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City of Culver City
MID-YEAR BUDGET REPORT
FISCAL YEAR 2021/2022
Through December 31, 2021
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1 INTRODUCTION
This Mid-Year Budget Report presents an overview of the City’s operating revenues and expenditures for the first half of Fiscal Year 2021/2022 as compared to budgeted amounts , explaining any notable deviations or t rends in the numbers . The information in this report is organized into two sections:
General Fund and Other Major Funds.
The Mid-Year Budget Report’s purpose is threefold. First, it illustrates the City’s focus on monitoring its revenues and expenditures, with the intent to proactively respond to unanticipated changes or emerging trends. Secondly , and equally important, the report provides fiscal transparency of City finances as the City is ultimately accountable to its residents for the use of revenue. Finally, the information in this report serves as a starting point for preparing the Fiscal Year 2022/2023 Budget.
The close of December encompasses the first six months of the City’s fiscal year, presenting an ideal point of analysis to determine the viability of the adopted budget , or if and where adjustments should be considered. The Finance Department staff has reviewed all line items and compared actual results against budget expectations, historical trends, seasonality and other known factors affecting both revenue and spending streams to determine if recommendations for reductions or increases should be made. As the defined mid- point of the fiscal year, although the presumed expectation is that most categories should be at 50% of budget, City revenues historically lag expenditures at this point in the fiscal year because of year -end accounting adjustments to major revenue sources and because the bulk of the property tax and business license revenues are received later in the fiscal year.
REPORT HIGHLIGHTS:
• General Fund Operating Revenues through December 31, 2021 total $49.8M or 37.5% of the current revised FY 2021/2022 Budget. Analysis of the current fiscal year suggests the City’s overall recurring General Fund revenues , along with one- time re venues, are expected to outpace the current revised FY 2021/2022 Budget. Additional General Fund Revenue details are provided beginning on page 2 of this report. Staff is recommending that revenue budget amounts be increased by $14.4M.
• General Fund Expenditures through December total $69.3M or 49.3% of the current revised FY 2021/2022 Budget. There are proposed mid-year budget adjustments of $2.3M explained in more detail starting on page 6 of this report. The General Fund mid-year budget adjustments are broken into three categories : on-going personnel adjustments of $768,520; on-going non- personnel/other adjustments of $639,750; and one-time adjustments of $894,272.
• A brief mid-year overview is included in this report for Enterprise Funds and Internal Service Funds starting on page 9.
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2 GENERAL FUND
GENERAL FUND REVENUES
As of December 31, 2021, General Fund operating revenue was $49.8M, or 37.5% of the current revised budget. City revenues historically are less than 50% at this point in the fiscal year because of year-end accounting adjustments to major revenues and because the bulk of the property tax and business license revenues are received later in the fiscal year . Analysis of the current fiscal year suggests the City’s overall recurring General Fund revenues, specifically sales tax, transient occupancy tax, and real property transfer tax, are expected to outpace the current revised FY 2021/2022 Budget.
The table below displays the comparison between revenues received as of December 31 st for th e
current and prior fiscal year . Actual revenues for FY2021/2022 were $11.5M higher than the same period in the prior year. This increase can be attributed to a combination of faster than predicted economic recovery in certain sectors including sales tax and transient occupancy tax and the addition of the real property transfer tax revenue stream which began in April 2021. The table also in cludes projected revenues for FY 2021/2022 compared to the revised budget.
