RPVCCA_CC_SR_2013_01_15_E_Fiscal_Health_Statement_And_Community_PresentationCrrvOF
MEMORANDUM
RANCHO PALOS VERDES
TO:
FROM:
DATE:
SUBJECT:
REVIEWED:
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCI
DENNIS McLEAN,DIRECTOR OF FINANCE &INFORMATION
TECHNOLOGY
JANUARY 15,2013
FISCAL HEALTH STATEMENT AND COMMUNITY PRESENTATION
(Supports 2012 City Council Goal of Government Efficiency,Fiscal
Control and Transparency)
CAROLYN LEHR,CITY MANAGERmfat-c:J-
Staff Coordinator:Kathryn Downs,Deputy Director of Finance &Information
Technology \GD
RECOMMENDATION
Receive and file the following:
1.Memorandum from the Finance Advisory Committee (FAC)titled "Statement
concerning the fiscal health of the City of Rancho Palos Verdes"(Fiscal Health
Statement) dated December 5,2012 (see Attachment A);and
2.Community presentation and brochure prepared by Finance &Information Technology
Staff,updated with suggestions from the FAC (see Attachments B and C).
DISCUSSION
On September 4,2012,the City Council approved the 2012-13 Work Plan for the FAC that
included the following task:
"Prepare a short statement regarding the City's fiscal health to be addressed to the City
Council,and provide feedback and suggestions for a presentation and publication to be
prepared by Staff regarding various financial issues relevant to the City (e.g.Capital
Improvement Plan,Reserves,Budget,etc.)that could be delivered at local community
meetings".
Fiscal Health Statement
On October 24,2012,the FAC received ten years of the following historical data to use
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FISCAL HEALTH STATEMENT AND COMMUNITY PRESENTATION
January 15,2013
Page 2 of 2
when developing its Fiscal Health Statement.
1.Ratio of current assets to current liabilities.
2.Ratio of total liabilities to total net assets.
3.General Fund budgeted revenue vs.budgeted expenditures,both original and final.
4.Final net General Fund budget vs.actual results.
5.Overall cash balance.
6.Reserve policy levels vs.actual levels.
7.Independent financial statement audit results (auditor's opinion,report on internal
control,and management letter).
The FAC appointed a subcommittee that reviewed the financial data prepared by Staff,
spoke with former City Council Members and an outside expert on municipal finance,and
prepared 'a draft Memorandum.On December 5,2012,the FAC finalized its Fiscal Health
Statement addressed to the City Council,for public distribution (see attachment A).
Community Presentation
On October 24,2012,the FAC received a draft Community Presentation and Pamphlet
discussing the City's finances.FAC Members offered suggestions for improvement,which
Staff incorporated into the updated documents (see Attachments B &C).It is Staff's goal
to offer the Community Presentation and distribute the Pamphlet at local meetings (e.g.
Homeowners'Associations).
Attachments
A -Memorandum from the Finance Advisory Committee titled "Statement concerning the
fiscal health of the City of Rancho Palos Verdes"dated December 5,2012
B -Finance &Information Technology 2012-13 Community Presentation PowerPoint
C -Finance &Information Technology Department Fiscal Year 2012-13 Brochure
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Attachment A
MEMORANDUM
To:
From:
Date:
Subject:
Rancho Palos Verdes City Council
Finance Advisory Committee
December 5,2012
Statement concerning the fiscal health
of the City of Rancho Palos Verdes
1.Assignment from City Council
In August,2012,the Finance and Information Technology Department of
the City of Rancho Palos Verdes requested the Finance Advisory Committee
(FAC)to include provisions in its 2012-2013 Work Plan (1)to comment on
and make suggestions concerning Staffs preparation of a pamphlet
regarding the City's fiscal health and a presentation to be made at local
community meetings,and (2)to participate in such presentations.
This proposal was discussed by the FAC at its August 22,2012 meeting.
FAC did not accept the suggestion that it directly participate in community
meetings,but it did agree to include a provision in its work plan to comment
on and,if appropriate,make suggestions concerning the proposed pamphlet
and presentation.As part of that process,FAC agreed to draft its own short
statement concerning the fiscal health of the City.
On September 4,2012,the City Council approved the FAC work plan and
the current assignment,as stated below.
