City Council
259 N. Wilma Avenue
Ripon, CA 95366
MEMO
To: Honorable City Council
From: Lisa Roos, City Clerk & Finance Director
Date: 08/13/2024
Subject: Enterprise Fund and Landscape Maintenance District transfers RECOMMENDED ACTION:
Approve this resolution for the 2023-24 fiscal year that authorizes transfers from (1) Enterprise Operating Funds to Enterprise Capital Reserve Funds, (2) General Fund to Landscape Maintenance Districts with deficits, (3) General Fund to CNG Station Capital Reserve Fund, and (4) General Fund to CalPERS Contingency Fund (funds invested in a Section 115 Trust).
BACKGROUND:
At the end of each fiscal year, transfers are analyzed from (1) Enterprise Operating Funds to Enterprise Capital Reserve Funds, (2) General Fund to Landscape Maintenance Districts with deficits, (3) General Fund to CNG Station Capital Reserve Fund, and (4) General Fund to the CalPERS Contingency Fund (funds invested in a Section 115 Trust).
DISCUSSION/ANALYSIS:
Enterprise Funds to Enterprise Capital Reserve Funds
The Enterprise Fund Rates and Cash Flow Study prepared by Municipal Financial Services established Enterprise Fund customer rates that provide the needed revenue to fund the annual operations of the service and the required annual transfer to fund the future replacement of capital items.
At the end of the fiscal year, each Enterprise Fund’s operating cash flow is evaluated and available funds are transferred to the appropriate Enterprise Capital Fund, as long as the enterprise operating fund minimum balance is maintained. The following table summarizes the fiscal year 2023-24 cash flow and recommended transfer to each Enterprise Capital Fund.
Table 1
FY 2023-24
Fund Beginning
Balance Income Expenses Balance Prior to Transfer Transfers Ending
Balance
Water Operating $926,514 $3,853,2971
($2,811,573) $1,968,238 ($1,041,724) $926,514
Sewer Operating $697,426 $2,101,216 ($1,374,863) $1,423,779 ($726,353) 2 $697,426
Garbage Operating $211,230 $2,650,585 ($2,488,899) $372,916 ($161,686) 3 $211,230
Water Enterprise
Capital $7,320,875 $367,045 ($823,042) $6,864,878 $1,041,724 $7,906,602 Sewer Enterprise
Capital $1,548,837 $28,485 ($787,988) $789,334 $365,286 $1,154,620 Sewer WWTP
Reserve $1,497,635 $38,005 $0 $1,535,640 $361,067 $1,896,707 Garbage
Enterprise Capital $868,700 $97,041 ($216) $965,525 $161,686 $1,127,211 Storm Drain
Enterprise Capital $341,600 $4,103 ($353,149) ($7,446) $0 ($7,446)
1. Water Operating and Water Enterprise Capital Funds income include transfer of water meter surcharge fee collected during the fiscal year of $192,669.
2. Sewer projected transfer is $365,286 for Capital Repair and Replacement and $361,067 for WWTP Reserve.
3. Transfer target per MFS study is $280,000, but we only transferred $161,686 because operating expenses were increased due to regulatory requirements. This will be evaluated prior to next year’s rate increase.
Each of these capital reserve funds are under the minimum balance required for future capital replacement needs.
General Fund to Landscape Maintenance and Lighting Districts with deficits The policy for transferring funds from the General Fund to the Landscape Maintenance Districts is if the district has an annual operating deficit and no balance to offset that operating deficit, a transfer from the General Fund is made.
Table 2
FY 2023-24
Fund Beginning
Balance Income Expenses
Balance
Prior to
Transfer
Transfers Ending
Balance
Dutch Meadows $ 0 $4,540 ($13,818) ($9,278) $9,278 $ 0
Country Woods $ 0 $7,809 ($18,227) ($10,418) $10,418 $ 0 Farmland Estates $ 0 $3,350 ($9,046) ($5,696) $5,696 $ 0 Jacob’s Landing $22,055 $5,701 ($7,400) $20,356 $20,356 Carolina’s $28,421 $14,500 ($14,221) $28,700 $28,700
Boesch/Kingery $15,778 $6,060 ($14,643) $7,195 $7,195
Main Street $ 0 $10,481 ($48,853) ($38,372) $38,372 $ 0 Cornerstone I $85,196 $14,079 ($15,010) $84,265 $84,265 The Vineyards $142,452 $64,938 ($45,326) $162,064 $162,064 Alexandra Place $ 0 $5,397 ($6,883) ($1,486) $1,486 $ 0 Lighting District $43,514 $335,394 ($292,312) $86,596 $86,596 General Fund to CNG Station Capital Reserve Fund
Each year we evaluate the rate at which CNG is sold at the fueling station on Doak Boulevard to ensure operating costs are recovered plus funds necessary to replace capital items in the future are reserved. At the end of the fiscal year, the CNG station cash flow is evaluated and available funds are transferred to the CNG Station Capital Reserve Fund.
