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Management’s Discussion and Analysis for Fiscal Year Ended June 30, 2024 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, 2024. 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 $290.3 million (Net Position), a $32.7 million increase from the prior year. Of total net position, $193 million was invested in capital assets, $114.9 million was restricted for other purposes, and ($17.8) million was unrestricted. Net Investment in Capital Assets and Restricted Net Position saw an increase of $10.4 million and $36.3 million respectively while Unrestricted Net Position saw a decrease of $14 million. • Assets and Deferred Outflows of Resources increased by $32.9 million and Liabilities and Deferred Inflows of Resources increased by $0.2 million from the prior fiscal year. The increase was primarily due to a $26 million loan receivable for the sale of Shoreline property for development, which includes $2 million in accrued interest. • City-wide Net Pension Liability to CalPERS for 2023-24 increased by $11.4 million, or 5% from $224.3 million in the prior year to $235.7 million. This increase in liability was driven by revised actuarial valuations from CalPERS which kept the discount rate the same as prior years at 6.9% but realized a 6.1% loss. In addition, the City contributed $14.2 million into the Section 115 irrevocable trust with the Public Agency Retirement Services (PARS). • The City’s total net position increase of $32.7 million is comprised of a $1.8 million increase in governmental activities and a $30.9 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 2022-23, $6.2 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 11 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 $10 million for an ending fund balance of $184.3 million. Ending fund balance classifications include: a) Nonspendable: $6.3 million of these funds are not available or spendable due to advances and loans to other funds. b) Restricted: $108.3 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