Fiscal Year Financial Report
Un-Audited Fiscal Year July 1, 2023, to June 30, 2024
Administrative Services 8/7/24 Q4 2023/24
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 (July 1, 2023, through June 30, 2024) for (1) Citywide Revenues and Expenses, (2) the General Fund, (3) Enterprise Funds, and (4) Summary of Cash and Investments. Notable cumulative year-end to year-end and preliminary amended 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 June 30, 2023, but received through July 31, 2024. Some revenues for the Fiscal year are still being received and will be properly accrued for the audited financial statements. ∗ Construction projects, specifically street 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 Financial Reporting and Budget Year 2023/24 Planning:
∗ September 2nd – Start of 2023/24 Fiscal Year end audit fieldwork. ∗ October 22nd – Present the Q1 2024/25 financial summary to Council. ∗ November 12th – Initiate scheduling for next Fiscal year budget planning meetings. ∗ November 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
June
Budget Adoption
NOW** July - December
Financial Evaluations
Budget Adjustments as
Approved by Council
November-December
City Manager and Admin.
Services Budget Planning
Meetings
Citywide Revenues and Expenses
∗ Other Special Revenues consist 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, In-Lieu Tree Fund, and Bed Tax.
** Includes the proposed budget adjustments for (1) the Park-n-Ride lot capital project including increased expenses for transfers out of the General Fund of $700,000, increased transfers in and related expenditures to the Capital Projects Fund of $1,982,588 and (2) $40,000 for recreation contract classes and event expenses.
City-wide Significant Variances
Fund type variances where revenues were less than 95 % or expenditures are greater than 95% of budget as of year-end were evaluated as follows:
• Capital Projects’ revenues are currently less than the budget due to the timing of the projects in place and pending transfers from other funds to cover expenditure as of the fiscal year end. • Other Special Revenues and Internal Services Funds had lower expenditures than budgeted primarily due to the pending year end closing entries and transfers of funds for capital projects and compensated absences as well as accounting for depreciation expense within the vehicle replacement fund.
Overall actual revenues and expenditures for all funds are anticipated to be aligned with the adopted budget, with the proposed adjustments, for the fiscal year ending June 30, 2024.
Fund Un-Audited
Actual
Annual
Budget**
%
Budget
Un-Audited
Actual
Annual
Budget**
%
Budget
General $ 11,217,761 $ 10,946,693 102.5% $ 12,107,318 $ 12,467,930 97.1% Wastewater 3,505,418 3,605,010 97.2% 3,947,726 4,245,963 93.0% Water 2,396,442 2,340,724 102.4% 2,128,615 2,220,062 95.9% Other Special Revenues * 1,019,435 1,092,224 93.3% 831,470 2,589,197 32.1% Capital Projects 6,373,182 7,622,901 83.6% 7,498,524 7,813,543 96.0% Internal Service 454,849 434,370 104.7% 197,190 448,420 44.0% Total For All Funds $ 24,967,087 $ 26,041,922 95.9% $ 26,710,843 $ 29,785,115 89.7% Revenues Expenses
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
General
Wastewater
Water
Other Special Revenues *
Capital Projects
Internal Service
Expenses Revenues
General Fund: Operating Revenues
The following table includes cumulative revenue comparisons of Fiscal Year 2022/23 and Fiscal Year 2023/24, and revenue budget to actual comparison for Fiscal Year 2023/24.
General Fund operating current revenues are $2,021,627, or 15.3% below the same period in FY 2022/23. The most significant reason for these decreases was primarily due to the one-time General Fund receipt of restricted funds for the Park-n-Ride Replacement. For Fiscal Year 2022/23 the City completed the sale of the St. Josephs Park and Ride which created a one-time Other Revenue inflow of $2,375,000. For the sake of comparisons, the adjusted balance for General Fund Revenues is provided below.
