Loading...
HomeMy WebLinkAboutE-20 Staff Report - FY 2020-21 Third Quarter ReportCONSENT ITEM E-20 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: SERGIO GONZALEZ, CITY MANAGER FROM: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES DATE: AUGUST 16, 2021 SUBJECT: FY 2020/21 THIRD QUARTER FINANCIAL REPORT ENDING MARCH 31, 2021 BACKGROUND: 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 the third 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 the City Council take the following action: 1) Receive, review, and file the FY 2020/21 third quarter financial report ending March 30, 2021. ANALYSIS: Attached is 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. FISCAL IMPACT: The 3rd Quarter FY2021 financial report was provided to review the fiscal position of the City. Details of the revenue and expenditure budget adjustments are outlined in the attached quarterly financial report. Staff will continue to closely monitor the fiscal impact, and if necessary, recommend revisions to the City Council as appropriate. APPROVED CITY COUNCIL 8/16/2021 3rd Quarter Financial Report August 16, 2021 Page 2 Prepared By: Reviewed and Approved: Richard Lam, Budget Administrator Talika M. Johnson, Director of Administrative Services Reviewed and Approved: Sergio Gonzalez, City Manager Attachment: 1. Quarterly Financial Report – 3rd Quarter, Ending March 31, 2021 FY 2020/21 Quarterly Financial Report 3rd Quarter, Ending March 31, 2021 OVERVIEW This financial report summarizes the City’s General Fund’s position for the 3rd quarter of Fiscal Year 2020/21 (July 1, 2020 through March 31, 2021). 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 3rd quarter’s revised data, the projection through the end of the fiscal year for total sources (revenues and transfers-in) are estimated to be $49,465,106, and it is higher than the adopted revenue of $46,634,102 by $2,831,004 primarily due to higher property tax $458,895, sales tax $970,560, transaction use tax $756,375, one-time allocation of the Coronavirus care act fund $613,134. Total uses (expenditures and transfers-out) are estimated to be $410,276 higher primarily due to budget carryforward including the HDL replacement system (Land Management System), and the purchase of new police vehicles, etc. Table 1 shows the adjusted budget figures: A B C Adopted Budget 2020-21 Revised Budget 2020-21 Variance (B - A) Beginning Reserve Balance $ 20.55 $ 20.55 * $ - Plus Revenues 45.11 47.92 ** 2.81 Transfers In 1.55 1.55 - Total FY 2020-21 Sources 46.65 49.47 2.81 Less Expenditures 39.84 40.25 ** 0.41 Transfers Out 7.92 7.92 - Total FY 2020-21 Uses 47.76 48.17 0.41 Expenses in (excess)/below Exp-FY 2020-21 (1.11) 1.30 2.40 Estimated Unassigned Fund balance before reserves 19.44 21.85 Less: Internally Restricted Reserves Budget Stabilization & Catastrophic Reserve 9.55 9.63 *** 0.08 Capital & Infrastructure Replacement Reserve 1.50 1.50 *** - Insurance Reserve 1.00 1.00 *** - Retiree Benefits Reserve 2.00 2.00 *** - Available Reserve Balance $ 5.39 $ 7.71 $ 2.32 *Unaudited **Financial Data as of 8/4/21 - Q3 FY20-21 ***Established Reserves - Per 6/15/20 Council Approval Revised Reserved Policy-Resolution# 2020-037 Table 1 Budget vs. Estimated Actual (in millions) Attachment 1 FY 2020-21 Quarterly Financial Report Attachment 1 3rd Quarter, Ending March 31, 2021 Page 2 of 6 The 3rd quarter’s revenues are pacing lower than the 75% mark due to timing of when the revenues are allocated to the Cities such as Property Tax, Sales Tax, and Transaction Use Tax. Staff is anticipated that the full year revenue and expense forecast will be achieved and will closely monitor the activities and update Council if there are any material data that will impact the full year revenue budget. 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 $4.2 Mil higher than the same period last year. This is primarily due the passage of Measure Z, the transaction use tax, and also stronger than forecasted sales and property taxes combined for $3.46Mil. In addition, there was a one-time allocation of the Coronavirus Relief fund of $613,134. Finally, Other taxes are higher due to increase in the hazardous waste tax rate per council actions, and also CPI increases in the enterprise businesses allowable by the agreements. Revenue Collection by Source As of 03/31/21 Chart 1 Revenues Collected by Source Quarter Ending: 03/31/20 vs. 03/31/21 2020-21 Actual % of REVENUE Adjusted Budget YTE 03/31/21 Adj. Budget Property Tax 12,187,428 7,541,112 61.9% Sales Tax 10,002,912 6,007,393 60.1% UUT Tax 3,323,341 2,304,391 69.3% Other Taxes 10,112,888 