AgdaPkt 2017-12-18 Special Joint SA PFA

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City of Redwood City Management’s Discussion and Analysis For the fiscal year ended June 30, 2017 12 The expenses of the Port of Redwood City experienced a slight increase of $513 thousand due to an increase in employee costs, maintenance, and depreciation, offset by decreases in utility costs, contractual services, supplies and services, and insurance and claims. During fiscal year 2016-17, the Docktown Marina expenses increased by $582 thousand, primarily due to an increase in contractual services related to ending residential uses of the marina, offset by a decrease in employee costs. 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, 2017, the City’s governmental funds reported combined fund balances of $130.6 million, which reflects an increase of $5.7 million from the beginning fund balance. Governmental fund revenues increased $8.8 million this fiscal year to $145.7 million. Significant increases occurred in the general fund, low and moderate income housing asset fund, and community benefits fund, which were offset by a large decrease in the parks impact and in lieu fee fund. Expenditures, including capital outlay, increased $4.6 million this fiscal year to $136.3 million. A large part of the increase was attributable to the $10.5 million expenditure increase in the general fund, described below, offset by decreases in every other fund except the traffic safety fund, transportation fund, redwood shores maintenance fund, supplemental law enforcement services fund, traffic mitigation fees fund, low and moderate income housing asset fund, planning cost recovery fund, and the new art in public places fund. The general fund is the primary operating fund of the City. At June 30, 2017, unassigned fund balance of the general fund was $29.4 million, while total fund balance increased to $32.4 million from a beginning fund balance of $28.4 million, as a result of revenues and transfers in of $130.4 million, exceeding expenditures and transfers out of $126.4 million. Unassigned fund balance increased $4.2 million during the current fiscal year, providing additional resources available for ongoing operations when compared to the prior fiscal year. During FY 2016-17, the City Council approved a reduction in the General Fund reserve from 20% to 15%, with the excess balance being utilized to set up a Section 115 Trust Account to fund pension expenses. It is expected that at least $8.8 million will be deposited into this Trust Account in FY 2017-18. 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 26.2% of total fund expenditures, while total fund balance represents 28.9% of that same amount. The following are the major funds that qualified under the reporting criteria for major funds selection: 6.1.E. - Page 35