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Home My WebLink About02/19/2019 18C 2018 Fiscal Closing Report and Three -Year Reserves Plan BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 18.C. For Meeting of: February 19, 2019 ITEM TITLE: Report from the Director of Finance and Budget Steve Groom on 2018 Fiscal Closing and Plan to Achieve 16.7% Reserve by 2022 SUBMITTED BY: SUMMARY EXPLANATION: ITEM BUDGETED: STRATEGIC PRIORITY: STAFF RECOMMENDATION: BOARD/COMMITTEE RECOMMENDATION: ATTACHMENTS: Description Upload Date Type D emo relimina 1-1'1- 1 1/1*/ 1 r e o D end 3Yr und al o 2 5.,. MEMORANDUM TO: The Honorable Mayor and Members of City Council Cliff Moore, City Manager FROM: Steve Groom, Finance Department DATE: January 18, 2019 RE: Preliminary 4th Quarter Fund Balance Update This financial update is an unaudited report for the 4th quarter ended December 31, 2018. At this point in time, our system is showing that 2018 city revenues are at 83.7% of budget and expenditures are at 74.2% of budget. Fund Balance improves due to the amount revenues exceeded expenditures as of this point in the closeout of the year. All invoices are likely not yet received and complete accrual analysis is not yet done, so this report is intended as a progress report toward the final audited financials. The Actual 2018 ending Fund Balance is likely to end less favorable than the preliminary 13.8% figure shown below. Staff continues to manage all discretionary expenses, as 2019 begins, exercising caution wherever manageable opportunities arise. Historical, and 2019 Budget, figures are shown for comparison in the table below. City of Yakima General Fund History Actual. Actual Actual Actual Projected Budget 2014 2015 2016 2017 2018. 2019 (001Genera/Fund,003 396 Criminal Justice and 612 Firemens Pension) Beginning Fund Balance 10,069,272 8,846,302 6,885,225 8,264910 8,462,926 9,204,160 Revenues 59,520,257 60,680,228 64,791,.138. 66,210,691 67,576,969 67,436,673 Expenditures (60,743,227} (62641,305) (63,411,453) (66,012,675) (66,835,735) (67,182,593) Ending Fund Balance 8,846,302 6,885,225 8,264,910 8,462,926 9,204,160 9,458,240 14.6% 11.0% 13.0% 12.8% 13.8% 141% Expenses 60,743,227 62,641,305 63,411,453 66,012,675 66,835,735 67,182593 Target% 16.67% 16.67% 16,67% 16.67% 16.67% 16.67% Target$ 10,125,89E 10,442,306 10,570,689 11,004;313 11,141,517 11,199,338 Shortfall (1,279,594) (3,557,081) (2,305,779) (2,541,387) (1937,357) (1,741098) 3 f - ""y. MEMORANDUM 4tr> „' x. TO: Cliff Moore, City Manager FROM: Steve Groom, Finance Department DATE: January 22, 2019 RE: Three-Year Plan to Reach Fund Balance Target This projection is in follow-up to City Council's January 2019 Strategic Plan deliberations. Based on current preliminary estimate for 2018 Actuals and 2019 Budget, if we can achieve savings of $675,000 per year we would arrive at the Policy Target of 16.7% of General Fund expenditures at the end of 2022. As the table below illustrates, this includes a revenue increase forecast of 1% per year. Actual Projected Budget Projected Projected Projected Projected 2017 2018 2019 2020 2021 2022 2023 Be®nning Fund Balance 8,264,910 8,462,926 9,204,160 9,458,240 10,133,240 10,808,240 11,483,240 Revenues 66,210,691 67,576,%9 67,436,673 1.0% 68,111,000 1.0% 68,792,000 14% 69,480,000 14% 70,175,000 Expenditures (66,012,675) (66,835,735) (67,182,593) 0.4% (67,436,000) 1.0% (68,117,000) 1.0% (68,805,000) 1.7% (69,975,000) Savings 198,016 741,234 254,080 675,000. 675,000. 675,000 r. 200,000 r. Ending Fund Balance 8,462,926 9,204,160 9,458,240 10,133,240 10,808,240 11,483,240 11,683,240 12.8% 138% 14.1% 15.0% 15.9% 16.7% 16.7% Expenses 66,012,675 66,835,735 67,182,593 67,436,000 68,117,000 68,805,000 69,975,000 Tartu% 16.67% 16.67% 16.67% 16.67% 16.67% 16.67% 16.67% Target$ 11,004,313 11,141,517 11,199,338 11,241,581 11,355,104 11,469,794 11,664,833 Shortfall (1,541,381) (1,9313S3) (1,/11,(08) (1,108,341) (546,864) 13,141 18,408 In this scenario, achieving a savings of$675,000 in the first year would be the most difficult, as it represents only a 0.4% increase in total expenditures. Once we realize these savings, expenses increasing at the same rate as revenues (each increasing 1%) would achieve the desired result. This is a highly simplified model. Many revenue and expense components will each affect the outcome and will certainly deviate from projection. Nevertheless, this is proposed as a management tool to achieve a policy target and the ability to achieve seems to rely on the first year.