Operating Revenues – Adjusted
For the adjusted revenues, overall, there is an increase of approximately 3.3% over the prior year representing an additional $353,373 towards operating income for the General Fund. Staff are aware of minor additional pending receipts that are still to be accrued for the final reporting of the fiscal year-end including franchise payments for gas and cable television. To properly depict the revenue for sales tax the City has included an estimated accrual of approximately $536K in Sales Tax receipts expected to be received by August 28, 2024.
FY 2022/23 FY 2023/24*** $ Variance % Variance FY 2023/24 Budget % Budget
Property Tax $ 1,967,056 $ 2,083,756 $ 116,700 5.9% 2,060,765 101.1% Sales Tax 6,024,055 5,932,192 (91,863) -1.5% 5,990,807 99.0% Other Taxes 678,562 715,810 37,249 5.5% 740,715 96.6%
Licenses, Permits & Franchises 718,840 642,128 (76,712) -10.7% 652,079 98.5% Rent 102,863 141,301 38,437 37.4% 133,135 106.1%
Other Agencies 151,897 285,361 133,464 87.9% 237,415 120.2% Charges for Services 602,780 491,308 (111,471) -18.5% 459,417 106.9% Other Revenues 2,405,455 280,116 (2,125,339) -88.4% 223,965 125.1% Investment Earnings 187,238 199,829 12,591 6.7% 200,895 99.5% Contributions 7,886 8,734 848 10.8% 2,780 314.2%
Transfers In 391,922 436,390 44,469 11.3% 244,720 178.3% Total: $ 13,238,553 $ 11,216,926 $ (2,021,627) -15.3% $ 10,946,693 102.5% Un-Audited Actuals Comparison
(July 1 - June 30) Budget to Actual Comparison General Fund Revenues & Expenditures
FY 2022/23 FY 2023/24*** $ Variance % Variance FY 2023/24 Budget % Budget
Property Tax $ 1,967,056 $ 2,083,756 $ 116,700 5.9% 2,060,765 101.1% Sales Tax 6,024,055 5,932,192 (91,863) -1.5% 5,990,807 99.0% Other Taxes 678,562 715,810 37,249 5.5% 740,715 96.6%
Licenses, Permits & Franchises 718,840 642,128 (76,712) -10.7% 652,079 98.5% Rent 102,863 141,301 38,437 37.4% 133,135 106.1%
Other Agencies 151,897 285,361 133,464 87.9% 237,415 120.2% Charges for Services 602,780 491,308 (111,471) -18.5% 459,417 106.9% Other Revenues 30,455 280,116 249,661 819.8% 223,965 125.1% Investment Earnings 187,238 199,829 12,591 6.7% 200,895 99.5% Contributions 7,886 8,734 848 10.8% 2,780 314.2%
Transfers In 391,922 436,390 44,469 11.3% 244,720 178.3% Total: $ 10,863,553 $ 11,216,926 $ 353,373 3.3% $ 10,946,693 102.5% General Fund Revenues &
Expenditures
Un-Audited Actuals Comparison
(July 1 - June 30) Budget to Actual Comparison
The following is an explanation of the notable variances:
- Sales Tax revenues are approximately 1.5% or $92K less than last year’s cumulative year-end balance. The primary source of this decrease is reduced spending on Cotati fuel and service stations, general consumer goods, and business and industry. 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.
- 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.
General Fund: 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. This comparison incorporates the proposed adjustments to the Fiscal Year 2023/24 budget to increase the transfers out for the Park-and-Ride project as well as increase the expenditures for Recreation contract class and event expense as it was removed in error during the budget process.
