PFM 2nd Quarter 2013 Report

 

 

 

 

 

 

 

Public Financial Management, Inc.
PFM Asset Management LLC
PFM Advisors

Two Logan Square
Suite 1600

18th & Arch Streets
Philadelphia, PA 19103-2770

215 567-6100

215 567-4180 fax

www.pfm.com


Q2 2013 Financial Results

 

This report summarizes preliminary financial results for the period January 1, 2013 through June 30, 2013 based on trial balance financial data provided by the City on July 9, 2013. By its nature, quarterly financial data is unaudited and subject to change. The data in this report may also differ from other reports that review the City’s financial performance solely on a cash basis.

 

Overview

 

The City collected 57.8 percent of its budgeted revenues and spent 38.7 percent of its budgeted expenditures through June 2013. Because of the seasonal collection cycle for the City’s largest revenues, the City usually collects more than 50 percent of its revenue halfway through the year. Similarly the City usually spends less than half of its budget halfway through the year because it makes the full $9.9 million pension contribution and most of its $12.8 million debt service payments in the second half of the year.

 

Budget to Actual Comparison

 

 

2013 Q2

2013 Budget

% Spent/ Collected

Revenues

44,455,327

76,932,310

57.8%

Expenditures

29,800,463

76,932,310

38.7%

Difference

14,654,864

0

N/A

 

On the revenue side, the City collected $1.8 million (or 4.2 percent) more in the first half of 2013 than in the first half of 2012, setting aside an accounting quirk that understates the 2012 revenues.1 The City collected more revenue from its real estate tax and its earned income tax than a year ago after increasing both taxes over 2012 levels. Revenues from new construction permits and EMS user fees are trailing last year's pace.

 

On the expenditure side, the City spent $745,000 (or 2.4 percent) less in the first half of 2013 than in the first half of 2012, setting aside the $5.0 million extra debt service payment that the City made in 2012.2 Spending for salaries is generally on target with the budgeted allocations halfway through the year, though the City will likely spend more than budgeted on police and fire overtime.

 

 

 

 

1 As explained in the Q4 FY2012 report, the City budgeted a $2.3 million payment from the Greater Berks Development Fund for 2012, but actually received the payment in December 2011. The City’s financial reports include the $2.3 million payment in its 2011 fiscal year.

2 The City paid $5 million toward its unfunded debt loan ahead of schedule in early 2012.


 

 

Eight Trends to Watch

 

Revenue

 

§  The City increased its property tax rate by 9 percent this year.  Will the revenue also increase by

9 percent or will higher taxes lead to a lower collection rate?       Through June, current year revenues are up 8.4 percent.

 

§  The City also increased the earned income tax on residents and non-residents. EIT revenues are outpacing 2012 levels and outperforming the 2013 budget projection.

 

§  The 2013 budget increased revenue projections related to housing inspections and zoning activity over 2012 levels. Some of these revenues are underperforming the year end projections so far. The City shows $0 on a $508,000 projection for prior year housing rental permits through June, though the related delinquent collections process is now underway. Revenue for housing inspections are at 31.6 percent of the target midway through the year.

 

§  The City has collected 35 percent of its budget target for EMS user fees through June. We expected the City to collect less than 50 percent of budget midway through the year because the budget assumes a fourth ambulance will be added in the second half of the year. But EMS fees are also $148,000 less than a year ago. This needs to be watched closely when the fourth ambulance is activated.

 

Expenditures

 

§  Salary spending is generally on target with the 2013 budget halfway through the year. The City reports spending $644,000 less on police salaries, wages and holiday pay than a year ago. The 2013 budget anticipated lower spending in these areas, partly due to officer turnover.

 

§  The City will likely spend more than budgeted on police and fire overtime in 2013. Through June, police overtime spending is $121,000 more than last year when the City spent $1.9 million. the City budgeted $1.5 million budgeted for this year. The City has spent 25 percent less on fire overtime than a year ago, but it has also spent 80 percent of its budget through June.

