|The Monthly Financial Report for June 2019 (see attached) is being presented to the City Council and the public to provide a status update of the City’s financials at June 30, 2019. The Financial Report includes the budgetary information for the City’s annual financial plan as well as the actual resources received and the use of these resources in fulfilling the financial plan.
Financial data is reported on a cash basis, meaning that revenue is reported when cash is received and expenditures are reported when cash payments are made. The majority of General Fund revenues come in sporadically throughout the year and most of it is received or accrued in the last six (6) months of the fiscal year. Meanwhile, expenditure transactions continue to be paid each month, regardless of when the revenues are received. This highlights the importance of maintaining a reserve that allows for cash flow needs during the lean months when there are no revenues. At the end of the fiscal year, the accrual basis of accounting is applied to all governmental accounts. As a result, many of the revenues received or expenditures paid in July and August are accrued to the month of June, to comply with the Generally Accepted Accounting Principles (GAAP), which matches the transaction to the period in which the revenue was earned or the expenditure occurred. The Enterprise Funds, or business type funds, use the “accrual” method of accounting. These business type funds charge customers a fee to cover the cost of services that are provided. This method applies to the Water Utility Fund and Sewer Utility Fund.
On a quarterly basis, staff reviews the status of the budget, prepares a summary of the Capital Improvement Program, and proposes budget amendments for City Council consideration. City staff is seeking approval for the following budget amendments:
Ratify City Manager Budget Amendments
Resolution No. 2018R-032 authorizes the City Manager to appropriate from reserves up to $25,000 per transaction, for each expenditure line item or capital improvement project. The total appropriations by the City Manager from the General Fund may not exceed $100,000 in a fiscal year until ratified by the City Council. In the fourth quarter of Fiscal Year 2018-19, the City Manager authorized $71,975 in budget amendments. These budget adjustments have already been recorded in the City’s financial system, and are reflected in the ending budget balances in the Monthly Financial Report for June 2019 (see attached). It is recommended that the City Council ratify the following:
||Slope restoration for Crossroads Marketplace Slope Stabilization project
||Purchase of water saving faucets at Community Center
||Increase overtime salaries for parks and landscape staff
||Increase CIP budget to be in line with expenditures
||Pine Avenue Extension Traffic Evaluation Study
||Purchase of new and replacement water meters
General Fund City Attorney - Fund (001)
The City Attorney provides legal counsel and representation on a wide variety of municipal issues. In Fiscal Year 2018-19, a number of unexpected concerns were encountered that required additional legal counsel and expertise. At June 30, 2019, the City Attorney costs totaled $367,538 which was $17,538 over the adopted budget of $350,000. It is recommended to increase the legal services budget by $17,538 to account for the additional attorney costs this year. This budget amendment will decrease the General Fund projected fund balance by $17,538.
General Fund Law Enforcement - Fund (001)
The County of San Bernardino Sheriff’s Department provides general police services and a variety of community services through a contractual agreement with the City. Final expenditures for Fiscal Year 2018-19 have exceeded budgeted amounts as a result of overtime and fuel/maintenance costs that vary and can fluctuate depending on the amount of special events, large cases, etc. There are also credits the City receives based on certain factors, such as personnel out on leave, unfilled positions, etc. Factors such as these are not known during the budget process. At June 30, 2019, the County of San Bernardino Sheriff’s contract for police services costs totaled $13,899,106. Which was $134,506 over the adopted budget of $13,764,600. It is recommended to increase the law enforcement budget by $134,506 to account for the additional police services. This budget amendment will decrease the General Fund projected fund balance by $134,506.
TDA Pass Thru - Fund (005)
During Fiscal Year 2018-19, the expenditures funded by developers through reimbursements from Developer Trust Deposit accounts did not meet the adopted budget of $1,617,048. At June 30, 2019, the TDA Pass Thru costs totaled $546,544 which was $1,070,504 under the adopted budget. It is recommended to decrease the revenue and expenditure budget by $1,070,504. This budget amendment will have a zero effect on the projected fund balance in the TDA Pass Thru fund.
Mitigation Fee - Fund (137)
During Fiscal Year 2018-19, traffic fair share and other miscellaneous mitigation fees that are designated for special purposes have been moved from the General Fund to a new Special Revenue Fund, the Mitigation Fee Fund.
