QUARTERLY FINANCIAL REPORT

FIRST QUARTER, 2020-21

Quarter Ended September 30, 2020

Purpose of this Report

This report is intended to provide city management, the city council, and the community a general update on the financial activities and condition of the City on a quarterly basis. In addition to providing financial information it provides a narrative or annotations on financial highlights meant to give context to the numbers, charts, and graphs found throughout.


Budget information is also provided in this report, and a link to the City’s fiscal year 2020-21 adopted budget can be found here:


Annual Operating and Capital Budget, FY 2020-21


Information contained in this report is preliminary and unaudited. Further adjusting entries may be made as part of the City's year-end close and audited processes. It is prepared and reported on a budgetary basis, meaning revenues and expenditures related to internal services funds are presented discretely and not consolidated. Please refer to the City's audited financial statements for a complete report on the City's financial activities and balances for the year. These reports are issued by December 31 following the end of the fiscal year.



Included in this report are the following sections:


-City-wide financial information

-Major fund financial information, including:

  • General fund
  • Electric enterprise
  • Water enterprise
  • Wastewater enterprise

-Departmental budget to actual

-Capital improvement budget to actual

-Special report: Indirect cost allocation plan

Financial Summary

In this section we report on the financial activities of the City as a whole (City-wide), which include all governmental and proprietary (enterprise and internal service) funds, all City departmental activities, and information on the status of capital improvement projects identified by the City Council.


Financial highlights of the first three months ending September 30, 2020 include the following:


  • Since the onset of the COVID-19 pandemic, the City has incurred $710,069 of direct costs in response.
  • Primary revenues sensitive to economic effects from the pandemic have been less affected than anticipated, with stronger than anticipated receipts from sales taxes.
  • Revenues City-wide of $15 million were outpaced by expenditures of $19.2.
  • Capital expenditures were $2.2 million, of which $58,311 was paid for by the general fund.
  • Major enterprise funds remained well capitalized and able to meet their service demands.
  • Top ten revenues of the general fund came in $429,934 (24.7%) higher than the same period last year, driven by sales taxes and the receipt of deferred TOT.
  • Departments and activities ended the quarter under budget estimates.
  • Personnel expenditures were the largest category of cost through the end of the quarter, totaling 56.2% of total City expenditures. Materials, services, insurance, and supplies totaled 32.1%, while debt service and capital outlay rounded out the remaining amount at 0.4% and 11.3%, respectively.

For More Information. This report is prepared by the City’s Finance Department and is a summary based on detailed information produced by its financial management system. If you would like additional information, or have questions about this report, please call the Finance Department at 707.463.6220.

COVID-19 PANDEMIC FINANCIAL REPORT

A limited series report on the financial effects on the City resulting from, and in its response to, the COVID-19 pandemic.

Pandemic Response Costs

Since the onset of the pandemic, the City has accounted for its response costs. Presented here are total costs accounted for since March 2020.

Pandemic-Sensitive Revenues


Certain revenues to the City are most vulnerable to the economic effects of the pandemic. Those primary revenue sources are presented here in context of their historical performance for the same time period.


For most of these revenue sources, early receipts and billings suggest the current fiscal year may be stronger than anticipated. However, the City remains conservative in those estimates moving forward.

CITY-WIDE (ALL FUNDS)

All City governmental and proprietary funds, including the general fund, special revenue funds, capital project funds, enterprise funds, and internal service funds.

Assets


Current assets are those available in the current period or shortly thereafter. They do not include fixed assets, long-term receivables, or other assets of a long-term nature.

Liabilities


Current liabilities are those due and payable in the current period or shortly thereafter. They do not include long-term liabilities, such as loans or bonds payable; long-term portion of pension obligations, compensated absences, or other liabilities of a long-term nature.

Fund Balance (Working Capital)

Revenues by Source, City-Wide

Expenditures

Cost of Service

Governmental


Governmental activities are those supported primarily by non-exchange resources, i.e. taxes. In other words there is no direct correlation in most cases to the services provided and the revenue collected.


This presentation includes the allocation of indirect costs to governmental activities. A more detailed discussion of direct and indirect costs can be found later in this report.

Business-Type


Business-types activities are services provided for which a specific fee or charge is imposed. The fee or charge is meant to be the primary or exclusive source of funding to provide the service. These are otherwise known as exchange transactions. Service examples include water, electric, or golf.


This presentation includes the allocation of indirect costs to business-type activities. A more detailed discussion of direct and indirect costs can be found later in this report.