 

§  The City reports spending 44.5 percent of its budget for employee health insurance (fringe benefits). However, reported expenditures have lagged behind actual expenditures in prior reports, so it is too soon to know if there are actual savings.

 

§  The City has spent less than 50 percent of its budget for most non-personnel operating costs, including contracted services. The City has also spent 21 percent less on contracted services than a year ago. This is partly due to a timing quirk for the Recreation Commission payment, but there is also lower spending overall.


 

REVENUES

 

The City had $44.5 million in General Fund revenues through June 2013, which is 57.8 percent of the annual budgeted total. The table below compares the City’s revenue performance through June 2013 to this year’s budget and to last year through June.

 

 

 

2013 Q2

2013

Budget

%

Collected

 

 

2012 Q2

Difference ($)

Difference (%)

Property taxes

17,160,731

20,606,517

83.3%

 

15,705,763

1,454,968

9.3%

Act 511 taxes

12,341,305

20,986,686

58.8%

 

10,839,079

1,502,226

13.9%

Licenses, Permits, Fine

2,813,719

6,512,327

43.2%

 

3,131,149

(317,430)

-10.1%

Intergovernmental Revenues

2,292,638

8,629,963

26.6%

 

2,521,623

(228,985)

-9.1%

Charges for service

2,353,505

6,192,233

38.0%

 

2,209,986

143,519

6.5%

Interest and rentals

828,816

1,113,000

74.5%

 

258,966

569,850

220.0%

Other revenues

2,679,614

4,921,584

54.4%

 

1,925,167

754,447

39.2%

Interfund transfer revenues

3,985,000

7,970,000

50.0%

 

3,810,000

175,000

4.6%

General Fund Total

44,455,327

76,932,310

57.8%

 

40,401,733

4,053,594

10.0%

 

Property taxes

 

Property taxes represent about a quarter of all General Fund revenues. The City increased its tax millage by 9 percent in the 2013 budgets.  Through the first six months, the City has collected

8.4 percent more revenue than a year ago, a little less than the rate increase.  We will continue to monitor this trend for any drop in collections related to the tax increases.

 

 

 

2013 Q2

2013

Budget

%

Collected

 

 

2012 Q2

Difference ($)

Difference (%)

Current year

16,708,280

19,706,517

84.8%

 

15,419,086

1,289,194

8.4%

Prior years

662,017

1,000,000

66.2%

 

483,823

178,194

36.8%

Penalties and interest

106,531

200,000

53.3%

 

140,000

-33,469

-23.9%

Discount for early payment3

(316,097)

(300,000)

105.4%

 

(296,283)

-19,814

6.7%

Property tax subtotal

17,160,731

20,606,517

83.3%

 

15,746,626

1,414,105

9.0%

 

 

3 Tax payers receive a discount for paying their property taxes early.  The City budgets that discount as a negative number against the revenues.


 

 

The City has received close to two-thirds of its budget target for prior year tax revenues through June and $178,000 more than a year ago. The Berks County Tax Claim Bureau handles delinquent real estate tax collection and anticipates revenues will be higher than last year. The County uses a longer collection cycle than the City’s prior tax collector, which resulted in lower revenues last year when the County began delinquent collections.

 

Act 511 Taxes

 

Act 511 taxes are the City’s largest revenue category. The earned income tax on residents and non-residents is the City’s second largest source of budgeted revenue after the property tax. The City collected 58.8 percent of its budgeted Act 511 Taxes through June 2013.

