03-02-2021 - AGENDA ITEM 04 CONSIDERATION OF SECOND QUARTER FINANCIAL REPORT FOR FISCAL YEAR 2020-21AGENDA ITEM NO. 4
AGENDA STAFF REPORT
City of West Covina I Office of the City Manager
DATE: March 2, 2021
TO: Mayor and City Council
FROM: David Carmany
City Manager
SUBJECT: CONSIDERATION OF SECOND QUARTER FINANCIAL REPORT FOR FISCAL
YEAR 2020-21
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1) Receive and file the Second Quarter Financial Report for Fiscal Year 2020-2 1; and
2) Adopt the following resolution:
RESOLUTION NO.2021-14 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF WEST COVINA, CALIFORNIA, ADOPTING A BUDGET AMENDMENT FOR THE
FISCAL YEAR COMMENCING JULY 1, 2020 AND ENDING JUNE 30, 2021 (SECOND
QUARTER FINANCIAL REPORT)
DISCUSSION:
The City of West Covina has completed the second quarter of Fiscal Year 2020-2 1. The attached Quarterly
Financial Report summarizes the City's overall financial position for the period of July 1, 2020 through
December 31, 2020, 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.). In
addition, it should be noted that all entries for both revenues and expenditures related to the issuance of
Pension Obligation Bonds have been eliminated from the Second Quarter Financial report to facilitate
comparison between Fiscal Year 2019-20 and 2020-2 1.
With only 33.9% of the City's General Fund Revenues received by December 31, 2020, 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) are not received on a consistent basis. In fact, most property tax revenues are
received in December/January and April/May. As part of the second quarter review, staff reviewed General
Fund revenue trends and current available information to provide revised General Fund revenue projections.
The revised revenue projections reflect increases and decreases of various estimated revenues with a net total
increase of $1,785,900. There were several decreases including Transient Occupancy Tax ($927,700), Prop A
Exchange ($300,000), School Resource Officer ($300,000), and False Alarms ($100,000). All these reductions
EXHIBIT NO. 1
CITY OF WEST COVINA
BUDGET AMENDMENT
Date: 3/2/2021
Requested by: Robbeyn Bird
Dept/Div: Various
EXPENDITURES
BA # 034
Posted By:
Date Posted:
Fiscal Year: 2020-21
Amount: N/A
Description: Mid _year Review
2nd Quarter Financial Report
Account Number
Dept/Account Description
Current Budget
Proposed Amendment
Amended Budget
110.32.3210.5129
Mutual Aid OT
214,500
885
500
1,100,000
110.14.1410.6111
Legal Services
25,000
250,000
275,000
110.14.1410.6110
Professional Services
125,000
250,000
375,000
110.32.3210.6424
Capitalized Lease Payments
46,944
184,500
231,444
110.95.9500.9300
Transfer Out
1,620,322
3,560,534
5,180,856
110.13.1350.5183
PERS UAL Pmt - Safet Misc
11,870,931
8 787
891
3,083,040
300.95.9500.9179
Transfer Out
1,000,000
1,000,000
363.15.1510.6490
Miscellaneous Reimbursements
1,600,000
1 000
000
600,00
411,444
1,570,000
1,981,444
REVENUES
Account Number
Account Description
Current Budget
Proposed Amendment
Amended Budget
110.00.4130
Transient Occupancy Tax
1,855,400
(927,7001
927,700
110.00.4580
Prop A Exchange
1,650,000
(300,0001
1,350,000
110.00.9169
Transfer In
1,034,800
1,034,800
110.32.4901
Mutual Aid Cost Reimbursement
330,000
1,070,000
1,400,000
110.31.4140
False Alarms
100,000
(100,0001
APPROVALS
City Council Approval Date (if required, attach minutes): ❑ Approval Not Required
Dept Head Approval: Date:
Finance Director: Date:
Funds Available? ❑ Yes No
City Manager: Date:
ofover$100,000)
❑ Approved ❑ Denied
EXPENDITURES
DescriptionAccount
REVENUES
Account Number
Account Description
Current Budget
Proposed
Amendment
Amended Budget
110.31.4575
School Resource Officer
300,000
(300,050)
110.00.4590
State COVID Relief Funds
1,308,800
1,308,800
300.00.9110
Transfer In
1,620,322
3,560,534
5,180,856
179.00.9300
Transfer In
1,000,000
1,000,000
were a result of the COVID-19 pandemic. These reductions in revenue were offset by increases in revenue for
a General Fund reimbursement of $1,034,800, receipt of COVID Relief Funds in the amount of $1,308,800,
and Mutual Aid reimbursement in the amount of $1,070,000.
