Mid-Year Financial Report
Fiscal Year to Date: July 1, 2021 to December 31, 2021
Administrative Services 1/31/22 Q2 2021/22
Fiscal Mid-Year Report
Fiscal Year 2021/22
MID-YEAR FINANCIAL REPORT | PAGE 1 of 8
Introduction
This financial report provides an overview of our where we are within the budget cycle, then a summary of the City’s financial position through the mid-year of Fiscal Year (FY) 2021/22 (July 1, 2021, through December 31, 2021) for (1) Citywide Revenues and Expenses, (2) the General Fund, (3) Enterprise Funds, and (4) Summary of Cash and Investments. Notable cumulative mid-year to mid-year and preliminary amended budget to actual comparisons are included in this report.
The following factors should be taken into consideration when analyzing mid-year data:
• Revenues reported herein are calculated based on actual receipts through December 31, 2021. Some revenues are received later in the year, and as such are subject to timing differences.
• Some costs, such as subscription services and other dues, are typically incurred at the beginning of the Fiscal Year, so appear high at mid-year but are on-budget for the fiscal year, with variances smoothing out over the Fiscal Year. • Construction projects, specifically streets improvements, have a different project cycle which is offset from the Fiscal Year. As such, major projects are typically funded across two or more Fiscal Years.
Standard Budget Process Cycle - Where We Are Now & Next Steps:
Tentative Schedule for Budget Year 2022/23 Budget Workshops:
• February 15th - Strategic Planning Session
• April 19th - General Fund Budget Study Session
• May 17th - Enterprise Funds Budget Study Session
* NOW* February
Mid-Year & Financial
Performance Review
March
Mid-Year & Financial
Performance Review
Internal Budget Review,
Strategic/Long-Term and
Capital Planning
April - May
Draft Budget
Budget Workshops
June
Budget Adoption
July - December
Financial Evaluations
Budget Adjustments as
Approved by Council
November-December
City Manager and Admin.
Services Budget Planning
Meetings
MID-YEAR FINANCIAL REPORT | PAGE 2 of 8
Citywide Revenues and Expenses
*Other Special Revenues consists of the following funds: Grants, CDBG Grants, Gas Tax, MTC Streets, RMRA, Traffic Mitigation Fees, Park-In-Lieu, PEG, Public Safety, K-9 Program, Inclusionary Housing, Linkage Affordable Housing, Community Facilities Districts, Measure M Parks, PEG, Bed Tax, ARPA, and all Local Landscaping and Maintenance Districts.
City-wide Significant Variances
Fund type variances where revenues were less than 40 percent or expenditures are greater than 60 percent of budget as of mid-year were evaluated as follows:
• General Fund Revenues – The difference is primarily due to pending receipts for sales tax and other taxes. See further discussion on pages 3-4 herein. • Capital Projects are subject to timing of the projects in place. • Internal Service revenues are less due to the timing of transferred funds required for the purchase of replacement fleet vehicles. This balance is expected to be complete by the end of the fiscal year.
Fund Actual Annual
Budget
%
Budget
Actual Annual
Budget
%
Budget
General $ 4,335,311 $ 11,013,225 39.4% $ 4,171,369 $ 12,282,769 34.0% Wastewater 1,582,828 2,849,419 55.5% 1,098,517 2,507,127 43.8% Water 1,172,263 2,076,000 56.5% 840,014 2,363,306 35.5% Other Special Revenues * 1,472,552 2,395,731 61.5% 1,347,466 3,074,409 43.8% Capital Projects 1,782,483 5,081,000 35.1% 1,782,235 5,081,000 35.1% Internal Service 120,700 456,480 26.4% 173,364 456,480 38.0% Total For All Funds $10,466,137 $ 23,871,855 43.8% $ 9,412,965 $ 25,765,091 36.5% Revenues Expenses
MID-YEAR FINANCIAL REPORT | PAGE 3 of 8
General Fund: Operating Revenues
The following table includes cumulative revenue comparisons through the first half of the Fiscal Year 2020/21 and a revenue budget to actual comparison for Fiscal Year 2021/22.
General Fund operating revenues through the mid-year are approximately $481,000, or 12 percent above the same period in FY 2020/21. Although revenues are only at 39.4% percent of the budget through the mid-year of the current year, this is primarily due to the timing associated with receiving some of the larger revenue sources. For instance, sales tax is the largest General Fund revenue source, but the receipts are received two months after the period paid by the consumers. The following is an explanation of the notable variances:
- Sales Tax revenues are approximately 3.4 percent or $64,000 greater than last year’s cumulative mid-year balance. The primary source of this increase is; (1) due to the mix of essential businesses in Cotati and (2) the increase of the county pool primarily due to sales tax receipts for online sales under the Wayfair decision.
Based on the latest sales tax forecast, combined revenues for Fiscal Year 2021/22 are projected to end approximately 5 percent or $300,000 above the original adopted budget.