Table 1
2020/2021
REVENUE AS OF
12/31/2020
2020/2021
REVENUE
TOTAL
2021/2022
REVENUE AS OF
12/31/2021
2021/2022
REVISED BUDGET
TOTAL
2021/2022
PROJECTED
REVENUES
Property Tax 2,655,025 11,830,948 2,617,187 10,511,000 10,511,000$ Sales Tax 6,761,014 22,441,130 8,212,723 21,650,192 25,059,487$ Sales Tax - Measure CC 3,578,847 10,193,555 3,566,833 9,937,000 10,917,000$ Sales Tax - Measure C 1,446,560 4,709,783 1,754,481 4,914,000 5,383,000$ Public Safety Sales Tax (PSAF) 155,383 486,429 178,989 450,000 475,000$ Business Tax 1,401,882 15,895,303 1,343,372 15,561,000 15,561,000$ Franchise Tax 1,044,811 2,298,715 201,235 1,400,000 1,400,000$ Real Property Transfer Tax 2,593,104 8,533,467 6,331,643 10,550,000 14,050,000$ Electricity UUT 3,050,095 6,577,145 3,632,131 6,769,000 7,069,000$ Gas UUT 341,721 1,200,734 437,477 1,167,000 1,167,000$ Water UUT 741,091 1,702,834 742,241 1,600,000 1,600,000$ Telecomm UUT 1,215,358 2,862,005 1,220,086 3,136,000 2,736,000$ Cable UUT 301,432 842,076 379,232 725,000 775,000$ Transient Occupancy Tax (TOT) 1,040,923 3,073,677 2,627,644 3,704,000 7,304,000$ Commercial/Industrial Dev. Tax 188,345 391,788 1,359,807 500,000 1,500,000$ Licenses and Permits 1,706,185 3,480,750 3,173,420 5,432,500 5,712,500$ Intergovernmental 345,193 11,225,938 15,613 10,030,259 11,111,049$ Charges for Services 2,472,447 8,173,472 4,424,617 9,384,324 9,495,423$ Fines and Forfeitures 943,005 3,448,170 1,383,671 2,802,000 2,802,000$ Use of Money & Property 1,745,255 3,096,947 1,368,524 1,920,365 1,920,365$ Interfund Revenues 2,714,966 5,429,932 2,780,225 5,560,449 5,560,449$ Transfers In 1,358,612 2,717,225 1,979,334 3,958,668 3,958,668$ Other Revenues 407,836 348,522 16,507 1,111,595 1,111,595$ TOTAL REVENUES 38,209,093$ 130,960,546$ 49,746,990$ 132,774,352$ 147,179,536$
GENERAL FUND REVENUES
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3 • Property Tax – As of December 31, 2021, the City received $2.62M in Property Tax. Secured property tax receipts are about 1.4 % below last year but are estimated to still meet budget projections for FY 2021/2022.
Sales Tax / Measure C/ Measure CC – Total Sales Tax receipts as of December 31, 2021 were $13.7M, or 37.1% of the current revised budget. There are only four months of receipts reflected in this report. In accordance with government accounting standards and the remittance from California Department of Tax and Fee Administration (CDTFA), sales tax revenues are received about two months in arrears.
Several sectors have experienced a faster than expected recovery. A few categories that are performing well this fiscal year are new motor vehicle dealers, casual dining, service stations, family apparel and specialty stores . Based on the most recent report from our sales tax consultant, HdL, sales tax receipts are expected to be higher than the budget estimate. It is recommended to increase the total Sales Tax category by $4.88M. This is inclusive of the City’s Bradley Burns, Measure C, Measure CC and Public Safety Sales Tax receipts.
It is important to note that during the March 2020 election, the City was successful in having the sunset date of Measure CC (formerly Measure Y), the City’s ½ cent Transaction Tax, extended by another ten years.
Business Tax – The Business Tax category in Table 1 also includes receipts for Cannabis Tax.
Total Business License Tax receipts as of December 31, 2021 are $1.3M and Cannabis Tax is $792.2K. Most of these revenues are received after the first half of the fiscal year in January and February. Overall receipts in this category are on track to meet the end of year estimate.
Utility Users Taxes (UUT) – Total UUT receipts as of December 31, 2021 were $6.41M, or
47.9% of the current revised budget. I n accordance with the same accounting standards that apply to sales tax receipts, UUT receipts received in July are recorded into the prior fiscal year, so as of December 202 1 only five months of receipts hav e been recorded. With accrual calculations considered and based on estimates received from the City’s consultant, Avenu, it is recommended that UUT is decreased by an aggregate amount of $ 50K ($300K increase in Electric UUT, $400K decrease in Telecommunications UUT and $50K increase in Cable UUT).
