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Section 4. Except as specifically amended by this Amendment, each and every provision of the Agreement shall continue in full force and effect as originally entered into.
IN
WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and attested by their proper officers thereunto duly authorized, and their official seals to be hereto affixed as of the day and year first above written. The Member Agencies agree that this Amendment may be executed in parts where the sum of the parts equals a whole and that a photocopy or facsimile signature shall be deemed an original.
Exhibit "A"
Resolution No. 2023-95
Exhibit "A"
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STAFF REPORT
October 11, 2023
File Number 0410-20
SUBJECT
FINANCIAL REPORT FOR FY2022/23
DEPARTMENT
Finance
RECOMMENDATION
Request that the City Council receive and file the annual financial report for FY2022/23 (Attachment 1).
Staff Recommendation: Approval (Finance: Christina Holmes, Director of Finance) Presenter: Christina Holmes, Director of Finance
FISCAL ANALYSIS
See Below.
PREVIOUS ACTION
On May 10, 2023, the City Council received the Fiscal Year 2022/23 Third Quarter Financial Status report.
BACKGROUND
The City Council Budget and Financial Policies require that the City present quarterly financial reports each fiscal year. The purpose of this report is to provide City Council and the public a financial update of selected funds of the City. This report provides the City Council with the analysis of unaudited revenues and expenditures for Fiscal Year 2022/23 in comparison to Fiscal Year 2021/22 for the General Fund, the Water Fund, and the Wastewater Fund. The financial highlights for each of these funds are summarized below.
General Fund
Prior to the onset of the COVID -19 pandemic, the City experienced a stable economy with moderate revenue growth averaging 4% annually. Then in March 2020, the public health measures and restrictions due to the pandemic forced government operations and pr ivate businesses to close or drastically alter operations, actions that many anticipated would create a severe economic downturn comparable to the Great Recession, which had a devastating impact on the City’s General Fund. However, the COVID-19 restrictions began to be lifted in FY2020/21 and a combination of California fully reopening its economy, 172
Item15.
improved vaccination rates, public health measures to reduce the spread of the COVID -19 virus, and additional federal funding allowed for additional public acti vities and improved the economic environment.
The General Fund has benefitted from improved revenue activity since the recovery period of COVID-19, from the end of 2020 through 2022. However, operating revenue has not kept pace with the growing costs of providing City services, and as a result t he General Fund long -term financial plan has projected annual deficits creating a structural budget deficit . To address this projected shortfall, the City has minimized increases in expenditures when possible and staff are continuously seeking measures that ensure efficiency, while enhancing basic operations. Despite all of these measures, and the City’s efforts to fund projects with grants and other sources of one-time funds, it has not been enough to meet growing costs and demand for services , the General Fund operating budget projected a net operating deficit of $8.5 million. In the Preliminary Operating Budget Workshop on May 11, 2022, the City Council direction was to prepare a General Fund Operating Budget that closed the $8.5 million deficit, without impacting the Public Safety departments and services, including Police, Fire, and Public Works.
In order to address the $8 .5 million General Fund deficit, Staff evaluated both projected operating revenue and the proposed operating expenses for FY2022/23. Projected operating revenue was increased by $1.4 million due to updated information received subsequent to the May 11, 2022 budget workshop .
General Fund operating expense reductions of $7.1 million were p roposed by staff, and t he proposed reductions and modifications to City services were sufficient to close the FY2022/23 budget gap.
After discussion and consideration of the recommended budget reductions, City Council directed Staff to modify the proposed FY2022/23 operating budget and offset some of the budgetary cuts recommended with the use of one -time funds from the American Rescue Plan Act (ARPA) funds and the Section 115 Pension Trust fund. To maintain a balanced budget and yet continue an appropriate level of service and address City priorities, the adopted FY2022/23 budget utilizes $3.7 million from the American Rescue Plan Act.
Total budgeted operating revenue was projected to increase by 6.4% to reach $119.7 million and the adopted expenditure budget of $125.2 million increased by approximately $8.1 million or 6.9% compared to the revised FY2021/22 operating budget. As reported in previous financial updates, Sales Tax Revenue declined in FY2022/23; however, due to increases in property tax and f ranchise fees, overall operating revenue exceed the budget amount by $8.3 million. Total operating expenditures were under the final amended budget by $670,030. As a result, the General Fund reported a Net Operating Surplus of $3,167,030. As noted above, additional funds from the American Rescue Plan Act Funds of $3,735,030 were utilized in the FY2022/23 budget to support the City’s essential services.
Attachment 1 to this staff report includes an analysis of General Fund operating revenues and operating expenditures for the fiscal year ending June 30, 2023.