With 50% of the year completed, a review of the City's General Fund Expenditures by department shows that
five of the nine departments are on target with budget projections. The Planning Department is just slightly
higher than 50% and is expected to be within the budgeted amount by June 30, 2021. The Community
Development Department was over due to salaries being higher than budgeted. Staff is performing analysis to
determine the reason for the difference between budget and actuals. A budget amendment may be needed
before year end depending on the outcome of this analysis. The Fire Department expenditures for the second
quarter are trending at 61.8% of budget. A study evaluating alternative options for the provision of fire
services is underway. The use of overtime is being closely monitored and evaluated by the City Manager and
the Finance Director and when the study is complete it will be presented to the City Council for review and
direction to resolve this issue.
The overtime budgets for the Police and Fire Departments are being reviewed biweekly by City staff. Staff
will also provide another update on the overtime for both departments in the Third Quarter Financial Report.
The City will make the second quarter financial report available on the City's website for review by the City's
stakeholders.
Prepared by: Robbeyn Bird, Finance Director
Fiscal Impact
FISCAL IMPACT:
The proposed budget amendment will increase General Fund estimated revenues by $1,785,900 and decrease
General Fund expenditures by $3,657,357. In addition, multiple times during the fiscal year, budget
amendments were approved by the City Council which resulted in a decrease in revenue of $300,000 for a
decrease in Contractor's License Tax and an increase in expenditures of $5,143,257. The net increase in both
revenues and expenditures is $1,485,900. Therefore, the General Fund remains in balance for Fiscal Year
2020-21.
Proposed General Fund (Fund 110) changes are summarized as follows:
Budgeted Revenues
$66,672,236
Budget Amendments=
BA#019
(300,000)
TOT
(927,700)
Prop A
(300,000)
GF Reimbursement for Lark Ellen
1,034,800
False Alarms
(100,000)
School Resource Officer
(300,000)
Mutual Aid Reimbursement
1,070,000
COVID Relief Funds
1,308,800
Adjusted Budgeted Revenues ISE3,158,136
Budgeted Expenditures
$66,672,236
Budget Amendments=
BA#011 FireTurn outs
$ 434,847
BA #019 MOE
$ 567,148
BA #021 Carry Overs
$ 320,000
BA #021 Restroom
$ 408,600
BA #021 Dispatch Roof
$ 60,000
BA #021 Energy Efficient Project
$ 2,805,162
Decrease in UAL
$ (8,787,891)
POB Interest Payment
$ 3,560,534
BA #023 CARE Ambulance
$ 547,500
Mutual Aid OT
$ 885,500
Pay Off Trucks
$ 184,500
HR
$ 500,000
Adjusted Expenditures _ $ 68,158,136
It should be noted that revenues and expenditures for Fiscal Year 2020-21 remain balanced.
Attachments
Attachment No. I - Second Quarter Financial Report for Fiscal Year 20-21
Attachment No. 2 - Resolution No. 2021-14
Exhibit No. 1
CITY Achieve Fiscal Sustainability and Financial Stability
COUNCIL
GOALS &
OBJECTIVES:
ATTACHMENT NO. 1
CITY OF
WEST COVINA
Fiscal Year 2020-21
The City has completed the second quarter of Fiscal
Year 2020-21. This report summarizes the overall
financial performance of the City for the period of July
1, 2020 through December 31, 2020, 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 and expenditure budgets per the Budget
to Actual comparisons include adjustments for
carryovers and any appropriations made as of
December 31, 2020. 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 original budget for FY 20-21 was
$66,672,236 for revenues and expenditures excluding
the payment to CalPERS for the Unfunded Accrued
Liability in the amount of $185,582,240 as a result of
issuing the Pension Obligation Bonds in July. All
General Fund Budget Amendments during the fiscal
year have been offset with the annual Unfunded
Liability payment that was budgeted in the amount of
$11,870,931 to keep the General Fund in balance
during the current fiscal year. With 50% of the year
complete, General Fund revenues are at 32.2% of
budget and expenditures are at 40.0% excluding the
budget of the PERS Unfunded Accrued Liability (UAL).
