01 - Laserfiche WebLink

Ms. Wagner reviewed the Water Operating Fund, noting that its performance was much more positive than projected by staff at the Mid-Term review when the city embarked on mandatory conservation. She reminded them that the amended budget projected a loss of $83,700 and explained that while revenues were almost $1.2 million less than projected, a material decrease in expenditures actually resulting in an overall gain of $884,000. This relates largely to a decrease in purchases from Zone 7. She also explained that the city will be undertaking a rate study, to be completed no later than September, 1, 2015 as required by Proposition 218. Recommended adjustments of $50,970 include additional transfers to Worker's Compensation Reserve for non-fire employees and the Repair and Replacement Fund, leaving an ending fund balance of$7.3 million against a goal of$6.5 million. Councilmember Brown asked and Ms. Wagner confirmed that net increase in this fund relates to decreased expenditures, not penalty revenues. She reviewed the Sewer Operating Fund, which staff had expected to also suffer the impacts of the drought but ended the year with a net gain of $373,409 resulting from a significant decrease in expenditures and more modest increase in revenues. Recommended adjustments of $25,000 again include contributions to the Worker's Compensation Reserve for non-fire employees and the Repair and Replacement Fund. The fund ends the fiscal year with a balance of$4.2 million, continuing to meet the goal balance of$3.5 million. She noted that sewer rates, which only experience a CPI increase this year, will also be reviewed between now and September 1, 2015. The Golf Course Enterprise Fund ended the year largely as anticipated after significant midyear adjustments to account for the continued drop in rounds played as well as greens 11 and 14 being under reconstruction. Revenues fell short of projections by $263,000 but were largely offset by a $258,000 reduction in expenditures. The fund ended the fiscal year with a net profit of$268,000, which • was transferred to the General Fund to continue to pay down the $10 million bond loan which now sits at $6.8 million. Ms. Wagner explained that total rounds played have fallen to 54,998, down from 73,000 in 2006, and that staff is concerned that the renovations which impacted play this summer will continue to impact revenues in 2014/15 and potentially result in the first ever operating loss at Callippe. Ms. Wagner reviewed the Repair and Replacement Fund, which is where operating funds transfer monies for repair and replacement of city owned assets. Expenditures totaled $1.2 million less than anticipated as a result of both new technology and extensions in useful life of various assts. Because transfers in were scheduled to total $3.5 million versus the $4.5 million that staff feels is necessary to sustain the fund long-term, staff is recommending an additional $1 million in funding from the enterprise funds as noted. With this the fund ends the year with a balance of$20.8 million. Ms. Wagner stated that staff would return in November with a year-end review of the Capital Improvement Program and is working diligently to complete the Comprehensive Annual Financial Report with the hopes of bringing it to the Council for ratification in January. Staff will also return in March 2014 with a mid-year update and in June 2015 with the new two-year budget. Mr. Fialho cautioned that while some might conclude from the presentation that the city is back to pre- recession levels, this needs to be balanced with the struggles and challenges of adhering to the city's own fiscal policies that require planning for reinvestment in much of the city's infrastructure. He noted that in pre-recession times, the city had approximately 50 more employees and dedicated approximately 75% of the operating budget to personnel expenses. Despite have significantly fewer employees, approximately 75% of revenue is still dedicated to personnel. Councilmember Narum asked what makes up the $1 million adjustment to the Repair and Replacement Fund. Ms. Wagner explained again that it is comprised of the $939,000 transfer adjustment from the General Fund and the remainder from the Water and Sewer Funds, as noted. City Council Minutes Page 6 of 11 October 21,2014