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HomeMy WebLinkAboutD-2 Staff Report - FY 23-24 Mid-Year and FY 24-25 Mid-Cycle Budgets ReviewSCHEDULED ITEM D-2 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: SERGIO GONZALEZ, CITY MANAGER FROM: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES DATE: APRIL 15, 2024 SUBJECT: FISCAL YEAR 2023-24 MID-YEAR BUDGET ADJUSTMENTS AND FISCAL YEAR 2024-25 MID-CYCLE BUDGET REVIEW BACKGROUND: On June 19, 2023, the City Council adopted its first Biennial (2-year budget) Budget for Fiscal Years 2023/24 and 2024/25, which still requires an official annual budget adoption before July 1 of each year. This report provides the City Council the following for considerations: 1. A mid-year review of the Fiscal Year 2023/24 budget and recommended budget adjustments. 2.A mid-cycle (2nd year of the biennial budget) review of major changes being proposed for the Fiscal Year 2024/25 budget before its adopted in June 2024. 3. An overview of the City’s General Fund overall financial position. RECOMMENDATIONS: Staff recommends that jointly, the City Council, Utility Board, and Oversight Board take the following actions: 1)Adopt Resolution No. 2024-C20, a Resolution of the City Council of the City of Azusa adopting mid-year budget adjustments for the City of Azusa for the fiscal year commencing July 1, 2023 and ending June 30, 2024; and 2) Adopt Resolution No. 2024-UB01, A Resolution of the Utility Board of the City of Azusa adopting mid-year budget adjustments for the City of Azusa for the fiscal year commencing July 1, 2023 and ending June 30, 2024; and 3) Adopt Resolution No. 2024-R07, A Resolution of the Successor Agency for the Former Redevelopment Agency of the City of Azusa adopting mid-year budget adjustments for the City of Azusa for the fiscal year commencing July 1, 2023 and ending June 30, 2024; and Approved City Council April 15, 2024 FY 2023/24 Mid-Year Budget Adjustments and FY 2024/25 Mid-Cycle Budget Review April 15, 2024 Page 2 4) Receive, review and file Fiscal Year 2023/24 Second Quarter Budget-to-Actual report ending December 31, 2023; and. 5) Provide input and direction on recommended changes for the Fiscal Year 2024/25 Annual Budget before its adoption in June 2024. ANALYSIS: Public safety, general government, internal support services, community resources, such as youth and senior recreational services, library activities, parks and facilities maintenance services make up the majority of the General Fund budget. The Fiscal Year (FY) 2023/24 and 2024/25 budgets were adopted on June 19, 2023, with General Fund projected surpluses of $2.8 million and $2.5 million and unrestricted cash reserve balances of $16.5 million and $14.4 million, respectively. Since budget adoption, several things have taken place which have impacted the annual budgets including: carried forward in progress projects from the FY 2022/23 budget year, implementation of a city-wide classification and compensation study, increased construction costs for capital improvement projects, out-of-pocket legal expenses claims not covered by insurance, and other amendments. Staff provides quarterly budget-to-actual reports to the public which details revenues received and expenditures at certain periods in the year. Mid-way through the fiscal year, Staff performs an in-depth review of the city-wide budget performance and presents necessary adjustments to Council for review and approval. New this year, in addition to the current year’s mid-year budget review, also provided is an overview of major budget changes anticipated for year two (FY 2024/25) of the Biennial Budget, which the City Council will review and adopt in June 2024. Fiscal Year 2023/24 Mid-Year Budget Adjustments General Fund proposed adjustments in total is an increase in revenue of $341,590 and a decrease in expenditures of $533,827 for net fund balance increase of $875,417. All Funds, including the General Fund, proposed adjustments in total is a decrease in revenues of $262,678 and an increase in expenditures of $1,247,046 for net fund balance decrease of $1,509,724. Table 1 is a summary of proposed FY 2023/24 Mid-Year budget amendments with justifications below: FY 2023/24 Mid-Year Budget Adjustments and FY 2024/25 Mid-Cycle Budget Review April 15, 2024 Page 3 Table 1: Proposed Citywide Mid-Year Budget Adjustments for Fiscal Year 2023/24 Increase/(Decrease) Summary by Fund Revenues Expenditures A.General Fund 341,590$ (533,827)$ $ 875,417 B.SB1 (39,288) - (39,288) C.Gas Tax (71,328) - (71,328) D.Prop C - 45,000 (45,000) E.Fire Services (574,002) (574,002) - F.Consumer Services - 125,175 (125,175) G.Water - 1,220,200 (1,220,200) H.Electric - 572,050 (572,050) I.Sewer - 14,550 (14,550) J.Risk Management - 500,000 (500,000) K.Information Technology 80,350 80,350 - L.Successor Agency - (202,450) 202,450 All Funds Total (262,678)$ 1,247,046$ (1,509,724)$ Net Increase/ (Decrease) to Fund Balance A. General Fund – revenues are expected to be higher by $341,590 and expenses lower by $533,827. Revenue changes are primarily due to: finalizing the lease contract with Metro for the Promenade property, higher excavation activities and open space payments by Vulcan, allocation of increased claims expenses to Enterprise funds, higher hazardous waste tax collections, and higher franchise fee collections from increased gas utility prices, offset by decreases from Measure Z transaction and use tax and sales taxes pacing 1.7% lower than forecasted, and less host fee collections due to a scheduled temporary (6-month) closure of Waste Management waste recovery facility. Expenses are expected to be lower due to the City’s Fire