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Financial Audit - POA FFA PMG

Financial Audit - POA FFA PMG

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Published by: SGVNews on Aug 03, 2012
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HARVEYM.ROSE
publicsectormanagementconsulting
ASSOCIATES,LLC
1390MarketStreet,Suite1150SanFrancisco,Callfornla94102(415)552-9292'(415)252·0461(FAX)www.harveyrose.com
August18,2011Mr.FabianValdez,PresidentSanGabrielPoliceOfficersAssociationP.O.Box861SanGabriel,CA91778DearMr.Valdez:WehavecompletedourreviewoftheCityofSanGabriel'sFY2007-08,FY2008-09andFY2009-10auditedfinancialstatements,aswellasitsFY2010-11AdoptedBudget.Inadditiontoreviewingthesedocuments,wecomparedtheCity'sGeneralFund,encumbrancereserves,expendituredataandindebtednesswiththoseof10SouthernCaliforniacitiesselectedbyyourorganization.Basedonthisreviewandanalysis,wewouldcharacterizethefinancialconditionoftheCityofSanGabrielasFAIR,basedonarangethatincludesexcellent,verygood,good,fair,weakandpoor.AsofJune30,2010,theCity'sGeneralFundbalanceofapproximately$11.2million,or38.4percentofannualGeneralFundexpenditures,rankedatthemidpointamongallofthecomparisoncities.Thisrepresentsan8.2percentdecreaseintheGeneralFundbalancefromthepriorfiscalyear,buta1.8percentincreaseoverallduringthethree-yearperiodofourreview.Ofthe$11.2millionGeneralFundbalance,approximately$11.0millionwasreservedforspecificpurposes.NofundsweredesignatedforotherusesbypolicyoftheCityCouncilormanagement.Therefore,only$122,874representedsurplusthatcouldbemadeavailableforanyCitypurpose.Otherfinancialattributesincluded:SanGabrielhadthehighestlevelofGeneralFundbalancereservedforencumbrances,at6.39percentofannualexpenditures,whencomparedwiththeaverageof0.35percentforthe10comparisoncities.Totalencumbrancesofapproximately$1.9millionshouldbecloselyexaminedbytheCityto
Harvey
M.
RoseAssociates,LLC
1
 
determinewhetheranyresourcescouldbereleasedtotheGeneralFundforotheroperatingpurposes.SanGabrielhadthelowestlevelofoutstandingCity-wideindebtednesswhencomparedwiththe
10
comparisoncities,at
15.1
percentoftotalassetscomparedwithanaverageof
39.1
percentforthecomparisoncities...TheCityheldinternalservicefundunrestrictednetassetsofonly
$450,264,
or'1.5percentofannualGeneralFundExpenditures,comparedwithanaverageof
2.0
percentforthe
10
comparisoncities.However,theSelfInsuranceFundincludedreservesforbothcurrentandlong-termliabilities,backedbycashofnearly
$1.9
million.Approximately
$1.9
millionreservedforthepaymentofemployeeretirementbenefitswereheldbySanGabrielinaRetirementSpecialRevenueFund,whichaccumulatedovertimeasrevenuesfromaspecialpropertytaxlevyexceededannualretirementbenefitcosts.However,
it
isimportanttonotethatinFY
2009-10,
theCitydrewdownthesereservesbecauseactualcostsexceededannualincomeby
$46t552.
Thissituationislikelytorepeatitselfthroughouttheeconomicdownturn,oruntilCalPERSinvestmentgainslowertheCity'sannualcostforemployeeretirementbenefits.TheCityhadtotalretireehealthunfundedliabilitiesofapproximately
$16.9
million,whichrepresented
48.0
percentofannualexpendituresforallfundsin
2009.
TheCityhasnotbeenpayingthefullamountofitsAnnualRequiredContribution(ARC)forretireehealthinrecentyears,contributingonly
30.0
percentoftherequirementinFY
2009-10.
Nearly
$7.1
millioninunreserved,undesignatedsurpluscashwasbeingheldintheCity'snon-majorspecialrevenuefundsattheendofFY
2009-10.
Theremainderofthereportdiscussesthesetopicsandrelatedfinancialdataingreaterdetail.Inaddition,severalattachedschedulesanddocumentscreatedfromtheCity'sauditedfinancialstatements,actuarialreportsandbudgetprovideadditionalspecificinformationpertainingtotheseissues.
Harvey
M.
RoseAssociates,LLC
GENERALFUNDBALANCE
TheCity'sGeneralFundbalancewas
$11,160,821,
or
38.4%
ofexpenditures,asofJune
30,2010
(Attachment1).ThismeanstheGeneralFundhadtheequivalentofaboutfourandahalfmonthsofannualexpendituresinfundbalance.Thisrepresentsadecreaseof
7.6%
fromtheGeneralFundbalanceattheendofthepriorfiscalyear.Detailsofthe
$11,160,821
GeneralFundbalanceforFY
2009-10
2
 
areshownbelow,alongwiththeamountsthatwerereserved,designatedoravailableassurplus.
CITYOFSANGABRIELJUNE30,2010GENERALFUNDBALANCERESERVES,DESIGNATIONSANDSURPLUS
CategoryAmount
Reserves
ReservedforEncumbrancesReservedforFutureCapitalProjectsReservedforCapitalReplacementReservedforPrepaidItemsReservedforAdvancestoOtherFunds1,857,961476,0003,750,0942,6404,951,252
TotalReservedFundBalance
$11,037,947
Unreserved,Designated
DesignatedforContingenciesDesignatedforBudgetStabilizationDesignatedforCapitalProjects
o
o
o
TotalDesignatedFundBalance
$
o
AvailableSurplus
TotalUnreservedandIlndesignatedFundBalance
TotalGeneralFundBalanceasofJune30,2010
TotalGeneralFundBalanceasofJune30,2009
$122,874$11,160,821$12,080(664
ChangefromFY2008-09toFY2009-10-$919,843Analysisoftheseamountsshowsthatapproximately$11.0millionofthe$11.1millionGeneralFundbalancewasreserved.Nofundswereumeservedbutdesignated,andonly$122,874wasunreservedandundesignated,andavailableforappropriationinFY2010-11.TheCityofSanGabrielFY2011-12AdoptedBudgetindicatedthattheCityexpectedtoendFY2010-11withanoverallGeneralFundbalanceof$429,181,whichwouldrepresentaseriousdepletionof
Harvey
M.
RoseAssociates,LLC
3

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