Transient Occupancy Tax (TOT) – TOT receipts as of December 31, 2021 were $2.6M or
70.9% of the revised budget. The COVID -19 pandemic significantly impacted TOT in the l ast fiscal year. TOT revenues this year are up by 152% compared to the same period in the prior fiscal year. Due to the rebound in travel in the second year of the COVID pandemic, there is renewed strength in TOT receipts that is occurring more quickly than had been anticipated. Staff is recommending increasing TOT estimates by $3.6M.
Real Property Transfer Tax – Real Property Transfer Tax as of December 31, 2021 was $6.3M or 60% of the revised budget. Real Property Transfer Tax came in higher by $3.7M compared to same period of the previous fiscal year due to the implementation of Measure RE. This report reflects five months of receipts.
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4 At the November 3, 2020 election, Culver City residents voted to approve Measure RE. Measure RE establishes a marginal tax rate with four brackets, based on sales price or value, for the City's real estate transfer tax effective April 1, 2021. This marginal tax adds 1.5% on amounts from $1,500,000 to $2,999,999, 3% on amounts from $3,000,000 to $9,999,999, and 4% on amounts $10,0 00,000 and above. Measure RE does not apply to sales under $1,500,000, affordable housing, and first transfer of new multi-family properties. Based on the data received since implementation in April 2021, s taff is recommending increasing real property transfer tax estimates by $3.5M.
Commercial/Industrial Development Tax – This category experienced significant declines due to the pandemic in Fiscal Year 2020/2021. The total revenue received for this category as of December 31, 2021 was $1.36M or 272% of the revised budget. The revenues are up by $1.2M compared to the same period of the prior fiscal year . Based on the strong receipts for the first half of the fiscal year, staff is recommending increasing this tax revenue by $1.0M.
Licenses & Permits – Like Commercial /Industrial Development Tax, Licenses and P ermits revenue is driven by residential and commercial construction activity. Due to the pandemic, this activity slowed considerably in the prior fiscal year. Revenues as of December 31, 2021 were $3.2M or 58.4% of the revised budget. The revenues for this category were up by 88.7% compared to same period of FY 20 20/2021. Licenses and Permits for building, electrical and plumbing are the major sources of revenue for this category. Staff is recommending increasing this revenue by $280K overall.
Intergovernmental Revenue – Intergovernmental revenue is mostly comprised of the motor vehicle license fees from the State Department of Motor Vehicles which is received in January and May . It also inc ludes revenue from the POST program, CNG Excise Tax credits, and CARES Act and FEMA reimbursements. Intergovernmental revenue as of December 31, 2021 was $15.6K or 0.2% of the revised budget. Most receipts for this category are received in January and May of the fiscal year.
Also included in this category is the Coronavirus Relief Funds (CRF) from the American Rescue Plan Act (ARPA) . The City’s allocation of ARPA funds was increased by $1.08M f rom the amount originally anticipated at the time of budget adoption for a total of $4,768,649. Staff is recommending increasing this revenue category by $1.08M to match the amount received. This is the final payment of these one-time funds.
Charges for Services – Receipts in this category as of December 31, 2021 were $4.4M or
47.8% of the revised budget. Charges for Services category is comprised of a variety of revenues ranging from recreation program fees to police services and plan checks. Last year, t his category experienced the most significant decreases due to the COVID-19 pandemic. This year the revenues are up by $ 1.95M compared to same period last year. Staff is recommend ing increasing this category by $111K to recognize various changes to revenues for Parks, Recreation & Community Services.
