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CITY OF SAN LEANDRO, CALIFORNIA <br />Management’s Discussion and Analysis <br />For the Fiscal Year Ended June 30, 2016 The Management’s Discussion and Analysis (MD&A) provides an overview of the City of San Leandro’s <br />activities and financial performance for the fiscal year ended June 30, 2016. To obtain a complete picture <br />of the City’s financial condition, this document should be read in conjunction with the accompanying <br />Transmittal Letter and Basic Financial Statements. FINANCIAL HIGHLIGHTS <br />Information about net position is presented in the summary schedule, below: <br /> <br />• At the close of the most recent fiscal year, the net position of the City exceeded its liabilities by $194.9 million (net position). Of this amount, $231.0 million was invested in capital assets. $23.7 million is <br />restricted for other purposes; leaving ($59.7) million unrestricted. Unrestricted fund balance changed <br />from ($86.3) million at the end of FY 2014-15 to ($59.7) million at the end of FY 2015-16; a change <br />of $26.6 million. This is mainly due to Assets and Deferred Outflows of Resources that were $6.8 million higher at the end of FY 2015-16 than they were at the end of FY 2014-15, Liabilities and <br />Deferred Inflow of Resources that were $7.8 million less at the end of FY 2015-16 than they were at <br />the end of FY 2014-15, Net Investments in Capital Assets that was $14.5 million less at the end of FY <br />2015-16 than it was at the end of FY 2014-15, and Net Position Restricted for Engineering and <br />Transportation that was $2.4 million less at the end of FY 2015-16 than it was at the end of FY 2014-15. <br /> <br />• As of June 30, 2016, the City’s total net position increased by $14.6 million; representing a $11.2 <br />million increase in governmental activities and a $3.4 million increase in Business Type activities. <br />• In FY 2015-16, per GASB Statement Number 54, governments are obligated to enhance the financial <br />reporting of the fund balance categories. Fund balances are described and presented in Note 9 which <br />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 <br />balance of $70.7 million, an increase of $14.7 million from the prior fiscal year. The increase is <br />primarily due to the rise of $11.5 million in Property and Other Taxes, $554,000 in Licenses and <br />Permits, $691,000 in Use of Money and Property, and $1.6 million in Other Revenues. <br /> a) Approximately 20.3% of the amount ($14.4 million) is Nonspendable because the funds are <br />not available or spendable such as advances and loans to other funds. <br /> <br />b) Approximately 35.4% of the amount ($25.0 million) is Restricted due to the constraints placed <br />on the use of resources or imposed by law through constitutional provisions or enabling legislation. This includes capital projects and debt service payments. <br /> <br />c) Approximately 4.4% of the amount ($3.1 million) is Assigned which are General fund <br />encumbrances from prior fiscal year and a reserve to fund anticipated Other Post Employment <br />Benefits (OPEB) costs resulting from the City’s contract for Fire Services with Alameda County. <br />5