AgdaPkt 2016-01-11 Closed and Joint SA PFA

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6.1.E. - Page 41 , Management's Discussion and Analysis For the year ended June 30, 2015 FINANCIAL ANALYSIS OF THE CITY'S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental Funds The general government functions are contained in the general,special revenue,debt service, and capital project funds. The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources by using the modified accrual basis of accounting. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of the City's net resources available for spending at the end of the fiscal year. At June 30, 2015,the City's governmental funds reported combined fund balances of$127 million, which reflects an increase of$16 million from the beginning year balance. Governmental fund revenues increased $11.1 million this year to $134.5 million. Significant increases occurred in the general fund, the transportation grants fund and the parks impact and in lieu fee fund, offset by decreases in the capital outlay fund. Expenditures, including capital outlay, increased $13.2 million this year to $117.9 million. Most of the increase was attributable to the $9.3 million expenditure increase in the general fund, described below, and increased expenditures related to transportation programs. The general fund is the primary operating fund of the City. At June 30, 2015, unassigned fund balance of the general fund was $26.2 million, while total fund balance increased to $28.6 million from a beginning fund balance of$23.8 million primarily due to an increase in revenues.As a measure of the general fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 27.4% of total fund expenditures, while total fund balance represents 29.8%of that same amount. The following are the major funds that qualified under the reporting criteria for major funds selection: General Fund—General fund revenues increased approximately$7.1 million this fiscal year primarily due to increases in property taxes,sales and other taxes,intergovernmental revenues,and charges for current services. Sales taxes increased $1.6 million, property transfer tax increased $.7 million, and transient occupancy tax increased $0.8 million due to the continued recovery from the recession. Property taxes increased $2.8 million. The increase in property tax resulted primarily from an increase in assessed value along with an increase in revenue received in the general fund from the county as its share of the Education Revenue Augmentation Fund (ERAF) refund in FY 2014-15. ERAF increased by $453,133 to a total of$5.1 million. ERAF, which was created by state law in the early 1990's, allowed the state to shift on an ongoing basis a portion of each city, county, and special district's property taxes to school districts. This shift allowed the state to decrease the state's general fund support to schools throughout the state and concomitantly reduced state funding of schools. Within each county, ERAF revenues are allocated to schools based upon a formula that considers, among several factors, the average daily attendance and the amount of each 12