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HomeMy WebLinkAboutPackets - Budget and Finance Committee (50)       AGENDA ORO VALLEY BUDGET AND FINANCE COMMISSION REGULAR SESSION MARCH 19, 2024 COUNCIL CHAMBERS 11000 N. LA CAÑADA DRIVE        REGULAR SESSION AT OR AFTER 4:00 PM   CALL TO ORDER   ROLL CALL   PLEDGE OF ALLEGIANCE   CALL TO AUDIENCE - at this time, any member of the public is allowed to address the Commission on any issue not listed on today’s agenda. Pursuant to the Arizona open meeting law, individual Commission members may ask Town staff to review the matter, ask that the matter be placed on a future agenda, or respond to criticism made by speakers. However, the Commission may not discuss or take legal action on matters raised during "Call to Audience." In order to speak during "Call to Audience", please specify what you wish to discuss when completing the blue speaker card.   STAFF LIAISON REPORT   REGULAR SESSION AGENDA   1.REVIEW AND APPROVAL OF THE FEBRUARY 20, 2024 REGULAR SESSION MEETING MINUTES   2.PRESENTATION AND POSSIBLE DISCUSSION OF THE TOWN'S FY 23/24 FINANCIAL UPDATE THROUGH JANUARY 2024 (Please reference attachments)   3.REVIEW AND DISCUSSION ON PROPOSED TOWN FINANCIAL AND BUDGETARY POLICIES FOR FY 2024/25   COUNCIL LIAISON COMMENTS   ADJOURNMENT   POSTED: 03/15/24 at 5:00 PM by dt. When possible, a packet of agenda materials as listed above is available for public inspection at least 24 hours prior to the Commission meeting in the Town Clerk's Office between the hours of 8:00 a.m. – 5:00 p.m. The Town of Oro Valley complies with the Americans with Disabilities Act (ADA). If any person with a disability needs any type of accommodation, please notify the Town Clerk’s Office at least five days prior to the Commission meeting at 229-4700. INSTRUCTIONS TO SPEAKERS Members of the public have the right to speak during any posted public hearing. However, those items not listed as a public hearing are for consideration and action by the Commission during the course of their business meeting. Members of the public may be allowed to speak on these topics at the discretion of the Chair. If you wish to address the Commission on any item(s) on this agenda, please complete a blue speaker card located on the Agenda table at the back of the room and give it to the Recording Secretary. Please indicate on the speaker card which item number and topic you wish to speak on, or if you wish to speak during “Call to Audience,” please specify what you wish to discuss when completing the blue speaker card. Please step forward to the podium when the Chair announces the item(s) on the agenda which you are interested in addressing. 1. For the record, please state your name and whether or not you are a Town resident. 2. Speak only on the issue currently being discussed by the Commission. Please organize your speech, you will only be allowed to address the Commission once regarding the topic being discussed. 3. Please limit your comments to 3 minutes. 4. During “Call to Audience”, you may address the Commission on any issue you wish. 5. Any member of the public speaking must speak in a courteous and respectful manner to those present. Thank you for your cooperation. “Notice of Possible Quorum of the Oro Valley Town Council, Boards, Commissions and Committees: In accordance with Chapter 3, Title 38, Arizona Revised Statutes and Section 2-4-4 of the Oro Valley Town Code, a majority of the Town Council, Board of Adjustment, Historic Preservation Commission, Parks and Recreation Advisory Board, Stormwater Utility Commission, and Water Utility Commission may attend the above referenced meeting as a member of the audience only.”    Budget and Finance Commission 1. Meeting Date:03/19/2024   Submitted By:Melissa Flores, Legal SUBJECT: REVIEW AND APPROVAL OF THE FEBRUARY 20, 2024 REGULAR SESSION MEETING MINUTES RECOMMENDATION: Staff recommends approval. EXECUTIVE SUMMARY: N/A BACKGROUND OR DETAILED INFORMATION: N/A FISCAL IMPACT: N/A SUGGESTED MOTION: I MOVE to approve the February 20, 2024 regular session meeting minutes. Attachments Draft Minutes 022024  D R A F T MINUTES BUDGET AND FINANCE COMMISSION REGULAR SESSION FEBRUARY 20, 2024 COUNCIL CHAMBERS 11000 N. LA CAÑADA DRIVE            REGULAR SESSION AT OR AFTER 4:00 PM   CALL TO ORDER   ROLL CALL Present: Joyce Garland, Member Gerald LeMay, Member Michael Mason, Chair Matthew Miller, Member Absent:Jennifer Carr, Vice Chair Staff Present:Joe Winfield, Mayor David Gephart, Chief Financial Officer Jeff Wilkins, Town Manager Wendy Gomez, Deputy Finance Director Chris Hutchison, Senior Budget Analyst Tobin Sidles, Legal Services Director Attendees: Rene Olvera, Presenter PLEDGE OF ALLEGIANCE - Chair Mason led the group in the Pledge of Allegiance.   CALL TO AUDIENCE - No comments were received.   STAFF LIAISON REPORT Chief Financial Officer, David Gephart, reported on the following: - At the Town Council Meeting, the future of the Pusch Ridge Golf Course was discussed and it was voted that the course was to remain open. - There was an item regarding the subsidence at the Valley Vista subdivision. After hearing the additional information presented, Staff identified the root cause of the subsidence issue and are working with homeowners to communicate plans on how best to move forward with that situation. - The new PSPRS Reports have been released and will be addressed during this Commission Meeting.   REGULAR SESSION AGENDA   1.REVIEW AND APPROVAL OF THE JANUARY 16, 2024 REGULAR SESSION MEETING MINUTES    2/20/24 Minutes, Budget and Finance Commission Regular Session 1    Motion by Member Gerald LeMay, seconded by Member Matthew Miller to approve the February 20, 2024 Regular Session Meetin Minutes as written.  Vote: 4 - 0 Carried   2.PRESENTATION ABOUT THE COMMUNITY'S EFFORT TO CREATE THE NEXT 10-YEAR PLAN, KNOWN AS OV'S PATH FORWARD Rene Olvera presented on Agenda Item #2. Discussion ensued amongst staff and commissioners.      3.PRESENTATION AND POSSIBLE DISCUSSION OF THE TOWN'S FY 23/24 FINANCIAL UPDATE THROUGH DECEMBER 2023 (Please reference attachments) Chief Financial Officer, Dave Gephart, presented on Agenda Item #3. Discussion ensued amongst staff and commissioners.      4.REVIEW AND DISCUSSION ON PROPOSED TOWN FINANCIAL AND BUDGETARY POLICIES Chief Financial Officer, David Gephart, leads the discussion on Agenda Item #4. Discussion ensued amongst staff and commissioners.      5.PRESENTATION AND DISCUSSION OF PSPRS PENSION FUNDING Chief Financial Officer, David Gephart, presented on Agenda Item #5. Discussion ensued amongst staff and commissioners.      COUNCIL LIAISON COMMENTS Mayor Winfield provided the following comments: - The Town Council had its annual Study Session that focused on the Town's Strategic Plan and Staff's Strategic Plan. This Study Session was less of an overview of the Strategic Plan and was more focused on topics provided by staff where the direction of the Town Council was needed. Such topics included the future use of Rooney Ranch, discussion about RTA Next, and contingencies of potential failures of that referendum, retail tourism, build-out analysis. - Some Staff, Council Members, and Commission Members of the Water Utility Commission attended a Growing Water Smart Workshop in Paradise Valley several weeks ago. There was a discussion on water management within the Town of Oro Valley. - The Housing Study conducted had been reviewed and the Town Council analyzed annexation strategies. - The Mayor further provides that the next Town Council Meeting will recognize outgoing Commission members, and that there will be presentations given on the following topics: - The Quarterly Financials that were presented this evening. - A presentation provided by the Chamber of Commerce. - Oro Valley Path Forward update by Rene Olvera. - There are no regular items on the Agenda, but a Study Session will be held to review the Comprehensive Economic Development Strategy.   ADJOURNMENT    Motion by Member Gerald LeMay, seconded by Member Matthew Miller to adjourn the meeting at 5:50 PM.  Vote: 4 - 0 Carried   2/20/24 Minutes, Budget and Finance Commission Regular Session 2   I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the regular session of the Town of Oro Valley Budget and Finance Commission of Oro Valley, Arizona held on the 20th day of February, 2024. I further certify that the meeting was duly called and held and that a quorum was present. Dated this 20th day of February, 2024. ___________________________ Melissa Flores Legal Secretary 2/20/24 Minutes, Budget and Finance Commission Regular Session 3    Budget and Finance Commission 2. Meeting Date:03/19/2024   Submitted By:Christopher Hutchison, Finance SUBJECT: PRESENTATION AND POSSIBLE DISCUSSION OF THE TOWN'S FY 23/24 FINANCIAL UPDATE THROUGH JANUARY 2024 (Please reference attachments) RECOMMENDATION: N/A EXECUTIVE SUMMARY: Please reference attachments for this item. BACKGROUND OR DETAILED INFORMATION: N/A FISCAL IMPACT: N/A SUGGESTED MOTION: N/A Attachments Town Council Report - January FY 23/24 Financial Update  Town Manager’s Office TOWN COUNCIL REPORT DATE: March 19, 2024 TO: Mayor and Council FROM: Jeff Wilkins, Town Manager David Gephart, Chief Financial officer SUBJECT: January 2024 Financial Update   This financial update is intended to provide an overview and status of financial results for the Town’s selected funds through January 2024 for fiscal year 2023/24. Please note that all amounts are preliminary, un-audited and subject to change. Additionally, estimates reflected in monthly financial updates may not include any adjusting audit entries required at year-end. EXECUTIVE SUMMARY Revenues and expenditures are performing well compared to budget. Further details are as follows: General Fund In the General Fund (see attachment A), revenues total $33.8 million or 58.8% of budget, while uses are at $33.8 million or 53.8% of budget. Highway Fund In the Highway Fund (see attachment B), sources total $2.5 million or 42.3% of budget, while expenditures total $3.9 million or 60.2% of budget. Community Center Fund In the Community Center Fund (see attachment C-1, C-2 and C-3), revenues total $6.0 million or 61.4% of budget, while uses total $6.9 million or 68.2% of budget. BACKGROUND AND DETAILED INFORMATION GENERAL FUND Attachment A shows General Fund revenues and expenditures through January, other financing uses and year-end estimates for each category. The estimated year-end projections in the General Fund are as follows: Revenues $58,629,086 Less: Expenditures ($49,793,677) Other Financing Uses ($12,274,644) Preliminary Estimated Decrease in Fund Balance: ($3,439,235)* Estimated FY24 Year-End Fund Balance $20,359,257** *The estimated decrease in fund balance is due to a budgeted transfer of $10 million to the Capital Fund for CIP projects. **The ending fund balance is currently estimated to exceed the 30% reserve policy by $5.2 million. General Fund Revenues  Local sales tax collections in the General Fund total $15.8 million or 59.8% of the budgeted amount of $26.4 million and overall are performing better than anticipated. Retail collections total $5.4 million, which is 0.7% greater than the same time period last fiscal year. Restaurant/bar collections total $1.5 million which is 2.6% greater than the same time period last fiscal year. Bed tax collections total $1.1 million which is 3.8% greater than the same time period last fiscal year. Construction sales tax collections total $3.5 million through January, which is 5.6% less than collections from the same time period last fiscal year. (The budgeted decrease for construction sales tax is 16.6%). Total local sales tax revenue in the General Fund is expected to come in about $1.0 million or 4.0% above budget due to stronger performance in construction, remote seller, bed tax and utilities. The low growth in retail sales tax is more than made up by the increase in remote seller sales tax which indicates a greater shift to online purchases from brick-and-mortar stores compared to the prior year. Please see attachment E for detailed information on General Fund local sales tax collections.  State shared revenues total $13.2 million or 57.6% of the budget amount of $23.0 million. These revenue sources are comprised of state shared sales taxes, state shared income taxes, auto-lieu fees, and Smart and Safe shared taxes. At this time, these revenues are forecasted to come in 0.2% under budget due to lower trending vehicle license tax, state income tax, and Smart & Safe tax.  License and permit revenues total about $1.1 million or 66.3% of the budget amount of $1.7 million. A total of 87 Single Family Residential (SFR) permits have been issued through January (119 budgeted). License and permit revenues are expected to come in $111,000 above budget, due to greater than expected commercial and residential development activity.  Charges for services revenues total $1.8 million or 55.3% of the budget amount of $3.2 million. Cost allocation charges to the Town’s enterprise funds for services provided, as well as Parks & Recreation fees, make up the bulk of this revenue category. Charges for services are forecasted to come in about $353,000 or 11.0% below budget due to a reduction in the enterprise service charge, lower-than-expected engineering plan review fees and court fees, and no transit farebox revenues.  Miscellaneous revenues are forecasted to come in about $291,000 above budget due primarily to a rebate received from the Arizona Municipal Risk Retention Pool (AMRRP). General Fund Uses  General Fund uses total $33.8 million or 53.8% of budget through January.  Personnel costs are forecasted to come in about $0.7 million or 1.9% less than budget, due to a combination of vacancy savings, position refills and budgeted PSPRS contributions.  Operations and maintenance are forecasted to come in about $20,000 or 0.1% less than budget, due to savings in travel and training and outside professional services.  Capital costs are forecasted to come in on budget.  Transfers out of the General Fund are expected to end the fiscal year on budget. Note that actuals through January reflect the budgeted transfer to debt service and 1/2 of the budgeted transfer to the Capital Fund for CIP. HIGHWAY FUND Attachment B shows Highway Fund revenues and expenditures through January, other financing sources, and year-end estimates for each category. The estimated year-end projections in the Highway Fund are as follows: Revenues $4,524,233 Transfers In $1,500,000 Less: Expenditures ($6,463,787) Preliminary Estimated Decrease in Fund Balance: ($438,554) Estimated FY24 Year-End Fund Balance $440,378 Please note the negative fund balance on attachment D is expected to be temporary and will be corrected when the budgeted transfer from the Capital Fund is posted. Highway Fund Revenues  State shared highway user funds total about $2.4 million or 54.9% of the budget amount of $4.3 million. These revenues are projected to come in on budget at this time.  