HomeMy WebLinkAboutItem 17 - 2020-21 Mid-Year Budget Review Department Name: Finance
Cost Center: 2002
For Agenda of: February 2, 2021
Placement: Business
Estimated Time: 60 minutes
FROM: Derek Johnson, City Manager
Brigitte Elke, Finance Director
Prepared By: Natalie Harnett, Principal Budget Analyst
SUBJECT: 2020-21 MID-YEAR BUDGET REVIEW
RECOMMENDATION
1. Receive and discuss an update to the City’s work programs, changes in financial positions,
and long-term forecasts (Attachment A, Sections A, B & C) based on revised projections for
all major funds at the mid-point of the 2020-21 fiscal year; and
2. Receive an update on the status of the current Meta City Goal (Attachment A, Section D);
and
3. Adopt a resolution (Attachment B) to approve the one-time allocation of unassigned fund
balance from 2019-20 into operating budget for the General, Water, Sewer, and Parking
Funds; and
4. Approve one full-time equivalent (FTE) position to provide public information and
communications.
DISCUSSION
The City’s budget policies1 require that the City Council review the City’s budget and financial
condition every six months. The mid-year review fulfills that purpose and allows
for adjustments to revenue and expenditure assumptions should the need arise. It therefore takes
a more in-depth look at the City’s budgeted revenues and expenditures compared to the first and
third-quarter status reports provided to Council.
The accompanying Mid-Year Budget report for 2020-21 provides a comprehensive overview of
the City’s financial condition at the mid-point of the fiscal year. The report summarizes current
financial trends since the adoption of the 2020-21 supplemental budget in June 2020. The
report’s focus is on the General Fund and each of the City’s enterprise funds. The Mid-Year
Budget report focuses on the current year and provides an analysis of the assigned workload for
each operating program. It outlines the achievements and, where applicable, the challenges for
each department. The report also includes a brief update to the City’s Meta City Goal status.
1 Pg. 19, 2019-2021 Financial Plan: Mid-Year Budget Reviews. The Council will formally review the City’s fiscal condition,
and amend appropriations if necessary, six months after the beginning of each fiscal year.
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This report follows the City’s completion of its comprehensive annual financial report (CAFR)
and analyzes the forecast based on prior year fiscal year actuals and fiscal year-end balances.
Report Organization
Section A: Mid-Year Budget Overview: Provides a narrative overview of the City’s current
financial condition and the current revenue and expenditure trends. It also outlines
recommendations for budget changes moving into the remainder of FY 2020-21.
Section B: Financial Condition Summaries: Provides up-to-date budget versus actual
comparison of revenues and expenditures of all major funds. It also displays the recommended
changes to budget. Section B-5 includes updated five-year forecasts for all major funds based on
actualized numbers from the 2019-20 audit financials.
Section C: Operating Program Evaluations: Provides a performance evaluation on the
workload, performance measures, and core objectives of each operating program. This section of
the report highlights accomplishments and identifies any challenges between the resources
allocated and the work program objectives for each program.
Section D: Status of Major City Goals: Provides an update on the City’s Meta City Goal tasks.
These updates are now also provided to Council on a monthly basis and information about how
the City is assisting Economic Recovery can be found on the City’s website here.
Section F: Recent Financial Reports: Includes the latest Transient Occupancy Tax and Sales
Tax reports.
Request to Create Position
The City formalized its approach for proactive, effective, and meaningful communication and
public engagement in 2016 with the additional contract services to support and maintain
Citywide communications. This work, overseen by the City Administration and IT Department,
is provided by a combination of contract services and staff support. The demand for additional
communication has further increased with the City's response to the COVID-19 pandemic,
resulting in additional workload spread across multiple departments. As a result, staff has
analyzed the most efficient and effective way to continue to provide the level of communication
service needed by the community.
The current, ongoing contract services funding provides approximately 57 hours per month of
contractor work, compared to the approximately 160 hours of monthly availability provided by a
regular, full-time position. To continue meeting the day-to-day needs for press releases, City
News items, social media management, media preparation, light design/video production and to
work with City departments to address other communications requests, a dedicated internal
resource is needed, and a regular, full-time position is proposed to be added to the current
budget.
