Discussion:
November 2017 Review (See Attachment)
Revenue Variances (+/- 10% of 92% Target)
- Taxes - Received first half taxes in June, second half is posted in December.
- Special Assessments - This remains a negative revenue amount through the first half collection of property taxes. The negative amount is result of the payment to Republic Services for delinquent garbage bills. The city will recoup this payment through special assessments levied against the delinquent account holders. The second half tax collection in December will account for the remainder of the variance.
- Licenses & Permits - November revenues of $114,971 put the year-to-date revenues over $2.6 million. This is close to $1.0 more million than originally budgeted and about $111,000 more than this same time last year.
- Intergovernmental - The police department received $6,663 of a Federal Towards Zero Deaths grant reimbursement in November. The city is not anticipating any further intergovernmental revenues.
- Charges for Services - Recorded monthly revenue of $468,117. Contractual police services accounted for $24,800, along with SPUC franchise fees of $176,000, and Recreation Services of $238,000.
- Fines & Forfeits - Fines and forfeits revenue has exceeded the 2017 budget allotment of $1,500. A majority of the revenues in this category come from late fees associated with the monthly lodging tax submittals and payments related to the driving diversion program.
- Miscellaneous - Interest earning receipts are slightly higher than anticipated.
Expenditure Variances (+/- 10% of 92% Target)
- Planning - Although within the target range, planning expenditures are above budget due to the 2040 Comp Plan contract with MKSK. The city will be receiving grants from various sources to offset some of this cost. These grants will be recorded as a revenue and likely not be recognized until 2018 when the Comp Plan is complete.
- Engineering - Is below budget due to personnel vacancies earlier in the year.
- Unallocated - This division accounts for items that cannot be specifically assigned to specific departments or divisions. Included in this division is the city's contingency allotment of $110,000.
- All other departments/divisions are within +/-10% of the November 30, 2017 target date.
Community Center & Ice Arena Year-over-Year Comparison (See Attachment)
Ice arena revenues are at $595,942 through November 30, which is approximately $332,950 greater than this same time last year. The ice arena is still expecting another $100,000 in contracted ice revenues for 2017.
Ice arena expenditures are remaining steady from month-to-month. As previously mentioned we are monitoring the utility costs, as the gas and electric charges are more than originally anticipated. The ice arena should recognize a savings in part-time salaries that will offset some of the utility variance.
The community center analysis has changed a bit for this month in order to make a better comparison of budget to actual revenues and expenditures. The original 2017 budget includes the community center pool expenditures under the business unit 0672 Pool Management. Previous to the community center pool, all pool related revenues and expenditures such as swimming lessons and Sand Venture were included within the 0672 budget. After the community center pool opened, staff began looking at operations of all the aquatics to ensure appropriate accounting of cost drivers.
Staff determined that isolating Sand Venture operations was appropriate because that facility runs as a stand alone operation. The community center pool is part of the entire community center facility. Isolating costs specific to the pool versus the rest of the community center becomes difficult. As a result of this analysis, all revenues and expenditures associated with the community center pool and any lessons within the facility are being accounted for under one business unit (0674). All Sand Venture revenues including any lessons provided at that facility are being run under business unit (0672).
The issue for 2017 is the revenues and expenditures for the community center pool is budgeted one business unit and recorded in another. In order to make sure we are doing an all inclusive comparison, I have included business unit 0672 into the report for the remainder of this year. This issue will be eliminated in 2018 as the budget and actuals will be reported in the same business unit.
Year-to-Date community center and now Sand Venture revenues are $640,475. This revenues is split between the community center and Sand Venture in the amounts of $435,745 and $205,000, respectively. Last month's report indicated year-to-date community center only revenues of $532,800.
The reason for a the decrease in the YTD revenues is do to a change in accounting principle. In the past all annual memberships were recognized as revenue in the year the membership was sold. Accounting standards require revenue to be recognized when it is earned. So if an annual membership is sold in November, we are now recognizing two months of revenue in 2017 and ten months of revenue in 2018. This provides a more accurate accounting and more true financial picture of the operations.
A new line has been included in the community center budget-to-actual report to indicate the deferred revenue balance as of the end of each reporting period. As of November 30, the community center now has $176,000 of deferred revenue on the books. In the past this entire amount would have all been recognized as revenue. The accounting change is retroactive to January 1, 2017. At this point we can't compare 2016 to 2017 in terms of deferred revenue. However, once we begin the new year we will then be able to compare 2017 to 2018.
Even with this change in accounting principle, community center revenues have exceeded the total 2017 budget of $385,900 and have almost doubled since this same time last year.
Community center and Sand Venture wages and benefits expenditures will exceed the 2017 original budget. However, the City Council approved hiring an additional maintenance worker for the community center in 2017 that was not included in the original 2017 budget. The 2017 revised budget accounts for this change, which should bring the actual wages in line with the revised budget. Community center and Sand Venture operating expenditures are running in line with the budget.