01-15-2019 - AGENDA ITEM 05 FIRST QUARTER FINANCIAL REPORT FOR FISCAL YEAR 2018-19AGENDA ITEM NO. 5
AGENDA STAFF REPORT
City of West Covina I Office of the City Manager
DATE: January 15, 2019
TO: Mayor and City Council
FROM: Chris Freeland
City Manager
SUBJECT: FIRST QUARTER FINANCIAL REPORT FOR FISCAL YEAR 2018-19
RECOMMENDATION:
It is recommended that the City Council approve the First Quarter Financial Report for Fiscal Year 2018-19.
DISCUSSION:
The City of West Covina has completed the first quarter of Fiscal Year 2018-19. The attached Quarterly
Financial Report summarizes the City's overall financial position for the period of July 1, 2018 through
September 30, 2018, but it is not meant to be inclusive of all finance and accounting transactions. While the
focus of the report is the General Fund, summary financial information is also provided for the Enterprise Fund
(West Covina Service Group) and Special Revenue Funds (i.e. Measure R, Proposition A, etc.).
With only 9% of the City's General Fund Revenues received by September 30, 2018, the General Fund
Revenues are below budget at this time. This is expected, as the City's two largest General Fund revenues
(sales and property taxes) do not come in on a regular basis. In fact, most property tax revenues are received in
December and April. Therefore, more scrutiny on the City's General Fund Revenues will be examined as part
of the Second Quarter Report in the coming weeks.
With 25% of the year completed, a review of the City's General Fund Expenditures by Department, shows that
departments are on target with budget projections with the exception of the Fire Department. The Fire
Department expenditures for the first quarter are trending higher than 25%, due to over budgeted use of
overtime. The over budgeted use of overtime is from the delay in implementing the staffing model changes in
the department, vacancies that are still being filled in the department, and participation in strike teams for
mutual aid wildfires. The State of California will be reimbursing the City for the overtime costs related to the
mutual aid for the wildfires. Therefore, with the reimbursement and salary savings from the vacant positions,
the Fire Department is expected to come within budget at the end of the fiscal year. A review of the Police
Department budget shows that the department is managing its overtime costs, even with a number of vacant
positions.
The overtime budgets for the Police and Fire Departments are being reviewed monthly by City staff, with
results being shared with the City Council. Staff will be sure to provide another update on the overtime for
both departments in the Second Quarter Report.
Lastly, the City prepaid its unfunded pension liability to CalPers at the beginning of the fiscal year at a General
Fund cost of $9,051,268. Doing so, saved the City approximately $364,000 in General Fund pension costs for
the fiscal year, but also represents the largest cost to the City's General Fund for the First Quarter.
Staff has prepared a new format for the attached First Quarter Report, with additional illustrations and charts,
meant to make it easier for readers to comprehend the status of the City's finances and compare to future
reports. The City will also make these reports available on the City's website for future review.
Prepared by: Marcie Medina, Finance Director
Attachments
1st Qtr Financial Report FYI 819
CITY COUNCIL GOALS & OBJECTIVES:
CITY OF
WEST COVINA
1M Utm
Fiscal Year 2018-19
The City has completed the first quarter of Fiscal Year
2018-19. This report summarizes the overall financial
performance of the City for the period of July 1, 2018
through September 30, 2018, but it is not meant to be
inclusive of all finance and accounting transactions.
While the focus of the report is the General Fund,
summary financial information is also provided for the
Enterprise Fund and Special Revenue Funds. The
information presented is unaudited. This report is
intended only to provide the City Council and the public
with an overview of the City's general fiscal condition.
The revenue projections and expenditure budgets
include adjustments for carryovers and any
appropriations made by the City Council as of
September 30, 2018. The information presented
reports revenues as they are received and
expenditures when paid. Revenues and expenditures
are only accrued at year end to account for such
activity in the correct fiscal year.
GENERALFUND
The General Fund is the general operating fund for the
City. It provides the resources to sustain the day-to-
day activities and services to the community. All nine
departments receive support, either directly or
indirectly, from the General Fund.
The General Fund budget for FY 2018-19 is
$65,999,334 for revenues and $65,626,464 for
expenditures. With 25% of the year complete, General
Fund revenues are at 9.0% of budget and
expenditures are at 24.1% excluding the prepayment
of the PERS Unfunded Accrued Liability (UAL).
