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HomeMy WebLinkAbout03.24.2022 Finance Committee Agenda Packet oaf SARj SARATOGA CITY COUNCIL FINANCE COMMITTEE 1956 gC1F 0 March 24, 2022 � RN�P 3:30 P.M. REGULAR MEETING Teleconference/Public Participation Information to Mitigate the Spread of COVID-19 This meeting will be held entirely by teleconference. All members of the Committee and staff will only participate via the Zoom platform using the process described below. The meeting is being conducted pursuant to recent amendments to the teleconference rules required by the Ralph M. Brown Act allowing teleconferencing during a proclaimed state of emergency when local officials have recommended social distancing. The purpose of the amendments is to provide the safest environment for the public, elected officials, and staff while allowing for continued operation of the government and public participation during the COVID-19 pandemic. Members of the public can view and participate in the meeting by: 1 . Using the Zoom website https://us02web.zoom.us/-i/85191337519 or App Webinar ID: 851 9133 7519 and raising their hand to speak on an agenda item when directed by the Mayor. 2. Calling 1.669.900.6833 or 1.408.638.0968 and pressing *9 to raise their hand to speak on an agenda item when directed by the Mayor. The public will not be able to participate in the meeting in person. Members of the public can send written comments prior to the meeting by commenting online at www.saratoga.ca.us/fc prior to the start of the meeting. These emails will be provided to the members of the Council and will become part of the official record of the meeting. CALL TO ORDER ROLL CALL ORAL COMMUNICATIONS ON NON-AGENDIZED ITEMS Any member of the public may address the Committee about any matter not on the agenda for this meeting for up to three (3) minutes. The law generally prohibits the Committee from discussing or taking action on such items. The Committee may choose to place the topic on a future agenda. City Council Finance Committee Agenda - March 24, 2022 Page 1 AGENDA ITEMS 1. Finance Committee Minutes Recommended Action: Review and approve the minutes for the February 17, 2022 meeting. 2. Review Financial Policies a. Facilities Reserve Update b. Fiscal Management Polices Recommended Action: Receive and review policies and provide direction to staff. 3. Format Update to Monthly Treasurer's Report Recommended Action: Receive and review Treasurer's Report format and provide direction to staff. 4. Master Fee Schedule Discussion (no written staff report) Recommended Action: Discuss options for Master Fee Schedule updates. ADJOURNMENT CERTIFICATE OF POSTING OF THE AGENDA, DISTRIBUTION OF THE AGENDA PACKET, COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT I, Gina Scott, Administrative Analyst for the City of Saratoga, declare that the foregoing agenda for the meeting of the City Council Finance Committee of the City of Saratoga was posted and available for public review on March 21, 2022, at the City of Saratoga, 13777 Fruitvale Ave., Saratoga, CA 95070, and on the City's website at www.saratoga.ca.us. Signed this 21" day of March 2022 at Saratoga, California. Gina Scott, Administrative Analyst In accordance with the Ralph M. Brown Act, copies of the staff reports and other materials provided to the Committee by City staff in connection with this agenda, copies of materials distributed to the Committee concurrently with the posting of the agenda, and materials distributed to the Committee by staff after the posting of the agenda are available on the City website at www.saratoga.ca.us and are available for review in the office of the City Clerk at 13777 Fruitvale Avenue, Saratoga, California. City Council Finance Committee Agenda - March 24, 2022 Page 2 In compliance with the Americans with Disabilities Act and the Governor's Executive Order, if you need assistance to participate in this meeting, please contact the City Clerk at bavrit@saratoga.ca.us or calling 408.868.1216 as soon as possible before the meeting. The City will use its best efforts to provide reasonable accommodations to provide as much accessibility as possible while also maintaining public safety. [28 CFR 35.102-35.104 ADA title III City Council Finance Committee Agenda - March 24, 2022 Page 3 MINUTES SARATOGA CITY COUNCIL FINANCE COMMITTEE REGULAR MEETING FEBRURY 17, 2022 CALL TO ORDER The meeting was called to order at 3:35 p.m. via Zoom. ROLL CALL Present: Mayor Tina Walia, Vice Mayor Kookie Fitzsimmons, Council Member Mary-Lynne Bernald Also Present: City Manager James Lindsay, Administrative Services Director Nick Pegueros, Assistant City Manager Crystal Bothelio, Finance Manager Agnes Pabis, Public Works DirectorJohn Cherbone, Administrative Analyst Gina Scott ORAL COMMUNICATIONS ON NON-AGENDIZED ITEMS None AGENDA ITEMS 1 . Finance Committee Minutes Recommended Action: Review and approve the minutes for the January 14, 2022 meeting. FITZSIMMONS/WALIA MOVED TO APPROVE THE MINUTES FOR THE JANUARY 14, 2022 MEETING. MOTION PASSED. AYES: FITZSIMMONS, WALIA. NOES: NONE. ABSTAIN: NONE. 2. ARPA Funds Recommended Action: Receive staff report and US Department of Treasury - Overview of the Coronavirus State and Local Fiscal Recover Funds Final Rule. City Manager James Lindsay presented report on ARPA funds. 3. FY 2022-23 Operating and Capital Improvement Program Budget Process Recommended Action: Review and accept report. Administrative Services Director Nick Pegueros presented report on CIP process and identified projects. City Council Finance Committee Minutes - February 17, 2022 Page 1 3 4. Financial Policies Recommended Action: Receive and review the report and attachments. Administrative Services Director Nick Pegueros presented report and financial policies for consideration. There was a consensus of the Finance Committee to move the Finance Committee meetings from the third Thursday of the month to the fourth Thursday of the month. ADJOURNMENT The meeting was adjourned at 4:37 p.m. Minutes respectfully submitted: Gina Scott, Administrative Analyst City of Saratoga City Council Finance Committee Minutes - February 17, 2022 Page 2 4 �\�� °i SAR,gpaG9 ADMINISTRATIVE SERVICES Ai Memorandum 1956 IFORN,P To: City Council Finance Committee From: Nick Pegueros, Administrative Services Director Date: March 24, 2022 Subject: FY 2023 (FY 23) Financial Policies BACKGROUND The purpose of this memorandum is to transmit potential changes to the City Council's financial policies for FY 23. At the City Council's March 16 meeting, Council took action to request Finance Committee review of the City's facility reserve policy(Attachment A)for updated language to incorporate use of the reserve for one-time augmentation to our pavement management program.We have provided sample language for the Committee's review. This item will be brought back to City Council with the Committee's recommended policy changes at their April 6 meeting as part of the Capital Improvement Program (CIP) agenda item. We have also reviewed the fiscal management policies (Attachment B) and offer potential edits for the Committee's consideration. The edits do not substantively change our current policies. RECOMMENDED ACTION Receive and review policies and provide direction to staff. Attachments A. Fund Balance Reserve Policy B. Fiscal Management Policy Statements 5 FUND BALANCE RESERVE POLICY ADOPTED JUNE 16, 2021 Prudent financial management dictates that the City reserve a portion of its funds for future use to maintain fiscal stability;ensure the continued orderly operation of government and provision of services to residents;and to mitigate current and future risks. As a general budget precept,the City Council decides when and whether to appropriate available funds to and from a reserve account. Use of reserve funds must be authorized by either specific direction in the annual budget, or by a separate City Council action—unless specifically directed by policy. Responsible fiscal stewardship also requires adequate reserves be maintained for all known liabilities and established City Council and community directed initiatives. In the following Fund Balance/Reserve Policy guidelines,the descriptions include identification of the fund type and classification,the purpose of the reserve,minimum and maximum funding goals if appropriate,appropriate utilization of the reserve and by what authority,and the procedure for funding the reserve initially;on an ongoing basis,or after utilization. FUND BALANCE AND NET POSITION In 2009,Governmental Accounting Standards Board("GASB")Statement No.54 revised fund balance classifications for"Governmental Funds" into five specific classifications of fund balance with the intent to identify the extent to which a specific fund balance reserve is available for appropriation and therefore spendable, or whether the fund balance reserve is constrained by special restrictions. Government Funds for which these new rules apply include: General Fund,Special Revenue Funds,Capital Project Funds,and Debt Service Funds. For "Non-Governmental Funds" equity classifications are classified as "Net Position" with sub-classifications of Restricted or Unrestricted Net Position. A third component of a Non-Governmental Fund's equity is"Net Investment in Capital Assets,"which for Saratoga refers to the non-monetary portion of equity such as vehicles and equipment, net of depreciation. Non-Governmental Fund types include Proprietary Funds(Enterprise and Internal Service Funds) and Fiduciary Funds. GOVERNMENTAL FUND TYPE RESERVE CLASSIFICATIONS The Governmental Reserve classifications are defined as follows,which includes the applicable reserves that fall into the classification. Non-Spendable Fund Balance Represents resources that are inherently non-spendable from the vantage point of the current period. The City does not presently hold Non-Spendable Reserve funds. Restricted Fund Balance Represents fund balance that is subject to external enforceable legal restrictions. The City maintains the following restricted fund balances under this designation: • General Fund: Environmental Services Fund Balance Reserve • Special Revenue Funds: Landscape&Lighting Assessment Districts Fund Balances • Debt Services Fund: Library General Obligation Bond Debt Service Fund • Capital Project Funds a) Park in Lieu Funds b) Highway User Tax Allocation Fund(Gas Tax) c) Capital Project Grant Funds 1 6 FUND BALANCE RESERVE POLICY ADOPTED JUNE 16, 2021 Committed Fund Balance Represents fund balance constrained by limitations the government imposes upon itself at its highest level of decision making and remains binding unless removed in the same manner. The City maintains the following fund balances under this designation: • General Fund: Hillside Stability Reserve • General Fund: Roads and Facility Replacement Reserve • Capital Improvement Plan Funds: Capital Improvement Project Fund Balance Reserve Assigned Fund Balance Represents fund balance identified by Council for an intended use;however as no legal obligations exist,the funds may be re-designated and utilized for another purpose if Council chooses. The City maintains the following General Fund reserves under this designation: • General Fund: Future Capital&Efficiency Project Reserve • General Fund: Carryforward Reserve Unassigned Fund Balance Represents funding which may be held for specific types of uses or operational funding/stabilization purposes;but is not yet directed to a specific purpose. Only General Fund reserves can be designated under the "Unassigned" fund balance classification. Other fund types are by nature structured for specific purposes;hence the fund balances are therefore considered"assigned"for that purpose. • General Fund: Working Capital Reserve • General Fund: Fiscal Stabilization Reserve • General Fund: Other Unassigned Fund Balance Reserve Fund Balance Ratios To ensure the City maintains available working cash flow and emergency funding at all times,the collective total of the General Fund's Assigned and Unassigned Reserves shall be sustained at a minimum of 20% of General Fund expenditure appropriations,net of transfers out. GENERAL FUND YEAR-END ALLOCATIONS After the City's financial records are finalized and audited, with legal obligations and liability reserves funded, revenues in excess of expenditures are closed out to the Other Unassigned Fund Balance Reserve. A base amount of funding, as set by budget policy, is to remain in the Other Unassigned Fund Balance Reserve, with the remainder distributed in the following order: 1. Repayment of Fund Balance Reserve loans-back to established levels(e.g. borrowing from/usage of the Fiscal Stabilization or Hillside Stability Reserves). • For the Hillside Stability Reserve,loan repayment shall be repaid with year-end net operations if funding in excess of the next year's priority Capital Improvement Project is available. At a minimum,reimbursements shall be made in annual contributions of$100,000 until reserve balance reaches the$1 million reserve goal. • Fiscal Stabilization loan repayments shall be made as directed by Council. 2. Annual contribution shall be made to Facilities Replacement Reserve and Fiscal Stabilization Reserve as directed by Council. 3. Remaining funds are allocated to the Future Capital Improvement and Cost Efficiency Projects Reserve. 