 

 

2013 Q2

2013

Budget

%

Collected

 

2012 Q2

Difference ($)

Difference (%)

Earned Income Tax

9,246,332

16,271,686

56.8%

 

8,121,196

1,125,136

13.9%

Business Privilege Tax

1,443,945

1,550,000

93.2%

 

1,310,932

133,013

10.1%

Real Estate Transfer Tax

1,061,468

1,900,000

55.9%

 

822,255

239,214

29.1%

Local Services Tax

584,707

1,200,000

48.7%

 

581,113

3,595

0.6%

Per Capita Tax

4,853

65,000

7.5%

 

3,584

1,269

35.4%

Act 511 tax subtotal

12,341,305

20,986,686

58.8%

 

10,839,079

1,502,226

13.9%

 

The earned income tax is by far the largest of these taxes, making up 74.9 percent of Act 511 tax revenue through June 2013. Berks EIT, Incorporated handles EIT collections for the City and all other governments in Berks County under the terms of Act 32 of 2010. As the Finance Department has reported, revenues have outpaced last year’s levels thus far.

 

Like the property tax, the Business Privilege Tax (BPT) is due during the second quarter with a discount available for early payment and penalties for late payment. The City collected 93.2 percent of its BPT budget target through June 2013. BPT receipts are also $133,013 (or 10 percent) more than through June 2012. Last year the City administered a BPT tax amnesty program that boosted prior year collections by $139,000 (or 48.8 percent) above 2012 budgeted levels. While the City’s prior year collections will be lower this year, current year collections are ahead of last year’s pace.

 

Licenses, Permits & Fees

 

This category includes rental housing permit fees, franchise fees, traffic and court fines and business privilege licenses. The City collected 43.2 percent of budgeted revenues in this category and $317,430 (or 10.1 percent) less than it did last year.


 

One of the largest items in this category is the City’s charges for rental housing permits.4 The City budgeted $744,000 for current year permit revenues and has nearly hit the annual target through June. Given the ongoing inspection activity, the City will exceed the $744,000 target. However, the City also has a $508,000 budget target for prior year permit revenues and the June data does not show any revenue. The delinquent collection process related to the $508,000 target is now underway with an external vendor actively pursuing the amounts due to the City.

 

Rental Housing Permit Revenues

 

 

2013 Q2

2013

Budget

%

Collected

Current year

737,174

743,576

99.1%

Prior years

0

508,437

0.0%

Housing/rental permit total

737,174

1,252,013

58.9%

 

Revenue for new construction permits is the other major variance in this category. The City has only collected $38,000 through June 2013 versus the $596,000 budget target and the $129,000 collected through June 2012. The $596,000 target assumed fees related to the new hotel project, which have since been removed from the City’s 2013 revenue projection.

 

Other Licenses, Permits and Fees

 

 

 

2013 Q2

2013

Budget

%

Collected

 

 

2012 Q2

Difference ($)

Difference (%)

District court summary offenses

431,601

825,000

52.3%

 

375,355

56,246

15.0%

Franchise fees

180,224

725,000

24.9%

 

175,312

4,912

2.8%

New construction permits

38,034

596,000

6.4%

 

128,925

(90,890)

-70.5%

Quality of life fines

191,796

390,000

49.2%

 

224,885

(33,089)

-14.7%

Business privilege licenses

250,188

350,000

71.5%

 

230,105

20,083

8.7%

Traffic fines motor codes

131,131

325,000

40.3%

 

117,628

13,503

11.5%

Other

853,570

2,049,314

41.7%

 

949,287

(95,717)

-10.1%

Subtotal

2,076,545

5,260,314

39.5%

 

2,201,497

(124,952)

-5.7%

 

Intergovernmental Revenues

 

The City collected 26.6 percent of total budgeted intergovernmental revenues. The largest item in this category is the Commonwealth pension aid, which the City receives in the second half of

 

4 Revenue from payments for housing rental inspections is tracked separately in the Charges for Service category.


the year. This category also includes the Reading Parking Authority’s (RPA) contribution to the General Fund, a portion of the Reading Area Water Authority (RAWA) contribution to the General Fund and reimbursement for costs at the Reading Public Library.

