HomeMy WebLinkAboutFin Fiscal Year 2021-22 City-Wide Budget Amendments and Fiscal Year 2022-23 Update____________________________________________________________________________________
FOR CITY CLERK ONLY
Council Meeting: September 19, 2022
Disposition: Resolution 15125
Agenda Item No: 1.b
Meeting Date: September 19, 2022
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Finance
Prepared by: Nadine Atieh Hade,
Administrative Services Director
City Manager Approval: ______________
TOPIC: FISCAL YEAR 2021-2022 CITY-WIDE BUDGET AMENDMENTS AND FISCAL YEAR
2022-2023 UPDATE
SUBJECT: RESOLUTION ADOPTING AMENDMENTS TO THE CITY OF SAN RAFAEL BUDGET
FOR FISCAL YEAR 2021-2022 FOR THE PURPOSE OF CONFIRMING AUTHORIZED
APPROPRIATIONS AND TRANSFERS
RECOMMENDATION: Adopt resolution as presented.
BACKGROUND: During the process of developing and recommending the fiscal year 2021-22 budget,
staff provided updates on the fiscal performance of the General Fund and projections through fiscal year-
end.
The fiscal year 2021-22 City-wide budget was last presented to the City Council on June 21, 2022, during
the budget approval process for the fiscal year 2022-23. At that point, staff shared updated projections
and noted adjustments would be formally requested as part of the year-end update. Since the close of
the fiscal year on June 30, 2022, staff has reviewed the revenues and expenditures in the General Fund,
special revenue funds and other special purpose funds. This review has yielded adjustments that are
specific to year-end and clean up in nature to special revenue funds and other special purpose funds.
Aside from the adjustments recommended during the June 21, 2022 meeting, staff is recommending
year-end adjustments to align the budget with actuals. These budget adjustments are recommended by
the City’s outside auditors as the approval by the City Council provides for complete budget
accountability.
The purpose of these amendments is to formally authorize the expenditures and transfers required in
certain funds to fulfill their respective purposes and functions through June 30, 2022.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
ANALYSIS:
General Fund
Revenues and Other Sources:
Revenues: The original FY 2021-22 budget, adopted on June 21, 2021, projected $87,861,080 in
revenues. The City worked with two revenue consulting companies (HdL and Management Partners)
and other local agencies to project revenues for FY 2021-22. As the recovery from the pandemic
continued to outpace projections, the mid-year budget review (updated budget) presented on March 7,
2022, estimated an increase in revenues of $5,060,000 for a projected balance of $92,921,080 citing
higher than anticipated sales and use tax receipts.
On June 21, 2022, revenues were projected to be $93,160,919, which was 0.3% above the updated
budget, based on activity through April. At this time the projected increase did not include the impact of
recognition of American Rescue Plan Act (ARPA) funds in the amount of $16,088,886, which was noted
in the June staff report. With the addition of these revenues, staff now projects revenues to be
$109,009,966 inclusive of ARPA revenue.
As the remainder of the year has come to a close, we’ve begun to see a macro-economic shift as the
highs of the recent pandemic recovery have given way to recessionary fears. Sales and use taxes, which
account for approximately 48% of the adjusted general fund budget, began to pull back a bit in the fourth
quarter from the stellar returns of the second and third quarters to end the year roughly flat when
compared to prior the prior year. This is owing to both the general economic slow-down to end the fiscal
year as well as an approximately $600,000 adverse action by the California Department of Tax and Fee
Administration regarding prior period misallocations of sales tax revenues to the City.
Property taxes, which account for about 30% of the general fund budget, have continued to achieve
strong growth at 4.4% year-over-year and an average of 5% over the last three years. Growth can be
expected to slow a bit in the coming year with the rise in interest rates cooling the frenzied housing market
of late, however, it remains a strong and stable revenue stream for City.
In other revenue items, investment earnings took a sharp decline as high inflation and interest rate
increases combined to take a heavy toll on the overall bond market. The City recorded a net investment
loss of $2,062,074 as a result, however, these losses are unrealized and are caused by fair value
measurement as of the report date (i.e., the City cannot currently sell its securities for a price
commensurate with its amortized cost) as well as the erosion of prior year unrealized gains as a result of
declining interest rates. As the City intends to hold the securities to maturity, these temporary losses will
give way to offsetting gains in the future. Also notable is the recognition of ARPA funds in the amount of
$16,088,886 during the year. These are Federal funds that have been earmarked for a variety of
important projects throughout the City that will be discussed further in this report. Staff requests the
budget be revised to reflect the recognition of these grant funds.
