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REVIEW FISCAL YEAR 2018-19 FIRST QUARTER MEASURES A AND B REVENUES AND EXPENDITURES
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RECOMMENDATION
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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 first quarter financial report for Fiscal Year (FY) 2018-19.
The FY 2018-19 Amended Budget, as shown on Attachment A, includes encumbrance rollovers from FY 2017-18 and administrative budget amendments. Police and Office of Violence Prevention (OVP) expenditures in the Amended Budget total approximately $24.7 million, an increase of $163,661 from the adopted budget.
Total revenues included in the FY 2018-19 Amended Budget are approximately $31.5 million. Measure A transaction and use tax revenues were $2,681,335 as of September 30, 2018, reflecting only one month of tax revenues received for sales occurring during July 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 September 30, 2018, showing $9,609,372 in gross revenues (Attachment B). Measure A revenues show on the report under Jurisdiction ID number 361. These third quarter revenues are not reflected on Attachment A, as the City does not fully receive them until December 2018.
The Police Department expended approximately $5.8 million, and the OVP expended $186,434 during the first quarter of the fiscal year, for total Marshall Plan expenses of approximately $6.0 million. Combined salary and benefit costs for Police sworn and non-sworn positions were at 25% of the budget including the budgeted vacancy savings. The Police Department continues to fill the positions funded by Measure A. As of September 30, 2018, the number of Measure A-funded sworn officers was 116 of the 120 authorized.
The increased vehicle usage seen in the fourth quarter of FY 2017-18 continued into the first quarter of FY 2018-19, which is a combination of higher-than-anticipated gas prices as well as vehicle usage. Fuel costs throughout the Police Department continue to run above budget and staff is working with the City’s Fleet Manager to find ways to mitigate and reduce those costs. Other Supplies and Training are under budget as a result of expenditure timing. Supplies include purchases of officer equipment such as vests, batons, flashlights, and ammunition, for which an inventory is kept and ordered as needed throughout the year. Measure A-funded training is cyclical and largely consist of Police Academy costs based on the number of trainees and timing of classes. As the year progresses, these line items will incur costs within the allotted budget.
OVP expended $186,434 in the first quarter of FY 2018-19, which was 18% of the OVP Measure A budget. OVP salary and benefit expenses were 20% of budget, reflecting the savings accrued from one position (of the seven budgeted) that was vacant for the entire quarter. One Measure A vacancy was hired during the quarter; however, it was filled by an internal candidate following a competitive recruitment. The result was a subsequent, but distinct vacancy also funded by Measure A. Key purchases from Other Services, such as the case management database, have yet to occur. In addition, training expenses typically charged to Other Services were deferred until calendar year 2019 to maintain focus on the strategic outcomes identified for calendar year 2018. Training, supplies, and software acquisition are large expenditures anticipated for the third and fourth quarters of FY 2018-19.
This quarterly report includes $55,810 in annual audit and tax collection expenses related to Measure A revenues. The report shows no FY 2018-19 expenditures on Mission Critical projects active in the General Fund. Approximately $557,000 was expended on Mission Critical projects tracked in other City accounts. General Fund Services and Reserves show a negative $3.4 million because expenses exceeded revenues in the first quarter. Consistent with the Adopted Budget, revenues are projected to exceed expenses by year-end. 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 - Measures A and B FY 2018-19 First Quarter Report
Attachment B - Measure A CDTFA Quarterly Revenue Report July - September 2018