Attachment 1BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
1
INTRODUCTION
Purpose
This is the second quarterly budget performance
report for the Fiscal Year (FY) 2017/18, for the six
month period ending December 31, 2017. The
purpose of this quarterly public reporting is twofold.
First, it ensures that the Town is consistently
monitoring its revenues and expenditures so that it
can proactively respond to unanticipated changes or
emerging trends. Second, and equally important,
these reports increase the transparency of the Town’s
finances. The Town is ultimately accountable to its
residents to use the revenue it brings in efficiently
and effectively to provide the highest quality services,
and quarterly public reporting provides taxpayers
with information that demonstrates the Town is
meeting this standard.
Content
This quarterly report presents an overview of the
Town’s operating revenues and expenditures for the
quarter ending December 31, 2017 as compared to
previous years, and explains any notable changes or
trends in these numbers. This report also provides
information on recommended budget adjustments.
Timeframe and Limitations
The information in this report is the most accurate
and up-to-date information available at the time of
publication. However, this report is not an audited
financial statement and the numbers provided herein
are preliminary and subject to change as the year
progresses. No data on revenues and expenditures is
final until the Town has completed its annual
comprehensive audit and finalized its Comprehensive
Annual Financial Report (CAFR), which is released in
the winter of each year for the prior fiscal year.
With respect to revenues: The Town regularly
monitors and adjusts its year-end revenue
projections based on revenue performance and other
developments that may affect Town revenues in
order to develop a more accurate picture of the
Town’s anticipated year-end financial position.
With respect to expenditures: The expenditure
information in this report is extracted directly from
the Town’s financial management system, and
adjustments are made to account for certain known
payments, reimbursements, or transfers between
Town Departments and funds that have not yet been
processed in the system at the time of publication. It
represents a snapshot of Town expenditures at a
certain point in time and does not reflect final
adjustments made to prepare the Town’s CAFR.
Table of Contents
Introduction .............................................................. 1
Executive Summary .................................................. 2
Status of FY 2017/18 Adopted Budget ....... 2
General Fund Reserve Status ..................... 2
Federal Economic Outlook ......................... 3
State Budget Update .................................. 3
General Fund – Key Revenue Analysis ..................... 4
Property Tax ............................................... 5
Sales Tax ..................................................... 6
Franchise Fees ............................................ 7
Business License Tax ................................... 8
Transient Occupancy Tax ............................ 9
Interest Income ........................................ 10
Charges for Services ................................. 11
Licenses & Permits ................................... 12
FY 2017/18 Recommended Budget Adjustments ... 13
Summary of Key Recommended Adjustments ....... 15
Financial Summaries and Projections ..................... 19
General Fund ............................................ 19
Special Revenue Fund .............................. 20
Capital projects Funds .............................. 21
Internal Service Funds .............................. 22
Trust and Agency Funds ........................... 23
Conclusion .............................................................. 23
Attachment 1
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
2
EXECUTIVE SUMMARY
Status of FY 2017/18 Adopted Budget
Overall, second quarter General Fund revenues are
trending in line with the second quarter of Fiscal Year
2016/17. Due to some projected revenue increases,
staff is recommending a net General Fund revenue
increase of $0.3 million from adopted budgeted
estimates, offset by expenditure increases (see page
13 for details). The current forecast expects a
substantial increase in property tax, motor vehicle in
lieu, transient occupancy tax (TOT), franchise fees,
and business license tax due to the continued surge in
the local economy as well as tourism within the Bay
Area. Sales tax revenues are declining primarily due
to the current Netflix business model and the impact
of online retail sales Revenues such as licenses and
permits, and fees for services are all trending
favorably, a strong indication that the economy
continues to rebound (see summary detail on page
19).
General Fund expenditure totals for the second
quarter are trending in accordance with forecasts,
with total operational expenditures at the end of the
second quarter at about 46% of the adopted budget.
With six months of data now available, staff can
better predict the next six months of expenditure
trends, although unexpected costs can occur. Should
any budget adjustments be necessary to balance
operating revenue and expenditures, staff will advise
the Council accordingly.
Expenditure additions at this time include increased
gas utility expenses, legal services, mandatory well
testing expenses, increased utility locator service
costs, funding to provide for additional background
check services, and tuition reimbursement expenses
(see page 13 for details).
Providing services to the community in this and future
fiscal years will continue to require strong
performance by economically sensitive revenues to
offset benefit and other cost increases. The FY
2017/18 budget is the fourth budget in five years that
did not require any service reductions to balance the
budget. The FY 2018/19 budget is expected to be
“status quo,” maintaining the Town’s high service
levels while recognizing the Town’s contractual
obligations and unfunded mandates.
General Fund Reserve Status - 6/30/17
General Fund Reserves are classified into the
following categories – Restricted, Committed,
Assigned, and Unassigned. Restricted reserves are
those which are restricted in use by accounting
standards or legal agreements and are not considered
as available for use for another purpose. Committed
reserves are established by Council Policy for an
intended purpose. Assigned fund balance describes a
portion of fund balance that reflects a government’s
intended use of resources. Unassigned fund balance
is available for appropriation.
General Fund Reserves, exclusive of the
Compensated Absences Fund, closed on June 30,
2017 with a balance of approximately $26.7 million in
committed and assigned reserves which is in
accordance with Town financial policies and
operating and capital budget requirements.
The Budget Stabilization Reserve was established to
serve as a transitional “bridge” funding source to
mitigate or smooth out cyclical ups and downs in
locally generated revenues due to fluctuations in the
local economy or “one-time” revenue losses where
the revenue base is likely to be restored in the near
future. The Catastrophic Reserve was established to
mitigate costs associated with unforeseen
emergencies, such as a disaster or catastrophic event.
Per the Town Council General Fund Reserve Policy,
the combined total of these two reserves is 25% of
the General Fund operating expenditures.