Interest income is expected to come in at a favorable budget variance of $80,000, due primarily to earnings in the State’s Local Government Investment Pool (LGIP).  Other minor revenues in the Highway Fund are expected to come in at a favorable budget variance of $12,625 due to insurance recoveries. Highway Fund Expenditures  Highway Fund expenditures through January are at $3.9 million or 60.2% of the adopted budget of $6.5 million. Highway Fund expenditures are projected to come in $5,004 under budget due to personnel savings. COMMUNITY CENTER FUND Attachment C-1 shows consolidated Community Center Fund revenues and expenditures through January, other financing uses, and year-end estimates for each category. Attachment C-2 shows the monthly line-item detail for the contractor-managed operations, specifically revenues and expenditures associated with golf, and food and beverage operations. The totals in the revenue and expenditure categories in attachment C-2 tie to the contracted operating revenues and expenditures in attachment C-1. Attachment C-3 shows contractor operations for 36-hole, Pusch Ridge and F&B separately, as well as capital investments for golf, half cent sales tax collections, and HOA contributions. The estimated year-end projections in the Community Center Fund are as follows: Revenues $10,588,146 Less: Expenditures ($8,426,695) Transfers Out ($1,717,203) Preliminary Estimated Increase in Fund Balance: $444,248 Estimated FY24 Year-end Fund Balance $1,452,481 Community Center Fund Revenues  Revenues in the Community Center Fund through January total about $6.0 million or 61.4% of the budget amount of $9.7 million.  Contracted operating revenues total $3.1 million as of January, which is about $502,000 or 19.7% greater than the same time last fiscal year. Contracted revenues are estimated to come in $574,000 or 12.5% over budget mostly due to member dues and greens fees.  Town operating revenues through January are at about $717,000 or 61.0% of the budget amount of $1.2 million. Town operating revenues are expected to end the fiscal year about $221,000 higher than budget due mainly to member dues. Recreation programs, daily drop-ins and facility rental income are also expected to exceed budget expectations.  Local sales tax revenues through January total about $2.2 million or 58.2% of the budget amount of $3.7 million. These collections are currently projected to come in $60,000 or 1.6% above budget, due to positive trends in the remote seller category. Community Center Fund Uses  Expenditures in the Community Center Fund total $5.2 million or 61.7% of the budgeted amount of $8.4 million.  Contracted operating expenditures total $3.2 million, or 63.9% of the budgeted amount of $5.0 million. Contracted expenditures are currently estimated to come in 6.3% over budget due to greater than expected utilities and labor costs, as well as cost of sales.  Town operating expenditures total about $1.0 million or 58.2% of budget and are currently estimated to come in approximately $84,000 over budget due to trending of personnel costs, as well as contracted program instructors.  Capital expenditures total about $1.1 million or 59.0% of budget and are currently estimated to come in approximately $412,000 under budget due to $540,802 of capital projects expected to carry over into next fiscal year, namely the Community Center flat roof surface replacement, restaurant cooler/freezer modernization, and Vistoso Trails Nature Preserve safety improvements. The budget carryover is partially offset by greater than expected expenditures on equipment.  Transfers out are expected to end the year on budget. Note that actuals through January reflect the full year budgeted transfer out to debt service. The Town is not expecting any year-end sales tax support for golf operations for the current fiscal year. Contracted operations have a projected net loss of $95,697 before outside HOA contributions of $159,050, and local sales taxes generated from golf related operations estimated at $131,015. ATTACHMENTS A. Additional details on the General Fund B. Additional details on the Highway Fund C. C-1, C-2 and C-3 for additional details on the Community Center Fund and golf operations D. Fiscal year-to-date consolidated summary for all Town funds E. Breakdown of monthly local sales tax for the General Fund F. Breakdown of monthly state shared revenue collections for the General Fund ATTACHMENT A General Fund Financial Status Fiscal Year to Date: January 2024 Revenues ` Amount Percent Local Sales Tax 15,602,530$ 15,775,626$ 26,398,318$ (10,622,692)$ 60% 27,410,951$ State Shared Revenues 10,411,931 13,221,132 22,953,222 (9,732,090) 58% 22,911,468 Licenses & Permits 1,728,330 1,138,838 1,717,118 (578,280) 66% 1,828,007 Grants 384,738 276,700 657,415 (380,715) 42% 728,887 Intergovernmental 789,494 886,788 1,869,500 (982,712) 47% 1,869,500 Charges for Service 1,601,633 1,773,182 3,204,246 (1,431,064) 55% 2,851,355 Other Revenue 884,080 717,613 688,000 29,613 104% 1,028,919 Total Revenues 31,402,736$ 33,789,880$ 57,487,819$ (23,697,939)$ 59% 58,629,086$ Uses Amount Percent Personnel Services 16,746,098$ 18,456,029$ 35,698,399$ 17,242,370$ 52% 35,007,347$ Operations and Maintenance 7,492,320 7,958,345 14,169,682 6,211,336 56% 14,149,697 Capital Outlay 146,212 247,422 636,633 389,211 39% 636,633 Transfers Out 6,548,965 7,136,644 12,274,644 5,138,000 58% 12,274,644 Total Uses 30,933,594$ 33,798,440$ 62,779,358$ 28,980,918$ 54% 62,068,321$ Change in Fund Balance Total Revenues 31,402,736$ 33,789,880$ 57,487,819$ 58,629,086$ Total Uses (30,933,594) (33,798,440) (62,779,358) (62,068,321) Change in Fund Balance 469,141$ (8,561)$ (5,291,539)$ (3,439,235)$ Beginning Fund Balance 23,798,492$ Estimated Ending Fund Balance 20,359,257$ Year End Estimate FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget FY 2022/23 Actuals FY 2023/24 Actuals FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget FY 2023/24 Budget Year End Estimate Year End Estimate ATTACHMENT A Page 1 OF 6 ATTACHMENT A General Fund Financial Status Fiscal Year to Date: January 2024 Local Sales Tax Revenue Amount Percent Construction 3,661,949$ 3,458,025$ 4,609,182$ (1,151,157)$ 75% 5,009,182$ Utilities 2,235,885 2,451,080 3,721,616 (1,270,536) 66% 3,891,392 Retail 5,364,745 5,403,521 9,339,301 (3,935,779) 58% 9,308,242 Bed Tax 1,096,767 1,137,995 2,384,479 (1,246,485) 48% 2,370,534 Restaurant & Bar 1,450,725 1,487,917 2,596,724 (1,108,807) 57% 2,564,755 Other 1,610,034 1,656,077 2,982,017 (1,325,940) 56% 3,293,180 Cable Franchise 182,425 181,011 765,000 (583,989) 24% 757,395 Local Sales Tax Total 15,602,530$ 15,775,626$ 26,398,318$ (10,622,692)$ 60% 27,194,681$ State Shared Revenue Amount Percent State Income Tax 5,298,254$ 7,454,698$ 12,839,525$ (5,384,827)$ 58% 12,779,484$ State Sales Tax 3,640,134 4,249,360 7,207,659 (2,958,299) 59% 7,411,231 County Auto Lieu 1,346,921 1,380,880 2,582,388 (1,201,509) 53% 2,428,421 Smart and Safe 126,622 136,194 323,650 (187,456) 42% 292,332 State Shared Total 10,411,931$ 13,221,132$ 22,953,222$ (9,732,090)$ 58% 22,911,468$ FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget Year End Estimate Year End Estimate FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget $7.5 $4.2 $1.4 $0.1 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 State Income Tax State Sales Tax County Auto Lieu Smart and SafeMillions FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget $3.5 $2.5 $5.4 $1.1 $1.5 $1.7 $0.2$0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 Millions FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget No explanation necessary ATTACHMENT A Page 2 OF 6 ATTACHMENT A General Fund Financial Status Fiscal Year to Date: January 2024 Licenses & Permits Revenue Amount Percent Business Licenses & Permits 131,809$ 215,884$ 300,000$ (84,116)$ 72% 305,000$ Residential Building Permits 600,935 702,650 1,090,118 (387,468) 64% 1,161,007 Commercial Building Permits 882,079 186,234 250,000 (63,766) 74% 300,000 Other Building Fees & Charges 113,507 34,070 77,000 (42,930) 44% 62,000 Licenses & Permits Total 1,728,330$ 1,138,838$ 1,717,118$ (578,280)$ 66% 1,828,007$ Grants Revenue Amount Percent Federal grants 342,162$ 187,411$ 582,415$ (395,004)$ 32% 581,401$ State Grants 42,575 89,289 75,000 14,289 119% 147,486 Grants Total 384,738$ 276,700$ 657,415$ (380,715)$ 42% 728,887$ FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget Year End Estimate FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget Year End Estimate $0.2 $0.7 $0.2 $0.0 $0.0 $0.5 $1.0 $1.5 Business Licenses & Permits Residential Building Permits Commercial Building Permits Other Building Fees & ChargesMillions FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget $0.2 $0.1 $0.0 $0.2 $0.4 $0.6 $0.8 Federal grants State GrantsMillions FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget No explanation necessary ATTACHMENT A Page 3 OF 6 ATTACHMENT A General Fund Financial Status Fiscal Year to Date: January 2024 Intergovernmental Revenue Amount Percent School Resource Officers 44,541$ 90,000$ 90,000$ -$ 100% 90,000$ RTA Reimbursements 744,953 796,788 1,774,000 (977,212) 45% 1,774,000 PC Library District Reimburse - - 5,500 (5,500) - 5,500 Intergovernmental Total 789,494$ 886,788$ 1,869,500$ (982,712)$ 47% 1,869,500$ Charges for Service Revenue Amount Percent Enterprise Funds Cost Allocation 961,897$ 1,068,355$ 1,897,065$ (828,710)$ 56% 1,653,935$ Recreation Fees 377,462 489,489 796,840 (307,351) 61% 797,140 Development Fees 72,125 49,738 116,080 (66,343) 43% 95,160 Court Fees 100,206 74,346 194,400 (120,054) 38% 135,000 Other 89,944 91,255 199,861 (108,606) 46% 170,120 Charges for Service Total 1,601,633$ 1,773,182$ 3,204,246$ (1,431,064)$ 55% 2,851,355$ FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget Year End Estimate FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget Year End Estimate $0.1 $0.8 $0.0 $0.0 $0.5 $1.0 $1.5 $2.0 School Resource Officers RTA Reimbursements PC Library District ReimburseMillions FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget $1.1 $0.5 $0.0 $0.1 $0.1 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 $1.6 $1.8 $2.0 Enterprise Funds Cost Allocation Recreation Fees Development Fees Court Fees OtherMillions FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget ATTACHMENT A Page 4 OF 6 ATTACHMENT A General Fund Financial Status Fiscal Year to Date: January 2024 Other Revenue Amount Percent Fines 51,191$ 32,047$ 125,000$ (92,953)$ 26% 53,950$ Interest Earnings 275,060 319,717 300,000 19,717 107% 402,331 Miscellaneous 557,828 365,849 263,000 102,849 139% 572,638 Other Revenue Total 884,080$ 717,613$ 688,000$ 29,613$ 104% 1,028,919$ FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget Year End Estimate $0.0 $0.3 $0.4 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 Fines Interest Earnings MiscellaneousMillions FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget ATTACHMENT A Page 5 OF 6 ATTACHMENT A General Fund Financial Status Fiscal Year to Date: January 2024 Expenditures by Department Amount Percent Clerk 240,147$ 218,681$ 419,897$ 201,216$ 52% 418,693$ Community & Econ. Dev. 1,719,702 1,832,248 3,882,445 2,050,197 47% 3,779,916 Council 149,244 134,805 209,203 74,398 64% 209,203 Finance 543,114 455,530 850,456 394,926 54% 837,979 General Administration 2,281,831 1,381,881 2,555,536 1,173,655 54% 2,555,536 Human Resources 312,057 334,131 673,755 339,624 50% 666,576 Information Technology 2,697,056 3,737,752 6,004,600 2,266,848 62% 5,959,357 Legal 538,849 570,681 1,132,503 561,822 50% 1,128,116 Manager 637,263 810,232 1,760,479 950,247 46% 1,651,253 Parks & Recreation 1,949,734 2,322,816 4,743,140 2,420,324 49% 4,433,701 Police 9,716,039 10,838,952 20,436,591 9,597,639 53% 20,393,738 Public Works 3,082,438 3,506,374 6,825,447 3,319,073 51% 6,759,523 Town Court 517,156 517,713 1,010,662 492,949 51% 1,000,086 Total Department Expenditures 24,384,629$ 26,661,796$ 50,504,714$ 23,842,918$ 53% 49,793,677$ FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget Year End Estimate $0.2 $1.8 $0.1 $0.5 $1.4 $0.3 $3.7 $0.6 $0.8 $2.3 $10.8 $3.5 $0.5 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 Millions FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget General Administration in FY23 is primarily comprised of an $885,000 settlement for Vistoso Trails Nature Preserve. Council actuals as a percent of budget reflect dues paid to PAG and the AZ League of Cities and Towns, which are front loaded at the beginning of the fiscal year. InformationTechnology actuals as a percent of budget are due to planned mobile data computer and PC replacements ATTACHMENT A Page 6 OF 6 ATTACHMENT B Highway Fund Financial Status Fiscal Year to Date: January 2024 Sources ` Amount Percent Licenses & Permits 16,896$ 13,460$ 25,000$ (11,541)$ 54% 25,000$ Highway User Revenue 2,345,652 2,379,124 4,334,608 (1,955,484) 55% 4,334,608 Interest Earnings 70,060 101,755 70,000 31,755 145% 150,000 Miscellaneous 6,419 13,951 3,000 10,951 465% 15,625 Transfers In - - 1,500,000 (1,500,000) - 1,500,000 Total Sources 2,439,026$ 2,508,290$ 5,932,608$ (3,424,318)$ 42% 6,025,233$ Expenditures Amount Percent Personnel 634,892$ 672,925$ 1,262,861$ 589,936$ 53% 1,257,857$ O&M 329,053 509,932 1,010,930 500,998 50% 1,010,930 Capital Outlays 1,193,182 2,713,157 4,195,000 1,481,843 65% 4,195,000 Total Expenditures 2,157,127$ 3,896,014$ 6,468,791$ 2,572,777$ 60% 6,463,787$ Change in Fund Balance Total Sources 2,439,026$ 2,508,290$ 5,932,608$ 6,025,233$ Total Expenditures (2,157,127) (3,896,014) (6,468,791) (6,463,787) Change in Fund Balance 281,898$ (1,387,724)$ (536,183)$ (438,554)$ Beginning Fund Balance 878,932$ Estimated Ending Fund Balance 440,378$ Year End Estimate Year End Estimate FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Year End Estimate FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget ATTACHMENT B PAGE 1 OF 1 ATTACHMENT C-1 Community Center Fund Financial Status Fiscal Year to Date: January 2024 Revenues Amount Percent Local