Loading...
HomeMy WebLinkAboutE.20 - Staff Report - Third Quarter FY 24-25 Financial 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: JULY 21, 2025 SUBJECT: FY 2024/25 THIRD QUARTER FINANCIAL REPORT ENDING MARCH 31, 2025 BACKGROUND: In an effort to be more transparent and to provide an opportunity to evaluate the City's fiscal health, the Administrative Services 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 2024/25 third quarter financial report ending March 31, 2025. 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 3rd Quarter FY2024/25 financial report was provided to review the fiscal position of the City. Approved City Council July 21, 2025 3rd Quarter Financial Report July 21, 2025 Page 2 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. Prepared By: Reviewed and Approved: Richard Lam Talika M. Johnson Budget & Revenue Administrator Director of Administrative Services Reviewed and Approved: Sergio Gonzalez City Manager Attachment: 1. Quarterly Financial Report – 3rd Quarter, Ending March 31, 2025 FY 2024/25 Quarterly Financial Report 3rd Quarter, Ending March 31, 2025 OVERVIEW This financial report summarizes the City’s General Fund’s position for the 3rd quarter of Fiscal Year 2024/25 (July 1, 2024 through March 31, 2025). 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 third quarter for total sources (revenues and transfers-in) are estimated to be $67.58 Mil, slightly higher than the FY2024-25 adopted budget due primarily to the forecasted revenue from the Measure ZZ TUT. Total uses (expenditures and transfers-out) are estimated to be $87.27 Mil and $19.06 Mil higher primarily due to CIP budget and Other Operation budget carryforwards including $3.90 Mil in Sr Ctr Remodel, $2.76 Mil in Memorial Park Improvements, $620.6K in Dog Park, $2.56 Mil in Promenade TI, $2.5 mil in Library Improvements, $708K in Sidewalk Maint, $740.6K in Women's Club Improvement, $574.6 K in Scout House, $504.5K in Outdoor learning center, $540.5 K in Cityhall Sidewalk improvement.etc. A B C Adopted Budget 2024-25 Revised Budget 2024-25 Variance (B - A) Beginning Estimated Fund Balance $ 42.04 $ 63.10 * $ 21.06 Plus Revenues 64.63 65.10 ** 0.47 Transfers In 2.47 2.47 - Total 2024-25 Sources 67.11 67.58 0.47 Less Expenditures 58.71 65.11 ** 6.40 Extraaordinary Capital Projects 2.32 14.98 12.66 Transfers Out 7.18 7.18 - Total FY 2024-25 Uses 68.21 87.27 19.06 Expenses in (excess)/below Exp-FY 2024-25 (1.11) (19.69) (18.58) Estimated Unassigned Fund balance before reserves 40.93 43.41 2.48 Less: Internally Restricted Reserves Budget Stabilization & Catastrophic Reserve 26.36 26.36 *** - Capital & Infrastructure Replacement Reserve 3.00 3.00 *** - Insurance Reserve 3.50 3.50 *** - Retiree Benefits Reserve 2.00 2.00 *** - Available Fund Balance $ 6.07 $ 8.55 $ 2.48 *Unaudited **Financial Data as of 03/31/25 - Q3 FY2425 ***Updated Reserves - Per 6-17-24 Council Approved Reserve Resolution # 2024-C35 Table 1 Budget vs. Estimated Actual (in millions) Attachment 1 FY 2024-25 Quarterly Financial Report 3 rd Quarter, Ending March 31, 2025 Page 2 of 6 The 3rd quarter’s revenues ended the year at the 65.9% mark. The charts and explanation below will go over each of the revenue categories in details. 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 higher by $2.92 Mil from the same period last year. The increase is primarily the result of $1.42 Mil in property tax increase from the 2% CPI increase and higher valuation, $1.35 Mil higher in charges for services due to the timing of the various services, and money and property use are higher by $487.9K due to promenade lease payment by MTA, and higher interest from investments. Revenue Collection by Source As of 03/31/25 Chart 1 Revenues Collected by Source Quarter Ending: 03/31/24 vs. 03/31/25 FY2024-25 Actual % of REVENUE Adjusted Budget YTE 03/31/25 Adj. Budget Property Tax 16,762,163 9,968,667 59.5% Sales Tax 7,756,681 4,210,394 54.3% Transaction Use Tax Z 6,824,000 3,784,911 55.5% Transaction Use Tax ZZ 427,000 - 0.0% UUT Tax 3,100,000 2,971,326 95.8% Other Taxes 12,914,416 8,517,648 66.0% Charges for Services 8,319,892 5,785,885 69.5% Cost Reimbursement 2,596,120 2,077,744 80.0% Fines & Penalties 1,290,535 1,162,012 90.0% License & Permits 3,085,735 2,556,972 82.9% Miscellaneous 393,120 387,348 98.5% Money & Property Use 4,106,314 3,128,514 76.2% Total Revenues $67,575,976 $44,551,422 65.9% Table 2: YTE % of Budget Actual Actual Increase/ REVENUE YTE 03/31/24 YTE 03/31/25 (Decrease) Property Tax $8,548,725 $9,968,667 $1,419,942 Sales Tax 4,747,230 4,210,394 (536,836) Transaction Use Tax Z 4,243,427 3,784,911 (458,516) Utility User Tax 2,745,186 2,971,326 226,139 Other Taxes 8,701,363 8,517,648 (183,715) Charges for Services 4,438,549 5,785,885 1,347,337 