City auditors give Long Beach an unmodified opinion as net position deficit narrows
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Summary
Independent auditors told the City Council they will issue an unmodified opinion on Long Beach's FY2025 financial statements and reported no material weaknesses; staff said the city's net position deficit narrowed largely because of infrastructure investments and the general fund increased its unassigned balance.
Alan Walter, a partner with the city's independent auditors, told the Long Beach City Council the firm will issue an unmodified opinion on the city's financial statements for the year ended June 30, 2025, the highest level of assurance the auditors can give. "We will be issuing an unmodified opinion on the city's financial statements," Walter said during the council's February meeting.
Walter and city staff presented several measures of the city's fiscal position. The government-wide net position deficit improved from about $236 million to roughly $190 million, a change Walter attributed largely to infrastructure investments completed in 2025. He said the city's current assets were about $109.8 million and noncurrent capital assets totaled about $184.3 million. The general fund unassigned balance was reported at about $16.9 million, and staff said approximately $2.25 million of that was used to balance the 2026 budget.
Council members asked about the large reported deficit, and Walter explained that the figure reflects required accounting recognition of other postemployment benefits (OPEB) and actuarial estimates rather than an immediate cash obligation. "You will never receive a bill in the mail for a $190,000,000," he said, describing the deficit as an estimate of long-term obligations. He and staff said no material weaknesses or instances of noncompliance were reported and auditors found the city's significant estimates to be reasonable.
City staff said the results have been used in discussions with rating agencies and helped support a ratings upgrade. Staff added that the city expects to end fiscal 2025 with a surplus and will continue focusing on increasing recurring revenue and controlling expenses.
The auditors noted required accounting changes the city implemented during the year, including adoption of GASB 101 related to compensated absences. City staff said the audit documents will be posted when they are complete and invited the public to review the detailed reports once available.
