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02-13-2018 CC Rpt 16COUNCIL AGENDA STAFF REPORTCOUNCIL AGENDA STAFF REPORT TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS DATE: FEBRUARY 13, 2018 FROM: CITY MANAGER ITEM NO:16 SUBJECT:MONTHLY FINANCIAL REPORT AND SECOND QUARTER BUDGET REVIEW FOR FISCAL YEAR 2017-18 RECOMMENDATION: 1. Receive and file the Monthly Financial Report for December 2017. 2. Approve the Second Quarter Budget Review for Fiscal Year 2017-18 and proposed budget amendments described in the Background/Analysis section of this report. 3. Approve Administrative Policy, Section 4.6, Fund Balance, by adopting the following Resolution: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHINO HILLS, AMENDING THE CITY'S FUND BALANCE POLICY BACKGROUND/ANALYSIS: The Monthly Financial Report (see attached) and Second Quarter Budget Review for Fiscal Year (FY) 2017-18 are being presented to the City Council and the public to provide a status update of the City's financials at December 31, 2017. The Financial Report includes the budgetary information for the City's annual financial plan as well as the actual resources received and the use of these resources in fulfilling the financial plan. Financial data is reported on a cash basis meaning that revenue is reported when cash is received and expenditures are reported when cash payments are made. The majority of General Fund revenues come in sporadically throughout the year, and most of it is received in the last six (6) months of the fiscal year. Meanwhile, expenditure transactions continue to be paid each month regardless of when the revenues are received. This highlights the importance of maintaining a reserve that allows for cash flow needs during the lean months when there are no revenues. At the end of the fiscal year, the accrual basis of accounting is applied to all governmental accounts. As a result, many of the revenues received or expenditures paid in July and August are accrued to the month of June to comply with the Generally Accepted Accounting Principles (GAAP) which matches the transaction to the period in which the revenue was earned or the expenditure occurred. The Enterprise Funds, or business type funds, use the "accrual" method of accounting. These business type funds charge customers a fee to cover the cost of services that are provided. This method applies to the Water Utility Fund and Sewer Utility Fund. On a quarterly basis, staff reviews the status of the budget, prepares a summary of the Capital Improvement Program, and proposes budget amendments for City Council consideration. City staff is seeking approval for the following budget amendments and Fund Balance Policy: 51/231 Ratify City Manager Budget Amendments - General Fund (001) Resolution No. 2017R-023 authorizes the City Manager to appropriate from reserves up to $25,000 per transaction for each expenditure line item or capital improvement project. The total of appropriations by the City Manager from General Fund reserves may not exceed $100,000 in a fiscal year. In the second quarter of FY 2017-18, the City Manager authorized $49,000 in General Fund budget amendments. These budget amendments have already been recorded to the City's general ledger and are reflected in the ending budget balances in the December Financial Report. It is recommended that the City Council ratify the following General Fund budget amendments: DepartmentDepartment DescriptionDescription AmountAmount City Manager Professional services for Tehachapi Transmission project $ 10,000 City Manager Legal Services for the Tres Hermanos Authority 25,000 Finance/PW Transfer to Parks and Landscape for budget clean-up 1,600 Finance/PW Adjust Parks and Landscape subsidy for landscape contract 12,400 T otal Total $ 49,000$ 49,000 City Manager Professional Services - General Fund (001) In FY 2016-17, the City Council approved an appropriations amendment in the amount of $31,000 to the City Manager's Professional Services account to cover the cost of the Professional Services Agreement with National Demographics Corporation (NDC) for voter districting services. These funds were not invoiced in FY 2016-17 and instead were invoiced in FY 2017-18. Due to an administrative oversight, these funds were not encumbered and rolled over into the new fiscal year; therefore, staff is requesting a budget amendment in the amount of $31,000 to cover the cost of the NDC services. This will decrease the General Fund projected fund balance by $31,000. Public Agency Retirement Services (PARS) - Fund (002) The FY 2017-18 adopted budget for the PARS investment fees did not include the US Bank trustee fee which is charged to manage the cash for the investments. The annual trustee fee is estimated to be $18,100 for FY 2017-18. In addition, at the November 13, 2017, City Council meeting, an additional transfer of $930,000 from the Water Utility Fund and $388,000 from the Sewer Utility Fund to the PARS Trust was approved. This