HomeMy WebLinkAbout09 YEAR-END UPDATE FOR FISCAL YEAR 2020-21 DocuSign Envelope ID:76C8EA61-5E4C-4EB8-86AE-45AEF804113D 9
Agenda Item
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AGENDAREPORT City Manager UZI
Finance Director
MEETING DATE: OCTOBER 5, 2021
TO: MATTHEW S. WEST, CITY MANAGER
FROM: JASON AL-IMAM, FINANCE DIRECTOR/CITY TREASURER
SUBJECT: YEAR-END UPDATE FOR FISCAL YEAR 2020/21
SUMMARY:
In February 2021, staff provided the City Council with a mid-year budget update on projected
revenues and expenditures for Fiscal Year 2020/21, which projected General Fund Reserves of
$19 million at June 30, 2021. This report provides an update on actual General Fund revenues
and expenditures, now that the books have been closed for Fiscal Year 2020/21. General Fund
revenues are approximately$7 million better than projected whereas General Fund expenditures
are approximately$1.5 million higher than expected yet within budgeted amounts. Consequently,
General Fund Reserves are approximately $5.5 million higher than expected at $24.5 million as
of June 30, 2021 (or 32% of General Fund operating expenditures), which exceeds the City
Council's minimum reserve policy of 20%.
RECOMMENDATION:
Staff recommends that the City Council receive and file this report on Fiscal Year 2020/21.
CORRELATION TO THE STRATEGIC PLAN:
The recommendation correlates to the strategic plan by implementing Goal C, sustain long-term
financial strength with adequate reserves and enhanced capacity to provide a sustainable level of
City services.
DISCUSSION:
In February 2021, General Fund revenues were projected to be approximately$69.8 million for Fiscal
Year 2020/21. However, now that the books have been closed, revenues are approximately $7
million better than projected.
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Fiscal Year 2020/21 Year-End Update Page 2 of 4
GENERAL FUND REVENUES _J
Actual
Operating Revenue Projected (Unaudited) Difference
Property Tax $22,205,016 22,138,108 (66,908)
Sales & Use Tax 26,428,690 30,351,631 3,922,941
Franchise Fees 1,532,800 1,652,333 119,533
Transient Occupancy Tax 700,000 1,218,924 518,924
Other Tax Revenue 943,750 1,394,570 450,820
Departmental Revenue 1,098,036 2,433,519 1,335,483
Use of Money & Property 1,714,940 1,869,854 154,914
Fines & Forfeitures 575,000 836,727 261,727
Transfers & Reimbursements* 10,646,800 10,003,942 (642,858)
Other Revenue 940,323 1,857,868 917,545
Total Operating Revenue 66,785,355 73,757,476 6,972,121
Non-Operating Revenue
CARES Act Revenue $3,038,619 3,038,619 -
Total General Fund Revenue $69,823,974 76,796,095 6,972,121
*The majority of transfers and reimbursements in the General Fund are related to ongoing program
costs and/or services funded by restricted funds.
The better than expected revenues is largely due to the following:
Sales & Use Tax Revenue was approximately $3.9 million better than projected, which is
largely associated with Autos &Transportation ($1.8 million higher than expected). Sales for
Tustin Autos & Transportation reflected an increase of 32% over the previous fiscal year
compared to the countywide average for Autos&Transportation, which reflected an increase
of 19% countywide.
The better than expected sales tax revenue was also due to strong sales from the General
Consumer Goods, Business & Industry and from the State &County Pools. The increase in
the countywide pool has been boosted by the collection of use-tax on internet sales in
response to the Supreme Court's Wayfair decision and as more consumers ventured online
during the pandemic.
Departmental Revenue consists primarily of revenue generated by Parks and Recreation
and Community Development. Building fees were approximately$700 thousand higher than
projected, which relates to a significant increase in the number of tenant improvement
projects that took place during the year. In addition, tennis and pickleball fee revenue
increased by approximately $360 thousand, which is largely related to court reservations at
the new Veterans Sports Park, which opened to the public in September 2020 and quickly
became very popular.
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Other Revenue was higher than projected partly due to a grant from the County of Orange
in the amount of$273,800, which was used to provide economic assistance to fifty-five (55)
small businesses. In addition, other revenues were higher than projected due to various
revenues and reimbursements, including but not limited to federal and state grants, state
mandated reimbursements, etc.
