Interim Financial Report
Projected 12 months ended June 30, 2016
(95% of the year complete)
This interim report provide s an update on the status of the City’s finances as of June 30, 2016, the fourth quarter of Fiscal Year 201 5-16. It is important to n ote that these numbers are unaudited and subject to change. The Finance Division staff is currently undergoing the pr ocess of closing out Fiscal 2015-16 in preparation for the City’s annual audit. Staff analyzes all funds for accuracy and completeness while processing year end transactions. Audit adjustments and accruals that are yet to be receipted or expended, if not already encumbered, are omitted from this report and remain to be processed.
As established in the prior fiscal year, this report excludes the activities of the Rialto Utility Authority (RUA), which were previously reported in the interim reports prior to the Concession Agreement (CA) .
Rialto Water Services, LLC (RWS), under the Concession Agreement is preparing separate financial reports to be presented to Council on activities for RUA.
The table below shows Cityw ide Revenues and Expenditures through the fourth quarter. It includes budget adjus tments approved by Council through the fourth quarter, and rolled -forward purchase order en cumbrances from th e previous fiscal year. The $1.38M budget carry forward from the previous year, which the City Council approved in December, is reflected in these figures.
Adjusted
BUDGET
FY2015/2016
4th QTR
PROJECTED
FY2015/2016
Variance
Over/(Under) % Actual
Total City Revenues by Fund
General Fund 72,227,469 71,374,582 (852,887) 99% Working Capital Fund 44,000 76,767 32,767 174% Special Revenue Funds 43,636,927 20,740,009 (22,896,917) 48% Capital Projects Funds 24,563,261 24,974,504 411,243 102% Enterprise Funds 4,424,777 4,355,907 (68,870) 98% Internal Service Funds 7,843,214 7,719,118 (124,096) 98% Rialto Housing Authority 113,700 123,558 9,858 109% Rialto Successor Agency 15,815,969 16,692,827 876,858 106% Debt Service Funds 1,262,836 1,274,399 11,563 101% Total 169,932,153 147,331,671 (22,600,482) 87% Total City Expenditures by Fund
General Fund 80,110,461 74,204,434 (5,906,027) 93% Working Capital Fund - - - 0% Special Revenue Funds 70,453,843 27,053,056 (43,400,787) 38% Capital Projects Funds 50,905,083 11,047,120 (39,857,963) 22% Enterprise Funds 4,205,308 3,971,451 (233,856) 94% Internal Service Funds 9,232,622 6,188,512 (3,044,110) 67% Rialto Housing Authority 7,249,770 6,947,711 (302,059) 96% Rialto Successor Agency 32,575,518 30,286,049 (2,289,468) 93% Debt Service Funds 1,450,210 1,434,360 (15,850) 99% Total 256,182,814 161,132,693 (95,050,120) 63% Excess Revenues (Expenditures) (86,250,661) (13,801,023) City of Rialto
Budget Year 2015-2016
REVENUE & EXPENDITURE SUMMARY - ALL FUNDS
The General Fund budget comprises forty-two percent of the Citywide R evenues and thirty-one percent of C itywide E xpenditures. The following pages discuss the act ivities in the General Fund revenues and expenditures followed by a discussion of the activities in all other funds.
General Fund Revenues
On June 9, 201 5, Council adopted a general fund budget consisting of $67.7M of revenues. The general fund revenue budget was increased a total of approximately $4.5M. The adoption of the business license tax on wholesale liquid fuel storage facilities and Airport land sales proceeds are responsible for approximately seventy-seven percent of the general fund revenue budget increase.
The subsequent table outlines the changes in the FY201 5-16 general fund revenue budget sinc e adoption.
