HomeMy WebLinkAboutStaff Report 6351
City of Palo Alto (ID # 6351)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 12/15/2015
City of Palo Alto Page 1
Summary Title: 1st Quarter FY 2016 Financial Results
Title: First Quarter Fiscal Year 2016 Financial Results
From: City Manager
Lead Department: Administrative Services
Motion
Staff recommends that Finance Committee review and approve the first (1st) Quarter financial
report.
Background
The purpose of this report is to provide the Council with information on the financial condition
of the City’s General Fund and Enterprise Funds as of the end of the 1st Quarter of fiscal year
(FY) 2016.
Discussion
The FY 2016 1st Quarter ended on September 30, and this report summarizes the actual
financial activity of the General and Enterprise Funds for the three months then ended, and
compares those amounts to the same period prior year and to the FY 2016 Adjusted Budget.
Attachment A provides a breakdown of revenues by source and expenses by function, with
separate columns for Adopted Budget and Adjusted Budget. The Adjusted Budget column
includes prior year commitments that were carried forward into this fiscal year and Budget
Amendment Ordinances (BAOs) through September 30. Encumbrances and actual expenses for
the three month period are also reported.
General Fund revenues (excluding operating transfers and other sources) for the 1st Quarter FY
2016 total $22.9 million which is $1.8 million, or 7 percent, lower than the same period prior
year. Revenue decreases occurred in the sales tax and charges for services categories, and
revenue increases occurred in the transient occupancy tax (TOT) and documentary transfer tax
(DTT) categories. These variances are explained in detail in the Revenue Highlights section.
General Fund expenses for 1st Quarter are 8 percent higher than prior year, and are tracking at
23 percent of Adjusted Budget which is identical to the prior year’s trend.
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Following is a detailed discussion of the most significant revenue and expense items.
Revenue Highlights for 1st Quarter FY 2016
Following is a table which highlights the City’s major revenue sources for the 1st Quarter,
compared to 1st Quarter of the prior year. Each quarter’s revenue is expressed as a percentage
of the Adjusted Budget for that year. Revised projections for the major tax categories are
currently being prepared, and adjustments may be brought forward for City Council
consideration as part of the FY 2016 Mid-Year Budget Review.
FY 2016 FY 2015 % change FY 2016 %FY 2015 %
Property Tax 57$ 69$ N/M 35,067$ 0%31,927$ 0%
Sales Tax 1,251 3,624 (65%)27,630 5%25,957 14%
Charges for Services 3,450 6,027 (43%)24,379 14%24,379 25%
Transient Occupancy Tax 3,283 2,276 44%18,791 17%14,156 16%
Utility User Tax 2,635 2,473 7%11,189 24%11,285 22%
Permits and Licenses 2,340 1,896 23%8,211 28%7,804 24%
Documentary Transfer Tax 1,914 1,302 47%6,852 28%7,514 17%
All Other Revenue Sources 8,019 7,121 13%33,232 24%29,380 24%
Total Revenue 22,949$ 24,788$ (7%)165,351$ 14%152,402$ 16%
1st Quarter Actuals Adjusted Budget
City of Palo Alto
General Fund Revenue
FY 2016 1st Quarter
(000's)
Property tax revenue in the 1st Quarter of the fiscal year is typically only a nominal amount as
property tax receipts are paid by the County primarily in the months of November and March.
FY 2015 actual property tax revenue was $34.1 million which included a one-time receipt of
$1.0 million from the County of Santa Clara for an Educational Revenue Augmentation Fund
(ERAF) distribution. The FY 2016 budgeted amount is $35.1 million, 2.8 percent higher than the
prior year’s actual revenue (5.9 percent higher without the one-time receipt).
Sales tax revenue for the 1st Quarter has decreased $2.4 million from the same period last year
due to the one-time accounting adjustment made in FY 2015 which aligned the sales tax accrual
with the fiscal year, increasing the FY 2015 revenue and decreasing the FY 2016 revenue.
Exclusive of this accounting adjustment, the first receipt of $1.251 million for the current fiscal
year compares to the prior year’s first receipt of $1.256 million.
Charges for services revenue is down $2.5 million from the same quarter last year. This
decrease is due to a combination of the following items:
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Stanford fire service revenue for the 1st Quarter of FY 2016 in the amount of $2.0 million
was invoiced in October (2nd Quarter). In the prior year it was invoiced in September (1st
Quarter). This is a timing difference which will be neutralized before the end of the
fiscal year.
Paramedic service fees decreased $240 thousand from the same period last year due to
fewer trips.
Plan check fees for the 1st Quarter decreased by $299 thousand from prior year’s 1st
Quarter due to two large projects in the prior year’s 1st Quarter.