Service contract costs being 7.7% below the original forecast. B. SB1 – revenues are expected to be lower by $39,288 due to the State’s budget reduction. C. Gas Tax – revenues are expected to be lower by $71,328 primarily due to lower gas prices and sales. D. Prop C – expenses are expected to be $45,000 higher due to increased maintenance and utility costs for the Metro parking lot. E. Fire Services – the General Fund funds the City’s Fire Services contract. Contract costs are expected to be $574,002 less than budgeted and therefore, incoming transfers from the General Fund is also expected to be lower by the same amount. F. Consumer Services – expenses are expected to be $125,175 higher due to VOIP phone storage and various network security products. FY 2023/24 Mid-Year Budget Adjustments and FY 2024/25 Mid-Cycle Budget Review April 15, 2024 Page 4 G. Water – expenses expected to increase by $1,220,200 for several reasons including, legal fees incurred for current litigation and new water quality regulations; procurement, development, and implementation of new Water Asset Management Tool; increased cost of materials and labor for concrete/asphalt restoration related to water system maintenance and repairs; increased material costs and meter box lead times; increased water treatment chemical costs; general increases in repair parts and labor; and increased allocation of claims expenses not covered by insurance. H. Electric – expenses expected to increase by $572,050 for increased line maintenance, digital alert, and tree trimming costs, and increased allocation of claims expenses not covered by insurance I. Sewer – expenses expected to increase by $14,550 due to allocation of claims expenses not covered by insurance. J. Risk Management – expenses expected to increase by $500,000 due to claims/lawsuits which fall outside of the City’s insurance coverage provisions. K. Information Technology – revenues and expenses both are expected to increase by $80,350 due to various network security products allocated to Sewer and Light & Water Consumer Services funds. L. Successor Agency – expenses need to decreased by $202,450 to adjust actual interest payments on various bonds to their respective debt service schedules. A detailed list of proposed changes is provided as Attachment 1 - Summary of the FY 2023/24 Proposed Budget Adjustments. Fiscal Year 2024/25 Mid-Cycle Budget Review The City Council reviewed in depth the proposed Fiscal Year 2024/25 budget prior to the Biennial Budget adoption in June 2023. For the most part, the overall citywide budget is expected to be the same when brining it back to Council in June 2024 for the required annual adoption with some notable exceptions: General Fund Revenues Revenue forecasts are $509,280 or less than 1% lower than anticipated from last year. Revenue changes are primarily due to lower forecasted sales and transaction and use tax estimates from the City’s tax consultant and less host fee collections due to a scheduled temporary (6-month) closure of Waste Management waste recovery facility, offset by rental income from Metro for the Promenade property and higher excavation activities and open space payments by Vulcan. Community Resources Community Resources may have approximately $700,000 in new budget requests for: funding for new or expanded special events such as the Teen Festival, Family Nights, Cultural Celebrations, Boxing showcase, 5K/10K Fun Run, Concerts, Festival of Lights, Golden Days, Community Festivals, trips, and summer programs; AQMD expansion of rideshare program to residents; addition of four kiosks for FY 2023/24 Mid-Year Budget Adjustments and FY 2024/25 Mid-Cycle Budget Review April 15, 2024 Page 5 public use at Memorial Park, Senior Center, and the Northside Park Recreation Center; purchase of inclusive/adaptive recreation equipment for open gym or activities for those with special needs; addition of Senior funds for emergency assistance; and funding for replacement of and preventative care for deteriorating equipment and facilities. Information Technology IT costs are expected to increase. Over $350,000 of the overall increase is related to necessary upgrades to our cybersecurity infrastructure which includes firewall protection and network routing enhancements. Light & Water The increase in commodities, materials and supplies, and construction costs continues to impact the Department’s budget. Power supply costs are expected to be $4.3 million higher due to the amended cost/MWh for the Mesa Wind project and increased Resource Adequacy costs. Additionally, the Electric utility anticipates an additional $500,000 is needed for the repair of underground lines. Water anticipates budget needs being higher by nearly $1.5 million due to the cost of labor/materials/supplies for various construction projects and the increase in chemical costs for water treatment. Public Safety Changes to the Public Safety budget accounts for the largest portion of anticipated General Fund budget adjustments. The Azusa Police Department is facing significant staffing shortages, with a deficit of approximately 12 sworn officers and ongoing recruitment challenges. Concurrently, the Department incurs substantial annual costs contracting external services for jail and security functions, with expenditures amounting to nearly $1 million annually. The performance of these contracted services is assessed as mediocre, signaling a critical need for improvement. The Department is in the process of developing a strategic approach to address both the staffing shortages and the underperforming contracted services through the introduction of city-employed Special