City of Lawrence, Kansas
Fiscal Year Report – 2006
Purpose of Report
The following information summarizes the unaudited financial activities of the City of Lawrence for the 2006 fiscal year and advises the City Commission as to year end budgetary conditions. These numbers are preliminary and subject to further adjustment. The City’s annual financial audit will contain final actual revenues and expenditures for 2006.
The first section provides an update on implementation of our new management system, including our work on collecting and reporting performance measures. In the second section, the budgetary highlights from the major funds of the City are itemized, including the General, Recreation, and Transportation Funds, which are partially funded by property taxes, and the Water & Sewer, Sanitation, Storm Water and Public Golf Course Funds, which are enterprise funds supported by user fees. Included in the third section is a summary of the investment activities for the year. The fourth section summarizes the amount of outstanding debt. The final section provides information on capital project financing.
I. MANGEMENT SYSTEM IMPLEMENTATION
The City Manager has continued to meet with department heads each month to discuss their operations and staff continues to work developing ways to collect performance data.
Staff is working on compiling a report to the City Commission using the Balanced Scorecard approach to tell the story of the City’s performance in four areas – Operational Performance, Customer Feedback, Employee Readiness and Growth, and Financial Performance. Much of the data will come from the Citizen Satisfaction Survey that will be conducted by ETC Institute later this spring.
The City Commission goals and some of the 4th quarter performance indicators are provided below.
Economic Development
- Sales tax collected in the 4th quarter of 2006 increased 3.31% compared to the 4th quarter of 2005
Planned Growth
- 71.35% of residential building permits were issued within 5 days of application submittal
- 39.85% of commercial permits were issued within 15 business days of application submittal
Transportation
- 65% of traffic signal heads were converted to more energy efficient, longer lasting, Light Emitting Diodes (LEDs)
- 100% of downed traffic signs were reinstalled within 24 hours of notification
- In December, 85% of potholes on arterial roadways were filled within 24 hours of notification
- 97.68% of the Transit system’s fixed routes were on time and there were zero FTA defined accidents
- The cost per transit passenger on the fixed route system was $5.47, while the cost per paratransit passenger was $17.32
Downtown Development
No data was collected in the fourth quarter of 2006 related to this goal however, a Downtown Summit was held in January of 2007 where business owners and others were able to discuss their priorities for downtown.
Service Delivery
- The City’s Email, Computer Network, and Internet connectivity were fully operational 99.93% of the time during the fourth quarter
- The Police Department Fleet had an average operational readiness of 98.13%
- The Fire Department had an average operational readiness of 81.17%
- The City Communications Manager completed nineteen public outreach projects
- The average fire response time within the city limits from Station 1 was 5 minutes, 10 seconds; the average fire response time from Station 3 was 6 minutes, 4 seconds
- The Police Department issued 10,588 tickets
- Attendance at the Indoor Aquatic Center increased by 3% over 2005
- Personnel staff provided 66 workforce development, training, and educational activities
- It cost the City approximately $1.37 for every 1,000 flushes of Wastewater treated
Neighborhood Quality
- 88.3% of the curb and gutter infrastructure was rated as fair or good, compared to 11.7% which was rated as poor
- The Police Department provided 8 crime prevention presentations at area schools in November and December
Environmental Issues
- In November, 60% of biosolids were reused for beneficial use
- 3.83% of the City’s fleet is capable of using alternative fuel
- 100% of environmental complaints received in November and December were inspected within 1 day of receipt
Community Building
The Citizen Survey should provide data related to this goal for future reports.
II. BUDGETARY HIGHLIGHTS
General Fund
· 2006 General Fund revenues in 2006 were $3,044,631 over budget, or 6.4%.
· Property taxes exceeded 2006 budgeted amounts by $592,647, or 3.6%.
