HomeMy WebLinkAbout01/18/2011, B3 - COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR 2009-10 council mm
A 1/18/11
aGEnaa nEpont 'umN°�, �
CITY OF SAN LUI S OBIS PO
FROM: Mary Bradley, Interim Director of Finance & Information Technology
Debbie Malicoat,Finance Manager
SUBJECT: COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR 2009-10
RECOMMENDATION
Review and discuss the Comprehensive Annual Financial Report and ending financial results for
2009-10.
DISCUSSION
The accompanying Comprehensive Annual Financial Report (CAFR) has been prepared in order to
present the City's financial condition and results of operations for the fiscal year that ended June 30,
2010, as well as to provide statistical information of general interest about the San Luis Obispo
community.
Financial Results Highlighted in the Report
Included in the document are the Transmittal Memorandum and Management's Discussion and
Analysis, which provide a comprehensive analysis of the City's financial position as of June 30,
2010 as well as summaries of significant City fiscal policies, practices and financial results. Key
variances from projected ending balances for 2009-10 are also highlighted in the Transmittal
Memorandum.
As highlighted in Management's Discussion and Analysis, the City's assets exceed its liabilities by
$311.6 million,which was an increase in total net assets of$5.8 million from the prior year.
The CAFR is presented on the modified accrual basis of accounting, which emphasizes the
increase or decrease in net assets, but doesn't necessarily reflect spendable funds. When making
decisions about spending, it is more appropriate to look at the budgetary basis, rather than the
accrual basis. For example, when considering investments, the modified accrual basis requires
that the investment assets are recorded at their market value on June 30, 2010. However, unless
the Council wants to liquidate those investments, fluctuations in the market value have little
relevance in planning for the amount of money available to spend in the future. The information
provided on December 14, 2010 was presented on the budgetary basis and showed a General
Fund ending fund balance of$1.2 million above minimum fund balance policy levels.
For the General Fund, financial results for the year were better than estimated; revenues and
other sources were on target with projections and expenditures (including encumbrances and
carryovers) were under budget by 2%.
B3-1
Comprehensive Annual Financial Report for 2009-10 Page 2
Changes in 2009-10 2009-10 Variance
General Fund Balance Estimated Actual Amount %
Revenues $ 49,114,400 $ 49,265,700 $ 151,300 0%
Expenditures' 48,010,100 47,276,200 733,900 2%
Other sources(uses) (5,935,100) (5,992,600) (57,500) 1%
Excess of revenues and sources
over(under)expenditures&uses (4,830,800) (4,003,100) 827,700
Fund balance,beginning of year 1 13,991,900 13,991,900
Available fund balance $ 9,161,100 is 9,988,800 1$ 827,700
'Includes estimated savings of$1.1 million,encumbrances of$201,800 and
carryovers of$923,500.
While overall General Fund revenues and sources were on target with budget estimates, revenues
from the City's top two General Fund sources — sales tax and property tax — were $791,000
lower than budget estimates. As discussed with the Council as part of the budget foundation
workshop on December 14, 2010, continued economic challenges remain ahead as the City
adjusts to a new, lower revenue base for key revenues.
Independent Audit
As required by the City Charter, the financial statements have been audited by independent certified
public accountants (Glenn, Burdette, Phillips & Bryson) and their letter expressing an unqualified
opinion regarding the City's financial position is also included in the report document. The
objective of a financial audit is to provide users of the financial reports with reasonable assurance
from an independent source that the reports are reliable.
The auditors also perform extensive tests on the City's internal control as part of the effort to obtain
evidence to support their opinion on the fair presentation of the City's financial position. While
performing these tests, auditors may become aware of significant deficiencies, or reportable
conditions, in internal controls and they must notify management of these. Some reportable
conditions are more serious than others. Specifically, reportable conditions that are of such
magnitude that they could potentially result in a material misstatement of the financial statements
are defined as material weaknesses. By definition, all material weaknesses are reportable
conditions,but not all reportable conditions need to be material weaknesses.
The auditors are required to communicate all reportable conditions. This communication takes the
form of the auditor's reports on internal control and compliance that accompany the Single Audit.
This will come to the Council in February. In addition, the auditors are required to communicate
with "those charged with governance" in compliance with Statement on Auditing Standards No.
114 (SAS 114). In November 2008, the Council designated the Mayor as the Council's
representative in communicating with the City's independent auditors for this purpose.
Report Organization
In accordance with generally accepted accounting principles for state and local governments, the
City's CAFR is organized into three major sections: introduction, financial reports and statistical
tables. The following is a brief summary of the contents of each of these sections.
Introduction. The Transmittal Memorandum and other information of general interest are
presented in this section, including: directory of officials and advisory bodies, organization chart,
B3-2
Comprehensive Annual Financial Report for 2009-10 Page 3
and awards for excellence in financial reporting from the Government Finance Officers Association
(GFOA) and the California Society of Municipal Finance Officers(CSMFO).
Financial Reports. This section includes the primary financial statements of the City and is
organized into five major parts:
1. Auditors' opinion regarding the financial statements. They have given the City an unqualified
opinion, stating the financial statements fairly present the City's financial position in conformity
with generally accepted accounting principles.
2. Management's discussion and analysis providing a narrative overview of the government-wide
financial activities.
3. The basic financial statements presenting the government-wide statements which combines the
activities of the major funds (General, Capital Outlay and all Enterprise Funds) into
governmental and business-type categories; the fund financial statements; and the notes to the
financial statements.
