HomeMy WebLinkAboutFY 2010-2011 Preliminary Unaudited General Fund Balance DesiCouncil/Agency Meeting Held: 2-AV 2D/2-
Deferred/Continued to:
XAp roved Conditional Approved ❑ Denied
City erk' ignat
Council Meeting Date: February 21, 2012
Departmen Number: FN 12 - 003
CITY OF HUNTINGTON REACH
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Manager
PREPARED BY: Lori Ann Farrell, Director of Finance
SUBJECT: Approve preliminary unaudited General Fund Balance Designations
for Fiscal Year 2010/11
Statement of Issue: At the January 25, 2012, Budget Study Session, the Finance
Department presented the preliminary, unaudited FY 2010/11 Year -End General Fund
Budget performance results. City Council approval is requested to implement the
recommended year-end Fund Balance designations and reflect them in the City's General
Ledger and in the City's Comprehensive Annual Financial Report (CAFR) for the Fiscal Year
ended September 30, 2011, subject to final certification by the City's external auditors.
Financial Impact: This action will result in an additional $1.3 million in the Capital
Improvements Reserve (CIR); the addition of $1.1 million to the PARS Obligation liability
reserve; the creation of a $600,000 set -aside for the third party administration of Workers'
Compensation claims; and, subject to final approval and certification by the City's
independent, external auditors, the deposit of an estimated $2.8 million to the Economic
Uncertainties Reserve. Please note that the final amount deposited into the Economic
Uncertainties Reserve may be less than or greater than the currently estimated $2.8 million,
based on final audited results.
Recommended Action: Motion to:
Approve the FY 2010/11 General Fund Year End Fund Balance allocations as follows:
A) The deposit of $1.3 million to the Capital Improvements Reserve (CIR); and,
B) The deposit of $1.1 million to the PARS Obligations Reserve; and,
C) The deposit of $600,000 for the third party administration of the City's Workers'
Compensation claims; and,
D) The deposit of $2.8 million into the Economic Uncertainties Reserve (exact amount to be
determined upon completion of the City's audit).
Alternative Action(s): Do not approve these allocations and provide alternative direction.
HB -45- Item 5. - I
REQUEST FOR COUNCIL ACTION
MEETING DATE: 2/21/2012 DEPARTMENT ID NUMBER: FN 12-003
Analysis:
At the conclusion of Fiscal Year 2010/2011 which ended on September ,30, .2011, 'the City
received a total of $185.5 million in General Fund revenue, including both recurring and one-
time revenue. Of this amount, it is recommended that $1.3 million be deposited into the
Capital Improvements Reserve (CIR) to finance the cost of additional street repairs that will
be performed in Fiscal Year 2011/2012 as approved by the City Council. Please note that
the FY 2011/2012 Adopted Budget assumed that the additional street repairs would be
funded by the CIR, hence, this deposit of $1.3 million into the CIR fully finances this project.
It is also recommended that an additional $1.1 million be set -aside for the potential future
prepayment of the City's outstanding PARS liability. It is important to note that this action
does not authorize the actual prepayment of the City's outstanding PARS liability, it simply
allows for $1.1 million to be reserved for potential future prepayment. The actual prepayment
of all or a portion of the remaining outstanding PARS liability associated with the City's early
retirement incentive program is subject to separate future City Council action.
Staff also recommends the allocation of $600,000 into a separate fund balance designation
for the third party administration of the City's Workers' Compensation claims consistent with
the negotiated contract. This amount will be kept in a separate trust account to smooth out
cash flow discrepancies that occur between the time the claims administrator makes
Workers' Compensation payments to employees on the City's behalf, and the time it takes
the outside administrator to invoice the City and be reimbursed by the City for these costs.
Of the remaining amount of $182.5 million, a significant portion is needed to support $179.7
million in General Fund expenditures, liabilities, and loan repayments incurred through
September 30, 2011. This results in a preliminary, unaudited, remaining year-end fund
balance of $2.8 million or 1.5 percent of the General Fund. It is important to note this
preliminary fund balance is largely comprised of one-time revenue totaling $2.1 million. The
deposit of $2.8 million into the City's Economic Uncertainties Reserve is subject to final,
audited General Fund amounts.
Environmental Status: N/A
Strategic Plan Goal: Improve long-term financial sustainability.
Attachment(s):
Item 5. - 2 HB -46-