· Sales and Use taxes exceeded 2006 budgeted amounts by $853,570, or 4.1%. However, revenues fell short of the mid year sales and use tax projection for 2006 that were used to build the 2007 budget by $466,430 or 2.1%.
· Revenues from licenses and permits exceeded budgeted amounts by 21.6%, or $200,747.
· Almost 13% more revenue was collected from municipal court fees and the payment of officer issued tickets than was budgeted.
· Interest significantly exceeded budget. More than $1.5 million in revenue was generated, which is 393.5% of 2006 budget amounts.
· General Fund expenditures overall were 98.1 % of budget. This is higher than expenditures in 2005 which were closer to 97% of budget. The trend should be monitored as it will impact future budgets.
· Revenues in 2006 were $3.7 million below expenditures in 2006. Staff will continue to monitor how this will impact the fund balance and resources available for future budgets.
· Two departments expended significantly more than 100% of their general fund budgets:
o City Manager’s Office (112.3%) – due to increased expenses related to personnel changes.
o Fire Medical (100.1%) – due in part to increases in significant increases in utility costs (electricity and gas) and increased communications expenses.
· Department or divisions that expended 95% or less of their general fund budgets included:
o City Clerk (89.4%)
o Risk Management (86.5%)
o Finance (89.6%)
o Public Works (95%)
Special Revenue Funds
· Recreation Fund revenues were 102.3% of budget. Charges for services exceeded 2006 budgeted amounts by 5.6%. Recreation Fund expenditures were 97.6% of budget.
· Revenues in the Public Transportation Fund exceeded budgeted amounts by 7.2% due largely to fare box revenues and bus passes which generated 21% more than budgeted amounts.
· Public Transportation Fund expenditures were 93.3% of the 2006 budget, a significant increase over 2005. This change is due to the depletion of federal grant funds, requiring a larger percentage of funding to come from local revenues than in previous years.
Enterprise Funds
· Water and Sewer Fund revenue exceeded budgeted amounts by 38.4%. Much of this was due charges for service, which generated $6.3 million more than budgeted, and interest earned which exceeded budgeted amounts by over $1.7 million. The rate increases were approved in 2005 to build up cash balances to help bund future capital projects. Revenues were also budgeted lower than expected to satisfy statutory fund balance requirements. Operating expenses in the Water and Sewer Fund were 92.5% of budgeted amounts in 2006, compared to 98.4% in 2005.
· Revenues in the Sanitation Fund exceeded budgeted amounts by $613,090, or 7.2%. Expenditures equaled 93.6% of budgeted amounts.
· Revenue is the Storm Water Fund exceeded budgeted amounts by 7.2%. Expenditures from this fund were 88.5% of budgeted amounts.
· Public Parking Fund revenues exceeded budgeted amounts by 24%. Expenditures from the Public Parking Fund were 86.7% of 2006 budgeted amounts.
· Golf Course Fund revenues were 95.6% of budget and exceeded expenditures by just over $30,000. Expenditures were 99.0% of budgeted amounts.
|
2006 Enterprise Funds |
Water and Sewer |
% |
Sanitation |
% |
Storm Water |
% |
Parking |
% |
Golf Course |
% |
|
Revenue Sources |
|
|
|
|
|
|
|
|
|
|
|
Licenses and Permits |
|
|
|
|
|
|
83,807 |
|
|
|
|
Service Charges |
$27,624,717 |
130 |
$8,738,810 |
104 |
$2,803,792 |
106 |
$492,623 |
|
$1,042,081 |
96 |
|
Interest |
2,075,315 |
692 |
150,516 |
334 |
61,726 |
263 |
12,625 |
253 |
|
|
|
Fines and Forfeits |
|
|
|
|
|
|
378,336 |
116 |
|
|
|
Intergovernmental |
|
|
85,000 |
|
160 |
|
|
|
|
|
|
Miscellaneous |
158,590 |
|
163,265 |
177 |
236 |
|
|
|
1,009 |
|
|
Transfers |
|
|
|
|
|
|
27,000 |
|
|
|
|
TOTAL REVENUES |
$29,858,622 |
138 |
$9,137,591 |
107 |
$2,865,914 |
107 |
$994,391 |
124 |
$1,043,090 |
96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
Operations |
$28,533,183 |
92.5 |
$9,715,928 |
93.6 |
$3,308,498 |
88.5 |
$818,060 |
86.7 |
$1,013,015 |
99.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
$1,325,439 |
|
($578,337) |
|
($442,584) |
|
$176,331 |
|
$30,075 |
|
III. INVESTMENTS
Short term investment rates have increased significantly in the last year. As a result, our interest earnings are greater than 2005. Interest revenue exceeded the budget in 2006 for most funds.