Cost Reimb.1,852,201 2,077,744 225,543 Fines & Penalties 939,318 1,162,012 222,694 License & Permits 2,479,532 2,556,972 77,441 Miscellaneous 288,144 387,348 99,204 Money & Property Use 2,640,541 3,128,514 487,973 Total Revenues $41,624,216 $44,551,422 $2,927,206 Table 3: Year-to-Year Comparison $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 YTE 03/31/24 YTE 03/31/25 FY 2024-25 Quarterly Financial Report 3 rd Quarter, Ending March 31, 2025 Page 3 of 6 Property Tax collections came in low at 59.5% in Q3 and it is normal due to the timing of when the revenues are allocated 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 54.3% of the adjusted budget. The reason for the low collections rate is due to the timing of when the revenues are available. The February and March 2025 sales tax will not be distributed by the California Department of Tax and Fee Administration until April and May of 2025. Transaction Use Tax Measure Z (TUT-Z) collections are at 55.5% of the adjusted budget. Similar to the Sales Tax, the low collection rate is due to the timing of when revenues are available. The February and March 2025 TUT will not be distributed by the California Department of Tax and Fee Administration until April and May of 2025. Transaction Use Tax Measure Z (TUT-ZZ) collections are at 0 % of the adjusted budget. The CDTFA began collecting the City’s Measure ZZ tax on April of calendar year 2025, and this is consistent with the CDTFA agreement approved under resolution 2024-C70 and the TUT-ZZ tax ordinance No. 2024-09. The $427K budget is reflected on this report as a forecast for FY2024-25. Utility User’s Tax collections are at 95.8% of the adjusted budget. This percentage is reflective of the consumption of utility services such as gas, electric, and water. The actuals are higher mainly due to higher utility usage, higher water rates from the water cost of service study, and the hot weather. The actuals compared to the same period last year was higher, and the reason is consistent with what was stated above. Other Taxes collections are at 66.0% of the adjusted budget. Other taxes are comprised mainly of transient occupancy tax (TOT), franchise/landfill, land excavation, material recovery facility, other franchise fees, and hazardous waste fees. The sanitary landfill tax, landfill replacement/expansion fee, and waste management fees were lower for FY2024-25 due to equipment upgrade on one of the enterprises. Other Taxes are lower in comparison to the same period last year mainly due to the Waste Management equipment upgrade that disrupted operations. Charges for Services collections are at 69.5% of the adjusted budget. Revenues are collected as services are rendered and is slightly lower than the budgeted forecast. This revenue source was higher compared to the same period last year due to the timing of the development projects, and greater demand for government services. Cost reimbursement collections are at 80% of the adjusted budget. Revenues are collected based on various reimbursement agreements and when the claims are paid. Cost reimbursement is higher when compare to the same period last year mainly due to the terms of the various reimbursement agreements and when it is paid. Fines and Penalties collections are at 90% of the adjusted budget due to the timing of when the fines are collected. The fines were higher due to the timing of when the payouts were distributed. This revenue source was higher compared to the same period last year due to the timing of when the fines were paid out. License and Permits collections are at 82.9% of the adjusted budget and is pacing higher than the forecast due to the timing of when the licenses and permits were issued. Revenue is slightly higher when compared to the same period last year and this is mainly due to the timing of the development activities and when the licenses and permit fees were issued. Miscellaneous collections are at 98.5% of the adjusted budget. The miscellaneous revenues are pacing high but is not a significant revenue source as a percentage of the total revenues. The Miscellaneous revenues were higher when compared to the same period last year mainly due to a one-time investment gain. Money and Property Use collections are at 76.2% of the adjusted budget, and the revenues are higher due to the metro payment of the promenade lease, higher interest from investments, and higher water rights revenues. The Q3 revenues were higher when compared to the same period last year, and it is mainly due to the same reasons stated above. FY 2024-25 Quarterly Financial Report 3 rd Quarter, Ending March 31, 2025 Page 4 of 6 GENERAL FUND EXPENDITURES Expenditures by Category As of 03/31/25 The expenditures outlined in Table 4 are pacing at 57.4 % of the 3rd