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HomeMy WebLinkAboutMinutes - February 11, 2003 SSCITY OF LODI INFORMAL INFORMATIONAL MEETING "SHIRTSLEEVE" SESSION CARNEGIE FORUM, 305 WEST PINE STREET TUESDAY, FEBRUARY 11, 2003 An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, February 11, 2003, commencing at 7:00 a.m. U B. C. ROLL CALL Present: Council Members — Beckman, Hansen, Land, and Mayor Hitchcock Absent: Council Members — Mayor Pro Tempore Howard* Also Present: City Manager Flynn, Deputy City Attorney Schwabauer, and City Clerk Blackston "Absent due to attendance at the American Public Power Association conference in Washington, D.C. CITY COUNCIL CALENDAR UPDATE City Clerk Blackston reviewed the weekly calendar (filed). Announcements: City Manager Flynn reported that he was notified last week that Cynthia Haynes would be leaving employment with the City effective May 1, as she has accepted a position with the Conference and Visitors Bureau in Auburn. He stated that Ms. Haynes will finish three projects that she is currently working on. Further, he reported that a diseased oak tree at Lodi Lake would be removed today, and that the February 18 Shirtsleeve Session had been canceled. TOPIC S C-1 "Follow up discussion regarding auditor's report" Ruby Paiste, Accounting Manager, recalled that at the January 15 Council meeting questions were raised regarding items one and two on page five of the financial statements. She explained that item two shows the ending fund balance of $1,299,032 in the budget column. The projected fund balance in the budget included the Other Sources and Uses of $3,145,000. Ms. Paiste explained that Other Sources and Uses is a line item to reflect projected savings for presentation purposes in the budget. These include savings from vacancies, deferred positions, the value of E step versus actual, personnel costs, carryovers from various departments, and additional projected revenues. Ms. Paiste stated that if she followed the budget format it would show a fund balance of $4,444,000, which is $1,299,032 plus the Other Sources and Uses of $3,145,000. She noted, however, that in the financial statements, she must follow the "financial statements presentation." In the actual financial statements, the items that are in the budget for Other Sources are reflected in the variance column. Ms. Paiste reported that the revenues show a favorable variance of $5,903 and the expenditures show a favorable variable of $1,758,960. The budget shows in Other Sources and Uses a projected share of the general fund of $900,000; however, the Market Cost Adjustment (MCA) transfer did not occur, which resulted in a draw down from the fund balance of $881,000. Ms. Paiste pointed out that if the $900,000 transfer had occurred, the item would have been a positive amount of $18,284. City Manager Flynn stated that revenue estimates and expenditure projections are made when the budget is started. One of the largest items that affects Other Sources and Uses is payroll. Departments are asked to fully budget every position they are authorized, i.e. budget at E step if the position is filled and A step if it is vacant. As the two-year budget progresses staff becomes aware of additional revenues that have come in. When revenue projections are made, adjustments are made for the prior year, or the current year, based upon what is known. On the expenditure side there may be adjustments, such as for pay raises. He stated that the variation amount from the budgeted number and actual number is placed "below the line." This acknowledges that there is a savings, Continued February 11, 2003 which becomes an Other Source, and expenditures (e.g. pay raises) are an Other Use. Mr. Flynn stated that there are things that happen during the year that change the numbers based upon actions taken or information coming in; however, at the end of the year, even after making the adjustments, there are at times additional revenues and expenditure savings. Finance Director McAthie reported that when staff presented this in the Other Sources and Uses, $650,000 was projected in additional revenue and $600,000 was the end result. The expenditure side was under budget. She pointed out that if the MCA transfer had been made prior to the audit, the fund