3/24/24 DRAFT
Measure K Transaction and Use Tax Oversight Committee
May 6, 2024
To: Pleasant Hill City Council
From: Measure K Oversight Committee
Re: Measure K Oversight Committee’s Report on the Measure K Transaction and Use Tax for Fiscal Year (FY) 2022-23
Pleasant Hill voters passed Measure K, a 20-year ½ cent transaction and use tax (TUT) in November 2016. The TUT commenced on April 1, 2017, with a stated purpose “to provide and maintain Pleasant Hill City services and facilities, including fixing potholes, and repairing neighborhood and city streets; replacing the aging library with a 21st century facility, including space for afterschool homework and tutoring; creating additional walking and biking paths; maintaining storm drains; and other city services”.
On February 6, 2017, the City Council established a "Transaction and Use Tax Oversight Committee” – known as the Measure K Oversight Committee, whose primary duties are to review revenue and expenditure reports produced by City staƯ and to determine whether the revenues are expended eƯiciently and eƯectively; to make recommendations if needed, along with an annual report to the City Council. In reviewing expenditures of Measure K funds for FY2022-23 the Committee met three times.
On December 19, 2023, the Committee received a detailed report from staƯ on the unaudited FY 2022-23 revenues and expenditures along with a summary of all Measure K revenues and expenditures since its inception. The committee was able to question staƯ on revenues as well as expenditures for the library along with other eligible activities (streets and roads, pedestrian and bicycle, storm drain improvements, and administration). At that meeting a sub-committee was established to meet with Finance Department staƯ to review a sample of individual transactions for compliance with the Measure.
On January 5 the sub-committee met with Erick Cheung, City Finance Manager, to review the process. The sub-committee was subsequently provided with the Measure K fund ledger. After selecting a sample of six transactions, which included transfers, vendor payments and corrective journal entries, the sub-committee returned to City Hall on January 18. They reviewed the source documentation and discussed the overall process along with project specific questions with Ross Yangwas and Ann James as needed.
The subcommittee found all the transaction reviewed to be appropriate, properly approved, and consistent with Measure K. In total, the 6 transactions represented 28% of the overall fiscal year expenditures.
On March 19 the full committee met again to receive a report on the final FY 2022-23 Measure K audit presented by Jon Waller from the City’s auditors Macias Gini and O’Connell (MGO). City staƯ and MGO staƯ responded to questions from committee members. The committee then reviewed and approved a report from the sub-committee summarizing its transaction review findings. The Chair was then asked to prepare a draft of the required annual report to the City Council for subsequent review and approval at the third committee meeting on April 26, 2024.
Revenue and Expenditure Summary for FY2022-23
Beginning Measure K Balance $10,190,465
FY 2022-23 Revenues: $5,693,891
Expenditures:
Library Construction: $3,738,878
Library Maintenance: $ 169,914
Ped/Bike $ 509,600
Streets & Roads $3,903,400
Storm Drain $ 535,121
Other/Admin $ 77,559
Debt Service $2,492,372
Total Expenditures $11,426,844
Ending Fund Balance: $4,457,512
Summary
In making its recommendation to the Council, the Committee relies on the following:
(1) The presentation by City staƯ to the Committee on December 19, 2023, on the overall revenues and expenditures along with questions, discussion and explanations as needed; and
(2) The sub-committee’s work in January meeting with City staƯ and reviewing the Measure K ledger and independently analyzing selected transactions (i.e. invoices and transfers); and
(3) The March 19, 2024, presentation of the Measure K financial statements for FY2022-23 by MGO which concluded that the statements “presented fairly in all material respects the financial position of the Fund as of June 30, 2023, and changes in its financial position for the year then ended”.
Conclusion
The Measure K Oversight Committee concludes that Measure K revenues were expended “eƯiciently and eƯectively” during FY 2022-23. The Committee wishes to thank the Finance and Engineering staƯ for their professionalism, assistance, and clarity in responding to the Committee’s inquiries.
Respectfully submitted.
Paul Maxwell
Chair, Measure K Oversight Committee