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HomeMy WebLinkAbout07.E- Finance DOC ID: 2052 © CITY OF SAN BERNARDINO—REQUEST FOR COUNCIL ACTION Report/Information From: Jason Simpson M/CC Meeting Date: 10/01/2012 Prepared by: Jason Simpson, Dept: Finance Ward(s): N/A Subject: Receive and File the City of San Bernardino Cash Flow Position Report as of September 26, 2012 Financial Impact: None. Motion: Receive and File Report and Information. Synopsis of Previous Council Action: None. Backaround• CASH POSITION DAY BEFORE FILING BANKRUPTCY [ ) On July 31, 2012, the day before the City declared bankruptcy, the City had approximately $6 �r million in Cash on the City's ledger. This amount is deceptive, however, because it is the net amount of the four categories below,as follows: General Fund $ (18,946,180) Discretionary Funds (3,741,023) Board Assigned/Committed 1,616,815 Restricted 27,077,679 $ 6,007,291 In essence, as of 7/31/12, the General Fund has borrowed $18.9 million from Restricted Funds and Board Assigned/Committed funds to pay for General Fund and Discretionary Fund expenditures. The main reason for this borrowing is the structural deficit that exists in the City, which put quite simply, is that expenditures exceed revenues. Absent immediate actions to reduce the structural deficit, the excess of expenses over revenues are projected to continue each month. CURRENT CASH POSITION-SEPTEMBER 26 2012 On September 26, 2012, the City's overall cash(including restricted funds) was $6,518,274 and the General Fund's negative cash balance was ($21,610,688); representing an increase in cash of $510,983 from July 31, 2012. The increase in cash is primarily due to deferral of currently due obligations totaling ($20,395,694) including payments due to bond holders, CalPERS, trade © payables, prior litigation costs, and employee leave bank cashouts. As shown on Exhibit A, the Updated:9/27/2012 by Georgeann"Gigi"Hanna I Packet Pg. 76 2052 OCity's net cash deficit is a negative($13,877,420)(See Exhibit A). The deferral of expenses has been necessary to continue to meet payroll obligations and other critical obligations necessary to provide basic level services. As estimated by staff in July, this would not have been possible without the deferral of the expenses listed above. The City would have run out of cash at the September 15`"payroll. As implemented, the deferral of expenses is intended to be short-term in nature (i.e., through September). In order to continue to provide essential services, the City must complete implementation of the restructuring approved in the Pre-Pendency Plan and continue with certain deferrals until the next phase of the Pendency Plan can be developed and approved by the Mayor and Common Council. Continued reductions in expenses, including those approved in the Pre-Pendency Plan, are necessary to ensure the City can continue to provide services, pay its obligations for services and materials necessary for staff to perform assigned tasks, pay deferred obligations, balance the budget, and to build operating capital and reserves. SuaoortineDocuments: 2012-09-26 Transmittal Memo to Common Council Regarding Cash Flow and BK Status(PDF) Updated:9/27/2012 by Georgeann "Gigi"Hanna aEµNARp,� 4 �' i r CITY OF SAN BERNARDINO, CALIFORNIA M* a TRANSMITTAL MEMORANDUM `o RpG~DED INS` W C O TO: Mayor and Common Council o CL 3 FROM: Andrea Travis-Miller, Acting City Manager ,° Jason Simpson, Director of Finance U DATE: September 26, 2012 N N SUBJECT: City of San Bernardino's