Fines and Forfeitures – Fines and Forfeitures as of December 31, 2021 were $1.4M or 49.4% of the revised budget. This category is primarily comprised of red- light camera violations and moving violations written by Culver City traffic enforcement, and park ing violations written by ATTACHMENT 1
5 Culver City parking enforcement. Last year, parking violations were not enforced, and with a significant decrease in traffic, moving violations were negligible. This year f ines and forfeiture revenues are up by 44% when compared to the same period last year . Staff anticipates these revenues meeting current budget projections.
Use of Money and Property – Use of Money and Property includes revenues from interest income, investments and income from rental of city propert ies. The revenues were $1. 4M or
71.3% of the revised budget.
• Other Revenues – Other Revenues is comprised of loan payments, land sale proceeds, donations and miscellaneous revenues. Other Revenues as of December 31, 2021 were $16.5K or 1.5% of the revised budget. This category will see receipts in the second half of the fiscal year and is anticipated to meet projections by the end of the year.
The recommended Mid-Year revenue adjustments total approximately $14.4M in increases above the current revised FY 2021/2022 Budget.
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6 GENERAL FUND EXPENDITURES
General Fund expenditures through mid-year are $69.3M or 49.3% of projected appropriations, which is $3.7M higher when compared to the same point last fiscal year. However, the amount represents a lower percentage of the total appropriation when compared to the same period in the prior year. Much of the increased amount is due to filling previously vacant positions and the greenlighting of ot her budget costs that were previously postponed during the peak of the COVID-19 pandemic.
The tables below display a comparison between expenditures for the first six months of Fiscal Year 2021/2022 and Fiscal Year 2020 /2021. The tables also include projected expenditures for FY 2021/2022 compared to the revised budget.
Comparison by Department:
Table 2
Comparison by Category:
Table 3
DEPARTMENT
2020/2021
EXPENDITURE AS
OF 12/31/2020
2020/2021
EXPENDITURE
TOTAL
2021/2022
EXPENDITURE AS
OF 12/31/2021
2021/2022
REVISED
BUDGET TOTAL
2021/2022
PROJECTED
EXPENDITURES
Administration 967,628 1,814,588 967,372 1,898,193 1,898,193$ City Attorney 1,326,618 2,852,766 1,217,057 3,382,746 3,382,746$ Finance 2,734,004 5,365,280 3,111,777 6,341,573 6,341,573$ Administrative Services 1,207,903 2,462,409 1,478,045 3,138,347 3,138,347$ Information Technology 2,168,110 4,807,245 2,409,024 5,256,595 5,256,595$ Parks, Recreation & Comm Svcs 4,028,028 8,268,396 4,659,993 10,529,238 10,529,238$ Police Department 25,123,461 44,359,141 25,847,359 48,842,926 48,842,926$ Fire Department 14,877,970 26,135,997 15,537,258 28,420,258 28,420,258$ Community Development 4,297,193 8,976,956 4,307,874 11,471,653 11,471,653$ Public Works 6,503,605 12,892,461 6,796,902 16,263,787 16,263,787$ Non-Departmental 2,007,610 6,184,367 1,599,856 4,651,817 4,651,817$ Transfers 343,060 619,000 1,378,998 633,270 633,270$ TOTAL EXPENDITURES 65,585,189$ 124,738,605$ 69,311,515$ 140,830,404$ 140,830,404$
GENERAL FUND EXPENDITURES
CATEGORY
2020/2021
EXPENDITURE AS
OF 12/31/2020
2020/2021
EXPENDITURE
TOTAL
2021/2022
EXPENDITURE AS
OF 12/31/2021
2021/2022
REVISED
BUDGET AS OF
12/31/2021
2021/2022
PROJECTED
EXPENDITURES
Personnel Costs $ 54,104,211 $ 98,607,983 $ 55,936,472 $ 105,075,271 $ 105,075,271 Operating O & M 11,038,218 24,588,397 11,698,157 37,420,485 $ 37,420,485 Capital 99,700 923,225 297,889 701,378 $ 701,378 Budgeted Excess Appropriations - - - (3,000,000) $ (3,000,000) Transfers 343,060 619,000 1,378,998 633,270 $ 633,270 TOTAL EXPENDITURES 65,585,189$ 124,738,605$ 69,311,515$ 140,830,404$ 140,830,404$
GENERAL FUND EXPENDITURES
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7 A few departments are currently exceeding the 50% mark halfway through the fiscal year , however, Finance Staff project s that all departments will end the fiscal year within budget . A number of large annual expenditures typically take place early in the fiscal year that push the 6- month percentages higher than 50%.
