February 5, 2020 Staff Report 4.3 Report of Expenditures and Revenues Through Quarter 2, 2019-20

Analysis 

Background

After the end of each quarter in a fiscal year, staff reports to the Budget Committee and the full Commission regarding the level of expenditures and revenues through that time period. This report discusses the expenditures and revenues through the end of the second quarter of Fiscal Year 2019-20.

A spreadsheet is attached, for Commissioners’ information. A report and data were provided to members of the Budget Committee in January.

Overall

Expenditures through the second quarter of the fiscal year totaled $355,786, or just less than 47 percent of the Adopted Budget of $762,295. Revenues of $744,958 have been received since the beginning of the fiscal year, with almost $24,000 received during the second quarter. Details are provided in the narrative below.

Expenditures: Salaries and Benefits

$274,445 has been expended through the end of the second quarter for salaries and benefits for staff and Commissioner stipends. This represents almost 45 percent of the total $612,630 expenditure budget for these types of expenses and is in line with the number of pay periods that have been completed (12.1 pay periods of 26.2 pay periods for the fiscal year, or 45.8 percent). No line item is significantly over- or under-expended.

It should be noted that salary step increases have been or will be awarded for the Clerk and Analyst positions, impacting the expenditures incrementally. Additionally, consistent with County policy, a lump sum payment for accrued vacation time will be paid to the Assistant Executive Officer upon her retirement.

Staff will continue to monitor salary and benefits expenditures as the year continues and will report any unexpected changes to the Budget Committee and the Commission, should they occur.

Expenditures: Services and Supplies

The Services and Supplies budget, approved at $149,665, has been expended through the second quarter at 54.3 percent or $81,341. Most accounts have been expended at the appropriate level for halfway through the year, but there are some exceptions, which are explained below.

Account 51206 (Auditing Services): As was explained in the report for the first quarter of the fiscal year, the expenditure of $6,570 covered the final payment to the outside certified public accounting firm that conducted the Commission’s audit near the end of the last fiscal year; the payment was made after the current fiscal year started. No further expenditures have been made from this account.

Account 51211 (Legal Services) has been expended at $12,075, about 60 percent of the budgeted $20,000. Beyond typical services, legal counsel has advised staff regarding two Requests for Proposals for (1) a municipal service review of the Timber Cove Water District and (2) an organizational assessment. Additional time has been devoted to issues associated with current applications for fire district reorganizations.

Account 51249 (Professional Services) has been expended, through the second quarter, at $11,300, $1,300 over the budgeted $10,000. This account is used primarily to pay State Board of Equalization (BOE) fees for that department’s processing changes in tax rate areas when territory is annexed or detached from agencies; staff submits materials to the BOE after the Commission approves proposals.

Because the BOE does not accept payment from private individuals, the cost assessed (based on the number of acres included in a boundary) is typically included in the processing fee that applicants pay to LAFCO; often public entity applicants choose to pay the fee through LAFCO as well. Thus, a portion of the $34,187 shown in Revenue Account 45061 (Fees for Services) is designated to cover BOE costs, even though the expenditure is charged to Account 51249. The fire district reorganizations that the Commission has approved over the last year cover substantial territory, resulting in payments to the BOE of several thousand dollars, which are charged to this account.

Staff notes that, beginning in Quarter 3, expenditures in this account will increase substantially to additionally reflect payments to consultants for a municipal service review for the Timber Cove Water District and the Commission’s organizational assessment. The Commission has directed that funds in the Commission’s Fund Balance be designated for the purpose of using consultant services. As a result, overall expenditures in 2019-20 could exceed the approved expenditure budget before year-end. Should staff’s monitoring determine a projected overage in actual expenditures, staff would request that the Commission approve a budget adjustment before the 2019-20 accounting is finalized.

Account 52091 (Memberships): As was reported for the first quarter, the expenditure of $4,965, 100 percent of the budgeted amount, represents Sonoma LAFCO’s dues payment to CALAFCO for membership for the fiscal year. No additional costs are anticipated to be charged to this account.

Revenues and Fund Balance

Total revenue to fund 2019-20 LAFCO expenditures was projected at $762,295. Of this amount, $55,000 was projected to be taken from the Commission’s Fund Balance, if needed by year end to balance expenditures and revenues.

Through the second quarter, almost $745,000 in revenue have been received, as indicated above. $699,295, of 93 percent, represents apportionments received from our funding agencies: the County, the cities, and the independent special districts, with 100 percent payment from those agencies.

Interest from invested cash, projected to be $8,000, has been exceeded already, with $11,476 received. Although this amount will continue to increase through the end of the fiscal year, the level of growth will be reduced due to greater expenditures for salaries and benefits and services and supplies as we move through the fiscal year.

Revenues from processing fees, which are not budgeted, due to the difficulty of projecting the number and types of applications that will be received in a given year, are tracked. Through the second quarter, just over $34,000 has been received. This represents payments for three reorganizations involving annexations to cities as well as authorizations for extensions of service and a balance paid amount for an earlier Geyserville Fire Protection District reorganization. Revenue from processing fees will show a further increase in the third quarter to reflect deposits towards actual costs from both the Sonoma County Fire District and Glen Ellen Fire District for upcoming reorganizations.

No changes have been reflected in the Fund Balance, through the second quarter. As indicated above, funds have been set aside for consultant studies. Depending on expenditures for the remainder of the fiscal year, it might be necessary for staff to recommend a budget adjustment. This would entail authorization by the Commission to move funds from the Fund Balance to balance the level of expenditures and revenues. This would occur before year-end accounting is finalized.

Recommendation 

Staff recommends that the Commission review, consider, and accept the report of expenditures and revenues through the second quarter of Fiscal Year 2019-20.

Alternate Recommendation 

None

Attachments

1. Sonoma LAFCO Expenditures and Revenue through Quarter 2, Fiscal Year 2019-20.