Revised revenues of $109,009,966 are 24% above the originally adopted budget for the reasons stated
above.
Other sources: No adjustments are requested at this time pertaining to other sources of revenue in the
general fund.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
Expenditures and Other Uses:
Expenditures: The original approved FY 2021-22 budget expenditures totaled $87,562,734 and were
increased by $1,083,374 to $88,646,108 during the mid-year review process. As presented during the
June 21, 2022, meeting an additional $2,700,000 in appropriations are requested to cover liabilities
resulting from the City’s Workers' Compensation and Liability program actuarial studies performed during
the year. Total expenditures are $91,346,108.
Other uses: An increase to transfers out in the amount of $9,000 is requested as a transfer to the Loch
Lomond Marina assessment district to reimburse the fund for staff time charged by the City in the prior
year for services that were ultimately not rendered.
Staff recommends the transfer from the general fund to the essential facilities fund in the amount of
$714,885. When Measure E, the use tax of 0.75%, was voted into place in November 2013, it was
approved by Council that 1/3 of the tax would be transferred to the essential facilities fund at year-end to
assist in construction costs and debt servicing. This year, the amount was approximately $4.9 million but
the general fund made principal and interest payments towards the debt on the facilities in the amount of
$4.3 million. This leaves a balance of $714,885 to transfer to the essential facilities fund to support capital
projects.
Proposed changes to the general fund revenues, expenditures and transfers are detailed in the table
below.
The net impact of all proposed changes on the general fund is $12,665,001 of additional revenues and
transfers.
Other Funds
Staff is requesting the approval of $3,765,205 in increased resources and $4,613,564 in increases of
appropriations to other funds that are detailed in Attachment A.
General Fund
Adopted Budget
FY 2021-22
Approved
Changes Current Budget
Proposed
Changes Revised Budget
Revenues 87,861,080 5,060,000 92,921,080 16,088,886 109,009,966
Transfers in 1,755,022 1,755,022 - 1,755,022
Total Resources 89,616,102 5,060,000 94,676,102 16,088,886 110,764,988
Expenditures 87,562,734 1,083,374 88,646,108 2,700,000 91,346,108
Operating Transfer out 2,000,000 250,000 2,250,000 723,885 2,973,885
Total Appropriations 89,562,734 1,333,374 90,896,108 3,423,885 94,319,993
Net Result 53,368 3,726,626 3,779,994 12,665,001 16,444,995
Allocations
Use/(Source) of Emergency
Reserves (720,651) (47,960) (768,611) (324,548) (1,093,159)
Use of Prior Period funds - 533,374 533,374 - 533,374
Available Funds (667,283) 4,212,040 3,544,757 12,340,453 15,885,210
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4
The net impact of all proposed changes on other funds of $848,360 in additional expenditures and
transfers is summarized below:
Other year-end communications:
The City’s Pension liability has achieved significant progress that will be reflected on the city-wide
statement of net position as of the fiscal year ending June 30, 2022. When the Marin County Employees’
Retirement Association (MCERA) Valuation from June 30, 2020, was updated to June 30, 2021, for
financial reporting purposes in the actuary’s annual GASB 67/68 report, the result was full funding of the
City’s pension liability. This was the result of extraordinary investment income during the year ended
June 30, 2021, that is used as the measurement period for reporting June 30, 2022 and is the measure
that is used for financial statement and related disclosure preparation. Therefore, our Annual
Comprehensive Financial Report for fiscal 2022 will disclose a fully funded pension liability. However,
when the new June 30, 2021, valuation was completed in February of 2022 the City’s funded ratio
dropped to 95.8% and with the market declines experienced in fiscal 2022 it can be expected to be
reduced further with the results being reported in the City’s June 30, 2023, annual report.
As staff completes its preparation of the government wide financial statements for the year-end audit, net
results are estimated at $16-17 million, with the vast majority already allocated to planned expenses in
the coming year(s). Staff will not have a finalized amount until the audit is completed as there could be
other revenues pertaining to FY 2021-22 that trickle in through the end of September and the auditors
could have proposed adjustments based on their review. Staff is recommending that the bulk of the net
unassigned funds be assigned as following:
• $1,093,159 to the emergency and cash flow reserve to adhere to the City Council approved policy
which requires minimum target reserve levels at 10% of general fund operating expenditures.
