title.Title
Recommendation to Accept the First Quarter Financial Report for the Period Ending September 30, 2014. [City Council and SACIC] (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
From: John A. Russo, City Manager
Re: Recommendation to Accept the First Quarter Financial Report for the Period Ending September 30, 2014
BACKGROUND
The first quarter's financial reports on all City funds have been completed, based upon actual unaudited revenues and expenditures through September 30, 2014. Quarterly reports include financial information for all City funds. The Exhibit includes the following:
· General Fund actual revenues by major category through September 30, 2014 and 2013
· General Fund actual expenditures by major department through September 30, 2014 and 2013
· Actual expenditures for the City's capital and maintenance projects through September 30, 2014
· All Funds revenues, expenditures and changes in current available fund balance as of September 30, 2014.
DISCUSSION
Quarterly reports provide the City Council with updates on the financial status of the City's funds by comparing budget projections for revenues and expenditures to actual receipts and expenses.
General Fund
The FY14-15 annual budget for the General Fund projected revenues of approximately $74.7 million, with total appropriations of approximately $78.2 million. General Fund actual revenues as of September 30, 2014, were $9.8 million, or 13% of the FY14-15 budget. Actual expenditures were $16.7 million, or 21% of the FY14-15 budget. General Fund revenues and expenses are in line with expectations for the current quarter, with revenues trailing expenditures. Major tax revenues are received primarily in the second and fourth quarters.
General Fund major revenue categories are summarized on page 1 of the Exhibit. The City derives a significant portion of its General Fund revenues from economically sensitive sources such as property taxes, sales taxes (both the Bradley Burns and Public Safety portions), and utility users' taxes. When one or more of these key revenue sources deviates from projections, funding for future programs and services may be affected.
Sales Taxes are significantly higher than the same period in the prior fiscal year due to a continued recovery of the economy and a one-time favorable adjustment of $313,000. Motor Vehicle In Lieu Taxes are lower than last year due to timing of the receipts. Transfer and Transient Occupancy Taxes are higher over the prior year due to an increase in the number and valuation of residential sales transactions in the City and higher occupancy rates at local hotels.
Business License Tax revenues are ahead of projections resulting from new collection methods implemented by the Finance Department and a continued recovery in the economy. Departmental Revenues are higher than in the same quarter last year due to increase in revenues received from the City's Basic Life Services Program, Ambulance Program and Traffic Citations. Interest and Rental Income are lower than the prior year due to the timing of receipts. Transfers In are lower than in the prior year due to a one time scheduled transfer.
General Fund expenditures by major department are summarized on page 2 of the Exhibit and include actual expenditures at September 30, 2014, including General Fund transfers to Vacation Liabilities, the Police/Fire Pension Fund, the Library Fund, and the Recreation Trust Fund. As of September 30, 2014, all departments are currently at or below the budget.
Special Revenue Funds
The Special Revenue Fund group includes funds accounting for the City's community development activities, streets funds, library operations, various assessment districts, and the Recreation fund. The FY14-15 actual receipts at September 30, 2014, for this fund group totaled $7.4 million (19% of budget); actual expenses totaled $7.0 million (16% of budget).
A number of these funds are grant or capital project driven funds, such as the transportation related and public safety grants funds, which generate revenues and expenditures in patterns different from the City's other operating funds. Sufficient reserve funds are maintained to ensure completion of projects or programs.
Capital Project Funds
The Capital Project Fund Group, which includes such individual funds as the Capital Improvement Projects fund, Construction funds, Assessment Districts, Development Impact Fee funds and the Urban Runoff fund, had aggregate actual revenues of $2.3 million (10% of budget) and expenditures of $5.7 million (26 % of budget) at September 30, 2014.
Many of these funds are project driven funds, or derive their revenues from the collection of impact fees from new development, which generate revenues and expenditures in patterns different from the City's other operating funds. Sufficient reserves are maintained to ensure completion of projects or programs.
Debt Service Funds
The Debt Service Fund Group accounts for the long-term debt of the City, including Base Reuse, as of September 30, 2014. The available fund balances of all debt service funds was approximately $0.6 million as of September 30, 2014. Additional monies are transferred in from a variety of sources to meet the debt service requirements as they come due. The funding source is dependent upon the purpose of the bond issue.
Enterprise Funds
The Enterprise Fund Group, consists of the City's Sewer Fund, requires proprietary fund balance reporting that includes cash, reserves, fixed assets and related long-term debt of the fund. Page 11 of the Exhibit includes the available reserves (excluding fixed assets and related long-term debt) for the sewer fund. The aggregate available reserve balance at September 30, 2014 for the Sewer Fund was $30.1 million, which includes $8.5 million of unspent bond proceeds allocated for approved sewer improvement projects. Sufficient reserves are maintained to ensure completion of current projects and programs.
