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CITY OF SAN LEANDRO, CALIFORNIA Management's Discussion and Analysis For the Fiscal Year Ended June 30, 2014 The Management's Discussion and Analysis (MD&A) provides an overview of the City of San Leandro's activities and financial performance for the fiscal year ended June 30, 2014. To obtain a complete picture of the City's financial condition, this document should be read in conjunction with the accompanying Transmittal Letter and Basic Financial Statements. FINANCIAL HIGHLIGHTS Information about net position is presented in the summary schedule, below: • At the close of the most recent fiscal year, the net position of the City exceeded its liabilities by $321 million (net position). Of this amount, $257 million was invested in capital assets. Of the remaining $63.7 million balance $14.4 million is restricted for other purposes leaving $49.3 million unrestricted. • As of June 30, 2014, the City's total net position decreased by $4.7 million; representing a $9.3 million decrease in governmental activities and a $4.6 million increase in Business Type activities. • In 2013-14, as required by the Governmental Accounting Standard Board (GASB), governments are obligated to enhance the financial reporting of the fund balance categories. Fund balances are described and presented in Note 10 which details the classifications of the City's new fund balance categories. The City's governmental funds include the general, special revenue, debt service, and capital projects, with a combined ending fund balance of $44 million, an increase from the prior fiscal year. The increases are primarily due to the rise of $2.8 million in Sales Tax, $900,000 in Property tax, and $300,000 in Property Transfer tax. a) Approximately 23% of the amount ($10.1 million) is Nonspendable because the funds are both legally and contractually required to be maintained and are not available or spendable such as advances and loans to other funds. b) Approximately 37% of the amount ($16.1 million) is Restricted due to the constraints placed on the use of resources or imposed by law through constitutional provisions or enabling legislation. This includes capital projects and debt service payments. c) Approximately 1% or $662,973 is assigned which are General fund encumbrances from prior fiscal year. d) Approximately 39% of the amount ($17.1 million) is Unassigned and available for spending in the future. These include Compensated Absences, Major Emergencies and Economic Uncertainties and funds that have deficit fund balances. 6