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REVIEW FISCAL YEAR 2017-18 FOURTH QUARTER MEASURES A AND B REVENUES AND EXPENDITURES
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RECOMMENDATION
Information item only.
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Summary
City ordinance 2013-07-09-1601, Section 19- “Citizen Oversight,” stipulates that 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 fourth 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 and administrative budget amendments. Police and Office of Violence Prevention (OVP) expenditures in the Amended Budget total approximately $23.1 million.
Total revenues included in the FY 2017-18 Amended Budget are approximately $31.0 million. Measure A transaction and use tax revenues were $31,735,727 as of June 30, 2018, ending the year $715,727 higher (+2.3%) than the budgeted amount. Revenues booked in FY 2017-18 represent receipts received by the State through September 2018 for activity through June 2018. Also attached is the California Department of Tax and Fee Administration (previously known as State Board of Equalization) sales tax revenues report for the quarter ended June 30, 2018, showing $6,980,162 in gross revenues (Attachment B). Measure A revenues show on the report under Jurisdiction ID number 361.
The Police Department expended $21.7 million, and the OVP expended $936,753 through the fourth quarter of the fiscal year, for total Marshall Plan expenses of $22.6 million. Combined salary and benefit costs for Police sworn and non-sworn positions were at 100% of the budget including the budgeted vacancy savings. The Police Department continues to fill the positions funded by Measure A. As of June 30, 2018, the number of Measure A-funded sworn officers was 116 of the 120 authorized. The Police Department has been successful in its recruitment efforts and was therefore unable to achieve the Marshall Plan budget vacancy savings goal. However, other Police Department vacancy savings were higher-than-budgeted. An administrative budget amendment was processed to re-allocate the Police Department salary budgets within the General Fund to cover the Marshall Plan staffing. Staff adjusted the budgets by increasing the Vacancy Savings line item in the Police Department by $665,000 and reducing the same amount in the Marshall Plan Vacancy Savings line. These adjustments have a net zero effect on the total department budget. Due to the higher rate of officers hired and retained in FY 2017-18, vacancy savings will be monitored closely during FY 2018-19.
Below is a summary of the Marshall Plan funded positions in the FY 2017-18 Budget compared to the actual results.
The costs for fuel in the Police Department are higher than expected. The Police Department filled 116 of the sworn positions resulting in an increased number of vehicles being deployed sooner in the fiscal year than originally anticipated. Increased vehicle usage coupled with rising gas prices resulted in fuel expenses exceeding budgeted amounts at the end of the fourth quarter. Vehicle expenses (including the costs to equip vehicles) and training came in within budget. Other Supplies came in under budget as planned expenditures for ammunition and other duty supplies were delayed until the new fiscal year due to a number of Measure A Officers attending the training academy. The budget under Technology Upgrades was not needed for the camera repairs once the body camera contract was converted to a monthly lease payment that covers equipment repair costs.
OVP expended $936,753 in FY 2017-18, which was 87% of the OVP Measure A budget. OVP salary and benefit expenses were at 86% of budget, 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 acquisition of a case management database that was anticipated for FY 2017-18 from Other Services will not occur until FY 2018-19. Also, funds that have been budgeted in recent years to outfit new employees with uniforms, equipment, and office furniture was not expended this fiscal year as the office has been fully staffed and has experienced limited turnover. These expenses and fuel expenses were reprogrammed in FY 2018-19 to support employee training maintenance of the new case management database. Furthermore, Other Expenses spending was not as aggressive as the demand for client services was lower-than-expected. Client services expenses are anticipated to increase in FY 2018-19.
Other uses of Measure A revenues budgeted in the General Fund Services and Reserves category total $9.1 million. This quarterly report includes $286,735 in annual audit and tax collection expenses related to Measure A revenues. The report shows no FY 2017-18 expenditures on Mission Critical projects active in the General Fund. Approximately $2.2 million was expended on Mission Critical projects tracked in other City accounts. General Fund Services and Reserves show as $8.8 million. This amount is a component of the $16.9 million increase to total General Fund reserves as approved by the City Council at their November 6, 2018 meeting. Consistent with the City’s Long-Range Financial Plan, these reserves are needed in future years to address the City’s known contingencies (financial system replacement, employee recruitment, and retention, public safety radio system replacement, increased pension costs) and to withstand economic downturns.
Attachment A - Measure A FY 2017-18 Fourth Quarter Report
Attachment B - Measure A CDTFA Quarterly Revenue Report April - June 2018