PFM 3nd Quarter 2017 Report

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Public Financial Management

1735 Market Street, 43rd Floor Philadelphia, PA 19103

215 567-6100

215 567-4180 fax

www.pfm.com

 

 

Q3 2017 Financial Results

 

This report summarizes the City of Reading's preliminary financial results for the period January 1, 2017 through September 30, 2017 based on trial balance financial data provided to PFM.

 

The City collected 76.7 percent of its budgeted revenues and spent 64.6 percent of its budgeted expenditures through September 2017. While revenues exceeded expenditures by $11.0 million through September, the large difference is partly because the City makes the majority of its debt payments during the fourth quarter.

 

Budget to Actual Comparison

 

 

2017 Q3

2017

Budget

% Spent/ Collected

Revenues

69,880,866

91,104,916

76.7%

Expenditures

58,893,305

91,104,916

64.6%

Difference

10,987,561

0

N/A

 

On the revenue side, the City collected $3.2 million (or 4.8 percent) more than a year ago through the same period. Much of that difference was because the City received $3.2 million in state pension aid in September this year and in the fourth quarter last year.

 

On the expenditure side, the City spent $12.0 million (or 25.5 percent) more than a year ago through the same period. The increase mostly results from the City making a portion of its $14.9 million pension contribution throughout the year instead of all at once during the fourth quarter.

 

Year-to-Year Comparison

 

 

2017 Q3

2016 Q3

Difference ($)

Difference (%)

Revenues

69,880,866

66,653,969

3,226,897

4.8%

Expenditures

58,893,305

46,918,887

11,974,418

25.5%

Difference

10,987,561

19,735,082

(8,747,521)

N/A

 

 

 

 

Eight Trends to Watch

 

Revenue

 

  • Total earned income tax receipts were 9.6 percent higher than a year ago through three quarters on a cash basis. The City now allocates a portion of its EIT receipts to its capital improvement fund so the amount available to fund operations through three quarters was 1.1 percent less than a year ago on a modified accrual basis.

     

  • Through September, business privilege tax revenues were down $238,000 (or 14.2 percent) relative to last year. While the gap between this year and last year is smaller than it was through two quarters, it is unlikely to be closed completely since the tax was due for payment in June.

     

  • Revenue results for other taxes were mixed. The City received more than a year ago from its real estate transfer tax and less from its local services tax. Per capita tax receipts are higher but still have a very low collection rate relative to the total population of tax payers.

     

  • The 2017 budget anticipated that intergovernmental revenue would be lower this year since the RPA was scheduled to make a smaller contribution than in 2016. The City did not receive any of the $300,000 budgeted RPA contribution through September 2017. Revenues from charges for service also lagged behind budget and last year's results.

     

Expenditures

 

  • Salary and overtime spending is generally on target with 73.7 percent of the total budget across these two items spent through September. The City spent 72.0 percent of its salary budget and 90.5 percent of its overtime budget.

     

  • In prior years the City has not made its required employee pension contribution until the fourth quarter. To help boost pension funding levels, the Administration is making a portion of these contributions throughout the year. Through the third quarter the City contributed $11.3 million, or 76.2 percent of the total.

     

  • The City spent 64.6 percent of its $14.8 million budget for employee health insurance through September. That is $343,000 (or 3.5 percent) less than a year ago, with most of the decrease in the Police and Fire Departments. There is often volatility in these expenditures because the City is self-insured.

     

  • Earlier this year the City repaid the bank loan that funded its 2014 information technology refresh project, retiring the debt a little ahead of schedule. That $1.5 million payment is reflected in the City's debt service spending.

 

 

 

 

REVENUES

 

The City had $69.9 million in General Fund revenues through September 2017. The table below compares the City's revenue performance through the third quarter of this year to this year's budget and last year through the same period.