balance would have been as was originally budgeted. Mayor Hitchcock stated that she did not understand the auditor's comment that the City had anticipated to have a $2.6 million loss, but ended with only an $800,000 loss. Ms. McAthie explained that because Other Sources and Uses cannot be booked, the beginning fund balance showed $3.9 million and the budget was projected to be $1.2 million. The $33 million figure represents all employees budgeted at E step. The difference is a combination of all the Other Sources and Uses, e.g. the additional $650,000 revenue, the E step to actual, the vacancies, and any amount of prospective memorandum of understanding adjustments. Ms. McAthie reiterated that if the MCA had been booked in June, and the Other Sources and Uses could be booked, then it would have come out evenly. She stated that the flexibility of the budget is for presentation purposes only. General discussion ensued regarding the two-year budget process, carryover, and the projected Public Employees Retirement System (PERS) increase. Addressing Mr. Flynn, Council Member Hansen commented that if the City is conservative in the next two-year budget cycle, it could translate into a surplus. Mr. Flynn replied that it would be a good idea to build up reserves considering the expected increase in PERS. He expressed concern and stated that the increase would be very significant. He recommended that the City be very careful until the matter is fully resolved and noted that there could be serious political repercussions from public sentiment that City services should not be decreased to cover the cost of government employees' retirement. Mayor Hitchcock reported that PERS projected an 8% return, and over the last 15 years it has been 9.4%. Mr. Flynn stated that he could not find any logical reason why in 2006-07 the City of Lodi would be paying 46% and questioned whether PERS is using margin accounts. Council Member Land stated that, in his opinion, the PERS increase should not become a tax- or ratepayer burden. He announced that on February 13, Mr. Flynn would be receiving the League of California Cities Award for the Advancement of Diverse Communities. D. COMMENTS BY THE PUBLIC ON NON -AGENDA ITEMS None. E. ADJOURNMENT No action was taken by the City Council. The meeting was adjourned at 8:03 a.m. ATTEST: Susan J. Blackston, City Clerk 2 .»„v/.M/,4^. ♦•G ''. t,::._.i. .'M.rt% rJ:". •r'�/a/s "1 ..u..�P'.: ',!',3^�[.,, *I: .0 rNi�:e.e' r.,f f:.:.(: .� /��Mi"et r /<n �i /R''.N' a/': -in ri i .: .n ../f..n.,«.!Yl+:'GfiY�:'R/laY:i{�Y!'!ij Mayor's & Council Member's Weekly Calendar WEEK OF FEBRUARY 11, 2003 Tuesday, February 11, 2003 Reminder Howard. APPA Legislative Rally, Washington D.C. February 8 - 12, 2003. 7:00 a.m. Shirtsleeve Session 1. Follow up discussion regarding auditor's report (FIN) 8:00 a.m. Leadership Lodi, Dynamics Day, Hutchins Street Square, Lodi. Wednesday, February 12, 2003 Thursday, February 13, 2003 Friday, February 14, 2003 Vakntine s Day!!! #10 Saturday, February 15, 2003 Sunday, February 16, 2003 4:00 - 7:00 p.m. Hitchcock. Annual Family Eid Mela sponsored by Pakistani - American Association of San Joaquin County, Stockton Ballroom, 9650 Thornton Road, Stockton. Monday, February 17, 2003 noon Hansen. Masonic High Twelve Club, Richmaid Restaurant, 100 South Cherokee Lane, Lodi. Holiday. City Hall is closed. President's Day. Disclaimer. • This calendar contains only information that was provided to the City Clerk's office N:1Administration\CLERK\FORMS\Mcalndcdoc r CITY OF LODI COUNCILCOMMUNICATION AGENDA TITLE: Follow up Discussion Regarding Auditor's Report MEETING DATE: February 11, 2003 (Shirtsleeve Session) PREPARED BY: Finance Director RECOMMENDED ACTION: No Action Required. BACKGROUND INFORMATION: The City Auditors, KPMG made a presentation on the 2002 Comprehensive Annual Financial Report (CAFR) at the January 15 Council meeting. Mayor Hitchcock requested additional information be presented at a follow up discussion regarding the Aud'itor's report. The requested additional CAFR discussion deals specifically with two items on the Combined Statement of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual — General and Special Revenue Funds (page 5). The first item of discussion will be the $881,756 deficiency