Table 3
FY 2023-24
Fund Beginning
Balance Income Expenses
Balance
Prior to
Transfer
Transfers Ending
Balance
CNG Operating Activity $ 0 $195,992 ($144,427) $51,565 ($51,565) $ 0 CNG Station Capital Reserve $216,448 $5,493 $0 $221,941 $51,565 $273,506 After the proposed transfer above is made, the CNG Station capital reserve fund is under the minimum balance required for future capital replacement.
General Fund to CalPERS Contingency Fund (invested in a Section 115 Trust with PARS).
In 2020, Redevelopment bonds were refinanced, creating additional property tax income of $832,823 that will be distributed to the General Fund for fiscal years 2021-2022 to 2026-2027, as shown in the table below.
Table 4
Fiscal Year Savings
2021-2022 $157,569
2022-2023 $161,861
2023-2024 $161,805
2024-2025 $162,117
2025-2026 $136,064
2026-2027 $53,407
Total Savings $832,823
At the March 2022 Strategic Planning meeting, City Council directed this savings to be used to mitigate the City’s unfunded liability related to the City’s sworn police officer’s CalPERS defined benefit retirement. As of the June 30, 2022 CalPERS Valuation Report, the City’s CalPERS unfunded liability is $6,549,253.
For Fiscal Year 2023-24, $161,805 will be transferred to the Section 115 Trust, which is dedicated to prefund employer contributions and unfunded liabilities related to the CalPERS defined benefit pension system, which is offered to City sworn police officers. In September 2022, the City Council approved Resolution 22-39 adopting investment guidelines for this Section 115 Trust. In addition to the investment guidelines, this resolution states that these funds can be used to pay CalPERS expenses when there is a deficit in the City’s General Fund with City Council concurrence, or as directed by the City Council.
RESOLUTION NO. 24-31
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
RIPON AUTHORIZING THE TRANSFER OF CERTAIN
MUNICIPAL FUNDS
WHEREAS, the City Council of the City of Ripon is desirous of transferring certain funds to capital reserve funds as hereinafter set forth; and
WHEREAS, it is necessary that the balance of certain funds as hereinafter indicated, be adjusted and certain transfers made in order to properly reflect the correct balance of said funds for the period from July 1, 2023 through June 30, 2024; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Ripon that the following transfers of the City of Ripon be and the same are hereby authorized and approved by the City Council of the City of Ripon as hereinafter specifically set forth:
1. The transfer of $1,041,723.73 from the Water Fund of the City of Ripon to the Capital Reserve Fund of the Water Department of the City of Ripon.
2. The transfer of $192,668.94 from the Water Fund of the City of Ripon to the Capital Reserve Fund of the Water Department of the City of Ripon, for the current year’s collection of water meter surcharge.
3. The transfer of $365,285.73 from the Sewer Fund of the City of Ripon to the Capital Reserve Funds of the Sewer Department of the City of Ripon.
4. The transfer of $361,066.94 from the Sewer Fund of the City of Ripon to the Wastewater Treatment Plant Contingency Fund of the Sewer Department of the City of Ripon.
5. The transfer of $161,686.22 from the Refuse Fund of the City of Ripon to the Capital Reserve Funds of the Refuse Department of the City of Ripon.
6. The transfer of $9,278.72 from the General Fund of the City of Ripon to the Dutch Meadows Landscaping Assessment District Fund for the deficit balance of this Fund.
7. The transfer of $10,418.22 from the General Fund of the City of Ripon to the Country Woods Landscaping Assessment District Fund for the deficit balance of the Fund.
8. The transfer of $5,695.50 from the General Fund of the City of Ripon to the Farmland Estates Landscaping Assessment District Fund for the deficit balance of this Fund.
9. The transfer of $38,372.24 from the General Fund of the City of Ripon to the Main Street Landscaping Assessment District Fund for the deficit balance of this Fund.
10. The transfer of $1,485.95 from the General Fund of the City of Ripon to the Alexandra Landscaping Assessment District Fund for the deficit balance of this Fund.
11. The transfer of $51,565.33 from the General Fund of the City of Ripon to the CNG Station Capital Reserve Fund for net income of the CNG Station during this fiscal year.
12. The transfer of $161,805.43 from the General Fund of the City of Ripon to the CalPERS Contingency Fund for the savings due to the refinancing of the Redevelopment Bonds.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of Ripon this 13th day of August, 2024, by the following vote:
RESULT: ADOPTED AS AMENDED BY CONSENT VOTE [UNANIMOUS]
MOVER: Gary Barton, Council Member
SECONDER:Dean Uecker, Council Member
AYES: Zuber, de Graaf, Barton, Uecker, Restuccia
THE CITY OF RIPON,
A Municipal Corporation
By ________________________________
LEO ZUBER, Mayor
ATTEST:
By: ___________________________
LISA ROOS, City Clerk