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REVIEW FISCAL YEAR 2017-18 SECOND QUARTER MEASURES A AND B REVENUES AND EXPENDITURES
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Information item only.
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Summary
City ordinance 2013-07-09-1601, Section 19-Citizen Oversight stipulates the Measure A Citizens Advisory Committee: “shall meet at least annually to review the expenditure of revenues generated by the tax imposed by this Ordinance and make recommendations to the City Council regarding those expenditures.”
Section 7 of the Committee’s bylaws (Informational Materials) also states: “At least quarterly, financial reports-including proposed Budgets and Actuals with detailed supporting schedules will be sent to each Committee member. The reports will show revenue generated by Measure A, detailed line-item expenditures as presented in the annual budget relative to Measure B (public safety), and all other uses of remaining Measure A funds and State Board of Equalization reports.”
Attached for review by the Measure A Citizens’ Advisory Committee is the second quarter financial report for Fiscal Year (FY) 2017-18.
Present Situation
The FY 2017-18 Amended Budget, as shown on Attachment A, includes encumbrance rollovers from FY 2016-17. Police and Office of Violence Prevention (OVP) expenditures in the Amended budget total approximately $22.4 million.
Total revenues included in the FY 2017-18 Amended Budget are approximately $31.0 million. Measure A revenues received as of December 31, 2017, totaled $6,825,000; reflecting three monthly payments for sales transactions occurring between July and September 2017 without the final quarterly true up. Also attached is the State Board of Equalization sales tax revenues report for the quarter ended December 31, 2017, showing $8,735,937 in gross revenues which does not reflect the quarterly true up. The report identifies Measure A revenues as add-on tax code 361.
The Police Department expended just under $10.0 million, and the OVP expended $382,274 through the second quarter of the fiscal year, for total Marshall Plan expenses of $10.4 million. Combined salary and benefit costs for Police sworn and non-sworn positions were at 48% of the budget including the budgeted vacancy savings. OVP salary and benefit expenses were at 41%, reflecting the savings accrued from one position (of the seven budgeted) having been vacated one month into the fiscal year. OVP subsequently filled the position on April 16, 2018. The Police Department continues to fill the positions funded by Measure A. As of December 31, 2017, the number of Measure A-funded sworn officer vacancies was just 12 of the 120 authorized, and in the remaining two quarters of the fiscal year, salary and benefit costs in the Police department are expected to increase and become closer to the full budgeted cost.
The costs for fuel in the Police Department appear higher than expected at mid-year. However, this change reflects an error that was corrected in the next quarter, with fuel costs expected to end the year close to the budgeted level. Vehicle and related equipment costs through mid-year are lower than budgeted although expenditures from a contract underway are expected to be realized during the second half of the year. Training costs for the first half of the year were more than 50% of budget due to timing of expenditures. As with the other expenditure categories mentioned in this report, overall training costs are anticipated to end the year at or close to the budget.
Police and OVP expenses are expected to increase in several categories in the second half of the year, with a current year-end projection of $22.1 million as reflected in the FY 2018-19 Proposed Budget schedules in the following agenda item. This projection would result in the Marshall Plan expenses as a percentage of Measure A revenues ending the year at 71%.
Other uses of Measure A revenues budgeted in the General Fund Services and Reserves category total $8.6 million. General Fund Services and Reserves show a negative $3.5 million because Marshall Plan expenses exceeded revenues at the end of the second quarter. Consistent with the Amended Budget, revenues are projected to exceed expenses by year-end. Revenue Collection & Audit Costs reflect a normal time lag that is expected to correct and fully expend the budget by year-end.
Attachment A - Measure A FY 2017-18 Second Quarter Report
Attachment B - Measure A BOE Quarterly Revenue Report Oct.-Dec. 2017