 

 

2013 Q2

2013

Budget

%

Collected

 

2012 Q2

Difference ($)

Difference (%)

Pension-State Contributions

0

2,800,000

0.0%

 

0

0

N/A

Meter Surcharge

708,333

1,700,000

41.7%

 

849,996

(141,663)

-16.7%

RAWA supplement

750,000

1,500,000

50.0%

 

750,000

0

0.0%

RPA supplement

405,000

810,000

50.0%

 

405,000

0

0.0%

Grants and Gifts

78,894

222,963

35.4%

 

255,080

(176,186)

-69.1%

Reading Public Library reimb.

169,615

620,000

27.4%

 

154,819

14,796

9.6%

Other

180,796

977,000

18.5%

 

106,729

74,068

69.4%

Intergovernmental subtotal

2,292,638

8,629,963

26.6%

 

2,521,623

(228,985)

-9.1%

 

The City received a $2.7 million grant from the US Department of Homeland Security under the Staffing for Adequate Fire and Emergency Response (SAFER) program. The City will receive a portion of the grant in 2013, increasing the grant and gift revenue above the $222,963 budgeted amount. The grant revenue will reimburse the City for the 21 additional firefighter positions.

 

Charges for Services

 

The City collected 38.0 percent of budgeted revenues from charges for services and $144,000 more than a year ago. The largest item in this category is the City’s charges for EMS service where the City has collected $148,000 (or 13.0 percent) less than a year ago. The City needs to monitor this revenue to make sure that pace improves since increased EMS revenue is assumed to fund the planned addition of a fourth regularly scheduled ambulance later this year.

 

The second largest item is the City’s charges for rental housing inspections. In 2012 the City budgeted $1.2 million for revenue in this category and reported $515,000, all in the second half of the year. This year the City budgeted $1.3 million and has collected less than a third of the target halfway through the year. This revenue line needs to be reviewed carefully for proper projection in the 2014 budget process.

 

The table below shows other large items in this category.  The City’s admissions tax receipts are

29.6 percent ahead of last year’s collections through June and the City is close to its revenue target for police copy services.


Service Charge Revenue

 

 

2013 Q2

2013

Budget

%

Collected

 

2012 Q2

Difference ($)

Difference (%)

EMS User Fees

993,508

2,836,638

35.0%

 

1,141,691

(148,183)

-13.0%

Housing Inspection

414,107

1,311,643

31.6%

 

0

414,107

N/A

Other

357,678

845,371

42.3%

 

345,441

12,237

3.5%

Admissions Fee/Tax

239,646

510,000

47.0%

 

184,921

54,725

29.6%

Kenhorst Police Contract

209,291

418,581

50.0%

 

205,187

4,104

2.0%

Police Service/Copy Service

139,275

170,000

81.9%

 

101,758

37,517

36.9%

Zoning Housing Appeals

0

100,000

0.0%

 

N/A

N/A

N/A

Police Reimbursement - RSD5

N/A

N/A

N/A

 

230,987

(230,987)

-100.0%

Charges for service subtotal

2,353,505

6,192,233

38.0%

 

2,209,986

143,519

6.5%

 

Interest and rent

 

The City collected 74.5 percent of the budget target for interest and rent because of an accounting change related to FirstEnergy Stadium. The Reading Fightin’ Phils pay the City approximately $300,000 a year with $22,000 for rent and the rest to cover debt service on a bank loan related to the Stadium. Previously the City only budgeted the $22,000 for the rental payment. Going forward the City will also report the $278,000 payment that covers Stadium related debt.  The City’s debt service payments should also be $278,000 higher than budgeted so there is no net impact on the City’s financial performance.

