Fiscal Year 2023/24
First Quarter Financial Report
Un-Audited Fiscal Year July 1, 2023, to September 30, 2023 Administrative Services 10/20/23 Q1 2023/24
First Quarter Report
Fiscal Year 2023/24
FISCAL YEAR 2023/24 FIRST QUARTER FINANCIAL REPORT | PAGE 1 of 7 Introduction
This financial report provides an overview of where we are within the budget cycle, then a summary of the City’s financial position through the Fiscal Year (FY) 2023/24 First Quarter (July 1, 2023, through September 30, 2023) for (1) Citywide Revenues and Expenses, (2) the General Fund, (3) Enterprise Funds, and (4) Summary of Cash and Investments. Notable cumulative first quarter to first quarter and preliminary budget to actual comparisons are included in this report.
The following factors should be taken into consideration when analyzing year-end data:
• Revenues reported herein are calculated based on actual receipts through September 30, 2023, but received through October 20, 2023. Some revenues for the first quarter are still being received and will be properly accrued once received. • Construction projects, specifically street improvements, have a different project cycle and are typically funded across two or more Fiscal Years.
Standard Budget Process Cycle - Where We Are Now & Next Steps:
Tentative Schedule for Financial Reporting and Budget Year 2023/24 Planning:
• September 6th – Start of 2023/24 Fiscal Year end audit fieldwork • November 14th – Present the Q1 2023/24 financial summary to Council. • November 14th – Discuss & initiate scheduling for FY 2024/25 budget planning meetings. • December 12th – Present audited financial statements and community annual financial report to the Council for Fiscal Year 2023/24.
February
Year-end & Financial
Performance Review
March
Year-end & Financial
Performance Review
Internal Budget Review,
Strategic/Long-Term and
Capital Planning
April - May
Draft Budget
Budget Workshops
May
Budget Adoption
* NOW *July - December
Financial Evaluations
Budget Adjustments as
Approved by Council
November-December
City Manager and Admin.
Services Budget Planning
Meetings
FISCAL YEAR 2023/24 FIRST QUARTER FINANCIAL REPORT | PAGE 2 of 7 Citywide Revenues and Expenses
*Other Special Revenues consists of the following funds: Gas Tax, RMRA, Public Safety, K-9 Program, Traffic Mitigation, CDBG Grants, Inclusionary Housing, Linkage Affordable Housing, MTC Streets, Measure M Parks, PEG, and Bed Tax.
City-wide Significant Variances
Fund type variances where revenues were less than 20% or expenditures are greater than 25% of budget as of year-end were evaluated as follows:
• Revenues for the General Fund and Wastewater are all considered in line with expectations given their specific timing for receipts. Further discussions in detail are provided in their detailed sections herein.
• Special Revenues funds are primarily derived for other special taxes which are reported to other special jurisdictions and then redistributed to the City. Other Special Revenues are derived from development impacts and as such are subject to timing of developments. • Capital Projects funds differences between revenues and expenses are primarily related to construction costs bridging fiscal years and the matching transfer funds to meet the construction expenditures. Significant projects during the period included Streets Improvement Projects and Kotate Park Improvement’s projects. Other priority projects are still in design and are scheduled for bidding and project initiation in line with the adopted capital improvement plan.
• Internal Services Funds had lower revenues than expenses pending transfers of funding required to meet additional payouts during the first quarter of the fiscal year. Additional transfers are aligned with budget expectations to be completed during the second quarter of the fiscal year.
Fund Un-Audited
Actual
Annual
Budget
%
Budget
Un-Audited
Actual
Annual
Budget
%
Budget
General $ 1,568,525 $ 10,694,033 14.7% $ 2,674,073 $ 14,529,062 18.4% Wastewater 549,506 3,231,839 17.0% 874,651 4,089,759 21.4% Water 477,786 2,295,500 20.8% 456,069 2,389,166 19.1%
Other Special Revenues * 193,343 1,412,258 13.7% 118,433 1,555,537 7.6% Capital Projects 1,461,378 7,487,628 19.5% 1,428,848 7,503,128 19.0% Internal Service 40,662 456,480 8.9% 79,623 500,710 15.9% Total For All Funds $ 4,291,200 $ 25,577,738 16.8% $ 5,631,696 $ 30,567,362 18.4% Revenues Expenses
FISCAL YEAR 2023/24 FIRST QUARTER FINANCIAL REPORT | PAGE 3 of 7 General Fund: Operating Revenues
The following table includes cumulative revenue comparisons of Fiscal Year 2022/23 and Fiscal Year 2023/24, and a revenue budget to current actual comparison for Fiscal Year 2023/24.