FY2015-16 GENERAL FUND REVENUE BUDGET
FY2015-16 Original Adopted Budget 67,691,785.00
Carry-Forward 529,423.00
CC MTG 7-28-15 RESO 6787 Kaiser Grant 10,000.00
CC MTG 8-25-15 RESO 6803 RUSD School Resource Officer 30,000.00 CC MTG 10-13-15 RESO 6834 Purchase and Sale Agreement APN#0240-241-10,38,56 50,000.00 CC MTG 12-08-15 RESO 6860 9-1-1 Equipment from State of CA 11,850.10 CC MTG 05-10-16 TAB 4 Mid-Year 1,511,041.00
CC MTG 06-28-16 TAB 11 Medi-Cal Intergovernmental Transfer Program 2,393,370.00 FY2015-16 Current Adjusted Budget 72,227,469.10
With ninety-five percent of the year complete actual revenues are at ninety-nine percent of budget, which is slightly above the prior fiscal year (due to a slightly delayed presentation ). Despite the budget-to-actual varian ce at the comple tion of the fourth quarter, staff anticipates General Fund revenues will continue to remain in accordance with budget as additional revenues are accrued during the recognition period. Variances and exceptions are discussed in further detail in the following paragraphs.
The Table below shows the General Fund revenues through the fourth quarter of FY2015-16:
Adjusted 4th QTR
BUDGET
FY2015/2016
PROJECTED
FY2015/2016
Variance
Over/(Under) % Actual
Taxes
Property Taxes 5,630,000 5,244,010 (385,990) 93% In Lieu Property Tax (VLF) 10,043,000 10,043,391 391 100% Sales Tax 10,147,750 9,236,209 (911,541) 91% In Lieu Property Tax (Sales Tax) 949,530 2,100,079 1,150,549 221% Utility Users Tax 13,080,000 12,620,908 (459,092) 96% Other Taxes 7,589,145 8,157,143 567,998 107% Taxes 47,439,425 47,401,740 (37,685) 100% Licenses & Permits 3,626,120 3,899,686 273,566 108% Fines, Forfeits & Penalties 574,800 545,896 (28,904) 95% Use of Money & Property 473,150 790,561 317,411 167% Revenue from Other Agencies 7,121,487 4,155,277 (2,966,210) 58% Charges for Current Services 6,882,500 6,613,569 (268,931) 96% Restricted Revenues - 81 81 0% RUA - Lease & Contract Payments 3,168,000 3,167,530 (470) 100% Other Revenues 745,600 1,021,154 275,554 137% Transfers - Pers Property Tax 200 219 19 110% Transfers In 2,196,187 3,778,869 1,582,682 172% Total General Fund Revenues 72,227,469 71,374,582 (815,202) 99%
GENERAL FUND - REVENUE SUMMARY BY CATEGORY
*For the above charts Fines, Forfeitures & Penalties, Use of Money & Property, and Res tricted Revenues are combined with Other Revenues and Transfers - Pers Property Tax and Transfers In are combined.
Utility User Tax – Through the end of the fourth quarter, current receipts reflect a $14K decrease over last year. Specifically due to the delay in scheduled rate increases in water and wastewater , along with the water conservation requirements imposed by the State of California . The receipts are in just below current year projections.
Sales Tax – In FY2015-16 projected Sales Tax Revenues exceeded the revised budget estimate by $239K although still a decrease from last year by $136K due t o the sale of a major sales tax provider resulting a change of sales tax desk location. The City has historically received Sales Tax for the 4 th Quarter into September of the following fiscal year. The City also received a final reimbursement of approximately $1M related to the reconciliation of the State of California’s Triple Flip program.
Accruals for Sales Tax were recorded as received.
Franchise fees – Non-departmental franchise reve nues through the end of the fourth quarter are in alignment with revenues for the prior fiscal year.
Business Licenses – In FY2015-16 Business Licenses Revenues are at 102% of budget through the end of the fourth quarter. Business License Revenue estimates were decreased from the original estimate due to staffing levels and Measure U.
Revenue From Other Agencies – In FY2015 -16 Council approved the City’s participation in the Medi-Cal Intergovernmental Transfer Program o n June 26, 2016 increasing estimated revenues by $2.4M. This creates the illusion of an over estimation of current-year revenue collections.