General Fund Expenditures
General Fund expenditures were projected at$73.8 million for 2020/21.Actual expenditures incurred
through June 30, 2021 amounted to approximately $75.3 million, which was approximately $1.5
million (2%) higher than projected. However, it is important to note that the amounts expended in the
General Fund were within budgeted appropriations of $75.7 million. The higher than projected
expenditures largely relates to the following:
• Police Services — Overtime costs associated with sworn personnel amounted to
approximately$1.5 million, which was approximately$800 thousand higher than projected.
• Public Works—General Fund costs associated with Public Works were approximately$500
thousand higher than projected,which primarily related to contract tree trimming,water costs,
and building maintenance and repair.
• Non-Departmental — The aforementioned small business assistance program, which was
funded from a County grant in the amount of$273,800, resulted in grant assistance to small
businesses, which was not factored into the mid-year forecast.
General Fund Reserves
General Fund Reserves were projected to be$19 million at June 30, 2021. However, actual General
Fund Reserves are approximately$5.5 million higher and amount to $24.5 million at June 30, 2021,
which is 32% of General Fund operating expenditures (based on General Fund appropriations for
Fiscal Year 2021/22 that amount to $76.5 million) and exceeds the City Council's minimum reserve
policy of 20%for the General Fund.
Tustin CARES Program Update
In 2020, as part of the federal Coronavirus Aid, Relief, and Economic Security(CARES)Act aid funds
the City of Tustin received, the Tustin City Council approved the Tustin CARES program and
provided over $3 million in direct grants to small businesses, non-profits and individuals/families in
need of food and/or housing/rental assistance to address the economic impacts of the loss of
revenue due to the COVID 19 pandemic.
In March 2021, Congress passed the American Rescue Plan Act of 2021 (ARPA), which includes
$350 billion in aid for state and local governments. The City of Tustin received an allocation of$19.4
million of funds, which will be utilized to address the economic impacts of the pandemic and to
provide aid and reinvestment into the Tustin Community. As a continuation of the Tustin CARES
program launched last year, $3 million from ARPA funds will be utilized in Fiscal Year 2021/22 to
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fund the Tustin CARES 2021 program for COVID response, relief and reinvestment into our
community, which began with two new grant programs: the Tustin Small Business Recovery Grant
Program and the Non-Profit Recovery Grant Program.
In a continuing partnership with the Orange County/Inland Empire Small Business Development
Center (OCIE-SBDC), the City allocated $2 million for the Tustin Small Business Recovery Grant
Program, which will provide grants to up to 200 small businesses needing financial assistance in
overcoming the temporary loss of revenue due to the COVID-19 pandemic. The application period
opened on August 23, 2021 and closed on September 3, 2021. The disbursement of funds is
underway and is expected to be fully disbursed to up to 200 small businesses by the end of October
2021.
The City has also partnered with the Tustin Community Foundation to develop a Non-Profit Recovery
Grant Program to provide funding to eligible Non-Profits that experienced a loss of revenue due to
COVID-19. The City allocated up to $1 million of ARPA funds for this program. Non-Profits may be
eligible to receive up to$15,000. The Non-Profit Recovery Grant Program application period opened
on September 13, 2021 and closed on September 27, 2021. The Non-Profit grants are expected to
be disbursed in November 2021.
Pension Update
The City's net pension liability was $76 million as of June 30, 2020, which is based on the most
recent CalPERS actuarial valuation report, which was issued in July 2021. It is important to note that
the 21.3% return on investments that CalPERS reported for Fiscal Year 2020/21 is not reflected in
the June 30, 2020 valuation.
The City has also deposited funds into a separate irrevocable Section 115 Pension Trust, which
provides for rate stabilization since Pension Trust assets can be used to offset unanticipated
increases in CalPERS pension costs. The Pension Trust has a balance of approximately $7 million,
which brings the City's net pension liability to $69 million, which is 77% funded.
During Fiscal Year 2021/22, the City will update its pension funding strategy to ensure that it is
designed to mitigate against risk exposure (e.g. CalPERS investment return volatility) and with the
goal of achieving 90% funded status within the next 5-7 years. In November 2021 CalPERS is
expected to consider potential changes to the discount rate, which is the long-term interest rate used
to fund future pension benefits. Therefore, the updated pension funding strategy will also address
impacts associated with any changes in the discount rate.
FSign//e//d by:
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Finance Director/City Treasurer