2 7 FUND BALANCE RESERVE POLICY ADOPTED JUNE 16, 2021 GENERAL FUND RESERVES Environmental Services Reserve Under the Restricted Fund Balance classification,the Environmental Services Reserve represents revenues collected under a prior funding structure for environmental purposes,and is therefore restricted for use in funding environmental program costs such as clean water programs, street sweeping, and storm drain cleaning services. Per policy, the Environmental Service Reserve is being utilized through annual budget appropriations of$50,000. The Environmental Services Reserve originated from a one-time funding structural change and therefore will not be replenished when depleted. Hillside Stability Reserve Under the Committed Fund Balance classification, a Hillside Stability Reserve of$1 million is set aside to provide funding for unanticipated or unforeseen emergency or extraordinary costs related to hillside degradation,inclusive of slide prevention and mitigation, slide repair, and associated drainage and roadwork to must be commenced prior to the next fiscal year's CIP Project funding availability. Use of the reserve requires an analysis be prepared and presented to Council for approval,or in the event of a landslide requiring immediate emergency work,the Public Works Director may direct use of up to 10%of the reserve to make emergency repairs and mitigate further damage until Council takes action. Reserve funding is to be used for emergency work which exceeds operational funding provided for in the Operations Budget. Upon use,refunding of the reserve shall be provided from year-end net operations,in full if funding is available,or at minimum in the amount of$100,000 each fiscal year until the$1,000,000 reserve cap is reached. Roads and Facility Replacement Reserve The Roads and Facility Replacement Reserve is established to accrue funding for the major rehabilitation or replacement of City-owned faedroadss and fEacilities(buildings/structures). Eligible uses of this reserve include both direct funding of pub lie y improvements,and the servicing of related debt. Small facility building replaoements major faoility renovations, and down payment eontributions toward a large facility replaeement in eonjtMetion wi bead fneasufe funding are examples ef intended Faeilit-y Replaeeffient Reser-ve uses. An initial contribution of $300,000 was established in FY 2012/13 with Council's recommendation to continue funding at this level,as a priority use of year-end net operations funding. Effective FY 2016/17,Council's direction i-,was to increase the annual year-end contribution amount to$500,000,as funding i-s-was available. In FY 2021/22 City Council expanded the reserve to include roads. Council has set a,goal to fund the Facility Replacement Reserve to a level equal to 1/3 of the City's insured value over the next 20 years (by FY 2n�2041/42) as a fiscally responsible practice to maintain city infrastructure. -In principle,Saratoga does not pursue bond money to fund capital improvements,however,replacing high cost facility infrastructure requires a long-term funding plan that may or may not be attainable through annual contributions. Therefore,the Facility Replacement Reserve demonstrates both the City's good faith funding effort and financial stewardship for future bond measures if needed,as well as accumulating funding for a down payment on replacement infrastructure to minimize bond fundingneeds. eeds. A facility's insured value represents the initial cost of the facility decreased each year over the facility's estimated lifespan. Therefore,insured value represents the remaining life of the facility's purchase cost-it does not represent the current cost to replace a facility. The City recognizes insured value is not sufficient to fund facility replacements, therefore annual contributions will continue as an ongoing funding obligation even after the 1/3 reserve goal is met. Changes in annual contributions and the reserve goal amount shall be determined by Council during the budget process, in line with changes in the City's economic situation. Utilization of the reserve shall be brought to Council for discussion and consideration as needed. 3 8 FUND BALANCE RESERVE POLICY ADOPTED JUNE 16, 2021 Future Capital&Efficiency Projects Reserve Under the Assigned Fund Balance classification,the Reserve for Future Capital Improvement&Efficiency Projects shall reserve funding for as yet undefined capital and efficiency improvement projects. Reserve funding is derived from General Fund accumulated net operations(as available)and is therefore considered a"one-time funding source". Funds are held in this reserve until Council reviews funding requests and approves a use or transfer to a capital project fund. Use of the reserve funding is at the Council's discretion,but typically occurs in conjunction with the annual budget adoption after Council conducts a comprehensive review of capital and efficiency improvement needs. Reserve replenishment is dependent upon net operational savings in subsequent fiscal years. Carryforward Reserve Under the Assigned Fund Balance classification,the Reserve for Carryforwards represents funding held at the end of each fiscal year for critical unexpended operating budget appropriations to be purchased in the following fiscal year, and any remaining Council Contingency funding. The reserve is reconciled at the end of each fiscal year to both release prior year carryforward funding and reserve current year carryforward funding into the following budget year. Staff determines the year-end reserve amount after all fiscal year payments are finalized; the reserve amount is conceptually appropriated by Council each year in the budget adoption resolution. Working Capital Reserves In accordance with the City's cautious and conservative fiscal philosophy, the City's general prevailing financial policy holds that the City should fund daily operations with current resources in order to avoid use of short-term borrowing for cash flow management. To support this policy a Working Capital Reserve is maintained that meets cash flow requirements,and in turn,ensures the continuance of services to the public while also preserving the City's credit worthiness. To provide adequate working capital in the case of extreme circumstances, the City shall maintain, in combination with the Fiscal Stabilization Reserve, a minimum operational reserve of 60 days of the following year's General Fund budgeted expenditures(net of internal service charges and transfers out),up to a maximum operational reserve amount equal to 90 days of the following year's General Fund budgeted expenditures (again, net of internal service charges and transfers out). This reserve falls under the Unassigned Fund Balance classification. Effective FY 2016/17, the Working Capital Reserve is maintained at $1 million(reduced from$2 million), and the Fiscal Stabilization Reserve in maintained at $2.5 million (increased from $1.5 million). At this time a Working Capital Reserve of$1 million is sufficient for cash flow needs, however, the funding level will be assessed on an annual basis to ensure $1 million is sufficient for cash flow needs. The $1 million funding shift to the Fiscal Stabilization Reserve reflects a more realistic reserve usage structure—the Working Capital Reserve's purpose is to ensure sufficient operating cash;the reserve has no defined fund uses,repayment terms,or authorization requirements. On the other hand,the Fiscal Stabilization Reserve's purpose is defined and may be called upon for critical uses in the future. The overall 60-day General Fund operational reserve minimum requirements shall continue to be met. Fiscal Stabilization Reserve Under the Unassigned Fund Balance classification,the Fiscal Stabilization Reserve represents a funding set-aside to provide temporary financing for budget stabilization caused by fiscal downturns, unanticipated extraordinary expenditures related to a natural disaster or calamity,or from an unexpected liability or funding decrease created by a legislative action. Effective July 1, 2016, the Fiscal Stabilization Reserve funding level increased by a $1 million transfer from the Working Capital Reserve,up to$2.5 million. As of FY 2018/19,the Development Services Reserve of$650,000 was integrated into the Fiscal Stabilization Reserve to reflect the Council's desire to review citywide operational priorities and needs as a whole rather than segmented sections. This brought the Fiscal Stabilization 4 9 FUND BALANCE RESERVE POLICY ADOPTED JUNE 16, 2021 Reserve up to$3,150 million;approximately 15%of the General Fund's budgeted operations. Together,these funding shifts provide a focused but flexible reserve funding purpose and utilization structure. Fiscal stabilization uses are defined and restricted to 1)revenue declines lasting more than one year and equal to more than 5%of either property tax,the combined total of other taxes,or General Fund revenues in total;2)an unanticipated extraordinary operational increase of more than 5%such as from a natural disaster;or 3)an unexpected Federal,State, County or Ca1PERS funding change. Council may utilize funding at budget adoption,by adoption of a budget adjustment resolution during the course of the year, or after a Federal, State, or locally declared emergency. In the event a locally declared emergency takes place, the City Manager has the authority to spend funds until such time as the City Council takes action. Reserve appropriations are to be replenished from year-end net operations, as available, on a priority basis. The Fiscal Stabilization Reserve funding level will be assessed on an annual basis and may direct staff to increase the reserve fund through the budget adoption or through-a budget adjustment to ensure this funding level is sufficient in light of operational reserve requirements and utilization needs. The General Fund budget continues to increase each fiscal year,the overall 60 day General Fund operational reserve minimum requirement level is close to the current total of Working Capital and Fiscal Stabilization Reserve Fund total. To assist the Fiscal Stabilization and Working Capital Reserves remain at minimum requirement level,$100,000 shall be allocated annually into the Fiscal Stabilization Reserve from Net Operations as part of the General Fund Year End Close,effective FY 2021/22. This allocation shall only occur if General Fund Net Operations exceed a minimum of$1,000,000 to ensure adequate funding is available for other necessary allocations. Compensated Absences Reserve Under the Unassigned Fund Balance classification, the Compensated Absences Reserve is established to smooth expenditure fluctuations resulting from the payout of accrued leave to employees at service separation and distribution payouts. Reserve funding equal to one-third of the compensated absences liability is established at year-end. Reserve funding in excess of one-third of the liability is to be returned to the General Fund's Other Unassigned Reserve. Use of the reserve occurs when total annual compensated absences payouts exceed budgeted salary funds. Large payouts decrease the compensated absences liability at year-end, thereby supporting the practice of utilizing the reserve if needed. Year-end reconciling allocations to and from the reserve are approved though Council's budget resolution adoption each fiscal year,with the liability and resulting reserve amounts determined as part of the year- end close process. Other Unassigned Reserve The `Other Unassigned Reserve' represents accumulated net operations not yet allocated to other fund balance reserves,and by definition,fall into the Unassigned Fund Balance classification. General Fund vs Other Fund Reserves Other Fund's accumulated net operations are typically accounted for in an undefined reserve account in the fund— and typically titled `Fund Balance Reserve' meaning they do not have reserve categories. This difference is because other funds are structured for specific uses or commitments,hence the fund balance already has a directed function and fund balance is therefore committed for that purpose.Whereas the General Fund is used for multiple and various operational purposes thereby requiring a distinction of purpose for each reserve. 5 10 FUND BALANCE RESERVE POLICY ADOPTED JUNE 16, 2021 SPECIAL REVENUE FUND RESERVES Landscape&Lighting and Storm Water Assessment Zone Funds Assessment Zone Funds are Special Revenue Funds,which is a type of governmental fund. As a governmental fund, the Landscape & Lighting and Storm Water Assessment Zone Funds comply with GASB 54 fund balance classifications,and by nature of the fund's purpose,fund balance reserves are classified as restricted reserves. Special Revenue Funds account for and report the proceeds of specific revenue sources that are restricted or committed to specified purposes(other than for debt service or capital projects.) For Saratoga,Assessment Zone Special Revenue Funds are established to account for each individual assessment zone financial assets separately; thereby each fund has its own separate fund balance reserve. Each zone's Fund Balance Reserve should be sufficient to provide working capital to cover operational expenses through the first half of assessment receipts in February,therefore equitable to approximately one-half of a district's annual expenditure budget. The second half of receipts are received in late May or early June. Some districts may include capital improvement projects in addition to ongoing regular maintenance. This requires accumulating fund balance over the years to generate sufficient resources for the improvement projects. As each zone's situation is different,a maximum fund balance shall be determined by the Public Works Director. Requests for use of the reserve for special projects are approved by Council through budget adoption or by a Council approved budget adjustment resolution throughout the year. Reserves are replenished from the Fund's net operations in subsequent years. DEBT SERVICE FUND RESERVES Library General Obligation(GO)Bond Debt Fund The Library General Obligation(GO)Bond Debt Fund is a Debt Service Fund established to account for the financial resources accumulated for principal,interest,and cost of issuance expenditures associated with the Library Bond Debt. As Debt Service Funds are a governmental fund type, the fund reserves fall under the GASB 54 fund balance classifications. Debt Service Fund reserves are classified as a Restricted Reserve with the funding only spent for specific purposes as stipulated by the bond covenants. The Library GO Bond Debt Fund ensures receipts are tracked separately, and that funding is available for the GO Bond debt service requirements. At a minimum, the year-end fund balance reserve shall be sufficient to provide working capital to cover the semi-annual principal and interest debt payment due on August 15t as the GO Bond tax receipts are received after the I" debt payment is due. December receipts provide for the February payment. In addition, as bond assessments are collected as a percentage of property values, reserves should provide sufficient funding to compensate for tax fluctuations. The fund's reserve maximum is set at no more than one-year of budgeted annual expenditures. The reserve balance is increased(or reduced)through establishing assessment rates at more (or less)than the semi- annual payments and bond services require. Therefore,use or replenishment of the reserve is approved by Council through budget adoption, and implemented through an increased or reduced assessment rate as a result of the fund's net operations. Arrowhead Community Facility District Bond Debt Fund In 2016,the City agreed to act as the fiduciary agent for the Arrowhead Community Facility District's bond issuance to fund the community's water system infrastructure. The bond was issued in December 2018,and participants in the bond issuance began assessment payments in FY 2018/19. The annual debt service assessment pays for the cost