THE GENERAL FUND

The General Fund is the main operating fund for the City. It accounts for sources and uses of resources that (primarily) are discretionary to the City Council in the provision of activities, programs and services deemed necessary and desirable by the community. It accounts for all general revenues of the City not specifically levied or collected for other City funds, and the related expenditures. The major revenue sources for this fund are sales taxes, property taxes, franchise fees, business license fees, unrestricted revenues from the state, fines and forfeitures, and interest income. Expenditures are made for community development, parks and recreation, public safety (including police and fire), public works, and other services.

Assets


Assets of note include advances to other funds, which represent internal interfund borrowing which the general fund was the lender. Restricted cash are amounts held with the Infrastructure Development Bank (I-Bank) on the City's behalf and will be available once the Redwood Business Park right-of-way improvement project has been completed.

Liabilities


Liabilities of note include advances from other funds, which represent internal borrowing to complete the Redwood Business Park right-of-way improvements.

Fund Balance


The change in fund balance presented here includes the net of revenues + other financing sources (e.g. transfers in) - expenditures - other financing uses (e.g. transfers out).


Note: fund balance to end the month September 30, 2018 dropped below zero due to payment of invoices for the Redwood Business Park project, which was later recouped by internal borrowing and receipt of property taxes later in January.

General Revenues

General revenues are those principally available for use for any governmental purpose deemed necessary and desirable by the City Council. Taxes are the largest component of these revenues, including sales and property taxes. General revenues in total have increased over the last three years, driven by new sales tax revenues (Measure Y), increased commerce activities (Costco), and a strong local economy.


Note: revenues do not include other financing sources, which include transfers in and debt proceeds. However, the inflow of such resources do affect fund balance in governmental funds, including the general fund.

Direct Expenditures by Character


This chart includes direct expenditures only.

Direct Expenditures by Character Over Time



Total Expenditures by Function

ELECTRIC UTILITY

The City's electric utility provides 24-hour, 365-day response to emergency service calls for customer power problems, and outages. Additionally, this team is responsible for making high voltage power lines safe for Fire & Police personnel at structure fires, automobile accidents, and to make other situations where electric lines are near emergency crews.


Services provided include:

  • Power purchase and generation
  • System expansion and enhancement
  • Technical services
  • Distribution
  • Public benefits (electric bill assistance)
  • Street lighting

Current Assets



Current Liabilities



Working Capital


The electric utility's working capital has been deployed for capital projects.

Electric Revenues by Source


Revenues continue to trend positively for the Electric Utility due to a rate adjustment implemented in 2017.

Service Revenue Composition


Commercial electric usage continues to be the largest source of revenue for the utility.

Total Expenditures



Direct Expenditures by Character



Direct Expenditures Over Time


Utility expenditures over the last three years have remained relatively consistent.

WATER UTILITY

The water utility is responsible for the production, treatment and distribution of drinking water to the residents and businesses of the City of Ukiah. Additionally, the recently completed recycled water project is a shared activity between the water utility and wastewater utility.


Services provided include:

  • Potable water production and capacity enhancements
  • Service expansion
  • Treatment
  • Distribution
  • Recycled water

Current Assets



Current Liabilities



Working Capital


Working capital dips below zero during this same period in years prior was due to capital expenditures related to the recycled water project, which were subsequently reimbursed by SRF.

Water Revenues by Source



Service Revenue Composition

The majority of revenue for the water utility comes from 3/4" services, used by both residential and commercial customers.

Total Expenditures



Direct Expenditures by Character



Direct Expenditures Over Time


Working capital for the utility decreased over the last several years as it completed capital projects, including recycled water.

WASTEWATER UTILITY

The wastewater utility serves the City by providing for the collection, treatment, and disposal of wastewater for the City of Ukiah and the Ukiah Valley Sanitation District (UVSD).


Costs for operations, debt service, and capital are budgeted in City funds and are shared by the City and UVSD based on an agreed upon apportionment.


Services provided include:

  • Wastewater collection
  • Service expansion
  • Treatment
  • Disposal
  • Recycled water
  • Direct sewer services to the Ukiah Valley Sanitation District

Current Assets



Current Liabilities



Working Capital


The utility maintains an adequate reserve to meet operational needs over the next several years; however, the recently settled litigation with the Ukiah Valley Sanitation District had a dramatic effect to the reserve balances of both agencies, costing rate payers nearly $9 million in attorney and other litigation costs. Both agencies will need to recoup those losses through rates.

Wastewater Revenues by Source


Revenues from commercial and residential rates comprise the majority of inflows to the utility.

Service Revenue Composition


Wastewater rates from base and usage charges are the overwhelming majority of rate revenue.

Total Expenditures


Direct Expenditures by Character



Direct Expenditures Over Time