RUA Lease and Contract Payments – Based on the Concession Agreement, the General Fund realizes these revenues in the second and fourth quarters of each fiscal year. Previously, the City had recognized these payments in the first and third quarters.
Transfer revenues - The major revenues that transfer into the General Fund for this fiscal year are the Airport land sales proceeds and Gas Tax Transfer . The Airport transferred approximately $ 441K to the General Fund . The Gas Tax transfer is approximately $ 2.9M to cover transportation -related activities. The transfer amount is dependent on funds available in the Gas Tax Fund.
Overall, actual General Fund revenues appear to be in line with budget at this time, showing a sustained collections in receipts in relation to the fourth quarter of the last fiscal year. It is anticipated that, through the accrual process, act ual FY2015-16 General Fund revenues will c ollectively parallel the budget.
General Fund Expenditures
On June 9 , 201 5, Council adopted a general fund budget consisting of $ 72.5M of expenditures including $4.5M of reserve fund balance appropriated for capital projects . The general fund expenditure budget was increased a total of $7.6M. Authorized FY2014-15 purchase orders totaling $1.4M that were required to be carried forward increased FY2014-15 fund balance and increased the FY2015-16 expenditure budget. In addition, approximately $1.9M in capital projects and grant budget carried forward from FY2014-15, $2M in Medi-Cal Intergovernmental Transfer Program and Mid-Year adjustments of $1.5M are responsible for eighty-nine percent of the increase in the general fund expenditure budget. Overall, adjusted General Fund expenditures exceed the adjusted General Fund revenues by $7.9M due to the aforementioned budget adjustments. The following tabl e outlines the changes in FY2015-16 general fund expenditure budget since adoption.
FY2015-16 GENERAL FUND EXPENSE BUDGET
FY2015-16 Original Adopted Budget 72,532,245.00
PO Roll-Forward 1,371,244.56
Carry-Forward 1,913,888.00
CC MTG 7-28-15 RESO 6787 Kaiser Grant 10,000.00
CC MTG 7-28-15 RESO 6790 Fire Station 201 Remodel 25,000.00 B003 7-31-15 TRSF BGT IT PT STAFF 780-500-2152-2022 to 010-500-2154-1* 16,700.00 CC MTG 8-25-15 RESO 6810 Double Barrel Environmental (Hazardous Waste) 55,000.00 CC MTG 10-13-15 RESO 6834 Purchase and Sale Agreement APN#0240-241-10,38,56 50,000.00 CC MTG 11-10-15 RESO 6852 Additional Funding - Pool Deck Resurfacing Project 159,075.00 CC MTG 12-05-15 RESO 6860 9-1-1 Equipment from State of CA 11,850.10 CC MTG 12-05-15 RESO 6862 Purchase of eProcurement Software 25,000.00 CC MTG 01-12-16 TAB 6 Kratos Alarm Monitoring Services 22,000.00 CC MTG 01-26-16 TAB 6 SBVMWD Turf Removal Grant Match 209,453.00 CC MTG 03-22-16 E-3 Renewal of Nixle 360 Platform 23,000.00 CC MTG 03-22-16 E-4 2-Hot-Uniforms for Fire 42,450.00
CC MTG 03-22-16 TAB 3 New Generator Fire Station 201 46,810.00 CC MTG 04-26-16 TAB 6 Maintenance & Repairs Fire Department Apparatus 80,000.00 CC MTG 05-10-16 TAB 4 Mid-Year 1,518,320.00
CC MTG 06-28-16 TAB 11 Medi-Cal Intergovernmental Transfer Program 1,998,425.00 FY2015-16 Current Adjusted Budget 80,110,460.66
With ninety-five percent of the year complete, actual expenditures are at ninety-three percent of budget. The Table below illustrates General Fund Expenditures by category and shows actual expenditures to date totaling $74M for the fourth quarter. The table shows that operating expenditures are relatively in line with budget. Services & Supplies are below budget due to $4.4M of Medi-Cal Intergovernmental Transfer Program appropriations approved in June . The Capital Expenditures budget remains available, mostly due to the fact that the majority of the large capital projects are in the design or planning phases, and will incur most of their costs in the construction phase. The Others category includes the transfer for the Ge neral Fund fund balance reserve use of $4.7M (when including projects approved during the fiscal year) completed in the fourth quarter.