Staff has deferred its recommendation to increase the reserve level to 12% of general fund
operating expenditures as there are currently projects on the horizon that are supported by grants
and require a City match. Staff recommends keeping net available funds for purposes of matching
the grants when the time comes.
• $14,971,510 earmarked for approved projects funded by ARPA proceeds supporting the City’s
policy focus areas of economic recovery, housing & homelessness, racial equity, and
sustainability, climate change & disasters.
• Any remaining fund balance following the above requested assignments earmarked for required
grant matching for the Pickleweed Park Field Renovation project of which a total of $4.24 million
is needed.
Other Funds
Adopted Budget
FY 2021-22
Approved
Changes Current Budget
Proposed
Changes Revised Budget
Revenues 50,163,304 50,000 50,213,304 2,725,463 52,938,767
Transfers in 2,085,000 1,562,000 3,647,000 1,039,742 4,686,742
Total Resources 52,248,304 1,612,000 53,860,304 3,765,204 57,625,508
Expenditures 54,400,936 37,017,905 91,418,841 4,297,707 95,716,548
Transfers out 1,840,022 1,312,000 3,152,022 315,857 3,467,879
Total Appropriations 56,240,958 38,329,905 94,570,863 4,613,564 99,184,427
Net Results (3,992,654) (36,717,905) (40,710,559) (848,360) (41,558,919)
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5
The Parking Services Fund continues to reel from the adverse effects of the pandemic. Although ending
the year with a positive change in net position of $1,128,068, the Fund benefitted from large favorable
adjustments for Pension and OPEB expense related to investment gains of the prior fiscal year. The
Parking Fund is an Enterprise Fund and, therefore, follows the accrual basis of accounting and economic
resources measurement focus as opposed to governmental funds, which use a modified accrual basis
and current financial resources measurement focus. Pension and OPEB balances are adjusted a year
in arrears as they require actuarial analyses of final balances that is not completed prior to issuance of
the annual report. For the fiscal year ended June 30, 2022, the Parking fund recorded favorable
adjustments to expense line items in the amounts of $1,319,144 and $306,839 for Pension and OPEB,
respectively. So, on an operational basis, the fund experienced a loss of approximately $500,000 during
the fiscal year and staff has been analyzing the fund to provide recommendations of actions needed in
order to be profitable again.
FISCAL YEAR 2022-2023 UPDATE
General Fund
It is too early in the year to predict the status of revenues and expenses. The City is focused on achieving
its Goals and Objectives established for the fiscal year, implementing an updated master fee schedule,
analyzing funds that continue to be adversely affected by COVID-19, such as Parking and Childcare to
modify operations to be self-sustaining, and following the market closely so we can start preparing for
recessionary times if needed.
The use of ARPA funds continues to be focused towards the City’s policy focus areas of economic
recovery, housing & homelessness, racial equity, and sustainability, climate change & disasters.
Expenditures are separately tracked and accounted for to ensure detailed accounting and transparency
of eligible uses. Staff continues to submit compliance reports to the Federal government as scheduled.
FISCAL IMPACT: This action authorizes the formal appropriation of resources in the 2021-22 fiscal year
to support the actual expenditure and transfer activity through June 30, 2022, as described in this report.
No spending authority beyond what was spent or committed as of June 30, 2022, is created through this
action.
RECOMMENDATION: Staff recommends that the City Council adopt the Resolution as presented.
