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City’s Financial Update
Tom McGreal | Stratford Court

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On February 3rd the City Council reviewed the six-month results ended December 31, 2019 and the audit report on the Consolidated Annual Financial Results for the fiscal year ended June 30, 2019. Below are the highlight comments and a chart showing key numbers.

Fiscal June 30, 2019:

The final results for the fiscal year ended June 30, 2019 were slightly improved from the FY19 forecast made in May 2019 during the Budget process. This is important because the new FY20 and FY21 budgets were established with the FY19 projected results as the baseline. In other words, there were no surprises.
Revenues continue to be healthy; spending is controlled and cash flow from operations was $1.9 million. This allowed the City to make discretionary decisions to spend $1.4 million on Capital Improvements and Special Projects leaving a surplus of $.5 million. General Fund Reserves totaled $5.7 million, which included a $3.2 million Contingency (22.8% or 83 days) and a growing Pension Reserve of $1.2 million. In addition, the Measure Q Reserve totaled $2.4 million.

Six-Month Results as of December 31, 2019:

Despite a slight decline in Revenues, the six-month results are essentially in line with the Budget as shown in the chart at the left with the following exceptions. Cash flow from operations is actually up somewhat to $2.1 million, but the City’s aggressive Capital Improvements and Special Projects plans totaling $3.1 million result in lower General Fund Reserves of $5.0 million. This includes a Contingency Reserve of $2.4 million (15.3% or 56 days) and a Pension Reserve of $1.8 million. Measure Q Reserves declined to $1.1 million, but that is based upon the assumption that Measure Q spending will total over $4 million in FY20, which will advance the undergrounding project according to plans.

Overall Reserve levels remain strong, however the Finance Committee recommended that the City Council hold the line on any further spending that would impact Reserves. The major driver for the increased Capital Improvement spending relates to Durante Bluff failure, which required an additional $400,000 for a cumulative total cost of almost $1 million. The City continues to pursue Grants and Insurance coverage; however, the costs must be recognized while these efforts are ongoing.

Finally, the chart numbers do not include one-time insurable legal costs of $840,000 and the related Insurance reimbursements of $674,000, which although sizeable are essentially offsets with the difference funded by the existing Self Insurance Reserve.

In Summary Revenues and spending are on-track and the higher Reserves carried over from FY19 provided the resilience to meet the increased project spending in FY20.

 

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