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City of Redwood City <br />Management’s Discussion and Analysis (Unaudited) (Continued) <br />For the Year Ended June 30, 2025 <br /> <br /> <br />9 <br />Reclassification of Governmental Function Categories <br /> <br />Background <br /> <br />Effective July 1, 2024 (fiscal year 2024–2025), the City reorganized the classification of governmental expenditures <br />and program functions presented in the Statement of Activities and the Governmental Fund financial statements. The <br />reclassification was undertaken to align the City’s financial reporting with: <br /> <br /> The California State Controller’s Office (SCO) City Financial Transactions Report (FTR) uniform functional <br />classification system, as required under Government Code §53891; and <br /> <br />This realignment improves the comparability and consistency of the City’s financial data across California <br />municipalities, enhances the usefulness of the SCO annual Financial Transactions Report, and provides a clearer picture <br />of service delivery by standardized function. <br /> <br />Nature of the Change <br /> <br />Prior to fiscal year 2024–2025, the City reported governmental expenditures using internally-defined groupings that did <br />not fully conform to the SCO FTR uniform classification structure. The following table summarizes how prior function <br />labels map to the new standardized classifications: <br /> <br />Prior Classification (through fiscal year 23–24) New SCO Classification (fiscal year 24–25 and forward) <br />Community Development General Government/Community Development (allocated by activity) <br />Human Services Culture and Leisure <br />Public Safety Public Safety <br />Transportation Public Ways and Facilities <br />Environmental Support and Protection Public Ways and Facilities/Culture and Leisure (allocated by activity) <br />Leisure, Cultural and Information Services Culture and Leisure <br />Policy Development and Implementation General Government <br /> <br />Effect on Comparability <br /> <br />Where practicable, prior-year expenditure amounts presented in this MD&A have been reclassified to conform to the <br />current-year presentation. However, because the prior-year accounting records were maintained at the departmental <br />level rather than the SCO functional level, certain subfunctions could not be fully disaggregated or reallocated across <br />the new categories. As a result, the prior-year function-level figures presented below carry a notation where full <br />reclassification was not practicable. <br /> <br />Total governmental expenditures, total revenues, and fund balance figures are not affected by this reclassification and <br />remain fully comparable between years. Readers seeking function-level prior-year detail should refer to Note 1W to the <br />financial statements, which provides a description of the reclassification and a reconciliation to the extent practicable. <br />7.C. - Page 41 of 269 <br />60