The CalPERS/OPEB (California Public Employees’
Retirement System/Other Post Employment Benefit)
Reserve was established in an initial amount of
$300,000 to mitigate the Town’s unfunded pension
Committed
Budget Stabilization Reserve $4.97
Catastrophic Reserve $4.97
CalPERS Reserve $3.39
Almond Grove Reserve $1.80
Assigned
Carryforward Appropriation $0.03
Strategic Planning $2.60
Capital Improvements $8.27
Open Space $0.56
Sustainability Reserve $0.14
Total General Fund Reserves $26.73
General Fund Reserves
6/30/2017
Amount
(millions)
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
3
liabilities in June 2016. According to the Council
action, an annual payment of $300,000 is deposited
from available year-end savings. In addition Town
Council can appropriate any additional funding to this
reserve by a formal Council action. Due to robust
investment earnings during the “dot com” years
preceding 2001, the Town’s pension trust was
determined by CalPERS to be “superfunded”. As
such, the Town was not required in those years to
make pension contributions and placed them into a
General Fund deposit account dedicated for future
CalPERS employer pension cost. In FY 2016/17 the
Town reclassified $1.8 million from the deposit
account as a prior year adjustment, increasing the
General Fund Reserve for CalPERS/OPEB to $3.39
million.
The reserve for Capital and Special Projects, funded
from annual available General Fund budget savings,
serves as the primary source for replenishment to the
Town’s General Fund Appropriated Reserves (GFAR),
which is the Town’s Capital Improvement Fund. This
Reserve functions as a potential funding source for
new capital projects or augmentations to authorized
projects funded through the Town’s Five Year Capital
Improvement Program (CIP). Out of the $8.3 million
available in Capital Improvement Reserve, $3.6
million is already committed for capital projects in FY
2017/18. In addition, the Council set aside money the
Almond Grove Reserve to provide funding to the
Almond Grove Street Rehabilitation Project.
The availability of approximately $26.7 million in
committed and assigned General Fund Reserves
provides the Town with resources to manage through
current and/or future fiscal challenges and
opportunities. The $2.6 million Strategic Planning
balance and the savings from the Almond Grove
Reserve were incorporated into the FY 2017/18
adopted budget.
Federal Economic Outlook
The Congressional Budget Office (CBO) projects
average growth for the economy. Real Gross
Domestic Product (GDP) is anticipated to grow by
about 2.0 percent in 2018. By the CBO’s projections,
the national unemployment rate will reach 4.2% by
early 2018. The CBO also estimates that the rate of
inflation will rise to 2.0% in 2018.
The CBO expects that the Federal Reserve will raise
the federal funds interest rate from 0.9% in the
second quarter of 2017 to 2.0% by the end of 2018
and then to 3.0% by the end of 2020.
The US Department of Commerce reported that
home construction rose 6.1% since last year.
State Budget Update
During the State’s recovery from the Great Recession,
the past five budgets expanded government
spending. The Governor’s proposed budget is
projected to have a one-time surplus. However, the
State must continue to plan for the next recession.
With this in mind, the Governor is proposing bringing
the Rainy Day Fund to 100 percent of its
Constitutional target.
The proposed budget also indicates that new
uncertainties in California’s relationship with the
federal government could have an impact on the
upcoming budget for the State. Some of the
uncertainties impacting the upcoming budget are
associated with possible federal government actions
related to federal tax changes, Children’s Health
Insurance Program Reauthorization, and federal cost
shifting.
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
4
GENERAL FUND – KEY REVENUE ANALYSIS
The following discussion provides a status of significant General Fund revenue sources as of the second quarter,
ending December 31, 2017.
Staff monitors each revenue source closely and may recommend certain revenue adjustments based on revenue
actuals or state budget action.
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
5
Property Tax
Property tax is the largest revenue source for the Town’s General Fund, accounting for 28.9% of budgeted General
Fund revenues in FY 2017/18. Property tax is levied by the Santa Clara County Assessor’s Office at 1% of a property’s
assessed value, of which the Town receives approximately 9.3 cents per dollar paid on property located within the
municipal limits of Los Gatos. In compliance with Proposition 13, the assessed value of real property is based on the
1975/76 assessment roll value, adjusted by 2% inflation factor thereafter. However, when property changes hands
or new construction occurs, property is reassessed at its current market value. Real property values critically impact
property tax revenues. With the passage of Proposition 13, voters limited the tax rate that can be imposed by the
Town on property. With the limitation on rates, therefore, higher revenues are generated by a higher aggregate
property value.
Analysis – Property Tax distributions are largely received in the third and fourth quarters. Property tax budget
projections are based on valuation projected by the Santa Clara County Assessor’s Office, given increased home
sales, coupled with anticipated adjustments in property tax distribution due to the dissolution of California
Redevelopment Agencies. Second quarter receipts are trending slightly higher than those received during the
second quarter of the previous fiscal year and are at 40% of budgeted totals. Based on these trends and the County
projections, staff recommends a $540,277 increase in General Property Tax.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
2nd Quarter Actual Revenues 3,475,492$ 3,690,329$ 4,030,272$ 4,274,774$ 4,604,788$
Fiscal Year Total Actual Revenues 9,054,908$ 10,113,287$ 10,791,743$ 11,518,257$
Fiscal Year Budgeted Revenues 11,383,073$
2nd Quarter Percent of Total 38%36%37%37%40%
Recommended Budget Revision 540,277$
PROPERTY TAX
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual
Revenues
Fiscal Year Total
Actual Revenues
Fiscal Year Budgeted
Revenues
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
6
Sales Tax
Sales tax is the second largest revenue source for the Town’s General Fund, accounting for 20.3% of budgeted
General Fund revenues for FY 2017/18. The Town receives 1 cent for every 9 cents of sales tax paid per dollar on
retail sales and taxable services transacted within Los Gatos. Since the implementation of the mechanism
commonly known as the “triple flip,” the State Board of Equalizat ion retains 0.25 cents of the Town’s 1-cent share
and requires the Santa Clara County Auditor to replace it with an equal amount of property tax revenue. Revenues
are remitted from the State to the Town on a monthly basis, and from the County to the Town on a biannual basis.
FY 2016/17 marks the “final triple flip” true-up payment. After FY 2016/17 the State Board of Equalization will
distribute the full 1 percent sales tax share to the Town. These revenues are placed in the General Fund for
unrestricted uses.