ATTACHMENT:
1. Attachment A
2. Resolution approving fiscal year 2021-22 amendments with Exhibit I
Attachment A
Resources
Proposed revenue changes
Increased funding for Workers’ Compensation Program following
actuarial analysis (606)
$2,100,000
Increased funding for Liability Program following actuarial
analysis (605)
600,000
999 3rd Street loan legal expense reimbursements (243) 24,563
Library grant from Sothern California Library Cooperative (215) 900
Proposed transfers in changes
Loch Lomond Marina Community Facilities District transfer to
correct prior year charges (237)
$17,544
Paramedic tax capital transfer to the Essential Facilities Fund
(420)
307,313
Measure E use tax transfer to the Essential Facilities Fund (420) 714,885
Total proposed changes to resources $3,765,205
Uses
Proposed expenditure changes
Increased appropriations to the Abandoned Vehicle Abatement
Fund for additional personnel costs in connection with the
repayment of furloughs (200)
$6,020
Increased appropriations to Library Special Assessment Fund for
additional grant received during the year (215)
900
Increased appropriations for legal costs associated with 999 3rd
Street loan completed earlier in the year (243)
40,574
Increased appropriations for the Measure C Wildfire Prevention
Fund to match additional funding provided for Core programs during
the year (242)
552,400
Increased appropriations to the East San Rafael Traffic Mitigation
Fund for project support (246)
427,000
Attachment A
Increased appropriations for the Grants Fund for expenditures
related to an additional sustainability grant received during the year
(283)
96,150
Increased appropriations to the Capital Improvement Fund for
project support (401)
197,675
Increased appropriations to the Parks Capital Improvements
Fund for rekeying tennis court locks (407)
279
Increased appropriations to the Low and Moderate Income
Housing Fund for legal costs associated with the Centertown project
(495)
46,040
Energy efficient lighting improvements to both the Albert J. Boro
Community Center and Department of Public Works building (603)
74,300
Increased appropriations to the Employee Benefits Fund for
additional payments of accrued vacation and sick leave to
employees upon termination in excess of budget (604)
119,420
Increased appropriations for the Liability Program to support
increased claims during the year (605)
248,000
Increased appropriations for the Workers Compensation Program
to fund additional claims (606)
2,325,200
Increased appropriations for the Communication Replacement
Fund for increased telecommunications charges (609)
163,750
Proposed transfers out changes
Transfer from the Paramedic Tax Fund to the Essential Facilities
Fund (210)
307,313
transfers out from the Loch Lomond CFD #10 to reimburse for
the prior year’s expenditure charged to Loch Lomond CFD #2 (236)
8,544
Total proposed changes to uses $4,613,564
Net proposed changes to Other Funds (Resources less Uses) $(848,360)
Expenditures and Transfers out as adopted fiscal year 2021-2022 $56,240,958
Expenditures and Transfers out as approved through June 30, 2022 $94,570,863
Expenditures and Transfers out with proposed changes $99,184,427
RESOLUTION NO. 15125
RESOLUTION OF THE SAN RAFAEL CITY COUNCIL ADOPTING AMENDMENTS
TO THE CITY OF SAN RAFAEL BUDGET FOR FISCAL YEAR 2021-2022 FOR THE
PURPOSE OF CONFIRMING AUTHORIZED APPROPRIATIONS AND TRANSFERS
WHEREAS, the City Council approved Resolution No. 14938 adopting the fiscal
year 2021-2022 budget; and
WHEREAS, the City Council approved Resolution No. 15043 amending the fiscal
year 2021-2022 budget, and took other actions during the year to authorize spending;
and
WHEREAS, as part of the fiscal year-end closing process, staff has reviewed
and analyzed actual revenues, expenditures and transfers through June 30, 2022, has
identified a need for additional budget adjustments, and has submitted its analysis and
recommendations in a report to the City Council; and
WHEREAS, after examination, deliberation and due consideration, the City
Council has approved the same report and recommendations;
NOW, THEREFORE, BE IT RESOLVED, by the San Rafael City Council that
Resolution No. 14938 for fiscal year 2021-2022 is further amended to authorize the
following adjustments to resources and appropriations, which are reflected in the
Consolidated Funds Schedule (Exhibit I attached hereto and incorporated herein by