Cash Flow Position— Report on Selected Analysis N N 7 w A BACKGROUND—CASH POSITION DAY BEFORE FILING BANKRUPTCY m V c On July 31, 2012, the day before the City declared bankruptcy, the City had approximately a $6 million m in Cash on the City's ledger. This amount is deceptive, however, because it is the net amount of the LL four categories below, as follows: L N 10 General Fund $ (18,946,180) Discretionary Funds (3,741,023) o Board Assigned/Committed 1,616,815 M Restricted 27,077,679 $ 6,007,291 0 0 In essence, as of 7/31/12, the General Fund has borrowed $18.9 million from Restricted Funds and L) c Board Assigned/Committed funds to pay for General Fund and Discretionary Fund expenditures. The E main reason for this borrowing is the structural deficit that exists in the City, which put quite simply, is c that expenditures exceed revenues. Absent immediate actions to reduce the structural deficit, the L) excess of expenses over revenues are projected to continue each month. c E m CURRENT CASH POSITION—SEPTEMBER 26.2012 A x On September 26, 2012, the City's overall cash (including restricted funds) was $6,518,274 and the General Fund's negative cash balance was ($21,610,688); representing an increase in cash of$510,983 from July 31, 2012. The increase in cash is primarily due to deferral of currently due obligations totaling ($20,395,694) including payments due to bond holders, CalPERS, trade payables, prior N rn litigation costs, and employee leave bank cashouts. As shown on Exhibit A, the City's net cash deficit is N a negative ($13,877,420) (See Exhibit A). N c w E r v m x Paeket Pg.78 The deferral of expenses has been necessary to continue to meet payroll obligations and other critical obligations necessary to provide basic level services. As estimated by staff in July, this would not have o been possible without the deferral of the expenses listed above. The City would have run out of cash at the September 151h payroll. c 0 As implemented, the deferral of expenses is intended to be short-term in nature (i.e., through o a September). In order to continue to provide essential services, the City must complete 3 implementation of the restructuring approved in the Pre-Pendency Plan and continue with certain 0 LL deferrals until the next phase of the Pendency Plan can be developed and approved by the Mayor and a Common Council. Continued reductions in expenses, including those approved in the Pre-Pendency v Plan, are necessary to ensure the City can continue to provide services, pay its obligations for services and materials necessary or staff to perform assigned tasks rY p g , pay deferred obligations, balance the .. budget, and to build operating capital and reserves. LO 0 N CITYWIDE FUND STRUCTURE/CATEGORIES m N Funds, which are used to account for specific activities, fall into one of four categories: Y m a A. The General Fund. This fund accounts for the majority of activity of the City's general operations m like Police, Fire, Public Works, and other services. In any City Government, there is only one General o LL Fund. r w M U B. Discretionary Funds represent funds that are Special Revenue Funds or Internal Service Funds that c do not have legal or Board restrictions. They are simply utilized to track and also spread costs to the overall organization. c C. Board Assigned/Committed Funds represent funds that the Board has made a formal or informal 'o action to assign or commit to specific purposes. c) c 0 E E D. Restricted Funds are funds restricted by external entities such as grantors, assessment districts, U 0 Measure I sales tax proceeds, and other legal restrictions such as Proposition 218 restrictions. 