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HomeMy WebLinkAboutE-10 Staff Report - Q1 FY 2021-22CONSENT ITEM E-10 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: SERGIO GONZALEZ, CITY MANAGER FROM: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES DATE: NOVEMBER 15, 2021 SUBJECT: FY 2021/22 FIRST QUARTER FINANCIAL REPORT ENDING SEPTEMBER 30, 2021 BACKGROUND: In an effort to be more transparent and to provide an opportunity to evaluate the City's fiscal health, the Finance Division has prepared a quarterly financial report. This report provides the 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 the City Council take the following action: 1) Receive, review, and file the FY 2021/22 first quarter financial report ending September 30, 2021. ANALYSIS: Attached is the 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 attached financial report is provided to review current fiscal year budget-to-actual performance as of quarter ending September 30, 2021. Details of the revenue and expenditure budget adjustments are outlined in the quarterly financial report and provides limited, snap shot information. Staff will continue to closely APPROVED CITY COUNCIL 11/15/2021 FY 2021/22 1st Quarter Financial Report November 15, 2021 Page 2 monitor fiscal activities impact, and if necessary, recommend budget revisions to the City Council as appropriate. Prepared By: Prepared By: Richard Lam Talika M. Johnson Budget Administrator Director of Administrative Services Reviewed and Approved: Sergio Gonzalez City Manager Attachment: 1. Quarterly Financial Report – 1st Quarter, Ending September 30, 2021 FY 2021/22 Quarterly Financial Report 1st Quarter, Ending September 30, 2021 OVERVIEW This financial report summarizes the City’s General Fund budget-to-actual position for the first quarter (Q1) of Fiscal Year (FY) 2021/22 (July 1, 2021 through September 30, 2021). Also, included is analysis of 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 First quarter revised budget (i.e. revisions since budget adoption), projects total sources (revenues and transfers-in) of $52,209,220, consistent with the adopted revenues with no change. Total uses (expenditures and transfers-out) are estimated to be $52,240,904, which is $158,840 higher than the adopted expenditures primarily due to $99,381 in budget carryforward for the Promenade property site, $50,000 for the Suite 2B relocation for the Public Works Engineering Division, and $9,459 for parking enforcement contract increase. Table 1 shows the adjusted budget figures: A B C Adopted Budget FY 2021/22 Revised Budget FY 2021/22 Variance (B - A) Beginning Estimated Fund Balance $ 27.00 $ 27.00 * $ - Plus: Revenues 50.55 50.55 ** - Transfers In 1.66 1.66 - Total 2021/22 Sources 52.21 52.21 - Less: Expenditures 44.88 45.04 ** 0.16 Transfers Out 7.20 7.20 - Total FY 2021/22 Uses 52.08 52.24 0.16 Expenses in (excess)/below Exp-FY 2021/22 0.13 (0.03) (0.16) Estimated cash reserves balance before restricted reserves 27.13 26.97 Less: Internally Restricted Reserves Budget Stabilization & Catastrophic Reserve 13.02 13.02 *** - Capital & Infrastructure Replacement Reserve 2.00 2.00 *** - Insurance Reserve 2.50 2.50 *** - Retiree Benefits Reserve 2.00 2.00 *** - Available Undesignated Cash Reserves $ 7.61 $ 7.45 $ (0.16) *Unaudited **Financial Data as of 11/1/21 - Q1 FY 2021/22 ***Established Updated Reserves - Per 6/21/21 Reserved Policy was approved under Resolution # 2021-C29 Table 1 Budget vs. Estimated Actual (in millions) Attachment 1 FY 2021-22 Quarterly Financial Report 1st Quarter, Ending September 30, 2021 Page 2 of 6 With 25& of the budget year passed, first quarter revenues were at 13% of total projections. Following is an explanation of first quarter budget-to-actual results for each of the revenue categories. 