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HomeMy WebLinkAboutE-7 First Quarter Financial ReportQuarterly Financial Report November 16, 2015 Page 2 of 2 CONSENT ITEM E-7 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: TROY L. BUTZLAFF, ICMA-CM, CITY MANAGER FROM: TALIKA JOHNSON, DIRECTOR OF FINANCE DATE: NOVEMBER 21, 2016 SUBJECT: FIRST QUARTER FINANCIAL REPORT ENDING SEPTEMBER 30, 2016 SUMMARY: In an effort to be more transparent and to provide an opportunity to evaluate the City's fiscal health, the Finance Department has prepared a quarterly financial report. This report summarizes first quarter budget-to-actual analysis for the City’s General Fund, Gas Tax, Fire Safety Special Revenue funds, the Sewer Enterprise fund, and major Internal Services funds including Risk Management/Liability and Information Technology. The proposed action consists of receiving, reviewing and filing the quarterly financial report. RECOMMENDATION: Staff recommends that the City Council take the following action: 1) Receive, review, and file the first quarterly financial report ending September 30, 2016. DISCUSSION: The Finance Department has prepared a quarterly financial report for the major non-utility funds to provide the City Council and public an update on the City’s financial position. Included in the report are the statuses of the General Fund, Gas Tax, Fire Safety Special Revenue Funds, Sewer Enterprise Fund, and Risk Management/Liability and Information Technology Internal Services funds. The General Fund received a total of $6.2M in revenues which represents approximately 15.3% of the estimated revenues while prior year’s first quarter revenues reflected 11.06%. The higher FY16-17 Q1 revenues in comparison with the same period last year is primarily due to the revenue the City received for the parking easement sold to the Metro Gold Line Foothill Extension Construction Authority for a purchase price of $2,000,000 that was approved by the City Council on December 7, 2015. APPROVED COUNCIL MEETING 11/21/2016 Quarterly Financial Report November 21, 2016 Page 2 Q1 also reflects additional appropriations of $71,124, which is highlighted in the attached report (Attachment 1). Overall, General Fund expenditures are on target for the first quarter at 24.4% of adjusted budget at $7.7M. Gas Tax revenues are pacing at 23.7% of the 1st quarter FY2016-17 adjusted budget due to the timing of when the State Controller Office distribute the revenues to the City, and the expenditures are tracking slightly higher at 27.5% due to timing of the planned expenditures. Fire Safety Fund’s operating revenues are minimal due to the timing of the transfer revenues. The expenditures are right on the mark of 25% for the 1st quarter. Sewer year-to-date operating revenues are 25.8% of estimated budget due to timing to the revenues. Expenditures are slightly lower than the 25% quarter end mark at 22.1%. The revenues for the Risk Management Fund are low at 8.7% due to the timing of its allocations. The expenditures are at 69.2% of the adjusted budget primarily due to the annual liability and worker’s compensation premiums that are due and payable in the 1st quarter. The Information Technology Fund revenues in the 1st quarter are not indicative of its collections. Its allocations are recorded twice a year, in December and June. The expenditures are pacing at 22.9%, slightly below the Q1 budget. FISCAL IMPACT: Although first quarter revenues and expenditures provide minimal data for analysis, the C it y ’s financial position is good and revenues/expenditures are consistent with the FY 2016/17 budget projections. As the City moves further into the fiscal year, Staff will continue to closely monitor revenues and expenditures, and if necessary, revisions will be recommended at the mid-year budget study session. Prepared by: Reviewed and Approved: Talika M. Johnson Louie F. Lacasella Director of Finance Management Analyst Reviewed and Approved: Troy L. Butzlaff, ICMA-CM City Manager Attachment: 1) Quarterly Financial Report-1st