 

 

2017 Q3

2017

Budget

%

Collected

2016 Q3

Difference ($)

Difference (%)

Real Estate Taxes

22,276,389

24,098,454

92.4%

22,110,884

165,505

0.7%

Act 511 Taxes

20,625,498

28,340,000

72.8%

20,868,713

(243,215)

-1.2%

Licenses, Permits, Fines

3,953,802

5,451,800

72.5%

3,699,214

254,588

6.9%

Intergovernmental

5,887,609

7,885,994

74.7%

2,138,508

3,749,101

175.3%

Charges for Services

3,207,649

5,272,168

60.8%

3,421,145

(213,495)

-6.2%

Interest and Rent

1,172,370

1,436,000

81.6%

1,088,466

83,904

7.7%

Other

3,551,298

5,495,500

64.6%

4,120,789

(569,491)

-13.8%

Transfers in

9,206,250

13,125,000

70.1%

9,206,250

0

0.0%

TOTAL REVENUES

69,880,866

91,104,916

76.7%

66,653,969

3,226,897

4.8%

 

Real estate tax

 

The real estate tax generates about a quarter of all General Fund revenues and is the City's largest source of General Fund revenue. The City's real estate tax rate is 17.689 mills with 0.2 mills dedicated to the Reading Public Library. The Library will receive about $250,000 from this millage and an additional $100,000 from the City's General Fund. Through September 2017, the City collected 1.1 percent less in current year real estate tax revenue than a year ago.

 

 

2017 Q3

2017

Budget

%

Collected

2016 Q3

Difference ($)

Difference (%)

Current Year1

20,696,278

21,734,954

95.2%

20,935,497

(239,220)

-1.1%

Prior Years

1,643,749

2,204,900

74.5%

1,263,559

380,190

30.1%

Penalties and Interest

302,582

526,000

57.5%

278,370

24,212

8.7%

Discount for Early Payment

(366,219)

(367,400)

99.7%

(366,542)

323

-0.1%

Property Tax Subtotal

22,276,389

24,098,454

92.4%

22,110,884

165,505

0.7%

 

Because real estate tax payments are due by June 30, collections in the first half of the year represent the majority of annual revenue. The following table shows the amount of current year real estate tax revenues collected through September for the last four years. This year's results were in line with prior years.

 

 

 

1 Current year results include the amount designated for the Reading Public Library

 

 

 

Real Estate Tax Collection relative to Budget

 

 

2013 Q3

 

2014 Q3

2015 Q3

 

2016 Q3

2017 Q3

Current Year

18,156,370

 

18,549,671

18,711,555

 

20,935,497

20,696,278

Actual/Budgeted Revenues

19,171,145

 

19,605,173

19,637,933

 

21,997,112

21,734,954

Percent Collected Thru Q3

94.7%

 

94.6%

95.3%

 

95.0%

95.2%

 

Act 511 taxes

 

Act 511 taxes are the City's largest revenue category. The City collected 72.8 percent of budgeted revenues for this category through September 2017.

 

 

 

2017 Q3

2017

Budget

%

Collected

 

2016 Q3

Difference ($)

Difference (%)

Earned Income Tax

15,466,533

22,300,000

69.4%

15,642,389

(175,857)

-1.1%

Business Privilege Tax

1,436,016

2,010,000

71.4%

1,674,116

(238,100)

-14.2%

Real Estate Transfer Tax

2,845,678

2,500,000

113.8%

2,542,081

303,597

11.9%

Local Services Tax

693,084

1,275,000

54.4%

838,376

(145,291)

-17.3%

Per Capita Tax

184,187

255,000

72.2%

171,751

12,436

7.2%

Act 511 Taxes Subtotal

20,625,498

28,340,000

72.8%

20,868,713

(243,215)

-1.2%

 

The earned income tax (EIT) is by far the largest item in this category and the City's second largest source of General Fund revenue after the real estate tax. Berks EIT, Incorporated collects the EIT for the City and all other governments in Berks County according to the terms of Pennsylvania Act 32 of 2008.

 

In compliance with the 2014 Amended Recovery Plan, the City shifted 0.2 percent of the resident and commuter EIT from its General Fund to its Capital Project Fund in 2017 to reduce its dependence on this revenue source tied to the City's Act 47 status. That money is not available to support operations.

 

Across all funds, all years and all taxpayers, the City's total EIT revenues were higher in 2017 through nine months than a year ago. On a cash basis, the City received $19.1 million through September 2017 versus $17.4 million through September 2016. Translating those cash-based results to modified accrual based results will result in lower revenue overall through three quarters, but the City's performance would still show growth across all funds.

