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ATTACHMENT 1 <br /> 7.1.A. - Page 4 <br /> General Fund Expenditure Comparison (FY 2012 -13 to FY 2013 -14) <br /> FY 2012 -13 FY 2013 -14 <br /> Actual Expenditures Actual Expenditures & Change -$- Change - %- <br /> & Encumbrances Encumbrances <br /> $81,898,607 $87,049,636 $5,151,029 6.3% <br /> Total general fund expenditures, including outstanding encumbrances, for FY 2013 -14 <br /> were $87.1 million. This was $5.2 million (or 6.3 %) more than the amount expended <br /> and encumbered in FY 2012 -13, and $1.3 million (or 1.4 %) below the adopted budget. <br /> Expenditures were less than budgeted primarily due to vacancies and an increased <br /> credit resulting from the prepayment of pension contributions to CaIPERS net of <br /> unbudgeted expenditures related to the activities of parks and recreation and the library. <br /> Expenditures in FY 2013 -14 were $5.15 greater than FY 2012 -13 primarily due to the <br /> new agreement with the City of San Carlos to provide fire services which increased <br /> expenditures by $4.6 million. <br /> Employee costs continue to represent the highest single source of expenditures <br /> accounting for 78.8% of all general fund expenditures in FY 2013 -14. <br /> Transfers <br /> Each year funds are transferred out of the general fund to support the traffic safety fund. <br /> In FY 2013 -14, $1.26 million was transferred to the traffic safety fund. Also, an amount <br /> equal to the utility users' tax and communication users' tax revenue less the Public <br /> Financing Authority lease payment is transferred to the capital outlay fund. This transfer <br /> amounted to $9.17 million in FY 2013 -14. Additionally, in accordance with Council <br /> direction provided during the 2014 -15 budget process, the general fund transferred $6 <br /> million to the self- insurance fund to more fully fund the City's workers' compensation <br /> liability through a mid -year budget amendment for fiscal year 2013 -14. <br /> Fund Balance <br /> When the general fund budget was adopted on June 24, 2013, it was anticipated that <br /> $1.162 million would be contributed to general fund reserves (unassigned fund balance) <br /> during FY 2013 -14. Due to the favorable revenue variance from increased property <br /> taxes, sales and other taxes, in addition to a favorable expenditure variance resulting <br /> from vacancies and an increased credit resulting from the prepayment of pension <br /> contributions to CaIPERS, about $2 million was added to reserves in FY 2013 -14 <br /> leaving a balance of $21.48 million in unassigned fund balance as of June 30, 2014. <br /> In FY 1999 -00, the Council adopted a Finance Committee recommendation to maintain <br /> the reserve balance at an amount between 15% and 20% of estimated revenues. <br /> Applying this formula (using FY 2014 -15 budgeted revenues) results in a projected fund <br /> balance as of June 30, 2015 at approximately 22.8 %. In view of the slow pace of the <br /> economic recovery and the estimated deficits of future years resulting from the change <br /> in CaIPERS actuarial methods, staff recommends that these funds be retained in the <br /> general fund. This will be a topic for further staff analysis and Council direction as part <br /> of the 2015 -16 budget process. <br /> Page 3 of 7 <br />