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The cost of the proposed position for FY 20-21 is $59,000 and the ongoing, annual cost is
$118,000. The Administration and IT Department currently has a budget of $120,000 for
ongoing communications contract services and no additional funding is being requested for the
position. Staff will be requesting some additional communication contract services (design,
video, printing), as part of the 2021-23 Financial Plan, as that ongoing budget item was reduced
as a part of the City’s initial financial response to COVID-19 and commensurate with the
needs/requests of a full communication program. The ongoing, annual cost of the position would
also be included in the 2021-23 Financial Plan.
Policy Context
As referenced, the City’s budget policies require that the City Council review the City’s budget
and financial condition every six months. Additionally, Task 4 of the City’s Major City Goal for
Fiscal Sustainability and Responsibility outlines the implementation of quarterly financial reports
to Council to monitor fiscal performance, including performance measures.
Under the City’s Financial Reporting and Budget Administration policy, the City Manager may
allocate or designate 75% of over realized Development Services revenues exceeding adopted
budget for the current fiscal year for temporary Development Services expenditures for the
purpose of timely processing of development permit applications in the current fiscal year or
throughout life of applicable projects. All City Manager authorized allocations and funds set
aside in a designation for future use, shall be reported to the Council on a semi-annual basis.
Public Engagement
Public comment on the item can be provided to the City Council through written correspondence
prior to the meeting and through public testimony at the meeting. The Mid-Year Review Report
for 2020-21 (Attachment A) will also be posted on the City’s website for public review.
CONCURRENCE
The City’s internal Financial Plan Steering Committee concurs with the recommendations
included in this report.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this
report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2020-21
Funding Identified: Yes
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Fiscal Analysis:
The table below outlines the projected changes in financial position for the City’s major
revenues. The significant variance in Tax and Franchise Revenue is due to the addition of
approximately $3.6 million in Local Sales Sax resulting from the passage of Measure G -20
which goes into effect on April 1, 2021. Per previous Council action on December 8, 2020,
$3.425 million of the anticipated revenue will be used to replenish the General Fund unassigned
fund balance to offset immediately needed expenditures for economic recovery and development
efforts and homeless services.
The other notable variance is the $5.5 million increase in Water Fund debt proceeds budget. This
is not new revenue but instead a carryover of budget that was not received 2019-20. Additional
revenue details can be found in Attachment A.
Table B1
Total Funding Sources - All Funds
Combined (in thousands) Total Budget*
Actual
Year-to-date
(11.30.20)
% Received Revised
Projection
Mid-Year
Projection
Variance
Tax & Franchise Revenue 57,902$ 24,881$ 43%64,461$ 6,559$
Service Charges
General Fund 12,212$ 5,890$ 48%12,478$ 266$
Water Service Charges 22,890$ 8,899$ 39%23,197$ 307$
Sewer Service Charges 15,895$ 6,111$ 38%16,127$ 232$
Parking Service Charges 2,798$ 1,039$ 37%2,296$ (502)$
Transit Revenue 4,808$ 1,205$ 25%4,808$ -$
Assessment Revenue 1,507$ 714$ 47%1,507$ -$
Proceeds from Debt Financing
Water Fund 8,800$ 7,674$ 87%14,300$ 5,500$
Sewer Fund 43,100$ 3,496$ 8%43,100$ -$
Total 169,913$ 59,909$ 35%182,275$ 12,362$
* Includes expenditure offsetting budget amendments from Q1 & Q2
Fiscal Year 2020-21
Staff is also recommending several budget amendments as part of the mid-year review. Given
the City’s Fiscal Health Contingency Plan activation, only items deemed critical are being
recommended at this time.