Analysis – The most recent sales tax and economic review update from MuniServices, the Town’s sales tax analysis
consultant, states that while sales tax receipts statewide grew by 4.3%, Town of Los Gatos Sales Tax revenues
increase by 0.6% over the same period. Second quarter receipts are trending behind those in the same period last
fiscal year. FY 2016/17proceeds were included a $900,000 final “ triple-flip” true-up payment from previous fiscal
years including FY 2015/16. As demonstrated in the graph below, the FY 2015/16 proceeds were less since the final
triple-flip payment was distributed in FY 2016/17. The current Netflix business model and on-line retail sales
negatively impact Sales Tax revenue. Staff recommends a $290,649 budget decrease to reflect the effect of declining
sales tax projection.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
2nd Quarter Actual Revenues 2,825,414$ 2,532,086$ 2,397,533$ 4,069,524$ 2,662,601$
Fiscal Year Total Actual Revenues 8,029,571$ 8,202,678$ 7,501,175$ 9,171,373$
Fiscal Year Budgeted Revenues 7,972,195$
2nd Quarter Percent of Total 35%31%32%44%33%
Recommended Budget Revision (290,649)$
SALES TAX
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Quarterly and Annual Revenues
5-Year History
2nd Quarter
Actual Revenues
Fiscal Year Total
Actual Revenues
Fiscal Year
Budgeted
Revenues
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
7
Franchise Fees
Franchise fees are collected by the Town for the privilege of operating a utility service within Los Gatos, and as a fee
in lieu of a business license tax. Franchise fees are currently received from Comcast for cable television, PG&E for
gas and electric services, West Valley Collection and Recycling for solid waste collection services, and AT&T and
Comcast for video services. Franchise fees represent 5.8% of budgeted General Fund revenues in FY 2017/18.
Analysis – Historically, franchise payments are not remitted equally throughout the fiscal year; therefore second
quarter receipts are not necessarily predictive. Total franchise fee revenues are trending slightly higher than those
of the second quarter in FY 2016/17. Staff recommends a $30,000 budget increase to this revenue source.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
2nd Quarter Actual Revenues 681,431$ 735,550$ 755,451$ 794,077$ 832,583$
Fiscal Year Total Actual Revenues 2,063,756$ 2,215,430$ 2,258,892$ 2,366,908$
Fiscal Year Total Budgeted Revenues 2,287,390$
2nd Quarter Revenue Percent of Total 33%33%33%34%36%
Recommended Budget Revision 30,000$
Franchise Fees
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual
Revenues
Fiscal Year Total
Actual Revenues
Fiscal Year Total
Budgeted Revenues
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
8
Business License Tax
The Town requires all businesses located within Los Gatos and/or those that operate within Los Gatos, to obtain a
business license. The amount of business license tax paid by each business is based on its business activity. Fees for
activities such as wholesale sales and manufacturing are charged on a sliding scale based on gross receipts, as is retail,
but retail is capped at $975. These activities account for approximately 25% of annual business licenses, while the
remaining 75% are flat fee businesses. Annual renewal payments are due on January 2 of each year. Payments for
new flat-fee-based businesses are pro-rated by quarter.
Analysis – As a result of the projected increase in economic activity, business license tax revenue for the current fiscal
year was budgeted slightly higher than the prior year budgeted number. Second quarter revenues are trending higher
compared to prior year second quarter revenue. FY 2014/15 actual revenues reflected below include a one-time prior
year adjustment for business license tax collection from Netflix. This adjustment was due to a reclassification that
happened in the first quarter of FY 2014/15. Current year second quarter revenues are trending in line with prior
year result consistent with the improved economic outlook. Therefore, staff recommends a budget increase of
$75,000.
FY 13/14 FY 14/15 FY 15/16
2nd Quarter Actual Revenues 352,049$ $ 945,846*$ 870,249**635,696$ 699,045$
Fiscal Year Total Actual Revenues 1,130,020$ 1,779,307$ 1,465,547$ 1,720,980$
Fiscal Year Total Budgeted Revenues 1,575,000$
2nd Quarter Revenue Percent of Total 31%53%59%37%44%
Recommended Budget Revision 75,000$
* Incudes "one-time" prior years adjustments due to Netflix recalssification to E-Commerce business
** Includes 2014 actual gross receipt adjustment for Netflix at the first time
Business License Tax
FY 16/17 FY 17/18
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual
Revenues
Fiscal Year Total
Actual Revenues
Fiscal Year Total
Budgeted Revenues
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
9
Transient Occupancy Tax
The Town levies a 12% transient occupancy tax (TOT) on all hotel and motel rooms within the municipal limits of Los
Gatos. This tax helps to fund Town services provided to visitors to Los Gatos. At the November 8, 2016 election the
Town of Los Gatos residents approved a ballot measure increase in the TOT from 10% to 12%. The 12% rate is effective
from January 1, 2017.
Analysis – Visit California, formerly the California Travel and Tourism Commission, reports that the total number of
visitors to California grew 2.2% in 2016. The forecast for California visitation is an increase of 2.5% in 2017. Personal
and business related travel is gaining strength. Second quarter TOT revenues are trending higher than those of the
second quarter of 2016/17. Based on the recent trend and the combined effect of increased TOT rate, staff is
recommending a budget increase of $190,000.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
2nd Quarter Actual Revenues 562,906$ 882,406$ 766,651$ 817,061$ 917,019$
Fiscal Year Total Actual Revenues 1,512,846$ 1,896,721$ 1,943,166$ 2,322,910$
Fiscal Year Total Budgeted Revenues 2,060,000$
2nd Quarter Revenue Percent of Total 37%47%39%35%45%
Recommended Budget Revision 190,000$
Transient Occupancy Tax
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual
Revenues
Fiscal Year Total Actual
Revenues
Fiscal Year Total
Budgeted Revenues
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
10
Interest Income
The Town earns interest income by investing monies not immediately required for daily operations in a number of
money market instruments. These investments are made within the parameters stated in the Town Council’s
Investment Policy. The Town’s investment goal is to achieve a competitive rate of return while protecting the safety
of its funds. Interest income revenue is primarily dependent on two factors: the cash balance in the Town’s
investment portfolio and the yield on those funds.
Analysis – Second quarter receipts are trending above those in the same period in the prior fiscal year. Financial
analysts throughout the market are predicting a slight increase in yields. The increase of the interest earnings
experienced this fiscal year are reflective of the Town’s total portfolio yield increasing from 0.88% as of December 31,
2016 to the current yield of 1.53% as of December 31, 2017.