reference):
Revenues:Revenues:Revenues:Revenues:Revenues:
Fund Current Budget Resources Transfers in Revised Budget
001 - General Fund 94,676,102.00 16,088,886.00 110,764,988.00
215 - Library Special Assessment Fund 1,101,827.68 900.00 1,102,727.68
237 - Loch Lomond-Marina CFD #2 80,851.00 17,544.00 98,395.00
243 - Affordable Housing In-Lieu-SR 869,880.74 24,562.50 894,443.24
420 - Measure E-Public Safety Facility 17,695.22 1,022,197.61 1,039,892.83
605 - Liability Insurance Fund 1,775,494.02 600,000.00 2,375,494.02
606 - Workers Compensation Fund 2,402,621.36 2,100,000.00 4,502,621.36
Total Revenue Adjustments 100,924,472.02 18,814,348.50 1,039,741.61 120,778,562.13
Expenditures Expenditures Expenditures Expenditures Expenditures
Fund Current Budget Appropriations Transfers out Revised Budget
001 - General Fund 90,896,108.00 2,700,000.00 723,884.69 94,319,992.69
200 - Abandoned Vehicle Abatement 171,464.23 6,020.00 177,484.23
210 - Emergency Medical Services 8,561,587.30 307,312.92 8,868,900.22
215 - Library Special Assessment Fund 1,230,295.98 900.00 1,231,195.98
236 - Loch Lomond CFD #10 19,148.00 8,544.00 27,692.00
237 - Loch Lomond-Marina CFD #2 350,000.00 40,573.50 390,573.50
242 - Measure C Wildfire Prevention Parc 1,817,116.32 552,400.00 2,369,516.32
246 - East SR Traffic Mitigation 1,498,837.04 427,000.00 1,925,837.04
283 - Grants Fund - Other 120,005.77 96,150.00 216,155.77
401 - Capital Improvement Fund-City 1,570,559.46 197,675.00 1,768,234.46
407 - Parks Capital Improvements Fund - 278.81 278.81
495 - Successor RDA-L & M Housing-City 95,000.00 46,040.00 141,040.00
603 - Building Maintenance Fund 745,098.15 74,300.00 819,398.15
604 - Employee Benefits Fund 1,041,759.71 119,420.00 1,161,179.71
605 - Liability Insurance Fund 2,528,985.93 248,000.00 2,776,985.93
606 - Workers Compensation Fund 2,017,859.25 2,325,200.00 4,343,059.25
609 - Communication Replacement Fund 487,735.00 163,750.00 651,485.00
Total Expenditure Adjustments 113,151,560.14 6,997,707.31 1,039,741.61 121,189,009.06
I, LINDSAY LARA, Clerk of the City of San Rafael, hereby certify that the foregoing
resolution was duly and regularly introduced and adopted at a special meeting of the
Council of said City on Monday, the 19th day of September 2022 by the following vote,
to wit:
AYES: COUNCILMEMBERS: Bushey, Hill, Kertz, Llorens Gulati & Mayor Kate
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
LINDSAY LARA, City Clerk
EXHIBIT I
TABLE I
CHANGES TO GENERAL FUND REVENUES AND OTHER SOURCES
General Fund
Adopted Budget
FY 2021-22
Approved
Changes Current Budget Proposed Changes
Revised Budget
Revenues 87,861,080 5,060,000 92,921,080 16,088,886 109,009,966
Transfers in 1,755,022 1,755,022 - 1,755,022
FY 21-22 Resources 89,616,102 5,060,000 94,676,102 16,088,886 110,764,988
FY 20-21 Rollover - - - - -
Total Resources 89,616,102 5,060,000 94,676,102 16,088,886 110,764,988
TABLE II
CHANGES TO GENERAL FUND EXPENDITURES AND OTHER USES
General Fund
Adopted Budget
FY 2021-22
Approved
Changes Current Budget Proposed Changes
Revised Budget
Expenditures 87,562,734 1,083,374 88,646,108 2,700,000 91,346,108
Transfer out 2,000,000 250,000 2,250,000 9,000 2,259,000
Transfer out‐CIP - - - 714,885 714,885
Total Appropriations 89,562,734 1,333,374 90,896,108 3,423,885 94,319,993
TABLE III
CHANGES TO OTHER FUND EXPENDITURES AND OTHER USES
Other Funds
Adopted Budget
FY 2021-22
Approved
Changes Current Budget Proposed Changes
Revised Budget
Revenues 50,163,304 50,000 50,213,304 2,725,463 52,938,767
Transfers in 2,085,000 1,562,000 3,647,000 1,039,742 4,686,742
FY 21-22 Resources 52,248,304 1,612,000 53,860,304 3,765,204 57,625,508
FY 20-21 Rollover - - - - -
Total Resources 52,248,304 1,612,000 53,860,304 3,765,204 57,625,508
Expenditures 54,400,936 37,017,905 91,418,841 4,297,707 95,716,548
Transfer out 1,840,022 1,312,000 3,152,022 315,857 3,467,879
Total Appropriations 56,240,958 38,329,905 94,570,863 4,613,564 99,184,427
Net Results (3,992,654) (36,717,905) (40,710,559) (848,360) (41,558,919)
TABLE IV
CITY‐WIDE APPROPRIATION SUMMARY
All Funds
Adopted Budget
FY 2021-22
Approved
Changes Current Budget Proposed Changes Revised Budget
General Fund 89,562,734 1,333,374 90,896,108 3,423,885 94,319,993
Other Funds 56,240,958 38,329,905 94,570,863 4,613,564 99,184,427
Total Expenditures 145,803,692 38,351,279 184,154,971 8,037,449 192,192,420
