor's report on compliance with the Statement of Investment Policy 7. Measure X Agreed -Upon -Procedures Report DISCUSSION The Finance and Management Services Agency — Accounting Division (Accounting Division) is the lead on various audit and separately issued reports compiled and prepared by the City's Independent Auditor, Clifton LarsonAllen LLP (CLA, formerly White Nelson Diehl Evans LLP). Outlined below is a list of the reports and related status. AUDIT REPORTS: Audited Financial Statements - Comprehensive Annual Financial Resort for the 2019-20 Fiscal Year Ended June 30, 2020 Annually, the Accounting Division prepares a CAFR which includes the City's audited financial statements and statistical information for each fiscal year. The CAFR is prepared in accordance with the Generally Accepted Accounting Principles (GAAP) along Comprehensive Annual Financial Report for the Fiscal Year -Ended June 30, 2020 February 2, 2021 Page 2 with the reporting requirements of the Governmental Accounting Standards Board (GASB). The City's independent public accounting firm, CLA, audits the financial statements, reviews other financial items at the City's request, and issues reports. The Accounting Division is pleased to report that the City received an unmodified opinion commonly known as a clean opinion; which is considered the most favorable conclusion for the audit. The unmodified opinion indicates that the City's financial statements present fairly, in all material respects, the financial position of the City, changes in financial position, and cash flows for the fiscal year ended June 30, 2020 (Exhibit 1). The CAFR for the fiscal year ended June 30, 2020 is posted and available on the City's website (https://www.santa-ana.org/finance/comprehensive-annual-financial-reports- cafr-and-other-financial-reports) along with prior fiscal years. The report was submitted to the Government Finance Officer Association's Certificates of Achievement for Excellence in Financial Reporting Program. The award is the highest form of recognition in governmental accounting and financial reporting. The City has received this prestigious award for forty-two consecutive years. In addition to the audit opinion, CLA issued the following communication letters: Government Auditing_ Standards (GAS) Letter (Exhibit 2) Auditor's communication of reportable conditions based on their review of the City's internal controls over financial reporting and on compliance. The results of their review disclosed no instances of noncompliance for the fiscal year 2019-20. Audit Committee Letter (Exhibit 3) Formal communication from the auditor to the City Council; acting as the City's Audit Committee, which discloses information related to the audit, including but not limited to the City's accounting practices and implementation of new accounting rules and estimates. Audit of the City's Air Quality Management District (AQMD) Financial Statements (Exhibit Under Assembly Bill 2766 Chapter 1705 [California Health and Safety Code (CHSC) Sections 44220 through 442471 cities and counties receiving the AB 2766 funds are required to separately account for the revenue and to expend the revenue for air pollution reduction measures. The AQMD audit report reflects the City's compliance to such measures. The Accounting Division is pleased to report that the City received an unmodified opinion (clean) on the AQMD audit report and no compliance findings were noted. Comprehensive Annual Financial Report for the Fiscal Year -Ended June 30, 2020 February 2, 2021 Page 3 Sinale Audit Report — Not Included Herein The City is also required to have a Single Audit of federal financial assistance by March 31 st following each fiscal year. Staff expects the Single Audit Report will be issued during February 2021 and will be presented to the City Council on a public agenda shortly thereafter. SEPARATELY ISSUED REPORTS: In addition to the CAFR and the AQMD reports, CLA performed the following Agreed - Upon Procedures (AUP) examinations. roariation Limit Calculations, also known as GANN Limit (Exhibit 5 The GANN limit established the appropriations limit on expenditures for publicly funded programs in accordance with Section 1 of Article XIII of the California Constitution. The Accounting Division is pleased to report that no findings were noted as a result of this AUP Review. Citv's Compliance with the Statement of Investment Policv (Exhibit 6 The City elected to have the auditor confirm the City's compliance with its Investment Policy. The Accounting Division is pleased to report that no findings were noted as a result of this review. Measure X Agreed -Upon -Procedures Report (Exhibit 7) In accordance with SAMC 35-216, staff has prepared an annual report that includes the list of expenditures made with Measure X money for FY19-20. In accordance with SAMC 35-215, the City's independent auditor has reviewed the annual report prepared by staff, verified the numbers presented, and opined the numbers are fairly stated. On January 13, 2021, the audit engagement partners presented their report to the Measure X Citizens Oversight Committee, in accordance with Section 6 of Resolution No. 2019-008 (the Committee's establishing resolution). We expect the Committee will prepare its annual