Annual Comprehensive Financial Report (ACFR) for the Fiscal Year ended June 30, 2025.

Summary

The City of Orange's Annual Comprehensive Financial Report (ACFR) for Fiscal Year ended June 30, 2025, presents a detailed overview of its financial health. The City received a "clean" or unmodified audit opinion from LSL, LLP, indicating sound financial reporting. However, a material weakness (Finding 2025-001) was identified in financial closing and reporting, attributed to key staff turnover and the simultaneous implementation of a new ERP system and chart of accounts, leading to delays and post-trial balance adjustments.The City's total net position was $704.6 million, a decrease of $14.3 million from the prior year. Governmental activities' net position decreased by 2.4% to $556.6 million, largely due to expenditures growing faster than revenues. The unrestricted net position for governmental activities remains a negative $224.6 million, primarily driven by long-term pension and claims liabilities.General Fund revenues increased by $14.9 million (10.16%) to $161.9 million, while expenditures rose by $16.9 million (11.7%) to $161.2 million. Property tax revenue increased by $3.1 million (5.54%), but sales tax revenue saw a $1.2 million (-2.3%) decrease due to fluctuating fuel prices and shifts in consumer spending. Public Safety remains the largest expenditure, accounting for $132.1 million (58.8%).The City's long-term liabilities totaled $314.6 million, a 2.8% decrease, with Pension Obligation Bonds ($246.3 million outstanding) being the largest component. A Financial Management Policy was adopted in August 2025 to maintain a minimum General Fund reserve of 16.6% of annual expenditures and proactively manage pension liabilities. The $126.0 million Five-Year Capital Improvement Plan outlines future infrastructure investments.

Citizen Impact

Residents can be assured of transparent financial reporting with a clean audit, but the identified material weakness in financial processes highlights areas for improvement. The city's stable economic outlook supports ongoing services and a $126.0 million capital improvement plan, though declining sales tax revenue and significant long-term pension debt may pose future fiscal challenges that could affect service levels or require new revenue sources.

Confidence

high