HomeMy WebLinkAbout06/16/1998, C4 - TRANSIT FUND INTERFUND BORROWING council 7r 1, R
j acEnaa Report ey
CITY OF SAN LUIS O B I S P O
FROM: Michael D.McCluskey,Public Works Director
Prepared By: David Elliott,Administrative Analyst
SUBJECT: Transit Fund Interfund Borrowing
CAO RECOMMENDATION:
Authorize interfund borrowing up to$456,100 from the General Fund to the Transit Fund until
1997-98 Federal Transit Administration grant revenues are received
DISCUSSION
The current cash balance of the Transit Fund has turned negative, and a return to a positive balance
is not projected until Federal Transit Administration(FTA)grant revenues are received in mid-
August 1998. General revenue management policies listed on page B-4 of the 1997-99 Financial
Plan allow temporary interfi nd borrowing for up to 45 days to resolve cash shortfalls. Interfund
borrowing for longer periods requires Council approval.
FTA revenues for 1997-98 operations will total$364,900 and amount to 28 percent of operating
costs. From year to year the application, approval,and disbursement process typically progresses
on the following schedule:
July The City's fiscal year starts.
October The Federal fiscal year starts.
FTA apportionment amounts for the current fiscal year appear in the Federal
Register.
November The Council reviews the transit program of projects and authorizes Public Works to
apply for FTA formula grants.
December Public Works submits a grant application through Caltrans,which reviews it and
forwards it to the FTA.
May The FTA approves the grant.
June The City's fiscal year ends.
July The FTA authorizes the City to request grant reimbursement for expenses incurred
in the fiscal year just ended.
If the City doesn't receive FTA revenues until after the fiscal year ends,there is obviously some
potential for the Transit Fund to run out of cash during the fiscal year. This potential has not
materialized in the past because the City has maintained large cash balances(composed mostly of
TDA revenues paid in advance)pending completion of capital projects. As projects have been
completed,these balances have been reduced and are no longer large enough to offset the delayed
disbursement of FTA revenues. The amount needed to cover current expenses in the Transit Fund
varies from month to month depending on how much revenue comes in from other sources.
Theoretically it could amount to about$456,100 if all current capital projects financed with fund
balance are completed. This$456,100 includes the$364,900 from 1997-98 (to be paid from the
1997-98 FTA grant)plus an estimated$91,200 for the first quarter of 1998-99(to be paid from the
1998-99 FTA grant).
C��Y/
Council Agenda Report-Transit Fund Interfund Borrowing
Page 2
Over the next few months,Public Works will look into the possibility of speeding up the
application and disbursement schedule in the future. Unless the schedule can be shortened by
several months,though,the Transit Fund may require a standing policy to allow interhmd
borrowing from the General Fund until FTA grant revenues are received. Public Works will report
back on this effort when it submits the transit program of projects in November 1998.
FISCAL EMPACT
The General Fund will charge the Transit Fund for lost interest revenue on the proposed interfund
borrowing. That amount is estimated to be$2,700.
C=wH AgmWa Reports\Trmtiit Fund h=fimd Borrowing