TITLE
Recommendation to receive and file the Second Budget Performance Report for Fiscal Year 2014. (Citywide)
DISCUSSION
This report includes information on the City's Fiscal Year 2014 (FY 14) budget performance through May 31, 2014, for all funds.
Summary
As of May 31, 3014, no significant concerns have been identified with any City fund, and any funds that are showing year-end estimates that exceed budgeted appropriations will be resolved with planned budget adjustments that will be presented to the City Council later in FY 14. The General Fund is also on track to end the year with the adopted surplus of $3.45 million that will be reserved, as previously directed by the City Council, for the CalPERS Stabilization Fund. The balance of the report summarizes the General Fund performance and provides additional details on the status of other funds.
General Fund and Uplands Oil Fund Overview
Based on current estimates as of May 31, 2014, it is anticipated that the General Fund and Uplands Oil Fund will end FY 14 with an ending funds available of approximately $0.5 million and $0.3 million, respectively. The estimated FY 14 sources and uses are summarized in the table below and described in further detail in the subsequent sections.
General Fund - Sources of Funds
Revenues
As of May 31, 2014, the General Fund experienced higher than expected growth in several revenues, including property tax, pipeline franchise, parking citations and revenue from other agencies. Property tax, natural gas pipeline franchise and parking citation revenues declined during the economic downturn and are now experiencing a rebound. Property taxes related to the dissolution of the Redevelopment Agency (RDA) are experiencing fluctuations as the methodologies for distribution are being refined. Revenue from the Office Depot sales tax sharing agreement, which was approved by the City Council in FY 13, is now reflected in the General Fund estimates-to-close. Actual revenues will be realized by year-end. While many of the major revenues are stable or experiencing growth, others, such as Telephone Utility Users Tax (TUUT) and Emergency Ambulance Revenue have not experienced a turnaround. Although Emergency Ambulance fees were increased in FY 14, anticipated revenues have been negatively impacted by the timing of reimbursements for transports in the first quarter of the fiscal year and reimbursement reductions at both the State and federal levels.
In addition to structural revenues, non-recurring General Fund revenues of $2.3 million from Ground Emergency Medical Transportation (GEMT) reimbursement have been received and an additional $0.5 million is anticipated by year-end, but could be received early next year. These funds are included in the FY 15 Proposed Budget for use in the purchase of fire engines and pumpers.
Other Sources
A key source of funds for the FY 14 Adopted Budget was revenue received in FY 13 and carried over. These sources were primarily from the State dissolution of the RDA and Uplands Oil revenue over $70/bbl. These non-recurring funds are budgeted for in the FY 14 Adopted Budget. Other Sources of funds were increased by the City Council as part of the first Budget Adjustments on February 11, 2014. These adjustments included releasing funds available for the Financial/Human Resources system and for the additional police officers that are a result of lower than anticipated attrition, overtime and for priorities set by the Police Chief.
General Fund - Uses of Funds
Expenditures by Department
With two-thirds of the FY 14 complete, 63 percent of adjusted General Fund appropriations have been expended. This is on pace with the spending pattern of the previous fiscal year. Citywide estimates are currently projecting the General Fund to come in under the FY 14 Adjusted Budget by $3.6 million, mainly due to planned savings in the Police Department, which will be reserved for ongoing Police Academy costs in FY 15. In addition, lower than budgeted expense for sales tax rebates in the Citywide Activities Department are projected. These expenses are based on actual revenues generated and are associated with a corresponding decline in sales tax revenue.
All Departments are estimating to end the year within their General Fund FY 14 Adjusted Budget with the exception of the City Clerk, Civil Service, Fire, and Disaster Preparedness and Emergency Departments. For the Civil Service and City Clerk Departments, the overages are the result of costs from the public safety academy recruitment and the elections, respectively. Both Departments have or will be requesting budget adjustments in FY 14 offset by existing funds. These budget adjustments will allow both Departments to end the year within appropriation. The Fire Department's overage is attributable to the delay in implementation of the new Rapid Medic Deployment (RMD). The current estimate does not include the $517,000 transfer to the Capital Projects Fund for sidewalks directed by the City Council on July 1, 2014. If the Department ends the year over budget due to delayed RDM implementation, the overage will be covered by GEMT funds. The use of GEMT funds to offset the RMD delay was approved by City Council on November 5, 2013. The use of additional GEMT funds to offset an overage in the Fire Department will reduce the amount available to fund fire engines as reflected in the FY 15 Proposed Budget. The Disaster Preparedness and Emergency Department has maintenance and repair costs that are trending upward for an aging Emergency Operations Center. This budgetary issue has been resolved in the FY 15 Proposed Budget and the Financial Management Department will continue to monitor and work with the Department to come in under budget at year-end.
Attachment B provides a breakdown of General Fund expenditure performance by department; notable department variances are identified in the footnotes to this attachment.
Other Uses
Other Uses in FY 14 are largely assignments of funds available to be reserved and released for various budgeted expenditures in the FY 15 Proposed Budget. These proposed expenditures include the FY 15 Police Academy costs, GEMT funds for the fire engines and pumpers, as well as assignments of fund balance for unfunded liabilities and the City Council approved reservation of $3.45 million in FY 14 surplus for the CalPERS Stabilization Fund.
FY 14 Revenues - All Other Funds
There are no revenue concerns to report at this time.
FY 14 Expenditures - All Other Funds
Overall, there are no funds where significant issues are projected. The Insurance, Parking and Business Area Improvement and Water Funds are showing year-end estimates that are over the appropriation limit. These overages are attributed to higher workers' compensation hospital benefits costs, as well as liability claims/judgments in the Insurance Fund and unbudgeted Uptown PBID expenditures in the Parking and Business Area Improvement Fund. Both have enough funds available to offset these increased costs and will be requesting additional budget appropriation, which will allow them to end the year in balance. The majority of the Water Fund's projected overage is due to unbudgeted costs that are 100 percent offset by revenue.
Please see Attachment A for a complete summary of expenditures by fund. Notable comments are identified in the footnotes to this attachment.
TIMING CONSIDERATIONS
City Council action on this matter is requested on August 5, 2014.
SUGGESTED ACTION
Approve recommendation.
BODY
[Enter Body Here]
Respectfully Submitted,
JOHN GROSS
DIRECTOR OF FINANCIAL MANAGEMENT
APPROVED:
PATRICK H. WEST
CITY MANAGER