4. Required supplementary information presenting the General Fund actual results with both the
original and final adjusted budgets.
5. Other supplemental schedules and financial statements providing financial information for each
of the City's non-major governmental and agency funds. This includes a financial schedule
presenting Measure Y revenues and uses in 2009-10.
Statistical Tables. This section provides demographic and financial tables showing current and
historical trend information for the City and is organized into six major parts:
1. Statistical overview. General information about the San Luis Obispo community.
2. General financial trends. Ten-year summary information on net assets, governmental
revenues and expenditures and fund balances.
3. Revenue capacity.Ten-year summary information on property and sales tax trends.
4. Debt capacity. Ten-year summary information on debt service requirements.
5. Economic and demographic trends. Ten-year summaries of taxable sales, building permits
and valuations,housing,population and other demographic trends.
6. Operating information. Ten-year trend information on operating indicators by function.
Recognition for Excellence in Financial Reporting
Beginning in fiscal year 1983-84, all of the City's CAFRs have been awarded the certificate of
achievement for excellence in financial reporting from the Government Finance Officers
Association of the United States and Canada (GFOA). This is a prestigious national award
recognizing the City's use of the highest standards in preparing our annual financial report. Staff
believes the current report continues to meet their program requirements, and staff is submitting it to
them to determine its eligibility for another award.
B3-3
Comprehensive Annual Financial Report for 2009-10 Page 4
Council Reading File
Comprehensive Annual Financial Report for 2009-10
T:\Council Agenda.Reports\Finance&IT CAR\Finance\2010\CAR CAFR 2009-I O.doc
B3-4
COUNOL MEMORANDUM
a COUNCIL a CDD DIR
a affmm c MDIR
January 13, 2011 °o A rORM o PPWDIR
o CLERKIORIG o POLICE CHIEF
o PID o PARRS&RECDIR
TO: City Council o TRZM o UMDIR
a ?MW TUM a MUM
a SLOcINNEWS aCOUNCL
a CrY MGR
FROM: Katie Lichtig, City Manager a
Mary Bradley, Interim Director of Finance& Information Technology
SUBJECT: Comprehensive Annual Financial Report for 2009-10—Item B3 January 18,2011
The City's Comprehensive Annual Financial Report (CAFR) for the Fiscal Year Ended June 30,
2010 includes a variety of information related to the City's financial condition. In addition, the
report includes supplementary information related to the City's use of the local %-cent sales tax
(Measure Y) funds during the fiscal year. These results are audited by the City's independent
auditors, Glenn, Burdette, Phillips & Bryson, CPA's.
During 2009-10, Measure Y generated $5,252,500 in revenues. The various uses of these funds,
for both day-to-day operations and capital improvements are detailed in the CAFR beginning on
page 85. As indicated, $2,267,100 was spent for ongoing operating costs and $2,161,200 for
capital improvement projects. In addition, the City has contracts or commitments for another
$3,461,700 in capital projects that are in progress, but were not yet spent as of the end of the
fiscal year. The table below provides a summary of the funding and uses.
Operating Encumber
Pro ams CIP Designated Total
Infrastructure Maintenance $ - $1,650,400 $1,450,800 $ 3,101,200
Traffic Congestion Relief 102,800 155,800 854,100 1,112,700
Preservation of Essential Services -
Public Safety 913,900 913,900
Maintenance Services 1,150,500 13,600 55,800 1,219,900
Neighborhood Code Enforcement 79,900 79,900
Total Preservation of Essential Services 2,144,300 13,600 55,800 2,213,700
Open Space Preservation 341,400 421,000 762,400
Downtown Maintenance&Beautification 1 20,000 1 1 680,000 1 700,000
TOTAL $ 2,267,100 1 $2,161,200 53,461,700 $7,590,000
Measure Y Revenues& Uses Summary
Revenues:
Prior year revenue $12,638,000
Revenues for 2009-10 5,252,500
Total revenues 17,890,500
Uses:
Prior year uses (10,000,500)
Current year uses (4,428,300)
Total Uses (14,428,800)
Measure Y funding available for future year expenditures $ 3,461,700
Encumbered or designated for carryover for future year expenditures (3,461,700)
Net available for future year appropriations $ -
RECEIVED RED FILE
JAN 18 2010 MEETING AGENDA
DATE IZI&ITEM # �3
SLO CITY CLERK
Comprehensive Annual Financial Report 2009-10: Measure Y Page 2
Community Benefits
Since its adoption in 2006, Measure Y has allowed the City to provide significant benefits to the
community including,but certainly not limited to:
■ Replacement of 1,800 feet of storm drain pipe
• Replacement of 11,400 square feet of sidewalks and 26 curb ramps
■ Paving of 96 City-blocks of roadways
■ Micro-surfacing or slurry sealing of 571 City-blocks
■ Removal of 900,000 pounds(450 tons) of trash, dirt and debris from the storm drains
■ Planting of 305 trees
■ Cleaning of 2,640 catch basins
• Replacement of 7 drainage inlets
• Senior center improvements to the kitchen and installation of parking lot
■ Installation of traffic signal at Osos at Santa Rosa
■ Hiring a full-time Fire Marshall
■ Hiring a full-time Training Battalion Chief
■ Traffic safety and police patrols
■ Enhanced building and zoning code enforcement
■ Enhancement of"SNAP"program
■ Park landscape and restroom maintenance
■ Hiring an additional Traffic Signal Operator
■ Increasing paving crew productivity
■ Implementation of the Storm Water Management Plan
TACouncil Memos\Council Memo-CAFR and Measure Y.doc