Title
A. ACCEPTANCE OF AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 2015
B. RESOLUTION NO. 2016-004 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA MAKING VARIOUS AMENDMENTS TO THE FISCAL YEAR 2014/15 BUDGET TO ADJUST FOR VARIANCES AND APPROPRIATING FUNDS THEREFOR (4/5 VOTE REQUIRED)
Body
RECOMMENDED ACTION
Recommended Action
Council accept the report and adopt the resolution.
Body
SUMMARY
Presented for City Council information and acceptance are the Audited Financial Statements for the fiscal year ended June 30, 2015, as prepared by the independent audit firm of Lance Soll & Lunghard LLP. The audit report submitted for the City has received an unqualified (clean) opinion from the independent audit firm.
ENVIRONMENTAL REVIEW
Environmental Notice
Environmental Notice
The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
Body
Environmental Determination
The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the requested action is not a “Project” as defined under Section 15378 of the State CEQA Guidelines because it is only the consideration and acceptance of the audited financial statements for the fiscal year that ended June 30, 2015; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines no environmental review is required.
BOARD/COMMISSION RECOMMENDATION
Not applicable.
DISCUSSION
Pursuant to the City Charter Section 1017, an annual audit is performed of the City's financial records by an independent accounting firm. The report is included as an attachment. The firm of Lance Soll & Lunghard LLP has examined the general purpose financial statements of the City of Chula Vista and has issued their opinion that those statements present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2015 and the respective changes in financial position, and where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The unassigned fund balance for the City’s General Fund (Fund 100) totaled $16.3 million as of June 30, 2015. This amount reflects 11.9% in unassigned fund balance (operating reserves) of fiscal year 2014-15 actual expenditures of $136.7 million. The unassigned fund balance increased from $14.3 million to $16.3 million when compared to June 30, 2014, representing an increase of $2.0 million.
In addition to the unassigned fund balance, the General Fund ended fiscal year 2014-15 with $3.6 million in the Economic Contingency Reserve - there is no change from the prior fiscal year. This reserve was established by the City Council in fiscal year 2009 with the approval of the updated General Fund Reserve Policy. The Economic Contingency Reserve has been funded through one-time revenues and/or expenditure savings. The reserve policy sets a reserve goal of 5% for the Economic Contingency Reserve. The General Fund ended fiscal year 2014-15 with approximately 2.6% in the Economic Contingency Reserve.
In order to form a basis for their opinion, Lance Soll & Lunghard LLP, evaluated the internal control procedures of the City and found no reportable conditions. This was Lance Soll & Lunghard LLP second year serving as the City’s independent auditors. The City previously contracted with Pun & McGeady, LLC. After five years of contracting with this firm the City decided to issue an RFP and awarded the contract to Lance Soll & Lunghard LLP.
The City’s Consolidated Annual Financial Report (CAFR), is provided as Attachment 1 of this report.
Budget Amendments - as part of the final review of the fiscal year 2014-15 budget, staff made two entries that require budget amendments. Based on a recommendation from the Auditor, the revenues and expenditures related to the lease agreement for the fire engine were booked to the General Fund. This amendment has no net fiscal impact to the General Fund but allows the City to recognize the purchase of the fire engine the year it was accepted and functional. Secondly, after review of the projected ending fund balance in the Workers Compensation Fund it was determined that a transfer from the General Fund was prudent. The fund balance in the Workers Compensation Fund had been reduced in prior years due to reduced revenues and increased expenditures. Staff will continue to evaluate revenue and expenditure trends in the Workers Compensation Fund. Personnel Services savings in various departments will offset the transfer to the Workers Compensation Fund.
DECISION-MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site specific and consequently, the 500-foot rule found in California Code of Regulations Title 2, section 18702.2(a)(11), is not applicable to this decision for purposes of determining a disqualifying real property-related financial conflict of interest under the Political Reform Act (cal. Gov’t Code § 87100, et seq.).
Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter.
LINK TO STRATEGIC GOALS
The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. This action supports the Operational Excellence goal by communicating the City’s financial position for the fiscal year ending June 30, 2015 in an open and transparent manner. This transparency supports City Initiative 1.3.1. - “Foster public trust through an open and ethical government.”
CURRENT YEAR FISCAL IMPACT
There is no fiscal impact as a result of accepting the Fiscal Year 2014-15 Comprehensive Annual Financial Report. The recommended budget amendments result in no net fiscal impact to the General Fund. Approval of the resolution will result in the following budget amendments/appropriations:
|
Department |
Expenditures |
Revenues |
Net Impact |
Description |
|
Non Departmental |
$578,225 |
|
($578,225) |
Recording purchase of fire engine (leased in prior year but received in fiscal year 2015) |
|
Non Departmental |
|
$578,225 |
$578,225 |
Recording purchase of fire engine (leased in prior year but received in fiscal year 2015) |
|
Non Departmental |
$950,000 |
|
($950,000) |
Transfer to Workers Compensation Fund |
|
Administration |
($75,000) |
|
$75,000 |
Reduce Personnel Services |
|
Finance |
($75,000) |
|
$75,000 |
|
|
Animal Care Facility |
($75,000) |
|
$75,000 |
|
|
Development Services (GF) |
($100,000) |
|
$100,000 |
|
|
Police |
($150,000) |
|
$150,000 |
|
|
Public Works |
($225,000) |
|
$225,000 |
|
|
Recreation |
($175,000) |
|
$175,000 |
|
|
Library |
($75,000) |
|
$75,000 |
|
|
Total General Fund |
$578,225 |
$578,225 |
$0 |
|
ONGOING FISCAL IMPACT
There is no ongoing fiscal impact as result of this action.
ATTACHMENTS
1. Fiscal Year 2014-15 Comprehensive Annual Financial Report
Staff Contact: David Bilby, Finance Director, Finance Department