11.b. Third Quarter Budget ReportMEMORANDUM
TO: CITY COUNCIUREDEVELOPMENT AGENCY BOARD OF
FROM: ANGELA KRAETSCH, DIRECTOR OF ADMINISTRATIVE SERVICE
SUBJECT: FISCAL YEAR 2011-12 THIRD QUARTER BUDGET REPORT
DATE: MAY 22,2012
RECOMMENDATION:
It is recommended the City Co~~ncil/Agency Board:
Approve detailed budget adjustments listed in the Third Quarter budget report;
Approve Schedule A; and
Approve (Deny) requests for additional adjustments in the General Fund
FINANCIAL IMPACT:
The General Fund ending balance will be impacted by the approval of the recommended
revenue and appropriation adjustments as follows:
Fund Balance at Mid Year Budget Report:
$2,692,408
Net decrease in Revenue $(205,763)
Net increase in Expenditures 1,200
Total Decrease to General Fund Balance (206,963)
Adjusted Fund Balance 03/31/2012
BACKGROUND:
Each year, the City CouncilIRDA Board of Directors adopts a budget, which commits
resources to the accomplishment of its policies. The Administrative Services Department
routinely prepares quarterly budget updates for the City Council.
The purpose of the City's Third Quarter budget review is to:
Compare revenues received and expenditures made to budgeted amounts to determine
appropriate adjustments.
Comment on any significant budget trends that will irr~pact financial planning.
Agenda Item 11.b.
Page 1
CONSIDERATION OF THIRD QUARTER BUDGET REPORT
MAY 22,2012
PAGE 2
Provide a link between the City budget, the financial records, and the independent
financial audit.
Compare current revenues and expenditures against the prior fiscal year.
ANALYSIS OF ISSUES:
The current projected available General Fund Balance for June 30, 2012 is $2,485,445.
This fund balance is projected to be 19% of appropriations, which is above the City
Council fund balance goal of 15%. The projected Fund Balance assumes revenues are
received exactly as budgeted, all budget expenditures are made, and all capital transfers
required by the CIP Program are completed. Historically, the expenditures at year-end
are traditionally less than budgeted.
As part of the Third Quarter process, staff is asked to review their current budgets and
determine if any adjustments are required. Staff is requesting the following General Fund
adjustments:
1) The decrease of $206,962 in transfer revenue due to the termination of the
Redevelopment Agency
2) The transfer of $60,000 of salary savings from the Police department to the City
Attorney's budget for ongoing personnel litigation
3) The transfer of $10,000 from the City Clerk's budget to the IT department for the
funding of the paperless agenda program
4) Transfer of $15,000 from Non-departmental to the Building and Maintenance
division for unanticipated building maintenance
5) A transfer of $3,400 from Non-departmental to the Auto Shop division for repairs
to the fueling system
The Council approved the following adjustments to the General Fund over the third
quarter:
1) An increase in revenues and expenditures of $1,200 for the purchase of
American Softball Association (ASA) approved bats
Additional increases and/or decreases in appropriations are being requested in several
funds. Detailed descriptions of these requests are included in the Third Quarter Report
and shown on Schedule A.
The Council adopted the Biennial Budget for Fiscal Years 201 1-12 and 2012-13 on June
28, 201 1. At that time staff indicated that adjustments would be required for the second
year of the two-year budget. Staff will be presenting the Budget Update Financial Report
for Fiscal Year 2012-1 3 in June.
Agenda Item 11.b.
Page 2
CONSIDERATION OF THIRD QUARTER BUDGET REPORT
MAY 22,2012
PAGE 3
ALTERNATIVES:
The following alternatives are provided for City CouncilIRDA Board consideration:
1. Approve Schedule A included in the Third Quarter Budget Report;
2. Do not approve recommended budget adjustments and propose reductions to balance
the budget andlor increase General Fund reserve;
3. Provide direction to staff.
ADVANTAGES:
The Third Quarter Budget Report maintains an updated review of the City finances in the
existing fiscal year, allocates additional funding to meet current needs and complete projects,
and maintains a fund balance that exceeds the City's minimum reserve policy amount.
DISADVANTAGES:
Based on the recommendations, departmental budgets will continue to be constrained and
will present a challenge to maintain current service levels.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted in front of City Hall on Monday, May 17,2012. The Agenda and
report were posted on the City's website on Monday, May 18, 2012. No public comments
were received.
Third Quarter Budget Report
Agenda Item 11.b.