report and make recommendations to the City Council in time for the budget process, in accordance with the same establishing resolution. FISCAL IMPACT There is no fiscal impact associated with this action. EXHIBIT(S) 1. Audit Opinion Letter 2. Government Auditing Standards (GAS) Letter 3. Audit Committee Letter 4. Air Quality Management District (AQMD) Report 5. GANN Limit Agreed -Upon Procedures Report 6. Investment Policy Agreed -Upon Procedures Report 7. Measure X Agreed -Upon Procedures Report Comprehensive Annual Financial Report for the Fiscal Year -Ended June 30, 2020 February 2, 2021 Page 4 Submitted By: Kathryn Downs, Executive Director Finance and Management Services Approved By: Kristine Ridge, City Manager EXHIBIT 1 CLA (CliftonLarsonAllen LLP) 2875 Michelle Drive Suite 300 Irvine, CA 92606 714-978-1300 1 fax 714-978-7893 CLAconnect.com INDEPENDENT AUDITORS' REPORT To the Honorable City Council of the City of Santa Ana Santa Ana, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Santa Ana, California (the City), as of and for the year ended June 30, 2020, and the related notes to the basic financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. OA member of Nexia International Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2020 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. Other Matters Report on Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, Budgetary Comparison Schedules - General and Major Special Revenue Funds, Notes to the Required Supplementary Information, Schedule of Changes in Net Pension Liability and Related Ratios and Schedule of Plan Contributions for the Miscellaneous, Safety, and Supplementary Retirement Plans, and Schedule of Changes in the Total OPEB Liability and Related Ratios, identified as Required Supplementary Information (RSI) in the accompanying table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the RSI in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the RSI because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The introductory section, combining and individual non -major fund financial statements and schedules (supplementary information), and statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The supplementary information, as listed in the table of contents, is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Other Matters (Continued) Other Information (Continued) The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 10, 2020, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Clifton LarsonAllen LLP Irvine, California December 10, 2020 EXHIBIT 2 CLA (CliftonLarsonAllen LLP) 2875 Michelle Drive Suite 300 Irvine, CA 92606 714-978-1300 1 fax 714-978-7893 CLAconnect.com INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS To the Honorable City Council of the City of Santa Ana Santa Ana, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Santa Ana, California (the City), as of and for the year ended June 30, 2020, and the related notes to the basic financial statements, which collectively comprise the City's basic financial statements and have issued our report thereon dated December 10, 2020. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. A member of Nexia International Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. CliftonLarsonAllen LLP Irvine, California December 10, 2020 PA EXHIBIT 3 CLA (CliftonLarsonAllen LLP) 2875 Michelle Drive Im Suite 300 Irvine, CA 92606 714-978-1300 1 fax 714-978-7893 ' CLAoonriect.com To the Honorable City Council of the City of Santa Ana Santa Ana, California We have audited the financial statements of the governmental activities, business -type activities, each major fund, and aggregate remaining fund information of the City of Santa Ana, California (the City) for the year ended June 30, 2020. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our planning letter to you dated June 9, 2020. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Matters Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year ended June 30, 2020. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City's financial statements were as follows: a. The annual required contributions, pension expense, net pension liability and corresponding deferred outflows of resources and deferred inflows of resources for the City's public defined benefit plans with CaIPERS and PARS are based on actuarial valuations provided by CalPERS and an outside consultant, respectively. �A member of Nexia International Significant Audit Findings (Continued) Qualitative Aspects of Accounting Practices (Continued) b. The Other Post -Employment Benefit Plan (OPEB) expense, total OPEB liability, and corresponding deferred outflows of resources and deferred inflows of resources for the City's OPEB plan are based several key assumptions that are set by management with the assistance of an independent third party actuary. These key assumptions include anticipated investment rate of return, health care cost trends, mortality and certain amortization periods. c. Management's estimate of the claims payable liabilities related to general liability and worker's compensation claims are based on actuarial valuations. We evaluated the key factors and assumptions used to develop these estimates in determining that they were reasonable in relation to the financial statements taken as a whole. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were reported in Note 4A regarding risk management and claims payable, Note 4E regarding the CaIPERS defined benefit plans, Note 4F regarding the PARS supplementary retirement plan, and Note 4G regarding the City's OPEB plan. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and cornpleting our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. As a result of our audit related testwork, we proposed no significant corrections to the financial statements. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors' report. We are pleased to report that no such disagreements arose during the course of our audit. 4 Significant Audit Findings (Continued) Management Representations We have requested certain representations from management that are included in the management representation letter dated December 10, 2020. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain Iirnited procedures to the Management's Discussion and Analysis, Budgetary Comparison Schedules - General and Major Special Revenue funds, Notes to the Required Supplementary Information, Schedule of Changes in Net Pension Liability and Related Ratios and Schedule of Plan Contributions for the Miscellaneous, Safety, and Supplementary Retirement Plans, and Schedule of Changes in the Total OPEB Liability and Related Ratios, which are required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the combining and individual non -major fund financial statements and schedules (supplementary information), which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. 3 Other Matters Continued We were not engaged to report on the introductory and statistical sections, which accompany the financial statements but are not RSI. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Restriction on Use This information is intended solely for the information and use of City Council and management of the City, and is not intended to be, and should not be, used by anyone other than these specified parties. CliftonLarsonAllen LLP Irvine, California December 10, 2020 4 EXHIBIT 4 CITY OF SANTAANA, CALIFO AIR QUALITY IMPROVEMENT SPECIAL FINANCIAL STATEMENT, WITH REPORT ON AUDIT BYINDEPENDENT CERTIFIED PUBLIC ACCOUNT FOR THE YEAR ENDED DUNE CITY OF SANTAANA, CALIFORNIA AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND TABLE OF CONTENTS For the year ended June 30, 2020 Independent Auditors' Report Page Number Financial Statements: Balance Sheet 4 Statement of Revenues, Expenditures and Changes in Fund Balance 5 Notes to Financial Statements Required Supplementary Information: 0 10 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual I 1 Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 12 CLA (CliftonLarsonAllen LLP) "'.. 2875 Michelle Drive Suite 300 Irvine, CA 92606 's 714-978-1300 J fax 714-978-7893 CLAconnect.com INDEPENDENT AUDITORS' REPORT The Honorable Mayor and Members of the City Council of the City of Santa Ana Santa Ana, California Report on the Financial Statements We have audited the accompanying financial statements of the Air Quality Improvement Special Revenue Fund (AQMD) of the City of Santa Ana, California (the City), as of and for the year ended June 30, 2020, and the related notes to the financial statements, as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the City's preparation and fair presentation of the AQMD's financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. �A member of Nexia Internatlonal Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Air Quality Improvement Special Revenue Fund of the City of Santa Ana, California as of June 30, 2020, and the changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1, the financial statements present only the Air Quality Improvement Special Revenue Fund and do not purport to, and do not present fairly the financial position of the City of Santa Ana, California, as of June 30, 2020, and the changes in its financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual, identified as Required Supplementary Information (RSI) in the accompanying table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the RSI in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the RSI because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Management has not presented the management's discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the AQMD's basic financial statements is not affected by this missing information. 2 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report December 10, 2020, on our consideration of the internal control over the financial reporting of the AQMD and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters, The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting the AQMD or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the internal control over the financial reporting and compliance of the AQMD. CliftonLarsonAllen LLP Irvine, California December 10, 2020 CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT FUND BALANCE SHEET June 30, 2020 ASSETS: Cash and investments Intergovernmental receivable Interest receivable TOTAL ASSETS LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCE: LIABILITIES DEFERRED INFLOWS OF RESOURCES: Unavailable revenues FUND BALANCE: Restricted for air quality improvement TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCE See accompanying notes to financial statements. 