06-04-2019 - Item 12 - Preliminary Fiscal Year 2019-20 BudgetAGENDA ITEM NO. 12
AGENDA STAFF REPORT
City of West Covina | Office of the City Manager
DATE:June 4, 2019
TO:Mayor and City Council
FROM:David Carmany
Interim City Manager
SUBJECT:PRELIMINARY FISCAL YEAR 2019-20 BUDGET
RECOMMENDATION:
It is recommended that the City Council receive and file the Fiscal Year 2019-20 Operating and
Capital Improvement Program Budget, direct that it be publicly disseminated, and schedule for
consideration at the June 18th meeting.
BACKGROUND:
The City of West Covina fiscal year is a 12-month period used to measure revenues and
expenditures. It starts July 1 and ends June 30 the following year. At its highest level, a municipal
budget identifies the needs and interests of the community and allocates available resources to those
interests while remaining fiscally strong for the future. In crafting the following proposed
allocations, the staff was guided by the principles of fiscal sustainability & responsibility. This
budget represents the City’s 2019-20 financial plan.
DISCUSSION:
The City’s financial policies, plans, and reporting systems help the operating departments achieve
their objectives and ensure the City’s long-term fiscal health. The City’s accounting program
maintains accounting records in accordance with Governmental Accounting Standards Board
(GASB) pronouncements and Generally Accepted Accounting Principles (GAAP).
The 2019-20 Budget is balanced and focuses on provision of essential services. It assumes changes
will be made to the city organization to achieve economies and efficiencies in city operations, and
improved service. As these changes are implemented, the City will analyze service delivery options,
to include levels of service, service quality and expected performance, service revenues and costs,
required transition activities and other relevant factors before implementing service delivery
methods. Timing and labor relations will be critical factors.
City Fund Structure
A number of different funds are utilized to account for the City, the Successor Agency to the Former
Redevelopment Agency, and the West Covina Housing Authority financial resources. Funds are
classified into the following fund types:
•General Fund
•Special Revenue
•Debt Service
•Capital Projects
•Proprietary
•Private Purpose Trust
The City has established multiple funds, under each fund type, to assist in accounting and record
keeping for the City and outside agencies. A brief description of all the funds is provided in
Attachment No. 1.
Proposed Budget Information
For FY 2019-20, estimated revenues (including transfers in) on an all funds basis are $113,090,058.
Many funds make up the total budget amount, with the largest being the General Fund in the amount
of $65,358,773, or 58% of the City’s total budget.
Estimated expenditures (including transfers out) for all budgeted funds are estimated at
$108,400,697. The General Fund makes up 60% of the organization’s total budget, or $65,358,773.
Personnel costs inclusive of all City funds are anticipated to be $59.4 million. Pension costs for the
California Public Employee's Retirement System (CalPERS) continue to increase again this year and
are anticipated to rise for the next several years.
General Fund
The City’s primary financial goal is to provide an appropriate level of municipal services meeting
the needs of the present without compromising the ability of future generations to meet their own
needs. This will require that community leaders continue to take an active role in the city’s efforts to
think and act sustainably. The City’s General Fund continues to be negatively impacted by
economic conditions, increases in pension costs, the State’s elimination of redevelopment, and the
State’s raid of local revenues.
General Fund Revenues:
Total General Fund revenues are projected to be $65,358,773, a decrease of $502,913 or less than
1% from the prior year adopted budget. Although many of the revenue sources of the City are
increasing such as property tax, the decline is largely due to a transfer into the General Fund
budgeted in the previous fiscal year in the amount of $1.9 million.
General Fund Expenditures:
At this time, General Fund expenditures for FY 2019-20 are projected to be $65,358,773. This
equates to a slight decrease in budgeted expenditures of $67,895 when compared to the adopted
budget for FY 2018-19.
General Fund revenues and expenditures are equal and the budget is balanced once again this year as
illustrated in the chart below.
General Fund Reserves:
To maintain the City’s credit rating and meet seasonal cash flow shortfalls, economic downturns or a
local disaster, the budget provides for an anticipated fund balance for general fund. The General
Fund ending unassigned fund balance, or reserve, is equivalent to a “savings account” to cover
unexpected costs or significant economic changes. The intent is to not use this for normal operating
expenses. Unless changes are made to this preliminary budget, the General Fund ending unassigned
fund balance is projected to be approximately $12 million, which is 18.3% of operating
expenditures, which meets the City’s 17% reserve policy.
At this time, the General Fund’s estimated ending fund balance for FY 2019-20 is $22.7 million;
however, $10 million is considered non-spendable. The non-spendable portion consists of unpaid
loans to the former Redevelopment Agency which have been approved by the Department of
Finance (DOF) and will be repaid over the next few years in the amount of $6.4 million and land
held for resale in the amount of $3 million.
Capital Improvement Program:
Staff is recommending a number of CIP projects for FY 2019-20, with the all of them being funded
from special revenue funds. These projects are listed on Attachment No. 2
This Preliminary Budget will be available on the City's website at the following address:
www.westcovina.org/AnnualBudget
Challenges:
The many and varied changes in this century have created new problems for local government.
Certainly, in this period the complexities of urban living have been compounded and now present
local government with some of the most challenging of problems and opportunities. West Covina
provides a full range of first-class municipal services. These services are varied, complex and often
expensive. The quality of public infrastructure and public services which the City provides help
define quality of life for residents.
There is much work to be done, starting with planning for necessary expenditures by quantifying
then identifying solutions. Current unfunded liabilities include facility and fleet maintenance,
competitive employee salaries and pension costs and other post-employment benefits, risk
management and infrastructure facilities. The 2019-20 budget is a coordinated fiscal plan which
provides vision, direction and fiscal guidance for the municipal organization. The budget will guide
decisions to achieve a future that is responsive to what the public wants. It is possible to achieve this
future with vigilance and specific action steps.
The budget was prepared to provide the City Council and public with transparent, balanced and
objective information to assist in understanding the City’s finances.
ENVIRONMENTAL REVIEW:
This project is a General Exemption under the California Environmental Quality Act.
Prepared by: Robbeyn Bird, CPA, Interim Finance Director
Fiscal Impact
FISCAL IMPACT:
City staff will make every effort to continue to provide the best quality service to our customers with
the resources available.
Attachments
Attachment No. 1 - City Fund Structure
Attachment No. 2 - 2019-20 Project Summary by Fund Number