Sales Tax 2,103,398$ 2,168,709$ 3,726,016$ (1,557,307)$ 58% 3,786,076$ Contracted Operating Revenues 2,551,385 3,053,531 4,609,486 (1,555,955) 66% 5,183,890 Town Operating Revenues 572,057 716,982 1,175,800 (458,818) 61% 1,397,012 Other Revenues 39,182 26,379 197,150 (170,771) 13% 221,168 Total Revenues 5,266,022$ 5,965,601$ 9,708,452$ (3,742,851)$ 61% 10,588,146$ Uses Amount Percent Contracted Operating Expenditures 2,761,615$ 3,171,434$ 4,965,264$ 1,793,830$ 64% 5,279,587$ Town Operating Expenditures 911,631 963,694 1,654,718 691,024 58% 1,738,371 Capital Outlay 1,037,253 1,074,821 1,820,500 745,679 59% 1,408,737 Transfers Out 2,028,066 1,717,203 1,717,203 - 100% 1,717,203 Total Uses 6,738,565$ 6,927,151$ 10,157,685$ 3,230,534$ 68% 10,143,898$ Change in Fund Balance Total Revenues 5,266,022$ 5,965,601$ 9,708,452$ 10,588,146$ Total Uses (6,738,565) (6,927,151) (10,157,685) (10,143,898) Change in Fund Balance (1,472,543)$ (961,549)$ (449,233)$ 444,248$ Beginning Fund Balance 1,008,233$ Estimated Ending Fund Balance 1,452,481$ FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget Year End Estimate Year End Estimate FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget Year End Estimate FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget ATTACHMENT C-1 PAGE 1 OF 4 ATTACHMENT C-1 Community Center Fund Financial Status Fiscal Year to Date: January 2024 Local Sales Tax Revenue Amount Percent Retail 1,341,186$ 1,350,880$ 2,334,825$ (983,945)$ 58% 2,327,060$ Restaurant & Bar 362,681 371,979 649,181 (277,202) 57% 641,189 Other 399,531 445,849 742,010 (296,161) 60% 817,827 Local Sales Tax Total 2,103,398$ 2,168,709$ 3,726,016$ (1,557,307)$ 58% 3,786,076$ Contracted Operating Revenue Amount Percent Golf Revenue, Trail & Cart Fees 1,200,111$ 1,508,170$ 2,424,211$ (916,041)$ 62% 2,569,390$ Member Dues 778,375 916,931 1,219,000 (302,069) 75%1,514,000 Food & Beverage 384,310 408,802 641,975 (233,173) 64%714,500 Merchandise & Other 188,589 219,629 324,300 (104,671) 68% 386,000 Contracted Revenue Total 2,551,385$ 3,053,531$ 4,609,486$ (1,555,955)$ 66% 5,183,890$ Year End Estimate FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget Actual Vs. Budget Year End Estimate FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget $1.5 $0.9 $0.4 $0.2 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 Golf Revenue, Trail & Cart Fees Member Dues Food & Beverage Merchandise & OtherMillions FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget $1.4 $0.4 $0.4 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 Retail Restaurant & Bar OtherMillions FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget ATTACHMENT C-1 PAGE 2 OF 4 ATTACHMENT C-1 Community Center Fund Financial Status Fiscal Year to Date: January 2024 Town Operating Revenue Amount Percent Daily Drop-Ins 24,752$ 47,217$ 50,500$ (3,283)$ 93% 77,516$ Member Dues 410,991 520,300 660,000 (139,700) 79% 819,247 Recreation Programs 91,514 96,032 380,000 (283,968) 25% 405,653 Facility Rental Income 44,800 53,433 85,300 (31,867) 63% 94,596 Town Operating Revenue Total 572,057$ 716,982$ 1,175,800$ (458,818)$ 61% 1,397,012$ Other Revenue Amount Percent Interest Income 35,045$ 21,277$ 35,000$ (13,723)$ 61% 57,000 HOA Contributions - - 159,050 (159,050) - 159,050 Miscellaneous 4,137 5,102 3,100 2,002 165% 5,118 Other Revenue Total 39,182$ 26,379$ 197,150$ (170,771)$ 13% 221,168$ Year End Estimate FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget Year End Estimate FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget $0.0 $0.5 $0.1 $0.1 $0.0 $0.1 $0.2 $0.3 $0.4 $0.5 $0.6 $0.7 Daily Drop-Ins Member Dues Recreation Programs Facility Rental Income FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget $0.0 $0.0 $0.0 $0.0 $0.1 $0.2 Interest Income HOA Contributions MiscellaneousMillions FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget ATTACHMENT C-1 PAGE 3 OF 4 ATTACHMENT C-1 Community Center Fund Financial Status Fiscal Year to Date: January 2024 Contracted Operating Expenditures Amount Percent Personnel 948,983$ 1,051,654$ 1,738,221$ (686,567)$ 61% 1,829,774$ Food & Beverage 330,047 386,973 550,992 (164,019) 70% 625,500 Operations & Maintenance 1,398,890 1,637,908 2,513,367 (875,459) 65% 2,661,629 Equipment Leases 83,694 94,898 162,684 (67,786) 58% 162,684 Contracted Expenditures Total 2,761,615$ 3,171,434$ 4,965,264$ (1,793,830)$ 64% 5,279,587$ Town Operating Expenditures Amount Percent Personnel 522,536$ 617,194$ 1,114,639$ (497,445) 55% 1,187,609$ Operations & Maintenance 370,305 343,911 540,079 (196,168) 64% 535,197 Town Operating Expenditures Total 892,841$ 961,106$ 1,654,718$ (693,612)$ 58% 1,722,806$ 550,000 75,000 198,000 65,000 100,000 285,000 75,000 75,000 255,000 20,000 12,000 7,500 12,000 15,000 10,000 7,000 35,000 8,000 16,000 1,820,500 Year End Estimate FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget Actual Vs. Budget List of FY24 Capital Projects: Canada Golf Crs Pathway Impro CC Fire Alarm Upgrade CC Flat Roof Replacement Year End Estimate Overlook Cooler/freezer Modern Life Cycle Repl - Bunkers & Turf Red PR ADA & Code Compliance PR Improvements VTNP ADA Restrooms VTNP Improvements PR Concrete ADA pad CC Walking path lighting External Pool lighting Facility beautification Outdoor movie screen replacement Facility landscaping Pool deck maintenance Pool handrails PR Tennis bleacher demo PR Tennis Court Gate repair $0.6 $0.3 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 Personnel Operations & MaintenanceMillions FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget $1.1 $0.4 $1.6 $0.1 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 Personnel Food & Beverage Operations & Maintenance Equipment LeasesMillions FY 2022/23 Actuals FY 2023/24 Actuals FY 2023/24 Budget ATTACHMENT C-1 PAGE 4 OF 4 ATTACHMENT C-2 Budget Last Year Budget Last Year Actual Budget Variance Last Year Variance Actual Budget Variance Last Year Variance Rounds 4,405 3,700 705 4,071 334 Rounds ‐ Member 25,306 20,600 4,706 22,329 2,977 677 900 (223)811 (134)Rounds ‐ Outing 4,109 3,450 659 3,287 822 5,575 6,100 (525)5,628 (53)Rounds ‐ Public 24,948 23,825 1,123 24,810 138 ==================================================================================================================================================================== 10,657 10,700 (43)10,510 147 Total Rounds 54,363 47,875 6,488 50,426 3,937 Revenue 255,898 261,500 (5,602)237,526 18,372 Green Fees 1,050,654 960,500 90,154 991,882 58,772 29,800 24,675 5,125 34,281 (4,480)Cart Fees 194,241 166,496 27,745 187,003 7,238 5,836 5,000 836 5,693 143 Driving Range 23,765 22,000 1,765 21,226 2,539 0 0 0 0 0 Golf Cards/Passes 0 0 0 0 0 22,509 21,575 934 20,247 2,262 Pro Shop Sales 142,761 138,975 3,786 136,423 6,337 28,879 25,900 2,979 34,256 (5,377)Food (Food & Soft Drinks) 204,337 164,775 39,562 200,408 3,930 27,396 27,900 (504)29,367 (1,971)Beverages (Alcohol) 195,953 158,025 37,928 174,792 21,161 (1,569)0 (1,569) (465) (1,104)Other Food & Beverage Revenue 8,512 0 8,512 9,110 (598) 7,347 2,900 4,447 6,398 950 Other Golf Revenues (Club Rent, Handica 40,485 14,050 26,435 23,825 16,661 895 3,150 (2,255)3,332 (2,437)Clinic / School Revenue 14,553 13,175 1,378 17,746 (3,193) 184,912 108,000 76,912 130,992 53,920 Dues Income ‐ Monthly Dues 912,502 695,000 217,502 774,295 138,206 0 0 0 0 0 Initiation Fee Income / Annual Membersh 4,429 0 4,429 4,080 349 (85)0 (85)4,114 (4,199)Miscellaneous Income and Discounts 21,830 0 21,830 10,595 11,234 ================================================================================= ============================================================= ================ 561,819 480,600 81,219 505,740 56,079 Total Revenue 2,814,021 2,332,996 481,025 2,551,385 262,637 Cost of Sales 15,389 15,018 (371)17,260 1,871 COGS ‐ Pro Shop 105,069 96,798 (8,272)105,516 447 11,325 7,607 (3,719)7,051 (4,275)COGS ‐ Food 74,192 47,333 (26,860)57,962 (16,230) 2,088 1,120 (968)1,235 (853)COGS ‐ Non‐Alcoholic Beverages 11,827 8,149 (3,679)10,035 (1,792) 7,908 8,363 455 8,163 255 COGS ‐ Alcohol 55,166 47,423 (7,744)46,612 (8,554) ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 36,710 32,107 (4,603)33,708 (3,002)Total Cost of Sales 246,255 199,701 (46,554)220,125 (26,130) ================================================================================= ============================================================= ================ 525,109 448,493 76,616 472,032 53,077 GROSS INCOME 2,567,766 2,133,295 434,472 2,331,260 236,507 Labor 37,010 41,485 4,475 36,889 (122)Golf Operation Labor 244,494 235,456 (9,039)231,024 (13,470) 9,867 10,063 196 10,867 1,000 General and Administrative 78,694 74,438 (4,256)81,519 2,825 75,443 68,611 (6,833)69,592 (5,852)Maintenance and Landscaping 518,961 483,800 (35,161)449,651 (69,311) 28,532 25,266 (3,266)27,775 (757)F&B 193,847 155,128 (38,719)158,321 (35,527) 7,873 8,558 685 5,042 (2,831)Sales and Marketing 53,593 50,608 (2,985)40,978 (12,615) ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 158,725 153,982 (4,743)150,164 (8,561)Total Direct Labor 1,089,590 999,430 (90,160)961,492 (128,097) 13,117 13,858 742 26,379 13,263 Total Payroll Taxes 87,664 89,949 2,284 90,960 3,295 10,640 14,300 3,660 10,460 (180)Total Medical/Health Benefits 76,215 55,400 (20,815)76,520 304 2,233 2,940 707 2,099 (134)Total Workmans Comp 15,705 13,205 (2,500)13,788 (1,917) ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 25,990 31,098 5,109 38,937 12,948 Total Payroll Burden 179,585 158,554 (21,031)181,268 1,683 ================================================================================= ============================================================= ================ 184,715 185,081 366 189,101 4,386 Total Labor 1,269,174 1,157,984 (111,190)1,142,760 (126,414) Other Operational Expenses 12,018 8,372 (3,646)5,941 (6,078)Golf Ops 45,810 41,856 (3,954)41,463 (4,347) 13,079 16,765 3,686 13,002 (76)G&A 70,781 87,702 16,921 90,594 19,814 33,187 27,668 (5,519)39,867 6,681 Maintenance 429,631 461,201 31,570 446,717 17,086 3,119 3,180 61 2,727 (392)F&B 28,268 25,845 (2,423)21,662 (6,606) 3,708 4,625 917 5,029 1,320 Sales and Marketing 30,500 17,725 (12,775)27,245 (3,255) 13,259 13,259 0 13,259 0 Golf Cart Leases 92,811 92,813 2 81,905 (10,906) 298 298 (0)298 0 Equipment Leases 2,087 2,086 (1)1,789 (298) 45,290 27,417 (17,873)11,193 (34,097)Utilities ‐ Maintenance 733,688 536,094 (197,594)438,142 (295,546) 21,316 14,750 (6,566)17,533 (3,783)Utilities ‐ G&A 130,688 106,750 (23,938)109,189 (21,498) 10,612 10,612 (0)10,404 (208)Management Fees 74,285 74,284 (1)72,828 (1,457) (2,224)4,000 6,224 2,493 4,717 Insurance ‐ P&C 17,457 39,000 21,543 39,697 22,239 ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 153,662 130,946 (22,716)121,745 (31,916)Total Other Operational Expenses 1,656,005 1,485,356 (170,649)1,371,230 (284,775) ================================================================================= ============================================================= ================ 338,377 316,027 (22,350)310,847 (27,530)Total Expenses 2,925,179 2,643,340 (281,839)2,513,990 (411,189) ================================================================================= ============================================================= ================ 186,732 132,466 54,266 161,185 25,546 EBITDAR (357,412)(510,045)152,632 (182,730)(174,682) ================================================================================= ============================================================= ================ 186,732 132,466 54,266 161,185 25,546 EBITDA (357,412)(510,045)152,632 (182,730)(174,682) Interest Expense/Dep&Amt (30,164)0 30,164 0 30,164 Other Expense (239,510)0 239,510 0 239,510 0 0 0 0 0 Capital Improvements/Cap Reserve 0 0 0 27,500 27,500 ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ (30,164)0 30,164 0 30,164 Total Interest Expense (239,510)0 239,510 27,500 267,010 ================================================================================= ============================================================= ================ 216,896 132,466 84,430 161,185 55,710 Net Income (117,902)(510,045)392,142 (210,230)92,328 El Conquistador Golf Club For the Month Ending January 31st, 2024 January YTD ATTACHMENT C-3Operating:Through JanBudgetCumulativeFY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY2024 FY 2024 ActualsRevenue36 Hole 500,158           1,883,452         1,798,304     2,171,484     2,367,136    2,593,395    3,522,083   3,674,489   3,856,880      2,435,873      3,553,371        24,803,254     Pusch ridge‐                   105,370            99,134          59,726          106,184       98,316          ‐               380,375      414,225         208,856         433,565           1,472,186       F&B ‐ Overlook‐                   606,171            708,594        745,766        671,582       554,336       448,782      671,479      725,222         408,802         622,550           5,540,734       Total Revenue500,158              2,594,993            2,606,032        2,976,976        3,144,902       3,246,047       3,970,865   4,726,343   4,996,327      3,053,531      4,609,486        31,816,174     Expenses36 Hole 1,112,252        3,588,714         3,936,889     3,817,932     3,771,706    3,891,341    3,915,216   3,740,982   3,929,757      2,495,464      3,993,980        34,200,253     Pusch ridge‐                   253,513            256,769        236,160        230,196       287,112        ‐               319,702      390,959         288,996         420,292           2,263,407       F&B ‐ Overlook‐                   861,740            823,383        841,866        785,499       701,538       440,382      630,509      596,910         386,974         550,992           6,068,801       Total Expenses1,112,252           4,703,967            5,017,041        4,895,958        4,787,401       4,879,991       4,355,598   4,691,193   4,917,626      3,171,434      4,965,264        42,532,461     Profit/(Loss)36 Hole (612,094)             (1,705,262)           (2,138,585)      (1,646,448)       (1,404,570)     (1,297,946)     (393,133)     (66,493)       (72,877)          (59,591)          (440,609)          (9,396,999)      Pusch ridge‐                      (148,143)              (157,635)         (176,434)          (124,012)         (188,796)          ‐               60,673         23,266           (80,140)          13,273             (791,221)         F&B ‐ Overlook‐                      (255,569)              (114,789)         (96,100)            (113,917)         (147,202)         8,400           40,970         128,312         21,828           71,558             (528,067)         Total Operating Profit/(Loss)(612,094)             (2,108,974)           (2,411,009)      (1,918,982)       (1,642,499)     (1,633,944)     (384,733)     35,150         78,701           (117,903)        (355,778)          (10,716,287)    Capital Investments45,116                  47,909             29,464             ‐                       ‐                      131,035      2,828,061   4,619,904      2,103,403      2,745,000 9,804,892       Initial purchase (1)300,000               350,000           350,000           ‐                       ‐                      ‐                ‐                ‐                   ‐                   ‐                   1,000,000       Notes: (1) $1,000,000 original purchase of courses and community center1/2 cent sales tax 506,710              2,030,750            2,199,466        2,330,941        2,463,034       2,584,916       2,947,420   3,535,507   3,707,578      2,168,709      3,726,016        24,475,031     HOA contributions‐                       ‐                         ‐                    ‐                    ‐                   ‐                  125,000      159,050      159,050          ‐                  159,050           443,100          POST AGREEMENTPRE AGREEMENTTown of Oro ValleyGolf AnalysisATTACHMENT  C‐3PAGE 1 OF 2 ATTACHMENT C-3Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May JunFY 2022Gross Income 229,456          231,657          245,357          246,063          421,446          388,213          469,675          503,028          597,798          492,033          313,725          219,663          Expenses 323,615          307,066          422,292          453,613          328,298          269,604          317,597          347,338          337,511          371,044          351,526          521,466          Net Income/(Loss) (94,159)           (75,408)           (176,935)         (207,550)         93,147            118,609          152,078          155,690          260,286          120,989          (37,801)           (301,802)         FY 2023Gross Income 218,180          210,232          258,241          252,747          499,632          394,901          472,032          541,889          636,010          523,324          315,175          231708Expenses 306,974          296,210          432,727          576,529          322,700          297,856          310,847          307,918          355,497          313,621          429,007          558,232          Net Income/(Loss) (88,794)           (85,978)           (174,487)         (323,782)         176,932          97,044            161,185          233,971          280,512          209,703          (113,832)         (326,524)         FY 2024Gross Income 213,698          225,040          295,419          332,783          495,412          480,305          525,109          Expenses 406,558          333,614          420,523          454,504          412,959          349,298          308,213          Net Income/(Loss) (192,860)         (108,573)         (125,103)         (121,721)         82,453            131,007          216,896           ‐                    ‐                    ‐                    ‐                    ‐                   Town of Oro ValleyGolf Analysis ‐ Contractor Financials ‐ 200,000 400,000 600,000 800,000Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May JunComparison of Gross Income by Month ‐Total Golf OperationsFY 2022FY 2023FY 2024 ‐ 200,000 400,000 600,000 800,000Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May JunComparison of Total Expenses by Month ‐Total Golf OperationsFY 2022FY 2023FY 2024 (400,000) (200,000) ‐ 200,000 400,000Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May JunComparison of Net Income/(Loss) by Month ‐Total Golf OperationsFY 2022FY 2023FY 2024ATTACHMENT C‐3PAGE 2 0F 2 ATTACHMENT DConsolidated Year-to-Date Financial Report through January 2024FY 2023/2024FundFY 23/24Beginning BalanceRevenueOther Fin Sources/Transfers InTotal In Personnel O&M CapitalDebt ServiceOther Fin Uses/ Transfers OutTotal OutFund Balance Through January 2024General Fund 23,798,492 33,789,880 33,789,880 18,456,029 7,958,345 247,422 7,136,644 33,798,440 23,789,932 Highway Fund 878,932 2,508,290 2,508,290 672,925 509,932 2,713,157 3,896,014 (508,792) Grants and Contributions Fund 162,207 1,633,437 1,633,437 1,524 19,607 1,078,320 522,701 1,622,152 173,493 Seizure & Forfeiture - Justice/State 230,193 34,653 34,653 30,860 30,860 233,986 Community Center Fund 1,008,233 5,965,601 5,965,601 617,194 3,517,933 1,074,821 1,717,203 6,927,151 46,684 Municipal Debt Service Fund 273,719 153,373 3,902,708 4,056,081 8,126 4,027,853 4,035,979 293,821 Water Resource System & Dev. Impact Fee Fund 18,419,840 1,672,366 1,672,366 80,655 4,318,297 73,005 4,471,957 15,620,249 Townwide Roadway Dev Impact Fee Fund 2,188,554 201,117 201,117 377 377 2,389,294 Parks & Recreation Impact Fee Fund 671,640 60,551 60,551 176 600,000 600,176 132,015 Police Impact Fee Fund 64,727 30,369 30,369 50 46,553 46,603 48,493 Capital Fund 24,550,287 1,530,577 5,000,000 6,530,577 151,143 2,671 9,724,869 9,878,684 21,202,180 PAG/RTA Fund 808,007 30,509 30,509 49,503 49,503 789,013 Water Utility 12,293,771 13,673,619 522,701 14,196,320 1,954,941 5,375,052 706,831 3,472,635 2,308 11,511,767 14,978,324 Stormwater Utility923,112 1,038,773 1,038,773 508,669 163,305 50,700 722,673 1,239,212 Benefit Self Insurance Fund 2,895,866 2,517,463 2,517,463 2,447,634 2,447,634 2,965,695 Recreation In-Lieu Fee Fund 17,216 459 459 - 17,675 Total 89,184,796 64,841,038 9,425,409 74,266,447 22,362,425 20,114,723 20,563,921 7,573,493 9,425,409 80,039,971 83,411,272 ATTACHMENT EGeneral Fund Local Sales Tax Collections FY 2023/24JULAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNTOTALConstruction Sales Tax566,321 609,737 391,196 422,231 488,917 493,394 486,229 3,458,025 Utility Sales Tax250,515 368,788 435,027 373,297 365,463 336,739 321,251 2,451,080 Retail Sales Tax728,452 730,517 682,418 725,728 645,288 841,754 1,049,364 5,403,521 Bed Tax144,726 137,921 139,535 165,545 212,911 192,359 144,997 1,137,995 Restaurant & Bar Sales Tax192,259 193,105 215,297 223,296 212,172 217,665 234,122 1,487,917 All Other Local Sales Tax *218,097 226,809 233,029 236,524 296,446 221,473 223,699 1,656,077 Monthly Total 2,100,370$ 2,266,876$ 2,096,503$ 2,146,622$ 2,221,197$ 2,303,384$ 2,459,664$ 15,594,615$ Cumulative Total 2,100,370$ 4,367,246$ 6,463,748$ 8,610,370$ 10,831,567$ 13,134,951$ 15,594,615$ -$ Monthly variance (63,193)$ 130,347$ (7,816)$ 27,123$ 154,685$ 46,257$ (112,892)$ Cumulative variance(63,193)$ 67,154$ 59,338$ 86,460$ 241,146$ 287,402$ 174,510$ FY 2022/23JULAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNTOTALConstruction Sales Tax 586,039 575,738 540,567 518,177 382,338 478,496 580,594 364,554 331,226 376,895 358,367 432,766 5,525,757 Utility Sales Tax317,210 371,973 356,012 334,868 295,825 266,797 293,200 333,721 320,870 270,869 245,486 302,123 3,708,954 Retail Sales Tax 716,720 680,117 691,138 713,672 729,067 838,562 995,470 705,424 711,636 806,316 786,447 755,079 9,129,647 Bed Tax 146,263 128,132 114,626 142,628 213,392 186,186 165,540 256,564 320,963 362,494 207,226 226,474 2,470,488 Restaurant & Bar Sales Tax 186,438 180,577 199,405 204,482 205,881 227,422 246,520 215,557 281,190 281,567 256,102 236,540 2,721,681 All Other Local Sales Tax *210,893 199,992 202,571 205,672 240,009 259,665 291,232 268,511 287,294 315,096 259,556 258,710 2,999,201 Monthly Total 2,163,563$ 2,136,529$ 2,104,319$ 2,119,499$ 2,066,512$ 2,257,128$ 2,572,556$ 2,144,331$ 2,253,179$ 2,413,237$ 2,113,184$ 2,211,693$ 26,555,729$ Cumulative Total2,163,563$ 4,300,092$ 6,404,411$ 8,523,910$ 10,590,421$ 12,847,549$ 15,420,105$ 17,564,436$ 19,817,615$ 22,230,852$ 24,344,036$ 26,555,729$ *Does not include cable franchise fees or sales tax audit revenues ATTACHMENT FGeneral Fund State Shared RevenuesFY 2023/24JULAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNTOTALState Shared Income Tax 1,064,957 1,064,957 1,064,957 1,064,957 1,064,957 1,064,957 1,064,957 7,454,698 State Shared Sales Tax 585,790 598,642 580,255 602,020 587,629 599,429 695,594 4,249,360 County Auto Lieu 189,254 220,268 179,819 201,993 183,567 183,086 222,892 1,380,880 Smart and Safe- - - - - 136,194 - 136,194 Monthly Total 1,840,001$ 1,883,868$ 1,825,032$ 1,868,970$ 1,836,152$ 1,983,666$ 1,983,443$ 13,221,132$ Cumulative Total 1,840,001$ 3,723,869$ 5,548,900$ 7,417,870$ 9,254,023$ 11,237,689$ 13,221,132$ Monthly variance 677,489$ 462,516$ 193,669$ 356,835$ (14,336)$ 348,734$ 784,294$ (1,739,561)$ Cumulative variance 677,489$ 1,140,005$ 1,333,673$ 1,690,508$ 1,676,173$ 2,024,907$ 2,809,201$ (18,969,634)$ FY 2022/23JULAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNTOTALState Shared Income Tax 756,893 756,894 756,893 756,893 756,893 756,893 756,895 756,893 756,893 756,894 756,894 756,893 9,082,721 State Shared Sales Tax 308,350 462,557 664,529 559,547 823,170 575,594 246,387 1,007,946 568,981 656,403 601,331 602,722 7,077,517 County Auto Lieu 97,269 201,901 209,941 195,695 270,425 175,823 195,867 182,872 267,340 190,731 217,316 216,309 2,421,489 Smart and Safe- - - - - 126,622 - - - - - 145,164 271,786 Opioid Settlement- - - - - - - - 91,120 - 6,528 18,472 116,120 Monthly Total 1,162,512$ 1,421,352$ 1,631,363$ 1,512,135$ 1,850,488$ 1,634,932$ 1,199,149$ 1,947,711$ 1,684,334$ 1,604,028$ 1,582,069$ 1,739,561$ 18,969,634$ Cumulative Total 1,162,512$ 2,583,864$ 4,215,227$ 5,727,362$ 7,577,850$ 9,212,782$ 10,411,931$ 12,359,642$ 14,043,976$ 15,648,004$ 17,230,073$ 18,969,634$    Budget and Finance Commission 3. Meeting Date:03/19/2024   Submitted By:David Gephart, Finance SUBJECT: REVIEW AND DISCUSSION ON PROPOSED TOWN FINANCIAL AND BUDGETARY POLICIES FOR FY 2024/25 RECOMMENDATION: None at this point - pending finalization of policies and PSPRS Pension Funding Policy for next fiscal year. EXECUTIVE SUMMARY: Based on feedback from the Commission, a new updated draft has been included for consideration.  Changes from current policies include the following:  Policy 1-1 Annual Budget Process  The definition for "Structurally balanced budget" has been modified1. A new definition has been added to define "Tentative Budget"2. "Budget Development" under policy statement 6.0 has been completely reworked to provide better guidelines as to what will be the intent of the final budget document 3. 1. Policy 1-4 Banking and Investments  "Authorized Financial Dealers and Institutions" under policy statement 5.4 has added a couple additional registration requirements, as well as a statement of adherence to the CFA Code of Professional and Ethical Standards 1. 2. Policy 1-5 Capital Expenditures and Improvements  Under the "Capital asset" definition, an exception has been made to the proposed increase in capitalization threshold from $5,000 to $25,000 for requirements of certain federal or state grants. 1. Under "Capital project", the proposed threshold has been increased from $50,000 to $150,000.2. 3. Policy 1-6 PSPRS Pension Funding  PSPRS has been spelled out in the title.1. The policy has been updated for current actuarial numbers as of the June 30, 2023 actuarial valuation.2. The amount of additional payment required above the normal cost contribution has been reduced from $2.5 million to $2.0 million in 1.6.2 and 1.7.1. 3. The threshold for decreasing additional contributions above and beyond the normal cost contribution has been decreased from 110% to 105% in 1.7.1. 4. 4. Policy 1-7 Revenues  An example has been added to describe what an "Unpredictable Revenue" is in policy statement 9.0.1. 5. Policy 1-10 Fund Balance  The matrix under policy statement 4.0 has been modified to change the Community Center Fund fund balance classification from Committed to Assigned.  Additionally, "Compensated Absences" and "Unemployment Claims" have been deleted from the matrix. 1. 6. BACKGROUND OR DETAILED INFORMATION: N/A - see executive summary for proposed changes from current policy. FISCAL IMPACT: N/A SUGGESTED MOTION: N/A N/A Attachments Draft Financial and Budgetary Policies  Current Financial and Budgetary Policies  1 Town of Oro Valley, Arizona Financial and Budgetary Policies Guiding Principles: The Town of Oro Valley has an important responsibility to its residents to carefully account for public funds, manage its finances prudently and plan for the adequate funding of services desired by the public. Sound financial policies help ensure the Town ’s capability to adequately fund and provide government services desired by the community. The policies contained herein are designed to foster and support the continued financial strength and stability of the Town of Oro Valley. Following these policies enhances the Town’s financial health as well as its image and reputation with residents, the general public, bond and credit rating agencies and investors. The policies serve as guidelines for the Town’s overall fiscal planning and management. In addition, both the Government Finance Officers Association (GFOA) and the National Advisory Council on State and Local Budgeting (NACSLB) recommend formal adoption of financial policies by the jurisdiction’s governing board. The most recent Town Council amendment and re-adoption of the policies occurred on January 4, 2023 per Resolution (R)23-01. 