additional contribution will increase the annual asset fee charged by PARS by $1,200. Staff is recommending a $19,300 increase in the PARS investment fees expense budget. This will decrease the PARS Fund projected fund balance by $19,300. Capital Improvement Projects (CIP) Rollover Reimbursements - Community Development Block Grant (CDBG) Fund (017) At the close of the fiscal year, CIP project budgets that are not completed are rolled into the new fiscal year. In FY 2017-18, CIP projects totaling $181,274 were rolled from FY 2016-17 to FY 2017-18, in the CDBG Fund. These expenditures are funded through reimbursements from the U.S. Department of Housing and Urban Development. Staff recommends that revenues in the CDBG Fund be increased by $181,274 to a total amount of $582,674 to account for these additional reimbursements. This budget amendment to increase revenues will correct the negative fund balance in the CDBG fund bringing the projected fund balance to zero. Development Impact Fees and Expenses - Traffic Impact Fee Fund (136) At the April 11, 2017, City Council meeting, the City Council adopted a new development impact fee called "Traffic Impact Fee" for new development within the City. As this fee was adopted late in the budget development process, no budgets for this fund were included in the adopted FY 2017-18 budget. To date, $34,835 has been collected from developers. Staff is recommending a budget increase in the Traffic Impact Fee revenues in the amount of $50,000 to account for estimated revenue for this fiscal year. In addition, staff is recommending an appropriation increase in the amount of $3,750 for administrative overhead costs which are charged at a rate of 7.5% of gross revenues to Development 52/231 Impact Fee funds. These budget adjustments will increase the projected fund balance in the Traffic Impact Fee Fund by a net amount of $46,250. Gas Tax 7360 - Fund (183) On April 28, 2017, the Governor signed Senate Bill 1 (SB 1), which is known as the Road Repair and Accountability Act (Act) of 2017. A portion of this bill requires the repayment of loans made from the former Traffic Congestion Relief Fund, which is now a part of the Highway Users Tax (Gas Tax) fund. The estimated revenues for the loan repayment for FY 2017-18 is $91,715. Staff is recommending to increase the gas tax revenues by this amount to account for the additional revenues. This budget amendment will increase the Gas Tax 7360 projected fund balance by $91,715. Road Maintenance Rehabilitation Account (RMRA) - Fund (184) At the September 12, 2017, City Council meeting, the City Council approved a revenue budget in the amount of $445,600 for the FY 2017-18 RMRA fund. On January 11, 2018, the California Local Government Finance Almanac released revised revenue estimates. The FY 2017-18 RMRA revenues are proposed to increase by $14,500 over the original projection of $445,600. Staff is proposing to increase the RMRA revenue budget to the revised amount of $460,100. In addition, staff recommends increasing the CIP expenditure budget for the Pavement Repairs project to a revised amount of $460,100. When the Public Works Department proposes the award of contract for Pavement Repairs, they will reallocate project funding to utilize this additional $14,500. These budget amendments will have a zero net effect on the RMRA projected fund balance. Fund Balance PolicyFund Balance Policy In February 2009, the Governmental Accounting Standards Board (GASB) issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. Staff previously implemented GASB Statement No. 54 with Resolution No. 11R-21 that was required for the fiscal period ended June 30, 2011. City Council most recently committed fund balance with the adoption of a General Fund Operating Reserve of $5,900,000 and a Stabilization Fund of $1,100,000 with Resolution No. 2017R-023. In addition, City Council recently contributed $5 million into a PARS Pension Stabilization Fund, which is characterized as restricted fund balance. In an effort to clean up the current fund balance designations and pull the policy out of the resolution, staff is proposing the following: Rescind Resolution No. 11R-21 to eliminate the Operating Reserve; Rescind Section 5 & 6 of Resolution No. 2017R-023 to eliminate the $1,100,000 Stabilization Fund and $5,900,000 Operating Reserve; Amend the Fund Balance Policy and make it an Administrative Policy as an attachment to the proposed resolution as opposed to it being a part of the resolution; and Commit by resolution $1,100,000 of fund balance in the General Fund to be set aside in the event of substantial increases in general liability insurance premiums. Capital Improvement ProgramCapital Improvement Program The City currently has 50 projects designated in the Capital Improvement Program. As of December 31, 2017, 5 projects were completed and 45 projects were either in the design process or under construction. The completed projects are as follows: Arsenic