CC 20161101 05 FY15-16 Year-end Financial ReportRANCHO PALOS VERDES CITY COUNCIL
AGENDA REPORT
AGENDA DESCRIPTION:
MEETING DATE: 11/01/2016
AGENDA HEADING: Regular Business
Consideration of and possible action regarding the Fiscal Year 2015-16 Year-end
Financial Report.
RECOMMENDED COUNCIL ACTION:
1) Receive and File the FY15-16 Year-end Financial Report.
FISCAL IMPACT: None
Amount Budgeted:
Additional Appropriation
Account Number(s):
ORIGINATED BY: Trang Nguyen,
REVIEWED BY: Deborah Cullen
APPROVED BY: Doug Willmore,
N/A
N/A
N/A
Deputy Director of Finance
Director of Finance;_
City Manager,.",","' `
BACKGROUND AND DISCUSSION:
Due to the lateness of the hour, this item was continued from the October 18, 2016, City
Council meeting.
Fiscal Year 2015-16 General Fund Year-end Results
At the FY16-17 budget workshop held May 31, 2016, Staff projected General Fund
revenues to end FY15-16 at $28.5 million and expenditures were projected to end the
year at $31.4, resulting in a negative variance (revenues to expenditures) of $2.9
million.
The unaudited FY15-16 General Fund total revenues ended the year at $28.9 million
and total expenditures ended the year at $30.8 million, resulting in a decrease in the
negative variance from $2.9 million to $1.9 million, an improvement of $1 million
revenues to expenditures. (see Table 1, General Fund Operations Reconciliation)
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Table 1 General Fund Operations Reconciliation (Revenues to Expenditures)
FY 15-16 YE FY 15-16 Change to YE
Estimates Actuals Estimates
Revenues $ 28.5 $ 28.9 $ 0.4
Expenditures 31.4 30.8 0.6
Variance (2.9) (1.9) 1.0
Fund Balance Reconciliation
The General Fund will end the fiscal year with an excess surplus in fund balance of $1.9
million; after applying the 50% reserve fund policy and Purchase Orders Carry -forward.
This is an improvement of $200,000 from the projection at the second budget workshop.
(see Table 2, Fund Balance Reconciliation)
Table 2 Fund Balance Reconciliation
General Fund Revenues
Revenues continued to improve over the last quarter of the fiscal year, resulting in a net
increase in General Fund revenues of over $400,000 over the year-end estimate
presented at the May 31 st budget workshop. Compared to the adopted budget the
General Fund revenues ended the year $851,000 higher than the budgeted amount.
The improvement in revenues is primarily from an increase in Property Tax revenue and
better than expected Utility User's Tax.(see Table 3 and Graph 1, General Fund
Revenue Reconciliation)
Property Tax
2
FY 15-16 YE
FY 15-16
Estimates
Actuals
Variances
Beginning fund balance
$ 15.1
$ 15.1
$ -
Add: Revenues(including transfers in
28.5
28.9
0.4
Subtotal
43.6
44.0
0.4
Less: Year-end operating expenditures
(20.9)
(20.4)
0.5
Less: TOT transfers out
(5.0)
(5.0)
-
Less: Prior year favorable variances
(2.2)
(2.2)
-
Less: Other transfers out
3.3
3.2
0.1
Subtotal
(31.4)
(30.8)
0.6
Unaudited General Fund Balance
12.2
13.2
1.0
Less: 50% policy reserve
(10.5)
(10.5)
Purchase Orders Carry -forward
(0.8)
Revised General Fund Unrestricted Surplus/(Deficit)
1.7
1.9
0.2
General Fund Revenues
Revenues continued to improve over the last quarter of the fiscal year, resulting in a net
increase in General Fund revenues of over $400,000 over the year-end estimate
presented at the May 31 st budget workshop. Compared to the adopted budget the
General Fund revenues ended the year $851,000 higher than the budgeted amount.
The improvement in revenues is primarily from an increase in Property Tax revenue and
better than expected Utility User's Tax.(see Table 3 and Graph 1, General Fund
Revenue Reconciliation)
Property Tax
2
The State made the final reconciliation payment of $340,000 for the revenue swap
program that sunset this fiscal year. Additionally, the City received $250,000 in prior
year adjustments and an increase of $55,000 in property tax transfers, for a total
increase in the year-end projection of approximately $645,000.
Utility Users Tax
Utility Users Tax (UUT) increased by $202,000 over the year-end estimate due to an
increase in utility usage during the last quarter of the fiscal year.
License and Permits
License and Permits revenues decreased approximately $248,000 from the year-end
estimates. Based on information from the Community Development Staff, some
projects were being postponed due to the increase in construction costs.
Other Revenues
The total of other revenues decreased from the year-end estimates by approximately
$250,000, primarily due to the reduction of one-time revenue sources such as State
Mandate reimbursement, RDA loan payments and donations.
