City of Lawrence, Kansas
First Quarter Report – 2007
Purpose of Report
The following information summarizes the financial activities of the City of Lawrence for the first three months of 2007 and advises the City Commission as to current budgetary issues that may become a concern.
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. Section three provides tables comparing year to date financial activities to the budget and prior year results for the same period. Included in the fourth section is a summary of the investment activities for the year. The final section summarizes the amount of outstanding debt.
I. MANGEMENT SYSTEM IMPLEMENTATION
The City Manager continued to meet with department heads each month to discuss their operations and staff continued to work developing ways to collect and report performance data.
A Citizen Satisfaction Survey was conducted by ETC Institute in March. Preliminary results indicate a higher response rate than expected. The final results are being tabulated and a report to the City Commission is expected in the coming weeks.
Eventually this survey data, along with other performance indicators, will be compiled into a Balanced Scorecard to tell the story of the City’s performance in four areas – Operational Performance, Customer Feedback, Employee Readiness and Growth, and Financial Performance.
In the meantime, the City Commission goals and some related first quarter performance indicators are provided below.
Economic Development
- Retail sales tax collected in the first quarter of 2006 is $132,153, or 2.4%, less than the same period last year
- Residential assessed valuation for 2007 increased 7.97% over 2006
- Non-residential property makes up 31.41% of the tax base. This is less than a tenth of a percent increase over 2006
Planned Growth
- 61.58% of residential building permits were issued within 5 days of application submittal
- 57.08% of commercial permits were issued within 15 business days of application submittal
Transportation
- An average of 68.77 hours per FTE were spent on roadway maintenance and repairs
- 100% of downed traffic signs were reinstalled within 24 hours of notification
- 61.33% of potholes on arterial roadways were filled within 24 hours of notification
Downtown Development
The citizen survey will provide data for resident satisfaction related to downtown including:
- satisfaction with retail and entertainment mix
- downtown safety in the daytime and after dark
- availability of downtown parking
Service Delivery
- The City’s Email, Internet connectivity, and E-Government applications were fully operational 99.99% of the time during the first quarter; the City’s Computer Network was fully operational 100% of the time
- The Police Department Fleet had an average operational readiness of 97.27%
- The Fire Department had an average operational readiness of 98.67%
- The City Communications Manager completed fourteen public outreach projects
- The Administrative Serviced Department provided 93 training and educational activities in the first quarter.
Neighborhood Quality
- 100% of residential lane miles were swept as scheduled
- Residential assessed valuation for 2007 increased 7.97% over 2006
- The Police Department provided 96 crime prevention presentations at area schools in the first quarter of 2007
- There were 29 violent crimes and 127 non-violent crimes involving students
Environmental Issues
- 100% of environmental complaints received in November and December were inspected within 1 day of receipt
- The amount of solid waste disposed at the landfill increased by 3.33% over the prior period.
Community Building
The Citizen Survey will provide data for the percent of residents rating their satisfaction with the availability of information about the City’s activities
II. BUDGETARY HIGHLIGHTS
General Fund
● General Fund revenues are over 28% of budget and increased by $440,534 or 2.9% compared to the same period last year.
● A significant portion of the increase in revenue was the $415,025 rise in property tax over the same period last year.
● Another component of the increase in General Fund revenue was the $348,571 increase in transfers from other funds.
● Sales tax receipts decreased $132,153, or 2.4%, from the same period last year.
● Licenses and permit fees also decreased 22.5% from the same period last year. Much of this decrease was in building permits and inspections, which decreased 35% from the first quarter of 2006.
● Another decrease in General Fund revenue is in service charges. Overall, service charges were down 23.1%. Some of that decrease can be attributed to charges for maps, plans, ordinances, etc., which were down 92.5% compared to the first quarter of 2006. Engineering review fees were down $33,026, or 65%, from this period last year. Charges for planning review were also down $1,585, or 26%. There were no charges for traffic signs in the first quarter of 2007, compared to $3,250 of charges for traffic signs in this quarter last year. Likewise, no exam application fees were collected in the first quarter of 2007, compared to $1,005 in first quarter 2006.
● Fines in the General Fund decreased by 18.6% from the first quarter last year. Police Officer ticket revenue increased by $15,483, or 30.6%, while municipal court fines and fees decreased by $140,238, or 22.6%.
● Interest revenue in the General Fund was down $20,181, or 6.6%, compared to the same period in 2006.
● Miscellaneous income increased by 11.1% over the first quarter last year. This is likely due to the timing of ambulance reimbursements.
● Intergovernmental revenues increased by 3.5% or $5,994 compared to the same period last year. Most of this difference can be attributed to a slight increase in the state highway connecting link funds the City received in the first quarter of 2007.