Remediation on City Well 15B Fairfield Ranch Road Rehabilitation Grand Ave Rehabilitation Raised Median on Pipeline Avenue Sleepy Hollow Water Main Replacement 53/231 Capital Project Budget Modifications:Capital Project Budget Modifications: Energy Efficiency Upgrades (Project No. NEW) Appropriation: Increase $198,000 Funding source: General Fund (001) Reason: It is recommended to add this new project to the fiscal year 2017-18 CIP budget. This project includes LED upgrades to the Chino Hills Community Center path and walkway lighting, exterior wall packs, up-lighting for the flags, and upgrades to the City Yard's security lighting and various park restrooms. This project will enable the City to achieve greater electricity savings and lower maintenance costs. The estimated payback periods for the individual upgrades range between five to ten years depending on the upgrade. Additionally, these projects will contribute toward the City's goal of advancing tiers in Southern California Edison's Energy Leader Partnership model, which will ultimately create greater energy savings at all City facilities. Pavement Repairs (Project No. S18006) Appropriation: Increase $39,100 Funding source: AD-94 Operations (691) Reason: It is recommended to increase appropriations in the amount of $39,100. This will utilize the remaining fund balance in the AD-94 Operations Fund so that the fund may be closed once the project is complete. R-19 Electrical (Project No. W13003) Appropriation: Decrease $50,000 Funding source: Water Utility Fund (500) Reason: It is recommended to delete this project from the CIP as the Public Works Department will use available operating budget to complete the project. Video of Sewer Lines (Project No. D18001) Appropriation: Decrease $500,000 Funding source: Sewer Utility Fund (501) Reason: It is recommended to delete this project from the CIP as the work will be completed using City staff instead of hiring outside contractors. Well 16 ASR (Project No. W08001) Grant Revenue: Decrease $66,000 Appropriation: Decrease $66,000 Funding source: Chino Basin Watermaster Grant (CBWM) (199) Reason: The original amount of the CBWM grant was recorded as $268,000. A recent review determined the actual grant amount available is $202,000. An adjustment of $66,000 will modify the grant amount to accurately reflect what is available to be spent on this project. ENVIRONMENTAL (CEQA) REVIEW: This proposed action is exempt from review under the California Environmental Quality Act (California Public Resources Code §§ 21000, et seq.; "CEQA") and CEQA regulations (14 California Code Regulations §§15000, et seq.) because it does not involve any commitment to a specific project which could result in a potentially significant physical impact on the environment; and constitutes an organizational or administrative activity that will not result in direct or indirect physical changes in the environment. Accordingly, this action does not constitute a "project" that requires environmental review (see specifically 14 CCR § 15378(b)(4-5)). 54/231 FISCAL IMPACT: There is no fiscal impact associated with the Fund Balance Policy. The amounts reported as total fund balance in any given fund will not be altered. The effects on fund balance as a result of the proposed FY 2017-18 budget amendments are as follows: Net Increase/Net Increase/ (Decrease)(Decrease) General Fund -- Unreserved (Fund 001)* $ (229,000) PARS Fund (Fund 002) (19,300) CDBG Fund (Fund 017) 181,274 Traffic Impact Fee Fund (Fund 136) 46,250 Gas Tax 7360 (Fund 183)91,715 RMRA Fund (Fund 184) - Miscellaneous Grants Fund (Fund 199) - Water Utility Fund (Fund 500) 50,000 Sewer Utility Fund (Fund 501) 500,000 Assessment District 91 Fund (Fund 691) (39,100) TOTAL TOTAL $ 581,839$ 581,839 *This total does not include the City Manager approved budget amendments which are reflected in the balances of the December Financial Report . REVIEWED BY OTHERS: None. Respectfully Submitted,Recommended By: Attachments Monthly Financial Report Resolution Administrative Policy 4.6 - Fund Balance Policy (Exhibit A) 55/231 Fiscal Year 2017-2018 Financial Report December 31, 2017 56/231 CITY OF CHINO HILLS SUMMARY OF CHANGES IN THE GENERAL FUND BALANCE - ACTUAL FOR THE MONTH ENDED DECEMBER 31, 2017 Estimated Beginning Fund Balance at 7/1/17 43,453,936$ Revenues 19,170,716$ Expenditures (23,050,277) Revenues over (under) expenditures (3,879,561) Estimated Fund Balance at 12/31/17 39,574,375$ Less: Restricted for contingency, projects & special purposes (32,017,231) Unrestricted Fund Balance at 12/31/17 7,557,144$ Unrestricted Fund Balance as a % of Operating Expenditures 12.97% CITY OF CHINO HILLS SUMMARY OF CHANGES IN THE GENERAL FUND BALANCE - BUDGET FOR THE YEAR ENDING JUNE 30, 2018 Estimated Beginning Fund Balance at 7/1/17 43,453,936$ Budgeted Revenues 55,478,300$ Budgeted Expenditures (58,256,731) Revenues over (under) expenditures (2,778,431) Estimated Fund Balance at 6/30/18 40,675,505$ Less: Estimated