Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: QUARTERLY FINANCIAL UPDATE - UNAUDITED FISCAL
YEAR ENDING JUNE 30, 2025
Date: August 26, 2025
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, 2025, covering the Fiscal Year of 2024/25 and by motion adopt the budget amendment for fiscal years 2025/26 and 2026/27.
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 $257K or 2.2% below the same period in fiscal year 2023/24. These balances are based on known balances as of August 21, 2025, 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 23.7%, Voter Approved Local Revenue (Measure S) at 26.2%, Property Taxes at 18.6% then other Taxes, Charges for Services, Permits and Licenses for a combined 17.6%.
Significant changes to the total revenues for the General Fund were:
· Sales Tax revenues are approximately 1.3% or $75K less than last year’s cumulative year-end balance. This is due to continued post COVID correction during 2024 and in 2025 was more due to economic uncertainty. The fiscal uncertainty is projected to continue and has been reflected in the adopted budget for fiscal year 2025/26.
· 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 15.8% or $79K due to a reduced combination of (1) reduced dollar value and number of permits need of engineering plan checks for development projects, (2) reduced development project cost reimbursement.
· Other Revenues received to date increased almost 27.5% or by $81K primarily due to reimbursements due from damage to City property, EV Charging Fees, and Insurance Payments for damaged vehicles.
Expenditures:
City Council adopted the amended fiscal year 2024/25 budget in June. The overall General Fund expenditures decreased from the previous year by approximately 6.4% or $844K. This change was due to decreased transfers out offset by increases in Repairs and Maintenance, Utilites, Salaries and Benefits, and Contract Services.
Overall spending by General Fund Departments have decreased in both the Police Department and Community Development Department. These decreases were due to decreased contract services for one-time special projects for each department. These decreases were offset by increases in City Managers Department and City Council which increased due to one-time contract services for those departments, and the Public Works Department which had increased salaries and benefits due to staffing demands for field crew and the Interim PW Supervisor. The City Manager’s office includes the legal costs pertaining to the mobile home park litigation and the City Council department had a contract for the facilitated strategic planning meeting.
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 2024/25, most of the expenses are in line with the budget at year-end. Significant differences between fiscal years are primarily related to Aqueduct Water Purchases, Wastewater Treatment, Salaries & Benefits, and Contract Services which include Legal and Insurance.
During fiscal year 2024/25 the City completed the SCADA System Hardware Resiliency Project, some Well 1A improvements.
City-Wide Cash and Investments:
Cash and Investments remain stable at $18.0M, where funds are held in US Bank Trust laddered investments (34.2%), liquid pooled investment funds at California Asset Management Program (59.1%), Local Agency Investment Funds (LAIF) and Sonoma County Investment Pool (SCIP) both with less than 1.1%, and the remaining held in operating cash within the City’s Operating Checking account held at Exchange Bank (5.5%). The balances within the checking accounts are managed very closely to match availability of funding requirements while optimizing investments to earning more return.
Budget Reclass for Fiscal Years 2025/26 and 2026/27:
After the adoption it was noted that the FTE allocation of staffing costs for Code Enforcement was not properly applied across the allocated salaries and benefits or allocated city-wide expenses. These budget adjustments will not appropriate any funds but rather reallocated the expenditures between two different departments within the General Fund. The total impact is a decrease of $34,370 and $35,555 for the Community Development Department for fiscal years 2025/26 and 2026/27 respectively. This is then a direct increase in the Code Enforcement Department for the same amounts for the same years.
Financial Considerations
There is no immediate fiscal impact based on the reporting presented. City Staff will continue to report to Council and the community quarterly and will bring forward the audited financial statements for the fiscal year.
For fiscal years 2025/26 and 2026/27 it was noted that the allocated expenses and adjusted allocated payroll for Code Enforcement based on the newly allocated FTE was not applied for both years. As such staff are proposing the adjustment as attached which reclass the expenses from Community Development (Dept 17) to Code Enforcement (Dept 25). There is no adjustment to fund balance or impact on other funds.
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.