AgdaPkt 2018-12-17 Joint Special

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6.G. - Page 40 of 187 City of Redwood City Management's Discussion and Analysis For the fiscal year ended June 30, 2018 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, 2018, the City's governmental funds reported combined fund balances of $133.4 million, which reflects an increase of $3.1 million from the beginning fund balance. Governmental fund revenues increased $17.6 million this fiscal year to $163.3 million. The majority of this increase occurred in the general fund, capital outlay fund, special gas tax street improvement fund, traffic mitigation fees fund, and parks impact and in lieu fee fund, which were offset by decreases in the transportation grants fund, grants fund, and community benefits fund. Expenditures, including capital outlay, increased $14.1 million this fiscal year to $150.4 million. A large part of the increase was attributable to the $13.7 million expenditure increase in the general fund, of which $8.8 million was the contribution to the Section 115 pension trust investment account, $1.3 million in community development expenditures, $2.1 million in public safety expenditures, and $513 thousand in leisure, cultural, and information services. The general fund is the primary operating fund of the City. At June 30, 2018, unassigned fund balance of the general fund was $25.0 million, while total fund balance decreased to $30.2 million from a beginning restated fund balance of $32.5 million, as a result of expenditures and transfers out of $146.1 million exceeding revenues and transfers in of $143.8 million. Unassigned fund balance decreased $4.4 million during the current fiscal year, due to the $8.8 million contribution to the Section 115 pension trust investment account during FY 2017-18. 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. 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 19.9% of total fund expenditures, while total fund balance represents 24.0% 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 $13.5 million this fiscal year due to increases in all revenues, except for intergovernmental revenues and contributions. These increases were a result of the continued growth in the local economy. The increase in property taxes of $5.8 million resulted primarily from an increase in assessed valuations. There was a large increase in revenue received in the general fund from the county for property taxes in the former redevelopment area (downtown). This revenue increased by $2.2 million in FY 2017-18 to $6.9 million. 13 219