Item 16 - FIRST QUARTER FINANCIAL REPORT FOR FISCAL YEAR 2022-23AGENDA ITEM NO. 16
AGENDA STAFF REPORT
City of West Covina I Office of the City Manager
DATE: December 6, 2022
TO: Mayor and City Council
FROM: David Carmany
City Manager
SUBJECT: FIRST QUARTER FINANCIAL REPORT FOR FISCAL YEAR 2022-23
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Receive and file the First Quarter Financial Report for Fiscal Year 2022-23; and
2. Adopt the following resolution:
RESOLUTION NO. 2022-117 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
WEST COVINA, CALIFORNIA, ADOPTING A BUDGET AMENDMENT FOR THE FISCAL YEAR
COMMENCING JULY 1, 2022 AND ENDING JUNE 30, 2023 (FIRST QUARTER FINANCIAL
REPORT)
BACKGROUND:
The City has completed the first quarter of Fiscal Year 2022-23. The First Quarter Financial Report
(Attachment No. 1) summarizes the overall financial performance of the City for the period of July 1,
2022 through September 30, 2022, 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 financial information included in this
report is preliminary, unaudited and subject to revision upon completion of the City's closing and audit.
This report is intended only to provide the City Council and the public with an overview of the City's
general fiscal condition.
The City will make the Quarterly Financial Report available on the City's website for review by the City's
stakeholders.
DISCUSSION:
The revenue and expenditures per the Budget to Actual comparisons include adjustments for carryovers
and any appropriations made as of September 30, 2022. 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.
Additionally, a budget amendment is proposed with the Quarterly Report to adjust revenue and
expenditures based on activity to date.
I, LISA SHERRICK, Assistant City Clerk of the City of West Covina, California, do
hereby certify that the foregoing Resolution No. 2022-117 was duly adopted by the City
Council of the City of West Covina, California, at a regular meeting thereof held on the
6th day of December, 2022, by the following vote of the City Council:
AYES:
NOES:
ABSENT:
ABSTAIN:
Lisa Sherrick
Assistant City Clerk
LEGAL REVIEW:
The City Attorney's Office has reviewed the resolution and approved it as to form.
Prepared by: Stephanie Sikkema, Finance Director
Fiscal Impact
FISCAL IMPACT:
The General Fund original budget for FY 2022-23 was $79.9 million in revenue, $79.4 million in
expenditures, and a total revenue less expenditures of $516,345. The proposed first quarter budget
amendment overall has zero impact on the General Fund.
Proposed General Fund (Fund 110) changes are summarized as follows:
Revenue
Property Tax
28,986,300
28,986,300
28,986,300
Sales Tax
23,142,000
23,142,000
23,142,000
Other Taxes
9,446,000
9,446,000
9,446,000
Charges for Services
7,578,220
7,578,220
7,578,220
Licenses & Permits
3,167,810
3,167,810
600,000
3,767,810
Revenue from Other Agencies
2,628,625
2,628,625
2,628,625
Cost Recovery
1,365,900
1,365,900
1,365,900
Interdepartmental Charges
1,196,200
1,196,200
1,196,200
Use of Money & Property
1,078,300
1,078,300
1,078,300
Fines & Forfeitures
1,023,290
1,023,290
50,000
1,073,290
Transfers In
200,093
170,093
170,093
Other Revenues
136,670
136,670
39,000
175,670
Expenditures
Police
27,844,530
27,852,792
102,000
27,954,792
Fire
20,544,117
20,548,652
158,000
20,706,652
Transfers Out
15,525,348
15,525,348
(401,000)
15,124,348
Public Services
6,036,175
6,036,405
140,000
6,176,405
Community Development
3,245,927
3,247,416
600,000
3,847,416
Finance
3,066,009
3,051,046
90,000
3,141,046
Administration
