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CC 03-08-2022 Item No. 1. Mid-Year Financial Report_Staff PresentationFISCAL YEAR 2021-22 MID-YEAR FINANCIAL REPORT CC 03-08-2022 Item No. 1 Agenda Budget Reporting Cycle Amended Budget as of December 31, 2021 General Fund Update American Rescue Plan Act of 2021 Agenda Recommended Adjustments Recommendations and Next Steps Transparency and Engagement Budget Reporting Cycle Proposed Budget May Final Budget June First Quarter November Mid-Year March Third Quarter May FY22 Amended Budget as of December 31, 2021- $229.2M $121.0 $148.8 $80.4 IN M I L L I O N S Proposed Final Budget Adjustments FY22 Appropriation Changes since Adopted Budget Fund FY 21‐22  Adopted Carryovers Encumbrances Adjustments  Approved in 1st  and 2nd Quarter FY 21‐22 Amended  Budget as of  December 31, 2021 General $  89,767,034 $  22,657,533 $    4,906,141 $       7,138,606 $  124,469,314  Special Revenue 18,597,024 11,749,252 2,414,116 212,681 32,973,073  Debt Service 2,676,000 ‐‐ ‐2,676,000  Capital Projects 19,540,000 18,540,682 9,149,571 1,936,000 49,166,301  Enterprise 9,417,117 855,369 189,833 107,800 10,570,119  Internal Service 8,848,012 60,790 208,700 190,045       9,307,547  Total  All Funds $148,845,235 $  53,863,626 $  16,868,361 $       9,585,132 $  229,162,354  General Fund Revenues & Expenditures – Mid-Year Trends (3-year) General Fund Revenues –Mid‐Year  FY 21 vs. FY 22 Mid‐Year Mid‐Year  2021 2022 05 ‐ Sales tax 24,060,027$                    13,818,656$                    (10,241,371)$                      ‐43% 10 ‐ Property tax 7,887,124                        8,331,800                        444,676                             6% 15 ‐ Transient occupancy 879,019                           1,336,855                        457,837                             52% 20 ‐ Utility tax 1,291,056                        1,276,177                        (14,879)                               ‐1% 25 ‐ Franchise fees 627,465                           684,498                           57,033                               9% 30 ‐ Other taxes 1,704,385                        1,056,602                        (647,783)                             ‐38% 35 ‐ Licenses and permits 1,951,667                        2,188,177                        236,511                             12% 40 ‐ Use of money and property 891,614                           926,372                           34,758                               4% 45 ‐ Intergovernmental revenue 1,022,927                        3,433,481                        2,410,554                          236% 50 ‐ Charges for services 5,230,311                        6,905,845                        1,675,534                          32% 55 ‐ Fines and forfeitures 53,744                             105,865                           52,121                               97% 60 ‐ Miscellaneous 1,048,256                        989,591                           (58,665)                               ‐6% 65 ‐ Transfers in 15,000                             4,862,387                        4,847,387                          32316% 70 ‐ Other financing sources 87,567                             52,224                             (35,342)                               ‐40% Grand Total 46,750,161$                    45,968,532$                    (781,629)$                           ‐2% Revenue Category Variance % Change General Fund Expenditures –Mid‐Year  FY 21 vs. FY 22 Mid‐Year Mid‐Year  2021 2022 05 ‐ Employee compensation 8,829,205$                      10,018,381$                    1,189,176$    13% 10 ‐ Employee benefits 4,117,014                        4,701,573                        584,559         14% 15 ‐ Materials 1,926,628                        1,826,518                        (100,110)         ‐5% 20 ‐ Contract services 10,271,661                      10,595,937                      324,275         3% 25 ‐ Cost allocation 5,236,770                        5,974,031                        737,261         14% 30 ‐ Capital outlays 23,470                             32,700                             9,230             N/A  31 ‐ Special projects 658,758                           953,489                           294,731         45% 45 ‐ Transfer out 10,148,689                      16,099,371                      5,950,682      59% 50 ‐ Other financing uses 101,433                           336,005                           234,572         231% Grand Total 41,313,629$                    50,538,005$                    9,224,377$    22% Expenditure Category Variance % Change City Manager Discretionary Fund •$75,000 Adopted Budget •$2,400 used to assist with funding Housing Op-Ed •Staff will continue to report out on the use of this fund Of the $4.8M in funding, $3.1M in revenues recognized •Transportation Transfer - $1,333,773 •Law Enforcement Services - $972,987 •General Liability Insurance - $182,112 •Administration Overhead - $191,573 •CDD Customer Service Solution - $49,343 •Climate Action Plan - $78,000 •Municipal Water System - $10,000 •General Plan and Muni Code Update - $19,052 American Rescue Plan Act of 2021 Mid‐Year  Budget Adjustments Summary by Fund Revenues ‐$                  ‐$              ‐$          10,000,000$ 220,000$     ‐$           10,220,000$  Expenditures 10,000,000$     910,000$       ‐$          (1,847,699)$ 369,650$    26,000$      9,457,951$    Fund Balance (10,000,000)$    (910,000)$      ‐$          11,847,699$ (149,650)$   (26,000)$    762,049$       TotalGeneral Special  Revenue Debt  Service Capital  Projects Enterprise Internal  Service Mid‐Year  Budget Adjustments by Fund and Department  Fund Department  Expenditure  Revenue  Fund Balance  (Use of)  Description 100 Non‐Departmental      10,000,000                    ‐           (10,000,000) Transfer from General Fund to Capital Reserve      10,000,000                   ‐           (10,000,000) 280 CIP           910,000                    ‐                (910,000) Lawrence‐Mitty Park Debris Removal, Clean Up, and  Tree Removal           910,000                   ‐                (910,000) 420 CIP      (1,847,699)                  ‐               1,847,699 All‐Inclusive Play Area Budget Reduction 429 Non‐Departmental                     ‐       10,000,000           10,000,000 Transfer from General Fund to Capital Reserve      (1,847,699)   10,000,000           11,847,699  520 Public Works           350,000                    ‐                (350,000) New Landfill Agreement and Solid Waste Consulting  Services 560 Parks & Recreation             10,300                    ‐                  (10,300) Tree Maintenance 560 Parks & Recreation               9,350          220,000                210,650 Additional Revenue Estimate and Bank Charges           369,650          220,000              (149,650) 630 Public Works             26,000                    ‐                  (26,000) Leaf Blower Replacement             26,000                   ‐                  (26,000)  TOTAL ALL  FUNDS        9,457,951     10,220,000                762,049  TOTAL INTERNAL  SERVICE FUND Recommended Adjustments GENERAL FUND CAPITAL PROJECTS FUND ENTERPISE FUND INTERNAL SERVICE FUND TOTAL GENERAL FUND TOTAL CAPITAL  PROJECTS FUND TOTAL ENTERPRISE FUND  SPECIAL REVENUE FUND TOTAL SPECIAL REVENUE  FUND •CIP- ($937,699) Adjustments by Department Description Revenue Expenditure Fund Balance Lawrence-Mitty Park Debris Removal, Clean up, and Tree Removal - $910,000 ($910,000) All-Inclusive Play Area Budget Reduction - ($1,847,699) $1,847,699 •Public Works- $376,000 Adjustments by Department Description Revenue Expenditure Fund Balance New Landfill Agreement and Solid Waste Consulting Services - $350,000 ($350,000) Leaf Blower Replacement - $26,000 ($26,000) •Parks & Recreation- $19,650 Adjustments by Department Description Revenue Expenditure Fund Balance Tree Maintenance - $10,300 ($10,300) Additional Revenue Estimate and Bank Charges $220,000 $9,350 $210,650 •Non-Departmental- $10,000,000 Adjustments by Department Description Revenue Expenditure Fund Balance General Fund Transfer to Capital Reserve $10,000,000 $10,000,000 - Fund Balance Adjustments •Pension Section 115 Trust •$2M contribution (4th of 5 annual contributions) •Estimated June 30, 2022 balance = $20.8M •Economic Uncertainty Reserve •Increase from $19M to $24M •Alignment with expenditure/revenue growth Fund Balance Adjustments (continued) •Capital Projects Committed Reserve •Establish $10M reserve in General Fund •Assist with capital program short- and long-term planning •Used to fund future capital projects •Requires City Council authorization, transfer, and appropriation before use Fund Balance Adjustments (continued) Actuals Year End  Projection Adopted  Budget 1st Quarter  Year End  Projection Mid‐Year End  Projection CLASSIFICATION 2019‐20 2020‐21 2021‐22 2021‐22 2021‐22 Non Spendable 3.45                      3.44                   3.44                   3.44                   3.44                    Restricted                     14.32                    20.14                    21.87                    21.92                    22.20  Committed 19.13                    19.13                 19.13                 19.13                 34.13                  Assigned                       3.18                     4.91                     3.00                     4.91                     4.91  Unassigned 34.43                    49.23                 35.70                 62.47                 37.15                  TOTAL FUND BALANCE 74.51 96.85 83.13 111.87 101.84 •Reclassify (One) Limited-Term Project Manager Position to Full Term Position Staffing Recommended Actions •Consider Accepting the City Manager’s Mid-Year Financial Report for FY 2021-22. •Consider Adopting a draft resolution 22-032 approving Budget Modification #2122-189 increasing appropriations by $9,457,951 and revenues by $10,220,000. •Consider Approving the Conversion of (One) Limited-Term Project Manager Position to Full-Term Position. Recommended Actions (continued) •Consider Approving Amendments to the City’s Committed, Unassigned Fund Balance, and Use of One Time Funds Policy which includes the following changes: •Consider Approving $2,000,000 contribution from the General Fund to the City’s Section 115 Pension Trust. •Consider Increasing the City’s General Fund Economic Uncertainty Committed Reserve by $5,000,000. •Consider Establishing a General Fund Capital Project Committed Reserve in the amount of $10,000,000. Next Steps ●FY 2021-22 ●Third Quarter Report to Council May 17, 2022 ●FY 2021-22 ●Proposed Budget Study Session May 17, 2022 Transparency and Engagement https://www.cupertino.org/budget Questions?