The strategy for the foreseeable future continues to be remaining fairly short-term and to invest in callable agency
bonds in order to attempt to pick up a few basis points over non -callable agencies and treasuries. Because of the
rising interest forecast, staff is continuing to focus on the purchase of new short-term (two years or less in maturity)
investments as the rewards for longer term investments in the three to five year maturity do not have adequate
spreads to justify the risk of holding longer term maturities. The Town also attempts to find good solid corporate
bonds when possible. While the current trend shows a slight increase staff recommends no budget adjustment at
this time since significant amount of cash will be spent on the Almond Grove Street Rehabilitation Pro ject and
additional cash will be placed on the IRS 115 Pension Trust during this fiscal year.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
2nd Quarter Actual Revenues 251,835$ 161,825$ 146,500$ 295,641$ 310,485$
Fiscal Year Revenues 321,555$ 292,209$ 310,887$ 401,961$
Fiscal Year Total Budgeted Revenues 378,410$
2nd Quarter Revenue Percent of Total 78%55%47%74%82%
Recommended Budget Revision
Interest Income
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual
Revenues
Fiscal Year Revenues
Fiscal Year Total
Budgeted Revenues
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
11
Charges for Services
Town Service revenues consist primarily of planning, building, inspections, and engineering fees assessed on local
building and development activity. Development fees and charges are assessed based on recovery formulas, which
reflect approximate costs of providing these regulatory services.
Analysis – Second quarter Town service revenues, specifically Charges for Services, are trending in line in the second
quarter compared to the previous fiscal year, with 49% of budgeted revenues already received. Typically
development fees are collected in advance for projects and recognized as revenue in the fiscal year the work is
performed. Staff recommends a $50,000 budget increase.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
2nd Quarter Actual Revenues 1,398,426$ 1,341,401$ 1,391,766$ 1,280,107$ 1,227,358$
Fiscal Year Total Actual Revenues 2,684,126$ 2,643,276$ 2,677,944$ 2,643,012$
Fiscal Year Total Budgeted Revenues 2,514,525$
2nd Quarter Revenue Percent of Total 52%51%52%48%49%
Recommended Budget Revision 50,000$
Charges for Services
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual
Revenues
Fiscal Year Total
Actual Revenues
Fiscal Year Total
Budgeted Revenues
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
12
Licenses and Permits
Licenses and permits consist mainly of planning and building permit fees which are collected by the Town to offset
administrative costs associated with evaluating development proposals to ensure compliance with codes and policies .
Licenses and Permit revenue was budgeted slightly lower than FY 2016/17 in anticipation of decreased development
activity.
Analysis – Second quarter License and Permit revenue is trending 51% of budgeted revenue but below second quarter
results from the previous fiscal year. Staff recommends no budget adjustment to this revenue source.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
2nd Quarter Actual Revenues 1,950,393$ 2,282,444$ 1,975,156$ 1,879,951$ 1,512,930$
Fiscal Year Total Actual Revenues 3,235,122$ 3,687,393$ 3,552,935$ 3,084,388$
Fiscal Year Total Budgeted Revenues 2,941,539$
2nd Quarter Revenue Percent of Total 60%62%56%61%51%
Recommended Budget Revision
Licenses & Permits
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual
Revenues
Fiscal Year Total
Actual Revenues
Fiscal Year Total
Budgeted Revenues
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
13
FY 2017/18 Recommended Budget Adjustments
Budget adjustments are recommended for the following revenues and expenditures at the second quarter :
Fund Program Account
111 1201 411XX Property Tax 240,277$
111 1201 41126 ERAF 300,000
111 1201 41141 Motor Vehicle In Lieu Fee 178,214
111 1201 41211 Sales & Use Tax (290,649)
111 1201 41311 Transient Occupancy Tax 190,000
111 2301 41411 Business License Tax 75,000
111 1201 41613 Franchise Fee 30,000
111 1201 45923 CalPERS Deposit (300,000)
111 3301 44421 Plan Check Building 50,000
111 3301 45953 SB 1186 ADA Training 5,000
111 1201 45919 SVCEA JPA Reimbursement 100,000
111 4201 45919 Lease for PD Tower - SVRCS Reimbursement 3,327
111 4999 45922 CERT Suplies - Insurance Reimbursement 29,115
TOTAL GENERAL FUND REVENUES 610,284$
Fund Program Account
111 1301 51111 Additional Salary per Town Attorney Contract Effective 1/16/2018 7,341$
111 3201 61241 Office Equipments 2,000
111 1301 63215 Legal Services 45,000
111 3201 61241 Office Equipments 5,000
111 3201 64111 Training 2,000
111 3301 61241 CDD Phase 1 Office Reorganization 15,000
111 3301 64232 SB 1186 ADA Training 4,000
111 3301 64232 SB 1186 ADA Training 1,000
111 4101 64292 Tuition Reimbursement per MOU 3,000
111 4201 62522 Lease for PD Tower 3,327
111 4202 64212 Backgound Check - Additional Hiring 2,000
111 4301 64291 Tuition Reimbursement per MOU 13,000
111 4999 61154 CERT Supplies 29,115
111 5101 62141 Safe Routes to School 5,000
111 5202 63356 Utility Locator Services 8,200
111 5301 61111 Park Maps 6,141
111 5301 61224 Drinking Fountain @ Livek Oak Manor & Oaks Hill Play Lot 9,000
111 5302 63219 Well Testing & Monitoring 10,000
TOTAL GENERAL FUND EXPENDITURES 170,124$
General Fund Revenues
General Fund Expenditures
FY 2017/18 MID-YEAR BUDGET ADJUSTMENT REQUESTS - GENERAL FUND
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
14
Fund Program Account -
411
411 xxxxx From Cleless Ness Trust for Library Teen Door 41,000
411 xxxxx From Library Trust for Library Teen Door 10,000
51,000$
481
481 481-811-9901 82405 Decreased Gas Tax Revenue Projections for Street Repair (14,417)
(14,417)$
631
631 5402 49411 From GFAR - Skid-Steer Tractor 98,000
98,000$
711
711 7301 45411 Donation 1,100
1,100$
TOTAL OTHER FUNDS REVENUES 135,683$
Fund Program Account
231
231 5501 63363 Landscape Maintenance 955
955$
233
233 5503 63363 Landscape Maintenance 838
838$
234
234 5504 63363 Landscape Maintenance 6,217
6,217$
236
236 5506 63363 Landscape Maintenance 897
897$
411
411 411-xxx-xxxx 82405 Library Teen Door Installation 51,000
411 411-xxx-xxxx 82405 Mechanic Bay Heater 25,000
411 411-821-2302 82405 Building Replacement at Corporate Yard 100,000