1,833,147
1,833,369
1,833,369
Human Resources
794,097
794,232
794,232
City Clerk
543,713
543,803
543,803
Revenue Less Expenditures
516,345
486,345
486,345
Transfer In from Sucessor Agency Adjusted (30,000)
Total GF Budget Adjustments (30,000)
Net Impact to General Fund 486,345 486,345 486,345
Proposed changes to other funds are summarized below
Uriginal
Current
Aequested
Amended
Other Funds
Budget
Revenue
Air Quality Improvement Trust
-
-
17,000
17,000
Capital Projects
800,000
800,000
(401,000)
399,000
Citywide Maintenance District
2,050,600
2,050,600
(140,490)
1,910,110
Maintenance District#4
-
-
996,266
996,266
Maintenance District#6
-
-
154,700
154,700
Maintenance District#7
-
-
173,744
173,744
WC Community Svcs Foundation
-
-
50,000
50,000
WC CSS CFD
-
-
110,000
110,000
Expenditures
Air Quality Improvement Trust
400,000
400,000
200,000
600,000
Auto Plaza Improvement District
61,464
61,464
57,907
119,371
Police Enterprise
10,000
10,000
490,000
500,000
Prop A
100,000
100,000
(100,000)
-
WC Community Svcs Foundation
-
-
50,000
50,000
ARPA Local Fiscal Recovery Funds
10,232,692
-
10,232,692
ProU A Discretiona
-
-
100,000
100,000
Attachments
Attachment No. 1 - First Quarter Financial Report for Fiscal Year 2022-23
Attachment No. 2 - Resolution No. 2022-117
CITY COUNCIL GOALS & OBJECTIVES: Enhance City Image and Effectiveness
Maintain Good Intergovernmental Relations
Achieve Fiscal Sustainability and Financial Stability
ATTACHMENT NO. 1
CITY OF WEST COVINA
Fiscal Year 2022-23
The City has completed the first quarter of Fiscal Year
(FY) 2022-23. This report summarizes the overall
financial performance of the City for the period of July
1, 2022, through September 30, 2022, 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 to provide City Council and the
public with an overview of the City's general fiscal
condition.
The revenue and expenditures per the Budget to Year -
To -Date (YTD) Actual comparisons include
adjustments for carryovers and any appropriations
made as of September 30, 2022. 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.
The General Fund (GF) 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.
Chart 1: GF Budget vs. YTD Actual
v $90 $79.9 $79.4
o $80
$70
$60
$50
$40
$30 $19.3
$10 ■
$0 $6.6
$0 —
Revenue Expenditures
■Current Budget ■YiDActual
The General Fund original budget for FY 2022-23 was
$79.9 million in revenue, $79.4 million in
expenditures, and a total revenue less expenditures of
$516,345. With only 25% of the year complete,
General Fund revenues are at 8.2% of budget and
expenditures are at 21.6%.
GENERAL FUND REVENUE
The City's two major General Fund revenue sources
are Property Tax and Sales Tax which make up 65% of
the General Fund revenues combined.
Table 1: GF Revenue — Budget vs. YTD Actual
Property Tax
28,986,300
331,603
1.1%
Sales Tax
23,142,000
1,722,759
7.4%
Other Taxes
9,446,000
514,087
5.4%
Charges for Services
7,578,220
1,635,239
21.6%
Licenses & Permits 1 3,167,810 1,569,971 49.6%
Revenue from Other
2,628,625
7,849
0.3%
Agencies
Cost Recovery
1,365,900
18,683
1.4%
Interdepartmental
1,196,200
297,125
24.8%
Charges
Use of Money &
1,078,300
181,730
16.9%
Property
Fines & Forfeitures 1 1,023,290 268,516 26.2%
Transfers In 1 170,093 11 0.0%
Other Revenues 1 136,670 41,723 30.5%
PROPERTY TAX
The first major property tax distribution to the City for
FY 2022-23 will be received in December. Included in
this line item are Secured Property Taxes, Property
Taxes In -Lieu of Vehicle License Fees (VLF), and
residual payments from the dissolution of the former
redevelopment agency.