Expenditures by Type – Adjusted
General Fund Expenditures by Type FY 2022/23 FY 2023/24 $ Variance % Variance FY 2023/24 Budget % Budget
Salaries & Benefits $ 4,964,375 $ 5,336,377 $ 372,002 7.5% $ 5,159,228 103.4% Contract Services 1,358,546 1,409,821 51,275 3.8% 1,641,155 85.9% Legal and Insurance 577,017 674,254 97,237 16.9% 771,189 87.4% Materials & Supplies 101,585 85,498 (16,087) -15.8% 106,815 80.0% Utilities 335,068 362,570 27,503 8.2% 403,591 89.8%
Repairs & Maintenance 113,920 123,559 9,639 8.5% 298,495 41.4% Other Expenses 524,632 836,957 312,325 59.5% 810,282 103.3% Transfers Out 4,002,213 3,278,281 (723,932) -18.1% 3,317,175 98.8% Total: $ 11,977,355 $ 12,107,318 $ 129,963 1.1% $ 12,507,930 96.8% Un-Audited Actuals Comparison
(July 1 - June 30) Budget to Actual Comparison
Expenditures by Department – Adjusted
Evaluating the expenditures on an adjusted basis, overall spending by General Fund Departments is consistent with the prior year with total dollar increases noted in all departments except for the City Council which was reduced due to a one-time contract service of $15K in the prior year 2022/23. Costs for all other departments were primarily driven by the following:
- Salaries & Benefits have increased over the last year primarily due to the proportional share of allocated expenses for the additional discretionary payment (ADP) to CalPERS, as well as negotiated MOU increases, increased overtime costs related to shift coverage with increased training and turnover, as well as payout transfers to the compensated absences fund. - Legal and Insurance has increased due to continued insurance costs that are being seen across the county which also change the City’s general liability, and workers comp. insurance premiums. The City uses California Intergovernmental Risk Authority as a risk management insurance pool with other agencies. Overall costs are expected to continue to increase and have been accounted for within the budget and discussed during the budget study sessions for the previous two years. - Contract Services had a minimal increase of 3.8% over the prior year primarily related to increased CPI across multi-year agreements as well as the one-time contract for professional recruiting services for the new Chief of Police.
- Utilities have increased primarily due to increased rates for electric charges from PG&E as well as some increased water consumption with establishment of new landscaping in the parks along with increased rates.
- Other Expenses increases in capital charges as other charges related to allocated charges for the vehicle replacement fund an increase of $275K. Other increases included costs for meeting and training as and recruiting which increased $22K and allow expense which increased $13K. Permit expense was previously a pass-through charge but is now a direct charge to the City and to be covered by the adopted set fees.
Reviewing the costs comparison to budget for the General Fund, by department and by type, most expenditures are aligned with expectations. The two types of expenditures which exceeded the budget were the Salaries & Benefits and Other Expenses. The reason for the increased expenses is outlined above.
General Fund Expenditures by
Department FY 2022/23 FY 2023/24 $ Variance % Variance FY 2023/24 Budget % Budget City Council $ 141,150 $ 133,600 $ (7,550) -5.3% $ 156,673 85.3% City Manager 689,672 694,205 4,534 0.7% 705,992 98.3%
Admin Services 421,651 480,392 58,740 13.9% 485,031 99.0% Community Development 921,758 983,813 62,055 6.7% 1,051,153 93.6% Public Works 1,309,049 1,423,236 114,187 8.7% 1,510,111 94.2% Police 4,078,078 4,668,616 590,538 14.5% 4,824,814 96.8% Recreation 413,784 445,175 31,391 7.6% 456,981 97.4%
Transfers Out 4,002,213 3,278,281 (723,932) -18.1% 3,317,175 98.8% Total: $ 11,977,355 $ 12,107,318 $ 129,963 1.1% $ 12,507,930 96.8% Un-Audited Actuals Comparison
(July 1 - June 30) Budget to Actual Comparison
Enterprise Funds: Operating and Capital Revenues and Expenses The following table includes cumulative revenue and expenses comparisons of Fiscal Year 2022/23 and Fiscal Year 2023/24, and a revenue budget to actual comparison for Fiscal Year 2023/24 for the Enterprise Funds.
The Water and Wastewater Fund revenues are made up of charges for services, connection fees other revenues, and development fees. The revenues for the Water Funds have increased in the current year to increase in consumption and rates as well as increased investment earnings. Investment earnings have increased by approximately $60K or more than 155% over the previous year. This increase is related to the City’s movement to active investment management as well as increased rates of investment. This is consistent with the Wastewater fund which also has an increase in revenue due to increased consumption and rates as well as increased investment earnings of $26K or 120% over the prior year.
