Council accepts auditor—indings: $23.35 million audited cannabis tax; $22.9 million baseline verified for Sacramento Children—und

The City Council on Tuesday unanimously approved two reports from the City Auditor that together determine how much money the city must dedicate to youth services under Measure L.

The auditor reported that audited cannabis business operations tax (CBOT) revenue for fiscal year 2023-24 was $23,351,809, and the finance department completed a year-end true-up that increased the transfer into the Sacramento Children—s Fund to about $9,300,000. Separately, the auditor verified a baseline funding amount of $22,900,000 that the city must maintain in general-fund and Measure U spending for youth services; the auditor found the city met that baseline for FY2023-24.

Why it matters: Measure L (the Sacramento Children and Youth Health and Safety Act) requires the auditor to publish an audited CBOT amount each year and to calculate and verify a baseline level of youth spending. Forty percent of the audited CBOT is allocated to the Children—s Fund; the baseline verification covers general-fund and Measure U expenditures that the charter says must not fall below the FY2023-24 level going forward.

Audit findings and the money flow The audited CBOT amount was prepared by the Office of the City Auditor and completed with the city's external auditors in accordance with generally accepted auditing standards. The auditor reported that the city originally estimated roughly $22 million in CBOT receipts for FY2023-24; 40% of that estimate ($~8.8 million) was budgeted to the Children—s Fund during the year. After the audited figure came in slightly higher, finance performed a true-up and contributed roughly $550,000 more, bringing the total FY2023-24 contribution to about $9.3 million.

For the baseline verification, the auditor calculated a baseline funding amount of $22,900,000 for FY2023-24 and then tested whether the city—s FY2023-24 spending, net of revenues, met that amount. The auditor—s scope covered expenditures dated between July 1, 2023, and June 30, 2024, and counted only expenditures paid from the general fund or the Measure L special revenue fund that met the charter—s criteria.

Method and limits of the verification The auditor described a multi-step approach: departments completed program identification worksheets, the auditor analyzed general ledger entries, researched program descriptions, and consulted the city attorney about charter compliance. In some cases the auditor relied on management—s estimates (for example, to apportion administrative costs or the youth share of programs that serve both youth and adults); the auditor explicitly noted it did not independently verify those estimates.

The city attorney advised that the baseline amount published in the charter is final and cannot be adjusted after publication. The auditor therefore counted eligible youth expenditures toward the verification whether or not a program had been listed in the initial baseline calculation.

What was excluded and why The auditor said some expenditures were excluded from the baseline because they came from ineligible funding sources, fell into prohibited categories, or were tied to general operational-support agreements that did not obligate the recipient to spend the money specifically on youth services. As an example, the auditor cited general operating support provided to entities such as the Sacramento Zoo and Fairytale Town: because the city—s agreements do not give the city authority to dictate how those operating-support dollars would be spent, the auditor concluded those funds were not eligible for the baseline.

Council discussion and direction Councilmembers thanked the auditor for the detail and asked several follow-up questions about exclusions and reconciliation with other local reports. Councilmember Vang praised the work and asked that the auditor present the results to the Sacramento Children—s Fund Oversight Committee; the auditor confirmed that presentation was scheduled for the committee—s May 1 meeting.

Councilmember Gayer moved to accept the baseline verification report with the additional direction that the auditor—s office produce the more-detailed verification report every other year and provide a shorter annual confirmation in off years. Councilmember Dickinson seconded; the council approved the motion 9-0.

Staff cost and next steps Auditor staff said the first, detailed baseline verification required substantial time and resources: the office estimated the project consumed about 0.75 full-time-equivalent staff and more than 1,500 hours to prepare, concentrated in the months after fiscal-year close. Auditor staff also said they are coordinating with the Children—s Fund (Measure L) administrative funds for partial reimbursement of their time.

Public comment Two members of the public addressed the council during the items. Public commenter Mac Worthy questioned the accounting and said, "You lied. You lied," expressing distrust of how children—s funds are tracked. Lisa Sanchez urged continued public education and transparency around how the funds are used for youth-oriented programs.

What the council approved - Acceptance of the FY2023-24 audited CBOT amount (audited revenue $23,351,809) and acknowledgement of the finance department—s true-up that resulted in an approximate $9.3 million contribution to the Sacramento Children—s Fund for FY2023-24. (Council vote: 9-0.) - Acceptance of the FY2023-24 baseline funding verification (baseline $22,900,000) and direction that the auditor provide a detailed verification report in even-numbered years and a summarized annual confirmation in odd-numbered years (Council vote: 9-0). The auditor will present the audited figures to the Sacramento Children—s Fund Oversight Committee on May 1.

The auditor said it will continue to refine its methodology and examine whether and how its baseline calculation aligns with other local reporting initiatives; councilmembers asked staff to pursue reconciliation where differences exist.