General Fund
Budget to Year -to -Date Actual
$80,000,000
$70,000,000 $66,672,236 $66,672,236
$60,000,000
$50,000,000
$40,000,000
$30,000,000 $21,451,987 $26,544,829
$20,000,000
$10,000,000 1
$_
Revenues Expenditures
■ Budget ■ YTD Actual
ENERAL
REVENU
AL
%
Property Tax
$ 27,386,200
$ 5,115,696
18.7 %
Sales Tax
15,900,000
5,754,067
36.2%
Other Taxes
8,800,700
1,974,325
22.4%
Licenses & Permits
1,636,550
1,026,936
62.8%
Fines & Forfeitures
588,000
433,013
73.6%
Interest & Rents
1 1,111,054
625,281
56.3%
Revenue from
other Agencies
2,255,000
2,726,563
120.9%
Charges for Services
7,052,139
2,111,772
29.9%
Other Revenues
412,500
51,003
12.4%
Transfers In
1,530,093
1,633,331
106.7%
TOTAL
$ 66,672,236
$ 21,451,987
32.2%
The City's two major General Fund revenue sources
are Property Tax and Sales Tax which make up over
65% of the General Fund revenues.
• Property Tax: The first major apportionment
distribution to the City for FY 2020-21 occurred
in December 2020. Also, the revenues
received in July and August are for the prior
year and accrued as such. Included in this line
item are Secured Property Taxes, Property
Taxes In -Lieu of Vehicle License Fees (VLF),
City of West Covina
Second Quarter Financial Report FY 2020-2021
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 2020. As
of December 2020, the allocation received
represents approximately 36% of the total
sales tax allocation for the year. 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 August 2021. Sales
Tax projections were adjusted downward when
the budget was prepared. Despite the COVID-
19 pandemic, Sales Tax projections do not
need to be adjusted at this time.
Other Taxes: This category includes
Franchise Fees, Business License Tax,
Transient Occupancy Tax (TOT), and Property
Transfer Tax. These revenues are not
received evenly throughout the year and with
the exception of Transient Occupancy Tax, are
expected to be on target by the close of the
fiscal year. Transient Occupancy Tax is
expected to be down approximately $927,700
or 50%. This reduction in revenue is
addressed in the attached budget amendment
presented to the City Council with this report.
• License & Permits: Revenues for licenses &
permits include building and engineering
permits, and animal licenses. Revenue
projections are higher than originally projected
mainly due to building activity increases.
Revenues from other Agencies: This
category includes Vehicle In -Lieu, State
Mandated Cost reimbursement revenue, the
exchange of Prop A funds, which are the
largest revenue source in this category, and
COVID-19 relief funds of $1.3 million that was
not budgeted. The Prop A exchange was
$300,000 less than budgeted due to declines in
anticipated Prop A revenues. The increase in
revenue for the COVID-19 relief funds and the
decrease in the Prop A exchange funds is part
of the budget amendment included in this
report.
Charges for Services: These revenues
include plan check and zoning related fees,
recreation fees, interfund charges, and police
and fire fees. These fees are at approximately
30% through the first half of the fiscal year.
Due to the COVID-19 pandemic, the City's
daycare programs have not been operating
and; therefore, the City is not collecting
revenue for these programs. However, the
expenditures of these programs offsets the
reduction in revenue.
Revenue projections were revised based on revenue
trends, and activity to date. The following revised
revenue projections reflect a total increase in
estimated revenues of $1,485,100. The single largest
reason for this increase is due to receipt of COVID
Relief funds in the amount of $1.3 million with a
corresponding decline in TOT of $927,700. Due to the
wildfires in California, an adjustment of $1,070,000 is
being made in the Other Revenue category. There
was a large reimbursement to the General Fund in the
amount of $1,034,800.
Property Tax
$ 27,386,200
$ -
$ 27,386,200
40.2%
Sales Tax
15,900.000
-
15,900.000
23.3%
Other Taxes
8800700
927 000
7873000
11.6%
Licenses & Permits
1,636,550
1,636,550
2.4%
Fines & Forfeitures
588,000
588,000
0.9%
Interest & Rents
1,111.054
1,111.054
1.6%
Revenue from othern a
2255000
408800
2663800
3.9%
Charges for Services
7,052,138
100.000
6,952,139
10.2%
Other Revenues
412.500
1,070.000
1,482,500
2.2%
Transfers In
1,530.093
1,034,800
2,564,893
3.8%
TOTAL
$ 66672236
$ 1485900
$ 68158136
100.0%
As of December 31, 2020, with 50% of the year
complete, $26.5 million or 39.8% of the General Fund
budget has been expensed (refer to chart on the next
page). Most departments are at or below 50% through
the first six months of the fiscal year with the exception
2 1 P a g e
City of West Covina
Second Quarter Financial Report FY 2020-2021
of Human Resources, Planning, Fire and Community amendment may be needed by year end depending on
Development. the outcome of this analysis.