Adjusted 4th QTR
BUDGET
FY2015/2016
PROJECTED
FY2015/2016
Variance
Over/(Under)
%
Expended
Personnel 48,121,615 48,311,160 189,544 100% Services & Supplies 20,744,790 16,306,163 (4,438,627) 79% Legal Services 376,351 133,358 (242,993) 35% Capital 2,384,033 971,963 (1,412,070) 41% Debt Service 5,000 3,119 (1,881) 62% Others 8,478,672 8,478,672 0 100% Total General Fund Expenditures 80,110,461 74,204,434 (5,906,027) 93% Expenditures by Category
The table below examines General Fund expenditures by dep artment, illustrat ing that most departmental expenditures are in-line budget due to conservative adjustments made with Mid -Year budget review . Development Services expenditures are 78% of budget due to some contract services not yet utilized. The transfer for the General Fund fund balance reserve use appr oved with Mid-Year of $4.7M was completed during the fourth quarter.
Adjusted 4th QTR
BUDGET
FY2015/2016
PROJECTED
FY2015/2016
Variance
Over/(Under)
%
Expended
Department
City Administrator 711,313 718,813 7,500 101% City Council 433,611 457,954 24,343 106% City Clerk 516,475 452,562 (63,914) 88% City Treasurer 418,944 412,651 (6,293) 98% Adm Svc - Human Resources 781,134 673,601 (107,533) 86% Adm Svc - Finance 1,866,962 1,820,815 (46,147) 98% Development Services 4,770,228 3,702,041 (1,068,187) 78% Fire 19,027,197 17,357,874 (1,669,323) 91%
Management Services 613,404 608,098 (5,306) 99% Police 27,096,111 26,327,539 (768,572) 97%
Public Works 9,228,354 8,691,944 (536,410) 94% Non Departmental 14,646,726 12,980,541 (1,666,185) 89% Total Expenditures 80,110,461 74,204,434 (5,906,027) 93% Expenditures by Department
All departments have maintained their expenditures within budget. Some salary savings may be anticipated across the board due to vacant positions that remain unfilled.
General Fund Reserves
The City adopted a reserve policy which requires fifty percent of the budgeted General Fund expenditures to be reserved for contingencies. General Fund contingency reserves are used for cash flow to cover operational deficits throughout the year. The audited FY2014-15 General Fund reserve balance as of June 30, 201 4
was $ 59M. On June 9, 2 016,
City Council adopted a balanced
budget consisting of revenues
and ex penditures totaling
$67.7M. Factoring out the
($1.4M) of encumbered
purchase or ders that rolled to
FY2015-16, ( $1.4M) net carry
forward budget, and the ($287K)
remaining budget adjustments
through June 30, 201 6 the
FY2015-16 General Fund
reserve balance i s projected to
be $51M. The table to the left
illustrates that the projected
FY2015-16 available General
Fund reserve of $ 51M is
adequate to satisfy the fifty
percent, or $35M, reserve policy
restriction projecting forward for
FY2015-16. Accounting for t he $5M contingency reserve for future capital projects, and other non - spendable reserves of $ 1.5M the projected spendable balance for FY201 5-16 is $44.7M, which results in a reserve balance of $0.6M in excess of the policy restriction. In the FY16 -17 Budget, adopted June 14, 2016 , $4. 98M of the excess above the policy restriction has been allocated to capital projects and funding the Other Post-Employment Benefits (OPEB) unfunded liability.