City of West Covina
First Quarter Financial Report FY 2022-2023
SALES TAX
As of September 30, 2022, the allocation received
represents approximately 7.4% of the total sales tax
allocation for the year. This is typical for this time of
year as there is a two -month lag in sales tax
distributions. 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 2023.
OTHER TAXES
This category includes Franchise Fees, Business
License Tax, Transient Occupancy Tax (TOT), and
Property Transfer Tax. At the end of the first quarter
only $514k or 5.4 percent of the original budget
projection has been realized. This is due to a lag in
when these revenues are received. Additionally, these
taxes are not evenly disbursed throughout the year.
LICENSE & PERMITS
Revenues for licenses & permits include building and
engineering permits, and animal licenses. Revenue
projections are trending as projected. Overall, licenses
and permits are at nearly 50 percent of the original
budget projection. This is mainly due to building and
electrical permits. Revenue and offsetting
expenditures (engineering and building safety
services) are proposed to be adjusted to account for
the influx.
REVENUES FROM OTHER AGENCIES
This category includes Vehicle In -Lieu, State Mandated
Cost reimbursement revenue, and the exchange of
Prop A funds, which are the largest revenue source in
this category. Most of this revenue is received one-
time within the fiscal year. Additionally, the Prop A
Exchange (which accounts for $1.8 million) typically
does not occur until the end of the fiscal year.
CHARGES FOR SERVICES
These revenues include plan check and zoning related
fees, recreation fees, interfund charges, police and fire
fees. These fees are trending as projected at
approximately 21.6% or $1.6 million through
September 2022.
FINES & FORFEITURES
This category includes late payment penalties,
collection agency fees, code fines, vehicle impound
fees, and administrative citations. Overall, fines and
forfeitures are at 26 percent of the original budget
projection. This is mainly due to vehicle code fines and
administrative citations.
OTHER REVENUES
This category includes proceeds from auction,
advertising, final map, and other miscellaneous
revenue. At the end of the first quarter only $41k or
30.5 percent of the original budget projection has
been realized. This is mainly due to one-time proceeds
from a recent auction ($39k).
REVENUES PROJECTIONS
Table 2: GF Revenue
Property Tax
28,986,300
28,986,300
Sales Tax
23,142,000
23,142,000
Other Taxes
9,446,000
9,446,000
Charges for
Services
7,578,220
7,578,220
Licenses & Permits
3,167,810
600,000 3,767,810
Revenue from 2,628,625 2,628,625
Other Agencies
Cost Recovery 1 1,365,900 1,365,900
Interdepartmental 1,196,200 1,196,200
Charges
Use of Money & 1,078,300 1,078,300
Property
Fines & Forfeitures 1 1,023,290 50,000 1,073,290
Transfersln 1 170,093 170,093
Other Revenues 1 136,670 39,000 175,670
2 1 P a g e
City of West Covina
First Quarter Financial Report FY 2022-2023
Revenue projections are revised with the Quarterly
Report based on revenue trends, and activity to date.
The total proposed adjustment is an increase of
$639,000 in revenue to the General Fund.
GENERAL FUND EXPENDITURES
As of September 30, 2022, with 25% of the year
complete, $19.3 million or 21.6% of the General Fund
budget has been expensed (see table below). Except
for Police and Fire, all departments are below 25% for
the quarter. Police and Fire are tending over due to
overtime and the annual CalPERS Unfunded Accrued
Liability (UAL) payment made in July.