ERAL FUND
ENDITURES
Administration
BUDGET
$ 2,497,876
YTD ACTUAL
$ 1,052,401
42.1%
Ci Clerk
612,557
117,802
19.2%
Finance
1683086
800559
47.6%
Human Resources
655,931
415,893
63.4 %
Rand
336,434
179,457
53.3 %
Police
25,151,357
11,680,539
4-6—.40/6
Fire
15,777,197
9,743,861
61.8%
Public Services
5,256,017
1,786,143
34.0%
Community Development
1 1,210,528
768,174
1 63.5 %
Transfers OutIDebt Service
1 620 322
-
0.0 %
TOTAL ExclWin PERS UAL
$ 54 801 305
$26 544,829
48.4
PERS UAL
11,870,931
0.0%
TOTAL
$ 66,672,236
$26,544.829
1 39.8%
Overtime expenditures should be 50% of budget
based on the number of payrolls for the first half of the
fiscal year. The Police Department is trending at
approximately 59.8% of the overtime budget. The Fire
Department overtime expenditures are over budget by
approximately $1.7 million excluding mutual aid
overtime which is fully reimbursable. Both departments
have had numerous cases of positive COVID-19
incidents which has resulted in the increased overtime.
At the end of the second quarter, five of the nine
General Fund department expenditures are at or below
50% of budget, excluding the PERS UAL prepayment.
The Human Resources budget is at 63.4% of the
budgeted amount through December 31, 2020. A
budget amendment correcting this is attached to this
report. The Planning Department is slightly over 50%
at mid -year and should be within budget at June 30,
2021. The Fire Department expense is at 61.8% of
budget, mainly due to overtime costs that were not
budgeted in the 2020-21 budget. A study exploring
alternative options for the provision of fire services is
underway to provide the City Council with various
options. Finally, the Community Development
department is at 63.5% of budgeted expenditures.
This is due to higher salaries than was budgeted. An
analysis of the salaries being charged to this
department is being performed and a budget
The adopted General Fund budget for FY 2020-21 is
$66,672,236 for revenues and expenditures. This
reflects a balanced budget with no surplus at July 1,
2020. After adjusting revenues and expenditures to the
revised projections of $68,158,136, the revised
General Fund budget is projected to remain in balance
through the end of this fiscal year.
""M=M
rim
The approved budget amendments of $4,595,757
were three (3) separate budget amendments approved
by City Council. On September 15, 2020, Resolution
No. 2020-95 approved a budget amendment of
$434,847 to purchase Firefighting PPE turnouts, a new
compressor, and various other fire equipment. On
October 20, 2020, Resolution No. 2020-108 approved
$567,148 for a Transfer Out to the SB1 Fund for the
maintenance of effort that is required each year and
was inadvertently not budgeted for in the original
budget. On November 17, 2020, Resolution No. 2020-
111 approved a $3,593,762 budget amendment for
Carryover expenditures from June 30, 2020 in the
amount of $320,000, and to fund three capital projects;
Shadow Oak restroom ($408,600), dispatch roof
($60,000), and the Energy Efficiency Project
($2,805,162). The increased costs were off set by the
Unfunded Accrued Liability (UAL) that was budgeted
in the General Fund at $11,870,931.
The requested General Fund budget amendments of
($2,542,709) are as follows: 1) $8,787,891 decrease
in the UAL to offset the increases to the budget during
the first six months of the fiscal year, 2) $500,000
increase for the Human Resources Department which
3 1 P a g e
City of West Covina
Second Quarter Financial Report FY 2020-2021
is offset by a corresponding decrease to the Workers
Compensation Fund, 3) $162,000 for Human
Resources Department insurance costs, 4)
$1,617,500 increase for the Fire Department;
$547,500 for adding an additional ambulance to
accommodate the increase in service calls due to the
COVID-19 pandemic, an increase of $885,500 for
additional mutual aid overtime, and an increase of
$184,500 to pay off the balance on the three trucks
leased in 2019, 5) an increase of $3,560,534 in
Transfers Out to pay the interest payment due on the
Pension Obligation Bonds.
