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Lemon Grove council receives audit showing stable reserves and no material weaknesses
Summary
The council received and filed the City of Lemon Grove's annual comprehensive financial report for the fiscal year ended June 30, 2025; auditors reported growing unrestricted reserves equal to roughly nine months of expenditures, no material weaknesses, and a pension liability roughly $11.7 million.
Lemon Grove City Council on March 17 received and filed the city's annual comprehensive financial report for the fiscal year ended June 30, 2025, after an audit presentation that described the city's finances as stable and improving.
Ahmed Badawi, audit partner with Badawi and Associates, told the council the firm found no material weaknesses and noted the city's unrestricted fund balance has grown, providing what he described as roughly nine months of operating coverage in the unlikely event revenues stopped. "The good news is that your unrestricted amounts continue to grow year over year," Badawi said during the presentation. He also highlighted that the city's largest liability is the pension obligation, which he placed at about $11,700,000 and described as sensitive to changes in discount-rate assumptions set by CalPERS.
Council members praised the work by finance staff. Mayor Snow and other councilmembers thanked Finance Director Stacy Tang and finance staff for pulling the report together; the city manager noted staff had applied for a Certificate of Achievement from the Government Finance Officers Association. Councilmember Smith raised that several of the city's top taxpaying businesses are service stations and flagged potential exposure if statewide vehicle sales or fueling patterns change. Badawi said that the audit identified standard risks—management override and revenue recognition—but that the team found estimates in the financial statements to be supported and not biased.
During questions, councilmembers also asked about prior-year findings. Badawi said the timeliness and closing-process issues noted in the 2024 report had been addressed in 2025 and that the city had improved its audit readiness. He explained an accounting change that increased the reported liability for compensated absences: under new guidance, governments must recognize vacation and sick-leave costs as employees earn them rather than when employees use the leave.
After the presentation and a brief council exchange, the council voted unanimously to receive and file the report.