For Fiscal Year 2023/24, most of the expenses are in line with the budget at year-end. Significant differences between fiscal years are primarily related to Salaries and Benefits, Legal and Insurance, and charges from outside agencies for the Aqueduct Water purchases. During fiscal year 2022/23 the City completed the sewer line replacement along E. Cotati Ave and in fiscal year 2023/24 we also invested in the sewer line replacement along Cypress Ave. in advance of the street paving improvements.
Enterprise Funds FY 2022/23 FY 2023/24 $ Variance % Variance FY 2023/24 Budget % Budget
-
Water Operations & Capital
Revenues $ 2,149,043 $ 2,396,442 $ 247,399 11.5% $ 2,340,724 102.4% Expenses
Salaries & Benefits 766,739 691,898 (74,841) -9.8% 664,457 104.1% Contract Services 297,403 234,528 (62,876) -21.1% 250,015 93.8% Legal & Insurance 77,022 96,994 19,973 25.9% 95,460 101.6% Other Expenses 275,634 345,629 69,996 25.4% 344,735 100.3% Aquaduct Water 554,449 641,128 86,680 15.6% 620,524 103.3% Operating Expenses 1,971,247 2,010,178 38,931 2.0% 1,975,191 98.3% Capital Outlay 288,411 100,633 (187,778) 100.0% 116,000 86.8% Interfund Debt 19,524 17,805 (1,719) -8.8% 128,871 13.8% Total Expenses $ 2,279,181 $ 2,128,615 $ (150,566) -6.6% $ 2,220,062 95.9% Net Income $ (130,137) $ 267,827 $ 120,662
Wastewater
Operations & Capital $ 2,938,131 $ 3,387,452 449,322 15.3% $ 3,313,010 102.2% Interfund Debt 48,733 117,966 69,233 100.0% 292,000 40.4% Revenues $ 2,986,863 $ 3,505,418 $ 518,555 17.4% $ 3,605,010 97.2% Expenses
Salaries & Benefits 766,552 692,777 (73,774) -9.6% 645,535 107.3% Contract Services 81,068 80,325 (742) -0.9% 79,745 100.7% Legal & Insurance 71,317 94,029 22,712 31.8% 82,520 113.9% Other Expenses 125,138 195,692 70,554 56.4% 426,950 45.8% Wastewater Treatment 2,372,316 2,348,951 (23,365) -1.0% 2,348,964 100.0% Operating Expenses 3,416,391 3,411,775 (4,616) -0.1% 3,583,714 105.0% Capital Outlay 250,469 497,742 247,273 98.7% 585,340 85.0% Interfund Debt 32,276 38,210 5,935 18.4% 76,909 49.7%
Total Expenses $ 3,699,135 $ 3,947,726 $ 248,591 6.7% $ 4,245,963 93.0% Net Income $ (712,272) $ (442,308) $ (640,953)
Un-Audited Actuals Comparison
(July 1 - June 30) Budget to Actual Comparison
Cash and Investments
The tables below show the cash and investments held by the City as of June 30, 2024. 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 next six months.
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 2023/24 annual audited financial statements as well as Fiscal Year 2024/25 quarterly budget to actual reports.
Name of Investment Maturity Date Yield
Balance at
06/30/2024
Local Agency Investment Funds - (LAIF)
LAIF - Pooled Investments - Net FMV N/A 4.51% $ 6,218
US Bank Investment Trust Various Laddered 4.28% $ 7,750,548 Cash and Time Deposits Including Escrow Accounts N/A 2.40% $ 2,167,611 California Asset Management Program (CAMP)
Pooled Investment Funds N/A 5.43% $ 8,724,821
Exchange Bank Operating & Payroll Accounts N/A N/A $ 249,458 Total Cash and Investments $ 18,898,656
FISCAL YEAR 2023/24
AS OF JUNE 30, 2024