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Home My WebLink AboutAGENDA REPORT 2022 1221 CCSA REG ITEM 10CCITY OF MOORPARK, CALIFORNIA City Council Meeting of December 21, 2022 ACTION APPROVED STAFF RECOMMENDATION. BY A. Hurtado. C. Consider Approval of Fiscal Year 2021/22 Closing Interfund Transfer Adjustment for the Gas Tax Fund and Receive Report of Required Operating Transfers. Staff Recommendation: Approve the transfer of an additional $13,217.14 from the Gas Tax Fund to the Lighting and Landscape Districts Funds in connection with finalization of FY 2021/22 financial results; and receive and file the report on required and final operational subsidies for the remainder of affected City funds. (Staff: Vivien Avella, Finance Director/City Treasurer) Item: 10.C. MOORPARK CITY COUNCIL AGENDA REPORT TO: Honorable City Council FROM: Vivien Avella, Finance Director DATE: 12/21/2022 Regular Meeting SUBJECT: Consider Approval of Fiscal Year 2021/22 Closing Interfund Transfer Adjustment for the Gas Tax Fund and Receive Report of Required Operating Transfers BACKGROUND/DISCUSSION At the conclusion of each fiscal year (FY), the Finance Department (Finance) examines and addresses deficit fund balances in each of the City’s nearly 90 funds. As City policy allows and as prudent management requires, Finance recommends appropriate actions to cure these operating deficits. Exceptions to the deficit cure process are grant-related funds, which commonly experience transient deficits due to the timing of expenses versus reimbursements, and funds which may experience structural deficits that require longer - term strategic and operational remedies. The only persistent structural deficit occurring within the City relates to the Police Facilities Fund. City staff plans to remedy this deficit through incremental development fees aimed at capturing the costs of expanded policing activity resulting from substantial new development activity within the City. The Community Development, Engineering, Park Maintenance, and Lighting and Landscape Assessment Districts (LLADs) typically generate operating deficits as currently structured and require subsidies. These subsidies are estimated and formally appropriated in the annual budgeting process. The intent of the subsidies is to allow the deficits to be cured on an annual basis at the end of the year, so that the funds can begin the new fiscal year with a zero fund balance. Resolution No. 2022-4097, Section 5.2, sets forth the existing policy related to the LLADs, which is as follows: “If any LLAD that is subject to fixed maximum assessment rates ends the fiscal year with a deficit fund balance, funds may be transferred from the General Fund or other funds, as approved by the City Council, to restore the LLAD to a zero fund balance. This transfer shall occur in the subsequent fiscal year so as to enable the LLAD to begin the fiscal year with a zero fund balance.” Item: 10.C. 136 Honorable City Council 12/21/2022 Regular Meeting Page 2 While no formal policy exists for the curing of deficits within the Community Development, Engineering, and Park Maintenance Funds, the City has generally taken a similar approach and intended to cure the deficit at each fiscal year-end. Finance has made the appropriate transfers so that all operating deficits have been cured in connection with the end of FY 2021/22/beginning of FY 2022/23. This is accomplished with post-closing fiscal year ending adjustments that were finalized in early December of 2022 during the City’s financial audit. To the extent the subsidies exceed the year’s budgeted appropriation, Council must approve the post-closing interfund transfer adjustment. The table below shows a breakdown of the funds requiring subsidies to cure $2,516,523.78 of operating deficits for FY 2021/22. The City’s practice has been to have the General Fund (1000) subsidize operating deficits, with exception of the Citywide – Street Lighting & Landscaping