Services Officers (SSOs) and the expansion of Civilian Investigator roles. The proposed restructuring is aimed at enhancing operational efficiency, improving service quality, and optimizing resource allocation within the Department. Although, the budget is expected to increase for these service enhancements, the actual cost increase will be gradual due to expected personnel savings from vacant officer positions. With the budget presentation in June, Staff plans to present a comprehensive organizational structure and personnel budget for Council’s consideration. Offsetting the General Fund costs increases, some savings are anticipated for the Los Angeles County Fire Services Contract which is expected to be lower by $397,835. Public Works With the development of two new parks, Dog Park and Great Park, the Department anticipates increased maintenance costs of $296,000 and approximately $80,000 increased facilities maintenance costs mainly for HVAC system upkeeps. Table 2 is a high-level summary of estimated total budget changes expected to be presented to the City Council in more detail with the adoption of the FY 2024/25 budget in June. FY 2023/24 Mid-Year Budget Adjustments and FY 2024/25 Mid-Cycle Budget Review April 15, 2024 Page 6 Table 2: Estimated Citywide Budget Adjustments for Fiscal Year 2024/25 Increase/(Decrease) Summary by Fund Revenues Expenditures General Fund (509,280)$ 1,592,140$ $ (2,101,420) Measure R (27,814) - (27,814) Measure M (31,523) - (31,523) SB1 (39,288) - (39,288) TDA (7,338) - (7,338) Gas Tax (71,328) 20,000 (91,328) Prop C - 50,000 (50,000) AQMD - 75,000 (75,000) Fire Services (397,835) (397,835) - Consumer Services - 100,000 (100,000) Water - 1,493,709 (1,493,709) Electric 4,052,213 4,820,660 (768,447) Sewer - 12,750 (12,750) Information Technology - 375,850 (375,850) Successor Agency - (204,283) 204,283 All Funds Total 2,967,807$ 7,937,991$ (4,970,184)$ Net Increase/ (Decrease) to Fund Balance Over the next month, Staff will be firming up the budget for Fiscal Year 2024/25 and some additional modifications are expected. For example, solidifying the budget for the Azusa Resource Center interim housing facility. Again, the Council will be provided an in-depth presentation on changes to the FY 2024/25 budget in June. General Fund Reserve Forecast The General Fund’s financial position remains healthy. Table 3 provides an updated estimate of the General Fund budget results and cash reserves forecast. The FY 2023/24 propose mid-year adjusted budget includes total revenues of $63,452,550 and expenditures of $77,213,035 (which includes nearly $17 million in carry over projects from the prior FY). With FY 2023/24 mid-year adjustments, total reserves by end of the fiscal year are estimated at $42.0 million, of which $28.6 or 68% is set aside to mitigate risk in high liability exposure areas such as claims expenses, aging infrastructure, and for rising costs in retiree benefits, leaving $13.4 million undesignated. The General Fund’s financial position is expected to continue to be strong through end of FY 2024/25, with a projected total ending reserve balance of $42.4 million, of which $33.8 million or 80% will be set aside in the City Council designated “rainy day” funds, leaving an estimated undesignated cash position of $8.6 million. FY 2023/24 Mid-Year Budget Adjustments and FY 2024/25 Mid-Cycle Budget Review April 15, 2024 Page 7 Table 3: General Fund Fiscal Year 2023/24 Mid-Year Budget and FY 2024/25 Reserves Forecasts RESERVES LEVELS ADOPTED BUDGET FY 23-24 MID-YEAR BUDGET FY 23-24 ADOPTED BUDGET FY 24-25 REVISED BUDGET FY 24-25 Total Revenues 63,115,961 63,110,960 64,274,971 64,274,971 Total Expenses 60,296,897 77,746,862 61,772,702 61,772,702 Normal Operating Surplus or (Deficit)2,819,064$ (14,635,902)$ 2,502,269$ 2,502,269$ Add: Mid-year revenue adjustment 341,590 (509,280) Less: Mid-year expenditure adjustment (533,827) 1,592,140 Total Sources or (Uses) of Reserves 2,819,064$ (13,760,485)$ 2,502,269$ 400,849$ Beginning Reserves Balance 44,288,148 55,779,551 47,107,212 42,019,066 Ending Reserves Balance 47,107,212$ 42,019,066$ 49,609,481$ 42,419,915$ Less: Internally Restricted Reserves Target 28,603,914 28,603,914 33,209,081 33,845,937 Less: ARPA Funds Restricted for Homelessness Initiatives 1,954,843 - 1,954,843$ -$ Reserves In Excess/(Short) of Restricted Funds 16,548,455$ 13,415,152$ 14,445,557$ 8,573,978$ *ARPA Funds for Homelessness initiatives moved into its own fund (Fund 54). Cash not part of General Fund. FISCAL IMPACT: Adoption of the recommended FY 2023/24 mid-year adjustments will result in a General Fund net fund balance increase of $875,417. Mid -year adjustments for All Funds, including the General Fund, will result in a citywide net fund balance decrease of $1,509,724. Reviewed and Approved: Reviewed and Approved: Talika M. Johnson Sergio Gonzalez Director of Administrative Services City Manager Attachments: 1.Attachment 1 - Summary of the FY 2023/24 Proposed Budget Adjustments 2. Resolution No. 2024-C20 3. Resolution No. 2024-UB01 4. Resolution No. 2024-R07 5. FY 2023/24 Second Quarter Budget-to-Actual Report Attachment 1 - Proposed Citywide Mid-Year Budget Adjustments for Fiscal Year 2023/24 Increase/(Decrease) Fund Department Division Description Revenues Expenditures Justification for Adjustment Account Coding Fire Services Public Safety Contract ServicFire Services Transfer In (574,002)$ -$ Lower billing estimate for Fire Services from the County 2920331000-5940 Fire Services Public Safety Contract ServicFire Services Contract Fee ‐ (574,002) Lower billing estimate for Fire Services from the County 2920331000-6401 Risk Mngmnt Admin Services