ENTERPRISE FUND
The following table summarizes the revenues and
expenditures for the City's Enterprise Fund:
ND
REVENUES
GET
IYTDKALI
Police Computer Service
Fund
$ 1,047,139
$ 319,827 1
30.5%
ENTERPRISE FUND
EXPENDITURES
BUDGET
YTD ACTUAL
Police Computer Service
Fundl
$ 1,047,198
1$ 248.470
23.7%
The Police Department's Computer Service Group
revenues and expenditures are trending to be within
budget.
OTHER FUNDS
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 FUND
REVENUES
BUDGET
YTD ACTUAL
Assessment Districts
$ 3,880,671
$ 1,685,336
43.41/.
Sewer Maintenance
3,781,918
1,615,659
42.7 %
Gas Tax
2,699,744
1,064,233
39.4%
Prop A
2,384,800
1,264,573
53.0%
Prop C
1,902,586
880,045
46.3 %
Measure R
1,671,988
662,227
39.6%
Measure M
1 1,622,051
1 752,790
1 .4%
Housing Authoritv
310,000
6,973
0.0 %
CDBG
847,054
81,065
9.6%
Grants
2,733,291
154,834
5.7 %
Other Special Revenues
3,004,410
851 356
28.3 %
TOTAL
$ 24 838,513
$ 9,019,091
36.3 %
PECIAL REVENUE FUNDS
EXPENDITURES
BUDGET
YTD ACTUAL
Assessment Districts
$ 4,846,628
$ 1,422,837
29.4%
Sewer Maintenance
4,144,367
445,158
10.7 %
Gas Tax
2,860,177
888,678
31.1%
Prop A
2,323,938
1,841,636
79.2 %
Prop C
2,469,761
436,159
17.7 %
Measure R
2,430,634
396,382
16.3%
Measure
1006423
77419
7.7%
Housina Authoritv
1 283 849
341,041
26.6 %
CDBG
990,605
272,629
27.5%
Grants
1,811,173
183,475
10.1 %
Other Special Revenues
1 2,869,449
801,618
27.9 %
TOTAL
1 $ 27 037 004
$ 7.107.032
26.3 %
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.
4 1 P a g e
ATTACHMENT NO.2
RESOLUTION NO.2021-14
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
WEST COVINA, CALIFORNIA, ADOPTING A BUDGET
AMENDMENT FOR THE FISCAL YEAR COMMENCING
JULY 1, 2020 AND ENDING JUNE 30, 2021 (SECOND
QUARTER FINANCIAL REPORT)
WHEREAS, the City Manager, on or about June 23, 2020, submitted to the City Council a
proposed budget for the appropriation and expenditure of funds for the City for West Covina for
Fiscal Year 2020-2 1; and
WHEREAS, following duly given notice and prior to budget adoption, the City Council
held public meetings, considered and evaluated all comments, and adopted a budget for the fiscal
year commencing July 1, 2020 and ending June 30, 2021; and
WHEREAS, amendments must periodically be made to the budget to conform to changed
circumstances following adoption of the budget.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF WEST COVINA,
CALIFORNIA DOES RESOLVE AS FOLLOWS:
SECTION 1. The City Council hereby approves Budget Amendment No. 34, attached
hereto as Exhibit No. 1, for Fiscal Year 2020-2 1.
SECTION 2. The City Clerk shall certify to the adoption of this resolution and shall enter
the same in the book of original resolutions and it shall become effective immediately.
APPROVED AND ADOPTED this 2nd day of March, 2021.
Letty Lopez-Viado
Mayor
APPROVED AS TO FORM ATTEST
Thomas P. Duarte Lisa Sherrick
City Attorney Assistant City Clerk
I, LISA SHERRICK, Assistant City Clerk of the City of West Covina, California, do hereby
certify that the foregoing Resolution No. 2021-14 was duly adopted by the City Council of the City
of West Covina, California, at a regular meeting thereof held on the 2nd day of March, 2021, by the
following vote of the City Council:
AYES:
NOES:
ABSENT:
ABSTAIN:
Lisa Sherrick
Assistant City Clerk