 

Interest and Rent Revenues

 

 

2013 Q2

2013

Budget

%

Collected

 

2012 Q2

Difference ($)

Difference (%)

Rental - Parking Authority

499,998

1,000,000

50.0%

 

199,998

300,000

150.0%

Rental on Stadium

300,000

22,000

1363.6%

 

22,000

278,000

1263.6%

Other

28,818

91,000

31.7%

 

36,968

(8,150)

-22.0%

Interest & rental subtotal

828,816

1,113,000

74.5%

 

258,966

569,850

220.0%

 

Other Revenues

 

The City collected 54.4 percent of the total budget for this catch-all category and $754,000 (or 39 percent) more than in the first half of 2012. The largest item in this category is the City

 

5 The City’s 2013 budget does not include any anticipated reimbursement from the Reading School District for supplementary coverage at District facilities.


employees’ contributions to the cost of health insurance.6 Total employee contributions are double the amount reported through June 2012 because the police officers are making higher contributions in compliance with the Recovery Plan, similar to other employee groups.

 

This category also includes indirect cost revenues where other funds (e.g. Wastewater, Community Development, Recycling) reimburse the General Fund for the cost of services provided (e.g. Information Technology, Human Resources, Payroll).

 

 

2013 Q2

2013

Budget

%

Collected

 

2012 Q2

Difference ($)

Difference (%)

Employee insurance contribution

790,369

1,465,845

53.9%

 

376,422

413,947

110.0%

Indirect cost reimb. - Sewer

556,969

1,066,442

52.2%

 

516,500

40,469

7.8%

CDBG Revenue to Fund Codes

145,116

500,000

29.0%

 

0

145,116

N/A

Indirect cost reimb. - CD

141,249

282,497

50.0%

 

95,000

46,249

48.7%

Rdg. Housing Auth.-Reimb.

92,537

265,000

34.9%

 

34,076

58,461

171.6%

Indirect cost reimb. - Recycling

126,278

254,896

49.5%

 

67,170

59,108

88.0%

Indirect cost reimb. - Water

251,869

250,000

100.7%

 

339,020

(87,151)

-25.7%

Heart & Lung reimbursement

170,974

250,000

68.4%

 

114,603

56,371

49.2%

Direct cost reimb. - Trades

48,022

170,000

28.2%

 

79,176

(31,154)

-39.3%

Other

356,232

416,904

85.4%

 

303,201

53,031

17.5%

Subtotal for other revenues

2,679,614

4,921,584

54.4%

 

1,925,167

754,447

39.2%

 

Interfund revenues

 

The City transfers $4.97 million from the Water Fund to the General Fund as an annual payment from the Reading Area Water Authority (RAWA) to lease the City’s system. The  lease agreement between the City and RAWA sets the transfer amount.7 The City also transfers $3.0 million per year from the Wastewater Treatment Plant Fund to the General Fund each year as restricted by the November 2005 federal consent decree. Both transfers are made on a monthly basis throughout the year.

 

 

2013 Q2

2013

Budget

%

Collected

 

2012 Q2

Difference ($)

Difference (%)

Transfer from Water Fund

2,485,000

4,970,000

50.0%

 

2,210,000

275,000

12.4%

 

 

6 The expenditure section of this report discusses the City’s expenses related to employee health insurance. Please note that this revenue line does not include the expenses that the City employees pay to medical care providers at the time of receiving service (e.g. office or prescription drug copayments, deductibles).

7 The lease agreement also sets RAWA’s supplemental and RAWA’s supplemental payment to the General Fund, which is tracked under the intergovernmental revenues


 

 

2013 Q2

2013

Budget

%

Collected

 

2012 Q2

Difference ($)

Difference (%)

Transfer from Sewer Fund

1,500,000

3,000,000

50.0%

 

1,500,000

0

0.0%

Other

0

0

N/A

 

100,000

(100,000)

N/A

Transfer subtotal

3,985,000

7,970,000

50.0%

 

3,810,000

175,000

4.6%

 

EXPENDITURES

 

The City had $29.8 million in General Fund expenditures through June 2013, which is 38.7 percent of the $76.9 million budget. The City spent $745,000 (or 2.4 percent) less than it did through June 2012. The table below compares the City’s expenditure performance through June 2013 to this year’s budget and to last year through June.