6,753,032 66.8% Charges for Services 4,452,305 3,233,664 72.6% Cost Reimbursement 2,690,523 1,270,984 47.2% Fines & Penalties 794,680 886,266 111.5% License & Permits 2,526,900 2,199,736 87.1% Miscellaneous 815,784 930,570 114.1% Money & Property Use 2,558,345 1,685,436 65.9% Total Revenues $49,465,106 $32,812,584 66.3% Table 2: YTE % of Budget Actual Actual Increase/ REVENUE YTD 03/31/2020 YTD 03/31/2021 (Decrease) Property Tax $6,269,070 $7,541,112 $1,272,042 Sales Tax 3,820,269 6,007,393 2,187,124 Utility User Tax 2,197,671 2,304,391 106,720 Other Taxes 6,279,509 6,753,032 473,523 Charges for Services 2,659,904 3,233,664 573,761 Cost Reimb.1,630,728 1,270,984 (359,744) Fines & Penalties 1,204,206 886,266 (317,940) License & Permits 2,051,966 2,199,736 147,770 Miscellaneous 438,702 930,570 491,868 Money & Property Use 2,021,319 1,685,436 (335,883) Total Revenues $28,573,343 $32,812,584 $4,239,241 Table 3: Year-to-Year Comparison $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 YTD 03/31/2020 YTD 03/31/2021 FY 2020-21 Quarterly Financial Report Attachment 1 3rd Quarter, Ending March 31, 2021 Page 3 of 6 Property Tax collections are lower and it is normal due to the timing of the revenue allocation by the County of Los Angeles Auditor Controller Tax Division. The main reason for the low rate of collection is due to the timing of when the revenues are allocated by the Los Angeles County 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. Sales Tax and Transaction Use Tax combined collections are at 60.1% 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 revenues compared to the same period last fiscal year is higher primarily due to the passage of Measure Z, the transaction use tax, and better than expected sales tax revenues. Utility User’s Tax collections are at 69.3% 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 66.8% of the adjusted budget. Other taxes are comprised mainly of transient occupancy tax (TOT), franchise/landfill, land excavation, material recovery facility, and hazardous waste fees. Other taxes are slightly lower due to the timing of when the taxes are received. Some revenues such as franchise/landfill are not paid until 30 days after the quarter ends. The full year forecast will be achieved based on the latest data. Charges for Services collections are at 72.6% of the adjusted budget. Revenues are collected as services are rendered. This revenue source was impacted slightly due to slower economic activities resulting from the Covid-19 pandemic. For example, the City did not receive any revenues from recreation fees including sports, recreation, swimming, etc. during the pandemic shutdown. However, this revenue category has recovered nicely once the economy opened up. Cost reimbursement collections are at 47.2% of the adjusted budget. Revenues are collected based on various reimbursement agreements. Fines and Penalties collections are at 111.5% of the adjusted budget. The 3rd quarter revenues are pacing higher than anticipated. There was a government mandate not to charge penalties or close any accounts for utility customers during the covid19 pandemic. The City and L&W started back assessing penalties as of Nov of 2020 and the cumulative penalties thru Q3 came in higher than anticipated. License and Permits collections are at 87.1% of the adjusted budget. This is mainly due to the timing of development activities and when the licenses and permit fees are issued. Miscellaneous collections are at 114.1% of the adjusted budget. The revenues are pacing high primarily due to a one-time Corona Virus Relief Stimulus payment of $613,134. Money and Property Use collections are at 65.9% of the adjusted budget. The 3rd quarter revenues are pacing lower than expected. Revenues were pacing lower due to lower rental revenues received from Women's Club, Senior Centers, and Recreation Facilities as a result of the pandemic. In addition, the Promenade lease from the LA County Metro was delayed and the anticipated lease of $59,040 will not be realized in FY 2021. FY 2020-21 Quarterly Financial Report Attachment 1 3rd Quarter, Ending March 31, 2021 Page 4 of 6 GENERAL FUND EXPENDITURES General Fund expenditures are tracking at 65.1% of the third quarter’s budget. Expenditures by Category As of 03/31/21 The expenditures outlined in Table 4 are pacing in line with the 3rd quarter budget. The personnel budget pacing is slightly over at 76.1, and it is primarily due to increased CalPERS costs. The operation budget is lower due to the timing of when the services and materials are procured. The 3rd quarter total