Restricted for contingency, projects & special purposes (32,017,231) Estimated Unrestricted Fund Balance at 6/30/18 8,658,274$ Unrestricted Fund Balance as a % of Operating Expenditures 14.86% 57/231 CITY OF CHINO HILLS GENERAL FUND REVENUES FOR THE MONTH ENDED DECEMBER 31, 2017 FY 2016-17 Actual Year-to-Date Actual Prior Year Prior YTD as a % of Variance Adjusted as a % of Adjusted Actual through Adjusted Increase / Revenue Type Budget Budget Budget 12/31/2016 Budget (Decrease) Property Tax 13,277,800$ 2,521,616$ 19%12,212,100$ 2,370,096$ 19%151,520$ Sales & Use Tax 8,110,800 2,794,959 34%7,928,400 2,602,645 33%192,314 Business License 110,800 52,505 47%87,800 46,816 53%5,689 Property Transfer Tax 640,500 171,389 27%368,800 170,866 46%523 Transient Occupancy Tax 1,179,500 463,957 39%1,081,200 454,112 42%9,845 Franchise Tax 2,383,800 445,133 19%2,478,000 475,740 19%(30,607) Intergovernmental 31,300 15,369 49%31,300 17,259 55%(1,890) Charges for Services 9,081,200 3,918,851 43%9,730,600 3,129,142 32%789,709 A Fines & Forfeitures 404,000 223,706 55%488,600 210,803 43%12,903 Use of Money and Property 1,088,800 640,825 59%1,059,300 35,792 3%605,033 B Interfund Charges 10,178,900 4,998,632 49%9,663,700 4,347,863 45%650,769 C Other Revenues 1,892,300 450,786 24%1,165,705 457,482 39%(6,696) Transfers In 7,098,600 2,472,988 35%4,875,500 7,381,050 151%(4,908,062) D Total Revenues 55,478,300$ 19,170,716$ 35%51,171,005$ 21,699,666$ 42%(2,528,950)$ A - The $789,709 increase in Charges for Services is largely due to a dramatic increase in user fees and permits for development services. D - The $4,908,062 decrease in Transfers In is largely due to the $5 Million transfer to the PARS Post Employment Benefit Trust made in December of the prior year. FY 2017-18 Year-to-Date Actual through 12/31/2017 Note: FY 16/17 included revenue from the sale of the former Founders property in the amount of $11,583,895. This has been removed from the report for comparison purposes. B - The $605,033 increase in Use of Money and Property is due to a positive Fair Market Value Adjustment (FMV) in the current year FY 17/18, compared to a negative $504,014 FMV Adjustment in the prior year FY 16/17. C - The 4% increase in Interfund Charges is due to the natural increase in overhead costs that occurs year over year. 58/231 CITY OF CHINO HILLS GENERAL FUND EXPENDITURES BY DEPARTMENT FOR THE MONTH ENDED DECEMBER 31, 2017 FY 2016-17 Actual Year-to-Date Actual Prior Year Prior YTD as a % of Variance Adjusted as a % of Adjusted Actual through Adjusted Increase / Department Budget Budget Budget 12/31/2016 Budget (Decrease) Legislative City Council 308,900$ 137,928$ 45%283,200$ 130,581$ 46%7,347$ City Attorney 350,000 156,088 45%350,000 85,568 24%70,520 City Clerk 1,266,700 543,240 43%1,268,400 503,879 40%39,361 Contract Services 206,100 61,259 30%196,300 51,422 26%9,837 City Manager Administration 2,090,300 630,167 30%1,989,700 571,801 29%58,366 Public Safety 13,200,800 6,525,745 49%11,998,900 6,535,717 54%(9,972) Community Relations 697,900 259,527 37%691,300 284,238 41%(24,711) Human Resources 471,500 173,225 37%478,800 168,059 35%5,166 Risk Management 2,340,100 1,980,842 85%2,232,800 2,103,859 94%(123,017) Emergency Preparedness 258,800 31,885 12%240,800 45,129 19%(13,244) Code Enforcement 650,500 284,126 44%617,200 275,376 45%8,750 Finance Administration 2,859,800 1,112,019 39%2,713,900 1,210,607 45%(98,588) Non-Departmental - - N/A A 62,500 25,198 40%(25,198) Development Fee Program 318,500 277,238 87%1,562,400 290,941 19%(13,703) Community Services Administration 5,024,600 2,253,960 45%4,643,500 2,046,913 44%207,047 Recreation 1,695,300 737,593 44%1,712,400 798,995 47%(61,402) Community Development Administration 1,461,000 620,849 42%1,596,400 656,697 41%(35,848) Building Services 1,684,200 641,640 38%1,476,700 633,721 43%7,919 Development Services 2,743,700 673,821 25%2,709,800 731,730 27%(57,909) Economic Development 159,600 65,334 41%119,200 53,979 45%11,355 Public Works Administration 1,164,900 591,593 51%1,267,900 583,812 46%7,781 Engineering 1,936,200 790,776 41%2,135,500 845,116 40%(54,340) Facilities Maintenance 2,350,900 932,492 40%2,022,100 801,968 40%130,524 Other Maintenance 1,817,100 652,752 36%1,478,900 535,888 36%116,864 Interfund Transfers Capital Improvement Projects 6,708,831 88,688 1%448,100 115,699 26%(27,011) Transfers Out 6,490,500 2,827,490 44%7,761,800 7,840,836 101%(5,013,346) B Total 58,256,731$ 23,050,277$ 40%52,058,500$ 27,927,729$ 54%(4,877,452)$ B- The $5,013,346 decrease in Transfers out is due to the one time $5 Million transfer to the PARS Post Emloyment Benefit Trust in the prior year. FY 2017-18 Year-to-Date Actual through 12/31/2017 A - The Non-Departmental budget has been moved to the respective department budgets, but is being presented for comparison purposes. 