Quarter, Ending September 30, 2016 2016/17 Quarterly Financial Report 1st Quarter, Ending September 30, 2016 OVERVIEW  This financial report summarizes the City’s General Fund’s pos ition for the 1st quarter of Fiscal Year 2016/17 (July 1, 2016 through September 30, 2016). Also, included are the major Special Revenue Funds: Gas Tax and Fire Safety; the Sewer Fund; and the major Internal Services Funds: Risk Management/Liability and Information Technology. The purpose of this report is to provide the City Council, City Management, and the Azusa community with an update on the City’s fiscal status based on the most recent financial information available. GENERAL FUND SUMMARY With the 1st quarter’s data, the projection through the end of the fiscal year for total sources (revenues and transfers-in) are estimated to be on target and consistent with the adopted revenue budget of $40,452,778. Total uses (expenditures and transfers-out) are estimated to be approximately $71,124 higher than the adopted expenditure budget. Table 1 shows the adjusted budget figures: The variance in uses of $71,124 was due to: a one-time FY 2015/16 carry forward of remaining project budget for the Classification and Compensation Study ($29,391); carry over of miscellaneous costs from FY 15/16 of ($21,733); and unanticipated legal costs required for the City to withdrawal from LA Works Joints Power of Authority ($20,000). The available fund balance shown in Table 1 is the estimated unaudited fund balance by the end of June 30, 2017, and this estimate may change once the FY 2015/16 audit has been completed. While continued growth in revenue sources is anticipated, the 1st quarter’s revenues provided limited meaningful data that can identify trends for the full year projection. Further into the 2016/17 fiscal year, revenues and expenditures will be closely monitored and a revised update will be provided midway through the year with more data on the full year forecast and trend analysis. Attachment 1  AB C Adopted  Budget  2016‐17 Q1 Adj.  Budget  2016‐17 Budget  Adjustments   (B ‐ A) Beginning Estimated Fund Balance $        2.00 $        2.00 * $                    ‐    Plus Revenues         38.92          38.92                         ‐    Transfers In           1.53             1.53                         ‐    Total  2016‐17 Sources         40.45          40.45                         ‐    Less  Expenditures         31.49          31.56                    0.07  Transfers Out           5.78             5.78                         ‐    Total  FY 2016‐17 Uses         37.27          37.35                   0.07  Revenues in excess/(below) Exp‐FY 2016‐17           3.18             3.11                  (0.07) Available Fund Balance $        5.18 $        5.11 $             (0.07) *Unaudited Table 1 Budget vs. Estimated Actual (in millions) 2016‐17 Quarterly Financial Report A ttachment 1 1st Quarter, Ending September 30, 2016 Page 2 of 5   GENERAL FUND REVENUES Table 2 shows actual collections for the major revenue sources and the percent collected compared to the adjusted budget. Table 3 shows that revenues are trending $1.87M higher than the same period last year. Revenue Collection by Source as of 9/30/16 2016‐17 Actual  % of REVENUES Adjusted Budget YTD 9/30/16 Adj. Budget Property Tax $9,197,783 $0 0.0% Sales Tax 5,764,711 380,300 6.6% UUT Tax 2,900,000 683,359 23.6% Other Taxes 8,496,283 1,367,477 16.1% Charges for Services 2,705,562 399,237 14.8% Cost Reimb.2,384,390 71,865 3.0% Fines & Penalties 1,227,050 173,474 14.1% License  & Permits 2,964,861 669,880 22.6% Miscellaneous 3,071,305 1,987,111 64.7% Money  & Property Use 1,740,833 449,507 25.8% Total  Revenues $40,452,778 $6,182,212 15.3% Table  2: YTD % of Budget Actual Actual Increase/ REVENUES YTD 9/30/15 YTD 9/30/16 (Decrease) Property Tax $0 $0 $0 Sales Tax 326,985          380,300 53,315 Utility User Tax 652,876 683,359 30,484 Other Taxes 1,326,715 1,367,477 40,761 Charges for Services 366,226 399,237 33,011 Cost Reimb.135,903 71,865 (64,037) Fines & Penalties 276,595 173,474 (103,121) License  & Permits 615,122 669,880 54,759 Miscellaneous 180,143 1,987,111 1,806,968 Money  & Property Use 435,488 449,507 14,019 Total  Revenues $4,316,053 $6,182,212 $1,866,159 Table  3:  Year‐to‐Year Comparison Chart 1 Revenues Collected by Source Quarter Ending: 9/30/15 vs. 9/30/16 Property Tax collections are zero and it is normal due to the timing of the revenue allocation by the County of Los Angeles Auditor Controller Tax Division. The majority of the property tax collections are received in four payments in December, January, April and May of each calendar year. $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 YTD 9/30/15 YTD 9/30/16 2016‐17 Quarterly Financial Report A ttachment 1 1st Quarter, Ending September 30, 2016 Page 3 of 5   Sales Tax collections are at 6.6% of the adjusted budget. The main reason for the low rate of collections is due to the timing of when the revenues are available. The City will not receive the August and September tax revenues from the State of California Board of Equalization until October and November of 2016 respectively. Utility User’s Tax collections are at 23.6% of the adjusted budget. This percentage is reflective of the consumption of utility services such as gas, electric and water. Other Taxes collections are at 16.1% of the adjusted budget. Timing of the payments is the reason for the low rate. Most revenues are collected after the 1st quarter. Charges for Services collections are at 14.8% of the adjusted budget. Revenues are collected as services are rendered and fees for Recreation programs are primarily collected during the 4th quarter. Cost reimbursement collections are at 3.0% of the adjusted budget. Revenues are collected based on various grant reimbursement agreements and are primarily collected later on in the fiscal year. Fines and Penalties collections are at 14.1% of the adjusted budget. The 1st quarter revenues are pacing low primarily due to staffing constraints. With priority focused on public safety, parking enforcement and motor vehicle ticketing activities have decreased. Finance staff will continue WRPRQLWRUduring the rest of the fiscal year. License and Permits collections are at 22.6% of the adjusted budget. Miscellaneous fees for Planning, Building Permits and Public Works fees collected are slightly lower than the first quarter projection, and the timing of various development projects played a role in the percentage collected. Activity is anticipated to increase due to several developments in the City such as the new Hilton hotel and Lagunitas. Miscellaneous collections are at 64.7% of the adjusted budget. The 1st quarter revenues are pacing high primarily due to the revenue the City received for the parking easement sold to the Metro Gold Line Foothill Extension Construction Authority for a purchase price of $2,000,000 that was approved by Council on December 7, 2015. Money and Property Use collections are at 25.8% of the adjusted budget. The 1st quarter revenues are pacing lower due to the timing of the rental revenues and water lease rights. As the year progresses, the revenue should pace fairly close to the budget target.   GENERAL FUND EXPENDITURES General Fund expenditures are tracking close to the anticipated 25% 1st quarter mark. Expenditures by Category as of 9/30/16 Table 4: % of Budget                                               Table 5: Year-to Year Comparison FY 16‐17 Actual  % of EXPENDITURE Working Budget YTD 9/30/16 Adopted Personnel $22,530,060 $6,343,675 28.2% Operating 9,034,589 1,352,109 15.0% Total  Expenditures $31,564,649 $7,695,784 24.4%        Actual Actual Increase/ EXPENDITURE YTD 9/30/15 YTD 9/30/16 (Decrease) Personnel $6,726,179 $6,343,675 ($382,504) Operating 1,326,977     1,352,109 25,132 Total Expenditures $8,053,156 $7,695,784 ($357,372) 2016‐17 Quarterly Financial Report A ttachment 1 1st Quarter, Ending September 30, 2016 Page 4 of 5   The expenditures outlined in Table 4 are pacing on target and consistent with the 1st quarter budget. The personnel