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Management’s Discussion and Analysis for Fiscal Year Ended June 30, 2022 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, 2022. 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 $215.8 million (Net Position), a $22.6 million increase from the prior year. Of total net position, $184.2 million was invested in capital assets, $51.2 million was restricted for other purposes, and ($19.7) million was unrestricted. While Net Investment in Capital Assets and Restricted Net Position saw a decrease of $2.0 million and $0.4 million, respectively, Unrestricted Net Position increased by $24.9 million. Assets and Deferred Outflows of Resources increased by $13.9 million and Liabilities and Deferred Inflows of Resources decreased by $8.8 million from the prior fiscal year. The decrease in Liabilities was partly due to the decrease in net pension liability of $62.8 million and the decrease in debt repayment of $6.7 million and decrease in net OPEB liability of $1.7 million. City-wide Net Pension Liability to CalPERS for 2021-22 decreased by $62.8 million, or 30.7% from $204.1 million in the prior year to $141.2 million. This significant decrease in liability was driven by revised actuarial valuations from CalPERS taking into account member contributions and strong investment earnings in FY 2020-21. In addition, the City contributed $6,500,000 into the Section 115 irrevocable trust with the Public Agency Retirement Services (PARS). The City’s total net position increase of $22.6 million is comprised of a $17.6 million increase in governmental activities and a $5.0 million increase in Business-Type activities. In response to the COVID-19 pandemic, the Federal government passed the American Rescue Plan Act (ARPA) in March 2021, including financial aid to cities. The City was awarded $18.6 million in ARPA funds, received in two equal tranches in 2020-21 and 2021-22. During 2021-22, $1.2 million was spent on eligible programs. 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 10 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 $17.3 million for an ending fund balance of $152.6 million. Ending fund balance classifications include: a)Nonspendable: $7.2 million of these funds are not available or spendable due to advances and loans to other funds. b)Restricted: $59.8 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. 5