Table 3: GF Expenditures — Budget vs. YTD Actual
Administration
1,833,369
411,535
22.2%
City Clerk
543,803
135,321
14.9%
Community
3,247,416
384,970
11.6%
Development
Finance
3,051,046
1,011,977
20.2%
Fire
20,548,652
6,295,798
28.7%
Human Resources
794,232
238,095
24.7%
Police
27,852,792
8,517,166
29.6%
Public Services
6,036,405
2,154,187
19.7%
Transfers Out
1 15,525,348
141,800
0.9%
GENERAL FUND OVERTIME
Overtime is trending over budget (over 25%) in Fire
(34.7%), Police (29.2%), and Public Services (51.7%):
Table 4: GF Overtime YTD
Administration
4,030
603
15.0%
Community Development
0
494
0.0%
Finance
2,860
229
8.0%
Fire
3,233,160
1,120,373
34.7%
Human Resources
0
0
0.0%
Police
3,125,240
912,581
29.2%
Public Services
51,110
26,441
51.7%
Overall, total General Fund Revenue ($6.6M) less
expenditures ($19.3M) for the year is negative $12.7
million. Negative revenue less expenditures is typical
for this time of year due to the lag in property and
sales tax revenue —the City's primary revenue sources.
Except for FY 2020-21, when the City had an influx of
revenue due to the pension bonds, current year
revenue less expenditures are up from prior years.
Chart 2: GF 1" Quarter Revenue Less Expenditures by FY
FYE18 FYE19
FYE20 FYE21
FYE22
FYE23
g (2.00)
(4.00)
(6.00)
(8.00)
(10.00) (9)
(12.00)
(14.00) (13)
(16.00)
(18.00) (17)
(20.00) (18) (18) (18)
PROPOSED BUDGET AMENDMENT
The original adopted General Fund budget for FY
2022-23 was for $79,433,063 expenditures. The
proposed first quarter budget amendment has zero
net impact on the General Fund.
Table 5: Summary of Proposed GF Budget Amendment
Administration 1 1,833,369 1,833,369
City Clerk 543,803 543,803
Community 3,247,416 600,000 3,847,416
Development
Finance
3,051,046
90,000
3,141,046
Fire
20,548,652
158,000
20,706,652
Human Resources
794,232
794,232
Police
27,852,792
102,000
27,954,792
Public Services
6,036,405
140,000
6,176,405
Transfers Out
15,525,348
(401,000)
15,124,348
31Page
City of West Covina
First Quarter Financial Report FY 2022-2023
The proposed General Fund budget amendment totals
$689,000 and includes the following:
1.
2.
9
S.
6.
Community Development ($600k): Building &
Safety ($300k) and Engineering fees ($300k) are
proposed to be increased proportionately to the
influx in Building and Permit Revenue.
Finance ($90k): Information Technology pays for
software licenses citywide. The last renewal of
these licenses was two years ago and therefore
missed in the FY2022-23 budget. An additional
$90k is proposed to be added to fund the
renewal.
Fire ($158k): Salaries & Benefits in Fire are
proposed to be increased based on the estimated
fiscal impact from the recently approved
Memorandum of Understanding (MOU) with the
Firefighters' Association (FFA) ($158k).
Police ($102k): Due to an influx in vehicle code
fines, a $50k adjustment is necessary for citation
processing services. Additionally, ammunition
prices have increased significantly in the past 2
years and the addition of ten new Police Officer
positions has resulted in increased ammunition
consumption. To purchase the proper amount of
ammunition, $52,000 is proposed to be added.
Public Services ($140k): The cost of janitorial,
HVAC, and other building maintenance services
has increased over the years. Based on the most
recent increases, $140k is necessary to
accommodate these services citywide.
Transfers Out (-$401k): The transfer to the CIP
Project Fund is proposed to be reduced by $401k
to balance this request.
The Police Department's Computer Service Group has
expended 26 percent of its budget YTD. Revenue is
generally billed once annually.
Table 6: Police Enterprise Budget vs. YTD Actuals
Revenue 1 645,080 8,000 1.2%
Expenditures 1 241,831 62,963 26.0%
A budget amendment is proposed in this fund to
budget pass -through expenditures totaling $480,000
and required software renewals of $10,000. There is
sufficient fund balance to cover this $490,000
adjustment.