General Fund current operating revenues are $1,568,525 or 9.1% above the same period in FY 2022/23, this increase is primarily due to agency fees, transfers in for grant reimbursements, and investment earnings. These increases were offset by declines in sales tax and cannabis business taxes, decreased other misc. one-time revenues and development charges.
The following is an explanation for decreases in key revenues or significant variances:
- Sales Tax revenues are approximately 0.7% or $7K less than last year’s first two months.
The primary source of this decrease is due to slight declines in retail sales as consumers are being impacted by higher interest rates and the continuing higher cost of goods in the market.
Adjusting the sales tax on an annualized basis, the revenue compared to budget is in line with budgetary expectations with less than 1% difference.
- Property Taxes are received in December and April of the Fiscal Year, and as such are not included in this report to date. We have budgeted for over $2 million, in line with the County’s proposed allocation, for Fiscal Year 2023/24.
- Other taxes are primarily made up of Cannabis Business Tax. The change from the previous year is primarily due to slowed growth of the industry and outstanding tax receipts for Q1 2023/24 for a couple businesses operating within the City. The Cannabis industry had an increase during the Covid-19 pandemic and as consumers adjust their spending. We anticipate sales and related revenues from this industry to trend back to their normal growth.
General Fund Revenues FY 2022/23 FY 2023/24 $ Variance % Variance FY 2023/24 Budget
% Budget
Property Tax $ - $ - $ - 0.0% 2,131,758 0.0%
Sales Tax 1,013,642 1,006,533 (7,109) -0.7% 6,084,000 16.5% Other Taxes 101,083 82,527 (18,556) -18.4% 652,300 12.7% Licenses, Permits & Franchises 87,660 92,699 5,039 5.7% 556,500 16.7% Rent 36,425 38,925 2,500 6.9% 78,000 49.9%
Other Agencies 15,609 77,522 61,913 396.6% 207,150 37.4% Community Development Charges 103,833 96,481 (7,352) -7.1% 377,876 25.5% Public Works Charges 12,300 28,558 16,258 132.2% 67,800 42.1% Public Safety Charges 5,815 22,048 16,233 279.2% 58,000 38.0% Other Revenues 51,123 26,314 (24,809) -48.5% 221,049 11.9% Investment Earnings 8,981 43,573 34,592 385.2% 45,600 95.6% Contributions 1,367 2,624 1,257 92.0% 12,000 21.9%
Transfers In - 50,721 50,721 100.0% 202,000 25.1%
Total: $ 1,437,838 $ 1,568,525 $ 130,687 9.1% $ 10,694,033 14.7% Un-Audited Actuals Comparison
(July 1 - September 30) Budget to Actual Comparison
SALES TAX BUDGET
ADJUSTMENT
FY 2023/24
Budget
Actual 2
Months Receipts
Annualized 12
Months FY 2023/24
% Variance Annualized to Budget
Adjusted
FY 2023/24
Budget
% Change
from Adopted
Budget
Sales Tax $ 6,084,000 $ 1,006,533 $ 6,039,198 99.3% $ 6,040,000 -0.7% Bradley Burns $ 2,969,000 507,981 3,047,885 102.7% 2,900,000 -2.3% Measure S $ 3,115,000 498,552 2,991,313 96.0% 3,140,000 0.8% FISCAL YEAR 2023/24 FIRST QUARTER FINANCIAL REPORT | PAGE 4 of 7 - Most Departmental Charges have remained constant compared to the previous year, but Community Development Charges revenues decreased by $7K due to the timing of permits being issued related to development projects.
