Fy2025 Local Transportation Fund final audit report

COUNTY OF LOS ANGELES, CALIFORNIA LOCAL TRANSPORTATION FUND Financial Statements and Supplementary Information (With Independent Auditor’s Reports Thereon) For the Year Ended June 30, 2025 COUNTY OF LOS ANGELES, CALIFORNIA LOCAL TRANSPORTATION FUND For the Year Ended June 30, 2025 Table of Contents Page Independent Auditor’s Report ....................................................................................................................... 1 Management’s Discussion and Analysis (Unaudited) .................................................................................. 5 Financial Statements: Statement of Fiduciary Net Position ....................................................................................................... 7 Schedule of Changes in Fiduciary Net Position ..................................................................................... 8 Notes to Financial Statements ....................................................................................................................... 9 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .......................................................................... 11 Supplementary Information Supplemental Schedule of Allocations and Disbursements ........................................................................ 13 Independent Auditor’s Report To the Honorable Board of Supervisors County of Los Angeles, California Report on the Audit of the Financial Statements Opinion We have audited the financial statements of the Local Transportation Fund, a custodial fund of the County of Los Angeles, California (County), as of and for the year ended June 30, 2025, and the related notes to the financial statements, as listed in the table of contents. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the fiduciary net position of the Local Transportation Fund of the County, as of June 30, 2025, and the changes in fiduciary net position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the County, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Emphasis of Matter As discussed in Note 2, the financial statements present only the Local Transportation Fund and do not purport to, and do not, present fairly the financial position of the County, as of June 30, 2025, the changes in its financial position, or, where applicable, its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Responsibilities of Management for the Financial Statements The County’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Macias Gini & O’Connell LLP 700 South Flower Street, Suite 800 www.mgocpa.com Los Angeles, CA 90017 1 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis be presented to supplement the financial statements. Such information is the responsibility of management and, although not a part of the financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the financial statements, and other knowledge we obtained during our audit of the financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Local Transportation Fund’s financial statements. The Supplemental Schedule of Allocations and Disbursements is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain 2 additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the Supplemental Schedule of Allocations and Disbursements is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated April 28, 2026, on our consideration of the County’s internal control over financial reporting as it relates to the Local Transportation Fund, and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the County’s internal control over financial reporting or on compliance as it relates to the Local Transportation Fund. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control over financial reporting and compliance as it relates to the Local Transportation Fund. Los Angeles, California April 28, 2026 3 This page intentionally left blank. 4 COUNTY OF LOS ANGELES, CALIFORNIA LOCAL TRANSPORTATION FUND Management’s Discussion and Analysis (Unaudited) For the Year Ended June 30, 2025 Management’s discussion and analysis of the County of Los Angeles, California (County), Local Transportation Fund provides a narrative overview of the Local Transportation Fund’s financial activities for the year ended June 30, 2025. We encourage readers to consider this information in conjunction with the accompanying financial statements. Financial Highlights During the current year, the Local Transportation Fund’s restricted net position held for claimants and unallocated amounts decreased by $279.3 million to $465.4 million. Sales taxes of $514.5 million were received from the State of California and $23.8 million was earned on investments. Transportation subsidies totaling $803.3 million were paid to 66 different cities and jurisdictions and $14.5 million was distributed for administrative and planning purposes. The Local Transportation Fund continues to have no short or long-term debt. Financial Statement Overview The Local