CC SR 20170221 08 - FY16-17 Mid-Year Financial ReportRANCHO PALOS VERDES CITY COUNCIL MEETING DATE: 02/21/2017
AGENDA REPORT AGENDA HEADING: Regular Business
AGENDA DESCRIPTION:
Consideration of and possible action regarding the FY16-17 Mid -year Financial Report
and year-end estimates.
RECOMMENDED COUNCIL ACTION:
1) Receive and File the FY16-17 Mid -year Financial Report;
2) Approve related budget adjustments as reported; and,
3) Set a budget workshop date for FY17-18
FISCAL IMPACT: Projected increase in revenues of $436,368 and a decrease in
operating expenditures of $934,480 and decrease in transfer out of $1,256,250.
Current Budget:
Additional Appropriation:
Revised Budget:
Account Number(s):
Revenues: $28,804,000
Expenditures: $31,630,000
Revenues: $436,368
Expenditures: ($934,480)
Transfer out: ($1,256,250)
Revenues: $29,240,368
Expenditures: $29,439,270
Various
ORIGINATED BY:
Allan Kaufman, Senior Administrative Analyst
REVIEWED BY:
Deborah Cullen, Director of Finance
APPROVED BY:
Doug Willmore, City Manager:'
I_To] Xel:loll] z I I7_1 ki 111 Q 6*8111*4 [el A
Staff has reviewed all revenues and expenditures at mid -year for FY16-17, with an
emphasis on the General Fund. Year-end estimates are included in this review and the
adopted budget will be updated to reflect these changes. At the end of the third quarter,
Staff will perform another review the revenues and expenditures and update the
yearend estimates, if necessary.
Currently, the estimated fund balance for General Fund Reserves at June 30, 2017, is
approximately $14.9 million and excess reserve is approximately $2.2 million. All other
funds are tracking at budget. A summary of the FY16-17 Fund Balance calculation is
illustrated below:
1
FY16-17 Fund Balance Summary
General Fund Revenue
The Summary Schedule of General Fund Revenue is presented below. It is important
to understand that these revenue estimates are based on consultants' analysis using
trend comparisons with previous years and reports provided by state, county and local
agencies. It should be noted that future economic activity, legislation and policy
decisions, as well as any other unforeseen circumstances could affect the City's
revenue stream for the remainder of FY16-17.
FY16-17 Budget vs. Projected Year-end Revenues
Adopted
Additional
Revised
Year-end
Revenue Type
Budget
Appropriation
Budget
Estimates
Beginning Fund Balance
15,068,099
-
15,068,099
15,068,099
Add: Re\nenues
28,614,000
-
28,614,000
29,050,368
Add: Transfers In
190,000
-
190,000
190,000
Subtotal
43, 872, 099
-
43, 872, 099
44, 308, 467
Less: Expenditures
(22,987,900)
(3,196,471)
(26,184,371)
(25,249,891)
Less: Transfers Out
(5,446,000)
-
(5,446,000)
(4,189,750)
Variance
28,903,281
28,614,000
29,050,368
436,368
(Transferred to CIP)
-
-
-
-
Subtotal
(28,433,900)
3,196,471)
(31,630,371)
(29,439,641)
Ending Fund Balance
15,438,199
-
12,241,728
14,868,826
Reserve Policy (50% of
11,493,950
-
13,092,186
12,624,946
budgeted expenditures)
Ex ce ss Re se rve
3,944,249
-
(850, 458)
2,243,881
General Fund Revenue
The Summary Schedule of General Fund Revenue is presented below. It is important
to understand that these revenue estimates are based on consultants' analysis using
trend comparisons with previous years and reports provided by state, county and local
agencies. It should be noted that future economic activity, legislation and policy
decisions, as well as any other unforeseen circumstances could affect the City's
revenue stream for the remainder of FY16-17.
FY16-17 Budget vs. Projected Year-end Revenues
2
FY15-16
FY16-17
FY16-17
Estimate vs.
Revenue Type
Actual
Budget
Estimate
Budget
Property tax__________________________________________________________$12,410,225
------
_
$12,088,500
- - - - - ----------------------------------------------
$12,238,021
$ 149,521
Sales tax
------------------------------------------------------------------------------------------------------------------------------------------------------------------
2,104,327
2,122,800
2,105,356
(17,444)
Transient occupancy 1�� ...................................