As of December 31, 2006, the City of Lawrence had over $109 million in cash and investments. A total of $95.7 million was invested in securities. The investments were 30% in certificates of deposits, 41% in government agencies, 16% in the municipal investment pool, and 13% was in cash. The City’s investment policy limits the portfolio to a maximum of 30% in any one financial institution’s certificates of deposit. The City’s certificates of deposit are with Bank of KC, Sunflower Bank, and U.S. Bank. The average rate of return on our investments during the second quarter was 3.65%.
Over 95% of the City’s portfolio has an original maturity of less than twelve months. Only 2.9% of our securities had a maturity longer than twenty four months. The City plans on holding its investments to maturity and has sufficient cash and short-term investments to avoid a liquidity crisis that would force the sale of the longer-term investments.
IV. DEBT ISSUANCE
The City issued $17,130,000 in general obligation bonds and $16,345,000 in temporary notes in 2006. The City closed on its most recent general obligation debt issuance on September 28, 2006.
The following table shows the current total outstanding debt for the City and the different funding sources. A preliminary analysis has shown that the City can issue approximately $4.5 – 5.0 million in at-large general obligation annually without having an adverse impact on the debt levy.
|
City of Lawrence Estimated Debt 12/31/2006 |
||||
|
|
GO Debt |
Enterprise |
Less Enterprise Portion of GO Debt |
Total |
|
Long term debt, 1/1/06 |
$ 77,080,000 |
$ 83,838,065 |
$(10,957,188) |
$ 149,960,877 |
|
|
|
|
|
|
|
Debt, added September 2006 |
17,130,000 |
209,766 |
(209,766) |
17,130,000 |
|
|
|
|
|
|
|
Debt, added, Kansas Water Supply Loan |
- |
0 |
- |
0 |
|
|
|
|
|
|
|
Less: Principal paid in 2006 |
(9,140,000) |
(3,644,002) |
1,215,799 |
(11,568,203) |
|
|
|
|
|
|
|
Total long term debt, 12/31/06 |
$ 85,070,000 |
$ 80,403,829 |
$ (9,951,155) |
155,522,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long term debt is composed of: |
|
|
|
|
|
Enterprise fund portion |
$ 9,951,155 |
$ 70,452,674 |
$ - |
$ 80,403,829 |
|
Sales tax portion |
8,598,206 |
- |
- |
8,598,206 |
|
Benefit District Debt (estimated) |
13,036,051 |
- |
- |
13,036,051 |
|
Net long term debt, city at large, 12/31/06 |
53,484,588 |
9,951,155 |
(9,951,155) |
53,484,588 |
|
Total long term debt, 12/31/06 |
85,070,000 |
80,410,443 |
(9,951,155) |
155,522,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Future long term debt will result from: |
|
|
|
|
|
Notes currently outstanding which will be bonded (includes fall note issue) |
$16,345,000 |
$ - |
$ - |
$ 16,345,000 |
V. CAPITAL BUDGET
As of December 31, 2006 expenditures in the capital project fund totaled $36 million. Funding sources for these projects consisted of $16.3 million temporary notes, $7.3 million in cash, and $23 million in general obligation bonds.