 

However, a growing portion of those EIT revenues goes to the City's Capital Project fund and is not available to support daily operations. The amount of revenue available to support operations is $176,000 (or 1.1 percent) less than a year ago on a modified accrual basis as shown above.

 

The City changed collectors for the local services tax and business privilege tax this year. Revenues from those two taxes continue to lag behind last year's results. BPT revenues were $238,000 (or 14.2 percent) lower than a year ago at the end of September and the City lowered the BPT target for 2018 by $50,000.

 

Revenues from the local services tax were also significantly behind last year's pace, coming in $145,000 (or 17.3 percent) lower than a year ago through three quarters. In our Q4 2016 report we noted that LST revenues were unusually high last year, finishing $347,000 (or 34.2 percent) higher than in 2015. External data sources show that the tax base itself – the number of people employed in Reading who make more than $12,000 per year – is relatively stable. Charting the LST revenues on a quarterly basis shows that the apparent spike in revenue last year and drop in revenue this year may be due to a timing quirk in when the City recorded revenue. Notice that the Q4 2016 results are unusually high and the Q1 2017 results are unusually low.

 

 

Local Services Tax Revenue by Quarter

 

PFM Graph1

 

 

If a portion of the 2017 revenue was accidentally booked to 2016, that error can be corrected in the external audit process currently underway.

 

In contrast, real estate transfer tax and per capita tax revenues were higher through Q3 in comparison to last year. Real estate transfer tax revenues through September were $304,000 (or 11.9 percent) higher than in 2016. Additionally, revenues exceeded the budget target by 13.8 percent.

 

Per capita tax receipts were higher than a year ago through three quarters. The City collected $178,000 in current year revenue through Q3 20172, which was $25,000 (or 16.4 percent) more than last year. With $178,000 in current year revenue from this $20 head tax, the City only collected revenue from about 8,900 (or 14.6 percent) of its 61,000 residents over the age of 18 through the third quarter3.

 

 

2 The City also collected $7,000 in prior year per capita tax revenue. The table above shows the sum of current and prior years ($184,000).

3 The US Census Bureau's American Community Survey lists Reading's population at 88,889 with 61,274 people age 18 and above (2016 ACS five-year estimates).

 

 

 

Licenses, Permits and Fees

 

This category includes rental housing permit fees, cable franchise fees, traffic and court fines and business privilege licenses. The City collected 67.9 percent of its budget target for this category but $193,000 (or 6.8 percent) more than a year ago.

 

One of the largest items in this category is the City's charges for rental housing permits4. The City collected 97.0 percent of its current year budget target and 56.7 percent of its prior year target. Compared to last year, the City collected $61,000 (or 7.0 percent) more in total revenues.

 

 

2017 Q3

2017 Budget

%

   

Collected

Current Year

877,759

905,000

97.0%

Prior Years

59,538

105,000

56.7%

Rental housing permit total

937,297

1,010,000

92.8%

 

Revenues from district court summary offenses were down $140,000 (or 33.8 percent) relative to last year. As discussed in prior quarterly reports, some of the drop is likely related to the City decriminalizing parking-related offenses. More parking fine revenue now flows to the Reading Parking Authority (RPA) which is negotiating a new lease with the City.

 

Business privilege license (BPL) revenues were $14,000 (or 5.1 percent) lower than a year ago. The BPL revenue should measure the number of businesses active in the City since each one is required to pay the $55 annual license fee. This applies to any business that receives payment for goods and services provided inside City limits, even if the business itself is located outside Reading.

 

In contrast, revenue for new construction permits and other licenses, permits and fees were

34.8 and 16.8 percent higher than in 2016. The largest increases in the “other” category were in pavements cuts and fire service call fees. The pavement cut revenues are payments from entities like utility companies that temporarily dig streets to service the infrastructure below.