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With the net General Fund surplus of $3,167,030 and allocation of American Rescue Plan Act funds of $3,735,030, a total of $6,902,060 is available for allocation. Staff will be returning to City Council in February 2024 with a Mid-Year Financial Update and will also make recommendations for how to allocate the FY2022/23 available resources. This will include additional General Fund resources needed to account for utility expenses as a result of the Utility Rate Study, a budget adjustment for a community survey, and potential funding needed for the replacement of three ambulances.
ATTACHMENTS
1. Attachment 1 – FY2022/23 Financial Status Report
174
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1 FY2022/23 Financial Status Report
OVERVIEW
This report summarizes the City’s financial position for the fiscal year ending June 30, 2023 for the General Fund, Water Fund, and Wastewater Fund.
The purpose of the report is to provide City Council, City Management, and the Escondido community an upd ate on the City’s fiscal status based on the most recent financial information available. The revenue and budget information include adjustments for encumbrances, carryovers, and any other supplemental appropriations approved by the City Council as of June 30, 2023.
This report is for internal use only. The figures presented here are unaudited and have not been prepared in accordance with Generally Accepted Accounting principles (GAAP).
GENERAL FUND
The General Fund has benefitted from improved revenue activity since the recovery period of COVID-19, from the end of 2020 through 2022. However, revenues have not kept pace with the growing costs of providing municipal services, and the City’s structural budget gap remains.
The adopted FY2022/23 operating budget reflects an overall strategy of fiscal prudence on the part of the entire City workforce by maintaining a hardline on expenditures while also continuing to provide core City services including Public Safety, Public Works, Community Services, and Development Services, as well as the community’s priorities. However, to maintain a balanced budget and yet continue an appropriate level of service and address City priorities, the adopted FY2022/23 budget utilizes $3.7 million from the American Rescue Plan Act, a short-term, one-time source of funds.
Total budgeted operating revenue was projected to increase by 6.4% to reach $ 119.7 million and the adopted expenditure budget of $ 125.2 million increased by approximately $ 8.1 million or 6.9% compared to the revised FY2021/22 operating budget. As reported in previous financial updates, Sales Tax Revenue declined in FY2022/23; however, due to increases in property tax and franchise fees, overall operating revenue exceed the budget amount by $8.3 million. Total operating expenditures were under the final amended budget by $670,030. A summary of the year end operating results are shown in the table below:
General Fund
Comparison of Projected FY2022/23 Operating Budget to Actuals FY2022/23
ADOPTED
BUDGET
FY2022/23
AMENDED
BUDGET
FY2022/23
ACTUAL
RESULTS
OVER / (UNDER)
AMENDED
BUDGET
Total Operating Revenue $119,687,230 $120,993,780 $129,236,630 $8,331,150 Total Operating Expenditures (125,186,930) (128,571,000) (127,900,970) (670,030) Other Sources (Uses) 1,764,670 1,764,670 1,831,370 66,700 ARPA Lost Revenue* 3,735,030 3,735,030 3,735,030 -
Net Operating Surplus / (Deficit)* - ($2,077,520) $6,902,060 - *FY2022/23 projected Operating Budget deficit closed with one-time revenue from the American Rescue Plan Act.
Attachment "1"
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City of Escondido Fiscal Year 2022/23 Financial Status Report
2 GENERAL FUND REVENUE
Prior to the onset of the COVID-19 pandemic, the City experienced a stable economy with moderate revenue growth averaging 4% annually. Then in March 2020, the public health measures and restrictions due to the pandemic forced government operations and private businesses to close or drastically alter operations, actions that many anticipated would create a severe economic downturn comparable to the Great Recession, which had a devastating impact on the City’s General Fund. However, the COVID -19 restrictio ns began to be lifted in FY2020/21 and a combination of California fully reopening its economy, improved vaccination rates, public health measures to reduce the spread of the COVID-19 virus, and additional federal funding allowed for additional public acti vities and improved the economic environment. The General Fund has benefitted from that improved revenue activity since the recovery period of COVID-19, increasing by 17.5% in FY2020/21 and an additional 6.0% in FY2021/22. Due to some uncertainty in the economy, the growth in total operating revenue has slowed, increasing by 1.7% in FY2022/23. A summary of the previous five fiscal years of total General Fund operating revenue is shown in the chart below:
The table below shows the major categories of revenue collected through June 30, 2023 compared to the revenue collected in the prior year through June 30, 2022:
FY2022/23
AMENDED BUDGET
ACTUAL RESULTS
JUNE 2023
ACTUAL RESULTS
JUNE 2022
Prior Year vs.