4 $ 1,397,448 105,694 4,220 $ 1,507,362 107,117 1,400,245 $ 1,507,362 CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE For the year ended June 30, 2020 REVENUES: Motor vehicle fees Investment income Miscellaneous TOTAL REVENUES EXPENDITURES: Direct program Administrative TOTAL EXPENDITURES EXCESS OF REVENUES OVER EXPENDITURES FUND BALANCE, BEGINNING OF YEAR FUND BALANCE, END OF YEAR See accompanying notes to financial statements. 5 $ 436,428 21,835 28,265 486,528 168,844 3,558 172,402 314,126 1,086,119 $ 1,400,245 CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND NOTES TO FINANCIAL STATEMENTS June 30, 2020 1. GENERAL: The financial statements are intended to reflect the financial position and changes in the financial position attributable to the Air Quality Improvement Special Revenue Fund (AQMD) of the City of Santa Ana, California (the City). These financial statements are exclusively for AQMD and do not purport to, and do not present fairly the financial position and changes in the financial position for the City. The South Coast Air Quality Management District (SCAQMD) is authorized under Assembly Bill 2766 (AB 2766) Chapter 1705 [California Health and Safety Code (CHSC) Sections 44220 through 442471 to impose a motor vehicle registration fee to be used by the SCAQMD and local governments specifically for programs to reduce air pollution from mobile sources and related planning, monitoring, enforcement, and technical studies necessary for the implementation of the California Clean Air Act of 1988. The California Department of Motor Vehicles collects the vehicle registration fee and subvenes it to SCAQMD. Upon receipt, the vehicle registration fee is split into segments with 40% of the revenue place in a special revenue fund designated as the Air Quality Improvement Trust Fund for quarterly distribution to local governments. CHSC Section 44243 requires cities and counties receiving the AB 2766 funds to separately account for the revenues and to expend the revenues for air pollution reduction measures pursuant to the California Clean Air Act of 1988 or the SCAQMD's Air Quality Management Plan pursuant to Article 5 of Chapter 5.5 of Part 3 of the CHSC. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: A. Fund Accounting: The financial activity of the City is accounted for on the basis of funds, each of which is considered a separate accounting entity with a self -balancing set of accounts. Monies under AB 2766 are accounted for in the Air Quality Improvement Special Revenue Fund, which is a special revenue fund. B. Measurement Focus and Basis of Accounting: The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements. 6 CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): B. Measurement Focus and Basis of Accounting (Continued): AQMD's financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. C. Budgetary Accounting: The City's fiscal year begins on July 1 of each year and ends June 30 the following year. On or before the fifteenth of June of each year, the City Manager recommends and submits to the City Council a proposed budget for the next ensuing fiscal year based on a detailed financial plan prepared by the heads of the various offices, agencies and departments of the City and its component units. Upon receipt of the proposed budget, the Council holds a public hearing wherein the public is given an opportunity to be heard, after which the Council may make any revisions deemed advisable. After the conclusion of the public hearing, the Council may make modifications with the affirmative vote of at least a majority of its members. On or before the thirty-first day of July, the City Council adopts the budget as amended by the affirmative vote of at least a majority of its members. Upon final adoption, the budget is in effect for the ensuing fiscal year and becomes the authority for the various offices, agencies, and departments to expend subject to controls established by the City Charter. At any meeting after the adoption of the budget, the City Council may amend or supplement the budget by affirmative vote of at least two-thirds of the members so as to authorize the transfer of unused balances appropriated for one purpose to another purpose, or to appropriate available revenue not included in the budget. Where appropriations are made to offices, departments, or agencies for more than one activity or program, "appropriations" are considered in the aggregate with respect to total expenditures authorized for that office, department or agency within each fund, limited to purposes for which the revenues of such funds are to be spent. The City Manager is authorized to make revisions among the items included in such appropriations if, in his opinion, such revisions are necessary and proper. Budgetary control exists at the department level. Council action is necessary for transfers between departments/agencies or transfers between funds. During the fiscal year, all budget and supplemental amendments were necessary and made in a legally permissible manner. 