Transportation Fund is accounted for as a custodial fund, a fiduciary type fund of the County. In its custodial capacity, the County holds the Local Transportation Fund assets in connection with its fiduciary responsibilities to other local governments, in this case, the Los Angeles County Metropolitan Transportation Authority (LACMTA). Custodial funds are recorded on an accrual basis of accounting. In addition to the financial statements, this report contains notes to the financial statements, which provide additional information that is essential for a full understanding of the data provided in the financial statements. The supplemental schedule of allocations and disbursements is presented for purposes of additional analysis and is not a required part of the financial statements. Financial Analysis Statements of Fiduciary Net Position (In thousands) June 30, 2025 2024 Assets Pooled cash and investments $ 371,172 $ 649,455 Sales tax receivable 90,629 8 8,485 Interest receivable 3,590 6 ,802 Total Assets 465,391 7 44,742 Net Position Amounts allocated to claimants 258,419 4 51,412 Unallocated amounts 206,972 2 93,330 Total net position $ 465,391 $ 744,742 5 COUNTY OF LOS ANGELES, CALIFORNIA LOCAL TRANSPORTATION FUND Management’s Discussion and Analysis (Unaudited)(Continued) For the Year Ended June 30, 2025 Total assets of the Local Transportation Fund decreased by 37.5% from the prior year to $465.4 million, due to a $278.3 million decrease in pooled cash and investments, a $3.2 million decrease in interest receivable, and slightly offset by a $2.1 million increase in sales taxes receivable. Pooled cash and investments decreased as a result of significant increase in transportation subsidies contributing to total deductions exceeding total additions during the year. Statements of Changes in Fiduciary Net Position (In thousands) For the Year Ended June 30, 2025 2024 Additions: Sales taxes $ 5 14,467 $ 5 35,583 Reimbursement from claimants 211 4 ,668 Interest income 23,758 2 1,388 Total additions 5 38,436 5 61,639 Deductions: Transportation subsidies 8 03,293 2 33,493 Administrative and planning 14,494 1 4,879 Total deductions 8 17,787 2 48,372 Change in net position (279,351) 313,267 Net position: Beginning of year 744,742 4 31,475 End of year $ 465,391 $ 744,742 Total additions of the Local Transportation Fund decreased by 4.1% from the prior year to $538.4 million. The primary source of additions was sales taxes and it significantly decreased by $21.1 million due to economic factors such as higher operational costs for businesses, consumer behavior and concerns over inflation and potential tariffs. The decrease in additions also came from reimbursement from claimants for unspent funding, which is $4.5 million lower than prior year. Interest income on pooled cash and investments increased by $2.4 million. Total deductions increased by 229.3% from the prior year to $817.8 million, due to $569.8 million increase in transportation subsidies as a result of increase in the allocation disbursements for projects started during the fiscal year. Contacting the Local Transportation Fund’s Financial Management This financial report is designed to provide citizens and other interested parties with a general overview of the Local Transportation Fund’s finances and to demonstrate accountability for the monies held in the County’s care. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the County of Los Angeles, Department of Auditor-Controller, 500 West Temple Street, Los Angeles, California, 90012. 6 COUNTY OF LOS ANGELES, CALIFORNIA LOCAL TRANSPORTATION FUND Statement of Fiduciary Net Position For the Year Ended June 30, 2025 See Accompanying Notes to Financial Statements. 7 A s s e ts : P o o l c a s h a n d in v e s tm e S a le s ta x e s r e c e iv a b le I n te r e s t r e c e iv a b le T o ta N e t P o s itio n : R e s tr ic te d : A m o u n ts a llo c a te d to U n a llo c a te d a m o u n ts T o ta n ts ( N o te 3 ) l A s s e ts c la im a n ts l N e t P o s itio n $ 3 7 9 4 6 5 2 5 2 0 $ 4 6 5 1 0 3 ,3 8 6 ,3 ,1 ,6 ,5 9 ,4 ,9 9 7 2 9 1 1 7 1 2 ,1 8 ,7 0 ,2 ,0 9 ,5 1 ,5 ,0 3 5 0 9 0 8 9 0 8 5 3 7 6 3 COUNTY OF LOS ANGELES, CALIFORNIA LOCAL TRANSPORTATION FUND Schedule of Changes in Fiduciary Net Position For the Year Ended June 30, 2025 Additions: Sales taxes $ 514,466,402 Reimbursement from claimants 210,591 Interest income 23,758,241 Total additions 538,435,234 Deductions: Transportation subsidies 803,292,667 Administrative and planning 14,493,855 Total deductions 817,786,522 Change in Net Position (279,351,288) Net Position, Beginning of year 744,742,381 Net Position, End of year $ 465,391,093 See Accompanying Notes to Financial Statements. 