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CITY OF SAN LEANDRO, CALIFORNIA <br />Management's Discussion and Analysis <br />For the Fiscal Year Ended June 30, 2018 <br />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, 2018. 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. <br />FINANCIAL HIGHLIGHTS <br />Infmmation about net position is presented in the summary schedule, below: <br />• At the close of the most recent fiscal year, the City's assets exceeded its liabilities by $190.2 million <br />(net position), a $16.1 million decrease from the prior year. Of the net position, $216.1 million was <br />invested in capital assets, $41.1 million was restricted for other purposes, and ($67.0) million was <br />unrestricted. While Net Investment in Capital Assets and Unrestricted Net Position saw a decrease of <br />$5.5 million and $20.1 million, respectively, restrict net position increased by $9.5 million. <br />• Assets and Defeffed Outflow of Resources saw an increase of $1.5 million from the prior fiscal year, <br />fully offset by an increase in Liabilities and Defe1red Inflow of Resources of $17. 7 million. The <br />increase in Liabilities is in paii due to an increase in the net pension liability and the implementation <br />of GASB Statement Number 75, which recognizes the net OPEB liability within the Statement of Net <br />Position. <br />• As of June 30, 2018, the City's total net position decrease of $16.1 million is comprised of a $17.3 <br />million decrease in governmental activities and a $1.2 million increase in Business-Type activities. <br />• Per GASB Statement Number 54, governments are obligated to enhance the financial reporting of the <br />fund balance categories. Fund balances are described and presented in Note 9, which details the <br />classifications of the City's new fund balance categories. The City's governmental fund balance, <br />which include the general, special revenue, debt service, and capital projects funds, increased by $11. 7 <br />million for an ending fund balance of $94.3 million. <br />a) Approximately 11.9% of the amount ($11.3 million) is Nonspendable because the funds are <br />not available or spendable due to advances and loans to other funds. <br />b) Approximately 43. 7% of the amount ($41.2 million) is Restricted due to the constraints placed <br />on the use of resources or imposed by law through constitutional provisions or enabling <br />legislation. This includes capital projects and debt service payments. <br />c) Approximately 5.6% of the amount ($5.3 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 <br />County. <br />d) Approximately 38.8% of the amount ($36.5 million) is Unassigned and available for spending <br />in the future. Unassigned is further categorized by Compensated Absences, Major <br />Emergencies, Economic Uncertainties and offsets from other fund deficits. <br />5 470