7 CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED); C. Budgetary Accounting (Continued): The City legally adopts annual budgets for the Special Revenue Funds including the Air Quality Improvement Special Revenue Fund. The budgetary control for the Special Revenue Funds is under the department in charge. The Air Quality Improvement Special Revenue Fund is managed by the Public Works Agency. Monthly budgetary reports are prepared to effect control through fiscal management. The City Council approved supplemental appropriations during the year, but they were not considered material. Budgets are prepared on a modified accrual basis. Encumbrances (e.g., purchase orders, contracts) outstanding at year-end are reported as restrictions of fund balances since they do not constitute expenditures or liabilities. All other annual appropriations lapse at fiscal year-end to the extent that they have not been expended or lawfully encumbered. During the fiscal year, the total Fund's expenditures were within the legal prescribed limits as approved by the City Council. D. Deferred inflows of resources: In addition to liabilities, the balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of fund balance that applies to a future period and will not be recognized as an inflow of resources (revenue) until that time. The AQMD fund has one item that qualifies for reporting in this category, which is unavailable revenues from intergovernmental revenues and interest receivable. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. E. Fund Balance: AQMD's fund balance is reported based on the extent to which the City is bound to observe constraints on the use of the AQMD's resources. AQMD's fund balance is classified under restricted, which include amounts which are constrained for specific purposes that are 1) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or 2) imposed by law through enabling legislation. AQMD's fund balance is restricted for programs initiated for the purpose of implementing the California Clean Air Act. Information regarding the fund balance reporting policy adopted by the City is described in Note 1 to the City of Santa Ana's Comprehensive Annual Financial Report. 8 CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2020 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): F. Estimates: The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that effect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 3. CASH AND INVESTMENTS: AQMD's cash and investments balances are pooled with various other City funds for deposit and investment purposes. Each fund's share of the pooled cash account is separately accounted for, and investment income is apportioned to the participating funds based on the relationship of their average daily balances to the total of the pooled cash and investments. Information regarding the credit risk and authorized types of deposits and investments in the City's pooled cash and investments is included in the City's Comprehensive Annual Financial Report. This report can be obtained from the City of Santa Ana. 9 REQUIRED SUPPLEMENTARY INFORMATION 10 CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the year ended June 30, 2020 REVENUES: Motor vehicle fees Investment income Miscellaneous TOTAL REVENUES EXPENDITURES: Direct program Administrative TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE, BEGINNING OF YEAR FUND BALANCE, END OF YEAR Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) $ 440,000 $ 440,000 $ 436,428 $ (3,572) 15,600 15,600 21,835 6,235 2,000 2,000 28,265 26,265 457,600 457,600 486,528 28,928 1,584,650 1,584,650 168,844 1,415,806 10,700 10,700 3,558 7,142 1,5 95,3 50 1,595,350 172,402 1,422,948 (1,137,750) (1,137,750) 314,126 1,451,876 1,086,119 1,096,119 1,096,119 - $ (51,631) $ (51,631) $ 1,400,245 $ 1,451,876 Ll i CLA (CliftonLarsonAllen LLP) 2875 Michelle Drive Suite 300 elk Irvine, CA 92606 714-978-1300 1 fax 714-978-7893 CLAconect.com INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS The Honorable Mayor and Members of the City Council of the City of Santa Ana Santa Ana, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Air Quality Improvement Fund (AQMD) of the City of Santa Ana, California (the City), as of and for the year ended June 30, 2020, and the related notes to financial statements, which collectively comprise the AQMD's basic financial statements, and have issued our report thereon dated December 10, 2020. Our report includes an emphasis of matter indicating that the financial statements present only the AQMD, and do not purport to, and do not, present fairly the financial position of the City as of June 30, 2020 and the changes in its financial position for the year then ended, in accordance with accounting principles generally accepted in the United States of America. Internal Control over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting of the AQMD (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the AQMD's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 12 A member of Nexia International Internal Control over Financial Reporting (Continued) Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Air Quality Improvement Special Revenue Fund of the City of Santa Ana, California's financial statements are free from material