59/231 CITY OF CHINO HILLS CHANGES IN FUND BALANCE - ACTUAL FOR THE MONTH ENDED DECEMBER 31, 2017 Fund Balance Change in Fund Balance Fund #Fund Title 7/1/17 Revenues Expenditures Fund Balance 12/31/17 001 General Fund 36,417,876$ 13,788,662$ 18,102,625$ (4,313,963)$ 32,103,913$ 002 PARS Pension Stabilization Fund 5,261,106 (122,645) 15,730 (138,375) 5,122,731 003 Community Services Operations 145,676 2,991,553 2,991,553 - 145,676 004 Community Development Operations 518,578 2,186,947 1,622,875 564,072 1,082,650 005 TDA Pass Thru Fund - 317,494 317,494 - - 006 Liability Insurance Stabilization Fund 1,110,700 8,705 - 8,705 1,119,405 TOTAL GENERAL FUND 43,453,936$ 19,170,716$ 23,050,277$ (3,879,561)$ 39,574,375$ 010 Special Gas Tax Fund 872,508$ 595,592$ 500,823$ 94,769$ 967,277$ 011 Air Quality Project (AB2766)408,276 29,393 289 29,104 437,380 012 Measure I Sales Tax 2040 1,857,042 369,570 350,623 18,947 1,875,989 015 Citizen's Option Public Safety 1,301 98,085 3,050 95,035 96,336 017 CDBG Entitlement - 99,318 199,307 (99,989) (99,989) A 018 Affordable Housing Program 2,245,434 482,485 21,670 460,815 2,706,249 026 Landscape & Lighting - Administration 5,300 895,998 769,495 126,503 131,803 027 Park & Recreation Facilities Fee 400,779 758,326 196,689 561,637 962,416 028 Quimby In-Lieu 2,081,181 275,571 68,797 206,774 2,287,955 030 Open Space Management Fund - 120,882 103,148 17,734 17,734 031 Park Maintenance Fund - 262,056 222,567 39,489 39,489 032 L & L - 1-C Commercial 473,967 160,845 187,643 (26,798) 447,169 033 Street Sweeping 31,224 102,367 102,399 (32) 31,192 040 L & L - Rolling Ridge Operations & Arterial 556,477 438,155 386,300 51,855 608,332 045 L & L - 1-H Los Ranchos Operations 959,804 1,535,566 1,812,120 (276,554) 683,250 046 L & L - 1-I Los Ranchos Operations - 7,966 7,514 452 452 050 L & L - 1-B The Oaks Operations 96,494 67,704 82,149 (14,445) 82,049 055 L & L - 1-K Woodview Operations 158,709 12,058 10,136 1,922 160,631 060 L & L - 1-N Carbon Canyon Operations 10,707 1,171 1,400 (229) 10,478 061 L & L - 1-P Carbon Canyon Operations - 33,681 30,478 3,203 3,203 062 L & L - 1-T Carbon Canyon Operations 19,398 1,886 1,414 472 19,870 071 L & L - 1-M Rincon Operations - 677,801 615,596 62,205 62,205 072 L & L - Los Serranos 15,690 16,253 8,233 8,020 23,710 073 L & L - Vellano 415,271 110,990 106,900 4,090 419,361 104 Sleepy Hollow Road Improvements 34,996 5,653 205 5,448 40,444 121 L & L - Los Ranchos Arterial 22,174 158,844 165,012 (6,168) 16,006 123 L & L - Woodview Arterial 1,528 4,345 3,902 443 1,971 124 L & L - Carbon Canyon Arterial 5,000 6,813 6,072 741 5,741 131 Traffic Signal Fee 321,772 2,516 10,219 (7,703) 314,069 132 Existing Infrastructure Fee 4,703,710 3,795,019 1,628,640 2,166,379 6,870,089 133 General City Facilities 3,950,822 592,322 41,941 550,381 4,501,203 134 Traffic Facilities Fee 2,379,113 89,058 5,261 83,797 2,462,910 135 Storm Drain Facilities 6,784,600 487,182 32,436 454,746 7,239,346 136 Traffic Impact Fee 4,437 34,969 2,945 32,024 36,461 140 Protected Tree Replacement 4,309 34 - 34 4,343 183 Gas Tax 7360 Fund 1,851,482 231,314 184,030 47,284 1,898,766 184 Sec 2103 - RMRA Account - - 13,853 (13,853) (13,853) B 198 Public Safety Programs 30,261 258 - 258 30,519 199 Miscellaneous Grant Fund 883,667 1,297,595 1,133,254 164,341 1,048,008 504 Solid Waste Fund - 2,252,695 1,424,828 827,867 827,867 506 Sewer Facilities Fee 4,557,555 173,664 18,494 155,170 4,712,725 507 Water Facilities Fee 14,693,342 1,152,887 251,059 901,828 15,595,170 624 Federal Emergency Management Agency 1 - - - 1 TOTAL SPECIAL REVENUE FUNDS 50,838,331$ 17,438,887$ 10,710,891$ 6,727,996$ 57,566,327$ Actuals through 12/31/17 B - The Road Maintenance & Rehabilitation Account is estimated to receive $445,600 in FY 17/18 with monthly payments beginning January 2018. A - Expenditures are reimbursed after they have been reported to the U.S Department of Housing and Urban Development. 60/231 CITY OF CHINO HILLS CHANGES IN FUND BALANCE - ACTUAL FOR THE MONTH ENDED DECEMBER 31, 2017 Fund Balance Change in Fund Balance Fund #Fund Title 7/1/17 Revenues Expenditures Fund Balance 12/31/17 Actuals through 12/31/17 377 CFD 10 Construction Fund 286,173$ 1,480$ 155,360$ (153,880)$ 132,293$ 379 CFD 9 Capital Projects 4,666,271 294,320 39,618 254,702 4,920,973 399 Capital Improvement Fund - - - - - TOTAL CAPITAL PROJECT FUNDS 4,952,444$ 295,800$ 194,978$ 100,822$ 5,053,266$ 500 Water Utility Fund 39,843,287$ 14,240,132$ 8,382,491$ 5,857,641$ 45,700,928$ 501 Sewer Utility Fund 10,109,135 3,762,133 3,176,784 585,349 10,694,484 512 Water Depreciation/Rate Stable 7,134,636 55,915 - 55,915 7,190,551 TOTAL ENTERPRISE FUND*57,087,058$ 18,058,180$ 11,559,275$ 6,498,905$ 63,585,963$ 551 Equipment Maintenance Fund 5,133,982$ 593,717$ 364,544$ 229,173$ 5,363,155$ 552 Information Technology Fund 1,359,055 805,562 832,222 (26,660) 1,332,395 TOTAL INTERNAL SERVICE FUNDS*6,493,037$ 1,399,279$ 1,196,766$ 202,513$ 6,695,550$ 009 General Agency Fund 41,220$ -$ -$ -$ 41,220$ 627 CFD 1 - Rolling Ridge Operations 1,348,779 209,938 205,807 4,131 1,352,910 636 CFD 4 - The Oaks Operations 5,874,871 85,681 