411 411-813-0219 82405 Facilities Assesment 80,000
411 411-821-2115 82405 Traffic Calming 30,000
411 8011 99631 Transfer to Equipment Replacement for Skidteer 98,000
384,000$
481
481 481-811-9901 82405 Decreased Gas Tax Revenue Projections for Street Repair (14,417)
(14,417)$
621
621 2501 61133 Patrol Car Mobile Computer Replacement 100,000
100,000$
631
631 5402 81201 Vehicle Replacement - Facility Maintenance Worker 51,300
Skidsteer 98,000
149,300$
633
633 5404 61222 Fire Protection Services - Increased Contract 4,107
5404 61214 Downtown Event Flags 5,000
5404 62612 Utilities - Gas 120,000
5404 63353 Elevator Maintenance 15,000
5404 63362 South Yard and Forbes Mill Fence 15,000
159,107$
711
711 7301 49411 To Teen Door Installation - Capital Project 10,000
7301 62415 Family Book Program 1,000
11,000$
712
712 7302 49411 To Teen Door Installation - Capital Project 41,000
41,000$
713
713 7304 61241 New Furniture 6,000
6,000$
TOTAL OTHER FUNDS EXPENDITURES 844,897$
Equipment Replacement Fund
Hillbrook Drive LLD
FY 2017/18 MID-YEAR BUDGET ADJUSTMENT REQUESTS - OTHER FUNDS
GFAR
Library Trust Fund
Gas Tax
Other Fund Expenditures
Blackweel District LLD
Gemini Court LLD
Santa Rosa Heights LLD
Other Fund Revenues
Gas Tax
GFAR
Facilities Maintenance
Equipment Replacement
Information Technology
Cleless Ness Trust
Mc Clendon Trust
Library Trust Fund
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
15
SUMMARY OF KEY RECOMMENDED BUDGET ADJUSTMENTS
General Fund Revenues
▪ General Property Tax and Motor Vehicle in Lieu Fee: Staff recommends an increase in projected revenues
of approximately $240,277 in General Property Tax, $300,000 in Educational Revenue Augmentation Fund
(ERAF) repayment, and $178,214 Motor Vehicle in Lieu fee which are in line with the estimates and
forecasts provided to the Town from Santa Clara County.
▪ Transient Occupancy Tax: Actual receipts and Visit California forecasts indicate steady growth in travel. In
addition, the Transient Occupancy Tax rate increased from 10% to 12% effective January 1, 2017 therefore,
staff recommends recognizing a revenue increase of $190,000.
▪ Silicon Valley Clean Energy Refund: Staff is requesting a revenue budget increase in the amount o f $100,000
to recognize the Silicon Valley Clean Energy (SVCE) refund. As part of the Joint Powers Agreement that
formed SVCE in 2016, the twelve Santa Clara County member communities loaned $2.7 million to provide
the agency's initial working capital. The loan agreement gave SVCE four years from the effective date, or
March 2020, to pay back the loan. However, all funds were returned in January 2018, more than two years
ahead of schedule and within SVCE’s first year of operation.
▪ Business License: Staff recommends a revenue increase of $75,000 as a result of an increase in business
license activity received during the period.
▪ Plan Check Building Service: Staff recommends $50,000 increase in revenues due to increased building
activities.
▪ Garbage Franchise Fees: Staff recommends $30,000 increase in revenues due to increased garbage
franchisee fee collections.
▪ Staff recommends a revenue budget adjustment of $29,115 to align the budget to the revenue that the
Town recieved from an insurance reimbursement to replace Community Emergency Response Team (CERT)
equipment.
▪ Americans with Disabilities Act (ADA) Training: ADA training is funded through SB1186 State Mandated Fee,
which is collected with every business license and placed in a deferred revenue account. Staff recommends
a revenue budget increase of $5,000 to provide ADA training for the Community Development Building
Division staff.
▪ Silicon Valley Regional Interoperability Authority (SVRIA) ECOMM: Staff recommends a budget increase of
$3,327 to recognize reimbursement from SVRIA to cover increased radio leasing cost.
▪ Sales and Use Tax: Staff recommends a $290,649 budget decrease to reflect the declining sales tax
projection provided by MuniServices, the Town Sales Tax advisor.
▪ CalPERS General Fund Deposit: As mentioned earlier the Town set aside money in the CalPER General Fund
Liability Deposit Account at the time when CalPERS was superfunded and did not require pension
contribution from the Town. Staff programmed the use of deposit in the amount of $300,000 annually in
the adopted budget if needed to address icreases in future CalPERS rates. In FY 2016/17 the Town
reclassified the $1.8 million in the deposit account as a prior year adjustment, increasing the General Fund
Reserve for CalPERS/OPEB in the same amount. Staff recommends a $300,000 revenue budget decrease
to reflect the change as the entire revenue was recognized in the prior year.
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
16
General Fund Expenditures
▪ Legal Services: Staff recommends a $45,000 budget adjustment for additional legal services related to the
North 40 lawsuit and preparing the wireless ordinance.
▪ Staff recommends a budget adjustment of $29,115 to align the budget to the revenue that the Town
recieved from an insurance reimbursement to replace Community Emergency Response Team equipment.
▪ Office Furniture: Staff recommends a $22,000 adjustment to improve ergonomic working conditions in
Town offices and relocate the Building Division staff offices.
▪ Tuition Reimbursement: Staff recommends a $16,000 adjustment to cover non-anticipated tuition
reimbursements that are mandated through the approved Memorandum of Understanding (MOU).
▪ Drinking Fountains at Live Oak Manor and Oaks Hill Play Lot: Staff recommends a $9,000 expenditure
budget adjustment to fund the replacement of the drinking fountains at Oak Hill Play Lot and Live Oak
Manor Park. The existing concrete drinking fountains are in poor condition and are near the end of their
useful life.
▪ Mandated Well Testing and Monitoring: Staff recommends an adjustment of $10,000 for well testing and
monitoring required by the County of Santa Clara. Before 1990, an underground oil tank leaked into the
surrounding soil. The Town began cleanup operations but did not complete the ongoing monitoring
element. Town staff began testing in FY 2014/15, and as a result, more testing and samples were required
by the County. The County has required that this project be closed out.
▪ Mandated Utility Location Services: Due to increased cost and activity of mandated utility location services,
staff recommends an adjustment of $8,200.