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 came in at $1.82 Mil higher than the same period last year. This is primarily due the passage of Measure Z, the transaction use tax, higher hazardous waste tax, and business activities are generally improving. Revenue Collections by Source Chart 1 Revenues Collected by Source Quarter Ending: 09/30/20 vs. 09/30/21 Adjusted Budget Actual % of REVENUE FY 2021/22 YTD 09/30/21 Adj. Budget Property Tax 13,129,662$ 443,269$ 3.4% Sales Tax 6,560,692 502,323 7.7% Transaction Use Tax 4,963,751 451,300 9.1% UUT Tax 3,259,463 737,869 22.6% Other Taxes 10,126,982 1,092,084 10.8% Charges for Services 5,602,149 1,409,853 25.2% Cost Reimbursement 1,783,131 548,184 30.7% Fines & Penalties 1,149,500 248,181 21.6% License & Permits 2,794,500 783,285 28.0% Miscellaneous 240,500 24,765 10.3% Money & Property Use 2,598,890 520,543 20.0% Total Revenues 52,209,220$ 6,761,656$ 13.0% Table 2: YTD % of Budget Actual Actual Increase/ REVENUE YTD 09/30/2020 YTD 09/30/2021 (Decrease) Property Tax -$ 443,269$ 443,269$ Sales Tax 505,459 502,323 (3,136) Transaction Use Tax - 451,300 451,300 Utility User Tax 670,190 737,869 67,679 Other Taxes 941,064 1,092,084 151,020 Charges for Services 1,032,689 1,409,853 377,164 Cost Reimb.422,545 548,184 125,639 Fines & Penalties 76,202 248,181 171,979 License & Permits 612,310 783,285 170,975 Miscellaneous 68,739 24,765 (43,974) Money & Property Use 608,940 520,543 (88,397) Total Revenues 4,938,137$ 6,761,656$ 1,823,519$ Table 3: Year-to-Year Comparison FY 2021-22 Quarterly Financial Report 1st Quarter, Ending September 30, 2021 Page 3 of 6 Property Tax collections came in low in Q1 and is normal due to the timing of when the revenues are remitted by the County of Los Angeles Auditor Controller Tax Division. Majority of property tax collections are received in four payments in December, January, April and May of each calendar year. Collections by end of fiscal year are expected to be on par with budget. Sales Tax collections were at 7.7% of the adjusted budget. The low collections rate for first quarter is due to the timing of when the revenues are remitted to the City. August and September 2021 sales tax will not be distributed by the California Department of Tax and Fee Administration until October and November of 2021. Transaction Use Tax (TUT) collections were at 9.1% of the adjusted budget. Similar to the Sales Tax, the low collection rate is due to the timing of when revenues are available. August and September 2021 TUT will not be distributed by the California Department of Tax and Fee Administration until October and November of 2021. Utility User’s Tax revenues are reflective of consumption of utility services such as gas, electric and water. Collections were at 22.6% of the adjusted budget, and slightly higher than prior year due to increased business activities since onset of the COVID19 pandemic. Other Taxes collections were at 10.8% 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 were higher in comparison to the same period last year mainly due to increases allowable in the enterprise agreements and higher hazardous waste tax. When compared to the same period last year, revenues were higher this year due to faster collection of the Q1 cable franchise fees and property transfer tax. Charges for Services collections were at 25.2% of the adjusted budget. Revenues are collected as services are rendered. This revenue source was higher compared to the same quarter last year due to the timing of the development projects, timely collection of service charges, and timely receipt of the landscape and lighting district assessment. Cost reimbursement collections were at 30.7% of the adjusted budget. Revenues are collected based on various reimbursement agreements. The revenues were higher in Q1 FY 2021-22 than same quarter last year due to greater demand for government services. Fines and Penalties collections were at 21.6% of the adjusted budget. The Q1 FY 2021-22 revenues are pacing slightly below the 25% mark. Revenues were higher this quarter compared to last year, and mainly due to the economy opening up and release on restrictions on issuing fines during the height of the COVID19 pandemic. License and Permits collections were at 28.0% of the adjusted budget, consistent with expected timing of development activities and licenses and permit fees collections. Miscellaneous collections were at 10.3% of the adjusted budget. Revenues in the category represent a small percentage of the general fund revenues and are dependent on items such as metal recycling and other miscellaneous sources that do not come in as a regular revenue stream. Money and Property Use collections were at 20.0% of the adjusted budget. First quarter revenues are paced slightly below target due to lower rental revenues received from Women's Club, Senior Centers, and Aquatic Facilities. Interest income also came in lower. In addition, the Promenade lease from the LA County Metro is delayed and revenues from the lease are not anticipated until FY 2022-23. FY 2021-22 Quarterly Financial Report 1st Quarter, Ending