Page 3
Quarterly Financial Report
Third Quarter of Fiscal Year 201 1-1 2
May 22,2012
OVERYlEW 3rd Quarter - Current Fiscal Year
I 1 Current 1 I
This report summarizes the City's overall financial position for
the fiscal year through March 20 1 2
Staff has determined that General Fund transfer revenue will
come in approximately $207,000 lower than budgeted due to
the termination of the City's Redevelopment Agency. It is
projected that approximately $63 1,644 of reserves will be used
this Fiscal Year ($350,000 originally budgeted and $281,644
in Quarterly adjustments) if revenues and expenditures come
in exactly as budgeted.
Adjusted Budgets: The revenue projections and budgets
include the adjustments for encumbrances, carryovers, and
expenditures that are included in this report.
GENERAL FUND
General Fund Financial Condition:
With 75% of the year complete, General Fund revenues are at
66% and expenditures are at 72%. The projected General
Fund balance is approximately 19% of appropriations. This is
higher than the City Council reserve goal of 15% and it is
anticipated that the actual percentage will be higher at the end
of the year.
MF li~ - VLF 1 1208.932 1 604.466 1 50%1
Top Ten Revenues
Property Tax
Triple Flip - Sales Tax
,, .
Sales Tax 1 2,210,000 1 1,349,909 1 61 %
%
66%
72%
23 %
19%
TOT I 530,000 1 362,355 1 68%
Franchise Tax 540.000 1 254.562 1 47%
YTD Actual
8,373,591
9,705,483
General Fund Balance
Revenues
Expenditures
BeginningFundBalance
Ending Fund Balance
- - - - - - - - - - - - I - ,--- ,
1Buildin~ Permits I 101.000 1 78.%4 1 78%1
%
70%
50%
Budget I YTD Actual
Adj us ted
Balance
12,782,929
13,414,173
3,116,689
2,485,445
3,534,000
756,04 1
2,486,054
378,020
Children in Motion
Telecomunication site
3rd Quarter - Prior Fiscal Year
Prior I I I
~, - 8
235,000 1 168,534 1 72%
leases
Total
Top Ten Revenues I Budget I Prior YTD I %
Children in Motion 252,000 165,037 65%
Telecommunication
site leases 185.500 144.932 78%
177,000( 142,655
9A01.973 1 5.891.212
Top Ten Revenues: The top ten revenues account for 74% of By the YTD prior year top revenues to the the General Fund revenue. By highlighting these, we can get a current YTD top revenue sources we can see an better understanding of the City's revenue position. Overall, overall increase in the revenue of 6% (shown on the these revenues are generally performing as projected based on schedule on the following page). payment schedules and past trends. Any significant variances
81%
63%
are noted on the next page.
Agenda Item 11.b.
Page 4
Ouarterlv Financial Re~ort Third Quarter of Fiscal Year 2011-12
Comparison of Actual YTD Revenue to Prior YTD
I TopTen Revenues I YTD ~ctuall Year I Decrease I % I
Revenue
I YTD Prior 1 Increase1 1
Property Tax
Triple Flip - Sales
Tax
Triple Flip - VLF
Franchise Tax
Bui l ding Permits 78,964 71,926
S a1 es Tax - Safety 65,693 54,163
Children in Motion
2,486,054
Sales Tax 1 1,349,909 1 1,301,158 1 48,751 1 4%
378,020
604,466
TOT
Comparison of 3rd Qtr Current Year Budget to Prior Year
Pmperty Tax
2,346,284
362.355 1 242.063 1 120.292 1 50%
Telecommunication
site leases
Total
380,659
617,355
139,770
142,655
1891.212
Children in Motion
Telecomnunicatim
Property Tax - The City receives the majority of its tax
revenue in December and April. This revenue source is
showing a 6% increase over the prior year and is expected
to reach 100% of the budgeted amount at year end.
6%
(2,639)
(12,889)
site leases
Total
Triple Flip - VLF: This revenue is received
50% in February and 50% in May. This is
calculated differently than the Sales Tax
Triple Flip payment because it is calculated
based on assessed values similar to property
taxes.
-1%
-2%
144,932
5564.703
235,000
Sales Tax: This revenue is showing an
increase when compared to the prior year.
The City has received 7 months of revenue
(58% of the year) and is on track to reach
100% of budget by year end.
177,000
9,401,973
Transient Occupancy Tax (TOT): This
revenue is showing a 50% increase when
compared to the prior year. However, this was
reflected in the FY 20 1 1-1 2 budget. The City
has received 8 months of revenue or 67%.