▪ Training: Staff recommends an adjustment of $7,000 to provide additional training (ADA and American
Planning Association) for the Community Development Department.
▪ Printing Services: Staff recommends an adjustment of $6,141 due to the cost of printing parks maps.
▪ Safe Routes to School: Staff recommends an adjustment of $5,000 to provide membership support for the
Safe Routes to School Partnership.
▪ Silicon Valley Regional Interoperability Authority (SVRIA) ECOMM: Staff recommends a budget increase of
$3,327 to cover increased radio leasing cost. SVRIA is reimbursing the Town for the additional leasing cost.
▪ Miscellaneous Operating Expenditures: Staff recommends $9,341 combined expenditure budget increase
to cover non-anticipated cross departmental operational expenditures (including Town Attorey salary
increase, and background check for increased hiring).
Other Fund Revenues and Expenditures
▪ Gas Utility: Staff recommends a$120,000 budget increase due to increased Town wide gas utility costs for
facilities. Gas expenditures are tracking high; staff is currently discussing potential causes with PG&E.
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
17
▪ Building Replacement at Corporation Yard: Staff is requesting a $100,000 budget adjustment from available
year-end savings to the existing Building Replacement at Corporation Yard Capital Project. This project was
put on hold and partially defunded to provide funding for the A lmond Grove Street Rehabilitation project.
This project will replace an old modular portable building and remodel an existing maintenance building to
consolidate office space together and Police evidence and P arks and Public Works Department supply
storage together. The existing space has deteriorated over the years and is beyond its useful life cycle.
▪ Skid-Steer Tractor: Staff is requesting a budget transfer in the amount of $98,000 from the existing Open
Space Trail Upgrade Capital Project for the purchase of a new Skid-Steer tractor to be used to mow weeds
in the Town’s open spaces and parks. Considering heightened concerns surrounding the use of chemicals
to control weeds, mechanical mowing is the only alternative to decrease fire hazards in the open spaces.
Staff has looked towards rental versus purchase; however, the suppliers do not rent needed equipment to
perform brush removal in the hillside areas. Additionally, the equipment will be used for many maintenance
operations such as sweeping trails and numerous maintenance tasks. With approval of this item through
the midyear budget, staff will proceed with the procurement utilizing the cooperative purchasing provision
in the Town’s purchasing policy. This will allow for timely use of this equi pment prior to vegetation growth
in the spring.
▪ Facilities Assessment: Staff is recommending a $80,000 budget increase from available year end savings to
provide funding for a condition assessment of Town facilities to determine current condition of equipment
and building systems to assess priorities for repair versus replacements and to predict capital expenditures
needed year by year for life-cycle scheduled work and replacements.
▪ Vehicle Replacements: Staff recommends $51,300 expenditure budget incr ease from available year end
savings to replace one of the last Compressed Natural Gas (CNG) operated Facility Maintenance Vehicle.
The Town has three other CNG vehicles and will gradually change those to hybrid and electic vehicle
whenever it is possible.
▪ Traffic Calming: Staff is recommending a $30,000 expenditure budget adjustment from available year end
savings to fund additional traffic calming measures on College Avenue that were identified and voted for
by College Avenue residents.
▪ Library Improvements for Sound Mitigation: Noise mitigation inside the Library was identified as a needed
project by Library Staff and by public request as early as 2013. Staff contra cted the original architects, Noll
and Tam, to research the problem and develop a comprehensive plan for sound -mitigation. The report
identified three phases of work to be completed. This project will include the first phase which is to install
glass sound barrier doors between the teen area and rest of the Library. $41,000 from the Library’s Ness
Trust and $10,000 from the Library Trust will be moved to the CIP budget to cover anticipated costs of the
project.
▪ Mechanic Bay Heater: The two Reznor gas-fired heaters for the mechanics bay have reached the end of
their useful lives. This concrete and cement block structure is extremely cold in the winter months. A
$25,000 budget adjustment is recommended as the new units will be more efficient than the existing 40-
year-old units.
▪ Library Elevator: Staff is recommending a $15,000 expenditure budget to fund state mandated testing and
emergency maintenance of the Library elevators.
▪ South Yard and Forbes Mill Fencing Repairs: Staff recommends $15,000 expenditure budget adjustment to
repair the fences at the South Yard and Forbes Mill. Due to the remote locations, the areas are subject to
frequent vandalism.
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
18
▪ Landscaping: Staff recommends a budget adjustment in the amount of $8,907 adjustment from available
fund balance to align the budget in multiple Landscape and Lighting Districts (LLDs) funds with the new
landscaping agreement.
▪ Additional Library Furniture: Staff has identified areas of the Library which could greatly benefit from the
addition of supplemental public seating and table space. Through an effo rt of rearranging existing space,
staff is now able to add more tables and chairs in the Children’s room and in the Teen area. $6,000 from
the Library’s McClendon Trust will be moved to the operating budget to cover the cost of furniture
additions.
▪ Downtown Events Flags: Staff request $5,000 expenditure budget adjustment to prepare permanent
mounting mechanism. The new flags will have their own mounts and will be flown toward the streets only,
as opposed to double hung and competing with the street trees.
▪ Fire Protection Services: Staff requests $4,107 budget adjustment to cover increased contract cost related
to fire protection and inspection services.
▪ Patrol Car Mobile Computer Replacement: Staff recommends a $100,000 budget adjustment to replace
the mobile data computers (MDCs) in patrol vehicles. Replacement funds for (MDCs) in patrol vehicles are
collected each year. The funding collected is now sufficient to cover the entire cost of replacing the fleet
of MDCs in patrol cars. Staff recommends replacing the MDCs this fiscal year to save on necessary repairs
and avoid additional down time associated with the warranties being expired.
▪ Library Donation: Staff recommends a $1,100 revenue budget increase to receive Library Trust donation
throughout the year. Staff also recommends a $1,000 expenditure budget increase to provide funding for
the Book Family Program.
▪ Gas Tax: Staff recommends a $14,417 revenue and expenditure budget decrease due to updated gas tax
revenue forecast.
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
19
FINANCIAL SUMMARIES, PROJECTIONS, AND RECOMMENDATIONS
General Fund
The following table is the Schedule of General Fund Operating Revenues Versus. Operating Expenditures for the
second quarter of FY 2017/18 which includes comparison information from the prior year. The last column
contains projections of final balances for the current fiscal year based upon the early trends observed through the
second quarter and the proposed mid-year adjustments.
