Unaudited FY 2024–25 figures show timing variances; city treasurer expects audited close near $104 million

The City of El Segundo presented an unaudited fiscal year 2024–25 third- and fourth-quarter financial report at the Sept. 16 council meeting and said it will finalize audited figures after the October audit.

Finance Director Chung told the council that general fund revenues as of Aug. 30 were $89.3 million (96% of the year-to-date budget figure shown), but that staff expected the final audited revenue total to be closer to $104 million after remaining accruals and timing adjustments. He emphasized the figures presented were unaudited and would be finalized after the city’s financial audit next month.

Why it matters: The report informs council decisions on reserves, transfers and capital projects and identifies timing issues that affect year-to-date comparisons. Councilmembers pressed staff on methods for verifying business-license headcount and discussed the city’s large capital improvement program (CIP) carryovers.

Highlights and staff comments - Revenues: Staff identified timing as the principal reason for apparent year-over-year variances in sales tax and other major revenue lines. The presentation noted a historic timing allocation anomaly tied to Rivian sales tax receipts that affected the prior fiscal year and that the state’s CDTFA had adjusted allocations in response to the issue.

- Top revenue sources: Sales tax, business license, transient occupancy tax (TOT), property tax and utility users tax remain the city’s five largest sources. Chung reported that as of the presentation there were collections unrecorded in the Aug. 30 snapshot; updated figures presented orally indicated higher collections (for example, sales tax nearer $15 million and TOT nearer $14 million when later accruals were considered).

- Expenditures: General fund expenditures were shown at $93.9 million (94% of budget) with vacancy savings cited as a major factor reducing salary outlays. The city also reported a final FEMA COVID-related reimbursement of about $1.67 million, concluding a multi-year recovery effort.

- CIP and carryovers: Councilmembers expressed concern about large CIP budgets that do not reflect work actually started in the year. The mayor urged staff to better align budgeting with realistic project timelines so funds are not carried forward for long periods without project initiation. City staff said several CIP projects will roll over to the current fiscal year and that some grant and school-district contributions were recognized earlier or later than anticipated.

Council questions and follow-up Councilmembers pressed the city on its process for verifying business-license headcount and whether the city uses third-party auditors. Staff said the city has a revenue inspector and can do audits but has not performed a broad proactive audit program recently due to staffing constraints; staff will explore contracting with qualified consultants for targeted business-license audits and return with options.

What’s next: Finance staff will finalize the audited FY 2024–25 numbers after the October audit and return to council with audited statements and any recommended mid-year adjustments. Staff also said the city is implementing a new ERP (Tyler) financial system with the financial module going live in early October and HR/payroll/utility billing planned for September 2026.

Provenance: Staff presentation and council exchange on the FY 2024–25 third- and fourth-quarter report appear in the meeting transcript (item 19).