The Stockton general fund grew by $27.7 million for the 2023-34 fiscal year, an improvement of 13.4% from the prior fiscal year.
The Annual Comprehensive Financial Report (ACFR) for the Stockton 2023-24 fiscal year was approved by the Stockton Audit Committee during their meeting on Monday. It provides a snapshot of the city’s overall financial activities, including revenues, expenditures, assets and liabilities across all funds – not just the general fund.
The report is required annually by the Stockton City Charter, as well as federal and state grant agreements and bond obligations, to ensure transparency and compliance.
The audit, conducted by The Pun Group, LLP, issued an unmodified or “clean” opinion, meaning the financial statements fairly represent the city’s position in all material respects under generally accepted accounting principles.
According to the audit presentation given by Sophia Kuo, a partner of The Pun Group, the audit was conducted while considering potential errors from inaccurate financial reports.
“Our responsibility also includes to plan and perform the audit to obtain reasonable assurance, but not absolute assurance, whether the financial statements are free from material misstatements,” Kuo said. “We were also required to consider internal control over financial reporting, however, such considerations were solely for the purpose of determining our auditing procedures, not to provide any assurance about the internal control.”
The audit details the city’s net position – assets minus liabilities – grew by $168.7 million, or 9%, to about $2 billion. This improvement was attributed to financial planning, including the use of Stockton’s Long-Range Financial Plan. Total assets stood at $3.2 billion, with liabilities at $1.3 billion.
The general fund, the city’s main operating account, ended the year with a balance of $240.1 million, up $27.7 million from the prior year. Revenues totaled $349.5 million, primarily from taxes, while expenditures reached $293.2 million, leaving a surplus before other financing uses like transfers for capital projects.
The fund’s “rainy day” reserve ratio remained stable at around $51.3 million or 17.5% for unassigned funds – above the city’s policy of maintaining at least 16.66%, or about two months of operating reserves.
However, the audit identified three deficiencies in internal controls over financial reporting. These included high staff turnover and vacancies in the Administrative Services Department, issues with the timeliness and accuracy of accounting closures and multiple revisions to the Schedule of Expenditures of Federal Awards (SEFA), which tracks federal grant spending.
Deputy City Manager Chad Reed, acknowledged the challenges during the meeting.
“We have been short-handed, and many of them have put in seven days a week to be able to get here,” Reed said. “We’ve had a lot of turnovers in key positions that’s hindered staff from being able to get this done. And so when you don’t have leadership in those key positions, it puts a strain on staff to be able to get stuff done.”
He noted that the city has seen a surge in grant funding since 2020, shifting from reimbursement-based to prepaid models, which complicated entries.
Councilmember Michael Blower, expressed concerns about the rushed timeline – the report was received just days before this meeting – and called for at least 30 days of review time in future years.
“I feel like a rubber stamp, and I hate that I’m just not built like that, and without a presentation, without knowing specifically,” Blower said. “I’m supposed to go through these 26 pages and ask questions that I’m not even sure what to ask. I want to be responsible to my commitment here to asking all the right questions, but I don’t know them all right now, because I haven’t had it long enough, you know.”
Committee vice chairperson Michele Padilla, asked about pension obligations, with the city’s net pension liability increasing by about $28 million.
Kuo explained that the increase in liability spending was mainly due to service cost and actual experiences differing from estimates.
Stockton maintains three plans: CalPERS Miscellaneous (about 80% funded), CalPERS Safety (65% funded), and a closed PARS plan (86% funded). Contributions totaled $65.4 million for the year.
Committee chairperson and Vice Mayor Jason Lee focused on transparency around spending, particularly from Measure A—a voter-approved transaction tax generating $46.3 million—was another focal point. About 84% went to police services, exceeding the advisory 65% target from Measure B, due to budgeting for full staffing amid vacancies.
Brendan Weaver, a city staff member, said the language is advisory rather than binding.
“When measure a was adopted in 2013 there was an advisory measure called Measure B that suggested 65% of the measure a transaction tax go towards public safety,” Weaver said. “We budget more to hit that target. So when we’re budgeting, we’re saying we’re going to target 80% in hopes that all of the police officer positions are filled, because if they’re vacant, then the actuals are not going to be 65%.”
The acceptance from the committee moved the item to the Stockton City Council for final review, where it also reviewed unanimous approval. City council members Michele Padilla, Michael Blower and Brando Villapudua were on the council during the 2023-24 fiscal year.
“We still have to follow through on making sure that funds, whether it’s general fund or not, that those funds stay where they were intended to be, so that we don’t find ourselves with holes where we can’t afford to have holes,” Mayor Christina Fugazi said. “I know staff has been working their tails off just to get this to the finish line, because that’s what happens when you don’t have anybody steering the ship.”