Table 3 General Fund Revenues Reconciliation
Revenues (in thousands)
2015-16
Adopted
Budget
2015-16
Year-end
Est.
2015-16
Unaudited
Actual
FY 2016
Unaudited
Actuals to YE
Estimates
PROPERTYTAXES
$ 11,756
$ 11,822
$ 12,467
$ 645
SALES TAXES
2,069
2,076
2,104
28
TOT
5,026
5,149
5,197
48
UUT
1,862
1,664
1,866
202
LICENSES AND PERMITS
2,160
2,631
2,383
(248)
OTHER REVENUE
5,217
5,173
4,924
(249)
TOTAL REVENUES (INCLUDING TRANSFERS IN)
28,090
28,515
28,941
426
9
Graph 1 General Fund Revenues
15,000
FY 2015.16 GENERAL FUND REVENUES
10,000
A�l
5,000
C
PROPERTY SALES TOT UUT LICENSES OTHER
TAXES TAXES AND REVENUE
PERMITS
2015-16 Adapted Budget 11,756 2,069 5,026 1,862 2,160 5,217
2015-16 Year-end Est. 11,822 2,076 5,149 1,664 2,631 5,173
2015-16 Unaudited Actual 12,467 2,104 5,197 1,866 2,383 4,924
General Fund Expenditures
General Fund expenditures ended the year approximately $657,000 less than the year-
end estimates presented at the May 31St budget workshop. The savings were spread
throughout all departments in various categories as described below.
Compared to the Adopted Budget the departments ended the year below the budgeted
amounts primarily due to vacancies that were not filled and projects that will be carried
over to FY 2016-17. (see Tables 4 and 5, General Fund Expenditures Reconciliation)
Salaries & Benefits
Year-end actuals for salaries and benefits resulted in an overall increase of
approximately $36,000 to the year-end estimate. This is primarily due to an additional
leave payout for unexpected retirements. Compared to the adopted budget salaries
and benefits ended the year $119,000 below budget. This underrun is largely due to
positions being vacant during the fiscal year.
Contract Services
Total contract services ended the year about $223,000 less than year-end estimates.
Professional/Technical Services were approximately $337,000 less than the projected
year-end estimates. The savings were due to contract services in Community
Development, Public Works and Recreation and Parks Departments that had been
budgeted but had not been awarded by year-end. Additionally, the Law Enforcement
El
contract increased from year-end estimates by about $114,000 due to an increase in
services and Automated License Plate Recognition (ALPR) camera implementation.
Other/Miscellaneous
Other expenses came in approximately $309,000 less than year-end estimates. The
decrease came from lower insurance premiums, savings from operating supplies and
maintenance services.
Transfers out
Transfers out came in about $161,000 less than year-end estimates due to reduction
from transfers to Habitat Restoration, Subregion One and Improvement Authority.
However, the General Fund transferred approximately $12,000 to Community
Development Block Grant (CDBG) to cover expenses that did not qualify under the
grant program.
Compared to the adopted budget, transfers out ended the year with $1.9 million over
budget. The overrun is largely due to the favorable transfer of $2.2 million from General
Fund to Capital Improvement Fund, per Council Policy #41, and cancelled transfers to
Habitat Restoration, Subregion One and Improvement Authority of almost $300,000.
Table 4 General Fund Expenditures Reconciliation (by department)
Department (in thousands)
FY 15-16
Adopted Budget
FY 15-16 YE
Estimates
FY 15-16
Actuals
Variance
to YE
Estimates
Variance
to
Adopted
Budget
C ITY ADMINISTRATION
$ 5,392
$ 5,416
$ 5,370
$ (47) $ (22)
NON -DEPARTMENTAL
108
310
274
(36)
166
COMMUNITY DEVELOPMENT
2,686
2,802
2,652
(150)
(34)
PUBLIC SAFETY
5,280
5,047
5,019
(27)
(261)
PUBLIC WORKS
4,554
4,189
4,010
(179)
(544)
RECREATION & PARKS
1,995
2,115
2,054
(61)
59
CITYATTORNEY
1,030
1,046
1,049
3
19
TRANSFERS OUT
8,417
10,500
10,339
(161)
1922,
TOTAL EXPENDITURES (INCLUDING TRANSFERS OUT)
29,462
31,425
30,767
(658)
17305
Table 5 General Fund Expenditures Reconciliation (by categories)
Variances
Variance to
FY 15-16
FY 15-16 YE
FY 15-16
to YE Adopted
Department (in thousands)
Adopted Budget
Estimates
Actuals
Estimates Budget
SALARIES & BENEFITS
$ 8,530
$ 8,375
$ 8,411
$ 36 $ (119)
PROFESSIONAL/TECHNICAL SERVICES
2,420
2,509
2,172
(337) $ (248)
LAW ENFORCEMENT CONTRACT
5,262
4,900
5,014
114 $ (248)
OTHER/MISC.
