Administration Department City of Guadalupe*

The General Fund balance of the City of Guadalupe has improved slightly over the period 2015- 16 to 2017-18 compared to the period 2012-13 to 2014-15 fiscal years. Response to Finding 1 Agree.

The total primary government balance - the sum of the General Fund balance and the Enterprise Fund balance – has also improved because of better financial results from the City of Guadalupe's enterprises. Response to Finding 2 Agree. Response to Grand Jury Report - Guadalupe Fiscal Reform

The ratio of current assets to current liabilities in the City of Guadalupe General Fund averaged 3.5 over the period 2015-16 to 2016-17, which is an improvement over the period 2012-13 to 2014-15. Response to Finding 3 Agree.

Guadalupe does not generate enough General Fund revenue from the sources on which most cities rely (property, sales and transient occupancy taxes) to provide basic administrative and safety services while maintaining a positive General Fund balance. Response to Finding 4 Disagree partially. The three tax measures approved by Guadalupe voters in November 2014 combined with increased permit fees from the 800-home Pasadera development have steadily helped to sustain administrative and safety services and move the General Fund to a positive balance.

Inadequate General Fund revenue necessitates continuous transfers from Guadalupe's Enterprise Funds. Given the slow growth of population and of per capita income in Guadalupe and the limited new investment in housing and business, it is unlikely that public revenue can eliminate the dependence of the General Fund on transfers from the Enterprise Funds. Response to Finding 5 Disagree partially. Population is expected to grow as 170 homes have been occupied since the February 2015 groundbreaking of the 800 home Pasadera development. Per capita income will increase due to the diverse nature of the new homebuyers. When the commercial portion of the development begins, the City will see increased sales tax, property tax, utility user tax, business license and permit fees.

Following the March 13, 2018 Guadalupe City Council meeting, at which the Draft City Audit of 2016-17 was discussed, the City may have used restricted monies from Measure A and Gas Tax funds to finance its General Fund and other fund deficits. Response to Finding 6 Disagree wholly. This finding is based solely on an inaccurate impromptu statement made by the Response to Grand Jury Report - Guadalupe Fiscal Reform City's independent auditor, who subsequently clarified his statement. The auditor was critical of the City's practice of pooling all monies from all funds together in one combined account, although all of the individual funds are separately accounted for. For a City with the limited financial and other resources available to it, keeping restricted and other funds literally separated in individual accounts is not efficient or practical.

The City of Guadalupe is considering several recommendations to improve its financial condition, in light of material deficiencies found in previous audits. Response to Finding 7 Agree.