2 Table of Contents 1-1 Annual Budget Process 3 1-2 Strategic Long-Range Financial Planning 6 1-3 Fiscal Monitoring & Reporting 7 1-4 Banking and Investments 8 1-5 Capital Expenditures and Improvements 14 1-6 PSPRS Pension Funding 17 1-7 Revenues 21 1-8 Expenditures 23 1-9 Debt 25 1-10 Fund Balance 27 1-11 Internal Controls 30 1-12 Grants 31 1-13 Accounting, Auditing, and Financial Reporting 32 3 Town of Oro Valley Policy Annual Budget Process 1-1 Last Review Review Month 2023 January Responsible for maintaining & applying this policy: Finance Next Review: January 2024 ______________________________________________________________________________ Purpose: To establish policy for setting guidelines for budgeting to help ensure a financially sound, accountable, and transparent process. Scope: All personnel Definitions: Appropriations: The legal authority to spend money granted through an adopted budget. Balanced budget: A financial plan in which all resources are equal to all requirements. Budget: A financial plan estimating revenues and expenditures over a set period of time, which is usually one fiscal year. Capital budget: A financial plan specific to procurement of durable, higher value purchases which satisfy requirements of the capital threshold of the Town , along with the resources necessary to fund the capital purchases. Contingency: Planned financial reserves in a fund that are not dedicated to a particular function, department or activity, whose purpose is to mitigate uncertainty inherent in cost estimates, as well as unpredictable risk exposure. Fiscal year: A year utilized for financial reporting and budgeting purposes. For the Town, the fiscal year begins July 1 and ends June 30. Fund: A fiscal and accounting entity with a self -balancing set of accounts. One-time revenues: Revenues which are expected to only be received once, and do not provide an ongoing inflow of monies to the Town. Operating budget: A financial plan of current annual spending, along with the resources necessary to pay for it. 4 Recurring expenditures: Expenditures which are expected to be incurred regularly and routinely required by Town operations. Recurring revenues: Revenues which are expected to provide an ongoing inflow of monies to the Town. Structurally balanced budget: A budget in which all recurring revenues are sufficient to pay recurring expenditures. A structurally balanced budget is one that supports financial sustainability for multiple years into the future. Tentative Budget: A budget required by statute that is made available to the public as part of the approval process of a final adopted budget. This version of the budget builds upon the Town Manager’s Recommended Budget, taking into account newly incorpo rated data or other improvements made to the previous version. The Tentative Budget is released to the public for input and comment prior to final adoption. Policy: 1.0 Operating Budget and Capital Budget – The operating budget and capital budget shall serve as the annual financial plan of the Town. The budget shall provide staff with the resources necessary to accomplish the Town Council’s determined service levels and will serve as the policy documents of the Town Council for implementing its Strategic Leadership Plan and other plans as periodically adopted by the elected body or voted on by the community. 2.0 Budget Timelines – The Town Manager shall annually prepare and present a Town Manager’s Recommended Budget to Town Council at least two months prior to the beginning of a new fiscal year. Based upon feedback from Town Council, a Tentative Budget shall be developed and approved by Town Council prior to the beginning of a new fiscal year establishing the maximum level of spending for the new fiscal year. The final budget shall be adopted by Town Council no later than July 31. The Town Manager shall meet all budget requirements specified in State Law. 3.0 Balanced Budget – The proposed budget will be balanced for the ensuing fiscal year. Deferrals, short-term loans, or one-time revenue sources will be avoided as budget balancing techniques. 4.0 Contingency – The budget shall include contingency appropriation to provide for unanticipated increases in service delivery costs, emergencies, and needs that may arise through the fiscal year. The contingency appropriation may only be expended upon Town Council approval. 5.0 Current Funding Basis – The Town shall budget and operate on a current funding basis. Expenditures shall be budgeted and controlled so as not to exceed expected current revenues. The Town shall strive to achieve a structurally balanced budget whereby recurring expenditures are funded exclusively with recurring revenues. 5 6.0 Budget Development – The Town will prepare a budget in accordance with Government Finance Officers Association best practices and its Distinguished Budget Award Program . The proposed budget will contain the following: 6.1 Revenue estimates by major category, by fund; 6.2 Expenditure estimates by program levels and major expenditure categories, by fund; 6.3 Estimated fund balance, by fund; 6.4 Debt service, by issue, detailing principal and interest amounts; 6.5 Proposed personnel staffing levels; 6.6 A detailed schedule of capital projects; 6.7 Any additional information, data, or analysis requested of management by Town Council. 7.0 Budget Management – The Town Council shall delegate authority to the Town Manager in managing the budget after it is formally adopted, including transfer of funds within programs, categories, and departments. The Town Manager may further delegate levels of authority for the daily operation of the budget. 8.0 Level of Budget Adoption – The annual budget shall be adopted at the fund level, except in the General Fund where it shall be adopted at the department level. To provide sufficient control and accountability, budgets shall be prepared and monitored by major expenditure categories (personnel, operations and maintenance, capital outlay, debt service). 9.0 Appropriations – All appropriations shall lapse at the end of the fiscal year. There is no carryover of appropriations from year to year. 6 Town of Oro Valley Policy Strategic Long-Range Financial Planning 1-2 Last Review Review Month 2023 January Responsible for maintaining & applying this policy: Finance Next Review: January 2024 ______________________________________________________________________________ Purpose: To establish policy for long-range forecasting and planning to help ensure a financially sound, accountable, and transparent Town. Scope: All personnel Definitions: None Policy: 1.0 Five-year Forecast of Revenues and Expenditures – A five-year forecast of revenues and expenditures of major funds, to include a discussion of significant trends affecting the Town’s financial position, shall be prepared in anticipation of the annual budget process. The forecast shall also examine critical issues facing the Town, economic conditions, and the outlook for the upcoming budget year. 7 Town of Oro Valley Policy Fiscal Monitoring & Reporting 1-3 Last Review Review Month 2023 January Responsible for maintaining & applying this policy: Finance Next Review: January 2024 ______________________________________________________________________________ Purpose: To establish policy for preparing and presenting regular reports that analyze, evaluate, and forecast the Town’s financial performance and economic condition . Scope: All personnel Definitions: None Policy: 1.0 Financial Status and Performance Reports – Monthly reports comparing expenditures and revenues to current budget, noting the status of fund balances to include dollar amounts and percentages, and outlining any remedial actions necessary to maintain the Town’s financial position shall be prepared for review by the Town Manager and Town Council. The monthly reports shall also contain forecasts, updated on a quarterly basis, projecting expenditures and revenues through the end of the fiscal year. 2.0 Status Report on Capital Projects – A summary report on the contracts awarded, capital projects completed, and the status of the Town’s various capital programs will be prepared at least quarterly and presented to the Town Manager and Town Council. 3.0 Compliance with Financial Policy Statements – Financial policies will be reviewed annually by the Town Council and updated, revised or refined as deemed necessary. Policy statements adopted by the Council are guidelines and occasionally exceptions may be appropriate and required. However, exceptions to stated policies will be specifically identified and the need for the exception will be documented and fully explained. 8 Town of Oro Valley Policy Banking and Investments 1-4 Last Review Review Month 2023 January Responsible for maintaining & applying this policy: Finance Next Review: January 2024 ______________________________________________________________________________ Purpose: To establish policy for investing Town cash and investments to ensure its safety, provide for necessary liquidity, and optimize yield. Scope: All personnel Definitions: Credit risk: The risk of loss due to the failure of the security or backer and/or banks. Interest rate risk: The risk that the market value of securities will fall or rise due to changes in market interest rates. Policy: 1.0 Objective – While conforming to federal, state, and other legal requirements the primary objectives of the Town of Oro Valley investment activities shall be: Safety, Liquidity and Yield. These objectives shall be achieved through mitigating credit risk and interest rate risk. 1.1 Safety – The principal goal of the investment program is the preservation and safety of the capital of all Town Funds. Each investment transacti on shall seek to first ensure that capital losses are avoided, whether they are from security defaults or erosion of market value. 1.2 Liquidity – The Town’s investment portfolio shall remain sufficiently liquid in order to meet the operati ng requirements that may be reasonably foreseen. The investment portfolio should be composed in such a way that securities mature concurrent with cash needs to meet required demands . Furthermore, since all possible cash demand cannot be anticipated, the portfolio should consist largely of securities with active secondary or resale markets (dynamic liquidity). Alternati vely, a portion of the portfolio may be placed in money market mutual funds or local government investment pools which offer same-day liquidity for short-term funds. 9 1.3 Yield – The Town’s investment portfolio shall attain the highest rate of yield through budgetary and economi c cycles taking into account the constraints imposed by its safety objectives, cash flow considerations and state laws that restrict the placement of certain public funds. Yield on investment is of secondary importance compared to the safety and liquidity objectives above. The investments are limited to relatively low risk securities in anticipation of earning a fair yield relative to the risk being assumed. Securities shall generally be held until maturity with the following exceptions: 1.3.1 A security with declining credit may be sold early to minimize loss of principal. 1.3.2 A security swap that would improve the quality, expected return, or target duration in the portfolio. 1.3.3 Liquidity needs of the portfolio require that the security be sold. 1.4 Credit risk – The Town will minimize credit risk by: 1.4.1 Limiting investments to the types of securities listed in this investment policy. 1.4.2 Pre-qualifying financial institutions, brokers/dealers, intermediaries, and advisors with which the Town will do business in accordance to this policy. 1.4.3 Diversifying the investment portfolio so that the impact of potential losses from any one type of security or from any one individual issuer will be minimized. 1.5 Interest rate risk – The Town will minimize interest rate risk by: 1.5.1 Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity. 1.5.2 Investing operating funds primarily in shorter-term securities, money market mutual funds or similar investment pools limiting the average maturity in the portfolio in accordance with this policy. 2.0 Delegation of Authority – Authority to manage the investment program is granted to the Town Finance Director/CFO, under the supervision of the Town Manager. Responsibility of the operation of the daily investment program is delegated to the Finance Director/CFO , who shall carry out the operation of the investment program consistent with this investment policy. No employee may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Finance Director/CFO. 3.0 Prudence – The standard of prudence to be used by the Finance Director/CFO shall be the "prudent person" standard and shall be applied in the context of managing the overall portfolio . The Finance Director/CFO, shall exercise due diligence and not be liable for losses . The "prudent person" standard with respect to Town Investments shall be the exercise of judgment and care, with prudence , discretion and intelligence that a person would exercise in their own affairs, not for speculation, but for investment, considering the primary objectives set forth in Section 1-1 of this policy. 10 4.0 Ethics and Conflicts of Interest – Employees involved in the investment process will refrain from conducting personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions. Employees will disclose any material interests in financial institutions with which they conduct business. They will disclose any personal financial/investment positions that could be related to the performance of the investment portfolio. Employees shall refrain from undertaking personal investment transactions with the same individual that conducts business with the Town. 5.0 Safekeeping and Custody – To protect against potential fraud or embezzlement, the investments of the Town shall be secured through third-party custody and safekeeping procedures. Ownership shall be protected through third-party custodial safekeeping. The Town’s external auditor shall review safekeeping procedures annually. 5.1 Internal Controls – The Finance Director/CFO is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the Town are protected from loss, theft or misuse. The controls shall be designed to prevent the loss of public funds arising from fraud, employee error, third party misrepresentation, unanticipated changes in financial markets or imprudent actions by employees and officers of the Town. 5.2 Independent Financial Institution - The Town shall contract with a single, independent financial institution for custodial and safekeeping services for the Town’s investment portfolio. 5.3 Delivery vs. Payment – All trades of marketable securities will be executed by delivery vs. payment (DVP) to ensure that securities are deposited in an eligible financial institution simultaneously to the release of funds. 