of the bond's principal and interest payments, and the associated administrative costs. Fund reserves are comprised of 6 11 FUND BALANCE RESERVE POLICY ADOPTED JUNE 16, 2021 assessments collected less bond costs. Assessments are established as dollar amounts rather than percentage rates,so the CFD Bond Debt Reserve does not generate unexpected excess fund balance as does the GO Bond Debt Fund. CAPITAL IMPROVEMENT PROJECT FUND RESERVES Overview Capital Improvement Project(CIP)Funds account for the acquisition and maintenance of major capital assets other than those financed through special assessments or enterprise funds. Capital Project Funds area type of governmental fund and therefore comply with GASB 54 fund balance classifications. Because Council has directed the fund's appropriated funding be spent on specific capital improvement projects,the Capital Project Fund Balance Reserve is classified as Committed Fund Balance. Budgeted capital improvement project funding is determined by the scope of work approved by Council,and remains assigned for that use until completed or reassigned by Council. Fund Balance amounts represent the total remaining funds in the individual projects at year-end. As Fund Balance amounts are determined by the amount of project completion at year-end,setting a minimum or maximum amount is not applicable. Fund Balance is automatically re- appropriated to budgeted capital projects in the following fiscal year for the improvement work to be completed. Street Improvement Projects Funds Street Improvement Project Funds provide for a safe and functional roadway and pedestrian street system. Each Street Improvement Fund(CIP Street Fund,CIP Grant Fund,and Gas Tax Fund)has multiple projects which roll up into the overall fund balances,but remain designated for use by project. The CIP Street Fund receives annual funding from designated fees,reimbursements,contributions,and transfers from other funds. The CIP Grant Fund receives federal,state,and local grants which vary in source and amount from year- to-year. On occasion, a private grant may be received. Typically,CIP Grant Funds have a negative fund balance as project work is conducted before reimbursement is received. Gas Tax Funds represent annual Highway User Tax and Transportation Congestion Relief revenue allocations that are to be accounted for separately and are subject to State audits. Park&Trail Improvement Project Funds Park&Trail Improvement Project Funds provide for capital improvements to the City's neighborhood and city parks and plaza,the sport fields,bike and pedestrian trails, and open space areas throughout the City. Each of the Park& Trail Improvement Funds(CIP Park&Trail Fund,CIP Tree Fund,and the CIP Park&Trail Grant Fund)have multiple projects which roll up into the overall fund balances,but remain designated for use by project. The CIP Park&Trail Fund receives annual funding from Park-In-Lieu fees,occasional subventions,reimbursements and contributions, and transfers in from other funds. The Tree Fund receives revenue from tree fines and transfers from other funds upon Council direction. The CIP Grant Fund receives federal, state, local and occasional private grants which vary in source and amount from year-to-year. Typically,CIP Grant Funds have a negative fund balance as project work is conducted beforehand and then reimbursed from expenditure invoices. Year-end fund balance represents the remaining unexpended project funds (net of any negative CIP Grant Fund Balance)which are subsequently re-appropriated by Council into the following budget year through budget adoption. Facility Improvement Project Funds Facility Improvement Project Funds provide for capital maintenance and improvements of City-owned buildings and structures throughout the City. Each of the Facility Improvement Funds(CIP Facilities Fund and the Facility Grant Fund)have multiple projects which roll up into the overall fund balances,but remain designated for use by project. 7 12 FUND BALANCE RESERVE POLICY ADOPTED JUNE 16, 2021 The CIP Facilities Fund receives annual funding from a General Fund transfer,from Theater Ticket Surcharge Fees, and from reimbursements and contributions. The Facility Grant Fund receives revenue from grants that vary in amount from year-to-year. Typically,CIP Grant Funds have a negative fund balance as project work is conducted beforehand and then reimbursed from expenditure invoices. Year-end fund balance represents the remaining unexpended project funds (net of any negative CIP Grant Fund Balance)which are subsequently re-appropriated by Council into the following budget year through budget adoption. Administrative&Technology Improvement Funds Administrative & Technology Improvement Project Funds provide for major capital expenditures to improve or enhance administrative, operational, and technology-based systems and processes. Each of the Administrative & Technology Improvement Funds(CIP Admin&Tech Improvement Fund and the Admin&Tech Grant Fund)have multiple projects which roll up into the overall fund balances but remain designated for use by individual project. The CIP Administrative&Technology Improvement Fund typically receives funding from a General Fund transfer. Administrative and technology improvement focused grants are limited, and typically limited to the Community Development function for housing elements or development processes. If grants are received,projects typically have a negative fund balance as project work is conducted beforehand and then reimbursed from expenditure invoices. Year-end fund balance represents the remaining unexpended project funds (net of any negative CIP Grant Fund Balance)which are subsequently re-appropriated by Council into the following budget year through budget adoption. 8 13 INTRODUCTION SECTION FISCAL MANAGEMENT POLICY STATEMENTS The City of Saratoga practices fiscal responsibility through conservative financial management, and cautious, sustainable, and enforceable fiscal policies and internal controls to ensure prudent and efficient use of resources. Policies and controls represent long-standing accounting, budgeting, debt, investment, and reserve principles and practices,and are the foundation upon which the City prepares its Long-Term Financial Plan. Saratoga's general fiscal management policy statements provide a summary overview of financial, operational, and budgetary management, in one comprehensive centralized format,to act as guidelines and to assist elected officials and staff with understanding the City's financial practices for fiscal operations. Detail level fiscal policies are administrative in nature and therefore not included in the budget document. However, fiscal policies that rise to Council review and impact budgetary decision making are incorporated into the budget document for annual adoption by Council. Currently this includes the Fund Balance Reserve Policy and the Capital Project Process Policy which follows this section. Other Council defined policies will be added as directed. The Summary Fiscal Management Policy Statements in this document are organized into the following categories: • General Financial Principles • Appropriations and Budgetary Control • Auditing and Financial Reporting • Capital Improvement Planning • Development Related Financial Policies • Expenditures and Purchasing • Fixed Assets and Infrastructure • Grants&Donations • Internal Service Funds • Investments • Long-Term Debt • Long-Term Financial Planning • Pension Funding • Revenues • Risk Management • Treasury Management • Trust&Agency Policies • User Fees CITY OF SARATOGA 9 FISCAL YEAR 2021/22 OPERATING&CAPITAL BUDGET 14 INTRODUCTION SECTION GENERAL FINANCIAL PRINCIPLES • The City shall ensure prudent financial practices are incorporatcd into operational procedures to ensure fiscal integrity and safeguard the City's assets. • The City's fiscal policies are structured to ensure fiscal responsibility,accountability,transparency,and efficient use of resources. Fiscal policies are to be reviewed,updated,and refined as necessary,with general policy level decisions brought to City Council for review and approval as Council Policies,and administrative and operational level functions approved by the City Manager as Administrative Policies. • Proposed revisions to the Fiscal Management Policy Statements and Council Policies are reviewed by the Finance Committee and then provided to the entire City Council at the annual Council Retreat or Budget Study Session. Council members are asked to provide comments or suggestions for revisions to the Administrative Services Director-with the final draft made available for review by the entire Council prior to adoption. • The City's primary long-term financial goals seek to maintain the City's fiscal health,preserve essential services, reduce financial risk, and support short and long-term administrative, financial, and operational goals in a financially judicious manner. Long-term financial and infrastructure planning and the annual adoption of a structurally balanced budget provides the foundation to these long-term financial goals. The City shall promote and implement strong internal financial controls to manage risks and monitor the reliability and integrity of financial transactions and operational activities. • Financial information shall be provided in a relevant,thorough, and timely manner,to effectively communicate the City's financial status to the Council,residents,employees,and all other interested parties. • Financial stability goals and judicious responsiveness shall be the foundation upon which proactive and advantageous financial decisions are made, and which guide the City's response to local,regional, and broader economic changes through the years. • The City shall undertake,adopt,and integrate new initiatives or programs in a cautious,well_-planned manner to support the City's long-term ability to maintain essential services and infrastructure at the level and quality required by its residents. • The City Council's financial, operational, and community goals, objectives, and policies are incorporated into and implemented with the development and adoption of the City's Operating and Capital Budgets. • Efforts will be coordinated with other governmental agencies and joint power associations to achieve common policy objectives, create beneficial opportunities and services for the community, share the cost of providing governmental services,and support legislation favorable to cities at the state and federal level. • The City shall develop and incorporate long-term financial planning tools to promote strategic analysis and prioritization of financial resources in decision making. • Replacement plans shall be maintained for fixed assets,such as vehicles,equipment,park infrastructure,building fixtures and equipment,and technology infrastructure. • Efficient major infrastructure funding requires comprehensive and long-term Master Plans. The City shall endeavor to develop major infrastructure maintenance and replacement plans for roadways, bridges, retaining walls,storm drains,streetlights,and similar infrastructure. APPROPRIATIONS AND BUDGETARY CONTROL CITY OF SARATOGA • FISCAL YEAR 2021/22 OPERATING&CAPITAL BUDGET 15 INTRODUCTION SECTION • The City Council shall adopt an annual balanced operating budget and the first year of an integrated five-year capital improvement plan budget by June 301 of each year,to be effective for the following fiscal year running from July 1 st through June 30'. Balanced budgets present budgeted sources in excess of budgeted uses. Budgeted "Sources" include Revenues, Transfers In, and Appropriated Uses of Fund Balance. Budgeted "Uses" include Expenditures and Transfers Out. Operating and Capital Budgets are to align with the City's long-term financial goals. • Each year,Finance&Administrative Services Department staff provides;a short recap of the prior-year budget; a mid-year budget status report;and an updated five-year financial forecast to the City Council,typically at the Annual Council Retreat(scheduled in late January or early February). This annual review assists Council with formulating direction for long-range fiscal planning,Operating Budget development,and capital project funding appropriations. • Budgets are prepared on the same basis of accounting used for financial reporting: governmental fund types (General,Special Revenue,and Debt Service)are budgeted according to the modified accrual basis of accounting; proprietary funds(Internal Service Funds)and fiduciary funds(Custodial Funds)are budgeted under the accrual basis of accounting. • The Operating Budget is primarily funded with current year revenues. Dedicated fund balance reserves,such as the Carryforward or Fiscal Stabilization Reserves represent prior-year savings designated for specific uses,which may be used to fund current year operational expenses in accordance with their purpose,upon Council approval. • Additionally,a minimal base amount of$500,000 remains in the Unassigned Fund Balance Reserve at year-end to provide the first layer of fiscal protection for unanticipated operational shortfalls or unforeseen needs in the following fiscal year. • The Capital Budget is funded with both prior-year surplus funding and dedicated capital funding resources. Dedicated funding sources include Gas Tax(HUTA)revenues,VTA Measure B funding,road impact assessment revenues; project revenues and reimbursements; community benefit assessments; and federal, state, local, and private grants. • In practice,budgeted revenues are conservatively stated, and budgeted expenditures are funded at the full level required to meet annual operational and capital improvement goals. With effectively managed revenue streams and efficient use of resources,fiscal year-end operational budget surpluses are typically available to fund future capital improvement projects and contribute to the City's fiscally responsible reserve accounts. • The City Council maintains budgetary control at the fund level; any changes in total fund appropriations during the fiscal year must be submitted to the City Council for review and Council majority approval. Operating Budget appropriations lapse at the end of each fiscal year unless specifically carried forward by appropriation in the following fiscal year's budget. Capital Budget appropriations are structured as a multi-year workplan;therefore, project expenditure balances are automatically carried forward to the following fiscal year as part of the annual budget adoption until funding is exhausted,modified,or the project is completed. • The City's adopted budget shall comply with State law that limits annual budget expenditures to the