Citywide Claims Expense General Liability - 500,000 Claims not covered by insurance 4250923000-6740 General Fund Admin Services Citywide Claims Expense General Liability Allocation 161,800 - Claims not covered by insurance 1090000000-4795 General Fund Admin Services Citywide Sales Tax (73,653) - True Up on FY2324 Revenue Forecast 1090000000-4101 General Fund Admin Services Citywide Transaction Use Tax (TUT)(197,292) - True Up on FY2324 Revenue Forecast 1090000000-4108 General Fund Admin Services Citywide Franchise Fee-Southern Cal Gas Company 50,779 - True Up on FY2324 Annual Southern California Gas Company Franchise Fee 1090000000-4147 General Fund Admin Services Citywide Fire Services Transfer Out ‐ (574,002) Lower billing estimate for Fire Services from the County will lower 1090000000-5950 General Fund Admin Services Citywide Information Technology Transfer Out ‐ 40,175 Transfer out for new network security products, various software licenses, 1090000000-6670 General Fund Econ & Com Dev Econ Dev Hazardous Waste Tax 50,000 - Updated forecast and true up on Veolia 1035630000-4112 General Fund Econ & Com Dev Econ Dev Host Fee - Materials Recovery Facility (122,000) - MRF Upgrade Facilities-Will Close Down for Two Quarter-Starting in May 1035630000-4161 General Fund Econ & Com Dev Econ Dev Land Excavation Tax 178,195 - Vulcan Excavation tax authorized by the City's Development Agreement. 1035630000-4120 General Fund Econ & Comm Dev Real Estate Rental Income From Promenade 208,761 - Promenade Rent for Jan of CY2023 Thru June of CY2024 1035645000-4412 General Fund Public Works Parks Open Space 85,000 - Vulcan Open space payment authorized by the City's Development Agreement. 1055420000-4899 SB1 Public Works Street Maint SB1 (39,288) - State Budget Reduction 0555661000-4507 Sewer Public Works Sewer Maint Claims Expense General Liability Allocation - 14,550 Lawsuit not covered by insurance 3455665000-6493 Gas Tax Public Works Street Maint Gas Tax (55,799) - True-up of actual State collection from gasoline sales 1255661000-4509 Gas Tax Public Works Street Maint Gas Tax (14,924) - True-up of actual State collection from gasoline sales 1255661000-4510 Gas Tax Public Works Street Maint Gas Tax 21,844 - True-up of actual State collection from gasoline sales 1255661000-4511 Gas Tax Public Works Street Maint Gas Tax 1,500 - True-up of actual State collection from gasoline sales 1255661000-4512 Gas Tax Public Works Street Maint Gas Tax (23,949) - True-up of actual State collection from gasoline sales 1255661000-4513 Info Tech Info Tech Info Tech Transfer In 80,350 - Transfer in for new network security products, various software licenses, upgrades 4849930000-4762 Info Tech Info Tech Info Tech Computer Software/ Licensing ‐ 40,175 New network security products, various software licenses, upgrades 4849930000-6504 Page 1 of 2 Attachment 1 Attachment 1 - Proposed Citywide Mid-Year Budget Adjustments for Fiscal Year 2023/24 Increase/(Decrease) Fund Department Division Description Revenues Expenditures Justification for Adjustment Account Coding Info Tech Info Tech Info Tech Computer Software/ Licensing ‐                              40,175 New network security products, various software licenses, upgrades 4849942000-6504 Prop C Comm Resources Prop C Maint & Repairs/Bldgs ‐                              45,000 Increased maintenance expenses/utility costs for parking structure 1725521301-6815 Consumer Svcs Light & Water Cust Service Information Technology Transfer Out ‐                              40,175 Transfer out for new network security products, various software licenses, upgrades 3140711903-6670 Consumer Svcs Light & Water Cust Service Utilities/Telephone ‐                              85,000 VOIP phone system recording storage 3140711903-6915 Electric Light & Water Electric Outside Services & Repairs ‐                              500,000 Line maintenance, Dig Alert, tree 3340735930-6493 Electric Light & Water Admin & Gen Claims Expense General Liability Allocation - 72,050 Claims not covered by insurance 3340799030-6493 Water Light & Water Sprvsn & Eng Claims Expense General Liability Allocation - 75,200 Claims not covered by insurance 3240721790-6493 Water Light & Water Water Legal Fees ‐                              100,000 Legal fees incurred by current and potential litigation; new water quality 3240721790-6301 Water Light & Water Water Professional Services/Other ‐                              100,000 Procurement, development, implementation of new Water Asset 3240721790-6399 Water Light & Water Water Outside Services & Repairs ‐                              400,000 Increased cost of materials, labor for asphalt /concrete restoration related to water system maintenance repair 3240723751-6493 Water Light & Water Water Supplies/Special ‐                              115,000 Increased water treatment chem. 3240722701-6563 Water Light & Water Water Supplies/Special ‐                              380,000 Increased material cost, meter box lead 3240723751-6563 Water Light & Water Water Maintenance & Repair/ Vehicle ‐                              50,000 Increased cost of repair parts and labor 3240723751-6825 Successor Agency Econ & Com Dev 2014A Interest Expense ‐                              6,700 Adjusted to debt schedule 8710165628-7001 Successor Agency Econ & Com Dev 2015A Interest Expense ‐                              (88,400) Adjusted to debt schedule 8710165630-7001 Successor Agency Econ & Com Dev 2015B Interest Expense ‐                              (118,000) Adjusted to debt schedule 8710165632-7001 Successor Agency Econ & Com Dev 2017B Interest Expense ‐                              (2,750) Adjusted to debt schedule 8710165636-7001 Total Increase/(Decrease) (262,678)$ 1,247,046$ Page 2 of 2 RESOLUTION NO. 2024-C20 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA ADOPTING MID-YEAR BUDGET ADJUSTMENTS FOR THE CITY OF AZUSA FOR THE FISCAL YEAR COMMENCING JULY 1, 2023 AND ENDING JUNE 30, 2024 WHEREAS, on June 19, 2023, City Council of the City of Azusa adopted the City­wide Biennial Fiscal Year 2023­24 and Fiscal Year 2024­25 Operating and Capital Budgets; and WHEREAS, on April 15, 2024, the City Council of the City of Azusa met and reviewed the mid­year financial status of the General Fund, Gas Tax Fund, Fire Safety Special Revenue Fund, Sewer Enterprise Fund, Risk Management/Liability and Information Technology Internal Services Funds, SB1 Road Maintenance Rehabilitation, and Proposition C, and considered recommendations for budget amendments. NOW, THEREFORE, BE IT RESOLVED, THE CITY COUNCIL OF THE CITY OF AZUSA DOES APPROVE AND ADOPT THE FOLLOWING FISCAL YEAR 2023-24 BUDGET AMENDMENTS: SECTION 1. On April 15, 2024, the City Council of the City of Azusa met and reviewed the mid­year financial status of the City budget and considered and approved the following recommendations for budget amendments: Attachment 2 SECTION 2. The City Clerk shall certify as to the adoption of this resolution. Mid-Year Budget Adjustments for Fiscal Year 2023/24 Increase/(Decrease) Fund Department DivisDescription Revenues Expenditures Account Coding Fire Services Public Safety Contr Fire Services Transfer In (574,002)$ ­$ 2920331000­5940 Fire Services Public Safety Contr Fire Services Contract Fee - (574,002) 2920331000­6401 Risk Mngmnt Admin Services Cityw Claims Expense General Liability ­ 500,000 4250923000­6740 General Fund Admin Services Cityw Claims Expense General Liability Allocation 161,800 ­ 1090000000­4795 General Fund Admin Services Cityw Sales Tax (73,653) ­ 1090000000­4101 General Fund Admin Services Cityw Transaction Use Tax (TUT)(197,292) ­ 1090000000­4108 General Fund Admin Services Cityw Franchise Fee­Southern Cal Gas Company 50,779 ­ 1090000000­4147 General Fund Admin Services Cityw Fire Services Transfer Out - (574,002) 1090000000­5950 General Fund Admin Services Cityw Information Technology Transfer Out - 40,175 1090000000­6670 General Fund Econ & Com Dev Econ Hazardous Waste Tax 50,000 ­ 1035630000­4112 General Fund Econ & Com Dev Econ Host Fee ­ Materials Recovery Facility (122,000) ­ 1035630000­4161 General Fund Econ & Com Dev Econ Land Excavation Tax 178,195 ­ 1035630000­4120 General Fund Econ & Comm Dev Real ERental Income From Promenade 208,761 ­ 1035645000­4412 General Fund Public Works Parks Open Space 85,000 ­ 1055420000­4899 SB1 Public Works Street SB1 (39,288) ­ 0555661000­4507 Sewer Public Works Sewer Claims Expense General Liability Allocation ­ 14,550 3455665000­6493 Gas Tax Public Works Street Gas Tax (55,799) ­ 1255661000­4509 Gas Tax Public Works Street Gas Tax (14,924) ­ 1255661000­4510 Gas Tax Public Works Street Gas Tax 21,844 ­ 1255661000­4511 Gas Tax Public Works Street Gas Tax 1,500 ­ 1255661000­4512 Gas Tax Public Works Street Gas Tax (23,949) ­ 1255661000­4513 Info Tech Info Tech Info Tech Transfer In 80,350 ­ 4849930000­4762 Info Tech Info Tech Info Tech Computer Software/ Licensing - 40,175 4849930000­6504 Info Tech Info Tech Info Tech Computer Software/ Licensing - 40,175 4849942000­6504 Prop C Comm Resources Prop CMaint & Repairs/Bldgs - 45,000 1725521301­6815 Total Increase/(Decrease)(262,678)$ (467,929)$ PASSED, APPROVED and ADOPTED this 15th day of April 2024. _____________________________________ Robert Gonzales Mayor ATTEST: _________________________________________ Jeffery Lawrence Cornejo, Jr. City Clerk STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES CITY OF AZUSA ) ) ss. I HEREBY CERTIFY that the foregoing Resolution No. 2024­C20 was duly adopted by the City Council of the City of Azusa, at a regular meeting of said City Council held on the 15TH day of April 2024, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCIL MEMBERS: _____________________________________________ Jeffery Lawrence Cornejo, Jr. City Clerk APPROVED AS TO FORM: _____________________________________________ Best Best & Krieger, LLP City Attorney RESOLUTION NO. 2024-UB01 A RESOLUTION OF THE UTILITY BOARD OF THE CITY OF AZUSA ADOPTING MID-YEAR BUDGET ADJUSTMENTS FOR THE CITY OF AZUSA FOR THE FISCAL YEAR COMMENCING JULY 1, 2023 AND ENDING JUNE 30, 2024 WHEREAS, on June 19, 2023, Utility Board of the City of Azusa approved the Fiscal Year 2023-24 and Fiscal Year 2024-25 Biennial Utility Budget; and WHEREAS, on April 15, 2024, the Utility Board of the City of Azusa met and reviewed the mid-year financial status of the Utility Budget, and considered recommendations for budget amendments. NOW, THEREFORE, BE IT RESOLVED, THE UTILITY BOARD OF THE CITY OF AZUSA DOES APPROVE AND ADOPT THE FOLLOWING FISCAL YEAR 2023-24 BUDGET AMENDMENTS: SECTION 1. On April 15, 2024, the Utility Board of the City of Azusa met and reviewed the mid-year financial status of the Azusa Light & Water budget and considered and approved the following recommendations for budget amendments: SECTION 2. The City Clerk shall certify as to the adoption of this resolution. Mid-Year Budget Adjustments for Fiscal Year 2023/24 Increase/(Decrease) Fund Division Description Revenues Expenditures Account Coding Consumer Svcs Cust Service Information Technology Transfer Out - 40,175 3140711903-6670 Consumer Svcs Cust Service Utilities/Telephone - 85,000 3140711903-6915 Electric Electric Outside Services & Repairs - 500,000 3340735930-6493 Electric Admin & Gen Claims Expense General Liability