5.4 Authorized Financial Dealers and Institutions – The Finance Director/CFO will review the financial condition and registration of qualified bidders. Financial institutions and broker/dealers who would like to become qualified bidders for investment transactions with the Town must supply the following: • Audited financial statements • Proof of National Association of Securities Dealers (NASD) certification • Proof of stated registration with the State of Arizona pursuant to ARS 44-3101, the Financial Industry Regulatory Authority (FINRA), and the Securities and Exchange Commission under the Investment Advisor’s Act of 1940, as amended • Certification of having read and understood and agreeing to comply with the Town’s investment policy • A statement of adherence to the Code of Professional and Ethical Standards as described by the CFA Institute • Evidence of adequate insurance coverage An annual review of the financial condition and registration of all qualified financial institutions and broker/dealers wi ll be conducted by the Finance Director/CFO. If the Town utilizes an external investment advisor, the advisor may 11 be authorized to transact with its own Approved Broker/Dealer List on behalf of the Town. If the investment advisor utilizes its own Broker/Dealer List, the advisor will perform due diligence for the brokers/dealers on its Approved List. 6.0 Investment Types – Suitable and authorized investments include the following: 6.1 Authorized investments for the debt service reserve funds shall be consistent with those set forth in the trust indentures or the long-term debt issuances. 6.2 Fully insured or collateralized certificates of deposit (CD) that are FDIC-insured in eligible depositories if the interest rate bid is 103% or more of the equivalent bond yield of the offer side of treasury bills. 6.3 Interest bearing savings accounts in qualified banks and savings and loan institutions which are FDIC insured. 6.4 Repurchase agreements with maximum maturity of 180 days. 6.5 The pooled investment funds established by the State Treasurer pursuant to A.R.S. 35-326. 6.6 Bond or other evidence of indebtedness of the United States or any of its agencies or instrumentalities when the obligations are guaranteed as to principal and interest by the United States or by any agency or instrumentality of the United States. 6.7 Bonds or other evidences of indebtedness of this State, any county, city, town, or school district. Ratings of these investments must be AAA or equivalent. 6.8 Bonds, notes or evidences of indebtedness of any county or municipal district within this State which are payable from revenues or earnings specifically pledged for the payment of the principal and interest on the obligations, if they meet certain criteria as specified in A.R.S .35-323. Ratings of these investments must be AAA or equivalent. 6.9 Bonds, notes or other evidences of indebtedness issued by any municipal improvement district in this State to finance local improvements authorized by law, if the principal and the interest of the obligations are payable from assessments on real property within the local improvement district. Ratings of these investments must be AAA or equivalent. 6.10 Money market mutual funds regulated by the Securities and Exchange Commission and whose portfolios consist of dollar-denominated securities. Money market mutual funds that are treasury-based funds must always be priced at $1/share. 6.11 Commercial paper, rated in the highest tier (e.g., A-1, P-1, F-1, or D-1 or higher) by a nationally recognized rating agency . 6.12 Bonds, debentures, notes or other evidences of indebtedness that are denominated in United States dollars and that carry at a minimum an “A” or better rating at the time of purchase, from at least two nationally recognized rating agencies. 6.13 Negotiable or brokered certificates of deposit issued by a nationally or state- chartered bank or savings and loan association. Callable securities are not permitted. 12 6.14 Collateralization of 102% will be required on two types of Town investments: certificates of deposit and repurchase agreements. 7.0 Investment Parameters – Investment parameters include the following: 7.1 Diversification - The investments shall be diversified by: 7.1.1 Limiting investments to avoid over-concentration in securities from a specific issuer or business sector (excluding U.S. Treasury securities) 7.1.2 Limiting investment in securities that have higher credit risks 7.1.3 Investing in securities with varying maturities 7.1.4 Investing a portion of the portfolio in readily available funds such as local government investment pools (LGIP’s), overnight repurchase agreements, or other overnight accounts to ensure that appropriate liquidity is maintained in order to meet ongoing obligations 7.2 Maturities - Reserve funds are subject to different requirements on maximum maturities than those for other Town funds according to the terms and provisions as outlined in the trust indenture of the long-term debt issuances. To ensure liquidity the Town shall attempt to match its investments with anticipated cash flow requirements . As all possible cash demands cannot be anticipated, a portion should consist of securities with active secondary and resale markets. The Town will not invest in securities with maximum maturities greater than those allowed under A.R.S. 35-323, Investment of Public Monies. Currently, maximum maturities are: 7.2.1 Securities and deposits: 5 years 7.2.2 Repurchase agreements: 30/180 days in accordance with A.R.S 35-323. 7.3 Competitive Procurement Process/Use of Cooperative Contract - Before the Town invests any public funds, a competitive procurement process should be conducted for the necessary services or investment instruments. If a specific maturity date is required, either for cash flow purposes or in order to conform to maturity guidelines, bids will be requested for instruments which meet the maturity requirement. If no specific maturity is required, a market trend (yield curve) analysis will be conducted to determine which maturities would be most advantageous. The competitive process will follow the policies and procedures outlined in the Town’s Procurement Code and comply with A.R.S. 35 -323. The Town may also choose to use an existing cooperative contract provided the contract meets all requirements of the Town’s Procuremen t Standards. 8.0 Shock Test – The purpose of the shock test is to analyze the impact of changes in market interest rates on the potential value of the portfolio. The investment portfolio shall be shock tested quarterly by the safekeeping agent as part of their contract re sponsibility. At a minimum, the stress test will value the portfolio assuming interest rates rise or fall by up to 300 basis points across the entire yield curve. Information obtained from the stress test combined with current economic and interest rate forecasts will assist in determining appropriate maturities for new investments considering risks. 13 9.0 Benchmarks – The investment portfolio held by authorized financial institutions will be managed in accordance with the parameters specified within this policy. The portfolio should obtain a market average rate of return of stable interest rates which are equal to or exceed that obtained through investing in the State of Arizona Local Government Investment Pool (LGIP), which is managed by the State Treasurer. Performance will be monitored quarterly. 10.0 Banking Services – The Town will execute a contract with its financial depository which shall designate the requirements of serving as a depository for the Town, including collateralization of Town funds invested at such depository and the related safekeeping requirements of the pledged securities. The Town will evaluate and request bids on banking services every five years. 14 Town of Oro Valley Policy Capital Expenditures and Improvements 1-5 Last Review Review Month 2023 January Responsible for maintaining & applying this policy: Finance Next Review: January 2024 ______________________________________________________________________________ Purpose: To establish policy for annually reviewing and monitoring the state of the Town’s capital equipment and infrastructure, setting priorities for its replacement and renovation based on needs, funding alternatives, and availability of resources. Scope: All personnel Definitions: Capital asset: Any item with an acquisition cost of $25,000 or more, and an estimated useful life of two or more years. Exceptions may be made depending on the requirements of certain federal or state grants. Capital improvement program (CIP): A planning document comprised of capital projects expected to be funded over the next 10 years. The purpose of the CIP is to systematically identify, plan, schedule, finance, track and monitor capital projects to ensure cost effectiveness as well as conformance to established policies and Council goals and priorities. Capital project: A project expected with an estimated cost of $150,000 or more, and expected to have a useful life of five or more years. Lease: A contract that conveys control of the right to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange -like transaction. Lessor: The party to a lease contract who conveys the right to use its nonfinancial asset(s) to another entity (i.e., landlord). Lessee: The party to a lease contract who acquires the right to use another entity’s nonfinancial asset(s) (i.e., tenant) 15 Subscription-based Information Technology Arrangements (SBITAs): A contract that conveys control of the right to use another party’s information technology software, alone or in combination with tangible capital assets, as specified in the contract for a p eriod of time in an exchange or exchange-like transaction. Policy: 1.0 Capital Improvements – The Town shall annually review the needs for capital improvements, including the current status of the Town infrastructure, replacement and renovation needs, and potential new projects. All projects, both ongoing and proposed, shall be prioritized based on an analysis of current needs and resource availability at the direction of the Town Manager. For every proposed capital project, all operation, maintenance, and replacement costs shall be fully costed. Proposed capital projects will not be authorized or awarded until a funding source is identified. 2.0 Capital Assets – Capital assets shall be depreciated over their estimated useful lives utilizing the straight-line method and shall be included in the operating budget. 3.0 Leases and SBITAs – Leased assets subject to GASB Statement No.87, shall be amortized over the shorter of the lease or the asset useful life. SBITAs subject to GASB Statement No.96, shall be amortized over the subscription contract term. The threshold for capitalizing lessor leases shall be $150,000. The threshold for capitalizing lessee leases and SBITAs shall be $75,000. 4.0 Capital Projects – Capital projects shall be depreciated over their estimated useful lives utilizing the straight-line method and shall be included in both the capital improvement program (CIP) and capital budget. 5.0 Capital Improvement Program (CIP) – A minimum ten-year capital improvement program will be developed and updated annually, encompassing both anticipated funding sources and any estimated operating expenditures. Estimated operating expenditures associated with capital projects will be included in the operating budget. Estimated first-year capital expenditures in the CIP shall be included in the Capital Fund budget. A quarterly status report will be prepared for Council to facilitate monitoring of each project’s progress and identify any significant issues. 6.0 Prioritization – Prioritization shall occur first at the department level, and then at the Town-wide level by a cross-departmental capital project team. Funding sources will then be identified for the projects ranking the highest based on evaluation criteria and available resources. 7.0 Minimum Funding Level – In order for the Town to provide sustainable funding for capital improvements and asset repair/maintenance needs each year, the annual budget shall include the allocation of a minimum of 5% of the Town’s General Fund estimated sales tax revenues (not including state-shared revenues) to fund these needs, subject to Council approval and funding availability. These funds will be accounted for in a separate Capital Fund. 8.0 Capital Expenditure Financing – The Town recognizes that there are three basic methods of paying for capital requirements. It can budget the funds from current resources (pay as you go), it can take the funds from fund balance as allowed by the Fund Balan ce Policy 16 (another pay as you go method), or it can borrow money through debt. Debt financing includes general obligation bonds, revenue bonds, lease/purchase agreements, certificates of participation, and other debt instruments permitted under Arizona law. Guidelines for incurring debt are set forth in the Debt Policy Statements. 9.0 Audits – The Finance Department shall be responsible for verifying the actual physical existence of capital and minor assets and the accuracy of the Town’s asset database. The process will be monitored through asset audits of Town departments and division s. Any significant irregularities will be reported to the Town Manager. The Town shall strive to perform a complete inventory of capital items at least every two years. 17 Town of Oro Valley Policy Public Safety Personnel Retirement System (PSPRS) Pension Funding 1-6 Last Review Review Month 2023 June Responsible for maintaining & applying this policy: Finance Next Review: June 2024 ______________________________________________________________________________ Purpose: The intent of this policy is to clearly communicate the Town Council’s pension funding objectives, its commitment to employees and the sound financial management of the Town of Oro Valley, and maintain compliance with statutory requirements of ARS 38-863.01. The Council shall annually assess the status of the Town’s PSPRS trust fund and take formal action to update this policy in concert with the final annual budget approval. This policy shall also apply to the Town’s participation in the Correction Officer Retirement Plan (CORP). Scope: The Town’s sworn police employees who are regularly assigned hazardous duty participate in the PSPRS. Selected individuals who serve as dispatchers in the Oro Valley Police Department participate in the CORP plan, which is also administered by PSPRS. Definitions: Unfunded actuarial accrued liability (UAAL): The difference between trust assets and the estimated future cost of pensions earned by employees. This UAAL results from actual results (investment income, member mortality, disability rates, payroll increases, etc.) bein g different from the assumptions used in previous actuarial valuations. Annual required contribution (ARC): The annual amount required to pay into the pension funds, as determined through annual actuarial valuations. It is comprised of two primary components: normal pension cost - which is the estimated cost of pension benefits earned by employees in the current year; and amortization of UAAL - which is the cost needed to cover the unfunded portion of pensions earned by employees in previous years. The UAAL is collected over a period of time referred to as the amortization period. The ARC is a percentage of the current payroll. Funded ratio: A ratio of fund assets to actuarial accrued liability. The higher the ratio, the better funded the pension is, with 100% being fully funded based on current actuarial valuations. Intergenerational equity: A concept meant describe the policy expectation that no generation is burdened by substantially more or less pension costs than past or future generations. 