"Prepare a short statement regarding the City's fiscal health to be
addressed to the City Council,and provide feedback and suggestions for
a presentation and publication to be prepared by Staff regarding various
financial issues relevant to the City (e.g.Capital Improvement Plan,
Reserves,Budget,etc.)that could be delivered at local community
meetings."
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Attachment A
2.Consideration by the Finance Advisory Committee
At its October 24,2012 meeting,Kathryn Downs provided us with a draft of
the presentation which it will make to community organizations regarding
financial issues relevant to the City of Rancho Palos Verdes.We asked a
number of questions concerning the presentation and made a few comments
and suggestions.FAC believes in general that Staff does an outstanding job
of preparing financial documents for the City,and that it has done a
thorough and professional job of putti~g together the current presentation.
The FAC then exchanged preliminary views concerning the preparation of
its own statement and agreed to the following framework:
1.Staffhas emphasized that FAC's statement should not attempt
to reflect an extensive analysis of the underlying data or to in
any way constitute an expert opinion.Staff has both the
resources and expertise necessary to perform those functions.
But,because of its mission and exposure to City finances over
an extended period of time,FAC believes that it is in a
position to provide a citizen's perspective on the subject.
2.Although Staffs presentation addresses a number of matters,
including,but not limited to,Staff resources,efficiency and
accomplishments,as well as the budget planning process and
transparency of City financial reports,the FAC statement will
only address the City's fiscal health.
3.Because of its proposed use in a pamphlet and power point
presentation,it is envisioned that the FAC statement will be
fairly short and will not seek to reevaluate or duplicate Staff s
more detailed presentation.It should be a concise and
independent view of the subject.
Chair Willie Wang then appointed FAC members Tuan Ho and Bill James to
act as a subcommittee to prepare a draft statement and scheduled a further
discussion for the FAC's next meeting on December 5,2012.
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Attachment A
The subcommittee reviewed financial information provided by Staff,spoke
with former council members and an outside expert,l and reviewed financial
information concerning other South Bay cities.It then drafted a proposed
Memorandum which was circulated by Staff to the members of the FAC.
At its meeting on December 5,2012,the FAC discussed the proposed
Memorandum and made minor changes.The following statement was
unanimously adopted.
3.Statement concerning the fiscal health of the City of Rancho Palos
Verdes
The Finance Advisory Committee is in a position to watch the
development of the financial health of the City of Rancho Palos
Verdes.It participates in issues as they develop and each year
reviews the Five Year Financial Model,the budget,and other
financial documents prepared by Staff or others on behalf of the City
as directed by the City Council.It provides independent views to the
City Council concerning the budget and related financial issues such
as banking and pensions.
Compared with other cities,both locally and across the state,the City
of Rancho Palos Verdes has a stable economy and an efficient
government which have largely been unaffected by the state's budget
problems or the recent dissolution of redevelopment agencies.The
establishment of the Terranea resort has added an important element
to our tax base and the City's conservative financial philosophy has
produced healthy reserve levels,a balanced budget and no debt.
These are strong indicators of fiscal health.
However,it is important to note that long term revenues and liabilities
can change over time and are not always fully reflected in financial
documents.Looking to the future will require handling significant
problems surrounding the San Ramon Canyon and Portuguese Bend
areas,continuing the repair of our storm drains,dealing with
1 Michael Coleman is a recognized expert on the evaluation of California local
government revenues spending and financing,sponsored by the California League of
Cities,and will be one of the featured speakers at the 14 th Annual South Bay Council of
Governments General Assembly on February 22,2013.
3
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Attachment A
deteriorating sewer lines,and addressing new problems sure to arise
in the future.
During its almost 40 years,our City has successfully dealt with a
number of significant issues.The City has grown and its trails and
recreational facilities have become an important part of the lives not
only of its own residents,but of people throughout Southern
California.It has dealt with landslides and constant repairs to major
arterial roads that run through areas affected.It is currently
addressing other unique geological problems involving our canyons,
coastline and storm drains.We believe that with continued leadership
and citizen support,the City of Rancho Palos Verdes will be able to
address future challenges.