Transient occupancy tax (TOT) revenue of $3.3 million represents approximately two months
of collections and compares to revenue of $2.3 million for the same period prior year. Factors
contributing to this increase are:
TOT rate increased from 12 percent to 14 percent effective January 1 2015, which
generated $0.5 million in receipts in the current year 1st Quarter from all hotels. In
addition, the 12 percent TOT from newly opened hotels contributed $0.7 million in the
1st Quarter, for a total of $1.2 million that is separated out for transfer to the
Infrastructure Plan.
Daily rates increased 28 percent from prior year - $190 per day to $244 per day -
however occupancy rates decreased from 85 percent to 80 percent. The total number
of rooms available increased by 182, or 9 percent, with the Hilton Garden Inn and
Homewood Suites both opening in March 2015.
Documentary transfer tax receipts total $1.9 million, which is $0.6 million greater than prior
year receipts for the same period. Year over year, the number of transactions is comparable
but the dollar value of current year transactions is higher. These receipts are variable in nature
and difficult to predict. The 2nd Quarter receipts to date are trending lower than 1st Quarter as
a result of fewer transactions.
Permits and licenses revenue totals $2.3 million, or 28 percent of the FY 2016 Budget, with the
$0.4 million increase from prior year primarily due to an increase in new construction permit
revenue.
Expense Highlights for 1st Quarter FY 2016
Following is a table which highlights the City’s expenses by function for the 1st Quarter,
compared to 1st Quarter of the prior year. Each quarter’s expense is expressed as a percentage
of the Adjusted Budget for each year.
City of Palo Alto Page 4
City of Palo Alto
General Fund Expenses
FY 2016 1st Quarter
(000's)
FY 2016 FY 2015 % change FY 2016 %FY 2015 %
inc (dec)
Police 8,675$ 8,120$ 7%37,042$ 23%34,399$ 24%
Fire 6,902 6,425 7%27,022 26%28,597 22%
Community Services 6,199 5,896 5%25,966 24%24,115 24%
Public Works 3,718 3,191 17%16,040 23%14,315 22%
Development Services 2,235 1,977 13%12,018 19%10,772 N/A
Library 1,944 1,708 14%8,727 22%8,253 21%
Administrative Services 1,859 1,651 13%7,738 24%7,326 23%
Planning and Community Env 1,832 1,616 13%11,289 16%8,839 18%
All Other Departments 4,940 4,781 3%24,203 20%19,836 24%
Total Expenses 38,304$ 35,365$ 8%170,045$ 23%156,452$ 23%
1st Quarter Actuals Adjusted Budget
Total expenses for the 1st Quarter of the fiscal year are up 8 percent from the same quarter last
year, which is right in line at 23 percent of the total budgeted amounts.
Police and Fire expenses comprise 41 percent of total General Fund expenditures for the 1st
Quarter, which is comparable to the prior year. Following is a table which highlights Police and
Fire overtime for the 1st Quarter.
Police and Fire
Overtime Expense
FY 2016 1st Quarter
(000's)
FY 2016 FY 2015 % change FY 2016 %FY 2015 %
Inc (Dec)
Police - Overtime 486 465 5%1,539 32%1,500 31%
Fire - Overtime 790 780 1%1,383 57%1,609 48%
1st Quarter Actuals Adjusted Budget
Police overtime is up slightly from prior year, and higher than normal due to overtime in the
dispatch center because of staff vacancies. Fire overtime is comparable to prior year, but has
consumed a higher percentage of budgeted dollars year to date. This is due to the additional
strike teams that were deployed this year to assist with regional fires. Reimbursement will be
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received from the state Office of Emergency Services. Further analysis of police and fire
overtime can be found in Attachment B.
General Fund Budget Stabilization Reserve (BSR) Balance
As reported to the Finance Committee on November 17, FY 2015 ended with a surplus of $13.6
million and a BSR balance of $48.2 million, after transferring $5.1 million of surplus funds to the
Infrastructure Reserve. After deducting the General Fund Adopted Budget BSR balance of
$34.6 million, staff made recommendations for disposition of the remaining surplus funds as
noted below. Council review and approval of these recommendations is scheduled for early
2016.
Description Amount
% of FY
2016
Budget
Beginning BSR balance, July 1, 2015 $ 48,198
Previously approved transfer to Roth Rehabilitation
Reserve per CMR #5879 dated June 2015 (1,000)
FY 2016 one-time expenditures per Adopted Budget (2,123)
FY 2016 BAOs approved and scheduled for approval (2,130)
Reserved for projects in Infrastructure Plan (7,000)
Potential funding for Pension Trust Fund (1,305)
Ending BSR Balance, September 30, 2015 $34,640 18.7%
Enterprise Funds
Following is a summary of change in net position for each of the Enterprise Funds for the three
months ended September 30, 2015, including a comparison of results from the same period last
year.
