San Buenaventura audit returns unmodified opinion; staff attributes $26.4M general-fund drop to one-time costs

Auditors told the Finance, Audit and Budget Committee that the city’s FY24–25 financial statements received an unmodified, or “clean,” opinion and that no material weaknesses in internal controls were identified.

“We had an unmodified clean opinion, which ultimately means that … the auditors found that our financial statements are materially correct,” the audit presenter, Wade, said during the committee’s Feb. 17 meeting.

City Chief Financial Officer Greg Morley told the committee the apparent decline in the general fund balance—reported in staff slides as a $26,400,000 reduction to an ending fund balance of about $35,000,000—was driven largely by one-time decisions and storm-related expenditures rather than an ongoing operating shortfall. Morley cited three principal factors: a discretionary $8,000,000 payment toward unfunded pension liabilities, more than $3,000,000 spent responding to the Bayshore incident, and roughly $25,000,000 of storm-related or other expenditures that were funded with prior-year cash or expected future reimbursements.

“Those are things that happened in 2023 and 2024. We’re doing repairs in 2025 and we’re doing those repairs using resources that we obtained past year counting on FEMA reimbursement in a future year,” Morley said, describing the timing mismatch between when the city incurred costs and when related reimbursements or revenues are recognized.

A council member pressed whether the 30% increase in expenditures versus modest revenue growth is sustainable, asking, “is this spending trajectory sustainable?” Morley replied, “It is,” and explained that the fiscal 2025 pattern reflected a “perfect storm” of events and several one-time actions, not a structural operating trend. He added the city expects ongoing revenues to increase in the FY2026 projection.

Committee members asked about capital investment timing after noting the adopted CIP budget of roughly $12.7 million but only about $3.8 million spent to date; staff said multi-year project timelines and phased activations explain that gap, and that CIP budgets commonly exceed single-year expenditures.

The committee confirmed there were no public comments on the audit and staff indicated a formal motion was not required to receive the audit file. The audit and staff presentation will be included on the City Council agenda for the next regular meeting.