The Personnel category was $55.9M or 53.2% of the Revised Budget. Actual expenditures exceed 50% of budget due to the prepayment of the CALPERS Unfunded Accrued Liability (UAL) of $15.8M from the General Fund. When the City pays the UAL payment up front , CALPERS offers a discount , which was $665K in the current fiscal year. Also included in the personnel category increase is a COLA adjustment for miscellaneous employees and the filling of some of the previously vacant/frozen positions. No COLA adjustment was given in the prior fiscal year to kept personnel expenses lower in response to the economic challenges of the pandemic.
The Operations and Maintenance (O&M) category was $11 .7M or 34.0% of the revised budget. O&M expenditures as of December 2021 were $666.7K higher than December 2020 due to increased spending on necessary purchases and the resumption of programs and other activities that had been delayed or previously canceled in the prior year due to COVID-19.
Finance staff is confident that the General Fund expenditures will end the fiscal year within the revised FY 2021/2022 Budget of $ 140.8M. These expenditure projections include $2.3M for mid-year appropriation adjustment requests. The mid-year adjustment requests are primarily offset by projected salary savings due to vacant positions across all departments . A significant number of retirements occurred in December 2021 and recruiting for those positions will take time.
Mid-Year Appropriation Adjustment Request
Recommended appropriation adjustments for m id-year total approximately $2.3M. Of this amount, $894,272 is for one-time expenditures, $768,520 is for on-going personnel costs, and $639,750 is for ongoing non-personnel costs. On-going expenses will be incorporated into future year budgets. A brief outline of the adjustment request s can be found below . For a detailed explanation of each mid-year appropriation request see Attachment #2 of this staff report. Again, t hese additional budget requests will be covered within the current revised budget appropriations due to projected savings in other areas.
One-time appropriation adjustments include:
• $50,000 for Legal Services related to in-depth review of MOU’s and Payroll • $20,000 for reconfiguration of Finance Department cubicle layout • $10,000 for Human Resources supplies and advertising related to higher number of recruitments • $11,990 for higher than anticipated expenses for Quality Assurance Fee ( QAF) related to the Ground Emergency Medical Transport (GEMT) funding due to an increase in the State’s rate • $46,200 for Community Development for Farmers Market audit, Apple I -Pads for use by Code Enforcement Officers, additional mailing charges and transcription services, two computers and two monitors for Rent Stabilization positions
• $154,775 for Public Works for emergency tree trimming services, required certifications and training, and cubicle reorganization
• $583,304 transfer to Fund 420 – Improvements & Acquisitions for needed Culver City Park equipment and renovation, and the installation of a gate and retractable bollards at Ballona Creek access gate near Jackson Avenue
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8 On-going appropriation adjustments include:
• $768,520 for a partial year of staffing adjustments in the Finance Department, Human Resources, Information Technology, Parks, Recreation & Community Services, Police, Fire, Community Development, and Public Works.
• $350,000 in increased costs to Southern California Edison. The i ncrease is due to the City’s enrollment in the Clean Power Alliance, the significant delivery rate increase that the California Public Utilities Commission approved, and volatility in the electricity spot market. • $40,000 for the implementation of the NeoGov on -boarding program for employee orientation. (The annual on-going amount will be $32,000.)