- Other Revenues received to date decreased by 48.5% or over $24K primarily due to one-time billings in the prior year related to reimbursements for damage to city property.
Overall revenues will continue to be monitored against the budget and staff will propose adjustments with our mid-year report.
General Fund: Department Operating Expenditures
The following table includes cumulative actual expenditure comparisons by department and again by expenditure type for Fiscal Year 2022/23 and Fiscal Year 2023/24 and an expenditure budget to actual comparison for Fiscal Year 2023/24.
Expenditures by Department
Expenditures by Type
Overall, cumulative General Fund expenditures increased from the previous year by approximately 17.4% or $396K. This change was due to a combination of the increased duction in Transfers Out required for capital projects and Other Expenses (which includes Insurance) offset by decreases in timing for contract services, and repairs and maintenance.
Spending by General Fund Departments is slightly higher than the prior year with total dollar increases noted in Police, City Managers, Admin Services, and Recreation departments. These increases were primarily due to staffing costs and related allocated insurance based on FTE.
General Fund Expenditures by
Department
FY 2022/23 FY 2023/24 $ Variance % Variance FY 2023/24
Budget % Budget
City Council $ 32,416 $ 32,142 $ (274) -0.8% $ 170,457 18.9% City Manager 150,356 176,084 25,728 17.1% 741,811 23.7% Admin Services 92,362 103,202 10,840 11.7% 508,290 20.3% Community Development 199,348 200,894 1,546 0.8% 1,159,735 17.3% Public Works 273,625 254,121 (19,504) -7.1% 1,400,181 18.1% Police 1,099,345 1,159,653 60,308 5.5% 5,017,822 23.1%
Recreation 110,071 119,806 9,735 8.8% 449,530 26.7%
Transfers Out 320,127 628,172 308,045 96.2% 5,081,236 12.4% Total: $ 2,277,650 $ 2,674,073 $ 396,423 17.4% $ 14,529,062 18.4% Un-Audited Actuals Comparison
(July 1 - September 30) Budget to Actual Comparison
General Fund Expenditures by Type FY 2022/23 FY 2023/24 $ Variance % Variance FY 2023/24 Budget
% Budget
Salaries & Benefits $ 1,221,191 $ 1,229,466 $ 8,275 0.7% $ 5,683,475 21.6% Contract Services 301,474 258,317 (43,157) -14.3% 1,881,461 13.7% Materials & Supplies 12,864 18,249 5,385 41.9% 76,762 23.8% Utilities 70,067 66,754 (3,313) -4.7% 381,817 17.5%
Repairs & Maintenance 22,726 8,908 (13,818) -60.8% 211,200 4.2% Other Expenses 329,201 464,207 135,006 41.0% 1,213,111 38.3% Transfers Out 320,127 628,172 308,045 96.2% 5,081,236 12.4% Total: $ 2,277,650 $ 2,674,073 $ 396,423 17.4% $ 14,529,062 18.4% Un-Audited Actuals Comparison
(July 1 - September 30) Budget to Actual Comparison
FISCAL YEAR 2023/24 FIRST QUARTER FINANCIAL REPORT | PAGE 5 of 7 Enterprise Funds: Operating Revenue & Expense
The following table includes cumulative revenue and expenses comparisons of Fiscal Year 2022/23 and Fiscal Year 2023/24, and a budget to actual comparison for Fiscal Year 2023/24 for the Enterprise Funds.
The Water and Wastewater Funds revenues include charges for services, connection fees other revenues, and development fees. Utility accounts are billed every two months as such within the first quarter of the fiscal year, only one billing cycle has been completed of the six in a year. For Fiscal Year 2023/24 there will be a combination of 3 Bi-Monthly Billing Cycles and 6 Monthly Billing Cycles.
The revenues for the Water and Wastewater Funds have increased primarily due to increased water consumption and rate increases. Due to the ongoing drought in 2022/23, Cotati residents and businesses continued decreasing water consumption, which also decreases the volume factor for the utility billing.