 

Other Licenses, Permits and Fees

 

 

2017 Q3

2017

Budget

%

Collected

2016 Q3

Difference ($)

Difference (%)

District court summary offenses

274,536

675,000

40.7%

414,721

(140,185)

-33.8%

Franchise fees

466,117

875,000

53.3%

445,901

20,216

4.5%

New construction permits

410,951

450,000

91.3%

304,819

106,132

34.8%

Traffic fines motor codes

131,246

390,000

33.7%

122,413

8,833

7.2%

Business Privilege Licenses

265,055

320,000

82.8%

279,353

(14,297)

-5.1%

Quality of life fines

113,500

135,000

84.1%

96,250

17,250

17.9%

Other

1,355,099

1,596,800

84.9%

1,159,696

195,403

16.8%

Total

3,016,505

4,441,800

67.9%

2,823,152

193,352

6.8%

       

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

 

 

 

Intergovernmental Revenues

 

The City received 74.7 percent of total budgeted intergovernmental revenues through Q3 2017. The largest item in this category is the Commonwealth pension aid that was recorded in the third quarter this year and the fourth quarter last year. That timing difference accounts for most of the $3.7 million increase shown below.

 

 

2017 Q3

2017

Budget

%

Collected

2016 Q3

Difference ($)

Difference (%)

Pension-State Contributions

3,615,544

3,590,505

100.7%

0

3,615,544

N/A

Meter surcharge

1,275,000

1,700,000

75.0%

1,275,000

0

0.0%

RPA supplement5

0

300,000

0.0%

0

0

N/A

Grants and Gifts

233,411

357,500

65.3%

263,190

(29,779)

-11.3%

Reading Public Library

442,618

840,000

52.7%

168,826

273,792

162.2%

Other

321,037

1,097,989

29.2%

431,492

(110,455)

-25.6%

Total

5,887,609

7,885,994

74.7%

2,138,508

3,749,101

175.3%

 

The Reading Parking Authority (RPA) makes two substantial payments to the City6. It pays the City $1.0 million a year to lease and operate the parking meters. The RPA's lease payments are on schedule and recorded in the Interest and Rentals category of this report. The second payment is a supplemental contribution to the General Fund (listed above as RPA Supplement) that has ranged from $810,000 to $3.9 million in recent years.

 

When the Coordinator amended the City's Recovery Plan in 2014, the Spencer Administration and City Council expressed their preference for higher RPA supplemental contributions instead of higher real estate tax increases. The approved version of the 2014 Amended Recovery Plan anticipated the RPA would make a $1.3 million supplemental contribution to the City's General Fund each year for 2016 through 2019. The RPA made a $800,000 contribution in 2016 and, as of the end of September, none of the $300,000 budgeted for 2017.

 

Other intergovernmental revenues were down by $110,000 (or 25.6 percent) primarily because of lower reimbursements from Community Development Block Grant (CDBG) dollars for community policing. The City budgeted $274,000 for this reimbursement but had not used any of it through September.

 

Charges for Services

 

The City collected 60.8 percent of its budgeted revenues from service charges. Revenues were

$213,000 (or 6.2 percent) less than a year ago and $331,000 (or 9.4 percent) less than in 2015. Most of the items in this category showed a decrease relative to the prior year.

 

 

5 This is the RPA's supplemental contribution of the General Fund. The RPA's lease payment for use of the City's parking meters is recorded under the Interest and Rent category discussed below.

6 There is a third smaller revenue called Parking Authority Tax Surcharges, which is recorded under Charges for Service. The City had not received any of the $190,000 budgeted for that source.

 

 

 

The largest item in this category is the City's emergency medical system (EMS) transport service charges. The City collected $108,000 (or 5.7 percent) less revenue from these “user fees” than a year ago.

 

The next largest item, housing inspections, decreased by $71,000 (or 14.6 percent) in comparison to the prior year. Also included in this category is a 5.0 percent admissions tax on events at the Santander Arena, Santander Performing Arts Center and FirstEnergy Stadium. Through the first three quarters, admissions tax revenue was down relative to 2016 by $58,000 (or 18.5 percent).

 

The City receives reimbursements from external organizations when it provides additional police coverage to them. That revenue, which is recorded in the Police Service/Copy Service account, similarly showed a decrease in revenue of $13,000 (or 11.5 percent)7.