• $61,100 for Parks, Recreation, and Community Services for training, recertifications, uniforms, landscaping and custodial services, and monthly mailing of Senior Center newsletter • $55,000 for Vital Medical Services contract for the Police Department • $26,000 for Community Development for transcription services and additional advertising for General Plan update, Housing Element, Cannabis Uses, and Zone Code Amendment • $58,450 for Public Works for training, membership and dues, conferences and conventions, contract services for underground service alter markings and a new Hirsch pad system at the Veterans Memorial Building
General Fund Financial Forecast
In the General Fund Financial Forecast, staff has included operational costs in the amount of $4.9M for Project Homekey starting in Fiscal Year 2022/2023. A baseline escalator has been applied to these costs in future years.
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9 OTHER MAJOR FUNDS
A brief overview follows for the City’s Enterprise and Internal Service Funds.
ENTERPRISE FUNDS
The City has four Enterprise Funds: Refuse Disposal, Municipal Bus Lines, Sewer Enterprise, and Municipal Fiber Network, which account for the provision of direct services to the public where all or a substantial portion of the costs involved are paid in the form of user charges or fees for such services.
• Refuse Disposal Fund was established to account for the operation of the City's refuse disposal, transfer station operation, recycling efforts, and street sweeping services. • Municipal Bus Lines Fund is used to account for the operation, as well as the capital assets, of the City's Bus Lines . Other funding assistance comes from FTA Section 9 (Federal-Capital), TDA a nd STA (Capital and Operating), and Proposition A and Proposition C.
• Sewer Enterprise Fund is used to account for revenues collected through sewer charge fees and sewer facilities charges. These funds are used for expenditures related to the operation and maintenance of sewer disposal facilities, capital projects, and debt service on bonds for sewer facility improvements.
• Municipal Fiber Network Fund was established through a loan from the General Fund to design and construct an open access network where Internet Service Providers (ISPs) will utilize City’s fiber infrastructure to service the business community.
Table 4
REFUSE
At mid-year, the Refuse Fund operating expenditures are $8.1 million, or 41.4% of the revised budget.
Expenditures through December 2021 are $334K more than the prior fiscal year . Several large expenditures will occur in the second half of the fiscal year c ontributing to expenditures coming in at less than 50% of the revised budget. These include Consulting Services ($150K), Department Special Equipment ($90k), and Refuse Disposal Services ($826K).
• Consulting Services is due to timing, expense will occur by end of fiscal year.
DEPARTMENT
2020/2021
EXPENDITURE AS
OF 12/31/2020
2020/2021
EXPENDITURE
TOTAL
2021/2022
EXPENDITURE AS
OF 12/31/2021
2021/2022
REVISED
BUDGET TOTAL
2021/2022
PROJECTED
EXPENDITURES
Refuse Disposal Fund 7,880,627 15,621,723 8,215,152 19,828,956 18,837,510 Municipal Bus Lines 13,780,276 27,458,549 18,678,703 59,706,639 35,439,350 Sewer Enterprise Funds 3,694,804 8,763,123 3,377,059 11,114,419 8,823,360 Municipal Fiber Network Fund 1,295,031 2,102,185 835,491 3,171,417 2,447,345 TOTAL EXPENDITURES 26,650,738$ 53,945,580$ 31,106,405$ 93,821,431$ 65,547,565$
OTHER MAJOR FUNDS EXPENDITURES
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10 • Department Special Equipment is due to timing, expense will occur by end of fiscal year • Refuse Disposal Services are projected to be favorable by $1.1 million which is driven by the short fall in construction demolition volume compared to prior year, and favorable recycling processing cost.
Based on analysis of the mid- year numbers, refuse expenditures are estimated to be at least 95% or less of revised budget at the end of the fiscal year.
Refuse Fund Revenues are trending slightly behind the mid-year target of 50% at $8.5M, or 48.1 % of the revised budget. Contributing factors to this variance are Refuse Disposal - Residential Property Tax, Tonnage Charges, and Sale of Recycle items. These items are offsetting favorable trends in all other revenue categories.
• Refuse Disposal variance is due to timing of payments received by residents and should balance out by year end.
• Tonnage charges is expected to remain behind budget due to the completion of several large construction projects.