category in Table 4 is higher primarily due to a lump-sump CalPERs payment for the pooled Public Safety fund in the amount of $1,181,914. The 1st quarter expenditures on table 5 compared to the same period last year was lower primarily due to retirements and vacancies that have not been filled. DEPARTMENT EXPENDITURES At the end of the 1st quarter, most departments are tracking at the 25% 1st quarter or below of the adjusted budget. Some expenses are paid in the beginning of the year such as Recreation seasonal staff and the lump- sum CalPERs payment for Public Safety as mentioned earlier. Table 6 Chart 2 Expenditures by Department % of Budget by Department As of 9/30/16 as of 9/30/16 2016/17 Actual EXPENDITURE Adj. Budget YTD 9/30/16 % of Budget Council $135,525 $27,923 20.6% City Clerk 664,155               104,368 15.7% City Attorney 250,000               55,090 22.0% City Treasurer 203,870               13,199 6.5% Administration 579,780               138,903 24.0% Finance 1,262,760            280,339 22.2% Economic & Comm. Dev. 2,037,290            400,892 19.7% Human  Resources 485,391               110,284 22.7% Library 1,149,370            212,957 18.5% Public Safety 18,167,267         4,888,821 26.9% Public Works 843,485               178,647 21.2% Recreation & Fam. Serv. 3,178,932            1,032,289 32.5% City‐Wide 2,606,824            252,072 9.7% Total Expenditure $31,564,649 $7,695,784 24.4% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% MAJOR SPECIAL REVENUE, SEWER AND INTERNAL SERVICES FUNDS SUMMARY The major Special Revenue funds including the Gas Tax, Fire Safety fund, Sewer Fund, and the major Internal Services funds such as Risk Management/Liability and Information Technology funds are reflected below. Table 7: Major Special Revenue and Internal Services Fund Revenues Table 8: Major Special Revenue and Internal Service Fund Expenditures 2016‐17 Actual % of REVENUE Adjusted Budget YTD 9/30/16 Adj. Budget Gas Tax Fund $1,097,670 $260,231 23.7% Fire Safety 4,656,973 67,585 1.5% Sewer Fund 2,910,870 750,747 25.8% Risk Management/Liab Fund 3,020,012 261,946 8.7% IT Fund 1,500,500 1,215 0.1% Total Revenues $13,186,025 $1,341,724 10.2% 2016‐17 Actual % of EXPENDITURE Adjusted Budget YTD 9/30/16 Adj. Budget Gas Tax Fund $1,287,320 $353,780 27.5% Fire Safety 4,576,973 1,144,241 25.0% Sewer Fund 3,539,483 781,485 22.1% Risk Management/Liab Fund 2,637,170 1,823,756 69.2% IT Fund 1,554,934 356,460 22.9% Total Expenditures $13,595,880 $4,459,722 32.8% 2016‐17 Quarterly Financial Report A ttachment 1 1st Quarter, Ending September 30, 2016 Page 5 of 5   Chart 3 Major Special Revenue & Internal Services Funds Revenues by Funds Ending 9/30/2016                                             Chart 4 Major Special Revenue & Internal Services Funds Expenditures by Funds Ending 9/30/2016 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% Gas Tax Fund Gas Tax revenues are pacing at 23.7% of the 1st quarter FY2016/17 adjusted budget due to the timing of when the State Controller Office distribute the revenues to the City, and the expenditures are tracking slightly higher at 27.5% due to timing of the planned expenditures. Fire Safety Fund Fire Safety Fund’s operating revenues are minimal due to the timing of the transfer revenues. The expenditures are right on the mark of 25% for the 1st quarter. Sewer Fund Sewer year-to-date operating revenues are 25.8% of estimated budget. Expenditures are slightly lower than the 25% quarter end mark at 22.1%. Risk Management Fund The revenues for the Risk Management Fund are low at 8.7% due to the timing of its allocations. The expenditures are at 69.2% of the adjusted budget primarily due to the annual liability and worker’s compensation premiums that are due and payable in the 1st quarter. Information Technology Fund The Information Technology Fund revenues in the 1st quarter are not indicative of its collections. Its allocations are recorded twice a year, in December and June. The expenditures are pacing at 22.9%, slightly below the Q1 budget.