City of Palo Alto Page 6
City of Palo Alto
Enterprise Funds Change in Net Position
FY 2016 1st Quarter
1st Qtr 1st Qtr Increase
FY 2016 FY 2015 (Decrease)% Change
Water 3,277 3,946 (669)(17%)
Electric (643)(744)101 14%
Fiber Optic 463 600 (137)(23%)
Gas 295 (205)500 (244%)
Wastewater collection 632 476 156 33%
Wastewater treatment 268 524 (256)(49%)
Refuse 2,781 2,873 (92)(3%)
Storm Drainage 832 777 55 7%
Airport 88 14 74 N/A
Total Change in Net Position 7,993$ 8,261$ (268)$ (3%)
Water Fund 1st Quarter net position decreased $0.7 million from prior year due to the
continued reduction of operating revenues as a result of the reduced water consumption
mandated by the San Francisco Public Utilities Commission.
Electric Fund 1st quarter improved $0.1 million from prior year. Utility purchase costs remain at
a high level due to less hydroelectric power as a result of the continued drought.
Gas Fund increased $0.5 million from prior year primarily due to reduced operating transfers to
the Electric Fund.
Pension Update
Following is a table which shows the employee count in each of the Miscellaneous and Safety
Plans as of November 2015 and November 2014.
City of Palo Alto Page 7
Nov 2015 Nov 2014 Nov 2015 Nov 2014
Tier 1 6 7 Tier 1 74 81
Tier 2 2 2 Tier 2 7 6
Tier 3 3 1 Tier 3 8 7
Sub-total 11 10 Sub-total 89 94
Tier 1 112 119 Tier 1 5 2 *
Tier 2 48 37 Tier 2 0 0
Tier 3 34 26 Tier 3 0 0
Sub-total 194 182 Sub-total 5 2
Tier 1 369 385 Tier 1 4 3
Tier 2 67 74 Tier 2 0 0
Tier 3 101 73 Tier 3 0 0
Sub-total 537 532 Sub-total 4 3
Tier 1 44 43 Tier 1 63 67 **
Tier 2 0 0 Tier 2 3 3
Tier 3 1 1 Tier 3 11 11
Sub-total 45 44 Sub-total 77 81
Tier 1 7 7
Tier 2 1 0
Tier 3 0 0
Sub-total 8 7
Tier 1 1 1
Tier 2 0 0
Tier 3 0 0
Sub-total 1 1
Total Tier 1 531 554 Total Tier 1 154 161
Tier 2 117 113 Tier 2 11 9
Tier 3 139 101 Tier 3 19 18
Grand Total Misc Plans 787 768 Grand Total Safety Plans 184 188
%Tier 1 67%72%%Tier 1 84%86%
Tier 2 15%15%Tier 2 6%5%
Tier 3 18%13%Tier 3 10%10%
Tier 1 2.7% @ 55 Tier 1 3% @ 50
Tier 2 2% @ 60 Tier 2 3% @ 55
Tier 3 2% @ 62 Tier 3 2.7% @ 57
*4 @ 3%@50; 1 @ 2.7%@55
**Excludes police trainees
Service Employees
International Union
Utilities Management
Miscellaneous Plans Safety Plans
Fire Chiefs
Association
Employee Group
IAFFCity Council and
Council Appointed
Officers
Employee Group
Management and
Professional
# of Employees # of Employees
Police Management
Association
Police Management
Fire Management
PAPOA
Attachments:
Attachment A: FY2016 Q1 GF (XLSX)
Attachment B Police & Fire OT (XLSX)
ATTACHMENT ACITY OF PALO ALTO
GENERAL FUND FIRST QUARTER FINANCIAL REPORT
FISCAL YEAR ENDING JUNE 30, 2016
(in thousands)
BUDGET ACTUALS (as of 09/30/2015)
Adopted Adjusted Pre % of Adj
Categories Budget Budget Encumbr Encumbr Actual Budget*
Revenues & Other Sources
Sales Tax 27,630 27,630 - - 1,251 #DIV/0!
Property Tax 35,067 35,067 - - 57 #DIV/0!
Transient Occupancy Tax 18,791 18,791 - - 3,283 #DIV/0!
Documentary Transfer Tax 6,852 6,852 - - 1,914 #DIV/0!
Utility Users Tax 11,189 11,189 - - 2,635 #DIV/0!
Motor Vehicle Tax, Penalties & Fines 2,180 2,180 - - 494 #DIV/0!
Charges for Services 25,399 25,399 - - 3,450 #DIV/0!
Permits & Licenses 8,211 8,211 - - 2,340 #DIV/0!
Return on Investment 824 824 - - 5 #DIV/0!
Rental Income 15,296 15,296 - - 3,817 #DIV/0!
From Other Agencies 373 457 - - 577 #DIV/0!
Charges To Other Funds 11,930 11,930 - - 3,017 #DIV/0!