● Overall, General Fund expenditures were only 21.3% of budget but increased by $255,023, which represents an increase of 2.1% over the first quarter of 2006.
● Almost half of the increase in expenditures were public safety expenditure. While Police expenditures in the General Fund decreased by $94,961, Fire Medical expenditures increased $267,874, or 10.3% over the first quarter of last year. The majority of the increase in Fire Medical was related to personnel costs including salaries and benefits and capital outlay for vehicle replacement.
● Parks and Recreation expenditures from the General Fund increased $90,429, or 14.1%, over the same period last year. Much of the increase was in the administrative division and was related to personnel costs, utilities, and fuel costs.
● Only three divisions in the General Fund have expended more than 25% of budget at the end of the first quarter.
§ Public Information (28.0%) due to an encumbrance for the printing and mailing of the Flame newsletter throughout the year.
§ Municipal Court (36.8%) due to a large encumbrance for the lease of office space.
§ Levee Maintenance (26.5%) due to overtime, motor vehicles repairs, chemicals, and other supplies.
Special Revenue Funds
● Recreation Fund revenues increased $55,733, or 6.7%, over the same period last year. The majority of the increase was due to an increase for sales tax transferred into the fund to cover the budgeted expenditures. Revenue from service charges also increased.
● Recreation Fund expenditures are less than 20% of budget but will likely increase during the summer recreation season.
● Public Transportation Fund revenues are higher than in the same period last year due to a slight increase in the levy for the Transportation Fund for 2007. Fare box revenues also increased over this quarter last year by $5,744, which represents an increase of 11.6%.
● Expenditures are only 16% of budget and represent a decrease of 6% over the same period last year. The allocation of salary and other operating expenses paid by federal grant funds increased compared to this period in 2006, resulting in a decrease in the amount of local funds expended.
Enterprise Funds
● Water and Sewer Fund revenue was $169,000 more than the same period last year due to increased interest earnings and miscellaneous charges. Water and Sewer Fund expenses increased 7.4% over the first quarter of 2006.
● Revenue in the Sanitation Fund was up $152,453, or 7.1%, from the first quarter of 2006. Expenses decreased less than one percent from this period last year.
● Golf Course Fund revenue was 7.5% of budget due to the seasonality of rounds played. Revenue was down from the first quarter of 2006 by 22.3%. Golf Course Fund expenses were 19.3% of budget and $14,525 more than expenditures made in the first three months of 2006, despite moving the debt service payments from this fund to the sales tax reserve fund in 2007. Included in expenditures are a number of encumbrances including security services, golf course equipment, chemicals, and gas and diesel fuel.
III. REVENUE – EXPENDITURE TABLES
First Quarter Fund Analysis
General Fund |
|
20061st Qtr. |
% of budget |
20071st Qtr. |
% of budget |
|
|
Revenue Source |
|
|
|
|
|
|
Taxes |
$6,732,234 |
40.7 |
$7,147,259 |
40.4 |
|
|
Sales Tax |
5,547,381 |
26.6 |
5,415,228 |
23.5 |
|
|
Licenses & Permits |
282,418 |
30.4 |
218,889 |
19.1 |
|
|
Intergovernmental |
172,992 |
25.9 |
178,986 |
25.9 |
|
|
Service Charges |
148,101 |
34.6 |
113,839 |
14.2 |
|
|
Fines |
670,252 |
30.8 |
545,497 |
19.8 |
|
|
Interest |
306,985 |
76.7 |
286,804 |
28.7 |
|
|
Miscellaneous |
842,237 |
25.2 |
936,062 |
22.8 |
|
|
Transfers |
466,166 |
28.6 |
814,737 |
26.9 |
|
|
Total Revenue |
15,216,767 |
32.7 |
15,657,301 |
28.4 |
|
|
|
|
|
|
|
|
|
Expenditures |
|
|
|
|
|
|
General Government |
4,261,786 |
23.2 |
4,323,608 |
22.1 |
|
|
Public Safety |
5,877,461 |
22.4 |
6,048,399 |
21.8 |
|
|
Public Works |
1,356,020 |
18.6 |
1,287,774 |
17.6 |
|
|
Parks & Recreation |
641,395 |
19.6 |
731,824 |
21.3 |
|
|
Total Expenditures |
12,136,582 |
22.0 |
12,391,605 |
21.3 |
|
|
|
|
|
|
|
|
|
Revenues over Expenditures |
3,080,185 |
|
3,265,696 |
|
|
