Agenda Report
Fullerton City Council
MEETING DATE: NOVEMBER 15, 2022
TO: CITY COUNCIL / SUCCESSOR AGENCY
SUBMITTED BY: Ellis chang, director of administrative services PREPARED BY: STEVEN AVALOS, BUDGET AND PURCHASING MANAGER
CINNDY BARRIOS, BUDGET ANALYST II
SUBJECT: FIRST QUARTER FISCAL YEAR 2022-23 FINANCIAL REPORT
SUMMARY
The First Quarter Financial Report (Q1 Report) provides an overview of the City’s financial position through the first three months, or first quarter, of Fiscal Year (FY) 2022-23. The Q1 Report compares General Fund revenues and expenditures incurred from July 2022 through September 2022 against the Adopted Budget.
RECOMMENDATION
Receive and file the First Quarter Financial Report for FY 2022-23.
CITY MANAGER REMARKS
Based on actions taken by City Council last year in working with city management, the City appears to be improving its fiscal position. A large part however, is due to still having a large position vacancy rate while attempting to fill multiple positions. While the vacancy rate has helped in the financial position, it has placed stress on the organization in delivering key services approved by City Council. Thus, the City Manager recommends that we continue to monitor as we are able to fill critical positions.
PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statement:
Fiscal and Organizational Stability.
FISCAL IMPACT
This report has no associated fiscal impact. Staff will use the information provided in these reports to ensure continued budgetary diligence and compliance with adopted budget levels through the end of the fiscal year.
DISCUSSION
Staff provides quarterly financial reports to City Council as part of the City’s budget monitoring and financial reporting practices. This provides a sound financial practice and fiscal transparency tool to report on the City’s ongoing fiscal condition, to identify and address any budget issues as they arise and to strengthen the City’s financial planning efforts. Quarterly reports provide a measurement of the City’s overall fiscal health and condition relative to adopted budget levels and keep City Council informed and updated regularly on the City’s financial condition.
The FY 2022-23 Q1 Report identifies all revenues received and expenditures incurred through the first quarter of the fiscal year, from July 1, 2022 through September 30, 2022, in comparison to adopted budget levels.
While assessing the fiscal condition of all City funds is important, the Q1 Report presents only the General Fund, the City’s chief operating fund that supports traditional municipal services such as public safety, community and economic development, parks and recreation and library community services and public works. Staff will present an update on all City funds at the Mid-Year Budget and Q2 Financial Report later in the fiscal year.
FY 2022-23 Q1 Review of General Fund (including Library and Parks and Recreation) General Fund revenues total $10.6 million and are at 9.3% of adopted revenues of $113.6 million through the first quarter of FY 2022-23. General Fund expenditures total $22.7 million and are at 19.8% of adopted expenditures of $114.3 million.
Revenues
While revenues appear low at 9.3% of adopted levels, revenues often comprise a small percentage of total revenues through the first quarter of the year. The City receives approximately 90% of its Property Tax, the City’s largest General Fund revenue source, in December and April when the County remits secured property tax rolls to the City. The City receives Sales Tax, the City’s second largest General Fund revenue, monthly (three months in arrears) and records only one sales tax installment during the 1st quarter of the fiscal year.
Plan Check and Development-related fees exceed revenue levels through the first quarter. Staff will present budget adjustments during the Mid-Year budget review if these revenues maintain this pace. Staff records other General Fund revenues, such as fees, charges and lease income when the City receives them, but these fees only constitute a small fraction of the City’s General Fund revenue base. Overall, General Fund revenues are at expected levels in the first quarter of the fiscal year.
Expenditures
Expenditures occur in a more linear fashion as the City processes payroll biweekly and processes invoices and bills on a weekly basis. Expenditures are at 19.8% of budgeted levels through the first quarter of FY 2022-23 and are currently about 80% of adopted budget projections due to higher than budgeted vacancy rates. Expenditures include recently approved employee salary increases for Police Officer Associations (POA) for both safety and dispatch employees and Police Management Association (PMA) approved in July 2022. Aside from POA and PMA salary increases, Public Safety salaries remain within adopted budget levels and may not require a Mid-Year adjustment. Staff will continue to monitor the budget and provide updates on the Q2 financial report.
Attachments 1 and 2 include the Q1 Revenue and Expenditure Schedules’ detail for the General Fund, respectively, for review and reference.
Next Steps
The City will have a better indicator of overall revenue and expenditure performance for FY 2022-23 in the next quarter financial report, better known as the Mid-Year Budget Report or Q2 Financial Report. Staff customarily presents any Mid-Year budget adjustments that may affect the current year’s financial outlook at this meeting. Staff anticipates bringing this item to City Council in February or early March 2023 and will assess the City’s fiscal position through the midpoint of the fiscal year.
Attachments:
Attachment 1 – FY 2022-23 Q1 Revenue Detail - General Fund Attachment 2 – FY 2022-23 Q1 Expenditure Summary by Fund and Department cc: City Manager Eric J. Levitt
Q1 FY 2022-23 Financial Report
November 15, 2022 - Page 2