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6.1.D. - Page 40 <br />Management's Discussion and Analysis <br />For the fiscal year ended June 30, 2016 <br />reduced state funding of schools. Within each county, ERAF revenues are allocated to schools based upon <br />a formula that considers, among several factors, the average daily attendance and the amount of each <br />school district's own property tax revenue. Within San Mateo County, the outcome of applying this <br />formula was that the school districts did not require all of the funds shifted from the cities, county, and <br />special districts. Consequently, these funds were returned to each entity in proportion to the amount <br />that was initially collected. <br />Sales and other taxes increased by $879 thousand, due to increased taxable sales within the City, as a <br />result of continued economic recovery. Sales taxes increased $1.141 million, while other taxes decreased <br />$262 thousand. <br />Licenses and permits increased $805 thousand, a 55% increase, due to increases in building activity. <br />Intergovernmental revenues increased $721 thousand primarily due to an increase in mutual aid <br />reimbursement revenue from fire operations. <br />Charges for current services increased $445 thousand primarily due to an increase in revenue received <br />from the City of San Carlos for fire services provided, and an increase in recreational program revenue. <br />General fund expenditures increased $5.828 million over the prior fiscal year. The increase primarily <br />resulted from programmatic changes, including increases in required CalPERS contributions, and <br />additional employees in public safety, leisure, cultural and information services, and policy development <br />and implementation, which enhanced the quality of service and programs provided to the public. <br />Additionally, there were increased consultant costs related to the increased building activity in the City <br />and planning related projects. <br />Transfers out of the general fund increased $5.32 million in FY 2015-16 primarily due to an increase in the <br />transfer out to the docktown marina fund of $2.982 and an increase of $1.8 million for the transfer to the <br />self-insurance internal service fund to cover increased workers' compensation costs. <br />Capital Outlay Fund — This fund accounts for resources provided to finance general governmental capital <br />projects. In FY 2015-16, the capital outlay fund generated $846 thousand in revenue, most of which was <br />from developer contributions. This fund was also the recipient of $8.822 million of transfers from the <br />general fund primarily from the Utility User's Tax, which has been allocated to support the City's <br />infrastructure. Total outlays were $12.758 million of which $7.424 million met the City's criteria for <br />capitalization. The balance ($5.334 million) was expended in FY 2015-16. Total outlays in the prior fiscal <br />year (FY 2014-15) were $7.208 million. Of the capital outlay fund's $28.971 million fund balance, $16.41 <br />million was committed, and $12.561 million was assigned. <br />Proprietary Funds — Enterprise fund net position totaled $236.373 million at the end of the fiscal year, an <br />increase of $21.181 million over the prior fiscal year balance of $215.192 million. Enterprise operating <br />revenues were $79.798 million this fiscal year, an increase of $2.777 million over last fiscal year, while net <br />non-operating revenues (expenses) were $8.754 million compared to a negative $6.978 million the prior <br />fiscal year. Net non-operating revenues (expenses) experienced a $15.732 million increase primarily due <br />to decreases in interest expense of $456 thousand, an increase in investment revenues of $156 thousand, <br />and an increase in the investment in the Silicon Valley Clean Water Authority of $15.118 million (current <br />fiscal year increase of $10.759 versus a decrease of $4.359 in the prior fiscal year). <br />13 <br />