Table 1 - Significant Operating Budget Changes
Funding Source Budget Amendment
Recommended Short Description (detail in Attachment A)
1 General Fund 250,000$ Unemployment Insurance
5 General Fund 29,800$ PERS Unfunded Liability Correction
6 Parking Fund 100,000$ Parking and Acess Management Plan Update
3 Sewer Fund 21,000$ Unexpected Emergency Repairs
4 Water Fund 29,794$ PERS Unfunded Liability Correction
7 Insurance Fund 150,000$ Allocation from Insurance Fund Balance
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The overall fiscal impact of the above recommendations is outlined in the fund overview below:
Table B2
Operating Expenditures
Combined (in thousands) -
excluding capital & transfers FootnoteAdopted
Budget
Budget
Adjustments*Total Budget
Year-to-date
Consumption**
(11.30.20)
%
Consumed
Revised
Budget
Mid-Year
Amendments
General Fund 1 73,183$ 5,390$ 78,572$ 30,065$ 38%79,002$ 430$
Business Activities
Water Fund 18,943$ 1,165$ 20,108$ 12,194$ 61%20,137$ 30$
Sewer Fund 9,230$ 592$ 9,822$ 4,575$ 47%9,843$ 21$
Parking Fund 3,270$ 128$ 3,397$ 1,546$ 46%3,497$ 100$
Transit Fund 3,843$ 271$ 4,114$ 3,620$ 88%4,114$ -$
Special Revenue
Tourism Assessment 1,225$ 34$ 1,260$ 646$ 51%1,260$ -$
Downtown SLO 2 253$ -$ 253$ 242$ 96%253$ -$
Total 109,946$ 7,579$ 117,525$ 52,887$ 45%118,106$ 581
* Budget adjustments include: encumbrances from FY19-20, CM approved carryover, revenue offsetting budget amendments, CM approved use of 18-19
undesginated fund balance
** Consumption = expenditures and commitments
1 - General fund includes Insurance ISF sub-fund and Debt Service sub-fund
2 - Downtown Assessment revenue is collected by the City upon business license renewal and paid to the Downtown Association. Almost all revenue
was collected in July during the renewal period, so 96% is not a significant variance, but is slightly low due to business closures during the pandemic.
Fiscal Year 2020-21
ALTERNATIVES
The Council could direct staff to not implement the proposed budget change
recommendations. Should the adjustments not be approved, the budget will remain unchanged
compared to the adopted supplemental budget. Staff does not recommend an unchanged budget
due to updated projections based on recent trend information.
Attachments:
a - COUNCIL READING FILE - FY 20-21 Mid-Year Report
b - Draft Resolution
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R ______
RESOLUTION NO. _____ (2021 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING AN AMENDMENT TO THE 2020-
21 BUDGET ALLOCATION
WHEREAS, in accordance with the San Luis Obispo City Charter Section 802, the City
Manager submitted the 2020-21 Supplemental Budget to Council for its review and consideration
on June 2, 2020; and
WHEREAS, the Council approved and appropriated the 2020-201 budget allocation
including operating, debt service, and capital improvement plan budget; and
WHEREAS, in accordance with Budget Policy G under Financial Plan Purpose and
Organization, the Council will formally review the City’s fiscal condition, and ame nd
appropriations if necessary, six months after the beginning of the year ; and
WHEREAS, this report follows the City’s completion of its comprehensive annual
financial report (CAFR) for 2019-20 which shows that the General Fund has an unassigned Fund
Balance of $7,122,607; and
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The 2020-21 budget is hereby amended to appropriate $279,800 of the
City’s General Fund unassigned fund balance into operating budget.
SECTION 2. The 2020-21 budget is hereby amended to appropriate $100,000 of the
City’s Parking Fund working capital balance into operating budget.
SECTION 3. The 2020-21 budget is hereby amended to appropriate $21,000 of the City’s
Sewer Fund working capital balance into operating budget.
SECTION 4. The 2020-21 budget is hereby amended to appropriate $29,794 of the City’s
Water Fund working capital balance into operating budget.
SECTION 5. The 2020-21 budget is hereby amended to appropriate $150,000 of the
City’s Insurance Fund balance into operating budget.
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Resolution No. _____ (2021 Series) Page 2
R ______
SECTION 6. The 2020-21 budget is hereby amended to adopt one full-time equivalent
(FTE) position to provide public information and communications.
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2021.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, on ____________________________.
____________________________________
Teresa Purrington
City Clerk
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