General Fund 010 34,478,337
Working Capital 030 24,557,982
Total Audited Fund Balance at June 30, 2015 59,036,319
FY2015-16 Projected Operational Revenues 67,691,785
FY2015-16 Projected Operational Expenditures (67,833,370) FY2015-16 Capital Outlay Reserve Use (4,698,875)
FY2014-15 PO Rolls to FY2015-16 (1,371,245)
FY2014-15 Net Carry-Forward to FY2015-16 (1,384,465)
FY2015-16 Recorded Net Budget Adjustments as of June 30, 2016 (286,822) Projected Fund Balance at June 30, 2016 51,153,327
Less $5M Non-Operational Contingency Reserve (5,000,000) Less Advances to Other Funds (1,400,000)
Less Prepaid Expenses (13,919)
Less Inventory (64,051)
Non-Spendable Fund Balance (6,477,970)
Available Balance Before Policy Restriction June 30, 2016 44,675,357 Available Fund Balance 44,675,357
Less 50% Reserve Policy Restriction (34,745,718)
Available Balance Over/(Under) Policy Restriction June 30, 2016 9,929,639 FY16-17 Capital Outlay Reserve Use (7,401,282)
FY16-17 OPEB Reserve Use (1,848,030)
Available Balance Over/(Under) Policy Restriction June 30, 2017 680,327
City Wide All Other Funds
The remaining City funds are compose d of Special Revenue Funds, Capital Projects Funds, Enterprise Funds, Internal Service Funds and Debt Service Funds. The following section discusses the activities relating to these funds. As shown in the table below, the Special Revenue, Capital Projects and Rialto Successor Agency fund categories c omprise eighty-one percent of the budget , with the discussion focusing on those funds.
Current 4th QTR
BUDGET
FY2015/2016
PROJECTED
FY2015/2016
Variance
Over/Under
%
Actual
Total City Revenues by Fund
Special Revenue Funds 43,636,927 20,740,009 (22,896,917) 48% Capital Projects Funds 24,563,261 24,974,504 411,243 102% Enterprise Funds 4,424,777 4,355,907 (68,870) 98% Internal Service Funds 7,843,214 7,719,118 (124,096) 98% Rialto Housing Authority 113,700 123,558 9,858 109% Rialto Successor Agency 15,815,969 16,692,827 876,858 106% Debt Service Funds 1,262,836 1,274,399 11,563 101% Total 97,660,684 75,880,322 (21,780,362) 78% Total City Expenditures by Fund
Special Revenue Funds 70,453,843 27,053,056 (43,400,787) 38% Capital Projects Funds 50,905,083 11,047,120 (39,857,963) 22% Enterprise Funds 4,205,308 3,971,451 (233,856) 94% Internal Service Funds 9,232,622 6,188,512 (3,044,110) 67% Rialto Housing Authority 7,249,770 6,947,711 (302,059) 96% Rialto Successor Agency 32,575,518 30,286,049 (2,289,468) 93% Debt Service Funds 1,450,210 1,434,360 (15,850) 99% Total 176,072,353 86,928,259 (89,144,094) 49% Excess Revenues (Expenditures) (78,411,669) (11,047,937) City of Rialto
Budget Year 2015-2016
REVENUE & EXPENDITURE SUMMARY - ALL OTHER FUNDS
Special Revenue Funds - The funds in this grouping ar e restricted funds to be used for specific purposes. This funding category includes: Transportation -related funds such as Measure I and Gas Tax Funds; Development Impact Fees; Waste Management activities, Landscape & Lighting Special Districts, Police Asset Forfeitures and grant-related funds.
Development Impact Revenues of approximately $4M were collected through the fourth quarter.
Additional r eceipts for the quarter derive from Measure I, Gas Tax, Waste Management and grant revenue.
Special Revenue Fund expenditure budget is $ 70.5M, of which capital budget is $ 59M (84% of the budget). Actual capital expenditure s and encumbrances through the fourth quarter are $20M. The majority of capital project funding is derived from Measure I, Gas Tax, Development Impact fees and Community Development Block Grant (CDBG) . Capital budget will be expended under their approved project schedules.
Capital Projects Funds – Are used to account for and report financial resources that are restricted, committed, or ass igned to expenditure for capital outlays, including the acquisition or construction of major capital facilities and other capital assets . This group includes the Airport Revitalization, the General Fund fund balance reserves expenditures along with Fair Share Fee improvements.