With water restrictions reduced customers moved back towards more water use during fiscal year during this comparative period in 2023/24. We anticipate that water usage will be reduced again in future fiscal quarters where there is excess rainfall and thus reduced irrigation. Overall City Staff believe the revenues are still in line with expectations for the budget but will continue to evaluate on an ongoing basis.
For FY 2023/24, most expenses are in line with budget expectations. The most significant costs for the Water Fund and Wastewater Fund are the Aqueduct Water Procurement from Sonoma County Water Agency and the Wastewater Treatment by City of Santa Rosa, respectively.
Enterprise Funds FY 2022/23 FY 2023/24 $ Variance % Variance FY 2023/24 Budget
% Budget
- Water Operations & Capital
Revenues $ 416,616 $ 477,786 $ 61,170 14.7% $ 2,295,500 20.8% Expenses
Salaries & Benefits 156,043 157,587 1,544 1.0% 726,080 21.7% Contract Services 54,612 21,212 (33,400) -61.2% 322,656 6.6% Other Expenses 89,678 114,889 25,211 28.1% 472,161 24.3% Aquaduct Water 136,876 144,922 8,046 5.9% 531,300 27.3% Capital Outlay 15,381 5,914 (9,467) 100.0% 232,500 2.5% Interfund Debt - 11,545 11,545 100.0% 104,469 11.1%
Total Expenses $ 452,590 $ 456,069 $ 3,479 0.8% $ 2,389,166 19.1% Net Income $ (35,974) $ 21,717 $ 57,691 -160.4% $ (93,666) -23.2% Wastewater Revenues $ 530,976 $ 549,506 $ 18,530 3.5% $ 3,231,839 17.0% Expenses
Salaries & Benefits 155,910 157,577 1,667 1.1% 722,520 21.8% Contract Services 17,139 16,109 (1,030) -6.0% 138,963 11.6% Other Expenses 83,858 76,340 (7,518) -9.0% 171,897 44.4% Wastewater Treatment 570,977 587,237 16,260 2.8% 2,416,450 24.3% Capital Outlay 24,598 19,990 (4,608) -18.7% 572,431 3.5% Interfund Debt - 17,398 17,398 100.0% 67,498 25.8%
Total Expenses $ 852,482 $ 874,651 $ 22,169 2.6% $ 4,089,759 21.4% Net Income $ (321,506) $ (325,145) (3,639) 1.1%
Un-Audited Actuals Comparison
(July 1 - September 30) Budget to Actual Comparison
FISCAL YEAR 2023/24 FIRST QUARTER FINANCIAL REPORT | PAGE 6 of 7 Cash and Investments
The tables below show the cash and investments held by the City as of September 30, 2023.
The current cash and investment balances are in line with the City adopted investment policy and have increased from prior years $19.3 Million. Overall cash flows are deemed sufficient to meet the City’s expenditure requirements in the next fiscal year.
FISCAL YEAR 2023/24 FIRST QUARTER FINANCIAL REPORT | PAGE 7 of 7 Cash and Investment Detail by Composition
Conclusion
Except for identified variances, expenditures and revenues are mostly in line with budget.
Continued budgetary strategic planning for future years along with pension planning strategies will continue to improve the City’s position into the future. Staff will provide the Council and community financial reporting for the Fiscal Year 2022/23 annual audited financial statements as well as Fiscal Year 2023/24 quarterly budget to actual reports.
Name of Investment
Weighted
Maturity
Weighted
Yield
Balance at
09/30/2023
Local Agency Investment Funds - (LAIF)
LAIF - Pooled Investments - Net FMV - 1.35% $ 11,133
US Bank Trust
Managed Investments in CD's and Treasuries 1.85 years 4.69% $ 9,900,697 Accrued Interest $ 98,235
California Asset Management Program (CAMP)
Pooled Investment Funds - 5.24% $ 6,605,464
Fiduciary Funds N/A 1.20% $ 285,535
Exchange Bank Operating & Payroll Accounts - N/A $ 1,826,468 Restricted Escrow Account - N/A $ 2,375,000
Funds held for payment on Park and Ride Project
Total Cash and Investments $ 21,102,531
FISCAL YEAR 2023/24
AS OF SEPTEMBER 30, 2023