----------------------
5,196,987
5,495,000
- - - - ----------------------------------------------
5,631,146
136,146
Utility user taxes
1,865,682
1,981,900
2,007,465
25,565
Planning, building & safety, and other permits
2,382,743
2,215,800
2,302,900
87,100
Other revenue
4,943,317
4,710,000
4,765,480
55,480
Subtotal
28,903,281
28,614,000
29,050,368
436,368
Transfers In
146,257
190,000
190,000
-
Tota I Revenues
$29,049,538
$28,804,000
$29,240,368
$ 436,368
2
The General Fund revenue is expected to exceed the current FY16-17 budget by
approximately $436,000. Discussion and analysis regarding General Fund major
revenues is presented below.
Property Tax
Staff is projecting a 1.5% increase in property tax for FY16-17. Based on the City's
recent review with our tax consultant, our year-end estimates are on the conservative
side for mid -year. If property tax remittances exceed year-end projections during the
coming months, Staff will bring back updated at third quarter review.
Transient Occupancy Tax (TOT)
Currently, TOT is performing better than expected and is currently estimated to end the
year 2.5% or $136,146 higher than budget and projected to end 6% higher than last
year. Based on the most current information available, room occupancy will remain
high through the remainder of the fiscal year.
Permit Revenue
Permit revenue is on track to exceed budget by 6.4% or $100,000. Planning activity
has increased at mid -year and expected to continue in the summer months.
Other Revenue (Interest Revenue)
Currently interest revenues are expected to exceed budget by $30,000. This is through
a combination of Local Agency Investment Fund (LAIF) rate increases and the City's
investment in Certificates of Deposit (CDs) through Viking Sparks.
Revenue Summa
Revenues are expected to increase by $436,368 as illustrated in the table above, which
would increase the General Fund revenue budget to $29.2 million, excluding transfers.
General Fund Expenditures
There are six major categories in expenditures: salaries, benefits, supplies/materials,
services, training/conferences and transfers out. At mid -year review, expenditures,
including transfers out, are estimated to end the year under budget by almost $2.2
million. Salaries and benefits are estimated to end the year approximately $715,000
under budget due to seven unfilled vacancies through the City. Services are estimated
to end the year under budget by $149,000 due to savings from professional technical
services and maintenance services in various departments. All year-end estimates
included actual expenses paid to date as well as commitments of future payments
through contracts and purchase orders. The table below summarizes General Fund
expenditures at mid -year.
9
FY16-17 Budget vs. Projected Year-end Expenditures
by Major Expenditure Categories
Year-end Projected Expenditures
The General Fund operating expenditures are estimated to come in under budget by
$934,000 and transfers out are estimated to come in under budget by $1,256,000. Staff
has analyzed FY16-17 General Fund expenditures to date, and has determined that a
number expenditure budgets warrant adjustment. A discussion of proposed
adjustments follows:
FY16-17 Budget vs. Projected Year-end Expenditures by Departments
Adopted
Additional
Revised
Mid -year
Year-end
Expenditure Categories
Budget
Appropriation
Budget
Actuals
Estimates
Salaries
$7.147.100
_ $112.600
$7,034.500
1 $3,212.017
$6.498.181
- - ----
----
-- ----
0
46.8%
Benefits
2,048,200
__________$1,500
$2,049,700
1,118,560
--------
$1,870,666__-
Services _ ___________________________12,689,600
_______$10,422______
$1,816,279
$14,505,879
3,827,935
$14,356,499
Supplies/Materials 811,500
$1,489,792
$2,301.292 481578
- - --- G----------'--------
$2,250,830
------ - - -
Trainin /Meetin s/Conferences
291,500
$1,500
$293,000
j 64,686
$273,715
Transfers Out
_89,578
$0
$5,446,000
t 2,823,000
$4,189,750
_________________________________5,446,000
2,309,068
_
i
i 7,4722230
Total General Fund
Public Works
4,933,514
1,342,633
27.2%
t 4,766,247
Expenditures
$28,433,900
$3,196,471
$31,630,371
$11,527,776
$29,439,641
Year-end Projected Expenditures
The General Fund operating expenditures are estimated to come in under budget by
$934,000 and transfers out are estimated to come in under budget by $1,256,000. Staff
has analyzed FY16-17 General Fund expenditures to date, and has determined that a
number expenditure budgets warrant adjustment. A discussion of proposed