Other Revenues 1,609 1,646 - - 109 #DIV/0!
Total Revenues 165,351 165,472 - - 22,949 #DIV/0!
Operating Transfers-In 18,589 18,589 - - 4,450 #DIV/0!
Encumbrances and Reappropriation 6,452 - - - #DIV/0!
Contribution from Budget Stabilization Reserve 1,732 1,732
As Assumed in the Adopted Budget - - - #DIV/0!
Total Sources of Funds 185,672 192,245 - - 27,399 #DIV/0!
Expenditures & Other Uses
City Attorney 3,101 3,683 583 698 #DIV/0!
City Auditor 1,175 1,206 101 258 #DIV/0!
City Clerk 1,328 1,401 66 223 #DIV/0!
City Council 455 496 42 86 #DIV/0!
City Manager 3,008 3,244 200 741 #DIV/0!
Administrative Services 7,635 7,738 270 1,859 #DIV/0!
Community Services 24,804 25,966 268 3,731 6,199 #DIV/0!
Development Services 11,901 12,018 87 264 2,235 #DIV/0!
Fire 26,532 27,022
Library 8,555 8,727 23 442 1,944 #DIV/0!
Office of Emergency Services 1,051 1,051
Office of Sustainability 423 423 50 136 #DIV/0!
People Strategy and Operations 3,555 4,037 11 519 812 #DIV/0!
Planning and Community Environment 8,900 11,289 150 1,233 1,832 #DIV/0!
Police 36,859 37,042
Public Safety - 126 1,414 15,601 #DIV/0!
Public Works 15,017 16,040 278 1,159 3,718 #DIV/0!
Non-Departmental 8,662 8,662 1,962 #DIV/0!
Total Expenditures 162,961 170,045 943 10,074 38,304 #DIV/0!
Operating Transfers-Out 1,834 2,212 - - 459 #DIV/0!
Transfer to Infrastructure 20,877 20,877 - - 5,219 #DIV/0!
Total Use of Funds 185,672 193,134 943 10,074 43,982 #DIV/0!
Net Changes to BSR - Surplus/(Deficit)(889)
Current BSR Balance (as of September 30, 2015)34,640
BSR % of Total Use of Funds, excluding
Prior year reappropriations & encumbrances 18.7%
12/3/2015
Attachment B
Overtime Analysis for Fiscal Years 2013 through 2016
thru 09/30/15
2013 2014 2015 2016
POLICE DEPARTMENT
Overtime Expense
Adopted Budget $967,900 $1,500,000 $1,500,000 $1,500,000
Modified Budget 970,382 1,500,000 1,500,000 1,500,000
Net Overtime Cost - see below (82,849) 593,565 1,119,728 187,398
Variance to Budget $1,053,231 $906,435 $380,272 $1,312,602
Overtime Net Cost
Actual Expense $1,542,754 $1,711,764 $1,893,220 $486,302
Less Reimbursements
Stanford Communications 51,299 54,552 62,000 13,932
Utilities Communications Reimbursement 28,247 29,845 36,614 7,811
Local Agencies (A)16,255 8,905 10,425 3,838
Police Service Fees 83,785 73,934 69,570 40,234
Total Reimbursements 179,586 167,236 178,608 65,816
Less Department Vacancies 1,446,017 950,963 594,884 233,088
Net Overtime Cost ($82,849)$593,565 $1,119,728 $187,398
Department Vacancies (number of days)5,543 4,251 2,506 1,009
Workers' Compensation Cases 10 14 11
Department Disabilities (number of days)641 776 468
FIRE DEPARTMENT
Overtime Expense
Original Budget $1,624,415 $1,424,414 $1,424,414 $1,382,714
Modified Budget 1,624,415 1,750,956 1,608,710 1,382,714
Net Overtime Cost - see below 628,711 1,012,521 484,339 282,420
Variance to Budget $995,704 $738,435 $1,124,371 $1,100,294
Overtime Net Cost
Actual Expense $1,812,170 $2,562,549 $2,171,795 $790,604
Less Reimbursements
Stanford Fire Services (B)549,088 776,452 658,054 239,553
Cal-Fire/FEMA (Strike Teams)- 50,542 118,317 -
Total Reimbursements 549,088 826,994 776,371 239,553
Less Department Vacancies 634,371 723,034 911,085 268,631
Net Overtime Cost $628,711 $1,012,521 $484,339 $282,420
Department Vacancies (number of days)2,340 2,618 2,709 963
Workers' Compensation Cases 9 18 12
Department Disabilities (number of days)216 489 175
NOTES:
(A)Includes Animal Services contract with Los Altos and Los Altos Hills.
(B )Stanford reimburses 30.3% of Fire Service expenditures.
Data not available
Public Safety Departments
12/3/2015