Fremont City Council Meeting: 11/12/24 07:00 PM
3300 Capitol Avenue Div/Dept: Finance Department
Fremont, CA 94538 Category: Presentations
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5286) DOC ID: 5286
Updated: 11/7/2024 3:06 PM by Dina Lewis Page 1
FISCAL YEAR 2023/24 YEAR-END BUDGET REPORT - Informational Report and Presentation of Year-End Results for FY 2023/24
Contact Persons:
Name: David Persselin
Title: Finance Director
Div/Dept: Finance Department
Phone: 510-494-4631
E-Mail: [email protected]
Executive Summary: The FY 2023/24 Year-End Budget Report provides a summary of actual operating results for the General Fund and identifies appropriation actions taken by the City Manager in accordance with Resolution No. 2023-36, a Resolution of the City Council of the City of Fremont Approving and Adopting a Budget for the Fiscal Year July 1, 2023, through June 30, 2024 (the “Budget Resolution”).
BACKGROUND: The FY 2023/24 operating budget was adopted by the City Council on June 13, 2023, and year-end estimates for General Fund revenues, expenditures, and ending fund balance were included with the FY 2024/25 Proposed Operating Budget presented to the City Council on May 14, 2024.
The audit of the City’s FY 2023/24 financial statements by an independent certified public accounting firm is underway, and the annual comprehensive financial report, including the audited financial statements, is expected to be available by December 31, 2024. To provide the City Council with more timely information about the year just completed, staff has prepared the following information using unaudited amounts. Staff will report on any material audit adjustments at the time the annual comprehensive financial report is provided to the City Council.
DISCUSSION/ANALYSIS:
General Fund Operating Results: General Fund revenues and transfers in, totaling $259.7 million, are $4.4 million higher than the final budget estimate of $255.3 million. This is primarily due to increased interest earnings and federal reimbursements to compensate the City for emergency expenditures during the Covid pandemic and costs of repairing 2023 winter storm damage. The final budget estimate and actual revenues reflect the State’s recovery of half of the sales tax it overpaid the City in FY 2022/23. The recovery of the second half of the overpayment, approximately $9.7 million, was included in the FY 2024/25 adopted operating budget.
General Fund expenditures and transfers out of $268.3 million were $5.5 million lower than the final budget of $273.8 million. Total actual expenditure savings exceeded the $22.1 million estimate included in the final budget; the additional $5.5 million of savings resulted primarily from a true-up in departmental allocations to the Information Technology Operations internal service fund. Encumbrances, reflecting the portion of the fund balance that has been contractually obligated but not yet spent, total $1.5 million.
Council Staff Report (ID # 5286) Meeting of November 12, 2024 Updated: 11/7/2024 3:06 PM by Dina Lewis Page 2
As part of the FY 2023/24 adopted operating budget, the General Fund Contingency Reserve was increased by $4.7 million to meet the Council-adopted policy requirement of 16.7% of budgeted expenditures and transfers out, or $46.4 million. However, in July 2023 the City Council reallocated $3.4 million of the Contingency Reserve to begin repair work on City infrastructure that was damaged by the winter storms, with the expectation that a portion of those costs would be reimbursed by the federal government.
Also included in the adopted operating budget was an increase of $7.5 million in the General Fund Budget Uncertainty Reserve. As part of the Midyear Budget Report in March 2024, anticipating the use of the reserve in FY 2023/24 and FY 2024/25 to offset the temporary reduction in sales tax revenue, the City Council transferred $10 million from the accrued leave liability reserve to increase the Budget Uncertainty Reserve to $30 million. The Budget Uncertainty Reserve is projected to end FY 2023/24 with a balance of $24.2 million.
The difference between sources of $282.8 million and uses of $269.8 million results in a net reserve increase of $13.0 million from the FY 2022/23 ending balances ($1.3 million to the Contingency Reserve and $11.7 million to the Budget Uncertainty Reserve).
The table below provides a summary of the final budget and the actual year-end results.
Appropriation Actions by the City Manager: The Resolution adopted by the City Council to implement the annual operating budget also includes authorization for the City Manager to take additional appropriation actions reflecting the following: (1) carryover of unexpended prior-year encumbrances; (2) cost center revenue increases; (3) grant revenue increases; and (4) increased General Fund revenue directly supported by General Fund Council Staff Report (ID # 5286) Meeting of November 12, 2024 Updated: 11/7/2024 3:06 PM by Dina Lewis Page 3
expenditures. Included in the Resolution are requirements to report these actions to the City Council at year-end.
The amount of increased appropriations for FY 2023/24 due to unexpended FY 2022/23 encumbrances was $36.7 million as detailed below.
Fund Type Encumbrances
Governmental Funds
General Fund $ 1,226,334
Capital Projects 14,125,710
Gas Tax 1,159,357
Environmental Services 612,509
Development Cost Center 338,382
Miscellaneous 1,029,783
Subtotal 18,492,075
Reimbursement Grant Funds 14,697,633
Internal Service and Custodial Funds 3,490,941
Total $ 36,680,648
Additional grant, donation, developer contribution, and fee revenue resulted in increased appropriations by the City Manager as summarized in the following table.
Source Amount Recipient Purpose
State Grants $ 500,000 Human Services Housing Navigation Center State Grants 9,403 Environmental Services Recycling Program Federal Grants 500,000 Human Services Housing Navigation Center Federal Grants 149,961 Human Services Housing Support Services Federal Grants 87,169 Fire Department Hazardous Materials Equipment Private Donations 97,000 Human Services Family Resource Center Developer Contributions 800,000 Human Services Homeless Services County Service Fees 749,572 Human Services Housing Navigation Center County Service Fees 220,449 Human Services Senior Services Total $3,113,554
FISCAL IMPACT: None.
ENVIRONMENTAL REVIEW: Action on this item is exempt from the requirements of the California Environmental Quality Act (CEQA) per CEQA Guidelines Section 15378(b), as an administrative and/or fiscal activity that does not involve commitment to a specific project that will result in any significant physical impact on the environment.
ATTACHMENTS: None.
RECOMMENDATION: Accept the report and presentation.