HomeMy WebLinkAbout8.1 - 2313 Fiscal Year 2017-18 4th Quarter Financial R
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STAFF REPORT
CITY COUNCIL
DATE: November 20, 2018
TO: Honorable Mayor and City Councilmembers
FROM:
Christopher L. Foss, City Manager
SUBJECT:
Fiscal Year 2017-18 4th Quarter Financial Review
Prepared by: Colleen Tribby, Director of Administrative Services
EXECUTIVE SUMMARY:
The City Council will receive a financial report on the fourth quarter of Fiscal Year 2017 -
18 and consider amendments to General Fund reserve designations.
STAFF RECOMMENDATION:
Receive the report and confirm General Fund reserve designations as of June 30, 2018.
FINANCIAL IMPACT:
City Council confirmation of reserve designations will not alter amounts received or
spent but will allow Staff to close the Fiscal Year 2017 -18 financial books.
Total General Fund reserves are projected at $142.1 million at June 30, 2018, with
$36.0 million in the unassigned cash flow reserve, representing 5.63 months of the
Fiscal Year 2018-19 Adopted Budget. It should be noted that this is above the target of
four months in cash flow reserve, and the City Council has discretion to make additional
reserve designations allowable by the City’s Fund Balance and Reserves Policy. All
balances in other funds comply with the Policy.
DESCRIPTION:
This report transmits the preliminary finan cial results of the Fiscal Year 2017-18 year-
end, focusing on the General Fund. At this time, the numbers are essentially final, and
though adjustments may happen as the audit is finalized, Staff does not expect
substantial changes from the numbers in this report. The Comprehensive Annual
Financial Report, which will be presented to the City Council at its second meeting in
December 2018, will contain the final audited results.
General Fund Overview
General Fund revenues totaled $91.3 million ($4.4 million over budget) in FY 2017-18,
while expenditures totaled $68.9 million ($7.2 million under budget). Transfers from the
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General Fund to Capital Improvement Project Funds totaled $2.7 million. The resulting
impact on total General Fund Reserves was an increase of $19.7 million, as shown in
Table 1.
Table 1: Total Reserves
FY 2016-17 FY 2017-18
Total Reserves, Beginning of Year $109,184,026 $122,418,381
Total Revenue 83,952,209 91,331,011
Total Expenditures (66,244,975) (68,927,446)
Total Transfers to CIP Projects (5,542,414) (2,706,559)
Adjustment to Accrued Expenditures 1,069,534
Total Reserves, End of Year $122,418,381 $142,115,387
Change $19,697,006
In June 2018, based on estimated revenues and expenditures at that time, the City
Council designated $4.3 million of the estimated year-end surplus to specific Committed
Reserves, and confirmed $4.1 million in allocations to Assigned Reserves as follows:
Committed Reserves:
• Public Safety Reserve - $400,000
• Downtown Public Improvements – $2,547,830
• Economic Development – $1,000,000
• Fire OPEB (Retiree Health) – $250,000
• Shannon Center Parking Lot – $75,000
Assigned Reserves:
• Non-Streets CIP Commitments – $120,484
• Catastrophic Loss – $2,550,000
• Pension and OPEB – $1,385,647
• Municipal Regional Permit – $500,000
• Parks and Streets Maintenance Contingency – $250,000
• Contribution to Internal Service Funds – $1,750,000
• Fire Equipment Replacement – $100,000
These designations, as well as reserve allocations for budget carryovers and for set
asides required by accounting rules and/or City policy, have been incorporated into the
General Fund Reserve Balances (Attachment 2), with the following recommended
changes:
1. Within the Committed Reserves category:
a. Increase the One-Time Initiatives Reserve by $5,000,000. In
accordance with the City Council’s Strategic Objective #3: Pursue efforts
to help strengthen the City’s infrastructure and technology, Staff has been
evaluating the feasibility of some major citywide technological and
infrastructure upgrades. Potential one-time projects that could be funded
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by this reserve include: a citywide adaptive traff ic control system,
implemented in phases beginning with major thoroughfares; solar
upgrades to City facilities including The Wave; and increased police
technology efforts, including additional camera equipment at key
intersections.
2. Within the Assigned Reserves category:
Adjust the addition to the Catastrophic Loss Reserve to $846,068. In
June 2018, Staff presented a $2,550,000 recommendation to the City
Council. Staff is recommending a change in order to increase funds to the
One-Time Initiatives Reserve (above) while maintaining a health cash flow
balance. With this adjustment, the total Catastrophic Loss Reserve
balance would be $14,764,599.
With approval of the recommendations above, the Unassigned Cash Flow Reserve,
estimated at $36.0 million (or 5.63 months of the Fiscal Year 2018-19 Adopted Budget),
is above the reserve target as provided for in the City Policy. However, Staff is not
recommending any additional allocations from that reserve, pending the City Council’s
review of the updated 10-Year Forecast, planned for the mid-year financial review in
early 2019. The table below illustrates the General Fund Cash Flow coverage over the
last five years.