• Sale of Recycle is expected to increase with added volumes being brought to the Transfer Station by the City of Santa Monica.
The net of these items will result in Refuse Fund revenues being fully realized by fiscal year end.
MUNICIPAL BUS LINES FUND
Municipal Bus Lines Fund mid-year expenditures are $18.7M, or 31.3% of the revised budget and are on target with projections to end within budget.
As of Decem ber 31, 2021, only 21.1 % of the $26.6M appropriated in other capital outlay had been expended. Approximately $11.4M has been encumbered and is anticipated to be expended over the next fiscal year. Capital projects not implemented or finished during a fisc al year are carried over to subsequent fiscal years.
Municipal Bus Lines Fund revenues are $4.9M or 10.7% of budgeted revenue. H alf of the projected revenue comes from grants for capital projects. Most grants operate on a reimbursable basis so the revenue will be received after work has commenced and costs incurred. Municipal Bus Lines Fund revenues are mostly a combination of f ederal, State and County funding sources along with farebox revenues.
Revenue invoicing and grant reimbursements have been impacted due to ongoing staffing challenges during first six months of FY 2021/2022. The City has received federal, State, and C ounty reimbursements in January and February that will be reflected in the third quarter report . Additional invoices will be submitted during the third quarter of the fiscal year for work that has been completed.
The department anticipates year-end revenue to match or exceed budgeted expenditures.
SEWER ENTERPRISE FUND
As of December 31, 2021, Sewer Fund operating expenditures are approximately $3.4 million, or 30.4% of the revised budget . Personnel costs are at 45.6% of revised projections. Expenditures are below ATTACHMENT 1
11 50% due primarily to the timing of payments to the City of Los Angeles for the Hyperion Treatment Plant. $3.6M is budgeted for these services, and only $363,000 had been expended through mid-year.
Sewer Enterprise Fund revenues at mid-year are $3.76M, or 40.4% of budget. Sewer Enterprise Fund revenues are on track to be fully realized at fiscal year-end.
MUNICIPAL FIBER NETWORK FUND
In July 2018, the Network was deemed operational with all the fiber infrastructure installed, spliced, and tested. During FY 2018/2019, network configuration was also initiated for the electronics located in the local hubs and at the telecommunications carrier hotels at One Wilshire and Equinix (El Segundo). In March 2021, the City transitioned to a new network operator, Onward. In October 2021, Onward lit its first internet service commercial customer. Additionally, City Council approved allowing Onward to provide residential internet services to multi-family customers. It is expected that Onward will be able to begin marketing services to these customers before the end of FY 2021/2022. Staff also continues to work with Ting in a potential joint -build which will further expand the footprint of the fiber network.
The Fund is now financially sustainable with annual revenues covering annual expenditures.
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12 INTERNAL SERVICE FUNDS
The Internal Service Funds are used to account for services and commodities furnished by designated funds of the City to user departments of the City.
• Equipment Replacement Fund is used to hold annual replacement payments from designated user departments and to use those funds to purchase equipment for general City purposes.
• Equipment Maintenance & Fleet Services (EMFS) Fund accounts for all activities of the City's central equipment maintenance operations, the costs of which are distributed among designated user departments.
• Self-Insurance Fund receives and disburses funds pertaining to the public liability and workers' compensation insurance programs. It also funds the Employee Disability (IOD) program for employee long-term work-related disabilities. • Central Stores accounts for the timely purchase of needed materials, supplies and auto parts in advance of actual need. Departments are billed as items are issued for use.
Table 5
EQUIPMENT REPLACEMENT FUND
At mid-year, the Equipment Replacement Fund actual expenditures are $187K, or 10.0% of the revised budget. Currently there is $515,740 encumbered for vehicles/equipment set to be received by the end of the current fiscal year or in the early part of next fiscal year.
Vehicles on the FY 2021/2022 replacement list include three fire rescues, specialized tires for a Caterpillar Wheel Loader, a dump truck, and two sedans.