At the March 12, 2019, City Council meeting, the City Council authorized the execution of Cooperative Agreement 08-1682 with Caltrans to contribute a fixed amount of $340,000 toward funding capital construction of modifications for the State Route 71 (SR-71) southbound off-ramp to Soquel Canyon Parkway. The payment of this agreement was budgeted for in the Fiscal Year 2019-20 adopted budget. Since the mitigation fees have been moved to the Mitigation Fee Fund, it is recommended that the expenditures be increased by $340,001 in the Mitigation Fee Fund and the corresponding budget in the General Fund be zeroed out. An additional $181 in mitigation fees was identified, so it is also recommended to decrease the Traffic Impact Fee fund by this amount. This budget amendment will decrease the Mitigation Fee Fund projected fund balance, increase the General Fund projected fund balance and increase the Traffic Impact Fee Fund projected fund balance.
At the May 14, 2019, City Council meeting, the City Council approved staff’s recommendation to increase the expenditures in the General Fund with the special reserves that were set aside from the original Development Agreement A14-34 for the construction of an apartment project and Pinehurst Park on Butterfield Ranch Road as part of the Third Quarter Budget Review. Since the special reserve that was set aside from the original developer payment to the City is now in the new Mitigation Fee Fund, it is recommended that the expenditures be increased by $1,221,649 in the Mitigation Fee Fund and decreased by $1,221,649 in the General Fund. This budget amendment will decrease the Mitigation Fee Fund projected fund balance and increase the General Fund projected fund balance.
Capital Improvement Program
The City currently has 53 projects designated in the Capital Improvement Program (CIP). As of June 30, 2019, 14 projects were completed, 35 projects were either in the design process or under construction, and four projects had been deleted. The completed projects are as follows:
Automated License Plate Readers - F18005
City Yard Gate Upgrade - F18002
Fairway Blvd Rehabilitation - S19012
Frost Avenue Rehabilitation - S19009
Government Center Security Cameras - F19001
Grand Avenue Park Artificial Turf Installation - P18003
Installation of Countdown Pedestrian Signals - S17009
Pavement Repairs - S18006
Sidewalk Replacement Program - FY 18/19 - S19002
Speed Feedback Signs - S18007
Street Improvement Program FY 17-18 - S18001
Twin Knolls Dr. Rehabilitation - S19011
Veterans Park Indentation - P18002
Yorba Ave./Los Serranos Country Club Dr. Rehabilitation - S19010
Capital Project Budget Modifications:
|Los Serranos Infrastructure Improvement (Project No. S12009)
||Increase Miscellaneous Grants Fund (199) by $139
|During the fiscal year, the Los Serranos Infrastructure Improvement (Project No. S12009) was overspent by $139 in which the expenditure budget was properly adjusted, however, the revenue was not concurrently increased. It is recommended to increase the revenue in the Miscellaneous Grants Fund in the amount of $139. This budget amendment will increase the Miscellaneous Grants Fund projected fund balance.
Installation of Countdown Pedestrian Signals (Project No. S17009)
||Decrease Miscellaneous Grants Fund (199) by $91,485
|During the fiscal year, the Installation of Countdown Pedestrian Signals Project (S17009) was completed and a portion of this project was funded by the Homeland Safety and Improvement Program. The project completed under budget in the amount of $91,485 which was decreased from the project expenditures after City Council approval in the Third Quarter Budget Review staff report. Since the City will not be spending these federal funds, it is recommended to decrease the revenue in the Miscellaneous Grants Fund in the amount of $91,485. This budget amendment will decrease the Miscellaneous Grants Fund projected fund balance.
Los Serranos Safe Routes to School West (Project No. S19005)
|Decrease General Fund (001) by $53,000
Decrease Capital Improvement Fund (399) by $53,000
Increase Mitigation Fee Fund (137) by $53,000
|The special project reserves for this project have been moved from the General Fund into a new Mitigation Fee Fund. Therefore, it is recommended to decrease the appropriations in the General Fund and Capital Improvement Fund, where the project is currently budgeted and to increase appropriations using the Mitigation Fee Fund’s special project reserves to cover the project costs. This budget amendment will increase the General Fund projected fund balance and decrease the Mitigation Fee Fund projected fund balance.