CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
2/28/2022
1 SUBJECT:
Quarterly Financial Report for the quarter ending December 31, 2021.
RECOMMENDED ACTION:
Review and accept the Quarterly Financial Report for the quarter ending December 31, 2021.
STAFF CONTACT:
Yulia Carter, Chief Financial Sustainability Officer
(650) 738-7402
[email protected] <mailto:[email protected]>
BACKGROUND/DISCUSSION:
Fiscal Sustainability remains one of the City Council Strategic Goals, which includes planning for and implementing long-term financial health and stability. A key component of this goal includes preparing a quarterly financial report that would provide readers with an executive summary of the City’s current economic conditions related to the annual operating budget.
Staff is pleased to implement the new financial reporting practice on a quarterly basis that started last quarter to ensure accountability and transparency in managing public funds. This work is especially meaningful as we are monitoring the effects of the COVID-19 pandemic on the local economy and the City’s financial health.
On June 28, 2021, the City Council adopted the structurally balanced FY 2021-22 Budget that included the revenue assumptions going into the second year of the COVID-19 pandemic.
However, as the COVID situation is still uncertain, it is particularly critical to continue monitoring the City’s financial position at the end of each quarter.
Finance staff has completed the second quarter of the Fiscal Year 2021-22. The Second Quarter Financial Report summarizes the City’s General Fund and is not meant to be inclusive of all finance and accounting transactions. This report intends to provide the Council and the public with a broad overview of the City’s fiscal condition, as the General Fund is the primary operating fund of the City and is used to account for most operational activities.
This report provides an update on the financial status of the City’s General Fund by outlining the revenues and expenditures for the quarter ending December 31, 2021.
The General Fund is the City’s primary operating fund and is used to account for day-to-day activities. It receives unrestricted revenues and provides the City’s general administrative services, law enforcement, fire, public works, parks, beaches and recreation, and community development-related activities such as planning, building, and engineering. Revenue sources include but are not limited to property tax, sales tax, transient occupancy tax (TOT), business registration, and current fees for services such as parking charges, engineering, planning, and Pacifica City Council 2
February 28, 2022
building permit fees, and recreation services.
The Second Quarter Financial Report for the City of Pacifica provides the financial status update of the City’s General Fund by outlining the revenues and expenditures for the Second Quarter of the fiscal year, ending December 31, 2021. The Financial Report is prepared on a cash basis; therefore, only the revenue received by December 31, 2021, is reflected in the analysis. Likewise, expenditures are recorded when paid using the cash basis method of accounting.
With the completion of the Second Quarter, General Fund Revenues were at $21.0 million (53% of budget), and Expenditures were $19.6 million (51% of budget).
General Fund Operating expenditures, including outstanding purchase orders and encumbrances, are on target at the end of the Second Quarter, although total expenditures increased over the Second Quarter of the prior year. This is primarily due to higher salaries and benefits related to implementation of new MOU provisions and timing of filling vacancies. Some City department expenditures are slightly lower than prior year Second Quarter, mainly due to the timing of payments for goods and services and lower salaries and benefits due to the timing of filling vacancies in those departments.
Overall, the FY2021-22 Budget appears to be on track with revenues and expenditures performing as expected. The City’s operating expenditures are at 51% of the budget at the end of the second quarter. The slight increase in expenditures from prior year quarter is mainly attributable to salaries and benefits, including public safety staff overtime. These are only preliminary numbers as additional booking entries may occur throughout the year and during the fiscal year-end that may modify some figures presented in this report. However, overall it is encouraging that the budget appears to be on target at the end of the second quarter. Staff will use the data presented in this quarter for a more in-depth FY 2021-22 Mid-Year Budget review that is currently underway and will be presented to Council in a subsequent meeting.
ALTERNATIVE ACTION:
There is no reasonable alternative to this informational item, as not accepting the 2nd Quarter Financial Report will not change the City’s financial condition as of the end of the quarter ending December 31, 2021.
RELATION TO CITY COUNCIL GOALS AND WORK PLAN:
This item furthers the City’s efforts toward Fiscal Sustainability.
FISCAL IMPACT:
There is no fiscal impact associated with the Council’s acceptance of this report.
ORIGINATED BY:
City Manager's Office
ATTACHMENT LIST:
Pacifica City Council 3
February 28, 2022
Attachment 1 - Quarterly Financial Report for the quarter ending December 31, 2021 (DOCX)