Agenda Report
Fullerton City Council
MEETING DATE: NOVEMBER 21, 2023
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 FINANCIAL REPORT FOR FISCAL YEAR 2023-24
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) 2023-24. The Q1 Report compares General Fund revenues and expenditures incurred from July 2023 through September 2023 against the Adopted Budget.
RECOMMENDATION
Receive and file.
CITY MANAGER REMARKS
None.
PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statement:
Fiscal and Organizational Stability.
FISCAL IMPACT
This item generates no fiscal impact. Staff will use the information in these reports ensure budgetary diligence and compliance with adopted budget levels through the end of the fiscal year.
DISCUSSION
Staff provides quarterly financial reports on the current year budget to City Council as part of City 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 financial planning efforts. Quarterly reports provide a measurement of the 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 2023-24 Q1 Report identifies all revenues received and expenditures incurred through the first quarter of the fiscal year, from July 1, 2023 through September 30, 2023, 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 chief operating fund supporting municipal services such as public safety, community and economic development, parks and recreation, library services and public works. Staff will present an update on all City funds in the Q2 (or Mid-Year) Financial Report.
FY 2023-24 Q1 Review of General Fund (including Library and Parks and Recreation) General Fund revenues total $9.4 million or 7.8% of $120.7 million adopted revenues through the first quarter of FY 2023-24. General Fund expenditures total $26.9 million representing 22.2% of $120.9 million adopted expenditures.
Revenues
Revenues through the first quarter of the Fiscal Year typically appear low at 7.8% of adopted levels. The City receives approximately 90% of Property Tax, the largest General Fund revenue source, when the County remits secured property tax rolls to the City in December and April. The City receives Sales Tax, the second largest General Fund revenue source, three months in arrears and records only one sales tax installment in the first quarter of the fiscal year.
The City records other General Fund revenues, such as fees, charges and lease income, as it receives funds but these constitute a small fraction of the overall General Fund revenue base. General Fund revenue has decreased by 2.0% through the first quarter in FY 2023-24, compared to the same period last fiscal year. Staff attributes the decrease to fewer plan-check and development-related fees which may differ from year-to-year due to project timing. Staff anticipates a steady increase in these development-related revenues aligned with budgeted projections as developers complete projects throughout the fiscal year. The major property and sales tax revenues remain in line with budgeted projections through the first quarter.
Expenditures
Expenditures track in a more linear fashion as the City processes payroll biweekly and invoices weekly. Expenditures total 22.2% of budgeted levels through the first quarter of FY 2023-24 with a 2.4% increase in expenditures through the first quarter of FY 2023-24 compared to the same period last fiscal year. The employee bargaining group Memorandum of Agreements, approved last fiscal year and earlier this fiscal year and incorporated in the FY 2023-24 Adopted Budget, primarily attribute the increase. All other operating expenses track in line with budget levels through the first quarter.
Staff included the Q1 General Fund Revenue and Expenditure Schedules as Attachments 1 and 2, respectively, for review and reference. Staff will present any significant changes and further updates to revenues and expenditures in the Q2 (or Mid-Year) Financial Report.
Next Steps
The City will have a better indicator of overall revenue and expenditure performance for FY 2023-24 in the next quarter financial report, known as the Q2 Financial Report (or Mid-Year Budget Report) which provides an overview of the City’s fiscal position through the midpoint of the fiscal year. The Q2 Financial Report will also include an update on all City Funds. Staff customarily presents any mid-year budget adjustments that affect the current year financial outlook with this report, usually presented in February or early March.
Attachments:
Attachment 1 – FY 2023-24 Q1 Revenue Detail by Fund
Attachment 2 – FY 2023-24 Q1 Expenditure Summary by Department cc: City Manager Eric J. Levitt
Q1 Financial Report for FY 2023-24
November 21, 2023 - Page 2