 

 

2013 Q2

2013

Budget

%

Spent

 

2012 Q2

Difference ($)

Difference (%)

Salaries, wages & holiday pay

13,576,868

27,486,737

49.4%

 

13,902,705

(325,837)

-2.3%

Overtime

1,463,538

2,175,563

67.3%

 

1,499,009

(35,470)

-2.4%

Pensions

0

9,919,726

0.0%

 

0

0

N/A

Fringe benefits

4,439,841

9,968,428

44.5%

 

4,682,864

(243,023)

-5.2%

Other personnel

829,345

1,639,017

50.6%

 

871,909

(42,565)

-4.9%

Debt service

3,938,428

12,774,079

30.8%

 

4,142,769

(204,341)

-4.9%

Operating costs

3,837,118

8,770,024

43.8%

 

4,308,603

(471,485)

-10.9%

Other expenses

395,512

577,137

68.5%

 

292,783

102,728

35.1%

Contingencies

1,821

985,615

0.2%

 

1,689

132

7.8%

Interfund transfer expenses

1,317,992

2,635,984

50.0%

 

843,846

474,146

56.2%

General Fund Total

29,800,463

76,932,310

38.7%

 

30,546,178

(745,715)

-2.4%

 

Personnel

 

The majority of the Personnel budget is for the “regular” pay of City employees - salaries, temporary wages, and holiday pay. These categories make up 91 percent of the 2013 Personnel budget. Overtime pay represents another 7.2 percent of budget. The remaining 1.8 percent includes longevity, any settlement payments and uniform/clothing allowance.

 

The table below shows spending for salaries, temporary wages, and holiday pay by department. All departments are close to the 50 percent spending level expected halfway through the year. The Fire Department is a little higher than 50 percent and $299,000 (or 8.1 percent) higher than last year because of increased headcount related to the SAFER grant.  Community Development


has spent $127,000 (or. 14.4 percent) more than last year because of increased headcount in the Property Maintenance Division.

 

Salaries, Temporary Wages and Holiday Pay by Department

 

 

2013 Q2

2013
Budget

%
Spent

 

2012 Q2

Difference
($)

Difference
(%)

Police

6,277,055

12,949,255

48.5%

 

6,921,360

(644,305)

-9.3%

Fire

3,992,944

7,708,755

51.8%

 

3,693,757

299,188

8.1%

Public Works

719,275

1,455,686

49.4%

 

815,788

(96,513)

-11.8%

Admin. Services

790,000

1,630,694

48.4%

 

782,144

7,856

1.0%

Comm. Development

1,010,984

2,082,784

48.5%

 

883,819

127,166

14.4%

Other

786,610

1,659,563

47.4%

 

805,838

(19,228)

-2.4%

Total

13,576,868

27,486,737

49.4%

 

13,902,705

(325,837)

-2.3%

 

Police has spent $644,000 (or 9.3 percent) less than a year ago through June. One possible explanation is that several police officers retired in 2012, impacting salary spending in two ways. As officers retired, they converted unused leave into cash payments, increasing the 2012 spending levels. The City hired new officers to fill their vacancies, and those officers have lower starting salaries, reducing the 2013 spending levels. This needs to be monitored along with the department's overtime spending to see if it is a sustained trend.

 

Overtime

 

The City’s overtime expenditures remain high relative to budget: The Police Department spent

$121,000 (or 15 percent) more through June in 2013 than last year when overtime spending finished at $1.9 million. We are working on a detailed analysis of the Department's use of overtime with recommendations for reducing it.

 

 

2013 Q2

2013
Budget

%
Spent

 

2012 Q2

Difference
($)

Difference
(%)

Police

920,004

1,479,063

62.2%

 

799,355

120,649

15.1%

Fire

512,750

640,000

80.1%

 

682,585

(169,835)

-24.9%

Public Works

28,012

54,500

51.4%

 

15,026

12,986

86.4%

Other

2,772

2,000

138.6%

 

2,042

730

35.7%

 

 

 

 

 

 

 

 

Total

1,463,538

2,175,563

67.3%

1,499,009

(35,470)

-2.4%


 

The Fire Department has already spent most of its budget for 2013, though it spent $170,000 (or

24.9 percent) less than in the first half of 2012 when overtime spending finished at $1.7 million.