 

Service Charge Revenue

 

 

2017 Q3

2017

Budget

%

Collected

2016 Q3

Difference ($)

Difference (%)

EMS User Fees

1,789,384

2,900,000

61.7%

1,897,011

(107,627)

-5.7%

Housing Inspection

415,283

655,000

63.4%

486,016

(70,732)

-14.6%

Kenhorst Police Contract

339,651

452,868

75.0%

298,923

40,728

13.6%

Admissions Fee/Tax

253,705

425,000

59.7%

311,225

(57,520)

-18.5%

Police Service/Copy Service

101,550

170,000

59.7%

114,798

(13,248)

-11.5%

Other

308,077

669,300

46.0%

313,172

(5,096)

-1.6%

Total

3,207,649

5,272,168

60.8%

3,421,145

(213,495)

-6.2%

 

Interest and rent

 

The City reported $81,000 more in revenue from interest and rent than a year ago. The City moved a portion of its unassigned General Fund balance to a separate investment fund with a better interest rate than the General Fund bank account. That revenue is recorded under “CD Bond Interest” and shows an increase of $64,000.

 

Interest and Rent Revenues

 

 

2017 Q3

2017

Budget

%

Collected

2016 Q3

Difference ($)

Difference (%)

Repayment of Debt to City

0

0

0.0%

3,296

(3,296)

-100.0%

Rental - Parking Authority

666,664

1,000,000

66.7%

666,664

0

0.0%

CD Bond Interest

141,089

70,000

201.6%

76,866

64,223

83.6%

Rent Other Property Bldgs

63,955

65,000

98.4%

51,351

12,604

24.5%

 

 

7 The City also records some of the revenue it receives to offset reimbursable overtime activities under grants and gifts in the Intergovernmental Revenue category.

 

 

2017 Q3

2017

Budget

%

Collected

2016 Q3

Difference ($)

Difference (%)

Other

300,000

300,000

100.0%

292,516

7,484

2.6%

Total

1,172,370

1,436,000

81.6%

1,091,763

80,608

7.4%

 

Interfund transfers

 

The largest item in this category is the Reading Area Water Authority (RAWA) lease payment to the City. The City also transfers $3.0 million per year from the Wastewater Treatment Plant Fund to the General Fund as restricted by the November 2005 federal consent decree.

 

The City makes these transfers on a monthly basis as reflected in the chart below. The 2017 budget also shows the potential use of $850,000 carried over from 2016. Use of prior year fund balance is not considered current year revenue from an accounting perspective, but it is often recorded that way in Pennsylvania local government budget.

 

 

2017 Q3

2017

Budget

%

Collected

2016 Q3

Difference ($)

Difference (%)

From RAWA

6,956,250

9,275,000

75.0%

6,956,250

0

0.0%

Transfer from Sewer Fund

2,250,000

3,000,000

75.0%

2,250,000

0

0.0%

Prior year carryover

0

850,000

0.0%

0

0

N/A

Total

9,206,250

13,125,000

70.1%

9,206,250

0

0.0%

 

Other Revenues

 

Revenues not counted in prior categories are grouped together in this category. Between all of these revenues, the City collected 64.6 percent of the total budget and $566,000 (or 13.8 percent) less than last year.

 

The largest item in this category is City employees' contributions to the cost of their health insurance8. Collections through the third quarter were consistent with the prior year. Some of this decrease in other revenues appears to be timing related as the City transferred a portion of its CDBG allocation to the General Fund for code enforcement during the first six months of 2016 and none during the first nine months of 2017.

 

Other Revenues

 

 

2017 Q3

2017

Budget

%

Collected

2016 Q3

Difference ($)

Difference (%)

Employee Insurance Contribution

1,404,713

2,103,000

66.8%

1,383,926

20,787

1.5%

Indirect Cost Reimb - Sewer

857,025

1,142,700

75.0%

775,989

81,036

10.4%

CDBG Revenue to Fund Codes

0

500,000

0.0%

248,942

(248,942)

-100.0%

       

8 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 City employees pay to medical care providers at the time of receiving service (e.g. office or prescription drug copayments).

 

 

2017 Q3

2017

Budget

%

Collected

2016 Q3

Difference ($)

Difference (%)

Heart & Lung Reimbursement

282,187

95,000

297.0%

135,957

146,230

107.6%

Indirect Cost Reimb - CD

149,436

199,250

75.0%

142,500

6,936

4.9%

Rdg. Housing Auth - Reimb.