5,533 80,148 5,955,019 640 CFD 5 - Soquel Cyn, Rincon & Woodview Oper.6,181,111 1,438,659 1,811,720 (373,061) 5,808,050 644 CFD 6 - Carbon Canyon Operations 1,577,626 167,274 194,260 (26,986) 1,550,640 647 CFD 8 - Butterfield Operations 369,850 48,282 2,187 46,095 415,945 657 CFD 9 - Rincon Village-1998 1,365,772 592,271 836,665 (244,394) 1,121,378 658 CFD 10 - Fairfield Ranch 1,908,339 530,536 767,985 (237,449) 1,670,890 659 CFD-Vila Borba 675,204 174,570 73,764 100,806 776,010 691 Assessment District 1994 Operations 39,068 824 99 725 39,793 698 CFD 2 - Los Ranchos Special Tax 4,968,762 853,831 1,709,988 (856,157) 4,112,605 699 RAD 10-1 749,583 152,510 298,691 (146,181) 603,402 TOTAL AGENCY FUNDS 25,100,185$ 4,254,376$ 5,906,699$ (1,652,323)$ 23,447,862$ GRAND TOTAL 187,924,991$ 60,617,238$ 52,618,886$ 7,998,352$ 195,923,343$ *Long-term debt, fixed assets and investment in joint venture have been removed to reflect working capital. 61/231 CITY OF CHINO HILLS CHANGES IN FUND BALANCE - BUDGET FOR THE MONTH ENDED DECEMBER 31, 2017 Projected Fund Balance Budgeted Budgeted Change in Fund Balance Fund #Fund Title 7/1/17 Revenues Expenditures Fund Balance 6/30/18 001 General Fund 36,417,876$ 41,627,400$ 45,581,631$ (3,954,231)$ 32,463,645$ 002 PARS Pension Stabilization Fund 5,261,106 1,330,700 12,700 1,318,000 6,579,106 003 Community Services Operations 145,676 6,635,300 6,719,900 (84,600) 61,076 004 Community Development Operations 518,578 4,066,800 4,142,400 (75,600) 442,978 005 TDA Pass Thru Fund - 1,800,100 1,800,100 - - 006 Liability Insurance Stabilization Fund 1,110,700 18,000 - 18,000 1,128,700 TOTAL GENERAL FUND 43,453,936$ 55,478,300$ 58,256,731$ (2,778,431)$ 40,675,505$ 010 Special Gas Tax Fund 872,508$ 1,353,600$ 1,209,900$ 143,700$ 1,016,208$ 011 Air Quality Project (AB2766)408,276 107,400 85,500 21,900 430,176 012 Measure I Sales Tax 2040 1,857,042 1,383,400 2,936,838 (1,553,438) 303,604 015 Citizen's Option Public Safety 1,301 100,200 101,500 (1,300) 1 017 CDBG Entitlement - 401,400 582,674 (181,274) (181,274) A 018 Affordable Housing Program 2,245,434 1,215,100 25,000 1,190,100 3,435,534 026 Landscape & Lighting - Administration 5,300 1,793,900 1,797,616 (3,716) 1,584 027 Park & Recreation Facilities Fee 400,779 1,661,500 1,493,700 167,800 568,579 028 Quimby In-Lieu 2,081,181 618,000 876,000 (258,000) 1,823,181 030 Open Space Management Fund - 247,200 261,500 (14,300) (14,300) B 031 Park Maintenance Fund - 556,000 556,000 - - 032 L & L - 1-C Commercial 473,967 320,700 378,500 (57,800) 416,167 033 Street Sweeping 31,224 261,500 271,200 (9,700) 21,524 040 L & L - Rolling Ridge Operations & Arterial 556,477 828,100 808,200 19,900 576,377 045 L & L - 1-H Los Ranchos Operations 959,804 2,922,000 3,729,500 (807,500) 152,304 046 L & L - 1-I Los Ranchos Operations - 15,300 15,100 200 200 050 L & L - 1-B The Oaks Operations 96,494 131,800 168,900 (37,100) 59,394 055 L & L - 1-K Woodview Operations 158,709 24,200 20,700 3,500 162,209 060 L & L - 1-N Carbon Canyon Operations 10,707 2,200 2,800 (600) 10,107 061 L & L - 1-P Carbon Canyon Operations - 64,900 64,900 - - 062 L & L - 1-T Carbon Canyon Operations 19,398 3,400 2,900 500 19,898 071 L & L - 1-M Rincon Operations - 1,361,400 1,361,400 - - 072 L & L - Los Serranos 15,690 41,000 25,900 15,100 30,790 073 L & L - Vellano 415,271 215,400 349,100 (133,700) 281,571 104 Sleepy Hollow Road Improvements 34,996 11,300 10,200 1,100 36,096 121 L & L - Los Ranchos Arterial 22,174 314,400 313,800 600 22,774 123 L & L - Woodview Arterial 1,528 8,600 8,600 - 1,528 124 L & L - Carbon Canyon Arterial 5,000 13,700 13,700 - 5,000 131 Traffic Signal Fee 321,772 6,200 59,354 (53,154) 268,618 132 Existing Infrastructure Fee 4,703,710 7,952,500 7,885,500 67,000 4,770,710 133 General City Facilities 3,950,822 1,269,000 91,900 1,177,100 5,127,922 134 Traffic Facilities Fee 2,379,113 191,900 11,700 180,200 2,559,313 135 Storm Drain Facilities 6,784,600 995,000 67,500 927,500 7,712,100 136 Traffic Impact Fee 4,437 - - - 4,437 140 Protected Tree Replacement 4,309 100 4,400 (4,300) 9 183 Gas Tax 7360 Fund 1,851,482 375,500 762,700 (387,200) 1,464,282 184 Sec 2103 - RMRA Account - 445,600 445,600 - - 198 Public Safety Programs 30,261 500 - 500 30,761 199 Miscellaneous Grant Fund 883,667 3,732,900 3,826,773 (93,873) 789,794 504 Solid Waste Fund - 5,107,400 5,107,400 - - 506 Sewer Facilities Fee 4,557,555 388,500 1,162,902 (774,402) 3,783,153 507 Water Facilities Fee 14,693,342 3,597,900 10,391,432 (6,793,532) 7,899,810 624 Federal Emergency Management Agency 1 - - - 1 TOTAL SPECIAL REVENUE FUNDS 50,838,331$ 40,040,600$ 47,288,789$ (7,248,189)$ 43,590,142$ A - Negative projected Fund Balance due to CIP budgets rolled into new year for any projects not completed in the prior year. B - Pending January 2018 budget adjustment to eliminate negative Estimated Fund Balance. 