Item No. 1.
| MEETING DATE: 03/15/2021 |
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| TO: | HONORABLE MAYOR/CHAIR AND COUNCILMEMBERS/DIRECTORS |
| FROM: | JIM SADRO, CITY MANAGER/EXECUTIVE DIRECTOR By: Mel Shannon, Director of Finance |
| SUBJECT: | RECEIVE AND FILE THE FISCAL YEAR 2019-2020 AUDITED ANNUAL FINANCIAL REPORTS |
RECOMMENDATION:
That the City Council, Agency and Authorities:
A. Receive and file the audited Fiscal Year 2019-2020 Comprehensive Annual Financial Report (CAFR) for the City of La Habra; and
B. Receive and file the audited Fiscal Year 2019-2020 Annual Financial Report for the La Habra Utility Authority.
DISCUSSION:
Each year the Finance Department prepares the City’s Comprehensive Annual Fiscal Report (CAFR) detailing the financial position and results of operations of the City’s General Fund and its related entities. The CAFR is prepared in accordance with Generally Accepted Accounting Principles (GAAP) and guidelines developed by the Governmental Accounting Standards Board (GASB).
In summary, the City’s major operating funds ended Fiscal Year 2019-2020 in a positive financial condition. The City’s practice of conservative revenue projections combined with closely controlled expenditures helped maintain or grow fund balances. As discussed in the CAFR (Attachment 1) and shown in the summary tables below, the City's funds are in good fiscal condition, with sufficient fund balance, fund equity, and cash to cover expected short-term operational needs and provide modest reserves. The following tables summarize the changes to fund balance for all major operating funds, and provide a summary of the General Fund’s budget performance for Fiscal Year 2019-2020.
In most cases, fund balances/net position for the City’s major funds grew or remained level over the past fiscal year. The General Fund ended the year with $3,350,963 of revenues over expenditures as the result of several factors, including continued growth in property taxes, a one-time payment collected from the Successor Agency on interagency loan repayment, and expenditure savings due to vacant budgeted positions. These and other factors allowed for sufficient net General Fund resources to justify the transfer of $2,439,172 to various internal service funds and special revenue funds. The General Fund also received a transfer of $48,903 from other Governmental Funds resulting in a net transfer out of $2,390,269.
The net position for the RDA Successor Fund is negative due to outstanding long-term obligations such as tax allocation bonds, and loans. These obligations will be repaid primarily through the Recognized Obligation Payment Schedule (ROPS) process administered by the State of California Department of Finance.
The following two graphs illustrate the General Fund information found in Table 2. Property tax remains the single largest source of General Fund revenue, representing 39.0% of total General Fund revenues. Sales and use tax revenue, combined with transaction and use tax revenue, are the second largest General Fund revenue source representing 35.6% of total General Fund revenues.
As shown in the next chart, Public Safety (Police and Fire/Ambulance) represents the largest budgeted expense for the General Fund, accounting for approximately two-thirds of General Fund expenditures.
AUDIT FINDINGS
There were no adverse audit findings with respect to the City’s general financial statements.
In summary, the City’s major operating funds ended Fiscal Year 2019-2020 in a positive financial condition. The City’s practice of conservative revenue projections combined with closely controlled expenditures helped maintain or grow fund balances. As discussed in the CAFR (Attachment 1) and shown in the summary tables below, the City's funds are in good fiscal condition, with sufficient fund balance, fund equity, and cash to cover expected short-term operational needs and provide modest reserves. The following tables summarize the changes to fund balance for all major operating funds, and provide a summary of the General Fund’s budget performance for Fiscal Year 2019-2020.
In most cases, fund balances/net position for the City’s major funds grew or remained level over the past fiscal year. The General Fund ended the year with $3,350,963 of revenues over expenditures as the result of several factors, including continued growth in property taxes, a one-time payment collected from the Successor Agency on interagency loan repayment, and expenditure savings due to vacant budgeted positions. These and other factors allowed for sufficient net General Fund resources to justify the transfer of $2,439,172 to various internal service funds and special revenue funds. The General Fund also received a transfer of $48,903 from other Governmental Funds resulting in a net transfer out of $2,390,269.
The net position for the RDA Successor Fund is negative due to outstanding long-term obligations such as tax allocation bonds, and loans. These obligations will be repaid primarily through the Recognized Obligation Payment Schedule (ROPS) process administered by the State of California Department of Finance.
The following two graphs illustrate the General Fund information found in Table 2. Property tax remains the single largest source of General Fund revenue, representing 39.0% of total General Fund revenues. Sales and use tax revenue, combined with transaction and use tax revenue, are the second largest General Fund revenue source representing 35.6% of total General Fund revenues.
As shown in the next chart, Public Safety (Police and Fire/Ambulance) represents the largest budgeted expense for the General Fund, accounting for approximately two-thirds of General Fund expenditures.
AUDIT FINDINGS
There were no adverse audit findings with respect to the City’s general financial statements.
FISCAL IMPACT/SOURCE OF FUNDING:
There is no fiscal impact associated with receiving, approving, and filing the City’s CAFR and the La Habra Utility Authority Annual Report (Attachment 2).
GENERAL PLAN RELEVANCE:
D9 Fiscal Strength-Stability