Allocation - 72,050 3340799030-6493 Water Sprvsn & Eng Claims Expense General Liability Allocation - 75,200 3240721790-6493 Water Water Legal Fees - 100,000 3240721790-6301 Water Water Professional Services/Other - 100,000 3240721790-6399 Water Water Outside Services & Repairs - 400,000 3240723751-6493 Water Water Supplies/Special - 115,000 3240722701-6563 Water Water Supplies/Special - 380,000 3240723751-6563 Water Water Maintenance & Repair/ Vehicle - 50,000 3240723751-6825 Total Increase/(Decrease)-$ 1,917,425$ Attachment 3 PASSED, APPROVED and ADOPTED this 15th day of April 2024. _____________________________________ Robert Gonzales Mayor ATTEST: _________________________________________ Jeffery Lawrence Cornejo, Jr. City Clerk STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES CITY OF AZUSA ) ) ss. I HEREBY CERTIFY that the foregoing Resolution No. 2024-UB01 was duly adopted by the Utility Board of the City of Azusa, at a regular meeting of said Utility Board held on the 15TH day of April 2024, by the following vote of the Utility Board: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCIL MEMBERS: _____________________________________________ Jeffery Lawrence Cornejo, Jr. City Clerk APPROVED AS TO FORM: _____________________________________________ Best Best & Krieger, LLP City Attorney RESOLUTION NO. 2024-R07 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE SUCCESSOR AGENCY FOR THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF AZUSA ADOPTING THE MID-YEAR BUDGET ADJUSTMENTS FOR THE SUCCESSOR AGENCY OF THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF AZUSA FOR THE FISCAL YEAR COMMENCING JULY 1, 2023 AND ENDING JUNE 30, 2024 THE BOARD OF DIRECTORS OF THE SUCCESSOR AGENCY OF THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF AZUSA DOES RESOLVE AS FOLLOWS: WHEREAS, On June 19, 2023, the Board of Directors of the Successor Agency of the Former Redevelopment Agency of the City of Azusa adopted the Successor Agency of the Former Redevelopment Agency of the City of Azusa Fiscal Year 2023-24 and Fiscal Year 2024-25 Biennial Operation Budget. NOW, THEREFORE, BE IT RESOLVED, THE BOARD OF DIRECTORS OF THE SUCCESSOR AGENCY FOR THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF AZUSA DOES APPROVE AND ADOPT THE FOLLOWING FISCAL YEAR 2023-24 BUDGET AMENDMENTS: SECTION 1. On April 15, 2024, the Board of Directors of the Successor Agency of The Former Redevelopment Agency of the City of Azusa met and reviewed the mid-year financial status of the Successor Agency budget and considered and approved the following recommendations for budget amendments: SECTION 2. The Secretary shall certify to the adoption of this resolution. Mid-Year Budget Adjustments for Fiscal Year 2023/24 Increase/(Decrease) Fund Department D iv ision Description Revenues Expenditures Account Coding Successor Agency Econ & Com Dev 2014A Interest Expense -$ 6,700$ 8710165628-7001 Successor Agency Econ & Com Dev 2015A Interest Expense - (88,400) 8710165630-7001 Successor Agency Econ & Com Dev 2015B Interest Expense - (118,000) 8710165632-7001 Successor Agency Econ & Com Dev 2017B Interest Expense - (2,750) 8710165636-7001 Total Increase/(Decrease)-$ (202,450)$ Attachment 4 PASSED, APPROVED and ADOPTED this 15th day of April, 2024. ________________________________________ Robert Gonzales Chairman ATTEST: _________________________________ Jeffrey Lawrence Cornejo, Jr. Secretary STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF AZUSA ) I HEREBY CERTIFY that the foregoing Resolution No. 2024-R07 was duly adopted by the Successor Agency of the former Redevelopment Agency of the City of Azusa, at a regular meeting thereof, held on the 15th of April 2024. AYES: AGENCY MEMBERS: NOES: AGENCY MEMBERS: ABSENT: AGENCY MEMBERS: _________________________________ Jeffrey Lawrence Cornejo, Jr. Secretary APPROVED AS TO FORM: _________________________________ City Attorney Best Best & Krieger FY 2023/24 Quarterly Financial Report 2nd Quarter, Ending December 31, 2023 OVERVIEW This financial report summarizes the General Fund’s position for the 2nd quarter of Fiscal Year 2023/24 (October 1, 2023 through December 31, 2023). 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 2nd quarter’s revised data, the projection through the end of the second quarter for total sources (revenues and transfers-in) are estimated to be $63.11M, consistent with the FY 2023-24 Adopted Budget. Total uses (expenditures and transfers-out) are estimated to be $77.75M and $17.45M higher primarily due to CIP budget and other operational projects budget carryforwards. Major carry forwards include: $3.95M for the Senior Center modernization, $2.95M for Memorial Park improvements, $2.4M for sidewalk maintenance and improvements, $2.5M for Library remodel, $785,000 for Downtown improvements, $750,000 for the Scout House/Northside Recreation Hub improvements, $740,587 for Woman's Club modernization, and $720,777 for constructing a Dog Park. Other carryforward increases include $234,947 in park maintenance activities, $186,000 for purchase of police vehicles, $125,866 in engineering services, $80,000 for Council parking lot redesign, and $60,000 in IT equipment. A B C Adopted Budget 2023-24 Revised Budget 2023-24 Variance (B - A) Beginning Estimated Fund Balance $ 54.18 $ 54.18 * $ - Plus Revenues 60.98 60.98 ** - Transfers In 2.13 2.13 - Total 2023-24 Sources 63.11 63.11 - Less Expenditures 52.87 70.32 ** 17.45 Transfers Out 7.43 7.43 - Total FY 2023-24 Uses 60.30 77.75 17.45 Expenses in (excess)/below Exp-FY 2023-24 2.81 (14.64) (17.45) Estimated Unassigned Fund balance before reserves 56.99 39.55 (17.45) Less: Internally Restricted Reserves Budget Stabilization & Catastrophic Reserve 21.10 21.10 *** - Capital & Infrastructure Replacement Reserve 2.50 2.50 *** - Insurance Reserve 3.00 3.00 *** - Retiree Benefits Reserve 2.00 2.00 *** - Available Fund Balance $ 28.39 $ 10.95 $ (17.45) *Unaudited (note: Fund Balance is not the same as Cash Reserves balance) **Financial Data as of 3/18/24 - Q2 FY2324 ***Per 6-19-23 Council Approved Budget Resolution # 2022-C30 and Reserve Resolution # 2023-C1 Table 1 Budget vs. Estimated Actual (in millions) Attachment 5 FY 2023-24 Quarterly Financial Report Attachment 5 2 nd Quarter, Ending December 31, 2023 Page 2 of 6 Second quarter revenue collections were at 34.2% of the annual projections. Following are charts and explanations of those revenue collections by sources. 