 

Benefits

 

This category includes the City's annual required contributions to the employee pension funds and spending on different types of employee insurance coverage (e.g. medical, prescription, dental, vision, Medicare).

 

Pensions

 

Pennsylvania law requires the City to make an annual required contribution to each of its three employee pension plans. The City's contributions, also known as the Minimum Municipal Obligations (MMOs), are calculated by an external actuary based on the pension plans' assets and liabilities, and accounting for the employees' contributions. The City uses Commonwealth pension aid and General Fund revenues to make the MMO payments. The City's total contributions for 2013 are $9.9 million, which is $3.5 million (or 55 percent) higher than a year ago. The City will make those contributions in the second half of the year before the December 31st statutory deadline.

 

 

 

2013 Q2

2013
Budget

%
Spent

 

2012 Q2

Difference
($)

Difference
(%)

Police

0

6,057,187

0.0%

 

0

0

N/A

Fire

0

2,286,857

0.0%

 

0

0

N/A

Employees & Officers

0

1,575,682

0.0%

 

0

0

N/A

Total

0

9,919,726

0.0%

 

0

0

N/A

         

 

Employee insurance (Fringe Benefits)

 

According to the City's data, it spent less than half of its fringe benefit budget halfway through 2013. It has also spent $243,000 (or 5.2 percent) less than during the first half of 2012. Reported spending for the non-public safety units is particularly low compared to budget.

 

Fringe Benefit Expenditures by Department

 

 

2013 Q2

2013
Budget

%
Spent

 

2012 Q2

Difference
($)

Difference
(%)

Police

2,385,157

4,709,012

50.7%

 

2,456,286

(71,129)

-2.9%

 

Fire

1,188,529

2,706,153

43.9%

 

1,200,914

(12,385)

-1.0%

 

 

 

2013 Q2

2013
Budget

%
Spent

 

2012 Q2

Difference
($)

Difference
(%)

Public Works

230,644

688,005

33.5%

 

346,616

(115,972)

-33.5%

 

Admin. Services

222,550

657,427

33.9%

 

257,670

(35,120)

-13.6%

 

Comm. Development

240,262

764,450

31.4%

 

242,315

(2,053)

-0.8%

 

Other

172,699

443,381

39.0%

 

179,063

(6,364)

-3.6%

 

Total

4,439,841

9,968,428

44.5%

 

4,682,864

(243,023)

-5.2%

 

 

If this information is accurate, it is a financial positive for the City. However, the reported spending on fringe benefits has lagged behind actual spending levels in prior years, so it is too early to conclude that there are actual savings in this area.

 

Despite the reported  spending  levels  to  date, the  City  anticipates  it  will spend more  than budgeted on fringe benefits this year. The City’s 2013 budget assumed it would reduce the number of retired employees receiving City-funded health insurance. To date, the City has not significantly reduced the number of retired employees on its health insurance roles. While it is still possible that the City will achieve savings this year and into the future, it will not receive a full year of savings as the 2013 budget anticipated.

 

We will continue to monitor this trend during the year.

 

Other personnel

 

The City spent another $829,000 on miscellaneous personnel-related expenditures through June 2012. Spending on these items is lower than a year ago because of reduced expenditures for premium pay and unemployment compensation.

