Live, Work & Play
in Foster City
City of Foster City
Financial Services Dept.
Based on the strong results in FY 22/23 and continued growth trends, staff is increasing estimated FY 23/24 General Fund revenues by $1.03 million which will help alleviate a budgeted General Fund Deficit of $6.32 million
The adopted FY 23/24 General Fund budget (Funds
001 to 003) included a projected deficit of $6.32
million, inclusive of a $6.0 million transfer out to
the City’s Capital Improvement Projects Fund.
Due to the stronger FY 22/23 revenue results and
expected revenue growth trends for transient oc-
cupancy tax, sales tax, and business license tax,
City staff is increasing the total projected General
Fund revenues by $1.03 million.
Total General Fund Revenues (Funds 001 to 003)
in the 1st quarter were $4.33 million compared to
$8.74 million in FY 22/23. This is due primarily to
the 2nd and final tranche of American Rescue Plan
Act (ARPA) relief monies received
in FY 22/23 and
the larger amount of Pr operty Tax in-lieu of VLF
backfill last year vs. this fiscal year ($2.01 million vs $667,000 respectively).
It is important to note that the City’s revenues are
non-linear and are not receiv ed evenly by the City
over the course of the fiscal year. As an example,
most property tax revenues are paid by the Coun-
ty to the City in December and April. Since prop-
erty taxes account for over 60% of total General
Fund revenues, total first quarter revenues are
normally low, as is the case for the current fiscal
year. Notwithstanding, transient occupancy tax
(TOT), sales tax, and recreation program/class rev-
enues were $663,000, $ 294,000, and $819,000
respectively compared to the prior year’s results
of $489,000, $247,000, and $610,000. Recreation
Center program revenue for the 1st quarter was
$819,000, a $209,000 improvement from last year.
With the Federal Funds rate remaining at its cur-
rent 5.25% to 5.50% level and expectations of a
rate cut not occurring before May 2024, the City’s
FY 23/24 interest earnings will likely exceed last
year’s results.
General Fund expenditures (Funds 001 to 003) to-
taled $13.5 million or $6.6 million lower than the
prior year’s mark of $20.1 million. Due to the
City’s available investment yield of approximately
5.5%, staff opted not to pr epay this entire year’s
required unfunded accrued liability (UAL) to CalPERS
at the end of July and inst ead make its 12 monthly
payments. This amounted to a cash outflow differ-
ence of $5.67 million ($1.84 million vs. $7.51 million).
In addition, the City made just the 1st quarterly fund- ing payments of $2.29 million to SMC Fire Depart-
ment for the current fiscal year, but made both the
1st and 2nd quarterly funding payments totaling $4.36
million ($2.18 million for each quarter) in the 1st
quarter of the prior fiscal year. Wage COLA for FY
2023-24 increased by 4.2% for the POA bargaining
unit as well as the Manage ment unit. No COLA pay-
ment was made for the AFSCME unit in the 1st quar-
ter as that labor agreement wasn’t finalized until Oc-
tober 2023. In terms of th e first quarter’s perfor-
mance from a budget perspective, General Fund ex-
penditures were at 22.8% of the annual total.
Water Enterprise operating revenues were $468,000
higher than last year as water consumption and fixed
charges increased by 4.3% and 6.0% respectively. Op-
erating expenditures were $3.60 million or $265,000
higher than the same period last year. Wastewater
Enterprise Fund operating revenues totaled $3.43
million or 642,000 higher than the same period in the
prior year as base rates were increased by 3.0% ef-
fective July 1, 2023 primarily to fund debt service
costs associated with the District’s financing of its
$156 million share of the Wastewater Treatment
Plant (WWTP) Master Improvements project with
the City of San Mateo. Operating expenditures were
$1.37 million or $132,000 higher than the same peri-
od last year.
While the organization still has multiple staff vacan-
cies with recruitment being a high priority, we are
happy to have hired a new Administrative Services
Director overseeing Human Resources, Risk Manage-
ment, and Information Tec hnology. The projected
multi-year deficits, impacts from CalPERS’ negative
6.1% returns in FY 21/22 and a 5.8% return in FY
22/23, higher labor costs, and higher Recreation Cen-
ter rebuild costs are some of the challenges as City
staff begins the preparation of the FY 24/25 budget
and 5-year financial plan in the upcoming weeks.
Foster City Financial
Update FY 23/24 Q1