District, which has been 100% funded by the Gas Tax Fund (2415) to the extent of available fund balance. Additionally, it has been historical practice to divide equally the subsidies to the individual Lighting and Landscape Districts between the General Fund and the Gas Tax Fund, again to the extent of available balance within the Gas Tax Fund. Adequate fund balance exists within the Gas Tax Fund to cure the deficits. The transfers for FY 2021/22 are therefore outlined below. Fund FY2021-22 Beginning Balance Revenues Expenses FY2021-22 Transfers FY2021-22 Ending Balance 2200: Community Development Fund ($1,185.61)$1,347,161.84 ($2,344,034.39)$998,058.16 - 2205: Engineering Fund (175.00)313,892.96 (411,373.71)97,655.75 - 2300: Citywide - Street Lighting & Landscaping (112,169.70)476,487.39 (436,086.54)71,768.85 - 2301: Dist 1 Pecan Ave Tract 28511 (9,960.54)10,211.35 (18,135.20)17,884.39 - 2303: Dist 3 Buttercreek/Peppermill (1,513.87)3,240.96 (2,747.89)1,020.80 - 2305: Dist 5 Pheasant Run Area (57,607.52)25,091.62 (72,482.41)104,998.31 - 2306: Dist 6 Inglewood Street (529.27)972.52 (1,095.21)651.96 - 2308: Dist 8 Home Acres Buffer (9,713.78)16,026.94 (22,168.93)15,855.77 - 2309: Dist 9 Moorpark Industrial Park (3,973.06)1,427.83 (5,696.93)8,242.16 - 2314: Dist 14 Silver Oak Lane (1,865.58)2,114.82 (4,609.93)4,360.69 - 2390: Park Maintenance Fund 0.00 966,975.53 (2,163,002.47)1,196,026.94 - Total ($198,693.93)$3,163,603.76 ($5,481,433.61)$2,516,523.78 - Transfer TO Fund: General Fund Gas Tax Fund Total Transfers 2200: Community Development Fund $998,058.16 $0.00 $998,058.16 2205: Engineering Fund 97,655.75 - 97,655.75 2300: Citywide - Street Lighting & Landscaping - 71,768.85 71,768.85 2301: Dist 1 Pecan Ave Tract 28511 8,942.20 8,942.20 17,884.39 2303: Dist 3 Buttercreek/Peppermill 510.40 510.40 1,020.80 2305: Dist 5 Pheasant Run Area 52,499.16 52,499.16 104,998.31 2306: Dist 6 Inglewood Street 325.98 325.98 651.96 2308: Dist 8 Home Acres Buffer 7,927.89 7,927.89 15,855.77 2309: Dist 9 Moorpark Industrial Park 4,121.08 4,121.08 8,242.16 2314: Dist 14 Silver Oak Lane 2,180.35 2,180.35 4,360.69 2390: Park Maintenance Fund 1,196,026.94 - 1,196,026.94 Total $2,368,247.89 $148,275.89 $2,516,523.78 2021-22 Budgeted Transfers $2,427,452.67 $135,058.75 $2,562,511.42 2021-22 Actual Transfers 2,368,247.89 148,275.89 2,516,523.78 Budget Savings $59,204.78 ($13,217.14)$45,987.64 Transfer FROM Fund: 137 Honorable City Council 12/21/2022 Regular Meeting Page 3 As shown in the prior table, overall, the transfers required were less than what was appropriated in the budget process, for a net savings. However, the amount of the actual transfer from the Gas Tax Fund exceeded the budgeted transfer by $13,217.44. Unless covered under a previously approved budget appropriation or existing policy, all interfund transfers must be approved by City Council. Shown below is a chart breaking down the variances and the $13,217.14 that requires Council approval. FISCAL IMPACT There is no fiscal impact to making year-end closing interfund transfers and the City’s overall FY 2021/22 results are not impacted. Additionally, the action does not impact next year’s Adopted Budget and therefore no Budget Amendment is being sought. COUNCIL GOAL COMPLIANCE This action does not support a current strategic directive. STAFF RECOMMENDATION Approve the transfer of an additional $13,217.14 from the Gas Tax Fund to the Lighting and Landscape Districts Funds in connection with finalization of FY 2021/22 financial results; and receive and file the report on required and final operational subsidies for the remainder of affected City funds. FY2021-22 Final Budget Transfers FY2021-22 Actual Transfer Variance For Council Approval General Fund (1000)$2,427,452.67 $2,368,247.89 $59,204.78 $0.00 Gas Tax Fund (2415)135,058.75 148,275.89 (13,217.14) (13,217.14) Total $2,562,511.42 $2,516,523.78 $45,987.64 ($13,217.14) Variances From Budget Approved Transfers 138