quarter budget. The personnel budget came in at 77.0% of the revised budget, and it is pacing fairly consistent with the personnel budget forecast. The Personnel costs were higher in Q3 of FY2024-25 when compared to the same period last year on table 5 primarily due to cola adjustments and higher benefits costs. Operation costs came in at 45.7% of the revised budget due to the timing of the various development and CIP projects. Operating costs was higher in Q3 of FY2024-25 when compared to the same period last year in table 5 and is primarily due to higher insurance cost and higher general fund CIP project costs. DEPARTMENT EXPENDITURES At the end of the 3rd quarter, actuals for some of the departments are tracking at or below the 75% 3rd quarter mark of the adjusted budget. Some departments with CIP projects are pacing lower due to the timing of the projects including $3.89 Mil for the senior center remodel, $2.76 Mil in memorial park improvement, $2.5 Mil in library improvement, $740.6K in woman’s club under Community Resources, and $620.6K for the Dog Park. Economic & Comm Dev is pacing low due to the timing of the development projects. Citywide is higher mainly due to insurance costs, pension bond and interest payments, IT charges, interest expenses, retiree health costs, benefit costs, and transfer charges and cash position that the General Fund has to cover. Table 6 Chart 2 Expenditures by Department % of Budget by Department As of 03/31/25 as of 03/31/25 FY 24-25 Actual % of EXPENDITURE Working Budget YTE 03/31/25 Adopted Personnel 32,689,306 25,186,680 77.0% Operating 54,580,123 24,946,073 45.7% Total Expenditures $87,269,429 $50,132,753 57.4% Table 4: YTE % of Budget Actual Actual Increase/ EXPENDITURE YTE 03/31/24 YTE 03/31/25 (Decrease) Personnel 22,340,232 25,186,680 $2,846,448 Operating 21,579,810 24,946,073 3,366,263 Total Expenditures $43,920,042 $50,132,753 $6,212,711 Table 5: Year-to-Year Comparison 2024-25 Actual EXPENDITURE Adj. Budget YTD 03/31/25 % of Budget Council $219,602 $159,545 72.7% City Clerk 880,458 414,131 47.0% City Attorney 315,000 186,762 59.3% City Treasurer 238,830 249,038 104.3% Administration 1,951,924 1,076,970 55.2% Finance 2,277,275 1,747,260 76.7% Economic & Comm. Dev.7,538,203 2,824,275 37.5% Human Resources 949,767 658,477 69.3% Library 5,238,737 1,852,104 35.4% Public Safety 24,713,089 17,680,283 71.5% Public Works 15,378,252 4,924,435 32.0% Community Resources 9,278,803 3,284,425 35.4% City-Wide 18,289,489 15,075,050 82.4% Total Expenditure $87,269,429 $50,132,753 57.4% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% FY 2024-25 Quarterly Financial Report 3 rd Quarter, Ending March 31, 2025 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 03/31/25 Chart 4 Major Special Revenue & Internal Services Funds Expenditures by Funds Ending 03/31/25 2024-25 Actual % of REVENUE Adjusted Budget YTD 03/31/25 Adj. Budget Gas Tax Fund $1,420,032 $974,075 68.6% Fire Safety 7,179,410 5,384,558 75.0% Sewer Fund 3,650,000 2,752,249 75.4% Risk Mgmt/Liab Fund 4,709,911 4,338,504 92.1% IT Fund 3,247,028 2,096,160 64.6% Total Revenues $20,206,381 $15,545,546 76.9% Table 7: YTD % of Budget 2024-25 Actual % of EXPENDITURE Adjusted Budget YTD 03/31/25 Adj. Budget Gas Tax Fund $2,144,812 $1,373,490 64.0% Fire Safety 7,179,410 5,849,386 81.5% Sewer Fund 4,239,589 2,382,080 56.2% Risk Mgmt/Liab Fund 5,761,710 5,756,758 99.9% IT Fund 3,985,043 2,095,913 52.6% Total Expenditures $23,310,564 $17,457,628 74.9% 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 2024-25 Quarterly Financial Report 3 rd Quarter, Ending March 31, 2025 Page 6 of 6 Gas Tax Fund Gas Tax revenues are pacing at 68.6% of the 3rd quarter FY 2024-25 adjusted budget, and the expenditures are tracking at 64.0%. 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 75.0% of revenues. The expenditures are pacing slightly higher at 81.5% for the 3rd quarter. The expenditures are slightly higher but is expected to remain consistent with the budget forecast for the full year. Sewer Fund Sewer year-to-date operating revenues are 75.4% of the adjusted budget. Expenditures are pacing lower at 56.2% the 3rd quarter budget due to the timing of the projects. Risk Management Fund The revenues for the Risk Management Funds are at 92.1% due to the timing of when the claims are paid out. The expenditures are at 99.9% of the adjusted budget and fairly consistent with the forecast, and the higher expenditures are due to the timing of when the claims are paid out. Information Technology Fund The Information Technology Fund revenues for the 3rd quarter are pacing at 64.6%. Its allocations are recorded twice a year, in December and June. The expenditures are pacing at 52.6% and consistent with the timing of the various IT projects.