8 COUNTY OF LOS ANGELES, CALIFORNIA LOCAL TRANSPORTATION FUND Notes to Financial Statements For the Year Ended June 30, 2025 NOTE 1 - GENERAL The Local Transportation Fund, a custodial fund of the County of Los Angeles (County), was established in accordance with the provisions of the Transportation Development Act (the Act) as administered by the Department of Transportation, Division of Rail and Mass Transportation of the State of California. In accordance with provisions of the Act, sales tax distributions to the Local Transportation Fund are derived from ¼ cent of the general retail sales tax collected in the County by the State Board of Equalization for the period July 1, 2024 through June 30, 2025. Disbursements from the Local Transportation Fund are made by the County upon receipt of written allocation and disbursement instructions issued in accordance with the Act’s provisions by the Los Angeles County Metropolitan Transportation Authority (LACMTA). NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Accounting The Local Transportation Fund is accounted for as a custodial fund of the County, a fiduciary type fund. In this custodial capacity, the County holds Fund assets in connection with its fiduciary responsibilities to other local governments. Custodial funds are accounted for using the economic resources measurement focus and the accrual basis of accounting. Additions are recorded when earned and deductions are recorded when liability is incurred, regardless of the timing of the related cash flows. The Local Transportation Fund’s financial statements are intended to present the fiduciary net position and changes in fiduciary net position of only those transactions attributable to the County’s Fund, and are not intended to present fairly the financial position, the changes in financial position, or, where applicable, the cash flows of the County. Fiduciary Net Position The fiduciary net position reflected on the accompanying statement of fiduciary net position includes amounts received from the State Board of Equalization, but not allocated and amounts allocated for which the County is awaiting final instructions from LACMTA before distribution to the claimants. Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires that management make estimates and assumptions that may affect certain reported assets and liabilities. Actual results could differ from those estimates. 9 COUNTY OF LOS ANGELES, CALIFORNIA LOCAL TRANSPORTATION FUND Notes to Financial Statements (Continued) For the Year Ended June 30, 2025 NOTE 3 – POOLED CASH AND INVESTMENTS California Government Code Sections 53601 and 53635 authorize the County Treasurer to invest the External Investment Pool (Pool) and Specific Purpose Investment funds in obligations of the United States Treasury, federal agencies, municipalities, asset-backed securities, bankers’ acceptances, commercial paper, negotiable certificates of deposit, medium-term notes, corporate notes, repurchase agreements, reverse repurchase agreements, forwards, futures, options, shares of beneficial interest of a Joint Powers Authority that invests in authorized securities, shares of beneficial interest issued by diversified management companies known as money market mutual funds registered with the Securities and Exchange Commission, securities lending agreements, the State of California’s Local Agency Investment Fund, and supranational institutions. California Government Code Section 53534 authorizes the County Treasurer to enter into interest rate swap agreements. However, these agreements should only be used in conjunction with the sale of the bonds approved by the Board. As permitted by the California Government Code, the County Treasurer developed, and the Board adopted, an Investment Policy that further defines and restricts the limits within which the County Treasurer may invest. The investments are managed by the County Treasurer, which reports investment activity to the Board on a monthly basis. In addition, the County Treasurer's investment activity is subject to an annual investment policy review, compliance oversight, quarterly financial review, and annual financial reporting. The County has not provided nor obtained any legally binding guarantees during the year ended June 30, 2025, to support the value of shares in the Pool. The Local Transportation Fund’s share of the County Treasury’s total pooled cash and investments is included in the accompanying statement of fiduciary net position under “Pooled Cash and Investments,” which totaled $371,172,130 at June 30, 2025, and represents approximately 0.65% of the total Pool. The Pool is not rated as of June 30, 2025. The weighted average to maturity of the Pool as of June 30, 2025 is 1.44 years. Additional information regarding the interest rate, credit, concentration of credit risks and fair value hierarchy of the County’s cash and investments pool can be found in the notes to the County’s basic financial statements. 