0 E d 2 M z E w c m F m N N N r O N r C d E r U N Q 21i' ., _ : Pa&A P g 79 0 0 CL 3 0 LL L w m U U N EXHIBIT A N y Y m a c A 0 0 LL L N A © U c a m a m v c 0 0 U c 0 E E 0 U O O E d f m z E Yl G N H O N 0) O N r O N C d O L U R a Packet Pg.80 7.E.a CITY OF SAN BERNARDINO,CALIFORNIA SELECTED ANALYSIS OF CITY CASH(unaudited) c H W 0 CASH PER CITY CALCUATION OF BOOKS* CASH SHORTAGE 0 Cash per City's books as of 912612012 ; General Fund $ (21,610,688) u. Discretionary Funds (2,463,423) Board Assigned/Committed 6,011,746 U Restricted 24,580,638 Z. U N Net Cash-Citywide(including restricted)@ 912612012 $ 6,518,274 c N_ N City's Obligations: � Unpaid City's Obligations from 7/31/12: vl Y m Due Date Obligation .a 712512012 Pension Obligation Bonds-Bond Payment (3,338,739) m 713112012 CaIPERS/PARS-Payperiod ending 7/31 (1,066,504) c 713112012 City lawsuits -litigation (1,461,100) (4,405,243) u_ r ur ea Unpaid City's Obligations from 8/31/12: v rn c 'v Due Date Obligation IM 811512012 CalPERS/PARS-Payperiod ending 8/15 (1,068,065) 0 it 813112012 CalPERS/PARS- Payperiod ending 8/31 (1,040,500) (2,108,565) c Unpaid City's Obligations from 8/31/12: 0 0 911512012 CaIPERS/PARS- Payperiod ending 9/15 (1,042,950) E E New City Obligations 9/16/12-9/30/12 0 V Due Date Obligation o 0 E 911512012 Cashouts to Separated Employees (unpaid) (299,782) °1 f 911512012 Sell Back Time(unpaid) (157,725) x 912612012 Trade payables (6,997,303) E w c Due 913012012 but bank requires advance funding: F 913012012 Payroll (4,341,176) N 913012012 CalPERS/PARS-Payperiod ending 9/15 (1,042,950) c (12,838,936) 0 Estimated Net Cash Deficit(Citywide)on 9/26/2012 including City Obligations $ (13,877,420) a c d Please note that the City's financial records have not been closed for FY 12;accordingly, there may be some adjustments to these u imounts as we finalize reconciliations and adjustment to the accounting ledgers for FY2011-12. m t; Q Packet Pg.81 7.E.a CITY OF SAN BERNARDINO Estimated Cash balances as of 9/26/12(unaudited) A B C D v OTHER 1: GENERAL DISCRETION ASSIGNED m FUND 9/26/2012 FUND ARY COMMITTED RESTRICTED C A General Fund available O M B Other Discretionary Funds N C Assigned/Committed by Council p D Legally Restricted(External or Charter) d CATEGORY SPREAD C LL 001 GENERAL FUND A (21,073,217.42) (21,073,217) 0 0 0 w 004 OLD FIRE D (532,819.17) 0 0 0 (532,819) W 105 LIBRARY FUND D (212,617.57) 0 0 0 (212,618) V 106 CEMETERY FUND D 15,522.65 0 0 0 15,523 108 ASSET FORFEITURE FUND D 1,165,618.14 0 0 0 1,165,618 tj 111 AB2744 AIR QUALITY-ALT TRANS D 46,422.30 0 0 0 46,422 •. 116 EMERGENCY SOLUTIONS GRANT D - 0 0 0 0 N 117 HOME IMPROVEMENT PART PROGRAM D (399,094.57) 0 0 0 (399,095) p 118 GANG&DRUG ASSET FORFETURE D 115,904.72 0 0 0 115,905 N, 119 CDBG A (537,470.52) (537,471) 0 0 0 120 NEIGHBORHOOD STABILIZATION PROGRAM D (896,135.46) 0 0 0 (896,135) M 121 SBETA D 2,149,083.71 0 0 0 2,149,084 io 123 FEDERAL&STATE PROGRAM D (2,753,026.04) 0 0 0 (2,753,026) y 124 ANIMAL CONTROL FUND C 161,787.89 0 0 161,788 0 y 126 GAS TAX FUND D 193,120.20 0 0 0 193,120 m 128 TRAFFIC SAFETY FUND D (826,047.77) 0 0 0 (826,048) C 129 1/2 CENT SALES&ROAD D 4,193,555.46 0 0 0 4,193,555 tD 132 SEWER LINE MAINTENANCE D 1,909,060.25 0 0 0 1,909,060 ; 133 BASEBALL STADIUM C (55,791.91) 0 0 (55,792) 0 p 134 SOCCER FIELD C 382,151.83 0 0 382,152 0 LL 135 AB 2928 TRAFFIC CONGESTION D (33,597.36) 0 