Revenues for the first quarter are at a higher percent
of budget as compared to the first quarter of the prior
year. Expenditures for the first quarter are lower than
the same period of the prior year.
General Fund
Budget to Year -to -Date Actual
$70,000,000 $65,999,334 $65,626,464
$60,000,000
$50,000,000
$40,000,000
$30,000,000
22 762,216
$20,000,000
$10,000,0D0 $5,938,167
$- M
Revenues Expenditures
■ Budget ■ YTD Actual
GENERAL FUND REVENUES
BUDGET
YTD ACTUAL
%
Properly Tax
$ 25,056,583
$ -
0.0%
Sales Tax
16,525,000
1,193,616
7.2%
Other Taxes
9,341,850
468,144
5.0%
Licenses & Permits
1,498,413
217,843
14.5%
Fines & Forfeitures
710,000
253,249
35.7%
Interest & Rents
915,294
338,454
37.0%
Revenue from other Other Agencies
2,302,000
1,712,479
74.4%
Charges for Services
7,184,166
1,605,610
22.3%
Other Revenues
291,852
8,772
3.0 0
Transfers In
2,174,186
140,000
6.4 0
TOTAL
$ 65,999,334
$ 5,938,167
9.0%
The City's two major General Fund revenue sources
are Property Tax and Sales Tax which make up over
63% of the General Fund Revenues.
City of West Covina
First Quarter Financial Report FY 2oi8-2019
Property Tax: The first major apportionment
distribution to the City for FY 2018-19 will occur
in December 2018. Also, the revenues
received in July and August are for prior year
and accrued as such. Included in this line item
are Property Taxes in -Lieu of Vehicle License
Fees (VLF) and residual payments from the
dissolution of the former redevelopment
agency.
Sales Tax: The City received the first monthly
allocation for sales tax in September 2018. This
allocation represents approximately 30% of the
total sales tax allocation for the first quarter.
The City will continue to receive sales tax
allocations with the final quarter allocation
distributed by the California State Department
of Taxes and Fees Administration, CDTFA, in
November 2019. Sales Tax growth is projected
to remain flat for the fiscal year.
• Other Taxes: Includes Franchise Fees,
Business License Tax, Transient Occupancy
Tax, and Property Transfer Tax. Revenues are
about 5% of budget in the first quarter, about
the same as prior year.
• License & Permits: Revenues include
building and engineering permits. For the first
quarter, revenue is slightly lowerthan prioryear
at 14.5% of budget received compared to
17.4% in the prior year.
• Revenues from other Agencies: Includes
Vehicle in -Lieu, State Mandated
reimbursement revenue, and the exchange of
Prop A funds, which are the largest revenue
source in this category. The Prop A exchange
was received during the first quarter.
• Charges for Services: Revenues include plan
check and zoning related fees, recreation fees,
interfund charges, and police and fire fees.
Included in the budget were new fire fees. Fire
fees represent the largest component of this
category at 44%. These fees were
recommended for approval as part of the FY18-
19 Fee Schedule. Fire Inspection Fees were
not approved and resulted in a reduction of
projected revenues of $161,000. The approval
of the Fee Schedule was delayed and
approved late October. This resulted in an
additional projected reduction in revenues of
approximately $324,600 due to the late
implementation of other fire fees.
GENERALFUND
EXPENDITURES
BUDGET
YTD ACTUAL
%
Administration
$ 1,407,638
$ 343,906
24.4%
City Clerk
487,615
55,316
11.3%
Finance
3,056,195
721,363
23.6%
Human Resources
670,006
127,012
19.0%
Planning
521,530
126,195
24.2%
Police
26,387,200
5,865,698
22.2%
Fire
16,138,156
4,280,575
26.5%
Public Works
3,746,952
890,910
23.8%
Community Services
2,521,314
495,497
19.7%
Transfers Out/Debt Service
1,997,968
804,476
40.3%
TOTAL (Excluding PERS UAL)
$56,934,574
$13,710,948
24.1%
PERS (UAL)
1 8,691,890
9,051,268
104.1%
TOTAL
$65,626,464
$22,762,216
34.7%
As of September 30, 2018, with 25% of the year
complete, $22.8 million or 34.7% of the General Fund
budget has been expensed. The expenditures are
higher than 25% due to the July prepayment of
CaIPERS Unfunded Accrued Liability which is
approximately 14% of the total annual General Fund
Budget. Excluding the PERS UAL prepayment,
General Fund expenditures are at 24.1 % of budget for
the first quarter.