147,015

290,000

50.7%

162,858

(15,843)

-9.7%

Indirect Cost Reimb- Recycling

279,918

469,083

59.7%

407,947

(128,029)

-31.4%

Direct Cost Reimb. - Trades

0

170,000

0.0%

76,361

(76,361)

-100.0%

Other

431,004

526,467

81.9%

783,014

(352,010)

-45.0%

Other Revenues Total

3,551,298

5,495,500

64.6%

4,117,493

(566,195)

-13.8%

 

EXPENDITURES

 

The City spent $58.9 million from its General Fund through September 2017, which was 64.6 percent of its $91.1 million budget. The City spent $12.0 million (or 25.5 percent) less than a year ago with most of the increase due to the City making a portion of its pension contribution earlier in the year.

 

Major Expenditures

2017 Q3

2017

Budget

%

Spent

2016 Q3

Difference ($)

Difference (%)

Salaries, wages & holiday pay

20,800,767

28,870,366

72.0%

20,781,840

18,927

0.1%

Overtime

2,654,810

2,934,520

90.5%

2,614,466

40,344

1.5%

Pensions

11,348,729

14,885,760

76.2%

0

11,348,729

N/A

Fringe benefits

9,579,977

14,834,469

64.6%

9,923,132

(343,155)

-3.5%

Other personnel

1,153,682

1,695,662

68.0%

1,125,469

28,213

2.5%

Debt service

4,524,351

12,065,128

37.5%

3,341,861

1,182,489

35.4%

Operating costs

5,944,856

11,250,185

52.8%

6,074,813

(129,957)

-2.1%

Other expenses

1,101,866

2,140,260

51.5%

586,740

515,126

87.8%

Contingencies

35,000

146,646

23.9%

0

35,000

N/A

Interfund transfer expenses

1,749,267

2,281,920

76.7%

2,470,565

(721,298)

-29.2%

Total Expenditures

58,893,305

91,104,916

64.6%

46,918,887

11,974,418

25.5%

 

The largest portion of the City's personnel expenditures is for the “regular” pay of City employees – their salaries and holiday pay – along with wages for temporary employees. The table below shows spending on those items by department. Most departments spent 71 to 74 percent of their budget allocation through the third quarter. Administrative Services spent less than 70 percent of its budget because of vacant full-time positions throughout the year.

 

 

 

Salaries, Temporary Wages and Holiday Pay by Department

 

 

2017 Q3

2017

Budget

% Spent

2016 Q3

Difference ($)

Difference (%)

Police

9,492,965

13,085,224

72.5%

9,599,943

(106,978)

-1.1%

Fire

6,071,826

8,431,406

72.0%

5,912,286

159,540

2.7%

Public Works

1,409,227

1,932,720

72.9%

1,441,817

(32,591)

-2.3%

Administration

1,194,092

1,789,843

66.7%

1,281,931

(87,839)

-6.9%

Community Dev

1,491,093

2,089,987

71.3%

1,455,750

35,343

2.4%

Other

1,141,566

1,541,186

74.1%

1,090,113

51,453

4.7%

Total

20,800,767

28,870,366

72.0%

20,781,840

18,927

0.1%

 

Overtime

 

The City's total overtime expenditures through September 2017 were $40,000 (or 1.5 percent) more than last year's levels. The Police and Fire Departments that account for most of the spending are discussed more below.

 

Overtime

2017 Q3

2017

Budget

% Spent

2016 Q3

Difference ($)

Difference (%)

Police

1,459,506

1,844,730

79.1%

1,293,659

165,847

12.8%

Fire

1,139,216

981,590

116.1%

1,248,128

(108,912)

-8.7%

Public Works

42,914

94,200

45.6%

59,312

(16,398)

-27.6%

Other

13,174

14,000

94.1%

13,368

(194)

-1.5%

Total

2,654,810

2,934,520

90.5%

2,614,466

40,344

1.5%

 

Fire Department

 

Through September the Fire Department already spent $158,000 (or 16.1 percent) more than the budget allocates for the full year. However, as noted above, the Department spent less than the 75 percent allocated for salaries as expected three quarters of the way through the year. Altogether the City's spending on Fire Department salaries and overtime was close to budget through three quarters and very close to its spending a year ago.