Table 2: Five-Year General Fund Cash Flow Coverage
FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18
Months of Cash Flow Coverage2.68 3.61 5.49 5.44 5.63
The following is a discussion of the major factors in budgetary variances (+/- $250,000)
that occurred in Fiscal Year 2017-18. The General Fund Summary (Attachment 1)
presents this data by major category.
Revenue
Property Tax: $1,426,893 higher than budget. Property taxes in Fiscal Year 2017-18
saw an increase in net assessed valuation (AV) by $1.1 billion (7.7%) over the prior
year, which was the second largest percentage growth in Alameda County, after
Newark’s 14.9% growth.
Sales Tax: $471,800 lower than budget. Overall Sales Tax came in $214,757 (1.%)
lower than Fiscal Year 2016-17, after four years of average growth of 5.6%. The
declines occurred primarily in the Autos and Transportation and General Consumer
sales sectors. Staff was prepared for the decline and adjusted the Fiscal Yea r 2018-19
budget accordingly.
Development Revenue: $2,233,300 higher than budget. Development Permits includes
all permits associated with new development (primarily building permits), as well as
tenant improvements on current structures. Development Services includes fees for City
services provided, most typically Zoning and Plan Checking services. The net increase
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in these revenue streams is related to development activity that had been originally
anticipated to occur over the course of the next few fiscal years.
Other Taxes: $1,169,201 higher than budget. The majority of the increase in this
category comes from an increase in Property Transfer Tax ($343,646), linked to
increased home sales and AV. In addition, hotel occupancy and room rates brought
Transient Occupancy Tax revenue in $221,423 over budget; and Garbage franchise fee
revenue came in $556,271 above budget due to expanded services and the
incorporation of the annual rate adjustment.
Interest: $606,519 higher than budget. Interest earnings reflect the health of the
economy and the strategies used by Chandler Asset Management in managing the
City’s portfolio.
Charges for Services: $991,753 higher than budget. The City received $334,595 in
revenue above the budgeted amount in reimbursement fo r services provided by
Alameda County Fire Services at the Santa Rita Jail. Family programs also brought in
$354,737 more than budgeted. The remainder of the variance was spread across all
other revenues in this category, including fire inspection services and waste
management administration fees.
Community Benefit Payments: $470,000 higher than budget, accounting for
development-related revenues received in the Fiscal Year.
Other Revenue: $697,487 higher than budget. This increase is due to higher revenue in
a variety of categories, including General Reimbursements and Miscellaneous
Revenue, including small grants, reimbursement for the City’s expenses related to
Community Facilities District No. 2015-1, and additional funds received available for the
vehicle abatement program.
Expenditures
Salaries and Wages: $1,543,769 lower than budget. Staff costs came in lower than
budgeted due to seven vacant positions throughout the year (each six months or
longer), as well as budgeting practices for new hires. In addition, seasonal salaries
came in $495,142 lower than budget due primarily to staffing cost containment efforts in
Parks and Community Services.
Benefits: $1,776,921 lower than budget. This budget variance is due to vacant
positions, and the budgeted $1,000,000 additional payment to CalPERS for the City’s
pension liability. While this payment was not actually made, the City Council approved
the addition of $1,385,647 to the Pension & OPEB Reserve in Fiscal Year 2017-18.
Services and Supplies: $907,693 lower than budget. This variance occurred primarily in
Parks and Community Services related to programming costs, repairs and
maintenance, and operating supplies. Police Services also achieved savings from lower
fuel, and repair and maintenance costs, and Human Resources costs for insurance
premiums and claims were lower than budgeted.
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Contracted Services: $2,841,620 lower than budget. Police Services came in under
budget by $1,365,310 for personnel and dispatch services. Development-related
contracts and general City contracts were also under budget $656,371 and $625,098
respectively, though many of these are annual contracts that were re -opened at the
start of the new fiscal year.
Transfers Out for Capital Improvement Projects
The General Fund transferred out $2.7 million in Fiscal Year 2017-18 for capital project
expenditures, the largest of which was $907,661 for the Shannon Center Parking Lot
improvements, which was covered by Committed Reserves.
General Fund Reserve Balances
After transfers out to CIP projects, total reserves increased $19.7 million in Fiscal Year
2017-18. Table 3 summarizes how those funds are allocated among reserve categories.
Some of the reserve shifts occur for accounting purposes or are dictated by the Fund
Balance and Reserves Policy, while the other shifts are based on City Council approval
and/or Staff recommendation. Attachment 2 provides the detail of these allocations.