misstatement, we performed tests of its compliance with applicable provisions of Assembly Bill 2766 (AB2766), Chapter 1705 (Health and Safety Code Sections 44220 through 44247), and certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of the AQMD's financial statement amounts, However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting of the AQMD or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance of the AQMD. Accordingly, this communication is not suitable for any other purpose. CliftonLarsonAllen LLP Irvine, California December 10, 2020 13 A member of Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, ,O\ Nexia an SEC -registered investment advisor. I GiftonLarsonAllen LLP International EXHIBIT 5 CITY OF SANTA ANA, CALIFORNIA APPROPRIATIONS LIMIT WORKSHEET NO.6 WITH INDEPENDENT ACCOUNTANTS' REPORT ON AGREED -UPON PROCEDURES APPLIED TO APPROPRIATIONS LIMIT WORKSHEET NO.6 FOR THE YEAR ENDED JUNE 30, 2020 CLA (CliflanLarsonAllen LLP) 2875 Michelle Drive Suite 300 l = �:i Irvine, CA 92606 a - r � 714-978-1300 1 fax 714-978-7893 CLAconnect.00m INDEPENDENT ACCOUNTANTS' REPORT ON AGREED -UPON PROCEDURES APPLIED TO APPROPRIATIONS LIMIT WORKSHEET NO. 6 To the Honorable Mayor and Members of the City Council of the City of Santa Ana Santa Ana, California We have performed the procedures enumerated below to the accompanying Appropriations Limit Worksheet No. 6 of the City of Santa Ana, California for the year ended June 30, 2020. These procedures, which were agreed to by the City of Santa Ana, California and the League of California Cities (as presented in the League publication entitled "Article XIII-B Appropriations Limit Uniform Guidelines") were performed solely to assist the City of Santa Ana, California in mecting the requirements of Section 1.5 of Article XIIIB of the California Constitution. The City of Santa Ana's management is responsible for the Appropriations Limit Worksheet No. 6. The sufficiency of the procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures performed and our findings were as follows: 1. We obtained the completed Worksheet No. 6 for the year ended June 30, 2020 and compared the limit and annual adjustment factors included in that worksheet to the limit and annual adjustment factors that were adopted by resolution of the City Council. We also compared the population and inflation options included in the aforementioned worksheet to those that were selected by a recorded vote of the City Council. No exceptions were noted as a result of our performing this procedure. 2. For the accompanying Appropriations Limit Worksheet No. 6, we added last year's limit to the total adjustments, and compared the resulting amount to this year's limit. We also recalculated the adjustment factor and the adjustment for inflation and population, and compared the results to the amounts on Worksheet No. 6. No exceptions were noted as a result of our performing this procedure. 0A member of 5Nexia International 3. We compared the prior year appropriations limit presented in the accompanying Appropriations Limit Worksheet No. 6 to the prior year appropriations limit adopted by the City Council for the prior year. No exceptions were noted as a result of our performing this procedure. This agreed -upon procedures engagement was conducted in accordance with attestation standards established by the America Institute of Certified Public Accountants. We were not engaged to, and did not, conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively, on the accompanying Appropriations Limit Worksheet No. 6. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures have been performed with respect to the determination of the appropriation limit for the base year, as defined by the League publication entitled "Article XIIIB Appropriations Limitation Uniform Guidelines". This report is intended solely for the information and use of the City Council and management of the City of Santa Ana, California and is not intended to be, and should not be, used by anyone other than these specified parties. CliftonLarsonAllen LLP Irvine, California December 10, 2020 2 CITY OF SANTA ANA APPROPRIATIONS LIMIT WORKSHEET NO. 6 For the year ended June 30, 2020 Appropriations limit for fiscal year ended June 30, 2019 (see Note 2) Adjustment factors for the fiscal year ended June 30, 2020 (see Note 2): Inflation Population Factor Factor (Note 3) (Note 4) 1.0385 1.0029 Adjustment for inflation and population Other adjustments (Note 5) Total adjustments Appropriations limit for fiscal year ended June 30, 2020 Combined Factor 1.0415 See accompanying notes to Appropriations Limit Worksheet No. 6. 3 $ 1,086,968,617 x 0.0415 45,109,198 45,109,198 1,132,077.815 CITY OF SANTA ANA NOTES TO APPROPRIATIONS LIMIT WORKSHEET NO. 6 For the year ended June 30, 2020 1. PURPOSE OF LIMITED PROCEDURES REVIEW: Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), California governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes. Effective for years beginning on or after July 1, 1990, under Section 1.5 of Article XIIIB, the annual calculation of the appropriations limit is subject to a limited procedures review in connection with the annual audit. 