Enterprise Funds – Enterprise funds are municipal services for which fees are charged in exchange for goods or services, such as Airport, Cemetary, Recreation & Community Services and Utility Services. As previously mentioned, the RUA activities have been excluded from this interim report, and will be reported in a separate report to Council.
Internal Service Funds – Internal service funds are established to account for any activities that provide goods or services to other funds o r departments on a cost-reimbursement or allocation basis.
Revenues are at 98% of budget and represent direct cost recoveries in expenditures for fleet services, information technology services (ITS), workers’ compensation and general liability.
Rialto Housing Authority - On November 4, 2003 the City Council established the Rialto Housing Authority (“Authority”) in accordance with California Health and Safety Code Section 34200 -34606.
The Authority enables the City to engage in affordable housing proje cts that includes new development or acquisition and rehabilitation of residential units. As of February 1, 2012, due to the dissolution of the Redevelopment Agency, the Authority assumed the Former Redevelopment Agency housing assets. The revenues colle cted this quarter are related to Former Redevelopment low and moderate income loan activities. At this point the expenditures are personnel related for administration of the Authority and debt related for the repayment of one of two HELP loans.
Rialto Su ccessor Agency – The funds in this grouping account for the dissolution of the Former Redevelopment Agency. The budgeted and actual items are a result of approval of the Recognized Obligation Payment Schedule by the Oversight Board and the Department of F inance. Actual expenditures consist primarily of capital outlay from the 2008A bond proceeds and debt paym ents from the Successor Agency.
Debt Service Funds – Includes the Sewer Community Facility District (CFD) 87-1, CFD 2006-1 and 2007 Refunding Cert ificates of Participation debt. Expenditures are typically made in August/September and again in February/March, based on the debt service amortization schedule.
Funding for the debt service derive s from tax assessments in the CFDs and also allocations t o various funds that benefited from the debt relating to the 2007 Refunding Certificates of Participation.
Capital Project Highlight
Bud Bender Park Improvement
The Special Events division and the City Clerk’s office held the Bud Bender Park Grand Re -Opening event on Saturday, May 21st. Two hundred and fifty (250) Rialto youth had the opportunity to participate in a baseball clinic hosted by the Los Angeles Dodger Alumni and staff. The event provided community members an opportunity to enjoy the newly renovated Bud Bender Park, visit the museum of memorabilia, volunteer with tree planting, fill a playground area with mulch, and enjoy free Rialto hot dogs, peanuts and kettle corn. The Rialto Historical Society provided residents information on the Rial to Adobe, and City staff hosted a booth with information on the new Community Garden. The collaborative event was highly anticipated by the members of the community and the park renovations will surely impress present and future park users.
Wal-Mart Supercenter
Construction continues for Wal -Mart’s new Supercenter at the southwest corner of Riverside Avenue and San Bernardino Avenue. Concurrent with construction of the new store, the City and Wal -Mart are widening all of the streets adjoining the site to improve customer access upon opening for business. NewMark Merrill expects to acquire the out -parcels and commence construction on the various retail and restaurant buildings
Cedar Avenue Storm Drain Improvements
The project will improve drainage facil ities at the Metrolink Railroad Crossing on Cedar Avenue. The volume of drainage conveyed at the crossing has increased significantly as a result of new development. The flooding during rainstorms from the deficient drainage has impacted the nearby Commerc ial Businesses. On February 10, 2015, City Council Awarded a Construction Contract to Downing Construction in the amount of $667,291 . The Notice of Completion was issued approved to be issued by Council on January 26, 2016.
San Bernardino, Willow, Riverside Avenues Improvements
The project will improve and widen the streets near the new Wal -Mart Site. Construction is ongoing and is currently undergoing a utility relocation on Riverside Avenue. Pavement improvements are ongoing on San Bernardino Aven ue and Concrete Improvement are ongoing on Willow Avenue. A notice of completion is anticipated for approval by City Council in October of 2016.