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AGENDA ITEM NO. 11.
CITY OF HAWTHORNE City Council AGENDA BILL For the meeting of 02/24/2026 Originating Department: Finance |
City Manager:
Department Head:
SUBJECT:
Annual Comprehensive Financial Report of the City of Hawthorne for the Fiscal Year Ended June 30, 2025.
RECOMMENDED MOTION:
Staff recommends that the City Council receive and file the Annual Comprehensive Financial Report of the City of Hawthorne for the Fiscal Year ended June 30, 2025.
DISCUSSION:
The General Fund actual revenues exceeded budgeted revenues by approximately $5.9 million in Fiscal Year 2024-2025. The excess revenue was primarily due to an increase in tax and special assessments revenues and operating transfers in. This resulted in an increase of 5.2% in General Fund revenues compared with the prior fiscal year 2023-2024. Revenue projections for FY 2024-2025 were based on conservative estimates to account for modest economic growth. The General Fund expenditures for Fiscal Year 2024-2025 were under budgeted expenditures by approximately $8.2 million. The decrease in expenditures was primarily due to a decrease in public safety expenditures; actual expenditures for most departments were below budgeted amounts.
The programs with lower than anticipated expenditure amounts included: City Manager of $332 thousand, City Attorney of $1 thousand, Administrative Services of $754 thousand, Public Safety of $4.2 million, Planning of $499 thousand, Building & Safety of $129 thousand, Parks & Recreation of $559 thousand, and Public Works of $1.8 million.
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The City’s unrestricted fund balance for the General Fund increased from $93.98 million at year end June 30, 2023, to $109.36 million at year end June 30, 2024. The City’s unrestricted fund balance at fiscal year end June 30, 2025, for the General Fund was $114,610,688. This is approximately 117.32% of the total General Fund Expenditures. The required fund Balance for Fiscal Year 2024-25 was $27.4 million, or 3 months (25%) of budgeted expenditures.
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The City’s total long-term liabilities increased by $26 million during the current fiscal year, primarily due to the increase in the bond liability in the fiscal year.
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The City’s operational liabilities, which include compensated absences, OPEB, pension-related debt and claims and judgments, total $142 million. This is a decrease of $5 million primarily in Net Pension Liability. Debt service payments for Fiscal Year 2024-25 totaled $5,350,850 as follows:
Debt Service Payment Amount
2019 Pension Obligation Bonds $ 2,930,000
Total $ 5,350,850
As determined by the latest actuarial valuation, the City’s OPEB Liability decreased by $702,522 thousand to a total of $99,916,552. The City’s OPEB liability decreased due to higher discount rate for the actuarial valuation. The increase in the discount rate from 4.27% to 4.53% reflects the additional investment earnings expected now that the City is partially pre-funding the benefit in a trust. The higher the discount rate, the lower the liability. The City currently pays the postemployment health insurance on a pay as you go basis, with payments totaling $3,211,093 in Fiscal Year 2023-2024. The Council authorized the PARS IRS approved Section 115 Trust, which was established in November of 2022. A total of $9.35 million in contributions has been made to the trust since it was established.
The City’s net position, at June 30, 2025 totaled $103.4 million. The total net position increased from the prior fiscal year 2023-24 by $28,861,646 primarily due to the decrease in public safety expenditures.
The following contributing items have impacted the overall net position:
· Taxes increased by $4 million
· Use of money & property increased by $1.8 million
· General Government expenditures decreased by $1 million
· Public Safety expenditures decreased by $4.2 million
· Community Development expenditures decreased by $628 thousand
· Parks & Recreation expenditures decreased by $559 thousand
· Public works expenditures decreased by $$1.8 million
The following table reflects the change in net position from fiscal year 2023-24 to fiscal year 2024-25.
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The programs with lower than anticipated expenditure amounts included: City Manager of $332 thousand, City Attorney of $1 thousand, Administrative Services of $754 thousand, Public Safety of $4.2 million, Planning of $499 thousand, Building & Safety of $129 thousand, Parks & Recreation of $559 thousand, and Public Works of $1.8 million.
The City’s unrestricted fund balance for the General Fund increased from $93.98 million at year end June 30, 2023, to $109.36 million at year end June 30, 2024. The City’s unrestricted fund balance at fiscal year end June 30, 2025, for the General Fund was $114,610,688. This is approximately 117.32% of the total General Fund Expenditures. The required fund Balance for Fiscal Year 2024-25 was $27.4 million, or 3 months (25%) of budgeted expenditures.
The City’s total long-term liabilities increased by $26 million during the current fiscal year, primarily due to the increase in the bond liability in the fiscal year.
The City’s operational liabilities, which include compensated absences, OPEB, pension-related debt and claims and judgments, total $142 million. This is a decrease of $5 million primarily in Net Pension Liability. Debt service payments for Fiscal Year 2024-25 totaled $5,350,850 as follows:
Debt Service Payment Amount
SBRPCA Direct Placement Lease $ 205,850
Certificates of Participation (Refinance of 2015 POB and Police Facility) $ 2,215,0002019 Pension Obligation Bonds $ 2,930,000
Total $ 5,350,850
As determined by the latest actuarial valuation, the City’s OPEB Liability decreased by $702,522 thousand to a total of $99,916,552. The City’s OPEB liability decreased due to higher discount rate for the actuarial valuation. The increase in the discount rate from 4.27% to 4.53% reflects the additional investment earnings expected now that the City is partially pre-funding the benefit in a trust. The higher the discount rate, the lower the liability. The City currently pays the postemployment health insurance on a pay as you go basis, with payments totaling $3,211,093 in Fiscal Year 2023-2024. The Council authorized the PARS IRS approved Section 115 Trust, which was established in November of 2022. A total of $9.35 million in contributions has been made to the trust since it was established.
The City’s net position, at June 30, 2025 totaled $103.4 million. The total net position increased from the prior fiscal year 2023-24 by $28,861,646 primarily due to the decrease in public safety expenditures.
The following contributing items have impacted the overall net position:
· Taxes increased by $4 million
· Use of money & property increased by $1.8 million
· General Government expenditures decreased by $1 million
· Public Safety expenditures decreased by $4.2 million
· Community Development expenditures decreased by $628 thousand
· Parks & Recreation expenditures decreased by $559 thousand
· Public works expenditures decreased by $$1.8 million
The following table reflects the change in net position from fiscal year 2023-24 to fiscal year 2024-25.
ECONOMIC DEVELOPMENT STRATEGIC PLAN:
.
FISCAL IMPACT:
None.
NOTICING PROCEDURE:
72 hours posted notice pursuant to the Ralph M. Brown Act.