2, METHOD OF CALCULATION: Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July 1, 1990, the appropriations limit is required to be calculated based on the limit for the fiscal year 1986-87, adjusted for the inflation and population factors discussed at Notes 3 and 4 below. 3. INFLATION FACTORS: A California governmental agency may adjust its appropriations limit by either the annual percentage change in the 41h quarter per capita personal income (which percentages are supplied by the State Department of Finance), or the percentage change in the local assessment roll from the preceding year due to the change of local nonresidential construction. The factor adopted by the City of Santa Ana, California (the City) for fiscal year 2019-2020 represents the annual percentage change in the 4' quarter for per capita personal income. 4. POPULATION FACTORS: A California governmental agency may adjust its appropriations limit by either the annual percentage change of the jurisdiction's own population, or the annual percentage change in population in the County where the jurisdiction is located. The factor adopted by the City for fiscal year 2019-2020 represents the annual percentage change in population in the County in which the City is located. 5. OTHER ADJUSTMENTS: A California government agency may be required to adjust its appropriations limit when certain events occur, such as the transfer of responsibility for municipal services to, or from, another government agency or private entity. The City had no such adjustments for the year ended June 30, 2020. 4 EXHIBIT 6 CLA (CliftonLarsonAllen LLP) 2875 Michelle Drive Suite 300 Irvine, CA92606 714-978-1300 1 fax 714-978-7893 C LAconnect. com INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED -UPON PROCEDURES To the Honorable City Council of the City of Santa Ana Santa Ana, California We have performed the procedures enumerated below, which were agreed to by the City of Santa Ana, California (the City), solely to assist the City in determining whether the City's investment activities are in compliance with the City's Statement of Investment Policy (the Policy) and the California Government Code, §53600, et al. (the Code) for the quarter ended June 30, 2020. The City's management is responsible for the compliance with the Policy and the Code. The sufficiency of these procedures is solely the responsibility of the City's management. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. Our procedures and findings were as follows: 1. We obtained a copy of the City's Quarterly Investment Report for the quarter ended June 2020 and compared the investments listed in the report to the types of investments authorized by the Policy for fiscal year 2019/2020. Finding: No exceptions were noted as a result of our performing this procedure. 2. We compared the investments listed on the City's Quarterly Investment Report for the quarter ended June 2020 to the type of investments authorized by the Code. Finding: No exceptions were noted as a result of our performing this procedure. 3. We ensured that the maturities of investments listed in the City's Quarterly Investment Report for the quarter ended June 2020 were in compliance with the Policy. Finding: No exceptions were noted as a result of our performing this procedure. 0 A member of �Nexia International 4. We reviewed the City's Quarterly Investment Report for the quarter ended June 2020 to ascertain it contained the information/data required by Government Code Section 53646 and met the timing requirements of Government Code Section 53646, as follows: a. Included the type of investment, issuer, date of maturity, par and dollar amount invested on all securities, investments and monies held by the City. b. Included those funds under management of contracted parties (fiscal agents, trustees, etc.). c. Included market value (and source) as of the date of the report for all securities held by the City or under management of any outside party that was not also a local agency or the State of California Local Agency Investment Fund. d. Stated compliance of the portfolio to the Policy of the City. e. Included a statement addressing the ability of the City to meet the pool's expenditure requirements for the next six months. Finding: No exceptions were noted as a result of our performing this procedure. 5. We compared the investments listed in the City's Quarterly Investment Report for the quarter ended June 2020 to the prohibited investments listed in the Code. Finding: No exceptions were noted as a result of our performing this procedure. 6. We reviewed the City's Quarterly Investment Report submission evidence documentation for the quarter ended June 2020 and ascertained whether a quarterly basis report was submitted within 30 days following the end of the quarter. Finding: No exceptions were noted as a result of our performing this procedure. This agreed -upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to, and did not, conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively, on the compliance with the Policy. