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Management’s Discussion and Analysis for Fiscal Year Ended June 30, 2021 The Management’s Discussion and Analysis (MD&A) provides an overview of the City of San Leandro’s financial activities and fiscal performance for the year ended June 30, 2021. Read this discussion and analysis in conjunction with the accompanying Transmittal Letter and Basic Financial Statements to obtain a complete picture of the City’s financial condition. FINANCIAL HIGHLIGHTS City’s Assets and Deferred Outflows of Resources exceeded its Liabilities and Deferred Inflows of Resources by $193.1 million (Net Position), a $12.9 million increase from the prior year. Of total net position, $186.2 million was invested in capital assets, $51.6 million was restricted for other purposes, and ($44.6) million was unrestricted. While Net Investment in Capital Assets and Restricted Net Position saw a decrease of $2.8 million and $12.9 million, respectively, Unrestricted Net Position increased by $28.6 million. Assets and Deferred Outflows of Resources increased by $43.7 million from the prior fiscal year, offset by an increase in Liabilities and Deferred Inflows of Resources of $30.7 million. The increase in Liabilities was partly due to the increase in net pension liability of $15.3 million and a new direct borrowing lease agreement of $7.6 million offset by the decrease in debt repayment of $6.0 million and decrease in net OPEB liability of $1.9 million. Unfunded pension liability as of June 30, 2021 was $204.1 million. The City’s total net position increase of $12.9 million is comprised of a $5.9 million increase in governmental activities and a $7.1 million increase in Business-Type activities. In accordance with GASB Statement No. 54, governments are obligated to enhance the financial reporting of the fund balance categories. Fund balances reported in Note 9 detail the classifications of the City’s fund balance categories. The City’s governmental fund balance, which includes the General, Special Revenue, Debt Service, and Capital Projects funds, increased by $6.3 million for an ending fund balance of $135.3 million. Ending fund balance classifications include: a)Nonspendable: $8.1 million of these funds are not available or spendable due to advances and loans to other funds. b)Restricted: $54.4 million based on constraints on the use of resources or imposed by law through constitutional provisions or enabling legislation. These include capital projects and debt service payments. c)Assigned: $9.5 million including General Fund encumbrances, the Oakland Airport Access Agreement, and a reserve funding anticipated Other Post-Employment Benefits (OPEB) costs arising from the City’s contract for Fire Services with the Alameda County Fire Department. d)Unassigned: $63.3 million is available for expenditure. Unassigned is further categorized by Compensated Absences, Major Emergencies, Economic Uncertainties, and offsets from other fund deficits. 5266