Equipment Replacement revenues, which are mainly the contributions from the various funds for replacement costs, will be fully recognized at year-end.
EQUIPMENT MAINTENANCE & FLEET SERVICES (EMFS) FUND
The EMFS Fund mid-year expenditures are $4.32M, or 50.9% of the revised budget. Fuel expenditures in the amount of $745K, which are 53.2% of revised budget appropriations at mid-year, are driving the overall expenditure percentage higher. Fuel expenditures through December 31, 2021 are 61.1% higher than fuel expenditures at this point last fiscal year. Higher gas prices are driving this increase.
DEPARTMENT
2020/2021
EXPENDITURE AS
OF 12/31/2020
2020/2021
EXPENDITURE
TOTAL
2021/2022
EXPENDITURE AS
OF 12/31/2021
2021/2022
REVISED
BUDGET TOTAL
2021/2022
PROJECTED
EXPENDITURES
Asset Replacement Fund 464,320 2,494,361 186,715 1,859,003 1,452,450 Equipment Maintenance/Fleet Svcs 3,887,310 7,712,063 4,323,221 8,488,493 8,456,300 Self Insurance Fund 5,592,345 9,868,983 7,750,713 9,723,025 11,105,400 Central Stores Fund 636,307 1,512,212 572,656 1,977,315 1,865,800 TOTAL EXPENDITURES 10,580,282$ 21,587,619$ 12,833,305$ 22,047,836$ 22,879,950$
OTHER MAJOR FUNDS EXPENDITURES
ATTACHMENT 1
13 EMFS Fund revenues are on track to be fully realized at fiscal year-end. All expenditures will be covered to ensure this Fund continues to operate in a financially sound manner.
SELF-INSURANCE FUND
The Self-Insurance Fund (SIF) regular expenditures at mid- year are $7.75M, or 79.7% of the revised budget. This fund exceeds 50% due to higher than estimated Liability Insurance Claims and higher personnel costs due to an above average number of employees on IOD. Further analysis of this fund will be performed by Finance staff in preparation for the FY 2022/2023 budget process.
Revenues for the SIF Fund are mainly allocations from the various funds and are on track to be fully realized at fiscal year-end. However, an in-depth review will be performed on this fund in the next couple of months to ensure the City meets the reserve percentage as stated in the financial policies. Any identified changes to allocations will be made during the FY 2022/2023 budget process.
CENTRAL STORES FUND
The Central Stores Fund operations continue to be on track for FY 2021/2022. Continued streamlining of purchasing practices and policies has enabled the City to save time and money by centralizing various purchases.
CONCLUSION
General Fund projections for FY 2021/2022 show total estimated revenues at $147.2M, $14.4M more than the current revised budget total. Finance staff estimates that there is enough General Fund budget savings in salaries and O&M cost to absorb the $2.3M in mid-year appropriation requests and to end the fiscal year within the total revised expenditure budget figure of $140.8M. Table 6 summarizes the projected FY 2021/2022 ending fund balance for the General Fund. Despite the significant reductions to the City’s revenues due to COVID-19, early, prudent budget tightening and sound fiscal management helped maintain the General Fund reserves.
Table 6
Finance staff will continue to monitor the City’s resources to ensure adequate funding for City services, public facilities, and infrastructure necessary to the community’s present and future needs. This report should be considered in conjunction with the General Fund Financial Forecast, which takes a longer - term view of the City’s financial position and is included as Attachment 3 of this report.
FY 2021/2022
Revised Budget
FY 2021/2022
Revised Budget
w/ Mid-Year
Adjustments
Total General Revenues 132,774,352 147,179,536
Total General Fund Expenditures (140,830,404) (140,830,404) Estimated Net Income/(Loss) (8,056,052) 6,349,132 Fund Balance Per FY 2020/2021
Annual Financial Report 108,808,031 108,808,031
Current Year Net Income/(Loss) (8,056,052) 6,349,132 Estimated Ending Fund
Balance as of FY 2021/2022 100,751,979 115,157,163