adjustments follows:
FY16-17 Budget vs. Projected Year-end Expenditures by Departments
Approximately 77% or $715,000 of savings in operating expenditures are from salaries
and benefits in various departments:
El
FY16-17
Mid -year Actual
%of
Year -End
$ Variance
Department
Budget
12/31/2016
Budget Spent
Estimate $
to Budget
City____________________________________
---- Council -
126,500 ----------------------------
48,-----021 ----------------------
/0
38.0------ �----------
. _ $119,$
- 814 - - - - ----
---------6,686 -----------------
City Attorney
0
46.8%
1 t__ $950,422___
_____________$940,000______________$439,642
_______$10,422______
City Administration
3,657,352
1,645,267
45,0%o
i 3,420,518
-$236,834
------------------- -------------------------
r-----------------------------------------------
Finance
Finance
1,296,900
527,582
40.7%
1,207,322
_89,578
_________________________________________________________
________________
_____r ________ _______
PublicSafety _______
7,565,430
2,309,068
30.5%
i 7,4722230
-93,200
Public Works
4,933,514
1,342,633
27.2%
t 4,766,247
-167,267
- - -- -- -
- - - ----------------------------------
-----------------------------------------------
Co munity Development______________
3,166,125
1.224,612
38.7% ----
i 2,887,992
-----------------------------------------------
-278,133
Recreation & Parks
- - - - - ------------------------------
2,380,200
1 044 397
-- ---------------
43 9 /0 ---------�
2,275,896
------------------
-104 304
------------
Non-Department
2,118, 350
123,552
o
5.8%
2,149,450
31,100
Operating Expenditures
26,184,371
8,704,774
33.2%
i 25,249,891
-934,480
Transfer Out
5,446,000
2,823,000
51.8%
i 4,189,750
-1,256,250
Total Expenditures
$31,630,371
$11,527,774
36.4%
$29,439,641
-$2,190,730
Approximately 77% or $715,000 of savings in operating expenditures are from salaries
and benefits in various departments:
El
• Administration is projected to have savings in salaries and benefits from three (3)
unfilled vacancies in the City Manager's Office and the City Clerk Office.
• Finance is projected to have savings from salaries and benefits from two (2)
vacancies at the beginning of the year and retirement of a Tier 1 employee at
mid -year.
• Public Safety is projected to have savings from salary and benefits from one (1)
unfilled vacancy at mid -year. The Administrative Analyst position was filled in
January of 2017.
• Public Works is projected to have savings from salaries and benefits from two (2)
unfilled vacancies in the department.
• Community Development is projected to have savings from salaries and benefits
from two (2) unfilled vacancies in the department.
The remaining 23% or $219,000 of savings are from services, supplies and training
from various departments.
Transfers
Earlier this fiscal year, the City Council approved several Proposition A exchange
agreements with the cities of Diamond Bar, Montebello, and Rolling Hills, whereby the
City received $1,675,000 in Proposition A funds in exchange for $1,256,250 of General
Fund money. The Proposition A money will be programmed to fund future capital
projects identified by the Public Works Department. As a result of this exchange, the
adopted budget for General Fund transfers to the Capital Fund will be reduced by $1.25
million.
Expenditure Summary
The projected year-end expenditures are almost $2.2 less than budget, as illustrated in
the table above. The result of this budget under -run is due to unfilled vacancies and
savings from non -personnel expenses.
FY17-18 Budget Workshop Date(s)
Staff seeks direction from the City Council tonight regarding possible dates to hold a
public budget workshop in the near future. Any input that the City Council may wish to
provide at this time is welcome.
CONCLUSION
Staff has reviewed all revenues and expenditures for mid -year FY16-17, with an
emphasis on the General Fund, to determine if all sources and uses are on target with
the originally adopted budget and to highlight any areas that may end the fiscal year
significantly above or below budget. In summary, projected year-end General Fund
revenues are tracking $436,000 higher than budget, while expenditures are tracking
approximately $2.2 million below budget.
5
ALTERNATIVES:
In addition to the Staff recommendations, the following alternative action is available for
the City Council's consideration:
1. Discuss and take other action related to this item.
Al
•