Internal Service Funds
The Internal Service Fund Group includes those funds created for the accumulation of reserves for insurance claims, vehicle, technology and equipment replacement, facility maintenance, vacation liabilities and for retiree health and dental costs. Revenues to these funds derive from administrative (cost recovery) charges to the other funds, primarily the General Fund. The working capital balance of this Internal Service Fund group was $19.5 million as September 30, 2014.
The working capital balance does not reflect the long term liabilities for Workers' Compensation claims (approximately $7.7 million), Risk Management Claims (approximately $2.2 million) and the unfunded portion of Other Post-Employment Benefits (OPEB) valued at approximately $91 million as of January 1, 2013.
Trust and Agency Funds
The Trust and Agency Fund Group includes bond funds for several bond issues which are not the obligation of the City, and funds established for the current year's payment of the City's historical pension obligations ( 1079 and 1082 Pension Plans). The available balance for this fund group as of September 30, 2014 was $3.1 million.
Successor Agency
The Successor Agency is an entity separate from the City and accounted for in separate trust funds that are used to account for tax increment monies received and payments of items approved by the Oversight Board in the Required Obligation Payment Schedule (ROPS). Governmental accounting standards require that the full amount of debt outstanding be recorded as part of these funds. The deficit balance as of September 30, 2014 was approximately $55.3 million, which reflects bonded debt outstanding of approximately $69.4 million, to be paid from future tax increment revenue. The successful refunding of the 2003 Tax Allocation Bonds will be reflected in future quarterly reports.
PROPOSED FIRST QUARTER BUDGET ADJUSTMENTS
Staff has reviewed the City's financial results and is proposing the following first quarter budget adjustments to account for errors in calculations and unanticipated events not accounted for in the City's adopted budget for Fiscal Year 2014-15. The net effect on estimated fund balances by fund is detailed in the table below:
Proposed Budget Adjustments
Fund |
Revenues |
Expenses |
Net Revenue (Expense) |
278 - Bayport Maintenance District |
$179,000 |
|
$179,000 |
280 - Recreation |
39,000 |
|
39,000 |
224 - Parking Meter |
|
$30,000 |
(30,000) |
224.1 - Civic Center Garage |
|
22,000 |
(22,000) |
351 - Urban Runoff |
|
101,000 |
(101,000) |
228 - Housing In Lieu |
184,060 |
184,060 |
- |
266 - Affordable Housing (a) |
92,550 |
255,005 |
(162,455) |
266 - Affordable Housing (b) |
|
150,000 |
(150,000) |
Total |
$494,610 |
$742,065 |
$(247,455) |
· Bayport Maintenance District and Recreation Fund - Increase revenue in both the Bayport Maintenance District and the Recreation Fund based upon an error found in the original budgeting worksheet for Fiscal Year 2014-15.
· Parking Meter and Civic Center Garage - Increased personnel benefit costs associated with existing authorized personnel in each fund not included in the budget as adopted. The Fund Balance of each fund is sufficient to cover these increased expenses.
· Urban Runoff -Three maintenance projects included in the CIP details were omitted from the operating budget as follows:
o Golf Complex lagoon cleaning $21,000
o School & Community education $ 5,000
o South Shore Lagoon Maintenance $75,000
There are sufficient funds in the Fund Balance to cover these expenses.
· Housing In Lieu - Increase both revenue and expenses as a result of unanticipated loan payoffs making funds available for additional projects.
· Affordable Housing (a) - An increase of revenues from affordable housing fees paid by developers greater than had been anticipated needs to be recognized in order to assist in covering additional costs relating to various new affordable housing units being planned by the Alameda Housing Authority. While the additional revenues are insufficient to cover all costs, the Fund Balance will be used to cover the remainder.
· Affordable Housing (b) - Increase expense budget to cover the anticipated costs related to Administrative Expenses denied by the State Department of Finance for Required Obligation Payments (ROPS) 14-15A (July-December 2014) These expenses will be accounted for in future budgets.
FINANCIAL IMPACT
The FY14-15 unaudited first quarter report includes information detailing the variances between budgets and actual for revenues, expenditures, capital and maintenance projects, as well as changes in fund balances through September 30, 2014. The Exhibit was created to present a representation of the City's actual results and of available reserves for each fund through the end of the first quarter.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is in conformance with the Alameda Municipal Code and all policy documents.
ENVIRONMENTAL REVIEW
This activity is not a project and is exempt from the California Environmental Quality Act (CEQA) pursuant to section 15378 (b) (4) of the CEQA Guidelines, because it involves governmental fiscal activities (acceptance of the fourth quarter financial report), which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
RECOMMENDATION
Accept the First Quarter Financial Report for the period ending September 30, 2014 and proposed budget adjustments. (City and City as Successor to the Community Improvement Commission).
Respectfully submitted,
Juelle-Ann, Interim Finance Director
By:
Brad Farmer, Finance Supervisor
Financial Impact section reviewed,
Juelle-Ann Boyer, Interim Finance Director
Exhibit:
1. Quarterly Financial Report