expenditures on table 5 compared to the same period last year was lower. The personnel cost efficiency efforts such as the consolidate of the Human Resource unit into Administrative Services offset was realized and offset by higher one time operating purchases such as phone system upgrade, police vehicle purchase, etc. yielding lower total cost by $325,900. Overall, the General Fund expenditures are at 65.1% or $31.3 mil of the adjusted budget of $48.2 mil. DEPARTMENT EXPENDITURES At the end of the 3rd quarter, most departments are tracking fairly close to the 75% 3rd quarter mark of the adjusted budget. The Community Resource Department is pacing low due to the pandemic shut down and halted the recreation activities. Human Resources was pacing low due to position vacancies, and Economic & Community Development was low due to the timing of the various development projects. Table 6 Chart 2 Expenditures by Department % of Budget by Department As of 03/31/21 as of 03/31/21 FY 20-21 Actual % of EXPENDITURE Working Budget YTE 03/31/21 Adopted Personnel 25,697,251 19,561,034 76.1% Operating 22,472,171 11,777,550 52.4% Total Expenditures $48,169,422 $31,338,583 65.1% Table 4: YTE % of Budget Actual Actual Increase/ EXPENDITURE YTD 03/31/20 YTD 03/31/21 (Decrease) Personnel 20,117,352 19,561,034 ($556,318) Operating 11,547,131 11,777,550 230,418 Total Expenditures $31,664,483 $31,338,583 ($325,900) Table 5: Year-to-Year Comparison FY 2020-21 Actual EXPENDITURE Adj. Budget YTD 03/31/21 % of Budget Council $154,881 $88,467 57.1% City Clerk 620,697 455,328 73.4% City Attorney 275,000 160,303 58.3% City Treasurer 173,105 113,749 65.7% Administration 554,565 382,815 69.0% Finance 1,529,312 1,052,859 68.8% Economic & Comm. Dev.4,330,737 2,048,828 47.3% Human Resources 565,772 240,001 42.4% Library 1,452,843 894,693 61.6% Public Safety 22,297,356 15,173,747 68.1% Public Works 3,590,863 2,307,987 64.3% Community Resources 1,901,584 857,292 45.1% City-Wide 10,722,707 7,562,515 70.5% Total Expenditure $48,169,422 $31,338,583 65.1% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% FY 2020-21 Quarterly Financial Report Attachment 1 3rd Quarter, Ending March 31, 2021 Page 5 of 6 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 and Internal Service Fund Expenditures Chart 3 Major Special Revenue & Internal Services Funds Revenues by Funds Ending 03/31/21 Chart 4 Major Special Revenue & Internal Services Funds Expenditures by Funds Ending 03/31/21 2020-21 Actual % of REVENUE Adjusted Budget YTD 03/31/21 Adj. Budget Gas Tax Fund $1,279,753 $827,100 64.6% Fire Safety 5,874,032 3,471,505 59.1% Sewer Fund 3,248,928 2,425,105 74.6% Risk Mgmt/Liab Fund 3,275,919 2,147,166 65.5% IT Fund 2,029,376 1,252,627 61.7% Total Revenues $15,708,008 $10,123,502 64.4% Table 7: YTD % of Budget 2020-21 Actual % of EXPENDITURE Adjusted Budget YTD 03/31/21 Adj. Budget Gas Tax Fund $1,656,568 $997,727 60.2% Fire Safety 5,874,032 4,623,959 78.7% Sewer Fund 3,548,540 1,921,788 54.2% Risk Mgmt/Liab Fund 4,366,112 2,865,787 65.6% IT Fund 2,099,619 1,257,851 59.9% Total Expenditures $17,544,871 $11,667,113 66.5% Table 8: YTD % of Budget 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Gas Tax Fund Fire Safety Sewer Fund Risk Mgmt/Liab Fund IT Fund 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Gas Tax Fund Fire Safety Sewer Fund Risk Mgmt/Liab Fund IT Fund FY 2020-21 Quarterly Financial Report Attachment 1 3rd Quarter, Ending March 31, 2021 Page 6 of 6 Gas Tax Fund Gas Tax revenues are pacing at 64.6% of the 3rd quarter FY 2020/21 adjusted budget, and the expenditures are tracking at 60.2%. Fire Safety Fund Fire Safety Fund’s operating revenues are pacing at 59.1% of revenues. The expenditures are pacing at 78.7% for the 3rd quarter. The total payments were slightly higher, but as the year progresses, the full year costs will smooth out. The full year costs are anticipated to be consistent with the FY 2020/21 budget. Sewer Fund Sewer year-to-date operating revenues are 74.6% of estimated budget. Expenditures are lower than the 3rd quarter end mark at 54.2% due to the timing of the various projects. Risk Management Fund The revenues for the Risk Management Fund are at 65.5% due to the timing of its allocations. The expenditures are at 65.6% of the adjusted budget due to the timing of when claims are paid out. Information Technology Fund The Information Technology Fund revenues for the 3rd quarter are pacing at 61.7%. Its allocations are recorded twice a year, in December and June. The expenditures are pacing at 59.9% and consistent with the timing of the various IT projects.