FY 2016/17 FY 2016/17
Q2 % of
FY 2016/17
Q2 % of
FY 2017/18 FY 2017/18 FY 2017/18
FY 2017/18
Finance
Actuals Q2 Actuals Adopted Q2 Adjusted Projection
Revenues
Sales & Use Tax 9,171,373$ 4,069,524$ 44.4%33.4%2,662,601$ 7,972,195$ 7,681,546$
Property Tax 11,518,257 4,274,774 37.1%40.5%4,604,788 11,383,073 11,923,350
VLF Backfill Property Tax 3,237,955 - 0.0%0.0%- 3,269,370 3,447,584
Franchise Fees 2,366,908 794,077 33.5%36.4%832,583 2,287,390 2,317,390
Transient Occupancy Tax 2,322,910 817,061 35.2%44.5%917,019 2,060,000 2,250,000
Other Taxes 1,726,128 637,636 36.9%44.4%702,477 1,582,000 1,657,000
Licenses & Permits 3,084,388 1,879,951 61.0%51.4%1,512,930 2,941,359 2,941,359
Intergovernmental 908,285 303,665 33.4%47.3%317,797 671,375 671,375
Town Services 2,634,012 1,280,107 48.6%48.8%1,227,358 2,514,525 2,514,525
Fines & Forfeitures 898,178 404,363 45.0%39.2%271,520 692,300 742,300
Interest 401,961 295,641 73.5%82.0%310,485 378,410 378,410
GASB 31 to Market (230,308) (107,687) 46.8%0.0%- (107,687) (107,687)
Other Sources 4,917,400 3,040,834 61.8%109.8%3,463,874 3,155,505 2,992,947
Fund Transfer In 313,825 103,230 32.9%17.6%102,000 579,836 579,836
Total Revenues & Transfers In 43,271,272$ 17,793,176$ 41%43%16,925,432$ 39,379,651$ 39,989,935$
Use of Other Funding Sources:
Use of Reserves - Capital Projects 1,400,000$ -$ 400,000$ 400,000$
Use of Reserves - Almond Grove 5,898,187 - - -
Use of Reserve - Budget Strategy and Almond Grove - - 3,166,786 3,166,786
Total Other Funding Sources 7,298,187$ -$ 0%0%-$ 3,566,786$ 3,566,786$
Total Revenues and Use of Reserves 50,569,459$ 17,793,176$ 35%39%16,925,432$ 42,946,437$ 43,556,721$
Expenditures
Mayor and Council 193,584 86,481$ 44.7%45.1%92,394$ 205,092$ 205,092$
Attorney 426,548 145,707 34.2%42.5%158,051 372,125 426,466
Administrative Services 2,825,082 1,212,612 42.9%44.2%1,582,199 3,577,761 3,577,761
Community Development 3,804,403 1,662,604 43.7%45.3%2,012,335 4,442,555 4,469,555
Police 13,347,234 6,816,759 51.1%46.6%7,197,220 15,455,232 15,505,674
Parks & Public Works 6,627,768 3,051,952 46.0%48.1%3,423,184 7,118,496 7,156,837
Library 2,514,653 1,204,043 47.9%46.2%1,291,021 2,793,218 2,793,218
Total Department Expenditures 29,739,272$ 14,180,158$ 48%46%15,756,404$ 33,964,479$ 34,134,603$
General Government 14,195,060$ 2,856,236$ 20.1%30.2%2,708,911$ 8,981,956 8,981,956
Total Non-Departmental Expenditures 14,195,060$ 2,856,236$ 20%30%2,708,911$ 8,981,956$ 8,981,956$
Total Operating Expenditures 43,934,332$ 17,036,394$ 39%43%18,465,315$ 42,946,435$ 43,116,559$
To CalPERS Reserve 1,804,511
Sales Tax Prior Adjustment 372,050
GASB Adjustments 255,045
Net Operating Revenues 4,203,521$ 756,782$ (1,539,883)$ *-$ 440,160$
* FY 2017/18 Q2 Net Operating Revenues are negative because some revenues budgeted for the entire fiscal year are received in the third or fourth quarters.
General Fund
Fund 111
SUMMARY OF REVENUES AND EXPENDITURES
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
20
The group of financial summaries on the following pages present data by governmental, proprietary and fiduciary
fund types. For each, the fund information starts with a beginning fund balance, adds current year revenues, and
subtracts current year expenditures, resulting in an ending fund balance. Adopted budget amounts are provided as
a basis for comparison of actuals to date.
Special Revenue Funds (Governmental Fund Type)
Special Revenue Funds account for the proceeds derived from specific revenue sources that are legally restricted or
assigned to special purposes. The Town’s Special Revenue Funds are Community Development Block Grant Fund,
Housing Conservation Program Fund, Urban Runoff Source Fund (Non-Point Source), and several landscaping and
Lighting District Funds. The revenue from the Non-Point Source Program fund continues to lag expenses. This largely
results from increased requirements associated with the Town’s storm water permit, including increased inspections
and monitoring, trash reduction requirements, and administrative costs. Staff has developed a plan to move the
program toward a sustainable cost recovery model as part of the FY 2017/18 budget process. As indicated in the
chart below, Non-Point Source fund balance is negative. It is anticipated that revenues for the Non-Point Source
program will be received by the end of the fiscal year and therefore no budget adjustment is being recommended at
this time. Staff will continue to monitor these revenue funds to ensure payments are received.