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 slightly lower by $963,708 from the same period last year. By in large, the variances are anticipated to smooth out due to the timing of when the revenues are received and are explained in more details outlined below for each major revenue categories. Revenue Collection by Source As of 12/31/23 Chart 1 Revenues Collected by Source Quarter Ending: 12/31/22 vs. 12/31/23 FY 2023-24 Actual % of REVENUE Adjusted Budget YTD 12/31/23 Adj. Budget Property Tax 15,325,616 2,815,076 18.4% Sales Tax 8,227,992 2,513,226 30.5% Transaction Use Tax 7,553,000 2,378,936 31.5% UUT Tax 3,100,000 1,749,639 56.4% Other Taxes 12,983,771 4,148,856 32.0% Charges for Services 6,582,820 2,137,844 32.5% Cost Reimbursement 2,151,836 1,226,110 57.0% Fines & Penalties 1,250,500 675,691 54.0% License & Permits 2,870,785 1,709,174 59.5% Miscellaneous 171,600 254,002 148.0% Money & Property Use 2,893,040 1,982,908 68.5% Total Revenues $63,110,960 $21,591,461 34.2% Table 2: YTE % of Budget Actual Actual Increase/ REVENUE YTD 12/31/2022 YTD 12/31/2023 (Decrease) Property Tax $3,025,245 $2,815,076 ($210,169) Sales Tax 2,665,960 2,513,226 (152,734) Transaction Use Tax 2,453,828 2,378,936 (74,892) Utility User Tax 1,771,781 1,749,639 (22,142) Other Taxes 4,579,745 4,148,856 (430,890) Charges for Services 3,028,757 2,137,844 (890,912) Cost Reimb.1,176,004 1,226,110 50,105 Fines & Penalties 804,931 675,691 (129,240) License & Permits 1,418,195 1,709,174 290,979 Miscellaneous 118,681 254,002 135,321 Money & Property Use 1,512,042 1,982,908 470,866 Total Revenues $22,555,168 $21,591,461 ($963,708) Table 3: Year-to-Year Comparison $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 YTD 12/31/2022 YTD 12/31/2023 FY 2023-24 Quarterly Financial Report Attachment 5 2 nd Quarter, Ending December 31, 2023 Page 3 of 6 Property Tax collections are always low in the 2nd quarter due to the timing of when the revenues are distributed 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. Sales Tax collections are at 30.5% of the adjusted budget. The reason for the low collections rate is due to the timing of when the revenues are available. The November and December 2023 sales tax will not be distributed by the California Department of Tax and Fee Administration until January and February of 2024. Transaction Use Tax (TUT) collections are at 31.5% of the adjusted budget. Similar to the Sales Tax, the low collection rate is due to the timing of when revenues are available. The November and December 2023 sales tax will not be distributed by the California Department of Tax and Fee Administration until January and February of 2024. Utility User’s Tax collections are at 56.4% of the adjusted budget. This percentage is reflective of the consumption of utility services such as gas, electric and water. The actuals compared to the same period last year was slightly lower, and that is mainly due to a higher than expected commodity prices including the gas price spike in the open market last year. Since then, the commodity prices have stabilized in the current fiscal year and the billing revenues are slightly lower as a result. Other Taxes collections are at 32.0% 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 lower in comparison to the same period last year mainly due to minor delays in revenue collections that were resolved and will be reflected in the next quarter. Overall the anticipated revenues are expected to be consistent with the revenue forecast and will smooth out in the second half of the fiscal year. Charges for Services collections are at 32.5% of the adjusted budget. Revenues are collected as services are rendered and is on pace with the budget forecast. This revenue source was lower compared to the same period last year due to the timing of the development projects. Cost Reimbursement collections are at 57.0% of the adjusted budget. Revenues are collected based on various reimbursement agreements. Fines and Penalties collections are at 54.0% of the adjusted budget due to the timing of when the fines are collected. The fines are higher due to the timing of when the payouts were distributed. This revenue source was lower compared to the same period last year. The Fines and Penalties revenues were higher in the same period last year, and it is due to previous years uncollected fines that were recovered and received during FY2022-23 reflecting higher than normal revenues for that period. License and Permits collections are at 59.5% of the adjusted budget. This is mainly due to the timing of development activities and when licenses and permits are issued. Miscellaneous collections are at 148.0% of the adjusted budget. The miscellaneous revenues are pacing higher primarily due to investment gains. This revenue category represents a small percentage of the overall revenues. Money and Property Use collections