At the September 8, 2020, City Council meeting, a preliminary June 2020 Financial report was presented to the City Council. The Finance department has completed all year-end accruals and adjustments and has prepared the final Monthly Financial Report for June 2020 (see attached). This report provides a final presentation of the City’s financials at June 30, 2020. 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 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. 2019R-034 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 reserves may not exceed $100,000 in a fiscal year until ratified by the City Council. In the fourth quarter of Fiscal Year 2019-20, the City Manager authorized $178,690.44 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 2020 (see attached). It is recommended that the City Council ratify the following:
Miscellaneous Grants Fund (2410)
||Weed Abatement Services
||Financial Services for CFDs
||Shady View Dr Pavmnt Rehab
||A/C Duct Work at Library
||Los Serranos Park Project
||Citizen's Option for Public Safety
||Streetlights Purchase & Conversion
||Refuse Contract & Uncollectibles
In March 2020, the City was awarded $310,000 for the Senate Bill 2- Building Homes and Jobs Act Planning Grant Program (SB 2 Planning Grant). The Community Development Department will use this money to offset a portion of the costs of a Land Management System (LMS). Staff requests that the City Council accept the SB 2 Planning Grant Award and approve a budget amendment to increase the Miscellaneous Grants fund revenues and expenditures by $310,000 to account for the grant activity.
General Fund Transfers to Capital Improvement Funds (1000 & 3100)
During Fiscal Year 2019-20, there were budget amendments for General Fund capital improvement projects that did not include the required transfers or were made to incorrect accounts. This was primarily due to accounting changes that were made during the set-up and implementation of the Enterprise Resource Planning Software (ERP). Staff requests an appropriations amendment in the net amount of $217,915 in the General Fund to correct these appropriations moving forward. This budget amendment will decrease the General Fund projected fund balance by $217,915.
Community Development Block Grant (CDBG) Fund (2150)
The Fiscal Year 2019-20 Community Development Block Grant budget did not include a rollover amount for prior year unexpended grant funds in the amount of $42,399.17. In order to properly account for the total CDBG allocation available to use, staff is requesting a budget amendment to increase the CDBG revenues by $42,358.99 and increase the CDBG expenditures by $42,399.17. This budget amendment will decrease the CDBG projected fund balance by $40.18.
Capital Improvement Program
The City currently has 56 projects designated in the Capital Improvement Program (CIP). As of June 30, 2020, 12 projects were completed, 44 projects were either in the design process or under construction. The completed projects are as follows:
English Springs Park Restroom – 800394
Military Monument – F19002
Los Serranos ATP Project – S15008
Lower Los Serranos Street Light Improvements – S16006
Street Improvement Program (FY 18-19) – S19001
Rolling Ridge Drive Pavement Rehabilitation – S19004
Los Serranos Safe Routes to Schools West – S19005
Calle San Marcos/Eagle Canyon Road Rehabilitation – S19006
Yorba Ave/Los Serranos County Club Dr. Rehabilitation – S19010
Twin Knolls Drive Rehabilitation – S19011
Sidewalk Replacement Program (FY 19-20) – ST200002
SR-71 Off-Ramp at Soquel Canyon Pkwy – ST200012
Capital Project Budget Modifications:
Los Serranos Park (Bird Farm Park) (Project No. 800212)
SR 71 Off-Ramp at Soquel Canyon Parkway (Project No. ST200012)
||Increase Quimby In Lieu Fund (2504) by $78,261.24
Increase CFD No. 5 Fund (6205) by $47,839.36
Decrease Parks & Recreation Facilities Fee Fund (2505) by $126,100.60
||Staff is requesting to move the funding for the Los Serranos Park, formally known as Bird Farm Park, from the Parks & Recreation Facilities Fee Fund to the Quimby In Lieu Fund and CFD No. 5 Fund. During Fiscal Year 2019-20, the Parks & Recreation Facilities Fee Fund did not receive enough fees to cover the costs of the project. This appropriation amendment will decrease the Quimby In Lieu and the CFD No. 5 Fund projected fund balance by $78,261.24 and $47,839.36, respectively, and increase the Parks & Recreation Facilities Fee Fund projected fund balance by $126,100.60.
||Increase General Fund (1000) by $121,903.25
Decrease Traffic Impact Fee Fund (2511) by $121,903.25
||Staff is requesting to move appropriations for the SR 71 Off-Ramp at Soquel Canyon Parkway project from the Traffic Impact Fee Fund to the General Fund. The Traffic Impact Fee Fund did not receive enough revenue to pay for the costs of the project. The General Fund will cover the shortage in funding, and will be reimbursed by Traffic Fair Share fees as they are received. This budget amendment will decrease the General Fund projected fund balance by $121,903.25 and increase the Traffic Impact Fee Fund projected fund balance by $121,903.25.