This would lead to a combined sales tax revenue of $5.8 million. Due to the continued uncertainty of the economic environment, high volatility of sales tax and to remain General Fund Revenues FY 2020/21 FY 2021/22 $ Variance % Variance FY 2021/22 Budget
% Budget
Property Tax $ 949,285 $ 999,507 $ 50,223 5.3% $ 1,964,916 50.9% Sales Tax 1,903,120 1,967,699 64,579 3.4% 5,561,951 35.4% Other Taxes 245,515 350,484 104,969 42.8% 630,300 55.6% Licenses, Permits & Franchises 151,861 216,223 64,362 42.4% 551,500 39.2% Rents 25,305 41,164 15,859 62.7% 91,000 45.2%
Other Agencies 91,185 93,654 2,469 2.7% 190,308 49.2%
Community Development Charges 248,692 232,252 (16,440) -6.6% 252,750 91.9% Public Works Charges 63,024 81,173 18,149 28.8% 50,900 159.5% Public Safety Charges 12,124 18,396 6,273 51.7% 82,800 22.2% Code Enforcement Charges 54,750 13,335 (41,415) -75.6% 10,000 133.4% Other Revenues 34,830 227,157 192,327 552.2% 1,445,500 15.7% Investment Earnings 18,865 6,055 (12,811) -67.9% 10,000 60.5% Contributions 5,545 6,211 $ 666 12.0% 7,300 85.1%
Transfers In 50,000 82,000 32,000 64.0% 164,000 50.0%
Total: $ 3,854,102 $ 4,335,311 $ 481,209 12.5% $ 11,013,225 39.4% Mid-Year Actuals Comparison
(July 1 - December 31) Budget to Actual Comparison
MID-YEAR FINANCIAL REPORT | PAGE 4 of 8
conservative for budgetary purposes, staff are proposing to retain the budget as it was adopted. This revenue stream will continue to be monitored and staff will provide the City Council with updated information during development of the FY 2022/23 budget. - Other taxes are primarily made up of Cannabis Business Tax. The change from prior year is primarily due to increased business within the City. As additional businesses of this type begin to operate in the City, this source of revenue is anticipated to continue to grow. - Property Taxes received to date increased over prior year by approximately 5 percent which is primarily due to valuations with a high demand housing market during 2021. We anticipate meeting the total annual budget for the Fiscal Year 2021/22. - Other revenues are misc. other receipts received by the City for general purposes. The increase in the beginning of fiscal year 2021/22 was primarily due to a $200,000 deposit for the 147 Joseph Way property.
General Fund: Department Operating Expenditures
The following table includes cumulative mid-year actual expenditure comparisons by department and again by expenditure type for Fiscal Year 2020/21 and Fiscal Year 2021/22 and an expenditure budget to actual comparison for Fiscal Year 2021/22.
Expenditures by Department
Expenditures by Type
Overall, cumulative mid-year General Fund expenditures decreased from the previous year by approximately 3 percent or $129,000. Most of the decrease was due to decreased Other Expenses offset by the increase in Contract Services primarily related to insurance, contract services provided for housing, stormwater, IT services, traffic signal repair and maintenance, as General Fund Expenditures by
Department
FY 2020/21
Mid-Year
FY 2021/22
Mid-Year $ Variance % Variance FY 2021/22Budget % Budget City Council $ 62,421 $ 50,451 $ (11,970) -19.2% $ 135,907 37.1% City Manager 329,288 291,330 (37,958) -11.5% 676,848 43.0% Admin Services 138,653 135,906 (2,747) -2.0% 386,670 35.1% Community Development 392,472 381,835 (10,637) -2.7% 981,337 38.9% Public Works 510,244 594,467 84,223 16.5% 1,393,287 42.7% Police 2,095,507 2,000,300 (95,208) -4.5% 4,499,245 44.5% Recreation 171,506 180,523 9,017 5.3% 451,135 40.0%
Transfers Out 600,000 536,558 (63,442) -10.6% 3,758,340 14.3% Total: $ 4,300,091 $ 4,171,369 $ (128,722) -3.0% $ 12,282,769 34.0% Cumulative Mid-Year Actual Comparison
(July 1 - December 31) Budget to Actual Comparison
General Fund Expenditures by Type FY 2020/21 FY 2021/22 $ Variance % Variance FY 2021/22 Budget
% Budget
Salaries & Benefits $ 2,487,897 $ 2,415,545 $ (72,352) -2.9% $ 5,330,551 45.3% Contract Services 550,303 822,891 272,588 49.5% 2,102,075 39.1% Materials & Supplies 33,241 29,039 (4,202) -12.6% 90,450 32.1% Utilities 128,920 120,587 (8,333) -6.5% 311,775 38.7%
Repairs & Maintenance 22,408 73,168 50,760 226.5% 267,600 27.3% Other Expenses 477,322 173,581 (303,741) -63.6% 421,978 41.1% Transfers Out 600,000 536,558 (63,442) -10.6% 3,758,340 14.3% Total: $ 4,300,091 $ 4,171,369 $ (128,722) -3.0% $ 12,282,769 34.0% Cumulative Mid-Year Actual Comparison
(July 1 - December 31) Budget to Actual Comparison
MID-YEAR FINANCIAL REPORT | PAGE 5 of 8
well as the license agreements for the Veronda-Falletti Ranch.