CDBG Non-Point LLD's
Grants Source
Beginning Fund Balance 87,900$ 14,894$ 199,643$
Budgeted Revenues - 584,394 38,861
Total Actual Revenues - 2nd Qtr -$ 25,640$ -$
Budgeted Expenditures - 564,910 110,046
Total Actual Expenditures - 2nd Qtr - 410,281 19,280
2nd Quarter Ending Fund Balance 87,900$ (369,747)$ 180,363$
Special Revenue Funds
Budget to Actuals Comparisons
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
21
Capital Projects Funds (Governmental Fund Type)
Capital Projects Funds account for resources used for the acquisition and construction of capital facilities by the
Town. Funds in this category are the GFAR (General Fund Appropriated Reserve) Fund, Traffic Mitigation Fund, Grant
Funded CIP Projects Fund, Utility Underground Fund, Gas Tax Fund, and three Storm Drain Funds. Capital Projects
Funds are generally tracking in accordance with the FY 2017/18 adopted budget. Staff recommends increasing GFAR
revenue budget by $51,000 to recognize the transfer from Cleless Ness Trust and Library Trust for the Library Teen
Door installation. Staff recommends increasing GFAR expenditure budget by $384,000 for the Library Teen Door
installation, Mechanic Bay Heater, Corporate Yard Building Upgrade, Facilities Assessment, and Traffic Calming on
College Avenue. Staff recommends to decrease both gas tax revenue and expenditure by $14,417 to match current
Gas Tax estimates. Staff will continue to monitor these expenditures throughout the remainder of the year. The
Grant Funded CIP fund displays a deficit balance because this grant fund expends Town dollars first, then provides
documentation of these expenditures to the State of California or other granting agencies and is reimbursed for
those costs. The reimbursements eventually result with the fund “breaking even” or a zero fund balance.
GFAR*Traffic *Grant Funds*Storm Utility Gas
Fund Mitigation CIP Drains Undergd Tax
Beginning Fund Balance 18,253,744$ 2,527,528$ (380,253)$ 1,805,442$ 2,929,116$ 693,508$
Budgeted Revenues 4,675,849 1,075,017 1,080,928 101,240 44,280 882,457
Total Actual Revenues - 2nd Qtr 460,564 - 85,718 61,644 15,446 299,664
Budgeted Expenditures 21,677,394 1,090,017 1,026,044 158,750 112,000 1,334,229
Total Actual Expenditures - 2nd Qtr 4,897,412 11,588 2,739 9,185 - -
2nd Quarter Ending Fund Balance 13,816,896$ 2,515,940$ (297,274)$ 1,857,901$ 2,944,562$ 993,172$
Capital Project Funds
Budget to Actuals Comparisons
* GFAR, Traffic Mitigation, and Grant Funds balances are combined in the CAFR. The combined balance of $18,102,031 is presented as an
Appropriated Reserve. The Traffic Mitigation Fund balance includes $2,298,987 deferred revenue.
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
22
Internal Service Funds (Proprietary Fund Type)
Internal Service Funds finance and account for special activities and services performed by a designated Town
Department for other Town Departments on a cost reimbursement basis. Included in this fund type are the
Equipment Replacement Fund, Workers’ Compensation Fund, Association of Bay Area Governments (ABAG) Self-
Insurance Fund, Office Stores Fund, Management Information Systems Fund, Vehicle Maintenance Fund, and the
Facilities Maintenance Fund.
Staff recommends a $249,300 budget adjustment to cover patrol car mobile computer replacements, and equipment
and vehicle replacements as explained in the budget adjustment section. Staff will continue to monitor expenditures
and propose a revised cost allocation if needed, during FY 2017/18 budget preparation.
Equipment Workers Self Office Information Vehicle Facility
Replacemt Comp Insurance Stores Technology Maint.Maint.
Beginning Fund Balance 1,894,057$ 902,307$ (*)885,441$ (*)200,437$ 2,251,331$ (*)182,369$ (*)(37,872)$
Budgeted Revenues 932,313 969,547 553,953 118,000 1,180,879 586,654 1,736,089
Total Actual Revenues - 2nd Qtr 356,038 529,375 253,388 59,547 557,664 293,328 718,821
Budgeted Expenditures 818,211 1,258,466 816,952 134,500 1,439,581 583,491 1,402,052
Total Actual Expenditures - 2nd Qtr 218,824 529,310 352,345 47,173 576,047 229,435 625,251
2nd Quarter Ending Fund Balance 2,031,271$ 902,372$ 786,484$ 212,811$ 2,232,948$ 246,262$ 55,698$
27%42%43%35%40%39%45%
(*) Reflects CAFR Net Position Adjusted for Net Pension Liability
Internal Service Funds
Budget to Actuals Comparisons
BUDGET PERFORMANCE REPORT – 2ND QUARTER FY 2017/18
23
Trust and Agency Funds (Fiduciary Fund Type)
Town Trust and Agency Funds have estimated fund balances as of December 31, 2017 of $534,217 for the Library
Trust Funds and $3,735,702 for the Successor Agency (SA) Trust Fund. Staff recommends a $1,100 revenue budget
adjustment for the donation received in the Library Trust. In addition, an expenditure budget adjustment of $58,000
for Library Teen Door installation, new furniture, and family book program . The budget adjustments were discussed
in the budget adjustment section of this report.
Successor Agency to the Redevelopment Agency
During the second quarter, the Successor Agency Board and staff continued to work diligently to satisfy the many
requirements and deadlines established by the state through AB1x26 and AB1484. AB1x26 is the “Dissolution Bill”
that eliminated the Town’s Redevelopment Agency effective February 1, 2012. AB 1484 is the “clean -up” bill that
revised and attempted to clarify AB1x26. In accordance with the law, the Successor Agency continues to wind down
the affairs and operations of the former Redevelopment Agency by implementing programs and activities in
accordance with the State-approved Recognized Obligation payment Schedule (ROPS). The Successor Agency monies
are now accounted for in a Private Purpose Trust fund and no longer part of the Town’s Financial Statements.
CONCLUSION
The financial results from the prior fiscal year, coupled with the FY 2017/18 second quarter data, confirm that the
second quarter financial results are stable and improving. Staff is cautious as the five-year financial plan projects
shortfalls beginning in FY 2018/19. The shortfalls are primarily due to the anticipated increased employer pension
costs associated with CalPERS discount rate assumption changes in December 2016. Staff is actively engaged in the
2018/19 budget process with the primary focus of ensuring that the available Town resources are allocated to meet
the priority service needs of the community.
Library SA
Trust Trust
Beginning Fund Balance 531,958$ 3,348,443$
Budgeted Revenues 78,365 3,857,721
Total Actual Revenues - 2nd Qtr 17,700 1,914,749
Budgeted Expenditures 72,500 3,856,383
Total Actual Expenditures - 2nd Qtr 15,441 1,527,490
2nd Quarter Ending Fund Balance 534,217$ 3,735,702$
21%40%
Trust & Agency Funds
Budget to Actuals Comparisons
* Certification of Participation Long Term Debt ($18,785,000) and net land and
building value ($6,986,199) are not presented in the Fund Balance