 

 

2017 Q3

2017

Budget

% Spent

2016 Q3

Difference ($)

Difference (%)

Fire Salaries

6,071,826

8,431,406

72.0%

5,912,286

159,540

2.7%

Fire Overtime

1,139,216

981,590

116.1%

1,248,128

(108,912)

-8.7%

Fire Subtotal

7,211,042

9,412,996

76.6%

7,160,413

50,628

0.7%

 

Similarly the Police Department's total spending on salaries and overtime through Q3 2017 was basically even with last year. The Department spent $107,000 (or 1.1 percent) less on salaries and $166,000 (or 12.8 percent) more on overtime. Across the two categories the City spent 71.5 percent of its budget through September.

 

 

2017 Q3

2017

Budget

% Spent

2016 Q3

Difference ($)

Difference (%)

Police Salaries

9,492,965

13,483,224

70.4%

9,599,943

(106,978)

-1.1%

Police Overtime

1,459,506

1,844,730

79.1%

1,293,659

165,847

12.8%

Police Subtotal

10,952,471

15,327,954

71.5%

10,893,601

58,869

0.5%

 

Some overtime expenditures are reimbursed by private parties, other governmental entities or grants. Accounting for the reimbursements tracked in the Police Service revenue line, the City had $1.4 million in unreimbursed police overtime expenditures through September, which was

$179,000 (or 15.2 percent) more than through the same period in 2016.

 

Police Department Overtime including Reimbursements9

 

 

Budget

Q3 Actual

FY16 Overtime

1,878,571

1,293,659

FY16 Reimbursement

160,000

114,798

FY16 Unreimbursed

1,718,571

1,178,861

   

FY17 Overtime

1,844,730

1,459,506

FY17 Reimbursement

170,000

101,550

FY17 Unreimbursed

1,674,730

1,357,956

 

Benefits

 

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

 

Pensions

 

Pennsylvania law requires the City to make an annual 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 employee contributions. The City uses Commonwealth pension aid and General Fund revenues to make the MMO payments. The City's total contributions for 2017 are $14.9 million, which will be $0.6 million (or 4.5 percent) higher than in 2016.

 

 

9 This does not include the overtime reimbursements that are recorded as grant and gift revenue.

 

 

 

As noted above the City has been making portions of its pension contribution throughout the year instead of contributing the full amount during the fourth quarter. Therefore the spending through nine months is $11.3 million higher than a year ago.

 

Pension

2017 Q3

2017

Budget

% Spent

2016 Q3

Difference ($)

Difference (%)

Total

11,348,729

14,885,760

76.2%

0

11,348,729

N/A

 

Employee insurance (Fringe Benefits)

 

The City spent 64.6 percent of its fringe benefit budget through September 2017, which was

$343,000 (or 3.5 percent) less than last year. The City is self-insured, so it pays the cost of claims as employees receive medical care with some time lag associated with the medical billing and payment posting process. The City also has a stop-loss insurance policy that covers an employee's medical treatment after the total costs for an injury or illness reach $225,000. The Police and Fire Departments had the largest decrease in costs in comparison to the prior year, though both had the largest increase in costs between 2015 and 2016.

 

Fringe Benefit Expenditures

 

Fringe Benefits

2017 Q3

2017

Budget

% Spent

2016 Q3

Difference ($)

Difference (%)

Administration

615,147

1,009,431

60.9%

646,526

(31,379)

-4.9%

Public Works

693,721

1,070,196

64.8%

650,320

43,401

6.7%

Police

4,960,622

7,361,342

67.4%

5,073,644

(113,021)

-2.2%

Fire

2,346,895

3,902,540

60.1%

2,678,643

(331,748)

-12.4%

Community Dev.

627,636

1,028,750

61.0%

558,623

69,013

12.4%

Other

335,957

462,210

72.7%

315,377

20,579

6.5%

Total

9,579,977

14,834,469

64.6%

9,923,132

(343,155)

-3.5%

 

Other personnel

 

The City spent another $1.2 million on other personnel expenditures through September. Police and Fire both spent less on longevity than a year ago. Longevity payments and eligibility for the payments are frozen under the terms of the 2010 and 2014 Recovery Plans, so spending on this type of premium pay will drop when senior employees who receive the payments are replaced by more junior employees who receive lower or no longevity payments.

