Deparment of Administetion Post Office Box 17 “Jackson, Missisipp 39205:0017 TO: Tony Yarber, Mayor Members of Jackson City Couneil FROM: Michelle Battee-Day, Interim Director of Administration DATE: May 9, 2016 SUBJECT: General Fund Update 1. Do we have a reserve deficiency for FY14-15 and FY15-16? Yes 2. If-so, how much? FY14-15 $4,187,367 FYI5-16 projection $7,150,044 FUND BALANCE Based on an ordinance approved by the city council, the requirement for the unreserved fund balance in the general fund is 7.5% of the adopted revenue. ‘The FY14-15 adopted revenue budget was $122,378,560, of which 7.5% ($9,178,392) was required to be set aside as fund balance reserve, At the beginning of FY14-15 the available fund balance including the reserve was $16,168,423. From this amount, the funds which represent the 7.5% of the adopted budget ($9,178,392 as referenced above) were carved out as FY 14-15 fund balance reserve. ‘The remaining funds, $6,990,031, were available to be used to balance the budget at FY14-15, The adopted applied fund balance for FY14-15 for the General Fund (not including sub funds) was $14,799,187, Therefore, $7,809,156 of the required 7.5% was used to balance the budget. However, at FY14-15 year end, the City only needed $11,177,398 to close out the budget. This created a deficit of $4,187,367. ‘The calculation is as follows: Available Fund Balance @ beginning FY14-15 $16,168,423 7.5% of Adopted FY 14-15 Revenue $9,178,392 Amount available to balance/close out FY 14-15 —$ 6,990,031 Adopted applied fund balance for FY14-15 $14,799,187 (87,809,156) Actual amount used to close out FY14-15 $11,177,398 FY14-15 Fund Balance Reserve deficiency ($4,187,367)Listed below ate the items that were drawn on the FY14-15 fund balance/reserve: Debt Service $1,234,206 ‘A payment on the 2005 GO Bond of $2.5M was due on October {, 2015. ‘The payment was originally budgeted in FY15-16 but later removed at the request of the former director. To absorb this payment, staff was asked {0 use the $958,507 from the New Horizon BP settlement, and the building permits revenue line was increased by $330,225 based on revenue collected in excess of the adopted budgeted amount, This was done in an effort to minimize the amount needed from the fund balance, ‘The net effect on the fumd balance was $1,234,206, ‘The calculation is as follows: Debt Service payment due: $2,522,938 ‘New Horizon BP settlement $ 958,507 Increase in revenue $330,225 $1,234,206 Insurance 424,809 ‘The insurance fund was not properly budgeted in FY14-15. A total of $980,743 of general fund dollars was uséd to cover the shorifall, of which $424,809 was deducted from fund balance, The remaining $555,934 was taken fiom unexpended funds in the 630 categories (Other Services & Charges) actoss multiple divisions in General Government; which is where the appropriations for the insurance are budgeted. Master Lease $ 116,500 ‘The city finances vehicle purchases through the use of a lease purchase program. Our practice hhas been that the funds for vehicles which have not been received and paid for by the end of the fiscal year are placed in a trust account. These unspent funds are then rolled forward to the next fiscal year and included in fund balance. In this case, the fimds had to be re-budgeted in FY15- 16 to cover the cost of the vehicle. Americorp S$ 858 ‘The appropriation from the General Fund was not sufficient to cover the expenses of the program, Police DUIGrant $ 756 ‘The expenses exceeded the reimbursements received at fiseal year-end. Miscellaneous $2,410,238 As described above, there were specific and ide1 15 that total $1,777, 129. iable draws on the fund balance during FY 14- There is an additional $2,410,238 that was approved with the adoption of the FY14-15 budget. This amount is not easily identifiable as it was absorbed as part of the overall budget.3. If'so, what’s the plan for lenishing the reserve? a, The city’s proposed financial plan included the establishment of a budget stabilization fund which will provide a mechanism by which fands which exceed budget needs (including the required fund balance) may be set aside, b. The city must re-define its core services. The city has historically provided services that extend beyond public safety, water and wastewater and infrastructure (streets & bridges) management, Our citizens have benefited tremendously from these services but the cost of providing them has begun to drain the city of much needed resources which has affected the city’s ability to provide the core services. ¢. The city must continue to explore, create and implement additional revenue streams (i.e. parking meters, explore monetizing the city’s assets explore private management of certain city facilities). 