Current Year
Sales Tax 51,012,200 47,103,020 49,857,190 (2,754,170) Property Tax 32,780,100 34,913,390 32,753,740 2,159,650 Other Taxes 14,671,560 19,684,880 17,008,370 2,676,510 Charges for Services 11,357,480 14,626,930 11,865,490 2,761,440 Permits and Licenses 1,778,500 1,999,070 2,157,450 (158,380) Fines and Forfeitures 832,500 728,990 880,870 (151,880) Intergovernmental 4,055,720 4,747,170 5,061,150 (313,980) Rental Income 3,775,920 4,126,340 4,008,410 117,930 Other Revenue 641,500 1,306,840 1,230,070 76,770 TOTAL OPERATING REVENUE $120,905,480 $129,236,630 $ 124,822,740 $4,413,890
FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 Budget
TOTAL OPERATING REVENUE $102.6 $102.0 $119.8 $124.8 $129.2 $127.4 -0.6%
17.5%
4.1%
3.6% -1.4%
$90.0
$95.0
$100.0
$105.0
$110.0
$115.0
$120.0
$125.0
$130.0
TOTAL GENERAL FUND OPERATING REVENUE
(IN MILLIONS)
Attachment "1"
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Item15.
City of Escondido Fiscal Year 2022/23 Financial Status Report
3 Sales Tax ($47.1 million)
Sales tax is the largest General Fund
revenue source at 42% of total operating
revenue. The City works closely with its
sales tax consultant, AvenuInsights, in
projecting sales tax revenue. Based on
AvenuInsights’ analysis of the trend in
year-to-date tax receipts and an
examination of the local econ omy, the
City’s sales tax revenue was anticipated
to increase in FY2022/23 by 10% to reach
$51.0 million.
Over the past two years, since the onset
of the COVID - 19 pandemic, the U.S.
economy has swung from the deepest
recession on record to a quick recovery
and a surge of inflation. The pent -up
demand for goods, as well as inflation,
led to higher prices for goods, increasing
the sales tax revenue generated within the City. As a result, the City saw significant growth in revenue for the previous two fiscal years.
Actual sales tax receipts decreased from the prior fiscal year amount by ($2,754,170), indicating that the economy is slowing from the post pandemic surge in spending. Decreases in sales tax revenue were reported in both the Transportation sales tax category and receipts from the County Pool.
The largest sales tax segment, 37% of total sales tax revenue, is Transportation, which includes new and used auto sales, auto repair shops, and service stations. Sales revenues decreased by 4% compared to the same quarter in the prior year primarily due to decreases in used auto sales. Tax receipts associated with the automotive industry
experienced a decline for the first time statewide since the onset of the pandemic in early 2020. Th e drop-in demand is likely attributed to hesitation from potential buyers
purchasing a high -cost vehicle , increased further by higher interest rates. Additionally, the increasing invento ry of cars available on dealership lots has begun to exert pressure on prices.
Sales tax revenue received through the County Pool is the second largest sales tax segment accounting for 19% of total sales tax revenue. Effective in April 2019, new taxable sales are distributed to the City under the AB 147 Wayfair decision which extended the sales and use taxes to online and out-of- state retailers engaged in business in California. However, the increase in activity from the countywide pool experienced during the pandemic ha s slowed; total receipts decreased by 24% compared to the prior year.
FY2019 FY2020 FY2021 FY2022 FY2023
Sales Tax $38.7 $36.7 $44.3 $49.9 $47.1
-5.2%
20.9%
12.6%
-5.5%
SALES TAX
(IN MILLIONS)
Transportation
37%
County Pool
18%
Construction
13%
General Retail
13%
Food Products
12%
Business to Business
8%
Sales Tax by Major Category
Attachment "1"
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City of Escondido Fiscal Year 2022/23 Financial Status Report
4 Property Tax ($34.9 million)
Property Tax revenue increased by $2,159,650 or about 6.6% compared to the prior year . The largest portions of property tax revenue are distributed by the County in December and April each year.
The FY2022/23 Operating Budget projected property tax growth of 6%. This is attributed to an increase in current secured and unsecured tax projections,
along with an increase in property
transfer taxes based on the current and
projected development activity, such as
permits, inspections, and plan checks,
which indicate continued growth in
property sales.
Also included in Property tax revenues
is the Property tax in lieu of Vehicle
License Fees (“VLF”). This revenue is in
addition to the regular apportionment
of property taxes received. VLF is levied
annually at 2% of the market value of
motor vehicles and is imposed “in-lieu”
of local property taxes. In FY2022/23
VLF revenue increased by $1,160,260
from the prior fiscal year, from
$15,949,030 to $17,109,290.