62/231 CITY OF CHINO HILLS CHANGES IN FUND BALANCE - BUDGET FOR THE MONTH ENDED DECEMBER 31, 2017 Projected Fund Balance Budgeted Budgeted Change in Fund Balance Fund #Fund Title 7/1/17 Revenues Expenditures Fund Balance 6/30/18 377 CFD 10 Construction Fund 286,173$ -$ 285,413$ (285,413)$ 760$ 379 CFD 9 Capital Projects 4,666,271 351,200 2,402,420 (2,051,220) 2,615,051 399 Capital Improvement Fund - - - - - TOTAL CAPITAL PROJECT FUNDS 4,952,444$ 351,200$ 2,687,833$ (2,336,633)$ 2,615,811$ 500 Water Utility Fund 39,843,287$ 26,599,000$ 30,208,590$ (3,609,590)$ 36,233,697$ 501 Sewer Utility Fund 10,109,135 8,463,800 10,752,451 (2,288,651) 7,820,484 512 Water Depreciation/Rate Stable 7,134,636 115,000 - 115,000 7,249,636 TOTAL ENTERPRISE FUND*57,087,058$ 35,177,800$ 40,961,041$ (5,783,241)$ 51,303,817$ 551 Equipment Maintenance Fund 5,133,982$ 1,183,400$ 910,200$ 273,200$ 5,407,182$ 552 Information Technology Fund 1,359,055 1,601,100 2,348,000 (746,900) 612,155 TOTAL INTERNAL SERVICE FUNDS*6,493,037$ 2,784,500$ 3,258,200$ (473,700)$ 6,019,337$ 009 General Agency Fund 41,220$ -$ -$ -$ 41,220$ 627 CFD 1 - Rolling Ridge Operations 1,348,779 394,600 258,000 136,600 1,485,379 636 CFD 4 - The Oaks Operations 5,874,871 234,000 1,447,800 (1,213,800) 4,661,071 640 CFD 5 - Soquel Cyn, Rincon & Woodview Oper.6,181,111 2,780,900 2,406,300 374,600 6,555,711 644 CFD 6 - Carbon Canyon Operations 1,577,626 312,900 427,800 (114,900) 1,462,726 647 CFD 8 - Butterfield Operations 369,850 104,000 66,100 37,900 407,750 657 CFD 9 - Rincon Village-1998 1,365,772 1,141,600 922,300 219,300 1,585,072 658 CFD 10 - Fairfield Ranch 1,908,339 1,048,500 994,200 54,300 1,962,639 659 CFD-Vila Borba 675,204 310,800 277,700 33,100 708,304 691 Assessment District 1994 Operations 39,068 - 33,900 (33,900) 5,168 698 CFD 2 - Los Ranchos Special Tax 4,968,762 1,715,100 3,671,283 (1,956,183) 3,012,579 699 RAD 10-1 749,583 392,800 392,800 - 749,583 TOTAL AGENCY FUNDS 25,100,185$ 8,435,200$ 10,898,183$ (2,462,983)$ 22,637,202$ GRAND TOTAL 187,924,991$ 142,267,600$ 163,350,777$ (21,083,177)$ 166,841,814$ *Long-term debt, fixed assets and investment in joint venture have been removed to reflect working capital. 63/231 Page 1 of 3 RESOLUTION NO. 2018R- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHINO HILLS, AMENDING THE CITY’S FUND BALANCE POLICY WHEREAS, the City Council desires to classify the various components of fund balance reported by the City as defined in Governmental Accounting Standards Board Statement No. 54; and WHEREAS, the classification and reporting of fund balance components as required by Governmental Accounting Standards Board Statement No. 54 became effective with the 2010-11 fiscal year; and WHEREAS, the City Council adopted Resolution No. 2011R-21 on May 10, 2011, to establish the City’s governmental fund balance, an Emergency Contingency, Cash Flow Emergency Contingency and Operational Contingency; and WHEREAS, the City Council adopted a commitment for a General Fund Operating Reserve of $5,900,000 and a Stabilization Fund of $1,100,000 with Resolution No. 2017R-023. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHINO HILLS DOES RESOLVE, DETERMINE, AND ORDER AS FOLLOWS: SECTION 1. Rescind Resolution No. 2011R-21, in its entirety, and the associated Emergency Contingency, Cash Flow Emergency Contingency and Operational Contingency. SECTION 2. Approve Administrative Policy 4.6 - Fund Balance Policy as reflected in Exhibit A to this resolution. SECTION 3. Amend Resolution No. 2017R-023 by rescinding Section 5 and Section 6, in its entirety, to eliminate the Operating Reserve and Stabilization Fund. SECTION 4. Commit $1,100,000 of fund balance in the General Fund to be set aside in the event of substantial increases in general liability insurance premiums. SECTION 5. The City Clerk shall certify as to the adoption of this Resolution. 64/231 Page 2 of 3 PASSED, APPROVED, and ADOPTED this 13th day of February 2018. _____________________________________ PETER J. ROGERS, MAYOR ATTEST: _____________________________________ CHERYL BALZ, CITY CLERK APPROVED AS TO FORM: _____________________________________ MARK D. HENSLEY, CITY ATTORNEY 65/231 Page 3 of 3 STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) § CITY OF CHINO HILLS ) I, Cheryl Balz, City Clerk of the City of Chino Hills, DO HEREBY CERTIFY that the foregoing Resolution No. 2018R- was duly adopted at a regular meeting of the City Council of the City of Chino Hills held on the 13th day of February 2018, by the following vote, to wit: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ___________________________________ CHERYL BALZ, CITY CLERK The foregoing is the original of Resolution No. 2018R- duly passed and adopted by the Chino Hills City Council at their regular meeting held February 13, 2018. ___________________________________ CHERYL BALZ, CITY CLERK 66/231 EXHIBIT A CITY OF CHINO HILLS ADMINISTRATIVE POLICY GUIDELINES Date Adopted: 02/13/18 FUND BALANCE Section: 4.6 I.PURPOSE In February 2009, the Governmental Accounting Standards Board (GASB) issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This