18 Policy: 1.0 Public Safety Personnel Retirement System (PSPRS) 1.1 PSPRS is administered as an agent multiple-employer pension plan. An agent multiple-employer plan has two main functions: 1.1.1 To comingle assets of all plans under its administration, thus achieving economy of scale for more cost-efficient investments, and invest those assets for the benefit of all members under its administration . 1.1.2 To serve as the statewide uniform administrator for the distribution of benefits. 1.2 Under an agent multiple-employer plan, each agency participating in the plan has an individual trust fund reflecting that agencies’ assets and liabilities. Under this plan all contributions are deposited to and distributions are made from that fund’s assets, each fund has its own funded ratio and contribution rate, and each fund has a unique annual actuarial valuation. The Town of Oro Valley has one trust fund for police employees. The Town also contributes to the Correction Officer Retirement Plan (CORP), administered by the Public Safety Personnel Retirement System, on behalf of selected individuals who serve as dispatchers in the Oro Valley Police Department. CORP maintains one trust fund for dispatchers. 1.3 Oro Valley Town Council formally accepts the assets, liabilities, and current funding ratio of the Town’s PSPRS and CORP trust funds from the June 30, 20 23 actuarial valuations specified below. Trust Fund Assets Accrued Liability Unfunded Actuarial Accrued Asset/(Liability) Funded Ratio Oro Valley Police $81,319,622 $85,636,864 ($ 4,317,242) 95.0% Oro Valley Dispatchers $ 3,929,592 $ 3,910,076 $ 19,516 100.5% 1.4 PSPRS and CORP Funding Goal – Pensions that are less than fully funded place the cost of service provided in earlier periods (amortization of UAAL) on current taxpayers. Fully funded pension plans are the best way to achieve taxpayer and member intergenerational equity. 1.5 The Council’s PSPRS and CORP funding ratio goal is 100% (fully funded) by June 30, 2036 and beyond. Council establishes this goal for the following reasons: 1.5.1 The PSPRS and CORP trust funds represent only the Town of Oro Valley’s liability. 1.5.2 The fluctuating cost of an UAAL causes strain on the Town’s budget, affecting the Town’s ability to provide services. 1.5.3 A fully funded pension is the best way to achieve taxpayer and member intergenerational equity. 1.6 Council has determined that in order to achieve the 100% funding ratio goal, the following actions will be taken: 19 1.6.1 Maintain ARC payment from operating revenues – Council is committed to maintaining the full ARC payment (normal cost and UAAL amortization) from operating funds. The estimated combined ARC for FY24/25 is estimated at $1.35 million for PSPRS and at $11,000 for CORP and shall be paid from operating funds. 1.6.2 At such time the ARC is projected to be reduced, the Town should endeavor to continue paying the ARC as defined as the normal cost rate plus an additional $2.0 million, to maintain the funding ratio goal of 100%. 1.6.3 Retain the 20-year amortization of unfunded liability. 1.6.4 Review Local board practices annually. 1.6.5 Periodically engage consultants to review actual results and recommend possible adjustments or corrections as necessary. 1.7 Payments to PSPRS will be as follows: 1.7.1 In FY25 and subsequent years, the Town will continue maintaining a 100% funding ratio by making contributions of $2.0 million per year, above and beyond the normal cost rate payment. If the funding ratio grows to over 105%, the Town Manager through the budget process, may recommend applying funding to other Town priorities. If the funding ratio falls below 100%, future additional payments will be made to restore the funding ratio back to 100%. 1.8 It is hereby the Town Council’s intent to achieve its goal of 100% funding by June 30, 2036, in accordance with the amortization timeline set forth by the PSPRS and CORP June 30, 2023 Actuarial Valuation. 1.9 The following shows the historical performance of the unfunded actuarial accrued liability: Unfunded Accrued Actuarial Accrued Funded Year Trust Fund Assets Liability Asset/(Liability) Ratio 2014 Oro Valley Police $23,567,852 $36,122,643 $(12,554,791) 65% 2014 Oro Valley Dispatchers $ 1,216,956 $ 2,269,744 $ (1,052,788) 54% 2015 Oro Valley Police $26,200,389 $40,452,911 $(14,252,522) 65% 2015 Oro Valley Dispatchers $ 1,205,067 $ 2,362,604 $ (1,157,537) 51% 2016 Oro Valley Police $29,296,195 $48,414,270 $(19,118,075) 61% 2016 Oro Valley Dispatchers $ 1,163,258 $ 2,524,360 (1,361,102) 46% 2017 Oro Valley Police $31,882,797 $53,037,566 $(21,154,769) 60% 2017 Oro Valley Dispatchers $ 1,260,798 $ 3,077,649 $ (1,816,851) 41% 20 2018 Oro Valley Police $34,172,618 $57,022,056 $(22,849,438) 60% 2018 Oro Valley Dispatchers $ 1,337,558 $ 2,945,307 $ (1,607,749) 45% 2019 Oro Valley Police $37,842,906 $62,278,853 $(24,435,947) 61% 2019 Oro Valley Dispatchers $ 1,424,947 $ 3,240,399 $ (1,815,452) 44% 2020 Oro Valley Police $41,498,361 $67,240,526 $(25,742,165) 62% 2020 Oro Valley Dispatchers $ 1,504,732 $ 3,374,933 $ (1,870,201) 45% 2021 Oro Valley Police $46,773,089 $70,792,554 $(24,019,465) 66% 2021 Oro Valley Dispatchers $ 1,649,829 $ 3,551,295 $ (1,901,466) 46% 2022 Oro Valley Police $77,967,201 $76,438,334 $ 1,528,867 102% 2022 Oro Valley Dispatchers $ 1,710,819 $ 3,721,151 $ (2,010,332) 46% 2023 Oro Valley Police $81,319,622 $85,636,864 $ (4,317,242) 95% 2023 Oro Valley Dispatchers $ 3,929,592 $ 3,910,076 $ 19,516 100% Source: Town Annual Comprehensive Financial Report for June 30, 2023 – Note 16. 21 Town of Oro Valley Policy Revenues 1-7 Last Review Review Month 2023 January Responsible for maintaining & applying this policy: Finance Next Review: January 2024 ______________________________________________________________________________ Purpose: To establish policy for designating, maintaining, and administering a revenue system that assures a reliable, equitable, diversified, and sufficient revenue stream to support desired Town services. Scope: All Personnel Definitions: None Policy: 1.0 Balance and Diversification in Revenue Sources – The Town shall strive to maintain a balanced and diversified revenue system to protect it from fluctuations in any one source due to changes in local economic conditions which adversely impact that source. 2.0 User Fees and Charges – For services that benefit specific users, the Town shall establish and collect fees to recover the costs of those services. The Town Council shall determine the appropriate cost recovery level and establish the fees. Where feasible and desirable, the Town shall seek to recover full direct and indirect costs. Material user fees shall be reviewed on an annual basis to calculate their full cost recovery levels, to compare them to the current fee structure, and to recommend adjustments where necessary. 3.0 Development Impact Fees – Development impact fees for capital expenses attributable to new development will be reviewed periodically to ensure the fees recover all direct and indirect development-related expenses and be approve by Town Council. 4.0 Enterprise Revenues – The Town will establish rates and fees at levels to fully cover the total direct and indirect costs, including operations, capital outlay, debt service, debt coverage requirements and unrestricted cash reserve balances. Enterprise funds will not be used to subsidize operations of other funds. Interfund charges will be assessed for the administrative support of enterprise fund activities. 5.0 Revenue Estimates for Budgeting – To maintain a stable level of services, the Town shall use a conservative, objective and analytical approach when preparing revenue estimates. The process shall include analysis of probable economic changes and their impacts on revenues, historical collection rates, and trends in revenues. This approach should reduce 22 the likelihood of actual revenues falling short of budget estimates during the year and should avoid mid-year service reductions. 6.0 Revenue Collection and Administration – The Town shall maintain high collection rates for all revenues by keeping the revenue system as simple as possible to facilitate payment. In addition, because revenue should exceed the cost of producing it, the Town shall strive to control and reduce administrative costs. The Town shall pursue to the full extent allowed by state law all delinquent taxpayers and others overdue in payments to the Town. 7.0 Write-off of Uncollectible Accounts – The Town shall monitor payments due the Town (accounts receivable) and the Town Manager or designee shall periodically write-off accounts where collection efforts have been exhausted and/or collections efforts are not feasible or cost-effective. 8.0 Use of One-time Revenues – The Town shall discourage the use of one-time revenues for ongoing expenditures. 9.0 Use of Unpredictable Revenues – The Town shall exercise caution with the use of unpredictable revenues (ie. construction sales tax) for ongoing expenditures. 23 Town of Oro Valley Policy Expenditures 1-8 Last Review Review Month 2023 January Responsible for maintaining & applying this policy: Finance Next Review: January 2024 ______________________________________________________________________________ Purpose: To establish policy for identifying priority services, establish appropriate service levels, and administer the expenditure of available resources to assure fiscal stability and the effective and efficient delivery of Town services. Scope: All Personnel Definitions: None Policy: 1.0 Current Funding Basis – The Town shall operate on a current funding basis. Expenditures shall be budgeted and controlled so as to not exceed current revenues plus the planned use of fund balance accumulated through prior year savings. (The use of fund balance shall be guided by the Fund Balance Policy Statements). 2.0 Avoidance of Operating Deficits (Governmental Funds) – The Town Manager shall take immediate corrective actions if, at any time during the fiscal year, expenditure and revenue re-estimates are such that an operating deficit (projected expenditures in excess of projected revenues) is projected at year-end. Corrective actions may include a hiring freeze, employee reductions, expenditure reductions, fee increases, use of fund balance within the Fund Balance Policy or other actions that may be deemed necessary and appropriate. Expenditure deferrals into the following fiscal year, short-term loans or use of one-time revenue sources shall be avoided in attempt to achieve fiscal structural balance. Corrective actions referenced above shall be presented to Town Council at the earliest possible time for approval. 3.0 Maintenance of Capital Assets – Within the resources available each fiscal year, the Town shall maintain capital assets and infrastructure at a sufficient level to protect the Town’s investment, to minimize future replacement and maintenance costs, and to continue service levels. 4.0 Periodic Program Reviews – The Town Manager shall undertake periodic staff and third - party reviews of Town programs for both efficiency and effectiveness. Privatization and contracting with other governmental agencies will be evaluated as alternative 24 approaches to service delivery. Programs which are determined to be inefficient and/or ineffective shall be reduced in scope or eliminated. 5.0 Purchasing – The Town shall conduct its purchasing and procurement functions efficiently and effectively, fully complying with applicable Federal and State laws, and the Town Procurement Code. Staff shall make every effort to maximize any discounts offered by creditors/vendors. Staff shall also utilize competitive bidding or cooperative purchasing agreements to attain the best possible price on goods and services. Procurement policy and procedures are found in Town AD 2-2. 6.0 Uniform Expenditure Reporting System – The Arizona Constitution imposes a limit on the expenditures of local jurisdictions. The Town will comply with these expenditure limitations and submit an audited expenditure limitation report, audited financial statements, and audited reconciliation report as defined by the Uniform Expenditure Reporting System to the State Auditor General within prescribed timelines in accordance with A.R.S. 41-1279.07. 7.0 Budget Amendments and Transfers – To provide flexibility in the management of department budgets for major expenditures (personnel, operations & maintenance, capital outlay, and debt service) the following amendment and transfer provisions shall apply: 7.1 Transfers of budget capacity between funds shall require the recommendation of the Town Manager and formal action by the Town Council. 7.2 Transfers of budget capacity between line items within each major expenditure category shall be permitted upon recommendation of the Department Head and approval by the Town Manager. 7.3 Transfers of budget capacity between line items or major expenditure categories to fund additional personnel or increased expenditures as a result of personnel reclassifications shall require the recommendation of the Town Manager and formal action by the Town Council. 7.4 Transfers of budget capacity that reduce or eliminate funding for items designated in the adopted Capital Improvement Program shall require the recommendation of the Town Manager and approval of the Town Council. 7.5 Transfers of budget capacity that reduce or eliminate funding for debt service shall require the recommendation of the Town Manager and approval of the Town Council. 