Table 3: Summary of Reserve Changes
Reserve Category Change Amount
Non-Spendable Accounting Adjustment 3,003
Restricted Accounting Adjustment 176,000
Committed Additions to Reserve 9,272,830
Committed Spending of Reserves (1,746,052)
Assigned Additions to Reserve 11,470,460
Assigned Spending of Reserves (4,329,428)
Unassigned Unrealized Gains 6,861,393
Unassigned Additions to Cash Flow (2,011,201)
Total $19,697,006
STRATEGIC PLAN INITIATIVE:
Strategy 1: Assure the City’s long-term financial sustainability.
Strategy 1a: Maintain strong conservative fiscal policies.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
None.
ATTACHMENTS:
1. General Fund Summary
2. General Fund Reserves Summary
GENERAL FUND SUMMARY
PRELIMINARY YEAR-END 2017-18
Actual
2016-17
Amended
2017-18
Actual
2017-18
$ Change
from
Amended
$ Change
from PY
% Change
from
Amended
% Change
from PY
Revenues
Property Tax 36,964,785 39,201,147 40,628,040 1,426,893 3,663,255 3.6%9.9%
Sales Tax 20,490,275 20,758,196 20,286,396 (471,800) (203,880) -2.3%-1.0%
Sales Tax Reimbursements (488,896) (461,395) (562,731) (101,336) (73,835) 22.0%15.1%
Development Revenue 12,350,738 11,318,488 13,551,788 2,233,300 1,201,050 19.7%9.7%
Other Taxes 6,834,545 6,197,000 7,366,201 1,169,201 531,656 18.9%7.8%
Licenses & Permits 318,981 309,096 318,400 9,304 (581) 3.0%-0.2%
Fines & Penalties 94,205 111,432 134,022 22,590 39,817 20.3%42.3%
Interest Earnings 1,286,942 1,326,000 1,932,519 606,519 645,577 45.7%50.2%
Rentals and Leases 1,119,167 1,081,672 1,243,389 161,717 124,222 15.0%11.1%
Intergovernmental 258,508 198,618 153,834 (44,784) (104,674) -22.5%-40.5%
Charges for Services 5,274,939 6,226,704 7,218,457 991,753 1,943,518 15.9%36.8%
Community Benefit Payments 699,000 200,000 670,000 470,000 (29,000) 235.0%-4.1%
Other Revenue 910,561 309,737 1,007,224 697,487 96,663 225.2%10.6%
Subtotal Revenues 86,113,750$ 86,776,695$ 93,947,539$ 7,170,844$ 7,833,789$ 8.3%9.1%
Unrealized Gains/Losses (2,161,541) (2,751,679) (2,751,679) (590,138) 0
Transfers In 155,861 135,151 (20,710) 135,151
Total Revenues 83,952,209$ 86,932,556$ 91,331,011$ 4,398,455$ 7,378,802$ 5.1%8.8%
Expenditures
Salaries & Wages 10,387,331 12,422,136 10,878,367 (1,543,769) 491,036 -12.4%4.7%
Benefits 5,409,898 6,443,563 4,666,642 (1,776,921) (743,256) -27.6%-13.7%
Services & Supplies 2,077,805 3,138,828 2,231,135 (907,693) 153,330 -28.9%7.4%
Internal Service Fund Charges 3,040,296 3,049,881 3,049,920 39 9,624 0.0%0.3%
Utilities 1,793,538 2,828,310 2,779,522 (48,788) 985,983 -1.7%55.0%
Total Contracted Services *42,600,146 46,565,748 43,724,128 (2,841,620) 1,123,982 -6.1%2.6%
Capital Outlay 935,960 433,907 357,516 (76,391) (578,444) -17.6%-61.8%
Contingency - 25,293 - (25,293) - -100.0%
Subtotal Expenditures 66,244,975$ 74,907,666$ 67,687,229$ (7,220,437)$ 1,442,254$ -9.6%2.2%
Carryovers from Prior Year 1,240,217 1,240,217
Total Expenditures 66,244,975$ 76,147,883$ 68,927,446$ (7,220,437)$ 2,682,471$ -9.5%4.0%
Operating Impact 17,707,234$ 10,784,673$ 22,403,566$
One Time Adjustment for Accruals 1,069,534
Transfers Out (5,542,414) (9,571,617) (2,706,559)
Impact on Total Reserves 13,234,354$ 1,213,056$ 19,697,006$
TOTAL RESERVES 122,418,380$ 123,631,437$ 142,115,386$
* Contracted Services Detail (1)
Actual
2016-17
Amended
2017-18
Actual
2017-18
$ Change
from Amended
$ Change
from PY
% Change
from
Amended
% Change
from PY
Police Services 16,356,051 18,769,564 17,404,255 (1,365,310) 818,465 -7.3%5.0%
Fire Services 11,788,015 12,104,855 12,103,333 (1,521) 723,351 0.0%6.1%
Maintenance Services (MCE)4,484,851 5,042,865 4,879,545 (163,320) 329,414 -3.2%7.3%
Development 5,563,674 6,811,143 6,124,772 (686,371) 142,736 -10.1%2.6%
Other Contracted Services 4,407,556 5,030,718 4,405,620 (625,098) 854,576 -12.4%19.4%
Total Contracted Services 42,600,146$ 47,759,145$ 44,917,525$ (2,841,620)$ 2,868,542$ -5.9%6.7%
(1) Contracted Services Detail includes carryovers from FY 2016-17 totaling $1,193,397.