(2,277)
326509
252,000
Franchise Fees: This revenue is higher than
the prior year due to audits performed by
PG&E and Charter communications in the
prior year. These audits determined that the
City had been receiving revenue based on
rural Arroyo Grande addresses that are outside
of the City limits and the true up covered
several years.
-2%
6%
185,500
935433
Building Permits - This revenue source
continues to increase due to the increase in
building projects.
(17,000) Telecommunication Site Leases: This
revenue is lower than the prior year due to
renegotiated lease agreements with Cingular
Wireless for two sites.
-7%
(8,500)
47,180
Triple Flip - Sales Tax: This revenue is received 50% in
February and 50% in May. This revenue is calculated on
prior year sales tax receipts. Once actual sales tax amounts
are available, the State Board of Equalization (BOE) issues
a true up payment in the next year. This revenue is lower in
the current year due to this true up payment.
-5%
1%
Agenda Item 11.b.
Page 5
Quarterlv Financial Re~ort Third Quarter of Fiscal Year 2011-12
Expenditures: Operating costs are less than budgeted in the
3'* quarter as summarized below:
The key variances "by type" are supplies, services and capital
purchases. Supplies are below 75% due to the diligence of all
departments to contain their expenditures. Services are over
75% due to the Fourth Quarter payment made to the Five
Cities Fire Authority (FCFA). Capital purchases are at 58%
due a delay in the purchasing of budgeted equipment by the
Third Quarter.
Departmental operating expenditures are also on target as
summarized by the following:
[Total 1 13,414,1731 9,705,4831 72% 1
The primary variance in expenditures is in Non-departmental
and is due to the payment of the Fourth Quarter FCFA
payment. All other departments are at 75% of budget or
below.
General Fund Third Quarter Adjustments
Council Approved Adjustments:
On March 13', the City Council approved an
increase in Adult Softball League fees for the
purchase of bats that are approved by the American
Softball Association (ASA). Revenues and
expenditures will increase by $1,200 this fiscal
year.
Staff is making the following recommendations:
Revenues:
With the dissolution of the Redevelopment Agency,
General Fund transfer revenue will decrease by
$206,962.
Ex~enditures:
1. The transfer of $60,000 of salary savings from
the Police department to the City Attorney's
budget for ongoing personnel litigation.
2. The transfer of $10,000 that is budgeted in
contractual services be transferred from the City
Clerk's budget to the IT budget for the funding
of the paperless agenda program.
3. Due to the upcoming reorganization of the
Recreation and Maintenance department, staff
has delayed the lease purchase of fleet vehicles.
Staff is requesting that $15,000 from this
savings be moved from Non-Departmental to the
Building and Maintenance division's contractual
services budget for unanticipated building
maintenance.
4. The transfer of $3,400 from Non-departmental
property insurance savings to the Auto Shop
division to repair the fueling system.
Overtime Summarv:
Department Jan Feb Mar Total
Police $ 10,668 $ 11,296 $ 21,632 $ 43,596
Fire 17,630 8,189 13,417 39,236
Rec & Maint Svcs 2,938 2,697 1,787 7,422 I Total % 31.236 % 22.182 % 36.836 % 90.254
Agenda Item 11.b.
Page 6
Quarterly Financial Report
OTHER FUNDS
Fire Protection Impact Fees - Actual revenues received are
higher than originally budgeted. Staff is requesting an increase
of $5,000 in revenue.
Police Protection Impact Fees - Actual revenues received are
higher than originally budgeted. Staff is requesting an increase
of $2,100 in revenue.
Park Development Fund: Actual revenues received are
higher than originally budgeted. Staff is requesting an increase
of $20,000 in revenue.
Park Improvement Fund: Actual revenues received are
higher than originally budgeted. Staff is requesting an increase
of $9,400 in revenue.
Water Neutralization Fund: Actual revenues received are
higher than originally budgeted. Staff is requesting an increase
of $3,600 in revenue.
Traffic Signal Fund: Actual revenues received are higher
than originally budgeted. Staff is requesting an increase of
$4,600 in revenue.
Transportation Facility Fund: Actual revenues received are
higher than originally budgeted. Staff is requesting an increase
of $13,500 in revenue.
In-Lieu Affordable Housing - Actual revenues received are
higher than originally budgeted. Staff is requesting an increase
of $25,200 in revenue. In addition, staff is requesting an
increase in expenditures of $2,900 for appraisal fees related to
a potential transitional housing project site.