of revenues and other financing sources vs. expenditures and other financing uses shown in the General Fund actual column. The major portion of this deficiency is due to the Electric Market Cost Adjustment transfer that was budgeted but not made until after the fiscal year end. The second item of discussion will be the $1,299,032 fund balance as shown on the General Fund revised budget column. The discussion will center on the flexibility of the budget format where items can be used for presentation purposes only vs. the more structured format required in the Financial Statements. In addition to the above items, there was a short discussion on City debt and the increase in borrowing over the last several years. As directed staff pulled the resolutions on any borrowings authorized during that time frame. All borrowings were unanimously approved by Council except the following: ■ Resolution 93-61 authorizing 1993-94 Tax and Revenue Anticipation Notes ■ Council Member Davenport voted no ■ Resolution 97-11 authorizing execution of agreement for financing Electric Capacity with NCPA ■ Council Member Sieglock was absent Resolution 2002-08 relating to COP for 2002 Public Improvement Financing Project ■ Council Member Hitchcock voted no FUNDING: None required at this time. , U"2&64 AVL ro; . t Vicky McAthie, Finance Director �r i 0 0 0 Revenues: Taxes Licenses and permits Intergovernmental revenues Charges for services Fines, forfeits and penalties Investment and rental income Miscellaneous revenue Total revenue Expenditures: Current: General government Public protection Public works Literary Parks and recreation Cap -gal outlay Total expenditures (Deficiency) excess of revenues (under) over expenditures Other financing sources (uses): Operating transfers in Operating transfers out Capital lease proceeds Total other financing sources (uses) (Deficiency) excessof revenues and other financing sources (under) over expenditures and other financing uses Fund balance, June 30, 2001 Fund balance, June 30, 2002 CITY OF LODI COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL -GENERAL AND SPECIAL REVENUE FUNDS Year ended June 30, 2002 10,092,125 - General Fund 1,105,323 13,130,102 13,094,347 Variance Revised 5,032,251 Favorable Budget Actual (Unfavorable) $ 20,388,939 20,575,333 186,394 1,595,564 1,464,450 (131,134) 4,457,772 4,515,275 57,503 1,644,914 1,746,045 101,131 808,032 80,212 (1,820) 779,204 515,748 (253,456) 79,775 137,087 57,312 29,754,220 29,760,150 5,930 10,092,125 - 8,986,802 1,105,323 13,130,102 13,094,347 35,755 5,331,616 5,032,251 299,365 1,198,273 1,157,663 40,610 3,138,340 2,860,433 277,907 148,282 14,282 808,000 33,038,738 31,279,778 1,758,960 (3,284,518) (1,519,628) 1,764,890 5,372,694 5,372,694 (4,883,104) (4,863,104) 148,282 148,282 637,872 637,872 tj (2,646,646) =(88170�1,764,890 3,945,678 3,945,678 Variance Revised t;;129;903;2]__ 3,083,822 1,784,890 Sae accompanying notes to general purpose financial statements. Special Revenue Funds 3,050,317 3,050,317 Variance Revised 7,690,586 Favorable Budget Actual (Unfavorable) 753,405 775,524 22,119 16,020,373 13,228,633 (2,791,740) 808,000 1,333,524 525,524 228,380 110,617 (117,763) 808,032 24,746 24,746 17,810,158 15,473,044 (2,337,114) 693,354 467,571 225,783 2,358,970 706,461 1,650,509 14,465,616 11,663,048 2,902,568 17,517,940 12,739,080 4,778,860 292,218 2,733,964 2,441,746 578,218 578,218 (3,189,750) (3,189,750) (2,611,532) (2,611,532) (2,319,314) 122,432 2,441,746 3,050,317 3,050,317 pe731,003 c 3,172,749 2,441,746 5 Total (Memorandum Only) 8,986,802 1,105,323 13,823,456 Variance Revised 7,690,586 Favorable Budget Actual (Unfavorable) 21,142,344 21,350,857 S 208,513 1,595,584 1,464,450 (131,134) 20,478,145 17,743,908 (2,734,237) 2,452,914 3,079,569 62,655 808,032 606,212 (1,820) 1,007,584 626,365 (381,219) 79,775 161,833 82,058 47,564,378 45,233,194 (2,331,184) 10,092,125 8,986,802 1,105,323 13,823,456 13,561,918 261,538 7,690,586 5,740,712 1,949,874 1,198,273 1,157,663 40,610 3,138,340 2,860,433 277,907 14,613,898 11,711,330 2,902,568 50,556,678 44,018,858 6,537,820 (2,992,300) 1,214,336 4,206,636 5,950,912 5,950,912 (8,072,854) (8,072,854) 148,282 148,282 (1,973,660) (1,973,660) (4,965,980) (759,324) 4,206,636 6,995,995 6,995,995 2,030,035 6,236671 S 4,206,636