appropriation limit calculated in accordance with Article XIIIB of the Constitution of the State of California. Known as the Gann Limit,the City Council adopt an annual resolution to this effect. • The City Manager is authorized to implement the City's workplan as approved in the adopted budget. Within a specific fund, the City Manager has the discretion to adjust appropriations between categories, departments, programs, and projects as needed to effectively operate, provided the fund's total appropriation amount is not changed. An example would be to backfill a vacant salaried position with a contract service,therefore shifting budgeted funds from wage and benefit appropriations to an operating expense expenditure within the Operating Expense appropriations. The City Manager also has the authority to withhold filling the position for a time if conditions warrant a delay. CITY OF SARATOGA • FISCAL YEAR 2021/22 OPERATING&CAPITAL BUDGET 16 INTRODUCTION SECTION • Generally, recurring expenditures are funded with recurring revenues, or with revenues specifically designated for operational use. One-time expenditures may be funded with one-time revenues or fund balances reserves. Fund balance reserves are to be used for non-recurring one-time expenditures and capital projects. • In compliance with Council's Fiscal Stewardship goal, fiscal stability and sustainability principles are incorporated into budget planning. Appropriating adequate funds on an annual basis for the replacement and maintenance of assets through Internal Service Funds, prioritizing infrastructure maintenance and repair in the capital budget, and institutionalizing prudent payment strategies for long-term liabilities are foundational strategies of fiscal stability and sustainability. • The City Council appropriates $50,000 annually to a `Council Discretionary account' to provide Council with funding for unplanned expenditures. Council direction and consensus approval is required to utilize these funds. AUDITING AND FINANCIAL REPORTING • California State statutes require an annual financial audit of the City's financial records and transactions by independent Certified Public Accountants. The City shall comply with Generally Accepted Accounting Principles (GAAP) and produce annual financial reports pursuant to Governmental Accounting,Auditing, and Financial Reporting(GAAFR)guidelines. The independent auditor will issue an audit opinion to be included in the City's r^,,..prehensivo Annual Comprehensive Financial Report(EACFR)testifying to the financial report's conformance with accounting principles. • Additional financial reports issued by the Auditor's may include: Single Audit Report(annual report of federal grant expenditures if in excess of the federal single audit limit is expended in a fiscal year), a Transportation Development Act (TDA) report (annual report of TDA fund expenditures), an Appropriations Limit review report(to establish tax revenue appropriation limit),and a Management report on the City's Internal Controls. • The City shall submit the ACFR to the Governmental Finance Officers Association (GFOA)Financial Reporting Program each year for review,and if in compliance with the program's requirements,apply to receive an award for meeting GFOA's financial reporting standards. • Regularly scheduled external Financial Reports include the following: • State required Annual Cities Report and Annual Streets Report completed in conjunction with the year- end close. • State required Annual Debt Transparency Report for any debt issued after January 21,2017. • California Debt and Investment Advisory Commission's (CDIAC) Mello-Roos Community Facilities District(CFD)Fiscal Status Report for CFD bond debt. • Quarterly SMIP(Seismic Motion)fee reconciliation reports; CASp(ADA Accessibility)reconciliation reports:and California Building Standard Commission(green building standards)reconciliation reports. • Quarterly Use Tax Reports to remit uncollected sales tax to the State Board of Equalization. • SB90 Mandated Cost reports for claims to comply with State regulated legislation. • Annual UST Certification report to show fiscal responsibility for the City's underground storage tanks. • Annual Possessory Interest Report submitted to the County's Assessor's Office to report City-owned leased property. • Regularly scheduled internal Financial Reports include the following: • Weekly check registers and monthly Cash and Investment Treasurer Reports are submitted for review and approval at City Council meetings. • Quarterly financial reports provide a status update on General Fund revenues and expenditures for the first,second,and third quarters. • A mid-year budget status report is presented to City Council in February each year to provide a comprehensive financial overview of the current year's budget and to propose recommended budget adjustments as appropriate. CITY OF SARATOGA • FISCAL YEAR 2021/22 OPERATING&CAPITAL BUDGET 17 INTRODUCTION SECTION * A year-end financial recap is provided after the City's annual financial audit is completed. CAPITAL IMPROVEMENT PLANNING • The Capital Improvement Plan is an ongoing process through which the City identifies,prioritizes,and develops a multi-year workplan for major capital expenditures and their associated funding sources, in the effort to improve and maintain the City of Saratoga's roadways, parks, and facility infrastructure. Non-infrastructure projects may also be included in the CIP under the Administrative&Technology programs if they are one-time, operational efficiency,technology,or multi-faceted administrative projects. • Generally, CIP improvements are major expenditures that have a multi-year life span and result in becoming City assets. The City's standard definition of a Capital Improvement Plan project is for the construction, acquisition,rehabilitation,or non-routine maintenance work that generally costs$25,000 or more,with a useful life of at least 5 years at a fixed location. The City also includes projects under$25,000 if they include staged or ongoing improvement projects,or if they are significant multi-year projects. • Capital Planning is developed and prioritized through infrastructure and operational assessments of asset maintenance plans, urgent mitigation needs to prevent structure or system failures, health and safety issues, federal or state mandates,availability of city and external funding,efficiencies,impacts if project not completed, business or community input/demand,and short-term vs long term cost of replacement considerations. • The Capital Improvement Plan includes funded capital improvement projects,typically scheduled for completion within the five year plan timeline,with cost estimates based on current year dollars. Project estimates are updated as needed,due to price changes,design specifications,or project scope adjustments. • Departmental staff research and prepare project proposals for review by Department Directors. Directors meet with the City Manager to identify and collaborate on approved proposals. Additionally,City Council members may propose projects during City Council meetings, for which, if seconded, -staff will research and prepare project proposals. Finalized project-proposals are brought to Council for review. Council then collectively directs which project proposals are to be funded and included in the following year's Proposed Capital Improvement Plan Budget in accordance with available funding. Council also determines what projects shall be included on the Unfunded Project List for future consideration. • The five-year Capital Improvement Plan (CIP) is updated annually in conjunction with the operating budget. While the CIP reflects the current and changing needs of the community as well as enhancements to improve the quality of the community, Council prioritizes the maintenance of City infrastructure to safeguard the public's safety and reduce maintenance costs over the long-term. The first year of CIP funding is adopted annually to authorize current year appropriations,which includes any remaining funds appropriated in the prior year's CIP. • The CIP is categorized into programs by project type. The four programs include: Street Improvements,Park &Trail Improvements,Facility Improvements,and Administrative&Technology Improvements. • All projects within the CIP programs are appropriated,managed, and tracked as separate funding entities,with each project's financial status reported ex-a-monthly,min the Treasurers Report. • Project updates are recorded in the annual Capital Budget, with narrative, timeline, and financial summary information updated with eaoh published budget a,,,., ment • Capital improvements that specifically benefit a select group of users and/or are fee-for-service based are to be financed through user fees,service charges,special assessments and taxes,or development impact fees. • The City shall identify and dedicate capital improvement related funding directly to the CIP and to maximize the use of grant funding for capital improvement projects. CITY OF SARATOGA • FISCAL YEAR 2021/22 OPERATING&CAPITAL BUDGET 18 INTRODUCTION SECTION • Grants,insurance,or other reimbursement funding is to be returned to the expenditure's funding source,unless otherwise directed by Council. For instance, Hillside Reserve funded projects that receive insurance reimbursement payments are to be returned to the Hillside Reserve,and grant reimbursements for projects funded through the CIP Reserve are to be returned to the CIP Reserve when payment is received. • After completion of the prior year's audit and the General Fund's priority funding requirements are met, the remaining net operations are moved into the Capital Project Reserve at year end. Proposed uses for the Capital Project Reserve fund is reviewed by Council,with preliminary allocation direction voted upon by Council at the Budget Study Session in April. This direction is presented at the Proposed Budget Hearing in late May or early June,with Final CIP funding direction determined by Council with Budget Adoption in June. • Council has designated the following capital projects as fundamental to maintaining City infrastructure on an ongoing basis,and shall therefore have priority status for available Capital Improvement Reserve-funding: The below funding allocations are guidelines to be reviewed by Council for budget direction each fiscal year: * $250,000—R,...a..ay la ff s,..,,,.ture r,aintefi ffi e Q. Repairs (f rAnnual Sidewalk, Storm Drains, Curb &Gutter,and Bridge Maintenance) * $200,000—Annual Retaining Wall Maintenance&Repairs * $250,000—Annual Parks,Trails,Grounds&Median Replacement Funding * $150,000—Annual Roadway Safety and Traffic Calming $ 25,000—Annual Public Art Infrastructure Projects $ 25,000—Annual Hakone Improvements • The Roadway r,aif4ea nee and Repair-(RA4 R Annual Pavement Management Program(,PMP)CIP project is the primary CIP project funded in support of Council's goal to maintain Saratoga city streets at an average 70 PCI rating. On occasion,separate street specific resurfacing projects are established that also contribute toward this goal. In FY 2016/17,Council established a$2 million fniniffmm annualfundin-goe4dedicates current year.. Funds g comes primarily from dedicated state and local roadway revenues including Gas Taxes, Measure B Sales Tax,wand frenrVehicle Impact Fees assessed on the Solid Waste Services contract provider. This CIP project encompasses roadway repairs,resurfacing;and rehabilitation projects,traffic light,curb and gutter, and other miscellaneous repairs;such as striping and signage,and assorted street materials and supplies. DEVELOPMENT RELATED FINANCIAL POLICIES • Most planning and building services are provided for business and individual benefit rather than for the general community's benefit. As such, the Community Development Department planning application and building permit fees are established at rates to recover the full cost of the service provided. However,a number of services provided by the department are not fee based(code compliance,event permits,etc.),hence the department-is not fall-cost recovery based overall. • The Williamson Act, also known as the California Land Conservation Act, was passed by the California Legislature in 1965 to encourage rural & agricultural land-owners to keep their land undeveloped. When land- owners enter into a contract under the act,they benefit from lower property taxes,which are based on the property's current use,rather than paying market value-based tax rates. In exchange,the property is to remain undeveloped and continue to function in the same manner for the duration of the contract. Contracts are valid for 10 years and are automatically renewed unless the farmer or rancher cancels it. The City does not limit the number of Williamson Act contracts entered into each year. • The Mills Act is State-sponsored legislation granting local governments the authority to enter into an agreement with property owners to allow reduced property tax payments in return for the restoration and continued maintenance of their historic property. The property must be privately owned and on a local, state, or national register of historic places. After the initial 10-year contract expires, the contract may extend one year annually unless either party elects to non-renew. CITY OF SARATOGA • FISCAL YEAR 2021/22 OPERATING&CAPITAL BUDGET 19 INTRODUCTION SECTION Since the agreement reduces the property tax assessment,the City receives a smaller share of property tax revenue in comparison to a property that is assessed at market value. Per State law, the County Assessor is required to recalculate each individual property's tax assessment each year, based upon a variety of stated market factors. This results in reductions that are specific to each property,with some benefiting more than others. The City will allows approval of up to three Mills Act Contracts per year. EXPENDITURES AND PURCHASING • All expenditures shall be in accordance with the City's purchasing policy, travel policy, credit card policy, contract policy,and public contract code,state or federal law,or any other applicable guidelines or regulations. • Expenditures are managed at the program level. Program managers are to ensure expenditures do not exceed the budgeted workplan and must take immediate action if at any time during the fiscal year an operating deficit is projected at year-end. Corrective actions may include expenditure reductions, service reductions, or with Council approval,budget adjustments to increase the program budget. • The City's current purchasing policy establishes purchasing authority levels, purchasing procedures, and procedural