Redevelopment Agency WA): On December 29,201 1, the
California Supreme Court upheld the validity of AB 1x26, the
bill that dissolved all Redevelopment agencies in the State.
Effective February I, 2012, the City's
Third Ouarter of Fiscal Year 2011-12
Redevelopment Agency (RDA) ceased to exist. It has
been determined that the dissolution of the RDA will
impact the City's General Fund by a loss of
approximately $207,000 in the current fiscal year. The
City as the Successor Agency is eligible for
reimbursement of administration costs; however, the
Successor Agency will not receive any additional
revenue for this fiscal year. The County will distribute
a payment in June but this revenue is to cover the July
through December 20 12 ROPS.
Sewer Fund: The Sewer Fund ended the 20 10-1 1
Fiscal Year with a fund balance of $423,383. The
estimated ending fund balance for the Sewer Fund is
$44 1,954. This does not meet the City Council's goal
of 60 days of operating expenses plus $500,000.
Water Fund: The Water Fund reports an audited fund
balance of $2,394,293 at the end of Fiscal Year 2010-
1 1. Staff is requesting an increase in appropriations
of $60,000 for the Alpine Street Waterline project.
The estimated ending fund balance in this fund is
$1,429,350. This meets the City Council's policy goal
of 60 days of operating expenses plus $500,000.
However, revenues continue to be less than current
expenditures. Staff will be including the funding for a
Water and Sewer rate study in the Budget Update
Report for FY 20 12- 13.
Water Facility Fund: Actual revenues received are
higher than originally budgeted. Staff is requesting an
increase of $6,300 in revenue.
Capital Project Fund (CIP): Staff is requesting an
increase of $60,000 in both revenue and expenditures
for the Alpine Street Waterline project.
Agenda Item 11.b.
Page 7
City of Arroyo Grande
Fund Balance - Control
All Funds Operating Budget
2011/12 Adopted Budget
Schedule A
Estimated Estimated
Total Total
Unreserved
Fund Balance
July 1,2011
General Fund
010 General Fund: $3,116,689 $10,761,510 ($1 76,248) $2,197,667 $10,000 $78,545 $13,428,698 ($103,070) $2,485,445
Special Revenue Funds:
210 Fire Protection Lmpact Fees $43,963 $16,150 $5,000 $0 $0 $0 $0 $0 $65,113
211 Public Access Television 67,016 38,500 0 0 0 0 36,000 0 69,516
212 Police Protection Impact Fees 63,575 1,300 2,100 0 0 0 0 0 66,975
213 Park Development Fees 597,408 29,000 20,000 0 199,781 0 0 0 446,627
214 Park Improvement Fees 348,016 17,000 9,400 0 311,439 0 0 0 62,977
215 Recreation Community Center 45,143 1,500 0 0 15,000 0 0 0 31,643
216 Grace Lane Assessment District 49,893 9,700 0 0 0 0 5,000 0 54,593
217 Landscape Maintenance District 25,746 6,000 0 0 3,200 0 2,600 0 25,946
218 Local Use Tax Fund 2,176,103 1,669,100 90,000 0 3,293,251 0 134,163 79,000 428,789
219 Parkside Assessment District 285,297 58,100 0 0 3,200 0 3,600 0 336,597
220 Streets 0 468,500 0 272,025 0 0 740,525 0 0
221 Traffic Congestion Relief 0 500 0 0 0 0 0 0 500
222 Traffic Signal 492,161 12,500 4,600 0 0 0 0 0 509,261
223 Traffic Circulation 25,047 200 0 0 0 0 0 0 25,247
224 Transportation Facility Impact 2,770,287 40,000 13,500 0 1,475,165 0 0 0 1,348,622
225 Transportation 0 108,365 70,526 0 168,800 0 10,000 0 91
226 Water Neutralization Impact 421,764 37,600 3,600 0 45,000 0 181,100 0 236,864
230 Construction Tax 3,198 0 0 0 0 0 0 0 3,198
231 Drainage Facility 461 0 0 0 0 0 0 0 461
232 In-Lieu Affordable Housing 978,838 300 25,200 0 0 11,232 0 7,900 985,206
233 In-Lieu Underground Utility 196 0 0 0 0 0 0 0 1%