Other Taxes ($19.7 million)
Other Taxes include franchise fee revenues, transient occupancy tax, and business license revenue and combined have increased by $2,676,510, or 17%, compared to the prior year.
The City colle cts franchise fee revenues
from San Diego Gas and Electric (SDG&E),
cable companies conducting business
within City limits, and Escondido Disposal
Incorporated (EDI). Revenues received
from franchise agreements increased by
$3.7 million from the prior fiscal year
primarily due to an increase in fees
collected SDG&E for electric generation
from the Escondido Palomar Energy Plan
which can also be attributed to the
higher prices for gas and electricity.
Transient occupancy tax, also known as
hotel tax, increased by $ 543,190
compared to the prior year. The tourism
industry was impacted significantly as a
result of the closures, an d many
forecasted its recovery would take much
longer than it has. In the prior fiscal year transient occupancy tax receipts increased by 49% from the pre-pandemic levels in March 2020. It is expected that those receipts will remain flat going forward as the activity stabilizes in the industry.
FY2019 FY2020 FY2021 FY2022 FY2023
Property Tax $28.0 $29.3 $31.2 $32.8 $34.9
4.7% 6.6% 4.9%
6.6%
PROPERTY TAX
(IN MILLIONS)
FY2019 FY2020 FY2021 FY2022 FY2023
Other Taxes $12.4 $13.1 $14.1 $16.7 $19.7
5.9% 8.0%
18.4%
17.6%
OTHER TAXES
(IN MILLIONS)
Attachment "1"
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Item15.
City of Escondido Fiscal Year 2022/23 Financial Status Report
5 All entities doing business in the City are required to have a valid business license. The business license tax is calculated based on a nnual gross receipts ; business license revenue from the 202 2 calendar year is based off of 20 21 gross receipts. Business license revenues increased by $181,560 compared to the prior fiscal year.
Charges for Services ($14.6 million)
Charges for Services include paramedic fees, Community Services fees for recreational and community activities, and charges for development related services, which include Engineering and Planning fees. Total revenue in this category increased by $2,761,440.
Community Service fees have increased
by approximately $1.1 million compared
to the prior fiscal year primarily due to
new revenue received from the school
district to support the After -School
Program totaling $1,161,000 that was
not included in the FY2022/23 operating
budget.
The City is also receiving new revenue
due to the Ground Emergency Medical
Transportation Program implemented at
the end of FY2022/23 that utilizes
Federal funding to supplement the
ambulance billing revenue received for
medical transports. As a result of this
new program, additional funds of
$674,400 were recorded in FY2022/23.
Intergovernmental ($4.7 million)
Intergovernmental revenue includes the
Rincon fire services agreement, state
mandated cost claims, various grants,
and revenue received from the fire
mutual aid reimbursements. Overall
revenue has decreased $ 313,980
compared to the prior year. The City’s
Fire Department staff can be deployed
to assist other State agencies with
responses to fires and other incidents.
The California Office of Emergency
Services reimburses the City for the time
and resources of the staff deployed.
Due to a decrease in th e number of
deployments in FY2022/23, this revenue
decreased by $563,540.
FY2019 FY2020 FY2021 FY2022 FY2023
Intergovernmental $4.7 $4.2 $5.1 $4.9 $4.7
-10.6%
22.2% -4.4% -2.5%
INTERGOVERNMENTAL
(IN MILLIONS)
FY2019 FY2020 FY2021 FY2022 FY2023
Charges For Services $11.6 $11.6 $11.0 $11.8 $14.6
0.5% -5.6%
8.1%
23.5%
CHARGES FOR SERVICES
(IN MILLIONS)
Attachment "1"
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City of Escondido Fiscal Year 2022/23 Financial Status Report
6 Permits and Licenses ($2.0 million)
Revenue generated from permits and licenses
decreased by $ 158,380 compared to fiscal year
2021/22; however, construction and development
activity continues driving building permit revenue
compared to previous fiscal years.
Fines & Forfeitures ($728,990)
Fines & Forfeitures represent fees collected for vehicle code fines, parking ticket fines, other court fines, code enforcement citations, and impound fees . Fines
collected due to vehicle and parking tickets decreased
during the pandemic and have not returned to
previous activity levels.
Investment, Rental Income, and Other Revenues ($1.3 million) Investments, Rental Income, and Other Revenue includes rental income, interest earned from investing activities, and other miscellaneous receipts and combined has increased by $194,700 compared to the prior year.