requirements,for the procurement of supplies,equipment,and services,in conformance with Federal and State codes and regulations,and City Ordinance No.2-45. • Public Work projects governed by the State's Public Contract Code are excluded from provisions of the City's purchasing policy. • Guidelines established by the City's Purchasing Policy directs the City's departments to purchase the best value obtainable, securing the maximum benefit for funds expended, while providing all qualified vendors an equal opportunity to do business with the City. • Services and supplies purchases that exceed $5,000 require written quotes and must be approved by the Purchasing Officer or designee,typically through the Purchase Order process. Documentation is to be retained by the department in accordance with the Record Retention Policy and schedule. • Services,supplies,and fixed asset purchases exceeding$25,000 must be authorized by the City Council,unless purchase is specifically identified as approved in the adopted budget or excluded under the Purchasing Policy. • City departments shall conduct quarterly program and capital project reviews to determine if projected operating revenues and expenditures meet budgeted expectations. If an operating deficit is projected to occur at year-end, the departments shall evaluate and implement corrective actions as needed and notify Council before services will be impacted. CITY OF SARATOGA • FISCAL YEAR 2021/22 OPERATING&CAPITAL BUDGET 20 INTRODUCTION SECTION FIXED ASSETS AND INFRASTRUCTURE • Tangible assets with a cost equal to or greater than$10,000 and a useful life of more than one year are considered fixed assets and added to the capitalization schedules. Repairs and maintenance of infrastructure assets will generally not be subject to capitalization unless the expense extends the useful life of the asset. • The City will sustain a long-range fiscal perspective through the use of a five-year Capital Improvement Plan designed to maintain the quality of City infrastructure, and through Internal Service Fund programs to both maintain and replace operational infrastructure, such as City buildings, fixtures, and equipment, vehicles and public works equipment,and technology related equipment on an ongoing basis. • A Capital Asset system will be maintained to identify all City assets, their condition, historical and estimated replacement costs, and useful life. Asset information is retained to provide information for preparation of financial statements in accordance with GAAP and compliance with GASB 34 requirements. • Infrastructure management systems are to be developed and maintained to provide long-term financial and operational planning. These shall include various roadway system management programs, storm drain system management plans,bridge replacements,street signal system replacements,and all other infrastructure categories that require significant financial resources to fund eventual replacement needs. • Information Technology software,hardware,and auxiliary equipment and system assets are tracked and funded through the Operating Budget's Internal Service Replacement Fund, whereas annual appropriations in the Information Technology Services program budget funds most ongoing license,maintenance,and security costs. GRANTS &DONATIONS • The City recognizes the value of grants and donations to extend pre-existing services, introduce new initiatives, add artistic and cultural infrastructure, implement technological advances, and subsidize programmatic staffing for public safety,recreational activities,development support,social services,homeland security,and economic efforts. • City will seek to obtain and effectively administer federal, state, local, foundation, business, and private grants that support the City's priorities and provide a benefit to the City, with grant requirements taken into consideration. • City staff shall notify City Manager of grant proposals prior to-submitting a grant application. If approved to pursue,requesting department's staff are responsible for all aspects of the grant process,including preparing and submitting grant proposals, preparing staff reports, ordinances and resolutions if needed, developing grant implementation plans, managing the grant program, preparing and submitting reports to grantors, and properly closing out grant projects. Staff shall work with Finance staff to track grant funding and expenses,and to generate grant payment requests. • The acceptance of grant funding will be assessed-for both immediate and long-term costs and benefits to the City. For example,a grant to construct infrastructure would incur future ongoing maintenance costs. These costs shall be disclosed with the grant application and/or pre-award notice. • All accepted grants and donations are to have assigned staff,known as the Grant/Donation Administrator,who is responsible for grant/donation oversight to ensure rigorous adherence to the grant or donation's related activity, ensure accountability for financial and ethical administration,and is consistent with the City's strategic priorities. • Infrastructure addition or improvement grants in excess of$10,000 shall be brought to the Council for review and approval. CITY OF SARATOGA • FISCAL YEAR 2021/22 OPERATING&CAPITAL BUDGET 21 INTRODUCTION SECTION • Operating Services grants, such as funding for health and safety programs that primarily utilize staff or contract service;or pay for material and supplies to accomplish the grant objectives may be approved by the City Manager up to the City Manager's current purchasing limit of$25,000. • The City Council's Public Art Policy establishes public art grant and donation authorization approval levels. • Donations may be accepted in accordance with the City of Saratoga Donation Policy most recently approved by the City Council. Under the current policy,unrestricted donations of$5,000 or less may be accepted or declined by the City Manager. Restricted donations of$500 or less may be accepted or declined by the City Manager. Unrestricted donations of more than$5,000 and restricted donations of more than $500 must be brought to the City Council for consideration. The City Manager may choose to request City Council consideration of any donation,regardless of value. INTERNAL SERVICE FUNDS • Internal Services Funds are established to both equitably allocate operating costs to departments for support and maintenance services,and to stabilize and spread the City's replacement and operational costs over fiscal years for the purpose of providing an accurate and balanced long-range fiscal perspective of the use of services and assets. • Vehicles, Equipment, and Building asset replacement and maintenance types of Internal Service Funds are structured to provide a consistent level of funding for asset and equipment replacement,and to ensure sufficient funding is available for the regular maintenance,repair,and replacement of the City's vehicles,equipment,and building fixtures in an ongoing manner. • Technology and Office Equipment replacement and maintenance Internal Service Funds are structured to provide a consistent level of funding for the replacement of assets and projects, and to appropriately distribute support and maintenance costs to City departments. • The Liability and Workers Compensation Insurance Internal Service Funds shall maintain adequate reserves to pay all valid self-insured claims and insurance deductibles,including those incurred but not reported,in order to keep the insurance funds actuarially sound. Additionally, funding is used to maintain required safety related documents,such as the City's ADA Transition Plan,and the Industrial Injury Prevention Plan(IIPP). • Each Internal Service Fund will set recovery charges at rates sufficient to meet all operating expenses, depreciation,and fund balance reserve policy objectives. INVESTMENTS • The City maintains a detail-level Council approved Investment Policy that outlines the goals of fiscal security and investment risk levels allowed to achieve the City's stated security restrictions and investment objectives. The Investment Policy is brought to Council for review and adoption each year,just prior to the beginning of the fiscal year. • The policy shall comply with the State's California Debt and Investment Advisory Commission (CDIAC) guidelines for the practice of public finance. • Fund Reserves and excess operational funding reside in the State managed Local Agency Investment Fund(LAIF) unless expressly approved by the City Council's Finance Committee to invest in other vehicles approved in the City's Investment Policy. • The City's Finance&Administrative Services Department shall oversee Treasury functions and submit a monthly Treasurer's Report to report on City funds,investments,and interest earnings. CITY OF SARATOGA • FISCAL YEAR 2021/22 OPERATING&CAPITAL BUDGET 22 INTRODUCTION SECTION LONG-TERM DEBT • The City maintains a Council approved Debt Policy to provide clear direction on debt issuance. Existing debt shall comply with all legal and reporting requirements to ensure the City is in compliance with State regulations, GASB guidelines,and transparency efforts. • The City shall seek to maintain a high credit rating through sound financial practices as a foundational financial objective,in order to obtain the lowest possible borrowing cost,and maintain financial responsibility. • The City does not incur debt for operational purposes or capital improvements as a standard practice. Under extraordinary circumstances,the City may seek voter approval for General Obligation(GO)Bond Debt for city- wide major infrastructure rehabilitation,or through Community Facility District Bonds for specific community desired infrastructure improvements. • Long-term Financing Debt is typically incurred for capital improvements or special projects that cannot be financed from current or dedicated revenues,or for large liabilities resulting in significant financial impacts. In principle,long-term debt is used only if the debt service requirements do not negatively impact the City's ability to meet future operating,capital,and cash reserve policy requirements. • Through City Council approval,the City may function as a bonding conduit for special districts. This may occur when a neighborhood or distinct area is seeking to improve private or cooperatively owned infrastructure, such as private roads or water system cooperatives. A special district may also be established to improve publicly owned infrastructure,such as a neighborhood park or a parking lot. • For special district debt offerings,the City shall require full liability protection and cost recovery as necessary to protect the City and mitigate the cost associated with such actions. • The term for repayment of long-term financing shall not exceed the expected useful life of the project or extend beyond functionally appropriate payment terms. Additionally, financing payment terms must be established at a manageable funding level or reasonable assessment level. • The City shall monitor all forms of debt in conjunction with budget development throughout the year and will report concerns and remedies to the City Council if needed. • The City will ensure compliance with bond covenants, providing financial information to reporting parties as required under the terms of the contract or State law. • The City will comply with Government Code Section 43605 limitations on debt,which limits general obligation indebtedness to an aggregate 15%of the assessed value of all real and personal property of the City. LONG-TERM FINANCIAL PLANNING • City policy is to develop, build upon, and incorporate long-term financial planning processes into a comprehensive plan that provides Council,staff,and the public with the resources to understand issues impacting the City's financial condition,and the tools with which to make informed decisions. • The City's Long-Term Financial Plan(LTFP)shall include various analyses and documents that support financial planning efforts, including a financial forecast and analysis, fiscal policies, revenue descriptions and trend analysis,an annual pension review,the City's Strategic Plan,the Capital Improvement Plan and funding analysis, Information Technology Strategic Plan,and numerous asset and infrastructure master plans. While the financial trend analysis and forecast is the foundation of the LTFP, the entirety of-the various documents provide a comprehensive outlook on many operational fronts. • Long-Term Financial Planning is an ongoing event that begins at the Council Retreat to review Strategic Plan goals and the current financial situation at the mid-year point, and as the starting point for the following years CITY OF SARATOGA • FISCAL YEAR 2021/22 OPERATING&CAPITAL BUDGET 23 INTRODUCTION SECTION budget process. Trends,critical or concerning issues,policy changes,new initiatives and priorities,new resource requirements,and potential impacts and opportunities are reviewed in conjunction with financial projections for the future. Direction is compiled into the following year's budgets,and plans are updated throughout the year,as needed. • Council shall review a General Fund revenue,expenditure, and financial position forecast of at least five-years, to garner a longer-term perspective of current fiscal expectations and fairly-reliable projected fiscal impacts in the effort to anticipate or mitigate operational changes for the near future. Because funds other than the General Fund are both specific and limited in nature,they are not currently included in the annual review. However,staff shall assess the funds and incorporate any items of concern into the forecast discussion. • Revenues shall be described, documented, and properly classified with historical trend analysis and known upcoming impacts built into forecast projections. Projections should be conservative,with those revenues of a more volatile nature projected with a greater conservative weight than those known to be consistent and dependable. Additional factors, such as unsustainable growth, shall also be identified and folded into the projections with caution. • Expenditures are classified by category in summary but forecast by individual programs appheation in detail. This methodology allows for greater specificity and accuracy in workplan expectations,while providing a broader view of trends. These trends are utilized for longer perspectives in the forecast analysis,strategic planning,asset management,capital prioritization and funding decisions,and funding gap analyses within the LTFP. • A Reserve Analysis is conducted to review and recommends appropriate levels of reserves per the needs of the reserve purpose,the