new standard has not changed the total amount of reported fund balance, but has substantially altered the categories and terminology used to describe its components. The new categories and terminology reflect an approach that will focus, not on financial resources available for appropriation within a fund, but on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the fund can be spent. This Fund Balance Policy establishes the procedures for reporting unrestricted fund balance in the City’s financial statements. Certain commitments and assignments of fund balance will help ensure that there will be adequate financial resources to protect the City against unforeseen circumstances and events, such as revenue shortfalls and unanticipated expenditures. The policy also authorizes and directs the Finance Director to prepare financial reports which accurately categorize fund balance as per Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. II.POLICY The term “Fund Balance” is used to describe the difference between assets (what is owned) and liabilities (what is owed) reported within a fund. In the past, fund balance has been classified into basically three separate components: Reserved, Designated, and Undesignated. There are almost always important limitations on the purpose for which all or a portion of the resources of a fund can be used. The force of these limitations can vary significantly, depending on their source. The various components of the “new” fund balance are designed to indicate the extent to which the City is bound by these limitations placed upon the resources. GASB Statement No. 54 defines five separate components of fund balance, each of which identifies the extent to which the City is bound to honor constraints on the specific purposes for which amounts can be spent. These new components of fund balance will replace the current existing three components. The five components are: •Nonspendable fund balance (inherently nonspendable) •Restricted fund balance (externally enforceable limitations on use) •Committed fund balance (self-imposed limitations on use) •Assigned fund balance (limitation resulting from intended use) •Unassigned fund balance (residual net resources) 67/231 The first two components listed above are not addressed in this policy due to the nature of their restrictions. Some examples of nonspendable fund balance are prepaid expenses, notes receivable, inventory and land held for resale. Restricted fund balance is either imposed by law or constrained by grantors, contributors, or laws or regulations of other governments. This policy is focused on financial reporting of unrestricted fund balance, or the last three components listed above. These three components are further defined below. Committed Fund Balance The City Council, as the City’s highest level of decision-making authority, may commit fund balance for specific purposes pursuant to constraints imposed by formal actions taken, such as an ordinance or resolution. These committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use through the same type of formal action taken to establish the commitment. City Council action to commit fund balance needs to occur within the fiscal reporting period; however, the amount can be determined subsequently. Some reasons to commit fund balance include the following: •Pension stabilization arrangements •Payment of future self-insured claims •Capital projects Assigned Fund Balance Amounts that are constrained by the City’s intent to be used for specific purposes, but are neither restricted nor committed, should be reported as assigned fund balance. Such intent needs to be established at either the highest level of decision making, or by an official designated for that purpose. This policy hereby delegates the authority to assign amounts to be used for specific purposes to the City Manager for the purpose of reporting these amounts in the annual financial statements. Some examples of current assigned fund balance include the following: •Recreation operations •Community development operations •TDA pass thru funds Unassigned Fund Balance These are residual positive net resources of the general fund in excess of what can be classified in one of the other four categories. Fund Balance Classification When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available the policy shall be to expend the restricted fund balance first before expending the unrestricted fund balance. Similarly, when an expenditure is incurred for purposes for which amounts in any of the unrestricted classification of fund balance could be used, the City considers committed amounts to be reduced first, followed by assigned amounts and then unassigned amounts. This policy is in place to provide a measure of protection for the City against unforeseen circumstances and to comply with GASB Statement No. 54. No other policy or procedure supersedes the authority and provisions of this policy. 68/231