Overtime expenditures should be 23% of budget
based on the number of payrolls for the 1s' Quarter of
the year. The Police Department is trending to be
within its overtime budget at slightly below 23%. The
Fire Department overtime expenditures are at 55.6 %
of budget. This is due to the filling of vacancies with
overtime, mainly for Fire Engine 4. The delay in
closing Fire Engine 4 caused the Fire Department to
2 1 P a g e
City of West Covina
First Quarter Financial Report FY 2oi8-2019
incur more overtime in the first quarter. Also, overtime
incurred for Strike Team in response to mutual aid
increased Fire Department overtime expenditures.
Such expenditures are reimbursed by the State and
result in an increase of expenditures as well as off-
setting revenues. Although the Fire Department
overtime expenditure is expected to exceed budget for
the fiscal year, total department personnel costs are
not projected to exceed the personnel budget. This is
mainly because of salary savings from vacant
positions.
At the end of the first quarter, eight of the General Fund
departments expenditures are at or below 25% of
budget, excluding the PERS UAL prepayment. The
Fire Department expense is at 26.5% of budget
(excluding PERS UAL), mainly due to the delayed
restructuring of the Fire Department. The General
Fund budget for FY 2018-19 is $65,999,334 for
revenues and $65,626,464 for expenditures. This
reflects a budget with a surplus. However, after
adjusting revenues for the loss of Fire Fees, projected
revenues are $65,513,734, which will result in a
shortfall of $112,730.
ENTERPRISE FUND
The following table summarizes the revenues and
expenditures for the City's Enterprise Fund.
ENTERPRISE FUND
REVENUES
BUDGET
YTD ACTUAL
%
Police Computer Service Fund
$ 1,296,400
1 $ 1,127,366
87.0%
ENTERPRISE FUND
EXPENDITURES
BUDGET
YTD ACTUAL
%
Police Computer Service Fund
$ 1,816,757
1 $ 432,045
1 23.8%
The Police Department's Computer Service Group
revenues and expenditures are trending to be within
budget. Originally the West Covina Service Group was
budgeted at a deficit for FY 2018-19, the Police
Department is taking actions to balance their budget
saving approximately $500,000.
OTHERFUNDS
Special Revenue Funds are restricted in their use for
specified purposes. Budget versus actual comparisons
for both revenue and expenditures for Special
Revenue Funds are presented below.
SPECIAL REVENUE FUNDS
REVENUES
BUDGET
YTD ACTUAL
%
Assessment Districts
$ 3,912,692
$ 29,826
0.8%
Sewer Maintenance
3,595,003
8,919
0.2%
Gas Tax
2,329,700
510,289
21.9%
Prop A
2,213,862
562,630
25.4%
Prop C
1,750,353
470,748
26.9%
Measure R
1,312,792
356,838
27.2%
Measure M
1,487,800
402,809
27.1%
Housing Authority
22,904
0.0%
CDBG
846,361
27,405
3.2%
Grants
3,490,898
86,353
2.5%
Other Special Revenues
2,399,417
107,8991
.5%
TOTAL
1$23,338,878
$ 2,586,620
1 11.1%
SPECIAL REVENUE FUNDS
EXPENDITURES
BUDGET
YTD ACTUAL
%
Assessment Districts
$ 4,592,819
$ 883,836
19.2%
Sewer Maintenance
5,182,807
646,790
12.5%
Gas Tax
2,168,331
541,679
25.0%
Prop
2,234,723
2,234,173
100.0%
Prop C
2,826,951
341,395
12.1 %
Measure R
3,258,116
141,428
4.3%
Measure M
2,736,275
9,671
0.4%
Housing Authority
1,036,114
170,119
16.4%
CDBG
1,481,899
65,321
4.4%
Grants
2,101,226
172,445
8.2%
Other Special Revenues
2,360,782
397,414
16.80%
TOTAL
$29,980,043
$ 5,604,271
FOR MORE INFORMATION
This summary report is derived from detailed financial
information generated by the City's Finance
Department. Additional financial information is
available online at www.westcovina.org.
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