Budget versus actual comparisons for both revenue
and expenditures for the Sportsplex are presented
below:
Table T Sportsplex Budget vs. YTD Actuals
Type
Lurrent
III
IN
Revenue
Budget
Actual
Charges for Services
326,000
20,770
6.4%
Transfers In
180,548
0
0.0%
Use of Money & Property
81,930
18,241
22.3%
Other Revenues
5,900
0
0.0%
Revenue Total
594,378
39,011
Expenditures
Salaries & Benefits
306,378
176,746
57.7%
Materials & Services
288,000
137,257
47.7%
Expenditures Total
594,378
00
4 1 P a g e
City of West Covina
First Quarter Financial Report FY 2022-2023
Table 8 shows budget versus actuals for other funds:
Table 8: Other Funds Budget vs. YTD Actuals
Assessment Districts
Revenue
Expenditures
Capital Project Funds
Revenue
Expenditures
CDBG
Revenue
Expenditures
CFD
Revenue
Expenditures
Debt Service
Revenue
Expenditures
Gas Tax
Revenue
Expenditures
Grant Funds
Revenue
Expenditures
Health Department
Expenditures
Housing Authority
Revenue
Expenditures
Internal Service Funds
Revenue
Expenditures
Metro Funds
Revenue
Expenditures
Other SR Funds
Revenue
Expenditures
SB1
Revenue
Expenditures
Sewer Maintenance
Revenue
Expenditures
Successor Agency
Revenue
2,972,440
0
0.0%
5,200,030
697,178
13.4%
930,900
123,188
13.2%
7,637,090
343,539
4.5%
2,284,395
87,719
3.8%
2,420,512
79,391
3.3%
777,400
338,653
43.6%
5,189,921
4,969,198
95.7%
15,446,948
63,583
0.4%
15,258,000
7,434,023
48.7%
3,063,915
509,837
16.6%
4,412,650
591,883
13.4%
1,156,847
30,461
2.6%
14,579,033
383,335
2.6%
401,000
0
0.0%
22,790
738
3.2%
1,139,103
206,433
18.1%
5,277,198
1,415,265
26.8%
5,009,046
2,792,632
55.8%
7,061,700
2,266,681
32.1%
9,582,330
482,602
5.0%
4,359,858
870,692
7,277,784
765,415
2,989,658
342,347
4,847,972
0
3,769,530 0
7,238,997 383,948
13,002,110 17,234
20.0%
10.5%
11.5%
0.0%
0.0%
5.3%
0.1%
88.8%
In addition to the proposed amendments in the
General Fund, the following is recommended:
1. Fund 119, Air Quality Improvement Trust
($200k): To cover the roll-over encumbrances
from FY2021-22, $200,000 is proposed to be
added. There is sufficient funding in available
fund balance to cover this increase.
2. Fund 1201121, Prop A and Prop A Discretionary
Funds ($0): In order to separate Proposition A
Exchange funds from other discretionary funds, a
new fund was created. An adjustment in the
amount of $100,000 is proposed to move
appropriations from Fund 121 to Fund 120 to
reflect this change. The net impact is zero.
3. Fund 160, Capital Projects Fund (-$401k):
Revenue has been reduced to match the
reduction in transfer from the General Fund.
4. Fund 179, ARPA Local Fiscal Recovery Funds ($0):
The $5,000 hazard pay from the recently
approved MOU with the FFA is proposed to be
added ($335k). Staff proposes reducing Project
No. 22010, Fire Station Repairs, to make the net
impact zero.
S. Fund 184-188, Assessment Districts ($1.4114):
Revenue is proposed to be added to reflect the
latest engineering reports for Maintenance
District (MD) #4 ($996,266), MD #6 ($154,700),
MD #7 ($173,744), and WC CSS CFD ($110,000).
6. Fund 190, Auto Plaza Improvement District
($57,907): Expenditures are proposed to be
adjusted to reflect the latest annual report.