The City receives rental income from various city owned properties, including the North County Mall, as well as lease income from the Vineyard Golf Course, jointly owned with the City of San Diego. Rental revenue decreased during the pandemic due to statewide closures; however, that revenue recovered quickly as businesses were able to reopen and the popularity of the outdoor recreation and golf industry skyrocketed.
The City Treasurer's office invests surplus funds according to the City's Investment Policy. In FY2020/21 and FY2021/22 the City received additional interest income of $8.5 million as part of the repayment of the Successor Agency Advance.
The loan was paid in full in FY2021/22.
Other revenue accounts for all other revenue received during the fiscal year not already accounted for in other categories of revenue.
FY2019 FY2020 FY2021 FY2022 FY2023
Permits and Licenses $0.9 $0.9 $2.4 $2.2 $2.0
4.0%
163.7%
-11.4% -7.3%
PERMITS AND LICENSES
(IN MILLIONS)
FY2019 FY2020 FY2021 FY2022 FY2023
Fines and Forfeitures $1.3 $1.1 $0.9 $0.9 $0.7
-11.1%
-23.0% 1.9% -17.2%
FINES AND FORFEITURES
(IN MILLIONS)
Attachment "1"
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City of Escondido Fiscal Year 2022/23 Financial Status Report
7 GENERAL FUND OPERATING EXPENDITURES
The FY202 2/23 General Fund Operating Budget increased by approximately $ 6.6 million or 6% compared to the FY2021/22 revised Operating Budget. In order to address an $8.5 million budget deficit, reductions were made to the proposed operating budget including: reduction in the funding for Fleet Services, removal of new staff positions for Building Maintenance to provide City services that are unable to be outsourced, the management fee to the California Center for the Arts was reduced by $133,000, and alternative funding sources and reclassifications were proposed for fire equipment, Planning division professional services, a Grant Writer position, and Human Resources Analyst position.
As shown in the table below, actual expenditures are under budget by $670,030:
FY2022/23
ADOPTED
BUDGET
FY2022/23
AMENDED
BUDGET
ACTUAL
RESULTS
JUNE 2023
OVER / (UNDER)
AMENDED
BUDGET
General Government Services 6,517,960 6,713,645 6,579,410 (134,235) Community Services 9,693,430 10,099,310 9,980,300 (119,010) Development Services 7,509,830 7,969,195 7,020,260 (948,935) Public Works 12,543,700 13,254,245 13,265,910 11,665 Police 52,939,360 53,662,930 53,722,790 59,860
Fire 30,721,430 32,059,150 32,521,080 461,930
California Center for the Arts 2,480,730 2,480,730 2,836,890 356,160 Other Expenditures 2,780,490 2,331,795 1,974,330 (357,465) TOTAL OPERATING EXPENDITURES $125,186,930 $128,571,000 $127,900,970 ($670,030) The City continues to be impacted by a competitive labor market , as a result of recurring vacant positions and long recruitment efforts there are expenditure savings in regular salary and benefits of $3,616,810. However, the vacant positions have also increased the overtime expenditures which are at 119% of the amount budgeted for the fiscal year.
The increase in overtime expenses is offset by the savings in employee services.
FY2022/23
ADOPTED
BUDGET
FY2022/23
AMENDED
BUDGET
ACTUAL RESULTS
JUNE 2023
OVER / (UNDER)
AMENDED BUDGET
Employee Services 105,633,530 106,819,220 103,774,860 (3,044,360) Maintenance & Operations 20,738,830 22,259,750 24,090,738 1,830,988 Internal Services 16,422,590 16,422,590 16,422,590 -
Allocations (18,228,140) (18,228,140) (17,165,938) 1,062,202 Capital Outlay 600,000 1,277,460 758,680 (518,780)
Loan Expense 620,120 620,120 620,040 (80)
Cost Savings Reduction (600,000) (600,000) (600,000) 600,000 TOTAL OPERATING EXPENDITURES $125,186,930 $128,571,000 $127,900,970 $(670,030)
Attachment "1"
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City of Escondido Fiscal Year 2022/23 Financial Status Report
8 The following table shows each department’s operating expenses compared to the amended budget for FY2022/23:
FY2022/23
ADOPTED
BUDGET
BUDGET
ADJUSTMENTS*
FY2022/23
AMENDED
BUDGET
ACTUAL
RESULTS
JUNE 2023
OVER /
(UNDER)
AMENDED
BUDGET
City Council 345,510 - 345,510 353,390 7,880 City Manager 1,296,630 225,845 1,522,475 1,629,520 107,045 City Attorney 147,870 23,360 171,230 205,300 34,070 City Clerk 640,840 8,845 649,685 622,410 (27,275) City Treasurer 213,080 1,085 214,165 284,380 70,215 Finance 1,425,700 34,380 1,460,080 1,646,970 186,890 Human Resources 745,520 14,160 759,680 654,930 (104,750) Risk Management (50,000) 2,730 (47,270) (148,360) (101,090) Information Systems Admin 501,350 12,500 513,850 473,480 (40,370) Enterprise Software & Web Adm 719,320 36,880 756,200 581,140 (175,060) Geographic Information Systems 368,040 - 368,040 276,250 (91,790) TOTAL GENERAL GOVERNMENT SERVICES $6,353,860 $359,785 $6,713,645 $6,579,410 $(134,235) *Budget adjustments include FY2021/22 Carryovers of $227,740 and a budget reallocation from the Non -Departmental Contingency Fund for Retirement and Vacation payoffs.