FY 2017-18 RESERVES SUMMARY
Reserve Balances
Actual
2016-17
Increase
2017-18
Decrease
2017-18
NET
CHANGE
Actual
2017-18
Non-Spendable 198,875$ 162,616$ (159,613)$ 3,003$ 201,878$
Prepaid Expenses 39,262 162,616 162,616 201,878
Advance to Public Facility Fees - - -
Advance to PERS Side Fund 159,613 (159,613) (159,613) -
Restricted 1,762,000$ 500,000$ (324,000)$ 176,000$ 1,938,000$
Heritage Park Maintenance 750,000 - 750,000
Cemetery Endowment 60,000 - 60,000
Developer Contr - Downtown 873,000 500,000 (324,000) 176,000 1,049,000
Developer Contr - Nature Pk 60,000 - 60,000
Developer Contr - Heritage Pk 19,000 - 19,000
Committed 36,213,716$ 9,272,830$ (1,746,052)$ 7,526,778$ 43,740,494$
Economic Stability 8,000,000 - 8,000,000
Public Safety Reserve 1,600,000 400,000 400,000 2,000,000
Downtown Public Impr 452,170 2,547,830 2,547,830 3,000,000
Economic Development 2,000,000 1,000,000 1,000,000 3,000,000
Emergency Communications 741,000 - 741,000
Fire Svcs OPEB 3,334,672 250,000 250,000 3,584,672
Innovations & New Opport 1,813,408 - 1,813,408
One-Time Initiative 1,341,408 5,000,000 5,000,000 6,341,408
Specific Committed Reserves
Maintenance Facility 76,033 (4,280) (4,280) 71,753
Cemetery Expansion 5,272,210 (1,335) (1,335) 5,270,876
Fallon Sports Park 200,000 (89,501) (89,501) 110,500
Civic Ctr Expansion 22,746 - 22,746
Storm Drain Trash Capture 722,198 (603,895) (603,895) 118,303
Shannon Center Parking Lot 967,680 75,000 (1,042,680) (967,680) -
Utility Undergrounding 1,170,190 - 1,170,190
Advance to Public Facility Fee 6,000,000 - 6,000,000
Dublin Sports Ground 2,500,000 (4,362) (4,362) 2,495,638
Assigned 50,126,808$ 11,470,460$ (4,329,428)$ 7,141,032$ 57,267,840$
Accrued Leave 998,235 74,273 74,273 1,072,508
Operating Carryovers 1,240,217 2,169,276 (1,240,217) 929,059 2,169,276
CIP Carryovers 1,739,331 4,272,555 (1,739,331) 2,533,224 4,272,555
Non-Streets CIP Commitments 3,879,516 120,484 120,484 4,000,000
Catastrophic Loss 13,918,531 846,068 846,068 14,764,599
Service Continuity 3,150,000 - 3,150,000
Pension Rate Stabilization Plan 2,000,000 - 2,000,000
Chevron Debt Payoff 5,238,622 (581,880) (581,880) 4,656,742
Pension & OPEB 10,614,353 1,385,647 1,385,647 12,000,000
Fiscally Responsible Adj 325,000 - 325,000
Municipal Regional Permit 1,870,030 500,000 500,000 2,370,030
HVAC Replacement 2,000,000 - 2,000,000
Relocate Parks Dept 250,000 - 250,000
Parks and Streets Contingency 250,000 250,000 250,000
Specific Assigned Reserves
Civic Ctr Renovation-Police 1,962,100 - 1,962,100
Façade Improvement Grants 250,000 2,157 (18,000) (15,843) 234,157
Contribution to ISF 500,000 1,750,000 (750,000) 1,000,000 1,500,000
Fire Equipment Replacement 190,873 100,000 100,000 290,873
Unassigned 34,116,982$ 6,559,092$ (1,708,900)$ 4,850,192$ 38,967,174$
Unassigned-Unrealized Gains (3,860,531) 7,110,575 (249,182) 6,861,393 3,000,862
Unassigned (Available)37,977,513 35,966,312
TOTAL RESERVES 122,418,380$ 27,964,999$ (8,267,992)$ 19,697,006$ 142,115,386$