25 Town of Oro Valley Policy Debt 1-9 Last Review Review Month 2023 January Responsible for maintaining & applying this policy: Finance Next Review: January 2024 ______________________________________________________________________________ Purpose: To establish policy for establishing guidelines for debt financing that provides needed capital equipment and infrastructure improvements while minimizing the impact of debt payments on current revenues. Scope: All Personnel Definitions: Excise Tax: Excise taxes for purposes of debt repayment include Town Sales and Franchise Fees, Licenses and Permits, Fines, State-shared Sales Tax, and State-shared Income Tax revenues. Policy: 1.0 Use of Debt Financing – Debt financing, to include general obligation bonds, certificates of participation, lease/purchase agreements, and other obligations permitted to be issued or incurred under Arizona law, shall only be used to purchase capital assets that cannot be prudently acquired from either current revenues or fund balance. The useful life of the asset or project shall exceed the repayment schedule of any debt the Town assumes. The Town shall not use long-term debt to finance current operations. 2.0 Future Bond Proposals – Future bond proposals will be accompanied by an analysis showing how the new issue, combined with current debt, impacts the Town’s debt capacity and conformance with Town debt policies. The Town shall only issue additional non-enterprise fund debt should its excise taxes equal or exceed three times the annual debt service requirement of all its current and proposed annual debt obligations. 3.0 Bond Rating – The Town will seek to maintain, and if possible, improve current bond ratings in order to minimize borrowing costs and preserve access to credit. The Town will encourage and maintain good relations with financial bond rating agencies and will follow a policy of full and open disclosure. 4.0 Utilization of Bond Proceeds – Proceeds from bonded debt will be used in accordance with the purpose of the issuance. Funds remaining after the project is completed will be 26 used in accordance with the provisions stated in the bond ordinance that authorized the issuance of the debt. 5.0 Arbitrage Rebate – The Town shall comply with Internal Revenue Service arbitrage rebate requirements for bonded debt. 6.0 Interest Earnings on Bond Proceeds – Interest earnings on bond proceeds will be limited to 1) funding or acquiring the improvement(s), or 2) payment of debt service on the bonds. 7.0 Bond Project Eligibility – All projects funded with bonded debt must be included in the Town’s Capital Improvement Program. 8.0 Bond Refunding – When considering refunding any outstanding bonded debt, either the Town or its financial advisor will perform a cost benefit analysis to determine if the cost savings of refunding will be greater than the cost to refund. Considerations will be made with regard to existing bond covenants when refunding any bonded debt. 9.0 Pledging of Utility Revenues – When utility revenues are pledged as debt service payments, the Town will strive to maintain a 1.3 times debt service coverage ratio to ensure debt coverage in times of revenue fluctuation. This will be in addition to the required ratio of the bond indenture. 10.0 Debt Limit – Article IX, Section 8 of the Arizona Constitution limits the Town’s bonded debt capacity (outstanding principal) to a certain percentage of the Town’s secondary assessed valuation by the type of project to be constructed. The limit for general purpose municipal projects is 6%. For water, light, sewer, open space, public safety, park, law enforcement, fire and emergency services, and streets and transportation facilities projects, the limit is 20%. 11.0 Post-Issuance Compliance – The Town will comply with all post-issuance compliance requirements in conformance with federal tax laws. 12.0 Bonded Indebtedness Report – In accordance with A.R.S. 35-501 and 35-502, new bond and securities issuances will be reported to the State Treasurer within 60 days of issuance. Further, the Town will produce an annual bonded indebtedness report to the Arizona Department of Administration. 27 Town of Oro Valley Policy Fund Balance 1-10 Last Review Review Month 2023 January Responsible for maintaining & applying this policy: Finance Next Review: January 2024 ______________________________________________________________________________ Purpose: To establish policy for maintaining the fund balance of various operating funds at sufficient levels to protect the creditworthiness of the Town as well as its financial position for emergencies. Scope: All Personnel Definitions: Nonspendable Fund Balance: That portion of a fund balance that includes amounts that cannot be spent because they are either (a) not in spendable form, such as prepaid items, supplies inventory, or loans receivable; or (b) legally or contractually require d to be maintained intact, such as the principal portion of an endowment. Restricted Fund Balance: That portion of a fund balance that reflects constraints placed on the use of resources (other than nonspendable items) that are either (a) externally imposed by creditors, such as debt covenants, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. Committed Fund Balance: That portion of a fund balance that includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision-making authority and remain binding unless removed in the same manner. Town Council action must be taken on or before June 30 of the applicable fiscal year. Assigned Fund Balance: That portion of a fund balance that includes amounts that are constrained by the government’s intent to be used for specific purposes, but that are neither restricted nor committed. Such intent needs to be established at either the highest level of decision making, or by the Town Manager. Unassigned Fund Balance: That portion of a fund balance that includes amounts which do not fall into one of the above four categories. The General Fund is the only fund that should report this category of fund balance. 28 Policy: 1.0 Committed Fund Balance – The Town shall strive to maintain the General Fund balance at 30% of regular General Fund operating expenditures. After completion of the annual audit, if the fund balance exceeds 30%, the excess must be specifically designated for capital project funding and/or reducing the Town’s Public Safety Personnel Retirement System (PSPRS) unfunded actuarial accrued liability (UAAL). 2.0 Unassigned Fund Balance – The Town shall strive to always maintain a positive unassigned fund balance. 3.0 Use of Fund Balance – Fund Balance shall be used only for emergencies, non-recurring expenditures or major capital purchases that cannot be accommodated through current year savings. Should such use reduce the balance below the appropriate level set as th e objective for that fund, restoration recommendations will accompany the decision to utilize said balance. 4.0 Governmental Accounting Standards Board (GASB) Statement No.54 – In accordance with GASB Statement No.54, fund balances will be classified in the following components: 4.1 Nonspendable Fund Balance 4.2 Restricted Fund Balance 4.3 Committed Fund Balance 4.4 Assigned Fund Balance 4.5 Unassigned Fund Balance The following matrix depicts to which classification fund balances of Town governmental funds will be applied: Fund Restricted Committed Assigned Unassigned Comments State & Justice Seizure Funds X Restricted by State Statute Municipal Debt Service Fund X Restricted by Debt Covenants Oracle Road Improvement District Fund X Restricted by Debt Covenants Townwide Roadway Impact Fee Fund X Restricted by State Statute Parks & Recreation Impact Fee Fund X Restricted by State Statute Police Impact Fee Fund X Restricted by State Statute Highway Fund X Restricted by State Constitution & Statute PAG/RTA Fund X Restricted by PAG/RTA Grant/Contracts Fund X Restricted by Grantor/Donor Community Center Fund X Capital Fund X General Fund Council 30% Reserve Policy on Contingency X Committed by Town Council Planned Use of Fund Balance/Budget Deficit X Bed Tax Collections X 5.0 Town Council Authorization – Fund balance reserves may only be appropriated by authorization of the Town Council. 6.0 Utilization Priority – When multiple categories of fund balance reserves are available for expenditure (i.e. a construction project is being funded partly by a grant, funds set aside by Town Council and unassigned fund balance) the Town will start with the most 29 restricted category – spending those funds first – before moving down to the next category with available funds. 7.0 Water Enterprise Fund – The Water Enterprise Fund shall maintain a cash reserve in the operating fund of not less than 20% of the combined total of the annual budgeted amounts for personnel, operations and maintenance, and debt service. This cash reserve amount specifically excludes budgeted amounts for capital projects, depreciation, amortization and contingency. No cash reserve is required for the Water Utility Impact Fee Funds. 8.0 Annual Review – All Town budgetary fund designations and reserves will be evaluated annually for long-term adequacy and use requirements in conjunction with development of the Town’s long-term financial forecast. 30 Town of Oro Valley Policy Internal Controls 1-11 Last Review Review Month 2023 January Responsible for maintaining & applying this policy: Finance Next Review: January 2024 ______________________________________________________________________________ Purpose: To establish policy for maintaining an internal control structure designed to provide reasonable assurance that Town assets are safeguarded and that the possibilities for material errors in the Town’s financial records are minimized . Scope: All Personnel Definitions: None Policy: 1.0 Proper Authorizations – Procedures shall be designed, implemented, and maintained to ensure that financial transactions and activities are properly monitored, reviewed, and authorized. 2.0 Separation of Duties – Job duties will be adequately separated to reduce to an acceptable level the opportunities for any person to be able to both perpetrate and conceal errors or irregularities in the normal course of assigned duties. 3.0 Proper Recording – Procedures shall be developed and maintained that will ensure financial transactions and events are properly recorded and that all financial reports may be relied upon as accurate, complete and current. 4.0 Access to Assets and Records – Procedures shall be designed and maintained to ensure that adequate safeguards exist over access to and use of financial assets and records. 5.0 Independent Checks – Independent checks and audits will be made on staff performance to ensure compliance with established procedures and proper valuation of recorded amounts. 6.0 Costs and Benefits – Internal control systems and procedures must have an apparent benefit in terms of reducing and/or preventing losses. The cost of implementing and maintaining any control system will be evaluated against the expected benefits to be derived from that system. 7.0 Information Technology – The Town will follow policies and procedures outlined in AD4- 1 Information Security and Computer Usage to minimize risk associated with electronic financial records being compromised. 31 Town of Oro Valley Policy Grants 1-12 Last Review Review Month 2023 January Responsible for maintaining & applying this policy: Finance Next Review: January 2024 ______________________________________________________________________________ Purpose: To establish policy for seeking, applying for and effectively administering federal, state and foundation grants which address Town priorities and policy objectives. Scope: All Personnel Definitions: None Policy: 1.0 Grant Guidelines – The Town shall apply for only those grants consistent with the objectives and high priority needs previously identified by the Town Council. The potential for incurring ongoing costs, to include the assumption of support for grant - funded positions from operating revenues, will be considered prior to applying for a grant. 2.0 Indirect Costs – The Town shall attempt to recover full indirect costs unless the funding agency does not allow it to do so. The Town may waive or reduce indirect costs if it is deemed to be advantageous to the Town. 3.0 Grant Review – Anticipated grant requests will be evaluated by the Town Budget Committee. Federal or State grant requests less than $15,000 will not be considered. All grant submittals shall be reviewed for their cash match requirements, their potential impact on the operating budget, and the extent to which they meet Town policy objectives. If there are cash match requirements, the source of funding shall be identified prior to application submittal. 4.0 Grant Program Termination – The Town shall terminate grant-funded programs and associated positions when grant funds are no longer available unless alternate ongoing funding is identified. 32 Town of Oro Valley Policy Accounting, Auditing, and Financial Reporting 1-13 Last Review Review Month 2023 January Responsible for maintaining & applying this policy: Finance Next Review: January 2024 ______________________________________________________________________________ Purpose: To establish policy for complying with prevailing federal, state and local statutes and regulations, as well as current professional standards, principles and practices. Scope: All Personnel Definitions: None Policy: 1.0 Conformance to Accounting Principles and Recommended Practices – The Town accounting practices and financial reporting shall conform to generally accepted accounting principles (GAAP) as promulgated by the Governmental Accounting Standards Board (GASB), and best practices recommended by the American Institute of Certified Public Accountants (AICPA) and the Government Finance Officers Association (GFOA). 2.0 Selection of Auditors – The Town shall request proposals from qualified, independent certified public accounting firms every five years, including the current auditors if their past performance has been satisfactory. The audit firm selected shall perform an annual audit of the books of account, records and transactions, opining on the Basic Financial Statements and Single Audit Report (if necessary). 3.0 Audit Completion – The Town shall strive to have its Annual Comprehensive Financial Report (ACFR), Alternative Expenditure Limitation Report, and Single Audit Report (if necessary) completed and available within 180 days, 270 days, and 270 days, respectively, after the close of its previous fiscal year ending June 30. 4.0 Report Submission to GFOA – The Town shall annually submit its budget to the GFOA Distinguished Budget Presentation Program. Further, the Town shall also annually submit its ACFR to the GFOA Certificate of Achievement for Excellence in Financial Reporting program.