4,833
5,141
4,832
(309) $ (1)
TRANSFERS OUT
8,417
10,500
10,339
(161) $ 1,922
TOTAL EXPENDITURES (INCLUDING TRANSFERS OUT)
29,462
31,425
30,767
(658) 1,305
Graph 2 General Fund Expenditures
FY 2015-16 GENERAL FUND EXPENDITURES
15,000
10,000
m �
a
t
c
5,000
0
SALARIES & PROFESSIONALIT LAW OTHERIMISC. TRANSFERS OUT
BENEFITS ECHNICAL ENFORCEMENT
SERVICES CONTRACT
FY 15-16 Adopted Budget $8,530 2,420 5,262 4,833 8,417
FY 15-16 YE Estimates $8,375 2,509 4,900 5,141 10,500
FY 15-16 Actuals $8,411 2,172 5,014 4,832 10,339
Overall, the City ended the year with the revenues exceeding year-end estimates and
expenditures ending the year below estimates. This results in a General Fund net
surplus of $1.9 million, after funding the 50% Reserve Policy and accounting for
purchase orders that are carried forward into FY 2016-17.
Capital Improvement Projects Fund
Capital Improvement ended FY15-16 with an increase of $12.2 million to fund balance.
Of the available $32.6 million in fund balance, $3.5 million is committed to projects
started during the fiscal year but not yet completed, and another $6.5 million is
committed to projects that were planned but delayed. The revised available fund
balance at June 30, 2016, is $22.6 million which is $2.2 million higher than what was
reported at the second budget workshop. The $2.2 million variance is due to City
Council Policy No. 41 which requires the transfer of the prior year favorable expenditure
variance from the General Fund to the Capital Improvement Projects Fund at year-end.
Equipment Replacement Fund
Equipment Replacement Fund ended FY15-16 with a slight increase in fund balance,
bringing the unrestricted fund balance to a little over $3 million. There is an increase of
$300,000 in available fund balance as reported on May 31, 2016, due to the delay of
implementation in the new finance software.
Water Quality/Flood Protection Fund
Water Quality closed FY15-16 with an increase in net position of about $200,000
bringing the fund balance to a little over $5.5 million. Of the $5.5 million in fund balance
over $900,000 is in open purchase orders started during FY15-16 but not completed,
on
and committed projects of $2.1 million, leaving the available fund balance at June 30,
2016, at $2.5 million.
Other Governmental Funds
Other Governmental Funds include Special Revenue Funds and Permanent Funds.
The City closed FY15-16 with an overall increase in fund balance in these funds by
almost $1.5 million, bringing the total fund balance to over $14 million. Almost 91% of
the fund balance is restricted by law or external agencies. Over $10 million is restricted
by law, $1 million is restricted by reimbursement settlement with the Improvement
Authority - Abalone Cove, and another $750,000 is restricted by endowment with
Subregion One. The total fund balance increased by $500,000 from what was
estimated because one of the projects that was funded out of the Donor Restricted
Fund for almost $500,000 was delayed to FY16-17.
Table 7 Other Funds Year-end Summary
The City is currently going through an external audit with Vavrinek, Trine, Day & Co.
(VTD). Once the audit is concluded, Finance will prepare and submit the
Comprehensive Annual Financial Report (CAFR), which will have the final revenues and
expenditures. We anticipate to have the audit completed later this year, and the CAFR
presented to the City Council by the second meeting in January 2017.
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Capital
Equipment
Special
Improvement
Replacement
Water Quality
Revenues
BEGINNING FUND BALANCE
$ 20.4
$ 3.5
$ 5.3
$ 12.9
INCREASE/DECREASE IN RESTRICTED
FUND BALANCE
12.2
-0.3
0.2
1.5
FY 15-16 FUND BALANCE
32.6
3.2
5.5
14.4
PURCHASE ORDERS CARRY -FORWARD
-3.5
0
-0.9
-0.4
COMMITTED
-6.5
0
-2.1
0
FY 15-16 AVAILABLE FUND BALANCE
22.6
3.2
2.5
14
AVAILABLE FUND BALANCE AS
20.4
2.9
2.5
13.5
REPORTED ON 5/31/16
VARIANCES
2.2
0.3
0
0.5
The City is currently going through an external audit with Vavrinek, Trine, Day & Co.
(VTD). Once the audit is concluded, Finance will prepare and submit the
Comprehensive Annual Financial Report (CAFR), which will have the final revenues and
expenditures. We anticipate to have the audit completed later this year, and the CAFR
presented to the City Council by the second meeting in January 2017.
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