priority of the reserve over other needs,and compliance with GFOA recommendations and legal requirements. PENSION FUNDING • In the pursuit of prudent fiscal practices and long-term financial sustainability, the City seeks to mitigate the overall cost of pension benefits, and prior year liabilities. Several strategies are utilized, which includes lower tier pension benefits,lump sum prepayments,and accelerated payments. • The City has three Miscellaneous Employee Pension Plan tiers: ♦ Tier I for employees hired prior to May 12,2012 ♦ Tier II for employees hired on/after May 12,2012,and"Classic"employees hired on/after January 1,2013 ♦ Tier III/PEPRA,for employees entering into the Ca1PERS pension plan system on/after January 1,2013 Tier I provides a 2%at 55 pension benefit. Tier II provides a 2%at 60 pension benefit. Tier III/PEPRA provides a 2%at 62 pension benefit. • In FY 2014/15,with Ca1PERS change to their pension funding methodology,Council paid off a large portion of the UAL liability and then established an alternative to Ca1PERS 30-year repayment policy to contribute an annual amount approximately equal to double the minimum Annual Required Contribution(ARC) due at the five-year mark. The intent was to lower the overall cost of the liability,but also to shorten the payment period to 15 years and maintain fiscal stability by establishing a set payment amount. Detailed information is provided in the Financial Summaries Staffing Information section. • Council also established a practice to pay Tier II and Tier III UAL amounts in full each year,to eliminate future unfunded liabilities for the growing segments of employees. This amount is minimal each year as the actuarial determined rates are in line with current actuarial factors,until actuarial factors are modified. • The City's goal is to fund pension liabilities near or at 100%to reduce unfunded liability payments to minimal payments each year. Currently,Tier II and III unfunded accrued liability payments are minimal,if any,and paid in full each year in alignment with this policy,however the Tier I pension unfunded accrued liability is understood to be a long-term goal. CITY OF SARATOGA • FISCAL YEAR 2021/22 OPERATING&CAPITAL BUDGET 24 INTRODUCTION SECTION • A review of the City's Unfunded Accrued Liability and Ca1PERS annual actuarial report will be brought to the Finance Committee for review and analysis each year,along with Ca1PERS Pension liability projection tools as they become available. • In addition to the City's policy to reduce the Tier I UAL through additional discretionary payments each year,a 115 Trust may be established to prefund future year's Ca1PERS liability payments as an alternative to depositing UAL payment funds directly with Ca1PERS . A 115 Trust is used to hold dedicated reserve funding in a higher investment-return vehicle,while also setting aside the funds that are designated for recession planning. Council direction determines when to use these funds,either as part of the annual budget adoption process,or during the course of the fiscal year,if needed. RECESSION PREPARATIONS • The City shall incorporate preparations for the inevitable future recession in its fiscal and operational practices. This includes prudent and cautious assessment of expansions in ongoing services, diligence in maintaining cost recovery for user services, aggressive funding of fund balance reserves to healthy levels in strong economies, conservative budgeting practices, fiscal frugality, alignment of one-time funding sources and uses, and a continued practice of long-term financial planning. • Education of City finances is vital to knowledgeable financial decision making. Finance staff remain available to all Council Members for one-on-one training sessions and to answer specific finance and budget questions throughout their tenure on the Council,either spontaneously or scheduled,in person,by phone,or email. • Council's identification of priority operational services, and Council Priorities as a whole are defined in the Strategic Plan,which is adopted as part of the overall budget plan each year. The Strategic Plan helps to drive long-term planning and operations and provides guidance in recession decision making when needed. • Recession fiscal decisions will ultimately be specific to the unique time period,recessionary causes,and economic environment,but a basic assumption is that recessions will impact the City's main revenue category of Property Tax. Fortunately,this impact is delayed due to the nature of tax assessments occurring before severe impacts are felt, and the subsequent distribution of funding, providing the City time to prepare. More immediate impacts come from development-related services fees, Sales Tax, and Hotel Tax revenue reductions. The advantage of having impacts hit City finances in phases allows for preliminary mitigation steps,and time to plan if more severe mitigation steps are needed. However,this delay also plays out in reverse as a time lag occurs before the City's finances return to normal. Hence,recession impacts will last a minimum of two years if minor, and(typically) three to five years if more severe. • Overall, financial resources funded during good economic periods are recommended for initial recessionary reductions, such as 1)the delay or reduction of funding for Internal Service Fund operations,2)use of one-time revenue resources,such as an unexpected payment or excessive net operation funding held for future use,and 3) the reduction of expenditures included in the budget each year that are not essential to providing services, such as staff conferences or optional consultant and contract services. REVENUES • General Revenue funding such as taxes, intergovernmental revenues, and interest provide the funding for services conducted for city-wide benefit, such as public safety, infrastructure maintenance, and city administration. Services provided upon request,such as for planning services and building permits,are financed through user fees,service charges,and assessments directly linked to the level of services provided. • To provide the Saratoga community with services and to maintain infrastructure, the City conducts ongoing reviews of operations to assess revenue leakage. If applicable, assessments or charges are assessed, and user fees are implemented for cost recovery. CITY OF SARATOGA • FISCAL YEAR 2021/22 OPERATING&CAPITAL BUDGET 25 INTRODUCTION SECTION • Designated and legally restricted tax and revenue funding sources will be accounted for in the appropriate funds. General taxes and revenues not allocated by law or contractual agreement to other funds are accounted for in the General Fund. Funds dedicated for specific capital improvements are accounted for in the appropriate Capital Improvement Plan fund, within a designated project. An example is VTA Measure B Sales Tax deposited directly to the Annual Roadway Improvement Project in the Street CIP Fund. • Categories of Revenues include Taxes,Intergovernmental,Fees/Licenses/Permits,Charge for Services,Interest Income, Rental Income, Other Sources such as grants, donations, sales of copies or maps, and over/short adjustments,Internal Service Fund charges,and Capital Improvement Revenues. • While a diversification of revenue funding is desired,the City only pursues additional funding streams that are in alignment with the City's overall goal to support and protect the Saratoga community. The City does not enter into profit-making enterprises that service select user groups, but rather seeks to engage in cost-recovery activities or taxpayer-funded services that maintain or enhance the Saratoga community as a whole. • Over the last decade,Property Tax revenue increased at a much faster pace than other tax revenues,due to rapidly increasing housing prices and the State's agreement to bring the allocation percentage up to the full 7%minimum rate,offset by-the City's 17.4 ERAF calculation rather than the County's 47.7%ERAF rate. As a result,Property Tax now makes up about 80% of all tax revenues,with Sales Tax,Franchise Fees, Transient Occupancy Tax, Business License Tax,and Construction Tax making up the remainder. By itself,Property Tax comprises about one-half of Total Operating Revenue,meaning there is a significant dependency on this one revenue category. Hence,the City tracks Property Tax-revenue closely and makes revenue and expenditure budgetary projections and adjustments in line with anticipated fluctuations. With revenue growth expected to increase slowly now that full allocation has been attained,City expenditure budgets will mirror this restrained growth. • The City follows a vigilant policy of collecting local taxes and revenues due to the City through persistent follow- up procedures. Efficiency of collections is paramount, and external resources are used as needed. A-past n example of this practice is the City's Business License audit engagement where a consultant is utilized to both educate and ensure companies doing businesses within Saratoga are paying their business license tax. RISK MANAGEMENT POLICY • The City is insured for up to $30 million of general liability, auto, and property damage claims through a Bay Area Joint Powers Association insurance cooperative(PLAN JPA). Claim coverage consists of up to$5 million from the JPA,and$25 million from an excess insurance provider. The City is self-insured for the first$25,000 for general liability and auto claims;property damage up to$5,000 and third party auto claims up to$10,000. • Workers Compensation claims are insured for the first$250,000 of coverage through the City's participation in a Workers Compensation risk pool. After the $250,000 limit is met, an excess insurance coverage policy is activated. The excess coverage provides an employer liability limit of$5 million per occurrence,and workers' comp per occurrence limit of$100 million. Workers'Compensation claims are managed by the PLAN JPA as a third-party administrator(TPA). • The City's role in managing both Risk Management and Workers Comp programs is preventative in nature, which is accomplished through careful monitoring of losses,working closely with the third-party administrator, participating in training,proactively addressing infrastructure maintenance and potential risks,and by designing and implementing safety programs to minimize risk and reduce losses. • Claims against the City are submitted to the City's pooled liability JPA administrator in a timely matter. Adverse claims in which City property is damaged, are also pursued for restitution. Repair cost for damages,and staff time for attending to the accident/incident, cleanup, and repair time is billed to the other party. The JPA Administrator follows up on these matters also. CITY OF SARATOGA • FISCAL YEAR 2021/22 OPERATING&CAPITAL BUDGET 26 INTRODUCTION SECTION TREASURY MANAGEMENT • The City's Investment Policy shall be brought to the Finance Committee and City Council for review,discussion, direction, and adoption on an annual basis. California Government Code Section 53600 and City of Saratoga Municipal Code Section 2-20.035 require the City Council to annually review and approve the City's Investment Policy. • It is the policy of the City of Saratoga to invest public funds in a manner which will provide the maximum security with the highest investment return,while meeting the daily cash flow demands of the City and conforming to all state and local statutes governing the investment of funds. • Finance staff shall exercise due diligence to comply with the Investment Policy. The City currently practices conservative and cautious investment practices by limiting its investments to the State's Local Agency Investment Fund (LAIF). Certificates of Deposits and high-grade investment vehicles may also be utilized under the Investment Policy,however the Finance Committee will provide oversight,review,and direction on any decisions to move a portion of the City's available funds into these other permitted investments. The Administrative Services Department's Finance Division shall prepare a monthly report to the City Council that has sufficient detail to present the financial condition of the City at month end, the cash and investments balance by fund, and fund balances by fund type. TRUST&AGENCY FUNDS • The City may serve as a Fiscal Agent for an agency organization only if the purpose of the agency is related to City operations and is in the best interest of the City. • A legal agreement governing the Trust or Agency relationship is approved by the City Council. • The Trust or Agency organization remains a separate entity from the City and shall not represent itself as a component of the City. • As the Fiscal Agent, the City may hold funds provided by the agency organization in a separate and clearly designated fund. The fund may earn interest at the City's investment rate. • Depending on the level of services provided to the agency organization,the City may charge for the cost of any and all fiscal services provided. • Depending on the agreement,the City may purchase goods or services on behalf of the agency organization,and/ or disburse funds as directed and permitted by the agency's by-laws and purpose. However,the City is not liable for any of the agency organization's debts,liabilities,or actions. USER FEES • The City allows for discretion in the use of general taxes to meet the cost of services that provide a larger public benefit, such as code enforcement,and to recover the full or partial cost of services that largely or solely benefit individuals,such as a building permit. • In some cases, fees are established with a goal to discourage the use of a service, such as a false alarm fee that results in the dispatch of a public safety officer. The fee may be structured to accelerate with usage but allows for a level of leniency initially for this service with the understanding that cost recovery goals are not met. • A master schedule of User Fees is reviewed and presented to Council on an annual basis to allow for the adjustment of discretionary service and rental fees. If an adjustment is needed,a request to increase or decrease the fee is brought to Council as a Public Hearing and becomes effective 60 days (or later if stated) following CITY OF SARATOGA • FISCAL YEAR 2021/22 OPERATING&CAPITAL BUDGET 27 INTRODUCTION SECTION approval of the fee adjustment. Typically, fee adjustments are brought to Council in late April for a July 1st effective date,however a stand-alone fee adjustment may be brought to Council at any time throughout the year. • The City's overall goal is to establish user charges and fees at levels that fully recover the direct and indirect activity cost