4.Conclusion
The above statement was prepared for possible use in a pamphlet and
power point presentation.If the City council would like the FAC to
focus on any element of the City's fiscal health with more specificity
or in greater detail,it would be happy to do so.
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Attachment B
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•An overview of Solicitation Standardsm the City of Rancho Palos
Verdes
•An overview of·tne Burglar Alarm ordinance in the City of Rancho
Palos Verdes
•Contact the Burglar Alarm (billing)Coordinator by email
•Click here fOT a Do Not Disturb ptacecard that you can print and
Attachment B
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Attachment B
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Attachment C
RANCHO PALOS VERDES
Finance &Information Technology Department Fiscal Year 2012-13
This overview of the City's Finance function is intended to give the reader a basic understanding of City's
resources and the use of taxpayer money.The City serves the public and is answerable for the
stewardship of public funds.Finance &Information Technology (FIT)Staff believes in transparency and is
always happy to answer your questions and share information with you.
The Committees also conduct public meetings.
This is your City government,and you are
encouraged to share your opinions!
FIT Staff supports the following 2 Committees:
-The Finance Advisory Committee reviews financial
information and studies financial issues assigned
by the City Council;and
-The Storm Drain Oversight Committee oversees
the use of property owners'storm drain user fees.
CITIZEN INPUT
There are many ways to share your opinions with
City Hall.Citizens are encouraged to contact the
City Council directly or by speaking at public
meetings.The City Council has appointed citizens
to Committees dedicated to various topics .
Citizens who want to get involved are welcome to
contact the City Clerk's office to apply for
appointment.
CORE CITY SERVICES
.:.Provide police services
.:.Maintain streets,storm drains,parks,and other
City-owned infrastructure
.:.Manage land use issues
•:.Issue building permits
.:.Provide recreation
.:.Maintain public records &provide information to
the public
.:.Manage the City's budget and cash
ORGANIZATIONAL EFFICIENCY
In 2008,the City retained an outside expert to
analyze the City's business practices.The report
included benchmarking,all departments of the City,
and a report to City Council with 65
recommendations for improvement.In 2012,the
City hired another outside expert to update the
2008 Organizational Assessment and review
staffing needs.We expect that the updated Report
will be available to the public in 2013.
FINANCE ADVISORY COMMITTEE STATEMENT
"Compared with other cities,both locally and across the state,the City of
Rancho Palos Verdes has a stable economy and an efficient government
which have largely been unaffected by the state's budget problems or the
recent dissolution of redevelopment agencies.The establishment of the
Terranea resort has added an important element to our tax base and the
City's conservative financial philosophy has produced healthy reserve
levels,a balanced budget and no debt.These are strong indicators of fiscal
health."
The full Fiscal Health Statement prepared by the Finance Advisory Committee can
be viewed on the City's website.
FINANCIAL
MANAGEMENT
PHILOSOPHIES
v"Fiscal Responsibility
v"Transparency
v"Accuracy
v"Efficiency
v"Long-Term Strategy
v"Public Process
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Attachment C
ancho a os Verdes
Finance &Informa ion echno ogy De a e
Excess Resources 49,000
LIVING WITHIN OUR MEANS
THE BUDGET PLA I G PROCESS
The City has a hybrid zero-based budgeting
process that begins with a baseline of expenditures
to provide minimum required service to the public.
FIT Staff identifies the amount of revenue expected
in the coming year,and expenditure programs are
analyzed to validate the need for budgeted items.
Staff makes recommendations for capital projects
based upon systematic infrastructure maintenance
plans,and provides long-term information to the
City Council regarding trends and expectations.
The City Council evaluates discretionary
expenditures,as well as the merits of existing and
new services and projects.The City Council
selects expenditures to add to the baseline budget,
with the goal of balanced spending.
