02-02-1999 - 1998/1999 Mid-Year Budget Report0
• City of West Covina
Memorandum
To: City Council and City Manager
FRom: Finance Department
SUBJECT: 1998-1999 Mid Year Budget Report
.AGENDA
ITEM NO. H-1
DATE 2/2/99
® PRINTED ON RECYCLED PAPER
SUMMARY: The Finance Department has reviewed the City's financial condition. through
December 31, 1998. The Finance Department is proud to reportthat, based
upon the trends through December 31, 1998, the City should end the fiscal
year 1998-1999 with moderate growth in the City's General Fund, and in the
planned positions for other funds.
BACKGROUND:
Each year the Finance Department reviews the financial condition of the City. The review
is based upon the information and financial plan adopted by the City Council in the Budget
Document. The review is divided into two major sections, General Fund and all other
funds.
GENERAL FUND: The City began the year anticipating the following balances and
activities within the General Fund:
Beginning balance — July 1, 1998* $ 11,970,078
Estimated revenues 31,504,840
Transfers in 1,141,500
Appropriations— operating budget 29,463,370
Appropriations — CIP budget 455,000
Transfers out, 2,564,583
Ending balance June 30, 1999* $ 12,133,465
* Undesignated fund balance
Subsequent to July 1, .1998, the City Council increased appropriations for the operating
budget by $28,215 (total $29,491,585). This level of expenditures continues to provide for
moderate growth in the General Fund.
Revenues: A review of revenues indicates that total revenues, as projected, '!will' be
realized. Certain revenue streams will be moderately understated, while others will exceed
projections. Our major revenue streams (property tax, sales tax, motor vehicle in lieu and
investment income) appear to be on target.
Expenditures: Each of the three major expenditure classifications are analyzed below:
Personnel Services —Full-time salaried employees constitute the majority of costs
in the General Fund (about 71%). The personnel services category is about49.2%
expended at the mid -year point. The majority of these savings result from unfilled
positions, which have not been back -filled or were back -filled through limited service.
or overtime. Other savings result from reorganization of departments. The 0.8%
savings, projected to the remainder of the year yields a projected savings of about
$195,000 at June 30, 1999.
Materials and Supplies Materials and supplies represent the second largest
category of costs. This category is about 49% expended. Since 49% is so near
to 50% and the timing of expenditures in this category fluctuates, no savings in this
category is projected.
1998-1999 Mid Year Budget Review
February 2, 1999
Page 2
Capital Expenditures — Traditionally, this category does.not yield savings.. This is
the smallest of the major expenditure categories. This expenditure category is
nearly fully expended at the mid year point. Since many departments purchase
capital items soon after the budget is approved, the near 100% expended level is
not alarming. No savings, however, are projected from this category.
The $195,000 projected savings in the operating budget coupled with the $28,000 in
additional appropriations and the $56,000 debt service savings (see discussion below)
yields net general fund savings of about $223,000.
Expenditures were also reviewed on a departmental basis. Departmental budgets with.
expenditures outside of the normal pattern were analyzed. No additional adjustments are,
considered necessary, and no additional savings are apparent form this review. .
The above savings does not consider
Other Funds: The City began the year anticipating the following balances and activities
outside the General Fund:
Beginning balance - July 1, 1998 $ 28,485,264.
Estimated revenues 23,023,527
Transfers in/Internal service charges 6,604,818
Appropriations — operating budget 22,909,210
Debt service 2,510,390
Appropriations — CIP budget 2,205,300
Transfers out/ 2,255,790
Ending balance — June 30, 1999 $ 28,232,919
Subsequent to July 1, 1998, the City Council increased appropriations for the operating
budget by $392,812. This level of expenditures continues to provide for stable balances
or planned draw downs in the related funds.
Revenues: A review of revenues indicates that the revenues, as projected will be on
target.
Expenditures: Each of the four major expenditure classifications are analyzed below:
Personnel Services — Full-time salaried employees represent the second largest
category of costs in funds outside the General Fund (about 33%). The personnel
services category is about 49.0% expended at the mid -year point. The majority of
these savings .result from unfilled positions, which have not been back -filled or were
back -filled through limited service or overtime. The 1.0% savings, projected to the
remainder of the year yields a projected savings of about $76,000 at June 30, 1999.
Materials and Supplies - Materials and supplies represent the largest category of
costs. This category is about 46% expended. Since 46% is so near to 50% and
the timing of expenditures in this category fluctuates, no savings in this category is
projected.
Debt Service — Debt service is about 42% expended. The amounts budgeted in
these accounts represent scheduled debt service payments. Savings . in these
accounts result from interest on cash held by the trustee. To date, the City has
earned $28,000 on cash held by trustees that reduced debt service costs. Another
$28,000 can be expected during the second half of the year. Since the contribution
by the General Fund pays the debt service costs, this adds $56,000 to the General
Fund reserves, by the end of the year. -
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1998-1999 Mid Year Budget Review
February 2, 1999
Page 3
Capital Expenditures — Traditionally, this category does not yield savings'. This is
the smallest of the major expenditure categories (about 10%). This expenditure
category is about 10% expended at the mid year point. Since many capital items
in these funds require grantor approval, purchases are often delayed. Because of
the nature of these items, no savings are projected from this category.
Expenditures were also reviewed on a departmental basis. Departmental budgets with
expenditures outside of the normal pattern were analyzed. No additional adjustments are
considered necessary, and no additional savings are apparent form this review. The non -
general fund revenue sources are restricted as to use. Accordingly, any savings from
these areas may only be reprogrammed for authorized purposes.
RECOMMENDATION:
Staff s recommends that the City Council receive and file this report.
Margie Tucker
Finance Director
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