 

Other Personnel

2017 Q3

2017

Budget

% Spent

2016 Q3

Difference ($)

Difference (%)

Premium Pay

193,616

239,184

80.9%

215,321

(21,705)

-10.1%

Social Security

704,151

1,052,428

66.9%

702,576

1,575

0.2%

Unemployment Comp

30,466

100,000

30.5%

50,412

(19,946)

-39.6%

Penny Fund

44,213

46,300

95.5%

6,521

37,692

578.0%

Uniforms/Clothing Allowance

181,236

257,750

70.3%

150,638

30,598

20.3%

Total

1,153,682

1,695,662

68.0%

1,125,469

28,213

2.5%

 

Debt service

 

The City spent 37.5 percent of its debt service budget through September 2017, which was $1.2 million (or 35.4 percent) more than last year. The increase in this expenditure compared to last year resulted from City repaying its 2014 IT infrastructure loan ahead of schedule10. Setting that early repayment aside, the majority of the City's debt payments are recorded during the fourth quarter.

 

Debt Service

2017 Q3

2017

Budget

% Spent

2016 Q3

Difference ($)

Difference (%)

Debt Service

4,524,351

12,065,128

37.5%

3,341,861

1,182,489

35.4%

 

Operating costs

 

Representing 12.3 percent of the total budget, this is the category for materials and services that City government uses in its regular operations. It includes utilities, legal services, equipment, and building maintenance.

 

Operating Costs

 

Operating Costs

2017 Q3

2017

Budget

% Spent

2016 Q3

Difference ($)

Difference (%)

Contracted Services

1,768,144

2,886,398

61.3%

1,605,599

162,546

10.1%

Maintenance Agreements

336,028

507,904

66.2%

354,849

(18,821)

-5.3%

Light & Power

557,964

1,578,800

35.3%

828,530

(270,566)

-32.7%

Gas

56,397

106,000

53.2%

46,401

9,996

21.5%

General Plant Supplies

430,707

601,245

71.6%

151,816

278,891

183.7%

Maintenance/Repair Equipment

144,837

329,214

44.0%

178,153

(33,316)

-18.7%

Fees

405,195

670,310

60.4%

346,815

58,380

16.8%

Other Operating Cost

2,245,584

4,570,314

49.1%

2,562,651

(317,067)

-12.4%

Total

5,944,856

11,250,185

52.8%

6,074,813

(129,957)

-2.1%

 

The City's spending on these items through September 2017 was $130,000 (or 2.1 percent) less than a year ago. General plant supplies is $279,000 higher than in 2016 because City needed to replace equipment for the Police Department. The City anticipated this purchase in the FY2017 budget. The City spent $270,000 (or 32.7 percent) less on light and power with street lighting expenditures down $206,000 compared to 2016. The City also spent less on a number of items including consulting, support and legal services that are included in the “other operating cost” category.

 

 

10 The City paid $1.5 million ahead of schedule to retire this loan during 2017.

 

 

 

 

Other expenses

 

The table below shows other expenditures and interfund transfers out of the General Fund. The City's 2017 budget includes a contingency of $147,000 as a modest buffer against unanticipated revenue shortfalls or increased expenditures that could occur during the year.

 

 

2017 Q3

2017

Budget

%

Spent

2016 Q3

Difference ($)

Difference (%)

Contingencies

35,000

146,646

23.9%

0

35,000

N/A

Miscellaneous

1,101,866

2,140,260

51.5%

586,740

515,126

87.8%

Transfer to Capital Fund

0

20,000

0.0%

774,127

(774,127)

-100.0%

Transfer to Self-Insurance Fund

1,749,267

2,261,920

77.3%

1,696,439

52,828

3.1%

 

The 2017 budget has one large transfer out of the General Fund. The City will transfer $2.3 million from the General Fund to the Self Insurance Fund to pay the cost of property, liability and workers' compensation claims and associated administrative costs. The City makes a portion of that transfer each month.

 

The City also budgets $2.1 million for miscellaneous expenditures. The largest item in this category is a $1 million one-time allocation for roof replacement and demolition. The City did not spend any money on that special project through September, but it did incur $239,000 in unexpected demolition costs.