September 30, 2021 Page 4 of 6 GENERAL FUND EXPENDITURES W ith 25%of the fiscal year passed, General Fund expenditures were at 23.0% of budget at first quarter end as outlined in Table 4 below and consistent with first quarter results last year. Expenditures by Category As of 09/30/21 Personnel expenditures came in at 19% of the revised budget, and is lower than prior year because the City did not have to pay the one time lump sum PERS pension payment due to issuance of pension obligation bonds in September 2020. Operating costs was higher in Q1 FY 2021-22 quarter due to the economy and business activities opening up. First quarter total expenditures in Table 5 compared to the same period last year was slightly higher. As stated above, the personnel costs were lower because the City did not have to make the one time lump sum PERS pension payment. Those costs were amortized through the pension obligation bond. Debt Service payment on the bond is the main reason for operating costs being higher than prior year. DEPARTMENT EXPENDITURES At the end of first quarter, actuals for most departments paced below the 25% Q1 mark of the adjusted budget, mainly due to personnel vacancies. The only exception is City-Wide, and it is pacing slightly higher due to the timing of when the debt service payments. Table 6 Chart 2 Expenditures by Department % of Budget by Department As of 09/30/21 As of 09/30/21 Working Budget Actual % of EXPENDITURE FY 2021/22 YTD 09/30/21 Adopted Personnel 26,219,297$ 4,980,881$ 19.0% Operating 26,021,607 7,046,780 27.1% Total Expenditures 52,240,904$ 12,027,661$ 23.0% Table 4: YTD % of Budget Actual Actual Increase/ EXPENDITURE YTD 09/30/20 YTD 09/30/21 (Decrease) Personnel 8,371,197$ 4,980,881$ (3,390,316)$ Operating 3,546,729 7,046,780 3,500,051 Total Expenditures 11,917,926$ 12,027,661$ 109,735$ Table 5: Year-to-Year Comparison Adj. Budget Actual EXPENDITURE FY 2021/22 YTD 09/30/21 % of Budget Council 158,950$ 31,333$ 19.7% City Clerk 657,720 96,320 14.6% City Attorney 285,000 51,944 18.2% City Treasurer 136,915 30,902 22.6% Administration 563,886 116,751 20.7% Finance 1,518,280 326,807 21.5% Economic & Comm. Dev.3,649,053 386,034 10.6% Human Resources 533,665 95,048 17.8% Library 1,519,910 225,286 14.8% Public Safety 20,111,329 3,798,792 18.9% Public Works 3,591,494 714,049 19.9% Community Resources 2,425,190 386,311 15.9% City-Wide 17,089,512 5,768,085 33.8% Total Expenditure 52,240,904$ 12,027,661$ 23.0% FY 2021-22 Quarterly Financial Report 1st Quarter, Ending September 30, 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 09/30/21 Chart 4 Major Special Revenue & Internal Services Funds Expenditures by Funds Ending 09/30/21 Adjusted Budget Actual % of REVENUE FY 2021/22 YTD 09/30/21 Adj. Budget Gas Tax Fund 1,188,842$ 338,789$ 28.5% Fire Safety 6,424,309 1,606,077 25.0% Sewer Fund 3,248,928 729,204 22.4% Risk Mgmt/Liab Fund 3,346,377 2,524,008 75.4% IT Fund 2,184,030 546,008 25.0% Total Revenues 16,392,486$ 5,744,086$ 35.0% YTD % of Budget Adjusted Budget Actual % of EXPENDITURE FY 2021/22 YTD 09/30/21 Adj. Budget Gas Tax Fund 1,800,510$ 310,116$ 17.2% Fire Safety 6,424,309 1,510,147 23.5% Sewer Fund 2,784,162 388,438 14.0% Risk Mgmt/Liab Fund 4,659,308 2,617,055 56.2% IT Fund 2,285,231 475,409 20.8% Total Expenditures 17,953,520$ 5,301,166$ 29.5% YTD % of Budget FY 2021-22 Quarterly Financial Report 1st Quarter, Ending September 30, 2021 Page 6 of 6 Gas Tax Fund Gas Tax revenues are pacing at 28.5% of the first quarter FY 2021-22 adjusted budget, and the expenditures are tracking at 17.2%. Revenues and expenditures are expected to pace with budget by year end. Fire Safety Fund Fire Safety Fund’s operating revenues are pacing at 25.0% of revenues. Expenditures are pacing at 23.5% for the first quarter. Sewer Fund Sewer year-to-date operating revenues are 22.4% of the adjusted budget. Expenditures are lower than the first quarter end mark at 14.0% due to the timing of the various projects and debt service payments. Risk Management Fund The revenues and expenditures for the Risk Management Fund are at 75.4% and 56.2%, respectively, due to premium payments made at the beginning of the fiscal year and allocated to various funds in the City and timing of when claims are paid out. Information Technology Fund The Information Technology Fund revenues for first quarter were at 25.0% of projections. Expenditures were at 20.8% and consistent with the timing of the various IT projects.