of providing a service or product. However,market rates and charges levied by other municipalities (of similar size)for like services are taken into consideration when establishing rates,fees,and charges. As some services have partial cost recovery objectives,cost recovery ratios will vary in accordance with policy objectives. CITY OF SARATOGA • FISCAL YEAR 2021/22 OPERATING&CAPITAL BUDGET 28 �\�� °i SAR,gpaG9 ADMINISTRATIVE SERVICES Ai Memorandum 1956 IFORN,P To: City Council Finance Committee From: Nick Pegueros, Administrative Services Director Agnes Pabis, Finance Manager Ann Xu, Accountant Date: March 24, 2022 Subject: Format Update to Monthly Treasurer's Report BACKGROUND Our fiscal management policies state that our monthly treasurer's report(Attachment A)includes a CIP activity report. The report has served the City well for many years. In our review of Administrative Services' public communications, we have prioritized potential updates to existing reports that may allow for broader understanding of the City's financial information. We are seeking Finance Committee input on potential reporting updates as demonstrated in Attachment B and C. Attachment B is a sample of the treasurer's report, as required by Government Code, and focuses on available cash to assess the City's liquidity. Attachment C creates a separate monthly report that focuses on the CIP budget.Both reports include variances to explain major activity for the reporting period. RECOMMENDED ACTION Receive and review Treasurer's Report format and provide direction to staff. Attachments A. Current Format-Monthly Treasurer's Report for the period ended January 31, 2022 B. Alternative Format-Monthly Treasurer's Report for the period ended February 28, 2022 C. Alternative Format-Monthly Capital Improvement Program Budget Report for the period ended January 31, 2022 30 C��y of SARgT�v SARATOGA CITY COUNCIL tes6 cgc��o�N�P MEETING DATE: April 6, 2022 DEPARTMENT: Finance&Administrative Services PREPARED BY: Ann Xu,Accountant SUBJECT: Treasurer's Report for the Month Ended January 31,2022 RECOMMENDED ACTION: Review and accept the Treasurer's Report for the month ended January 31,2022. BACKGROUND: California government code section 41004 requires that the City Treasurer submit to the City Clerk and the legislative body a written report and accounting of all receipts, disbursements, and fund balances. The Municipal Code of the City of Saratoga,Article 2-20, Section 2-20.035 designates the City Manager as the City Treasurer. This report is prepared to fulfill this requirement. The following attachments provide various financial transaction data for the City of Saratoga's Funds collectively as well as specifically for the City's General (Operating) Fund, including an attachment from the State Treasurer's Office of Quarterly LAIF rates from the Pt Quarter of 1977 to present. FISCAL STATEMENT: Cash and Investments Balance by Fund As of January 31,2022,the City's unaudited cash and investments totaled$34,696,198. The City Council's adopted policy on the Working Capital Reserve Fund states that effective July 1,2016: for cash flow purposes and to avoid occurrence of dry period financing,pooled cash from all funds should not be allowed to fall below$1,000,000. The total pooled cash balance exceeds the minimum limit required. Cash Summary Comerica Bank $ 5,779,524 Deposit with LAIF $ 28,916,674 Total Cash $ 34,696,198 City's Current Financial Position In accordance with California government code section 53646(b) (3),the City is financially well positioned and able to meet its estimated expenditure requirements for the next six months. As of January 31,2022,the City's financial position(Assets $35.7M,Liabilities $8.4M and Fund Equity$27.3M) remains very strong and there are no issues in meeting financial obligations now or in the foreseeable future. 31 The following Fund Balance schedule represents actual funding available for all funds at the end of the monthly period. This amount differs from the above Cash Summary schedule as assets and liabilities are components of the fund balance. As illustrated in the summary below, Total Cash is adjusted by the addition of Total Assets less the amount of Total Liabilities to arrive at the Ending Fund Balance—which represents the actual amount of funds available. Adjusting Cash to Ending Fund Balance Total Cash $ 34,696,198 Plus: Assets 1,034,667 Less: Liabilities (8,449,929) Ending Fund Balance $ 27,280,936 Fund Balance Designations In accordance with Governmental Accounting Standards Board(GASB) Statement No. 54,Fund Balance Reporting and Governmental Fund Type Definitions, the components of fund balance are categorized as follows:"non-spendable fund balance",resources that are inherently non-spendable from the vantage point of the current period; "restricted fund balance",resources that are subject to enforceable legal restrictions; "committed fund balance",resources whose use is constrained by limitations the government imposes upon itself through formal action at its highest level of decision making and remains binding unless removed in the same manner; "assigned fund balance", resources that reflects a government's intended use of resources,such intent would have to be established at either the highest level of decision making,by a body, or an official designated for that purpose; and"unassigned fund balance",net resources in excess of what can properly be classified in one of the other four categories. Currently, the City's fund balance reserves fall into one of the four spendable categories; restricted, committed,assigned, or unassigned fund balance. ATTACHMENT: Attachment A—Change in Total Fund Balances by Fund under GASB 54 Attachment B—Change in Total Fund Balances by CIP Project Attachment C—Change in Cash Balance by Month Attachment D—Local Agency Investment Fund(LAIF)Quarterly Apportionment Rates 32 ATTACHMENT A CHANGES IN TOTAL FUND BALANCE UNDER GASB 54 Prior Year Increase/ Carryforward (Decrease) Current Current Fund Balance FundDescri 'on 7/1/2021 Jul-Dec Revenue Expenditure Transfer In Transfer Out 1/31/2022 General Fund Restricted Fund Balances: Environmental Services Reserve 63,182 - - - - - 63,182 Conanitted Fund Balances: Hillside Stability Reserve 1,000,000 - - - - (75,000) 925,000 Assigned Fund Balances: Future Capital Replacement&Efficiency Project Reserve 2,796,663 - - - - - 2,796,663 Canyforwards Reserve 20,850 - - - - - 20,850 Facility Reserve 3,700,000 - - - - - 3,700,000 Unassigned Fund Balances: Working Capital Reserve 1,000,000 - - - - - 1,000,000 Fiscal Stabilization Reserve 3,150,000 - - - - - 3,150,000 Compensated Absences Reserve 331,481 - - - - - 331,481 Other Unassigned Fund Balance Reserve re YE distribution 3,159,399 1,488,739 715,894 1,550,565 2,885,131 928,336 General Fund Total 15,221,575 1,488,739 715,894 (1,550,565) - (2,960,131) 12,915,512 Special Revenue Landscape/Lighting Districts 872,945 (183,209) 305,015 (21,444) - - 973,306 Debt Service Library Bond 791,385 (703,374) 482,093 (134,893) - - 435,212 Arrowhead Bond 389,618 324,353 64,860 2,124 128,001 Debt Service 1,181,003 (1,027,727) 546,953 (137,017) - - 563,213 Internal Service Fund Liability/Risk Management 686,985 (183,796) - (9,893) - 493,296 Workers Compensation 228,367 1,655 2,048 (3,401) - 228,669 Office Support Fund 144,166 10,256 527 (2,715) - 152,235 Infomtation Technology Services 591,431 40,758 1,189 (54,464) - 578,915 Vehicle&Equipment Maintenance 302,005 528 - (12,428) - 290,105 Building Maintenance 684,330 40,951 - (50,813) - 674,468 Vehicle&Equipment Replacement 1,057,067 (29,163) - (1,178) - 1,026,726 Technology Replacement 735,699 73,279 - (1,909) - 807,068 Facility FFEReplacement 830,960 100,000 32,681 898,279 Internal Service Fund Total 5,261,011 54,467 3,765 (169,482) - - 5,149,761 Trust/Agency WVCWP Agency Fund 538,025 313,15 459,512 374,36 310,012 Trust/Agency Fund Total 538,025 (313,157) 459,512 (374,367) - - 310,012 Capital Project Street Projects 2,603,258 (1,130,726) 35,079 (32,668) 1,845,000 - 3,319,942 Park and Trail Projects 870,206 (156,531) - (4,192) 310,131 - 1,019,614 Facility Projects 1,117,176 (303,651) - (165,059) 80,000 - 728,466 Administrative Projects 670,066 (41,485) 5,384 (5,564) 725,000 - 1,353,401 Tree Fund Projects 47,639 (4,138) 6,350 - - - 49,851 Parkin-Lieu Projects 291,309 950,799 - (44,453) - - 1,197,657 CIP Grant Street Projects 64,685 (106,789) 118,982 - - - 76,878 CIP Grant Park&Trail Projects 399 (399) - - - - - CIP Grant Administrative Projects (14,573) - - - - - (14,573) Gas Tax Fund Projects 113,624 523,509 50,281 2,500 362,104 CIP Fund Total 5,763,789 (1,316,429) 216,076 (254,435) 2,960,131 - 7,369,130 Total City 28,838,347 1 297 316 2,247,215 2 507 11 2,960,131 2 960 131 27,280,936 *Negative fund balance due to authorized spending of anticipated revenues 33 ATTACHMENT B FUND BALANCES BY CIP PROJECT Prior Year Increase/ Carryforward (Decrease) Current Current Fund Balance CIP Funds/Projects 7/1/2021 Jul-Dec Revenue Expenditure Transfer In Transfer Out 1/31/2022 Street Projects Annual Road Improvements 776,210 (612,674) 35,079 (14,383) - - 184,233 Roadway Safety&Traffic Cahning 42,189 (59,139) - 37,519 150,000 170,569 Citywide Traffic Signal Battery Backup 150,000 - - - 150,000 - 300,000 Portable Radar Feedback Sign - (37,519) 40,000 2,481 Prospect/Saratoga Median Improvement 309,379 - 20,000 329,379 Village Clock 9,486 (793) - 8,693 Big Basin Way/Blaney Trash Can Replacement - (1,628) - 34 75,000 - 73,406 Annual Infrastructure Maintenance&Repairs 18,063 (72,650) - - 250,000 - 195,413 Guava Court Club&(later Replacement - 280,000 280,000 Mendelsohn Lane Pathway Rehabilitation Project - (106,199) - - 110,000 - 3,801 El Camino Grande Storm Dmin Pump - 104 - - - - 104 Saratoga Village Crosswalk&Sidewalk Rehabilitation 44,000 (36,333) (3,200) 45,000 49,467 Quito Road Sidewalk Improvements 43,370 - - - - - 43,370 Saratoga/Sunnyvale Road Sidewalk 92,158 - - - - - 92,158 Saratoga Sunnyvale Rd.Pathway Rehab Coxto RRX 110,000 (110,000) - - - - - Quito Road Sidewalk Rehabilitation and Gap Closure - (2,100) - - 325,000 - 322,900 Fourth Street Bridge Widening 99,837 - - - - - 99,837 Quito Road Bridge Replacement 136,175 (3,979) - - - - 132,197 Quito Road Bridge-ROW Acquisition 6,012 (2,350) - - - - 3,662 Annual Retaining Wall Maintenance&Repairs 151,785 (14,709) - (14,327) 200,000 - 322,750 Mt.Eden Erosion Repair 99,880 - - - 125,000 - 224,880 Continental Circle Landslide Stabilization 122,912 (65,465) - - - 57,447 Pierce Road Retainment 391,800 (13,660) - - - - 378,140 Mt.Eden Emergency Landslide 29,945 75,000 45,055 Total Street Projects 2,603,257 (1,130,726) 35,079 (32,668) 1,845,000 - 3,319,942 Parks&Trails Projects Park/TrailRepairs 41,836 (127,323) - - 250,000 - 164,513 Hakone Gardens Infrastructure Improvements 5,853 (2,385) - 2,000 25,000 - 30,468 Hakone Pond Reconstruction 300,000 - - - - - 300,000 Beauchamps Park Playground Replacement - - - - 35,131 - 35,131 Guava/Fredericksburg Entrance 293,527 (26,823) - (6,192) - - 260,513 Saratoga Village to Quarry Park W alkwa -Design 228,989 228,989 Total Parks&Trails Projects 870,206 (156,531) - (4,192) 310,131 - 1,019,614 Facility Projects Open Work Space - 80,000 80,000 Civic Theater Improvements 107,925 (79,228) (12,462) - 16,236 PEG Funded Project 432,116 (191,434) (66,766) 173,916 Community Center Improvement 90,779 (18,377) - (20,000) - - 52,403 Community Center Generator and EV Charging Stations 471,355 (9,613) (65,831) 395,911 Library Building Exterior Maintenance 15,000 5,000 10,000 Total Facility Projects 1,117,176 (303,651) (165,059) 80,000 728,466 Administrative and Technology Projects City Website/Intranet 16,948 - - - - - 16,948 Development Technology 66,949 (39,977) 216 - - - 27,189 Software Technology Management 43,138 37,623 5,168 - - - 85,929 LLD Initiation Match Program 25,000 - - - - - 25,000 Horseshoe Beautification 16,775 (870) - (580) - - 15,325 Business Renewal Program 15,000 (3,857) - - - - 11,143 Citywide Accessibility Assessment 34,937 - - - - - 34,937 City Art Program 28,669 - - - 25,000 - 53,669 Safe Routes to SchoolNeeds Assessment 13,714 (13,714) - - - - Fl Quito Neighborhood Improvements 134,507 150,000 284,507 Parking District ADA Improvements and Rehabilitation - - - - 250,000 - 250,000 Storm Drain Master Plan - - - - 300,000 - 300,000 General Plan Update 216,208 (20,690) - (4,984) - - 190,534 Wildfire Mitigation Program 4,067 - - - - - 4,067 Risk Management ProjectFundin 54,153 54,153 Total Administrative and Technology Projects 670,066 41,485 5,384 5,564 725,000 1,353,401 34 ATTACHMENT B(Cont.) FUND BALANCES BY CIP PROJECT Prior Year Increase/ Carryforward (Decrease) Current Current Fund Balance CIP Funds/Projects 7/1/2021 Jul-Dec Revenue Expenditure Transfer In Transfer Out 1/31/2022 Tree Fund Projects Citywide Tree Planting Program 22,889 (4,638) 5,600 - - - 23,851 Tree Dedication Program 24,750 500 750 26,000 Total Tree Fund Projects 47,639 (4,138) 6,350 - - - 49,851 Park In-lieu Projects Orchard Irrigation&Tree Planting - (19,500) - (44,453) 100,000 - 36,048 Hakone Gardens Infrastructure 82,420 - - - - - 82,420 Beauchamps Park Playground Replacement - - - - 10,079 - 10,079 Trail Pet Stations - - - - 25,000 - 25,000 Saratoga Village to Quarry Park Walkway-Design 73,811 - - - - 73,811 Unallocated Park In-Lieu Funds 135,079 970,299 135,079 970,299 Total Park In-Lieu Projects 291,310 950,799 - (44,453) - - 1,197,657 CIP Grant Street Projects Traffic Signal Battery - (118,982) 118,982 - - - - Local Roadway Safety Plan - (19,180) - - - - (19,180) Prospect/Saratoga Median Improvement (41,000) 21,784 - - - - (19,216) * Citywide Signal Upgrade II 18 - - - - - 18 Saratoga Ave Sidewalk 25,493 21,217 - - - - 46,710 Village Sidewalk Curb&Gutter-Phase II Construction 39,909 - - - - - 39,909 Big Basin Way Sidewalk Repairs 9,550 (9,550) - - - - - Saratoga Village Crosswalk&Sidewalk Rehabilitation 3,368 (4,202) - - - - (834) 4th Street Bridge 4,626 2,125 - - - - 6,751 Quito Bridge Replacement 18,596 - - - - - 18,596 Quito Road Bridges-ROW Acquisition 4,124 4124 Total CIP Grant Street Projects 64,685 (106,789) 118,982 - - - 76,878 CIP Grant Park&Trail Projects Saratoga to the Sea Trail-Desi n 399 399 Total CIP Grant Park&Trail Projects 399 (399) - - - - - CIP Grant Adndnistratiw Projects CDD Software/ADA 14,573 14,573 Total CIP Grant Administrative Projects (14,573) - - - - - (14,573) Gras Tax Fund Projects Annual Roadway Improvements 58,261 (521,707) 50,281 (2,500) - - (415,665) Prospect/Saratoga Median Improvements 48,278 - - - - - 48,278 Big Basin Way Sidewalk Repairs - (1,802) - - - - (1,802) Quito Road Brid es 7,085 7,085 Total Gas Tax Fund Projects 113,624 (523,509) 50,281 (2,500) - - (362,104) Total