FY2022/23
ADOPTED
BUDGET
BUDGET
ADJUSTMENTS*
FY2022/23
AMENDED
BUDGET
ACTUAL
RESULTS
JUNE 2023
OVER /
(UNDER)
AMENDED
BUDGET
Recreation 4,133,780 223,880 4,357,660 4,188,000 (169,660) Main Library 3,661,960 - 3,661,960 3,661,950 (10) Older Adult Services 691,580 3,020 694,600 693,610 (990) Senior Nutrition 465,700 1,620 467,320 467,150 (170) Video Services 164,100 - 164,100 145,230 (18,870) Communications 740,410 13,260 753,670 824,360 70,690 TOTAL COMMUNITY SERVICES $9,857,530 $241,780 $10,099,310 $9,980,300 $(119,010) *Budget adjustments include FY2021/22 Carryovers of $ 37,390 a budget reallocation from the Non -Departmental Contingency Fund for Retirement and Vacation payoffs, and an increase of $157,760 for the After-School Program (offset by additional revenue).
FY2022/23
ADOPTED
BUDGET
BUDGET
ADJUSTMENTS*
FY2022/23
AMENDED
BUDGET
ACTUAL
RESULTS
JUNE 2023
OVER /
(UNDER)
AMENDED
BUDGET
Planning 2,103,050 56,765 2,159,815 1,895,100 (264,715) Code Compliance 1,063,970 1,080 1,065,050 865,140 (199,910) Engineering 2,840,680 241,970 3,082,650 2,731,690 (350,960) Building 1,502,130 159,550 1,661,680 1,528,330 (133,350) TOTAL DEVELOPMENT SERVICES $7,509,830 $459,365 $7,969,195 $7,020,260 $(948,935) *Budget adjustments include FY2021/22 Carryovers of $ 23,280 a budget reallocation from the Non -Departmental Contingency Fund for Retirement and Vacation payoffs , an increase of $42,000 for the Short-Term Rental consulting agreement (offset by additional revenue), and $346,060 for Engineering and Building Department Professional Services contracts.
Attachment "1"
182
Item15.
City of Escondido Fiscal Year 2022/23 Financial Status Report
9 FY2022/23
ADOPTED
BUDGET
BUDGET
ADJUSTMENTS*
FY2022/23
AMENDED
BUDGET
ACTUAL
RESULTS
JUNE 2023
OVER /
(UNDER)
AMENDED
BUDGET
Street Maintenance 8,696,930 613,995 9,310,925 9,172,080 (138,845) Park Maintenance 3,866,770 96,550 3,963,320 4,106,980 143,660 Radio Communications (20,000) - (20,000) (13,150) 6,850 TOTAL PUBLIC WORKS $12,543,700 $710,545 $13,254,245 $13,265,910 $11,665 *Budget adjustments include FY2021/22 Carryovers of $ 677,460 and a budget reallocation from the Non -Departmental Contingency Fund for Retirement and Vacation payoffs.
FY2022/23
ADOPTED
BUDGET
BUDGET
ADJUSTMENTS*
FY2022/23
AMENDED
BUDGET
ACTUAL
RESULTS
JUNE 2023
OVER /
(UNDER)
AMENDED
BUDGET
Police Department 52,939,360 723,570 53,662,930 53,722,790 59,860 Fire Department 30,721,430 1,337,720 32,059,150 32,521,080 461,930 TOTAL PUBLIC SAFETY $83,660,790 $2,061,290 $85,722,080 $86,243,870 $521,790 *Budget adjustments include FY2021/22 Carryovers of $ 883,790, a budget reallocation from the Non -Departmental Contingency Fund for Retirement and Vacation payoffs, an increase of $279,300 to account for negotiated salary increases for the Police Officers Association, an increase of $22,270 to account for negotiated salary increases for the Firefighters Association, CalOES Strik e Team Expenses of $605,720 (offset by revenue), and $458,830 to fund the administrative fee for the Ground Emergency Medical Transportation Program.