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the City Council and management of the City, and is not intended to be, and should not be, used by anyone other than those specified parties. CliftonLarsonAllen LLP Irvine, California December 10, 2020 oil EXHIBIT 7 CITY OF SANTA ANA, CALIFORNIA SCHEDULE OF MEASURE X REVENUES AND USES/EXPENDITURES WITH INDEPENDENT ACCOUNTANTS' REPORT ON EXAMINATION REPORT ON MANAGEMENT'S ASSERTIONS ABOUT THE CITY'S COMPLIANCE WITH MEASURE X FOR THE YEAR ENDED JUNE 30, 2020 CLA (CliftonLarsonAllen LLP) 2875 Michelle Drive Suite 300 Irvine, CA92606 714-978-1300 1 fax 714-978-7893 CLAconnect.com INDEPENDENT ACCOUNTANTS' REPORT ON EXAMINATION REPORT ON MANAGEMENT'S ASSERTIONS ABOUT THE CITY'S COMPLIANCE WITH MEASURE X To the Measure X Citizen Oversight Committee and Members of City Council of the City of Santa Ana Santa Ana, California We have examined management of the City of Santa Ana, California's, (City) assertion that the accompanying Schedule of Measure X Revenues and Uses/Expenditures (Schedule) for the fiscal year ended June 30, 2020 is accurate and that the City's uses/expenditures of Measure X funds complied with the requirements of Measure X ballot language. The City's management is responsible for its assertion. Our responsibility is to express an opinion on management's assertion about the City's compliance with the specified requirements based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether management's assertion about compliance with the specified requirements is fairly stated, in all material respects. An examination involves performing procedures to obtain evidence about whether management's assertion is fairly stated, in all material respects. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material misstatement of management's assertion, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. We have been informed that, under the City's interpretation of Measure X requirements, the funds collected during the fiscal year ended June 30, 2020 were used in compliance with Measure X towards program expenses and unrestricted general revenue purposes. We agreed the Measure X revenues and uses/expenditures identified by the City to the supporting documentation. Our examination does not provide a legal determination on the City's compliance with the specified requirements. In our opinion, management's assertion that the accompanying Schedule for the fiscal year ended June 30, 2020 is accurate and that the City's uses/expenditures of Measure X funds complied with the requirements of Measure X, is fairly stated, in all material respects. This report is intended solely for the information and use of the Measure X Citizen Oversight Committee, City Council, and management of the City of Santa Ana and is not suitable for any other purpose. ZZ->7;. CliftonLarsonAllen LLP Irvine, California December I0, 2020 A member of Nexia International CITY OF SANTA ANA SCHEDULE OF MEASURE X REVENUES AND USESIEXPENDITURES For the year ended June 30, 2020 Amount Measure X Revenue: July 2019 $ 5,598,021 August 2019 6,110,120 September 2019 4,200,402 October 2019 6,009,318 November 2019 5,823,402 December 2019 5,804,754 January 2020 5,821,148 February 2020 5,010,139 March 2020 1,287,394 April 2020 4,526,084 May 2020 5,584,567 June 2020 6,021,608 Total Measure X Revenue $ 61,796,957 Amount Measure X Uses/Expenditures: Maintain Effective 911 Response $ 4,495,822 Retaining Firefighters 3,096,098 Retaining Police Officers 9,707,941 Addressing Homelessness 732,049 Fixing Streets 238,163 Maintaining Parks 2,540,408 Unrestricted General Revenue Purpose 28,201,426 Total Measure X Uses/Expenditures $ 49,011,908 See accompanying notes to the Schedule of Measure X Revenues and Uses/Expenditures. 2 CITY OF SANTA ANA NOTES TO SCHEDULE OF MEASURE X REVENUES AND USES/EXPENDITURES For the year ended June 30, 2020 1. REVENUES AND USES/EXPENDITURES: Measure X revenues consist of the 1.5 cent transactions and use (i,e. "sales") tax approved by the voters of Santa Ana on November 6, 2018 and became effective April 1, 2019. Total revenue collected in fiscal year 2019-20 was $61,796,957. Measure X is a general-purpose tax, which means the revenues received from the tax go into the City's General Fund to maintain or enhance any lawful City program, improvement or service such as maintain effective 9-1-1 response; retaining firefighters and police officers; addressing homelessness; fixing streets; maintaining parks; and unrestricted general revenue purposes. Total Measure X uses/expenditures for fiscal year 2019-20 were $49,011,908. The largest program expense was unrestricted general revenue purposes totaling approximately $28,201,426, which included the following: • Addressing prior year deficits and employee compensation increases for non -Safety employees totaling $21.0 million • Street Tree Maintenance - $3.7 million • Vehicle Incentive Program - $0.7 million • Streetlight retrofit Debt Service - $0.8 million • Building Roof repair and replacement - $0.7 million • Other Programs (various) - $1.3 million The revenues are higher than uses/expenditures reported for the period, however management has designated the excess as follows: • Additions to Reserves - $5.7 million • Carryovers into Fiscal Year 2020-21 - $7.0 million The following is a recap of the activity for fiscal year 2019-20: Total Measure X Revenue Total Measure X Uses/Expenditures Additions to Reserves Carryovers into Fiscal Year 2020-21 Subtotal 3 Amount $ 61,796,957 $ 49,011,908 5,745,288 7,039,761 $ 61,796,957