CIP Funds 5,763,788 (1,316,429) 216,076 (254,435) 2,960,131 7,369,130 *Negative fund balance due to authorized spending of anticipated revenues 35 ATTACHMENT C CHANGE IN CASH BALANCE BY MONTH Treasury Balance $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 "o �o\'o Se Cry a �¢ �c to�a� PQ��S'1`�c �o\'o Se O�5'e"Oe/ -c Q¢�3xa'QQa'�Sa l`�c ��\PAC;SeQ Oc�°I�¢ �c 4e�a PQ �Sy, 1`�c �o\p� Se Cry ao"q¢ �c to�a� PQ��S'1`�c �o\p� Se 0,5 j,,Oe/ 4 General Fund ■OP ■Internal Service ■L&L Districts ■Debt Service 36 ATTACHMENT D Local Agency Investment Fund Quarterly Apportionment Rates March June Septei"ber December 1977 5.68 5.78 5.84 6.45 1978 6.97 7.35 7.86 8.32 1979 8.81 9.10 9.26 10.06 1980 11.11 11.54 10.01 10.47 1981 11.23 11.68 12.40 11.91 1982 1 11.82 11.99 11.74 10.71 1983 9.87 9.64 10.04 10.18 1984 10.32 10.88 11.53 11.41 1985 10.32 9.98 9.54 9.43 1986 9.09 8.39 7.81 7.48 1987 7.24 7.21 7.54 7.97 1988 8.01 7.87 8.20 8.45 1989 8.76 9.13 8.87 8.68 1990 8.52 8.50 8.39 8.27 1991 7.97 7.38 7.00 6.52 1992 5.87 5.45 4.97 4.67 1993 4.64 4.51 4.44 4.36 1994 4.25 4.45 4.96 5.37 1995 5.76 5.98 5.89 5.76 1996 5.62 5.52 5.57 5.58 1997 5.56 5.63 5.68 5.71 1998 5.70 5.66 5.64 5.46 1999 5.19 5.08 5.21 5.49 2000 5.80 6.18 6.47 6.52 2001 6.16 5.32 4.47 3.52 2002 2.96 2.75 2.63 2.31 2003 1.98 1.77 1.63 1.56 2004 1.47 1.44 1.67 2.00 2005 2.38 2.85 3.18 3.63 2006 1 4.03 4.53 4.93 5.11 2007 5.17 5.23 5.24 4.96 2008 4.18 3.11 2.77 2.54 2009 1.91 1.51 0.90 0.60 2010 0.56 0.56 0.51 0.46 2011 0.51 0.48 0.38 0.38 2012 0.38 0.36 0.35 0.32 2013 0.28 0.24 0.26 0.26 2014 0.24 0.22 0.24 0.25 2015 0.26 0.28 0.32 0.37 2016 0.46 0.55 0.60 0.68 2017 0.78 0.92 1.07 1.20 2018 1.51 1.90 2.16 2.40 2019 1 2.55 2.571 2.451 2.29 2020 1 2.03 1.361 0.841 0.63 2021 1 0.44 0.331 0.241 0.23 37 O\�y of SARgTo v SARATOGA CITY COUNCIL t 956 cgClFORN\P MEETING DATE: March 16, 2022 DEPARTMENT: Administrative Services PREPARED BY: Agnes Pabis, Finance Manager Ann Xu, Accountant SUBJECT: Treasurer's Report for the month ended February 28, 2022 RECOMMENDED ACTION: Receive and file the Treasurer's Report for the month ended February 28, 2022. BACKGROUND: California Government Code section 41004 requires that the City Treasurer submits to the City Clerk and the legislative body a monthly report of receipts, disbursements, and account fund balances. DISCUSSION: Cash and investments decreased approximately $800,000 compared to the month ended January 31, 2022,which is consistent with month-to-month experience for the same period in the previous fiscal year. One measure of a local agency's financial condition is its ability to meet budgeted expenditures without any additional revenue, a scenario that is exceedingly unlikely in Saratoga. As of the period's end, the General Fund's share of cash and investments is sufficient to support General Fund operations for approximately 9.6 months with no additional receipts. Table 1 of this report transmits the City's beginning balance,receipts,disbursements,inter-account transfers, and ending balances for the specified period. Balances are verified by bank-issued account statements. City staff reconciles bank statements with General Ledger as part of the month-end accounting procedures. The City's independent auditor reviews the monthly reconciliations as part of their annual audit of City finances. 38 Quarterly AllocationAccount Beginning Balance Receipts Disbursements Interest Transfers Ending Balance Comerica General 6,177,114 1,566,562 (1,650,258) - (3,753,000) 2,340,417 Comerica Payroll 106,278 - (748,396) - 753,000 110,882 LAIF 28,916,674 - - - 3,000,000 31,916,674 Total 35,200,067 1,566,562 (2,398,654) - - 34,367,974 The City maintains three cash and investment accounts: 1. Comerica Bank general checking. The general checking account receives all revenues paid to the City in the reporting period. Receipts include all cash and check deposits and electronic transfers such as property taxes. Funds held in this account at the end of the reporting period reflect anticipated cash flow requirements for the upcoming thirty (30) days. All funds that are not required to meet anticipated obligations are transferred to the City's money market account, at the Local Agency Investment Fund(LAIF.) 2. Comerica Bank payroll checking. The payroll checking account receives transfers from the general checking account as each payroll is processed. An ending balance in this account reflects payroll transactions such as employee checks, payments to benefit providers, and tax obligations that are uncashed at month-end. This account maintains a zero balance once all uncashed payments are clear. 3. Local Agency Investment Fund (LAIF). Saratoga invests cash in LAIF when the Comerica Bank general checking account holds more funds than are necessary to meet current and anticipated obligations in the next thirty (30) days. LAIF is utilized by many cities and special districts in California due to its security and liquidity. LAIF offers same- day access to funds deposited and manages their portfolio to avoid losses that may result from a sale of a security prior to its maturity. The tradeoff for LAIF's security and liquidity is lower investment returns paid quarterly. LAIF's average monthly effective yields were 0.278% in February compared to 0.234% in January. Receipts February receipts totaled $1.6M, and primarily consist of Measure B Sales Tax payment($0.8M), Sales Tax($0.2M), and San Jose Water Utility franchise fee ($0.3M). Disbursements February disbursements totaled $2.4M and primarily consisted of payroll costs ($0.8M), Internal Services expenditures ($0.2M), CIP project expenditures ($0.2M). Inter-Account Transfers The beginning balance for the reporting period was higher than necessary due to staff transitions which delayed the City's ability to transfer funds to LAIF in January. February transfers totaled $3.8M and consisted of transfer to LAIF $3.OM and payroll $0.8M. Accordingly, interfund transfers are higher than normal for the February timeframe. FINANCIAL IMPACT There is no financial impact of this report. LAIF interest earnings are reported in the Treasurer's Report for the months of March, June, September, and December. 39 C��y of SARgT�v SARATOGA CITY COUNCIL tes6 cgc��o�N�P MEETING DATE: March 16, 2022 DEPARTMENT: Finance&Administrative Services PREPARED BY: Agnes Pabis, Finance Manager Ann Xu,Accountant SUBJECT: Capital Improvement Program (CIP) Report for the Month Ended January 31, 2022 RECOMMENDED ACTION: Receive and file the Capital Improvement Program(CIP) Report for the month ended January 31, 2022. BACKGROUND: City Council policy on the monthly treasurer's report includes a requirement that City staff provide a monthly CIP fund report. City staff has updated the presentation to facilitate an analysis of the notable activity in the reporting period. DISCUSSION: The following tables provide financial information for the City of Saratoga's Capital Improvement Program (CIP). The tables specify each project's carryforward balances from prior years, net revenue or (expenditure) for the preceding months in the current fiscal year, current period revenues and expenditures,budgeted transfers in and out, and ending balance as of the close of the reporting period. Table 1 of this report transmits CIP projects by category or project type: Street Improvements, Park & Trail Improvements, Facility Improvements, and Administrative & Technology Improvements. Significant current period activity The most active projects during the period were in the Facilities category with $165,059 spent on Theater lighting and installing a new Gas Metter for Joan Pisani Community Center. The Traffic Signal Battery Backup Project received revenue to offset expenditures in the previous periods, $118,982, from Silicon Valley Clean Energy SVCE Resilience Grant. The Orchard Irrigation and 40 Planting Project expended $44,453 in the current period as work progressed with removing and replacing the irrigation system in the Heritage Orchard. TableProjects By Category o Dec. Available ProjectProject Carryover Transfers In/Net Revenue/ January January Balance Balance Street Projects Annual Road Improvements 776,210 - (612,674) 35,079 14,383 184,233 Roadway Safety&Traffic Calming 42,189 150,000 (59,139) - (37,519) 170,569 Citywide Traffic Signal Battery Backup 150,000 150,000 - - 300,000 Portable Radar Feedback Sign - 40,000 37,519 2,481 Prospect/Saratoga Median Improvement 309,379 20,000 - - 329,379 Village Clock 9,486 - 793 8,693 Big Basin Way/Blaney Trash Can Replacement - 75,000 (1,628) (34) 73,406 Annual Infrastructure Maintenance&Repairs 18,063 250,000 (72,650) - 195,413 Guava Court Curb&Gutter Replacement - 280,000 - 280,000 Mendelsohn Lane Pathway Rehabilitation Project 110,000 (106,199) - 3,801 El Camino Grande Storm Drain Pump - 104 - - 104 Saratoga Village Crosswalk&Sidewalk Rehabilitation 44,000 45,000 (36,333) 3,200 49,467 Quito Road Sidewalk Improvements 43,370 - - 43,370 Saratoga/Sunnyvale Road Sidewalk 92,158 - 92,158 Saratoga Sunnyvale Rd.Pathway Rehab Cox to RRX 110,000 - (110,000) - - Quito Road Sidewalk Rehabilitation and Gap Closure - 325,000 (2,100) - 322,900 Fourth Street Bridge Widening 99,837 - - - 99,837 Quito Road Bridge Replacement 136,175 (3,979) - 132,197 Quito Road Bridge-ROW Acquisition 6,012 - (2,350) - 3,662 Annual Retaining Wall Maintenance&Repairs 151,785 200,000 (14,709) 14,327 322,750 Mt.Eden Erosion Repair 99,880 125,000 - 224,880 Continental Circle Landslide Stabilization 122,912 (65,465) - 57,447 Pierce RoadRetainment 391,800 - (13,660) - - 378,140 Mt.Eden Emergency Landslide - 75,000 (29,945) - - 45,055 Total Street Projects 2,603,257 1,845,000 (1,130,726) 35,079 32,669 3,319,941 Parks &Trails Projects Park/TrailRepairs 41,836 250,000 (127,323) - - 164,513 Hakone Gardens Infrastructure Improvements 5,853 25,000 (2,385) - (2,000) 30,468 Hakone Pond Reconstruction 300,000 - - - 300,000 Beauchamps Park Playground Replacement - 35,131 - - 35,131 Guava/Fredericksburg Entrance 293,527 - (26,823) - 6,192 260,513 Saratoga Village to Quarry Park Walkway-Design 228,989 - - - 228,989 Total Parks&Trails Projects 870,206 310,131 (156,531) - 4,192 1,019,614 Facility Projects Open Work Space - 80,000 - - - 80,000 Civic Theater Improvements 107,925 - (79,228) 12,462 16236 PEG Funded Project 432,116 (191,434) - 66,766 173,916 Community Center Improvement 90,779 (18,377) 20,000 52,403 Community Center Generator and EV Charging Stations 471,355 (9,613) - 65,831 395,911 Library Building Exterior Maintenance 15,000 - (5,000) - - 10,000 Total Facility Projects 1,117,176 80,000 (303,651) - 165,059 728,466 41 Administrative and Technology Projects City Website/Intranet 16,948 - 16,948 Development Technology 66,949 (39,977) 216 27,189 Software Technology Management 43,138 37,623 5,168 85,929 LLD Initiation Match Program 25,000 - - - 25,000 Horseshoe Beautification 16,775 - (870) - 580 15,325 Business Renewal Program 15,000 (3,857) - - 11,143 Citywide Accessibility Assessment 34,937 - - 34,937 City Art Program 28,669 25,000 - 53,669 Safe Routes to School Needs Assessment 13,714 (13,714) - - - El Quito Neighborhood Improvements 134,507 150,000 - 284,507 Parking District ADA Improvements and Rehabilitation - 250,000 - - 250,000 Stone Drain Master Plan - 300,000 - 300,000 General Plan Update 216208 - (20,690) - 4,984 190,534 Wildfire Mitigation Program 4,067 - - 4,067 Risk Management Project Funding 54,153 - - - 54,153 Total Administrative and Technology Projects 670,066 725,000 (41,485) 5,384 5,564 1,353,401 Tree Fund Projects Citywide Tree Planting Program 22,889 - (4,638) 5,600 - 23,851 Tree Dedication Program 24,750 500 750 - 26,000 Total Tree Fund Projects 47,639 - (4,138) 6,350 - 49,851 CIP Grant Street Projects Traffic Signal Battery - (118,982) 118,982 - - Local Roadway Safety Plan (19,180) - - (19,180) Prospect/Saratoga Median Improvement (41,000) 21,784 - - (19,216) Citywide Signal Upgrade II 18 - - - 18 Saratoga Ave Sidewalk 25,493 21,217 - - 46,710 Village Sidewalk,Curb&Gutter-Phase II Construction 39,909 - - - 39,909 Big Basin Way Sidewalk Repairs 9,550 (9,550) - - Saratoga Village Crosswalk&Sidewalk Rehabilitation 3,368 (4,202) - (834) 4th Street Bridge 4,626 2,125 - 6,751 Quito Bridge Replacement 18,596 - - 18,596 Quito Road Bridges-ROW Acquisition 4,124 - - 4,124 Total CIP Grant Street Projects 64,685 - (106,789) 118,982 - 76,878 CIP Grant Park&Trail Projects Saratoga to the Sea Trail-Design 399 - (399) - - - Guava/Fredericksburg Entrance - - - - Total CIP Grant Park&Trail Projects 399 - (399) - CIP Grant Administrative Projects CDD Software/ADA (14,573) - - - (14,573) Total CIP Grant Administrative Projects (14,573) - - - (14,573) Park In-Lieu Projects Orchard Irrigation&Tree Planting - 100,000 (19,500) - 44,453 36,048 Hakone Gardens Infrastructure 82,420 - - 82,420 Beauchamps Park Playground Replacement - 10,079 - 10,079 Trail Pet Stations - 25,000 - 25,000 Saratoga Village to Quarry Park Walkway-Design 73,811 - - - 73,811 Unallocated Park In-Lieu Funds 135,079 (135,079) 970,299 - - 970,299 Total Park In-Lieu Projects 291,310 - 950,799 - 44,453 1,197,657 Gas Tax Fund Projects Annual Roadway Improvements 58,261 (521,707) 50,281 2,500 (415,665) Prospect/Saratoga Median Improvements 48278 - - 48,278 Big Basin Way Sidewalk Repairs - (1,802) - - (1,802) Quito Road Bridges 7,085 - 7,085 Total Gas Tax Fund Projects 113,624 - (523,509) 50,281 2,500 (362,104) 42 Negative revenues and expenditures A negative revenue or expenditure is a correction in the current period of a previous period revenue or expenditure recorded in an incorrect account number. For the current period, one correcting entry moved $37,519 originally coded as an expenditure to the Roadway and Traffic Safety project when the work is for the Portable Radar Feedback Sign project. Negative ending balances A negative ending balance reflects year-to-date expenditures exceeding cash available in the project at the end of the period.Negative ending balances are a concern when no additional revenue or transfers-in are budgeted. However, if revenues are budgeted, expenditures can occur before revenue is collected,which results in a negative ending balance in reporting periods before the end of the fiscal year. We use very conservative budgeting methods for current year revenue and CIP projects and only budget those revenues for which there is a high degree of confidence in their receipt. For example, Gas Taxes are very reliable revenue sources. There were no significant changes in negative ending balances for the current period. The Gas Tax Fund negative ending balance of($362,104) is the result of expenditures occurring in August and September 2021,before receipt of Gas Tax funds. 43