Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: QUARTERLY FINANCIAL UPDATE - UNAUDITED FISCAL
YEAR ENDING JUNE 30, 2024
Date: August 13, 2024
Written by: Angela Courter, Director of Administrative Services Recommendation
It is recommended that the City Council receive the presentation on the un-audited financial position for the City as of June 30, 2024, covering the Fiscal Year of 2023/24 and adopt by motion the proposed budget amendment.
Background
City staff are committed to continued financial updates to report on receipts of key revenues, management of expenditures, overall City cash position, summary of investment management, and a financial resilience evaluation.
Analysis/Discussion
General Fund:
Revenues:
Overall Revenues for the General Fund are $353,373 or 3.3% above the same period in Fiscal year 2022/23. This is on an adjusted basis which removes the one-time receipt of $2,375,000 funds for the sale of the St. Joseph's Park and Ride Lot. This one-time receipt of funds is restricted for use for the alternative park and ride replacement lots projects. These balances are based on known balances as of September 8, 2024, and as such exclude certain additional payments that are pending to the City. These additional payments will be properly accrued as adjustments for the annual audited financial statements.
The City of Cotati’s main revenue sources as a percent of total General Fund Sources are Sales Taxes at 26.6%, Voter Approved Local Revenue (Measure S) at 27.75%, Property Taxes at 17% then other Taxes, Charges for Services, Permits and Licenses for a combined 29.2%.
Significant changes to the total revenues for the General Fund were:
• Sales Tax revenues are approximately 1.5% or $92K less than last year’s cumulative year-end balance. We believe this is still a post pandemic correction and adjustment to both changes in post covid consumer demand with increased inflation and increased interest rates. This is expected to continue to remain constant for the fiscal year 2024/25. • Licenses Permits and Franchises are primarily reduced due to pending Q4 receipts or accrual adjusting entries for franchise agreements for both Cable TV and Gas. • Charges for Services decreased by 18.5% or $111K due to a combination of (1) reduced need of engineering plan checks for development projects, (2) number of encroachments permits primarily major encroachment permits, as well (3) reduced police charges for services under traffic and parking citations as they implement use of more warnings. • Other Revenues received to date increased almost 820% or by $250K primarily due to reimbursements for administrative costs related to grants and developer deposit accounts Expenditures:
City council adopted the amended fiscal year 2023/24 budget in June. After the adoption, two balances were excluded in error. First is the Transfers out of the General Fund for the Park-and Ride Project. As the one-time receipt and held escrow funds are included in the General Fund for accounting purposes, the funds must be transferred out of the general fund and then into the Capital Fund. This transfer does not have a cash effect on the general fund as the transfers only pertain to the balance held in the escrow account. Second the Recreation contract class and event expenditures budget totaling $40,000 was also removed in error and should be returned for proper accounting.
With these adjustments the overall General Fund expenditures increased from the previous year by approximately 1.1% or $130K. This change was due to increased Salaries & Benefits and Other Expenses, offset by decreases in transfers out.
By department, total dollar increases were noted in all departments except for the City Council. most of this increase is due to (1) the proportional share of allocated expenses for the additional discretionary payment (ADP) to CalPERS, (2) continued increasing insurance costs, (3) increased transfers for capital charges to the vehicle replacement fund, (4) negotiated MOU increases, and (5) increased utility charges for PG&E. Each department is anticipated to complete the fiscal year in line with the budget as proposed with the amendment.
Enterprise Funds:
The revenues for the Water Funds and Wastewater have continued to increase primarily related to the move to monthly billing, better matching the period of service with the revenues derived and expenditures incurred. Additional factors that increased revenues are the increases applied based on the adopted rate schedule and increased interest earnings on investments.
For Fiscal Year 2023/24, most of the expenses are in line with the budget at year-end. Increases in salaries and benefits were primarily due to the additional discretionary payment made to CalPERS. Overall expenses are expected to be in line with the budget at the end of the fiscal year.
City-Wide Cash and Investments:
Cash and Investments remain stable at $18.9M, where funds are held in US Bank Trust laddered investments (41%), liquid pooled investment funds at California Asset Management Program (46%), Local Agency Investment Funds (LAIF) and Sonoma County Investment Pool (SCIP) both with less than 1%, then Cash held in Escrow Funds held for funding the park and ride project and other time deposits at 12%, and the remaining held in operating cash within the City’s Operating Checking account held at Exchange Bank (1%). The balances within the checking accounts are managed very closely to match availability of funding requirements while optimizing investments to earning more return.
Financial Considerations
There is no immediate fiscal impact based on the reporting presented. Staff are proposing a budgetary adjustment as follows for Fiscal Year 2023/24 for proper accounting of the intended expenditures for the year.
General Fund – Net change increase of expense $740,000
Expenditure Increases
101-00-80188-000000 – Transfers Out for Park-and-Ride $1,990,000 101-24-80187-CLSEXP – Contract Class $ 25,000
101-24-80187-EVENTS – Contract Events $ 15,000
Expenditure Decreases
101-00-80188-000000 – Transfers Out for Redwood Drive $1,290,000 Capital Projects – Net change decrease of revenue $1,290,000 Revenue and Expenditure Increase
605-00-67000-PARKNR – Transfer In for Park-and-Ride $1,990,000 605-00-91300-PARKNR – Capital Costs $1,990,000
Revenue Decrease
201-00-67000-PWRDCY – Transfers in for Redwood Drive $1,290,000 City Staff will continue to report to Council and the community quarterly and will bring forward the audited financial statements for the fiscal year.
Environmental Issues
This action is exempt from the California Environmental Quality Act (CEQA) because it is not a project which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, pursuant to CEQA Guideline section 15378.