FY2022/23
ADOPTED
BUDGET
BUDGET
ADJUSTMENTS
FY2022/23
AMENDED
BUDGET
ACTUAL
RESULTS
JUNE 2023
OVER /
(UNDER)
AMENDED
BUDGET
TOTAL OTHER EXPENSES $2,780,730 ($441,515) $2,331,795 $1,974,330 ($357,465) *Budget adjustments include a budget reallocation from the Non -Departmental Contingency Fund to other General Fund Departments for Retirement and Vacation payoffs and an increase of $78,480 for the ProjectDox software Contract.
FY2022/23
ADOPTED
BUDGET
BUDGET
ADJUSTMENTS
FY2022/23
AMENDED
BUDGET
ACTUAL
RESULTS
JUNE 2023
OVER /
(UNDER)
AMENDED
BUDGET
CALIFORNIA CENTER FOR THE ARTS $2,480,730 $- $2,480,730 $2,836,890 $356,160 The California Center for the Arts department budget includes utilities expenses from San Diego Gas and Electric, which excee d the budget amount by $356,160.
Attachment "1"
183
Item15.
City of Escondido Fiscal Year 2022/23 Financial Status Report
10 GENERAL FUND RESERVES
In December 2015, City Council adopted a Fund Balance Policy and established a General Fund target Reserve balance of 25% of General Fund operating revenues in order to maintain adequate levels of fund balance based . This goal is based on a risk-based analysis to mitigate current and future risks, adequately provide for cash flow requirements, and to fund one-time unanticipated expenditure requirements.
Total General Fund budgeted operating revenue in FY2022/23 is $119,929,230 and 25% of this amount is $29,982,308.
The current General Fund Reserve balance is $17,392,319, or 15% of budgeted operating revenue, which is below the identified acceptable risk-based analysis adopted by City Council and general government practices.
Section 115 Irrevocable Pension Trust Fund
In February 2018, City Council authorized the establishment of a Section 115 Irrevocable Pension Trust Fund. The Trust Fund is used to set aside and hold money to meet future pension liabilities and can be used to provide economic relief during recessionary cycles and/or rate increases that are significantly above anticipated projected employee rate increases. Funds placed in this Trust can also be used to offset the City’s “normal” CalPERS costs, such that if funds are necessary for other purposes, a certain amount of flexibility is present. Another benefit is that funds held in the Trust can be invested in the same manner as funds in a typical pension fund rather than as part of the City’s General Fund, which means a potentially higher rate of return.
When the Pension Trust Fund was established, a funding policy for contributions to the Fund was recommended and included the four years of annual Successor Agency Redevelopment Loan Repayments of $14 million that began in FY2018/19, future proceeds from the sale of City Property belonging to the General Fund, and a portion of General Fund surplus at the end of each fiscal year, if one exists. On December 7, 2022, City Council approved the transfer of the FY2021/22 Successor Agency Redevelopment Loan Repayment of $ 2,194,370 and the remaining net resources from the FY2021/22 yearend operating results of $4,656,850.
On June 30 , 2023 , t he Section 115 Pension Trust Fund ha d a balance of $ 31,788,595.96 which include d City contributions of $31,257,650 plus investment earnings net of expenses of $ 530,945.96. The Trust Fund has a 3-year rate of return of 1.91% and a 1-year rate of return of 4.55%.
The following table provides a summary of the activity since the establishment of the Trust Fund.
Section 115 Pension Trust Fund
Initial Deposit – General Fund $1,984,000
General Fund Operating Results (5 years) 20,705,235
Successor Agency Advance Repayments 8,568,415
Investment Earnings, net of expenses 530,945
Balance as of June 30, 2023 $31,788,595
Attachment "1"
184
Item15.
City of Escondido Fiscal Year 2022/23 Financial Status Report
11 WATER FUND
The Water Fund ended the fiscal
year with net revenue of $11. 6
million, a n in crease of $ 377,780
compared to the prior year.
Water usage charges decreased
compared to the prior year.
Operating expenses also
decreased due to the amount of
purchased water needed in the
fiscal year.