4, The hiring of all non-essential personnel should be suspended, ¢. All non-emergency overtime and overtime not previously approved by the department director should be suspended. £. Requests for non-emergency purchases and travel should be suspended. g. Reduce funding provided to outside agencies, : h. Discontinue the youth employment and the summer enrichment programs uatil the city’s “reserve has been cna The city must be pro-active in its efforts to eliminate fraud and abuse of city resources. 4, What's the current revenue in the general fund budget for FY15-16? $77,929,755. 5. What's the final general fund revenue for FY14-15? $109,575,976.. 6, How do they compare to the budget? As of April 30, 2016, collections were 67.9% of the budget. As of September 30, 2015, collections were 99.6%, — 7. What are our total General Fund expenditures for FY15-16 through the end of the 2"! quarter? $56,055,253. 8, How do they compare to the current budget? As of March 31, 2016, expenses were 45.88% of the budget. 9. What’s the fund balance for FY15-16? At the end of FY 14-15 the available fund balance was $4,991,025. This amount was therefore, the beginning fiund balance for FY15-16. 10, How much fund balance from the end of FY14-15 did we plan fo use to balance the budget for FY15-16? $907,627 was used to balance the FY16 budget. FUND BALANCE FY15/16 At the end of FY14-15 the available fund balance was $4,991,025. Of this amount, $907,627 was used to balance the FY15-16 budget. Listed below are items that have been drawn on the FY15-16 fund balance: Master Lease SF The city finances vehiclé purchases through the use of a lease purchase program. Our practice has been that the funds for vehicles which have not been received and paid for by the end of thefiscal year are placed in a trust account. ‘These unspent finds are then rolled forward to the next fiscal year and included in fund balance. In this case, the funds had to be re-budgeted in FY15- 16 to cover the cost of the vehicle. Constituent Services $ 48,289 During the preparation of the FY15-16 budget the PEG Media Services Coordinator position was frozen in error. These funds were used to restore this position. Community Center $20,000 Recommended by Couneilman Stamps and approved by council. Part-time position $7,676 Recommended by Councilman Stokes and approved by couneil Additionally, 1 anticipate the following items having a negative impact on the fund balance by the end of this fiseal year. Please keep in mind that these are preliminary estimates and are subject to change as the year continues, > As of May 4, 2016, JPD had expended 91% of its overtime budget. If they continue to spend at this rate, they will exceed their overtime budget by at least $750,000. Also, Community Improvement will exceed its demolition budget by an estimated $98,417, if they continue their current spending trend. aa ‘The insurance fund was not properly budgeted for FY1S-16, Current projections indicate that we will require approximately $1,841,912 to cover the shortfall. There is no scientific method to perform this calculation. It is contingent on the number and severity of the medical insurance claims (ie. cancer, accidents, etc.), > Jatran ordered 2 buses in FY14-15. ‘The purchase order was cancelled and there was a delay in getting it re-issued. During that time the price increased by $272,000; which the city will have to cover. We are still reviewing Jatran for potential issues that may negatively impeet the fund balance, > The projected FY15-16 revenue budgets were adjusted based on actual collections to date and projections through the end of the fiscal year. The adjustments in the revenue budgets amount to approximately $34,970, - RT v Also, it is important to note that HUD found that the City had disallowed expenditures of $1,939,952 in FY13 and $1,510,810 in FY14 that were not budgeted. ‘The city was required to make these payments once a settlement was reached with HUD. These were two significant draws that further reduced previous years fund balance. Ends Result basedd on i . ecto is Pus deste SATO 6S oor , hot case , Sten ne i have 4 | 345,670 feRE withodt immed? ake Speadisg.