2006 Enterprise Funds - 1st Qtr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Water & |
|
Sanitation |
|
Storm |
|
Golf |
|
|
|
Revenue Sources |
Sewer |
% |
|
% |
|
% |
|
% |
|
|
Intergovernmental |
- |
|
21,250 |
|
60,944 |
|
- |
|
|
|
Service Charges |
$5,865,365 |
27.6 |
$2,095,915 |
25 |
$670,787 |
25.3 |
$94,492 |
8.7 |
|
|
Interest |
339,210 |
113.1 |
23,742 |
52.8 |
7,956 |
33.9 |
0 |
|
|
|
Miscellaneous |
32,573 |
|
37,458 |
40.7 |
235 |
|
1,787 |
|
|
|
Total Revenues |
6,237,148 |
28.9% |
2,157,115 |
25.6% |
678,978 |
27.7% |
96,279 |
8.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
Operations |
8,373,968 |
27.2 |
2,470,800 |
23.8 |
700,462 |
18.7 |
197,754 |
19.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
(2,136,820) |
|
(313,685) |
|
(21,484) |
|
(101,475) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 Enterprise Funds - 1st Qtr. |
|
|
|
|
|
|
|
|
|
|
|
Water & |
|
Sanitation |
|
Storm |
|
Golf |
|
|
|
Revenue Sources |
Sewer |
% |
|
% |
|
% |
|
% |
|
|
Intergovernmental |
0 |
|
16,844 |
|
0 |
|
|
|
|
|
Service Charges |
5,682,365 |
21.5% |
2,192,341 |
24.6% |
679,839 |
24.3% |
72,908.73 |
7.3% |
|
|
Interest |
447,284 |
59.6% |
42,139 |
93.6% |
27,298 |
54.6% |
0 |
|
|
|
Miscellaneous |
276,796.86 |
184.5% |
58,244 |
52.9% |
0 |
|
1,870.86 |
|
|
|
Total Revenues |
6,406,446 |
23.4% |
2,309,568 |
25.4% |
707,137 |
24.8% |
74,780 |
7.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
Operations |
8,992,718 |
|
2,450,528 |
|
734,373 |
|
212,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
(2,586,272) |
|
(140,960) |
|
(27,236) |
|
(137,499) |
|
|
|
|
|
|
|
|
|
|
|
|
|
III. INVESTMENTS
Short-term investment rates are higher than the first quarter of last year. As a result, interest earnings are greater than the first quarter of 2006 for most funds. Interest revenue should meet the budget in 2007 for most funds.
As of March 31, 2007, the City of Lawrence had over $109 million in cash and investments. Over $93 million was invested in securities. Approximately 37% of our investments were in certificates of deposits, 30% in government agencies, 18% in the Municipal Investment Pool, and 14% 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 the Bank of Kansas City and U.S. Bank. The average rate of return on our investments during the third quarter was 5.26%.
The City’s entire portfolio has an original maturity of less than twelve months. Less than 24% of our securities had a maturity longer than six months. The City plans to hold 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 closed on its most recent general obligation debt issuance on September 29, 2006. The issues included a $17,130,000 general obligation bond and a temporary note totaling $16,345,000. The debt was issued to pay for two fire stations and various street improvements, many of which involve benefit districts.
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 3/31/07 |
||||
|
|
GO Debt |
Enterprise |
Less Enterprise Portion of GO Debt |
Total |
|
Long term debt, 1/1/07 |
$ 85,070,000 |
$ 76,972,324 |
$(7,569,873) |
$154,472,451 |
|
|
|
|
|
|
|
Debt, added Fall 2006 |
0 |
0 |
(0) |
0 |
|
|
|
|
|
|
|
Debt, added, Kansas Water Supply Loan |
- |
0 |
- |
0 |
|
|
|
|
|
|
|
Less: Principal paid in 2007 |
(0) |
(1,224,711) |
0 |
(1,224,711) |
|
|
|
|
|
|
|
Total long term debt, 3/31/07 |
$85,070,000 |
$75,747,613 |
$ (7,569,873) |
$ 153,247,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long term debt is composed of: |
|
|
|
|
|
Enterprise fund portion |
7,569,873 |
$68,177,740 |
$ - |
$75,747,613 |
|
Sales tax portion |
10,978,206 |
- |
- |
10,978,206 |
|
Benefit District Debt (estimated) |
13,036,051 |
- |
- |
13,036,051 |
|
Net long term debt, city at large, 3/31/07 |
53,485,870 |
7,569,873 |
(7,569,873) |
53,485,870 |
|
Total long term debt, 3/31/07 |
85,070,000 |
75,747,613 |
(7,569,873) |
153,247,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 March 31, 2007, expenditures for active projects in the capital improvement budget totaled $30.9 million. Funding for the projects came from $16.3 million in temporary notes along with $7.3 million in general obligation bonds and $7.3 million in grants and reimbursements.