The City has agreed to set charges
for water services each year at
rates sufficient to produce net
revenues (after paying ope rating
and maintenance expenses,
excluding depreciation, GASB 68 pension accounting entries and interest) of at least 1. 20 times debt services on the bonds. As shown in the chart above, the City has met this debt service coverage in both fiscal years. Excess net revenues are used to fund ongoing capital expenditure projects needed to maintain the City’s water system infrastructure.
WASTEWATER FUND
The Wastewater Fund ended
the fiscal year with net revenue
of $ 11.5 million, a decrease of
$3.4 million compared to the
prior year. This was primarily
the result of a decrease in
wastewater charges for
services, offset by increases in
Utilities and general operating
expenses.
The City has agreed to set
charges for wastewater services
each year at rates sufficient to
produce net revenues (after
paying operating and
maintenance expenses, excluding depreciation, GASB 68 pension accounting entries and interest) of at least 1.15 times debt services on the bonds. As shown in the chart above, the City has met this debt service coverage in both fiscal years. Excess net revenues are used to fund ongoing capital expenditure projects needed to maintain the City’s wastewater system infrastructure.
FOR MORE INFORMATION
This summary report is based on detailed information generated by the City’s Finance department. If you have any questions or would like additional information on this report, please contact the Finance department at (760) 839 - 4676 or visit www.escondido.org
ACTUAL
RESULTS
JUNE 2023
ACTUAL
RESULTS
JUNE 2022
PRIOR YEAR VS
CURRENT YEAR
Operating Revenues $68,184,223 $74,725,288 ($6,541,065) Operating Expenses (56,547,773) (63,466,618) 6,918,845
Net Operating Income $11,636,450 $11,258,670 $377,780
Amount Required for Long-Term Debt Obligations:
Debt Service Payments $5,554,152 $4,512,451
Coverage Required 1.20 1.20
Amount Required 6,664,982 5,414,942
Excess of Net Revenues $4,971,468 $5,843,728
ACTUAL
RESULTS
JUNE 203
ACTUAL
RESULTS
JUNE 2022
PRIOR YEAR VS
CURRENT YEAR
Operating Revenues $39,970,939 $42,923,368 ($2,952,429) Operating Expenses (28,448,441) (28,017,969) (430,472)
Net Operating Income $11,522,498 $14,905,399 ($3,382,901) Amount Required for Long-Term Debt Obligations:
Debt Service Payments $3,716,802 $5,673,346
Coverage Required 1.15 1.15
Amount Required 4,274,322 6,524,347
Excess of Net Revenues $7,248,176 $8,381,052
Attachment "1"
185
Item15.
KEY-
CONSENT CALENDAR CURRENT BUSINESS
PUBLIC HEARING WORKSHOP
10/18/2023
PUBLIC HEARING - (A. MORROW) - PROPOSED WATER, WASTEWATER, AND RECYCLED WATER RATE ADJUSTMENTS - Request the City Council adopt Resolution No. 2023-131, approving a five-year adjusted water, wastewater, and recycled water rates and fees structure to fund future Utilities maintenance and operations, and capital improvements.
CURRENT BUSINESS - (J. AXELROD) - AQUATICS FACILITY DESIGN - Request the City Council select and approve an Aquatics Facility concept to commence design and direct staff to return with funding options. 10/25/2023
CONSENT CALENDAR - (E.VARSO) - FY 2022-23 REGIONAL REALIGNMENT RESPONSE GRANT AND BUDGET ADJUSTMENT - Request the City Council Adopt Resolution No. 2023-118 authorizing the Chief of Police to accept a FY 2022-23 Regional Realignment Response Grant in the amount of $80,000 from the State of California Board of Community Corrections; authorize the Chief of Police or his designee to execute grant documents on behalf of the City; and approve budget adjustments needed to spend grant funds.
CONSENT CALENDAR - (C. MCKINNEY) - PL23-0267 - GENERAL PLAN AMENDMENT FOR SPECIFIC PLANNING AREA ("SPA")13 - It is requested that the City Council authorize the processing of an amendment to the General Plan Land Use and Community Form chapter to modify the residential area overlay of the Imperial Oakes Corporate Center - Specific Planning Area 13.
CURRENT BUSINESS - (E.VARSO) - MASSAGE PARLOR ORDINANCE UPDATE CURRENT BUSINESS - (Z. BECK) - NORTH COUNTY DISPATCH JPA APPOINTMENT - Request the City Council appoint a primary and alternate member to the North County Dispatch JPA Board of Directors.
CURRENT BUSINESS - (J. SCHOENECK) VINEHENGE UPDATE - Request the City Council approve staff’s recommendation to remove/replace/preserve/ the Vinehenge play structure in Grape Day Park.
186
Item16.