0 0 (33,597) t 137 CFD 1033-FIRE STATION D 333,300.04 0 0 0 333,300 W 208 VERDEMONT CAPITAL PROJECT C 248,607.77 0 0 248,608 0 (,7 211 FIRE EQUIP ACQUISITION C 95,971.24 0 0 95,971 0 p1 240 CIEDB STREET CONSTRUCTION C (9,048.89) 0 0 (9,049) 0 C 241 PARK EXTENSION FUND C 4,519.34 0 0 4,519 0 9 242 STREET CONSTRUCTION FUND C (1,714,144.92) 0 0 (1,714,145) 0 to 243 PARK CONSTRUCTION FUND C 268,825.00 0 0 268,825 0 I 244 CEMETERY CONSTRUCTION D 52,519.06 0 0 0 0 52,519 245 SEWER LINE CONSTRUCTION C 2,315,752.08 0 0 2,315,752 0 V 246 PUBLIC IMPROVEMENT FUND C 1,079,023.50 0 0 1,079,024 0 C 247 CULTURAL DEVELOPMENT CONSTRUCTION C 477,758.23 0 0 477,758 0 G 248 STORM DRAIN CONSTRUCTION C 2,756,335.33 0 0 2,756,335 0 t0 250 TRAFFIC SYSTEMS CONSTRUCTION B (10,750.00) 0 (10,750) 0 0 C 251 SPECIAL ASSESSMENTS FUND D (2,025,723.16) 0 0 0 (2,025,723) O 254 ASSESSMENT DISTRICT FUND D 2,029,792.72 0 0 0 2,029,793 E 256 ASSESSMENT DISTRICT 1015 D 33,778.69 0 0 0 33,779 E 257 STREET LIGHTING/SWEEPING D 226.13 0 0 0 226 O 258 PROP 1B-LOCAL STREET D 2,359,556.67 0 0 0 2,359,557 U 261 LAW ENFORCEMENT FACILITY D 87,250.04 0 0 0 87,250 2 262 FIRE SUPRESSION/MEDIC D 148,179.17 0 0 0 148,179 E 263 LOCAL REGIONAL CIRCULA D 519,815.44 0 0 0 519,815 E 264 REGIONAL CIRCULATION S D 6,107,266.74 0 0 0 6,107,267 4) 265 LIBRARY FACILITIES D (9,997.99) 0 0 0 (9,998) 266 PUBLIC USE FACILITIES D 379,296.67 0 0 0 379,297 267 AQUATICS FACILITIES D 115,303.32 0 0 0 115,303 268 AB 1600 PARKLAND D 1,529,896.85 0 0 0 1,529,897 W 269 QUIMBY ACT PARKLAND D 241,344.42 0 0 0 241,344 m 305 AD#985 DEBT SERVICE FUND D 68,456.95 0 0 0 68,457 306 AD#987 DEBT SERVICE FUND D 19,019.89 0 0 0 19,020 ~ 356 AD939 NEW PINE DEBT D 25,474.44 0 0 0 25,474 N 527 INTEGRATED WASTE MANAGEMENT B 1,452,754.51 0 1,452,755 0 0 621 CENTRAL SERVICES FUND B (90,127.94) 0 (90,128) 0 0 C 629 LIABILITY INSURANCE FUND B 484,255.86 0 484,256 0 0 N 630 TELEPHONE SUPPORT FUND B (16,262.79) 0 (16,263) 0 0 0 631 UTILITY FUND B (919,524.37) 0 (919,524) 0 0 N 635 FLEET SERVICES FUND 8 (1,602,931.18) 0 (1,602,931) 0 0 C 677 UNEMPLOYMENT INSURANCE B (108,242.35) 0 (108,242) 0 0 C 678 WORKERS COMPENSATION FUND B (1,846,250.62) 0 (1,846,251) 0 0 E 679 INFORMATION TECHNOLOGY B 193,655.87 0 193,656 0 0 L 701 AD 961 TRUST AND AGENCY D 369,598.46 0 0 0 369,598 m 703 AD977A TRUST&AGENCY D 62,144.71 0 0 0 62,145 Q 704 AD977B TRUST&AGENCY D 26,718.41 0 0 0 26,718 Packet Pg.82 7_E.a OTHER GENERAL DISCRETION ASSIGNED FUND 9126/2012 FUND ARY COMMITTED RESTRICTED O A General Fund available pt B Other Discretionary Funds M C Assignetl/COmmittetl by Council C D Legally Restricted(External or Charter) p CATEGORY SPREAD �= 758 AD906 TRUST&AGENCY D 57,686.75 0 0 0 57,687 0 772 SPECIAL DEPOSITS FUND D 4,069,861.08 0 0 0 4,069,861 IL 775 CEMETERY PERPETUAL CARE D 206,386.14 0 0 0 206,386 G 784 PAYROLL TRUST FUND D 3,638,537.17 0 0 0 3,638,537 LL TOTAL $ 6,518,274 * (21,610,688) (2,463,423) 6,011,746 24,580,638 N A SUMMARY U General Fund A $ (21,610,688) U Discretionary Funds(General Fund eligible) B (2,463,423) N Board assigned/committed C 6,011,746 tp Restricted-Prop 218 Funds D 1,000,474 N Restricted D 23.580,164 W, TOTAL 6,518,274 m Y *Please note Mat the Citys finanda/records have not been dosed forFY12,accordingly,there may be some adjustments to these amounts as we finalize Y reconciliations and adjustment to the accounting ledgers for FY 2011-12. m 13 C t0 0 O W L H tti U m C 'O A O d C 0 O U c 0 E E 0 U 0 0 E d f M z E UP c rtt r m N O N r O N i+ C tU M U a Packet Pg. 83