Title
Recommendation to Accept the Fourth Quarter Financial Report for the Period Ending June 30, 2015. [City Council and SACIC] (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
From: Elizabeth D. Warmerdam, Interim City Manager
Re: Recommendation to Accept the Fourth Quarter Financial Report for the Period Ending June 30, 2015
BACKGROUND
The fourth quarter’s financial report on all City funds has been completed, based upon actual unaudited revenues and expenditures through June 30, 2015. This quarterly report includes financial information for all City funds. The Quarterly Financial Report attached as Exhibit 1 to this document includes the following:
• General Fund actual revenues by major category through June 30, 2015;
• General Fund actual expenditures by major department through June 30, 2015;
• Actual expenditures for the City’s capital and maintenance projects through June 30, 2015;
• All Funds revenues, expenditures and changes in current available Fund balances as of June 30, 2015.
DISCUSSION
This quarterly report provides 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. Budget amendments previously approved by the City Council have been included in this report.
General Fund
General Fund actual revenues as of June 30, 2015, were $85 million, or 114% of the FY14-15 budget and 106% of the projected revenue presented in May 2015. Actual expenditures were $79.5 million, or 96% of the FY14-15 budget but only 99% of the projections presented in May 2015. General Fund revenues exceeded the May projections by almost $5 million, which is 6% of the 2014-15 fiscal year.
General Fund major revenue categories are summarized on page 1 of Exhibit 1. 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.
Revenue from Property Taxes has increased due to increased valuation assessments and an increase in home sales taking place in FY14-15. Revenue from Sales Taxes has increased over FY13-14 and at June 30, 2015, is 14% higher than at June 30, 2014. This increase is due to the continued economic recovery and the increased number of businesses in the City.
Transfer Taxes are higher over the prior year due to an increase in the number of properties sold and an increase in valuation of residential sales in the City. However, almost $1.1 million of the current receipts can be considered as one-time revenues because these payments were associated with large properties that were part of business to business transactions and are unlikely to happen each year.
Business License Tax revenues increased over last year due to new businesses opening up in newly constructed buildings on Park Street and at the Alameda Landing. Departmental revenues are higher than in the prior year due to increases in revenues received for City programs, most notably from the Basic Life Support and Ambulance programs. Transient Occupancy Taxes continue to increase as the economy improves and lower fuel prices entice people to travel. Other revenues include a one-time adjustment for the reinstatement of the Alameda Point Improvement Project loan in the General Fund from the Successor Agency with final repayment expected during the 2015-16 fiscal year.
The FY14-15 annual budget for the General Fund total appropriations of approximately $82.9 million is summarized in Exhibit 1. It includes actual expenditures of $79.5 million or 96% of budget at the end of the fiscal year. These expenditures include General Fund transfers to Vacation liabilities, the Police/Fire Pension, the Library, and the Recreation Fund.
Special Revenue Funds
The Special Revenue Funds 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 June 30, 2015, for all the funds in this fund group totaled $43.5 million (107% of budget); actual expenses totaled $38.8 million (79% of budget).
These funds are driven by grants or other specific funding sources and are used for specific purposes, such as the transportation, public safety, and library related programs. Such funding sources require revenues and expenditures to be tracked differently from the City’s other operating funds. There is sufficient funding for the completion of current projects or programs but the addition of any new programs or projects are dependent on availability of future funding sources.
Capital Project Funds
The Capital Projects Funds 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 $19.2 million (43% of budget) and expenditures of $18.9 million (31% of budget) at June 30, 2015.
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.
Debt Service Funds
The Debt Service Funds group accounts for the long-term debt of the City, including Base Reuse, as of June 30, 2015. The available fund balances of all debt service funds were approximately $1.1 million as of June 30, 2015. 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 a bond issue.
Enterprise Fund
The Enterprise Funds group, consisting 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 Exhibit 1 includes the available balances (excluding fixed assets and related long-term debt) for the sewer fund. The aggregate available balance at June 30, 2015 for the Sewer Fund was $35 million, which includes $1.7 million of unspent bond proceeds (contained in fund 602.2) allocated for approved sewer improvement projects. Sufficient reserves are maintained to ensure completion of current projects and programs.
Internal Service Funds
The Internal Service Funds group includes those funds created for the accumulation of reserves for insurance claims, vehicles, technology and equipment replacement, facility maintenance, vacation liabilities and for retiree health and dental costs. Revenues for these funds are derived from administrative (cost recovery) charges to the other funds, primarily the General Fund. The working capital balance of this Internal Service Funds group was $23.9 million as of June 30, 2015.
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 Funds group includes bond funds for several bond issues that are not obligations of the City, and funds established for the payment of the City’s 1079 and 1082 Pension Plans. The available balance for this funds group, as of June 30, 2015 was over $4 million.
Successor Agency
The Successor Agency is an entity separate from the City and presented in special 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 June 30, 2015 was approximately $54 million, which reflects bonded debt outstanding of approximately $59 million, to be paid from future Redevelopment Property Transfer Tax Fund (RPTTF) revenue. The agency successfully refinanced the 2003 CIC Tax Allocation Bonds by the 2014 Tax Allocation Refunding Bonds during the 2014-15 fiscal year.
FINANCIAL IMPACT
The FY14-15 unaudited fourth 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 June 30, 2015. Exhibit 1 was created to present the City’s actual results and status of available reserves for each fund through the end of the fiscal year.
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 Fourth Quarter Financial Report for the period ending June 30, 2015. [City Council and SACIC].
Respectfully submitted,
Elena Adair, Finance Director
Exhibit:
1. Fourth Quarter Financial Report