241 Water Availability Fund 1,726,251 35,000 0 0 289,579 0 0 0 1,471,672
250 CDBG Grant Funds 0 0 171,063 0 36,929 0 0 134,134 0
271 State COPS Block Grant 106,417 500 100,000 0 0 88,457 0 100,000 18,460
284 Redevelopment Agency 225,477 1,314,000 0 0 330,699 0 829,560 0 379,218
285 Redevelopment Set Aside 1,872,061 354,000 0 0 22,229 892,877 214,611 0 1,096,344
Total Special Revenue Funds $12,324,318 $4,217,815 514,989 $272,025 $6,194,272 $992,566 2,157,159 $321,034 $7,664,116
Orifial Adjustment Operating Operating FY 2010-11 Budgeted Adjustments to
Revenues to Revenues Transfer In Transfer Out Carryovers Appropriations Appropriations
Unreserved
Fund Balance
June 30,2012
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City of Arroyo Grande
Fund Balance - Control
All Funds Operating Budget
2011/12 Adopted Budget
Schedule A
Estimated Estimated
Total Total
Unreserved
Fund Balance
June 30,2012
Unreserved
Fund Balance
July 1,2011
Capital Proiect Funds:
350 Capital Improvement Fund $0 $604,000 $2,642,719 $7,797,739 $0 $8,480,958 $2,159,000 $404,m $0
Total Capital Project Funds $0 $604,000 $2,642,719 $7,797,739 $0 $8,480,958 $2,159,000 $404,500 $0
Enterprise Funds:
612 Sewer $423,383 $928,800 $294,077 $0 $882,806 $0 $321,500 $0 $441,954
634 Sewer Facility 360,138 12,000 0 0 100,000 0 0 0 272,138
640 Water Fund 2,394,293 3,488,400 0 0 2,22!5,411 15,721 2,127,211 85,000 1,429,350
641 Lopez Water 3,569,054 2,504,000 0 0 365,300 0 2,738,305 0 2,969,449
642 Water Facility 721,359 25,000 6,300 0 271,389 0 0 0 481,270
Total Enterprise Funds $7,468,227 $6,958,200 $300,377 $0 $3,844,906 $15,721 $5,187,016 $85,000 $5,594,161
Trust and Agency Fund:
751 Downtown Parking $213,428 $9,300 $0 $0 $218,253 $0 $3,500 $0 $975
Total Trust & Agency Fund $213,428 $9,300 $0 $0 $218,253 $0 $3,500 $0 $975
Grand Total All Funds
$23,122,662 $22,550,825 $3,281,837 $10,267,431 $10,267,431 $9,567,790 $22,935,373 $707,464 $15,744,697
Original Adjustment Operating Operating FY 2010-11 Budgeted Adjustments to
Revenues to Revenues Transfer In Transfer Out Carryovers Appropriations Appropriations
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GENERAL FUND - FUND SUMMARY
FUND: 010 GENERAL FUND FISCAL YEAR 2010-11 BIENNIAL BUDGET
2008-09 2009-10 ORIGINAL AMENDED ESTIMATED 201 1-1 2 2012-13
ITEM ACTUAL ACTUAL BUDGET BUDGET ACTUAL BUDGET BUDGET
Beginning Fund Balance $ 2,042,389 $ 2,191,544 $ 3,234,884 $ 3,234,884 $ 3,234,884 $ 3,116,689 $ 2,485,445
Revenues:
Revenues
Transfers In
Use of Reserves
Total Revenues 14,322,288 14,061,667 13,208,870 13,803,485 13,764,898 13,132,929 13,436,220
Expenditures:
Salaries and Benefits 10,848,356 10,289,661 10,970,320 8,884,473 8,486,398 8,934,739 9,324,960
Current Expenses 2,378,506 2,362,704 2,584,900 4,212,153 4,709,783 4,174,323 4,171,050
Debt Service 122,501 133,750 160,180 160,180 133,750 177,100 235,650
Equipment Replacement 718,886 232,211 118,480 986,393 142,750 118,011 66,675
Transfers Out 104,882
Capital Transfers 451,000 410,413 10,000
Total Expenditures 14,173,131 13,018,326 13,833,880 14,694,200 13,883,094 13,414,173 13,798,335
Total Operating Increases (Decreases) 149,155 1,043,340 (625,010) (890,715) (118,196) (281,244) (362,115)
Audit Adjustments to Fund Balance
Use of Reserves (350,000) (350,000)
Total Adjustments to Fund Balance
Ending Fund Balance 2,191,544 3,234,884 2,609,874 2,344,169 3,116,689 2,485,445 1,773,330
Reserve for Carry-Over of Appropriations (95,658) (82,262)
Available Fund Balance $ 2,095,886 $ 3,152,622 $ 2,609,874 $ 2,344,169 $ 3,116,689 $ 2,485,445 $ 1,773,330
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