10 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards To the Honorable Board of Supervisors County of Los Angeles, California We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards), the financial statements of the Local Transportation Fund, a custodial fund of the County of Los Angeles, California (County), as of and for the year ended June 30, 2025, and the related notes to the financial statements, and have issued our report thereon dated April 28, 2026. Our report includes an emphasis of matter paragraph indicating that the financial statements present only the Local Transportation Fund of the County. Report on Internal Control Over Financial Reporting In planning and performing our audit of the Local Transportation Fund’s financial statements, we considered the County’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the Local Transportation Fund’s financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control as it relates to the Local Transportation Fund. Accordingly, we do not express an opinion on the effectiveness of the County’s internal control as it relates to the Local Transportation Fund. A deficiency in internal control exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified. Macias Gini & O’Connell LLP 700 South Flower Street, Suite 800 www.mgocpa.com Los Angeles, CA 90017 11 Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the Local Transportation Fund’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, including applicable provisions of the Public Utilities Code (Sections 99230-99251), noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Los Angeles, California April 28, 2026 12 COUNTY OF LOS ANGELES, CALIFORNIA LOCAL TRANSPORTATION FUND Supplementary Schedule of Allocations and Disbursements Year Ended June 30, 2025 Disbursements Administrative Total Total and Current Year Current Year Claimant Total Allocations Planning Article 3 Article 4 Article 8A Disbursements Reimbursements Agoura Hills $ 20,309 $ - $ 20,309 $ - $ - $ 20,309 $ - Arcadia 555,677 - 92,688 462,989 - 555,677 - Avalon 238,896 - 5,000 - 233,896 238,896 - Azusa 100,599 - 100,599 - - 100,599 - Baldwin Park 55,975 - 55,853 - - 55,853 122 Bell Gardens 34,790 - 34,790 - - 34,790 - Bellflower 90,000 - 90,000 - - 90,000 - Beverly Hills 105,223 - 105,223 - - 105,223 - Bradbury 5,000 - 5,000 - - 5,000 - Burbank 134,924 - 134,924 - - 134,924 - Calabasas 91,317 - 91,317 - - 91,317 - Carson 75,686 - 75,686 - - 75,686 - Claremont 28,701 - 28,701 - - 28,701 - Commerce 784,656 - 12,367 772,289 - 784,656 - Compton 74,823 - 74,823 - - 74,823 - Culver City Muni Bus Lines 7,732,127 - 40,754 7,691,373 - 7,732,127 - Diamond Bar 27,098 - 27,098 - - 27,098 - Duarte 23,416 - 23,416 - - 23,416 - El Monte 65,316 - 65,316 - - 65,316 - El Segundo 15,000 - 15,000 - - 15,000 - Foothill Transit 34,648,106 - - 34,648,106 - 34,648,106 - Gardena 11,461,453 - 61,421 11,400,032 - 11,461,453 - Glendale 245,220 - 245,220 - - 245,220 - Glendora 178,785 - 178,785 - - 178,785 - Lakewood 98,085 - 98,085 - - 98,085 - Lomita 19,276 - 19,276 - - 19,276 - Long Beach 21,278,672 - 852,500 20,426,172 - 21,278,672 - L.A. City Treasurer 4,107,095 - 4,107,095 - - 4,107,095 - LACMTA 626,688,593 10,018,855 - 616,669,738 - 626,688,593 - LACO - ACCTG 140,000 140,000 - - - 140,000 - LA Canada Flintridge 20,473 - 20,473 - - 20,473 - LA County Public Works 10,136,755 - 1,906,562 - 8,230,193 10,136,755 - 13 COUNTY OF LOS ANGELES, CALIFORNIA LOCAL TRANSPORTATION FUND Supplementary Schedule of Allocations and Disbursements (Continued) Year Ended June 30, 2025 Disbursements Administrative Total Total and Current Year Current Year Claimant Total Allocations Planning Article 3 Article 4 Article 8A Disbursements Reimbursements Hawaiian Gardens 5,159 - 5,159 - - 5,159 - Hawthorne 88,000 - 88,000 - - 88,000 - Hermosa Beach 18,499 - 18,499 - - 18,499 - Hidden Hills 10,000 - 10,000 - - 10,000 - Irwindale 5,000 - 5,000 - - 5,000 - LA Mirada 668,693 - 49,192 619,501 - 668,693 - LA Puente 10,000 - 10,000 - - 10,000 - Lynwood 166,525 - 166,525 - - 166,525 - Monrovia 49,280 - 49,280 - - 49,280 - Montebello 11,712,304 - 63,306 11,648,998 - 11,712,304 - Monterey Park 5,547 - 5,547 - - 5,547 - Norwalk 4,429,420 - 57,100 4,372,320 - 4,429,420 - Palmdale 10,564,290 - 169,290 - 10,395,000 10,564,290 - Paramount 53,585 - 53,585 - - 53,585 - Pasadena 145,190 - 145,190 - - 145,190 - Pico Rivera 77,523 - 77,523 - - 77,523 - Pomona 116,353 - 116,353 - - 116,353 - Rancho Palos Verdes 35,000 - 35,000 - - 35,000 - Redondo Beach 928,667 - - 928,667 - 928,667 - Rolling Hills 10,658 - 10,658 - - 10,658 - Rosemead 50,028 - 50,028 - - 50,028 - San Dimas 24,279 - 24,279 - - 24,279 - Santa Fe Springs 19,077 - 19,077 - - 19,077 - San Fernando 42,417 - 42,417 - - 42,417 - San Gabriel 15,000 - 15,000 - - 15,000 - San Marino 19,000 - 19,000 - - 19,000 - Santa Clarita 25,478,025 - 231,924 - 25,035,632 25,267,556 210,469 Santa Monica's Big Blue Bus 30,331,137 - 261,589 30,069,548 - 30,331,137 - SCAG 4,335,000 4,335,000 - - - 4,335,000 - South Gate 124,800 - 124,800 - - 124,800 - Torrance 8,889,181 - 146,900 8,742,281 - 8,889,181 - Vernon 15,000 - 15,000 - - 15,000 - Walnut 25,000 - 25,000 - - 25,000 - West Covina 149,650 - 149,650 - - 149,650 - Westlake Village 8,140 - 8,140 - - 8,140 - Whittier 89,640 - 89,640 - - 89,640 - Total $ 817,997,113 $ 14,493,855 $ 10,945,932 $ 748,452,014 $ 43,894,721 $ 817,786,522 $ 210,591 14