PREPARED BY: J. KELLY SESSIONS DATE OF MEETING: 02/18/20
SUBJECT:
TITLE
RECEIVE AND FILE THE SECOND QUARTER BUDGET REPORT FOR FISCAL YEAR ENDING JUNE 30, 2020
Label
CITY MANAGER RECOMMENDATION
Recommendation
Receive and file
Body
Compliance statements
Providing the City Council with a quarterly budget report is not related to a specific policy in the adopted FY 2019-21 City Council Priority Workplan, effective March 1, 2019, but is a best management practice for city operations and transparency.
CEQA Compliance Statement
This is not a project as defined by CEQA.
BACKGROUND
Best Management Practices (BMP’s) established by the Government Finance Officers Association (GFOA) urge local governments to fulfill their financial reporting responsibilities by providing timely financial statements regarding the entire financial reporting entity. This second quarter budget report, therefore, is provided to the City Council to support meeting the City’s fiduciary responsibilities to the residents of San Pablo.
This report uses unaudited figures and is for budgetary control purposes only for the fiscal year ending June 30, 2020. The final year-end audited fund balance will be contained in the Comprehensive Annual Financial Report (CAFR) and is generally presented to City Council in January, seven months after the end of the fiscal year.
2nd Quarter Revenues
At the second quarter mark, the City is on target, having collected $21.7 million (48%) of its $45.6 million adopted revenue budget. Revenue receipts typically lag each fiscal quarter by two or three months, and this quarter is no different. At $12.9 million, Casino Revenue, the City’s largest revenue source, only shows five months of revenue, which when projected out for the entire fiscal year, totals approximately $30.0 million. Similarly, at this time last fiscal year, the City had collected only $18.7 million, or 46% of its $41.1 million revenue budget. Intergovernmental Revenues, the City’s second largest budgeted revenue source, are lagging significantly. With a budget of $4.4 million, only $680,000 has been received (15%). This is due to the fact that as of the end of the quarter, no In-lieu Vehicle License Fee revenue had been received, and minimal amounts of Gas Tax and Road Maintenance and Rehabilitation Act (RMRA) revenues have been received. These revenues are expected to be received later in the fiscal year. Sales Tax continues to be one of the City’s strongest revenue sources; thus far, $1.7 million (41%) has been collected of its $4.2 million adopted budget. These figures include both Measure Q and Measure K revenues.
Second Quarter Revenues
FY 2019/20
2nd Quarter Expenditures
At the end of the second fiscal quarter, the City’s operating expenditure budget is tracking well with projections. With an adjusted budget of $50.2 million, a total of $20.2 million was spent, or 40% of budget (the adjusted budget figure excludes the $1 million in capital expense for Public Works paving projects).
At this point, only Administrative Services is ahead of budget at 56% spent; this is due to an upfront payment of $2.6 million for unfunded accrued liability (UAL) to CalPERS for pension costs. Conversely, the City Manager’s Office is significantly underspent at 21%. This is due primarily to the $4.5 million payment to the County for Fire Station 70 that had not been made by the end of December. The City is projected to end the fiscal year at or under budget.
Second Quarter Expenditures
FY 2019/20
Expenditures by Type: At $29.2 million, Salary and Benefits makes up the largest part of the adjusted budget (58%). After the second fiscal quarter, $15.0 million was spent (51% of budget); after accounting for the upfront UAL payment to CalPERS, total spent for Salary and Benefits drops to less than 50%. With $20.5 million, Service and Supplies makes up 41% of the adopted budget. $4.9 million was spent (24%), leaving a healthy $15.6 million balance. Departmental capital budgets total $0.5 million making up 1% of budget. A total of $291,000 was spent in capital outlay (54%), leaving a balance of $250,000. Again, the capital budget figures exclude the $1 million in annual General Fund contribution to CIP.
Second Quarter Expenditures by Type
FY 2019/20
|
SECOND QUARTER EXPENDITURES |
FY 2019/20 |
|
|
|
Adjusted Budget |
Q2-20 Actuals |
Variance |
% Spent |
|
Salary and Benefits |
29,228,739 |
14,964,215 |
14,264,524 |
51% |
|
Service and Supplies |
20,463,977 |
4,900,205 |
15,563,772 |
24% |
|
Capital Outlay |
541,564 |
291,025 |
250,539 |
54% |
|
Total |
50,234,281 |
20,162,671 |
30,078,836 |
40% |
FISCAL IMPACT
The Fiscal Year 2019/20 budget is in good shape at the end of the second quarter. Year-to-date revenue collections total $21.7 million or 48% of budget due to only five months of Casino Revenue showing and because of lag time in receiving revenues, particularly for Sales Tax, Intergovernmental Revenues, and Property Tax. On the expenditure side, the City has spent $20.2 million of its adjusted budget of $50.2 million, or 40% (excludes $1 million in annual General Fund transfer to CIP). Only one department, Administrative Services, is over the 50% budget mark, due to the annual upfront payment of unfunded accrued liability to CalPERS.
This report describes the unaudited budget status of the City through the end of the second quarter of FY 2019/20 and has no direct fiscal impact. Actual audited figures will be released in January 2021 with the publication of the 2019/20 Comprehensive Annual Financial Report.