7. Fund 220, West Covina Community Services
Foundation ($0): Both revenue and expenditures
are proposed to be increased by $50k for the
State of the City Event. The net impact is zero.
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.
5 1 P a g e
ATTACHMENT NO. 2
RESOLUTION NO. 2022-117
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
WEST COVINA, CALIFORNIA, ADOPTING A BUDGET
AMENDMENT FOR THE FISCAL YEAR COMMENCING
JULY 1, 2022 AND ENDING JUNE 30, 2023 (FIRST
QUARTER FINANCIAL REPORT)
WHEREAS, on April 19, 2022, the City Manager presented to the City Council a
proposed budget for Fiscal Year 2022-23 in compliance with Section 2-151(m) of the West
Covina Municipal Code; and
WHEREAS, following the initial presentation of the proposed budget for Fiscal Year
2022-23, the City held meetings and community workshops and conducted an online budget
survey in order to solicit input from the public regarding the proposed budget; and
WHEREAS, on June 7, 2022, the City Council adopted a budget for the 2022-2023
Fiscal Year; 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. 2023-009,
attached hereto as Exhibit A, for Fiscal Year 2022-23.
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 6th day of December, 2022.
APPROVED AS TO FORM
Thomas P. Duarte
City Attorney
Dario Castellanos
Mayor
ATTEST
Lisa Sherrick
Assistant City Clerk
City of West Covina
Fiscal Year 2022-23
Budget Amendment No. 2023-009
First Quarter Financial Report
Current
Fund Name (No.) Budget
General Fund (110
Revenue
79,919,408
Expenditures
79,433,063
Revenue less
Expenditures
$486,345
Air Quality Improvement Trust (119)
Revenue
138,910
Expenditures
402,000
Revenue less
Expenditures
-$263,090
Prop A Discretionary
(120)
Revenue
0
Expenditures
0
Revenue less
Expenditures
$0
Prop A (121)
Proposed
Amendment
17,000
200,000
-$183,000
100,000
Amended
Budget
80,608,408
80,122,063
$486,345
155,910
602,000
-$446,090
0
100,000
-$100,000-$100,000
Revenue
2,242,220
2,242,220
Expenditures
2,148,400
-100,000 2,048,400
Revenue less Expenditures
$93,820
$100,000 $193,820
Capital Projects (160)
Revenue
800,000
-401,000 399,000
Expenditures
Revenue less Expenditures
6,129,306
-$5,329,306
ARPA Local Fiscal Recovery Funds (179)
Revenue 0
Expenditures 10,372,692
Revenue less Expenditures-$10,372,692
6,129, 306
-$401,000-$5,730,306
0
0 10,372,692
$0-$10,372,692
WC CSS CFD (183)
Revenue 690 110,000 110,690
Expenditures 66,880 66,880
Revenue less Expenditures-$66,190 $110,000 $43,810
i! < IF11'i X, i OUTIMiiMMIfffiRyll
Revenue 3,350 996,266 999,616
Expenditures 1,245,338 1,245,338
Revenue less Expenditures-$1,241,988 $996,266-$245,722
Current Proposed Amended
Fund Name (No.) Budget Amendment Budget
Maintenance District #6 (186
Revenue
Expenditures
Revenue less Expenditures
Maintenance District #7 (187)
Revenue
Expenditures
Revenue less Expenditures
Auto Plaza Improvement District (190)
Revenue
Expenditures
380
186,369
154,700
155,080
186,369
-$185,989
$154,700
-$31,289
560
173,744
174,304
194,966
194,966
-$194,406
$173,744
-$20,662
115,870
115,870
62,264
57,907
120,171
Revenue less Expenditures $53,606
WC Community Svcs Foundation (220)
Revenue 0
Expenditures 317,537
Revenue less Expenditures-$317,537
-$57,907-$4,301
50,000
50,000
$0
50,000
367,537
-$317,537