are at 68.5% of the adjusted budget. The current Q2 revenues were higher when compared to the same period last year, and it is mainly due to payments for the Promenade lease for the full CY 2023 and the first two months of CY 2024 from Metro, higher interest rates from investments, and some water rights revenues. FY 2023-24 Quarterly Financial Report Attachment 5 2 nd Quarter, Ending December 31, 2023 Page 4 of 6 GENERAL FUND EXPENDITURES Expenditures by Category As of 12/31/23 The expenditures outlined in Table 4 are pacing at 37.7% of the 2nd quarter budget. The personnel budget came in at 47.1% of the revised budget, and it is pacing very close to the budget. Personnel costs were higher in Q2 of FY 2023-24 compared to the same period last year on table 5 primarily due to cola adjustments and implementation of the class and compensation study adjustments. Operating costs came in at 31.8% of the revised budget due to the timing of the various development and CIP projects. Operating costs were higher in Q2 of FY 2023-24 compared to the same period last year, as shown in Table 5, and is primarily due to higher insurance cost which has to be paid upfront, pension obligation bond payments that are paid in the beginning of the fiscal year, and higher general fund CIP project costs compared to the same period last year. DEPARTMENT EXPENDITURES At the end of the 2nd quarter, actuals for some of the departments are tracking at or below the 50% mark of the adjusted budget. Some departments with CIP projects are pacing lower due to the timing of the projects listed in the first section of this report. Economic & Community Development is pacing low due to the timing of various development projects. Citywide expenditures paced higher mainly due to insurance costs paid at the beginning of the year. Pension obligation bind payments are also reflected in the Citywide budget and paid at the beginning of the fiscal year. Table 6 Chart 2 Expenditures by Department % of Budget by Department As of 12/31/23 as of 12/31/23 FY 23-24 Actual % of EXPENDITURE Working Budget YTE 09/30/23 Adopted Personnel 30,099,646 14,171,364 47.1% Operating 47,647,216 15,139,461 31.8% Total Expenditures $77,746,862 $29,310,825 37.7% Table 4: YTE % of Budget Actual Actual Increase/ EXPENDITURE YTD 12/31/22 YTD 12/31/23 (Decrease) Personnel 12,554,608 14,171,364 $1,616,755 Operating 9,887,309 15,139,461 5,252,152 Total Expenditures $22,441,918 $29,310,825 $6,868,907 Table 5: Year-to-Year Comparison 2023-24 Actual EXPENDITURE Adj. Budget YTD 12/31/23 % of Budget Council $257,625 $135,157 52.5% City Clerk 761,928 304,604 40.0% City Attorney 315,000 124,661 39.6% City Treasurer 149,135 73,387 49.2% Administration 1,458,910 648,068 44.4% Finance 2,173,074 1,026,526 47.2% Economic & Comm. Dev.4,654,901 1,348,592 29.0% Human Resources 931,869 291,662 31.3% Library 4,955,770 714,688 14.4% Public Safety 22,486,588 10,209,407 45.4% Public Works 12,248,803 2,449,426 20.0% Community Resources 9,248,806 1,478,963 16.0% City-Wide 18,104,453 10,505,684 58.0% Total Expenditure $77,746,862 $29,310,825 37.7% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% FY 2023-24 Quarterly Financial Report Attachment 5 2 nd Quarter, Ending December 31, 2023 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. Major Special Revenue and Internal Services Fund Revenues Major Special and Internal Service Fund Expenditures Chart 3 Major Special Revenue & Internal Services Funds Revenues by Funds Ending 12/31/23 Chart 4 Major Special Revenue & Internal Services Funds Expenditures by Funds Ending 12/31/23 2023-24 Actual % of REVENUE Adjusted Budget YTD 12/31/23 Adj. Budget Gas Tax Fund $1,427,441 $616,339 43.2% Fire Safety 7,428,671 3,714,335 50.0% Sewer Fund 3,030,000 1,616,245 53.3% Risk Mgmt/Liab Fund 4,083,339 3,424,194 83.9% IT Fund 3,519,661 1,576,412 44.8% Total Revenues $19,489,112 $10,947,525 56.2% Table 7: YTD % of Budget 2023-24 Actual % of EXPENDITURE Adjusted Budget YTD 12/31/23 Adj. Budget Gas Tax Fund $1,782,731 $875,600 49.1% Fire Safety 7,428,671 4,197,867 56.5% Sewer Fund 4,136,682 1,503,556 36.3% Risk Mgmt/Liab Fund 5,241,287 4,081,385 77.9% IT Fund 3,808,226 1,600,275 42.0% Total Expenditures $22,397,597 $12,258,683 54.7% 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 2023-24 Quarterly Financial Report Attachment 5 2 nd Quarter, Ending December 31, 2023 Page 6 of 6 Gas Tax Fund Gas Tax revenues are pacing at 43.2% of the 2nd quarter FY 2023-24 adjusted budget, and the expenditures are tracking at 49.1%. Revenues are slightly lower due to the timing of when the revenues are distributed by the State. Fire Safety Fund Fire Safety Fund’s operating revenues are pacing at 50.0% of revenues. The expenditures are pacing at 56.5% for the 2nd quarter, and costs are anticipated to smooth out for the full year and consistent with the budget. Sewer Fund Sewer year-to-date operating revenues are 53.3% of the adjusted budget. Expenditures are pacing at 36.3% slightly of the 2nd quarter budget due to the timing of projects. Risk Management Fund Revenues for the Risk Management Funds are at 83.9%. The expenditures are at 77.9% of the adjusted budget due insurance premium payments made at the beginning of the fiscal year and timing of when claims are paid out. General Liability claims expenses are higher than expected and may require a budget adjustment later in the fiscal year. Information Technology Fund The Information Technology Fund revenues for the 2nd quarter are pacing at 44.8%. Expenditures are pacing at 42.0% and consistent with the timing of the various IT projects. Revenue collections are usually consistent with timing of expenditures.