FY12-13 GE E
Resources
Uses
Infrastructure
Public Safety
Public Works
Administration
Community Development
Finance &IT
Recreation
Other
Total Uses
GE
$24,302,000
$4,786,000
4,621,000
4,453,000
3,728,000
2,608,000
1,892,000
1,665,000
500,000
$24,253,000
$900
$800
$700
$600
$500
$400
$300
$200
$100
$-
$828
GE E EVE E
PE C PT
Fiscal year 2010-11
as reported by the
State Controller's Office
(most recent available)
CITY RESOURCES
In millions
30 I LIO _......L.-.-L Y
Storm Drain User Fees
$1.3
Pernit Fees
$2.0
Hghway Users Tax
$1.1 Sales Tax
$1.6 Franchise Tax
$1.9
utility Users Tax
$2.4
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PROPERTY TAX I TRIB TIO
City of Rancho Palos
Verdes
6%
LA Community College
District
3%
Attachment C
E
eCi
A 0 6°A>of 0A>Ta
evy (abo 360 for a assesse
value of 600,000);
2.About 51 per ho se 01 for
landscaping and ligh ing dis ric s;
and
3.$93 per equivalen residen ial ni for
the storm drain user fee.
OTHER TAXES RECEIVED BY CITY
Sales tax -about $1 of the sales tax paid for a $100 restaurant mea in he City
Highway users tax -about 7 cents for each $4 gallon of gas purchase
Utility users tax -about $160 annually per household
Transient occupancy tax -10%of the hotel room charge
CITY RESERVES
Set by City Council Policy or legal
Requirements (in millions)
$23.3 ILLION TOTAL
At June 30,2012
Equipment &Building Other Reser\es
Replacement $1.6
$2.5 ------,-----
FISCAL HEALTH
'/Reserves of $23.3
million
'/Salance budget
'/No debt
,/Some funding for
infrastructure
improvements
'/Largely unaffected by
state budget problems
or redevelopment
dissolution
CHALLE GES FOR THE FUTURE
Infrastructure Funding
.:.Sunset of dedicated fee for storm drain repairs in 2016
.:.Not enough dedicated funding for street rehabili ation
.:.0 dedicated funding for Citywide sewer main enance/repa·r
.:.Shrinking resources from federal and s ate agencies
Infrastructure Needs
.:.Construction of $20 million San Ramon Canyon s abiliza ·0
.:.Landslide stabilization
.:.Aged public facilities
.:.At least $64 million of unfunded potential infras r c re projec s
with varying levels of priority (including storm drain projec s
identified when fee was developed)
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Attachment C
ancho a os Verdes
Finance &Information Technology De
STAFF RESOURCES
As the City outsources many of its core
services,much of the Staff at Rancho Palos
Verdes are professionals such as Engineers,
Planners,Accountants,and Analysts.About
64%of the City's staffing positions require a
degree,an additional 17°A>have technical
requirements,leaving only about 19°A>non-
technical support Staff.For a City the size of
Rancho Palos Verdes,we believe this is an
efficient way to do business.
FI A CIAL REPO TI G 0 C TY CO C
THE PUBLIC
Weekly current events
,Monthly cash &investments
Biannual budget status for all funds
Annual budget,audited financial sta ements,
five-year financial model,five-year capital
improvement plan,and reports 0 sta e and
federal agencies
PLUS ANYTIME URGE T I SUE RI E
Lomita Lawndale Rancho
Palos
Verdes
Rolling Carson Rolling
Hills Hills
Estates
PERSO E COSTS PE C T
Based on fiscal year 2011-12 salary &benefi
budgets for contract cities in the So h Bay
$600 .....-~"l---------------
$500
$400
$300
$200
$100
$0 -r-.-------r-................L.-..----a........-...I.....--....------I--..l....--.,....----J~.L..--,.--I-.l...-.-.1
FINANCIAL INFO ON THE RPV WEBSITE
www.palosverdes.com/rpv
.:.The annual budget -both comprehensive
and brief
.:.Audited financial statements
.:.Financial policies
.:.Employee compensation
.:.Five-year plans
.:.Finance Advisory Committee agendas
.:.Cash and investments
.:.Solicitation rules
.:.Business license information
.:.Fee schedules
FINANCE STAFF ACCO PLIS E TS
~Clean audit opinions
~Financial statement and budget awards
~Comprehensive staff reports
~Public outreach
~Continuing education
~Benchmarking
~Association with professional peers
AVERAGE 25 YEARS OF EXPERIE CE!
DE NIS McLEAN
DIRECTOR
dennism@rpv.com
310.544.5212
KATHRY DOW 5
DEPUTY DIRECTOR
kathrynd@rpv.com
310.544.5216
cc@rpv.com
oversight@rpv.com
fac@rpv.com
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