 

 

 

2013

Budget

%

Spent

 

 

Difference ($)

Difference (%)

 

 

 

 

 

2013 Q2

2012 Q2

 

 

 

 

 

 

 

 

 

 

 

Premium Pay

268,754

369,659

72.7%

 

302,796

(34,042)

-11.2%

Social Security

463,576

978,333

47.4%

 

481,031

(17,455)

-3.6%

Unemployment Comp

17,639

150,000

11.8%

 

43,139

(25,500)

-59.1%

Penny Fund

1,318

500

263.6%

 

1,604

(287)

-17.9%

Uniforms/Clothing Allowance

78,058

140,525

55.5%

 

43,339

34,719

80.1%

Total

829,345

1,639,017

50.6%

 

 

871,909

(42,565)

-4.9%

         

 

Debt Service

 

The City spent 30.8 percent of its debt service budget through June 2013. For most outstanding bonds, loans and notes, the City makes one payment in the second quarter (May or June) and a second payment in the fourth quarter (November or December).  Because of the schedules for


principal and interest payments over the 12-month period, the City makes most of its debt service payments in the second half of the year.

 

 

 

2013

Budget

%

Spent

 

 

Difference ($)

Difference (%)

 

 

 

 

 

2013 Q2

2012 Q2

 

 

 

 

 

 

 

 

 

 

 

Debt service

3,938,428

12,774,079

30.8%

 

4,142,769

(204,341)

-3.6%

 

Operating Costs

 

Representing 11.4 percent of the total budget, this is the category for materials and services that are used in regular government operations. It includes utility costs, legal services, equipment, and building maintenance costs. Overall, first-quarter expenditures in this category were less than 50 percent except for maintenance agreements and gas where the City spent 53.6 and 59.8 percent respectively.

 

Operating Costs

 

 

2013 Q2

2013

Budget

%

Spent

 

2012 Q2

Difference ($)

Difference (%)

Contracted Services

855,611

1,937,376

44.2%

 

1,084,622

(229,011)

-21.1%

Maintenance agreements

457,960

853,635

53.6%

 

612,116

(154,156)

-25.2%

Light & Power

192,346

612,723

31.4%

 

280,753

(88,407)

-31.5%

Gas

343,815

575,000

59.8%

 

284,583

59,232

20.8%

Other Operating Cost

1,987,385

4,791,290

41.5%

 

2,046,529

(59,144)

-2.9%

Total

3,837,118

8,770,024

43.8%

 

4,308,603

(471,485)

-10.9%

 

The City spent $229,000 (or 21 percent) less on contracted services through June compared to last year. The biggest difference is in the City’s payment to the Recreation Commission. The City’s budgeted payment is $488,000 in both years, but the City paid a larger share of it in the first half of 2012 ($368,000 versus $244,000).

 

Setting aside that timing quirk, the City has spent $66,000 less than a year ago on contracted services in the Managing Director’s office, $60,000 less in fire suppression and $57,000 less in the Mayor’s Office. Countering these variances, the City spent $88,000 more than a year ago on in the Police Department.

 

The City spent $154,000 (or 25.2 percent) less than a year ago on maintenance agreements. Most of that difference occurs in Information Technology ($146,000) where the City also budgeted $112,000 less than last year.


Other expenses

 

The table below shows other expenses in the General Fund.

 

 

2013 Q2

2013

Budget

%

Spent

 

2012 Q2

Difference ($)

Difference (%)

Contingencies

1,821

985,615

0.2%

 

1,689

132

7.8%

Other expenses

395,512

577,137

68.5%

 

292,783

102,728

35.1%

Interfund transfers

1,317,992

2,635,984

50.0%

 

843,846

474,146

56.2%

 

Contingencies represent the City’s fund balance. Rather than budgeting revenues higher than expenditures and showing a fund balance, the City budgets expenditures to equal revenues, with the difference in the Contingencies line. The City theoretically should not spend much in these lines, which has been the case so far in 2013.

 

The interfund transfer is a payment from the General Fund to the Self Insurance Fund for the actual cost of property, liability and workers compensation claims and associated administrative costs. The size of this transfer increased by $948,000 (or 56 percent) in 2013 and the spending to date reflects that increase.