Spending by General Fund Departments are consistent with the prior year with noted increases in public works and recreation. The increases in public works are consistent with the increased cost of repairs and maintenance, contract services for addressing the increased incidents of damage to City property, as well as street safety improvements including the solar powered flashing crosswalk signs and video vehicle detection cameras which replaced the in-ground traffic loops. The increase in recreation expenditures is primarily due to the decreased events and expenditures incurred in the prior year during the winter COVID-19 shut-downs. Additional budgeted increases also include funding needed for increased insurance and other negotiated payroll costs.
Through the first six months, as compared to budget, General Fund expenditures are mostly tracking as expected with all operating departments (all departments except transfers out) averaging 40 percent of the budget. Budgeted transfers are to be reduced to account for the reduction in general funds needed due to the passing of the Streets Bond issuance effective January 27, 2022. This decrease in transfers out will be offset by increased department expenditures for salaries and benefits due to the $4 million Pension Bond and $2 million Additional Discretionary Payment (ADP) ($6 million total) which was also completed on January 27, 2022. Overall Expenditures are in line with expectations.
Enterprise Funds: Operating Revenue
The following table includes cumulative revenue and expenses comparisons through the first half of the Fiscal Year 2020/21 and 2021/22 and a revenue budget to actual comparison for Fiscal Year 2021/22 for the Enterprise Funds.
Enterprise Funds FY 2020/21 FY 2021/22 $ Variance % Variance FY 2021/22 Budget
% Budget
- Water Operations & Capital
Revenues $ 1,233,165 $ 1,172,263 $ (60,902) -4.9% $ 2,076,000 56.5% Expenses Salaries & Benefits 359,521 363,980 4,459 1.2% 767,610 47.4% Contract Services 439,239 334,922 (104,317) -23.7% 949,907 35.3% Other Expenses 171,184 141,112 (30,072) -17.6% 430,789 32.8% Capital Outlay - - - 100.0% 215,000 0.0%
Total Expenses $ 969,944 $ 840,014 $ (129,930) -13.4% $ 2,363,306 35.5% Net Income $ 263,221 $ 332,249 $ 69,028 26.2%
Wastewater Operations & Capital
Revenues $ 1,484,784 $ 1,582,828 $ 98,044 6.6% $ 2,849,419 55.5% Expenses Salaries & Benefits 320,153 348,619 28,466 8.9% 725,183 48.1% Contract Services 1,049,599 688,152 (361,447) -34.4% 1,365,584 50.4% Other Expenses 123,391 61,746 (61,645) -50.0% 220,360 28.0% Capital Outlay 623,129 - (623,129) -100.0% 196,000 0.0% Total Expenses $ 2,116,273 $ 1,098,517 $ (1,017,756) -48.1% $ 2,507,127 43.8% Net Income $ (631,489) $ 484,311 1,115,800 176.7%
Cumulative Mid-Year Actual Comparison
(July 1 - December 31) Budget to Actual Comparison
MID-YEAR FINANCIAL REPORT | PAGE 6 of 8
The Water and Wastewater Fund revenues are made up of charges for services, connection fees other revenues, and development fees. The revenues for both the Water and Wastewater Funds have decreased compared to the prior year primarily due to additional connection fees associated with Kessing Ranch which were collected in the prior year.
For Fiscal Year 2020/21, most of the expenses are in line with budget at mid-year. One significant difference is the decrease in capital outlay expenses for the Wastewater Fund over the prior year of approximately $0.6 million related to the William/Olaf Pipeline Replacement project.
Cash and Investments
The tables below show the cash and investments held by the City as of December 31, 2021.
The current cash and investment balances are in line with the City adopted investment policy and as budgeted are enough to meet the City’s expenditure requirements for the remainder of the fiscal year.
MID-YEAR FINANCIAL REPORT | PAGE 7 of 8
Cash and Investment Detail by Composition
Conclusion
Except for identified variances, expenditures and revenues are tracking as expected. Staff will continue to monitor these variances and provide updated information to the City Council during budget development for Fiscal Year 2021/22.
Name of Investment Maturity Date Yield
Balance at
12/31/2021
Local Agency Investment Funds - (LAIF)
Local Agency Investment Fund - Pooled Investments N/A 0.21% $ 15,749,308 Local Agency Investment Fund - Sucessor Agency N/A 0.21% 5,196 Total Local Agency Investment Funds - (LAIF) $ 15,754,504 Sonoma County Investment Pool - SCIP N/A 0.50% $ 422,944 RBC Wealth Manangement
Total RBC Wealth Manangement $ 510,275
Exchange Bank Operating & Payroll Accounts N/A N/A $ 4,490,000 Total Cash and Investments $ 21,177,723
FISCAL YEAR 2020/21
AS OF DECEMBER 31, 2021