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HomeMy WebLinkAbout111621-08.1 8.1 ADMINISTRATIVE STAFF REPORT TO: Mayor and Town Council November 16, 2021 SUBJECT:Resolution No. 75-2021, accepting the Fiscal Year 2020/21 Audited Annual Comprehensive Financial Report for the Town of Danville BACKGROUND The Pun Group, LLP, has completed its examination of the financial statements for the Town of Danville and have approved the draft financial reports, including unqualified opinions, as to their accuracy. The draft audit is attached to this report and the Council is now being asked to accept the FY 2020/21 Annual Comprehensive Financial Report (ACFR). FORMAT OF TOWN’S FINANCIAL REPORT The ACFR is presented in compliance with Government Accounting Standards Board (GASB) Statement 31, Statement 34, Statement 40, Statement 44 and Statement 54. The ACFR is composed of three sections: Introductory, Financial and Statistical. The Introductory Section familiarizes the reader with the Town and includes the Transmittal Letter, the Town’s organizational chart and a directory of public officials. The Financial Section includes the Independent Auditor’s Report, Management’s Discussion and Analysis, Basic Financial Statements, Notes to the Basic Financial Statements, Required Supplementary Information(unaudited)and Supplemental Information. GASB 34 presents financial information fromtwo perspectives. The first perspective, the Government-Wide Financial Statements, located at the beginning of the Financial Section, groups the Town’s funds into major and non-major funds and presents them in this condensed format. The value of the Town’s long-term debt and the Town’s infrastructure, net of depreciation, is included in the Government-Wide Statement of Net Assets and the Statement of Activities and Changes in Net Assets. The second perspective, the Fund Financial Statements, includes the Governmental Funds Balance Sheet and the Statement of Revenues, Expenditures and Changes in Fund Balance, but omits long-term debt and the value of infrastructure. Reconciliation of the Government- Wide Financial Statements and the Fund Financial Statements are presented after each of the Fund Financial Statements. Based on GASB criteria, the Town’s major funds are the General Fund and the Capital Improvement Project Fund. The Town has chosen to present the Lighting and Landscape Special Revenue Fund and Regional Traffic Impact Fees Special Revenue Fund as major funds. The Statistical Section schedules are designed to show trends in five areas: financial, revenue capacity, debt capacity, demographic and economic information and operating information. Highlights of the Town’s accomplishments and fiscal activities are presented in the Transmittal Letter and Management Discussion and Analysis. ECONOMIC CONDITION OF DANVILLE’S GENERAL FUND General Fund The General Fund realized a net increase in fund balance of $7,960,776 (year over year 2019/20 to 2020/21). Revenues exceeded expenditures by $10,238,463 with net operating transfers to other funds of $2,277,687. Actual revenues exceeded final budgeted revenues by $5,871,090. General Fund expenditures were below budget by $4,249,688 with cost savings in all departments. These savings were largely attributable to several position vacancies that went unfilled in all departments and significant expenditure reductions in Recreation, Arts and Community Services due to the inability to offer many fee classes, programs and activities due to the pandemic. Note 10 of the Notes to Basic Financial Statements details the reserves and designations against the June 30, 2021Fund Balance. The recommended designated reserves, described in detail below, were reviewed by the Town Council Finance Committee on October 19, 2021, and require approval and appropriation by the full Town Council. TOWN FUND BALANCE Total reserves and designations amount to $25,398,836 (Table 1), an increase of $3,430,729 from prior year reserves and designations of $21,968,107. It is recommended that the Town Council approve the following adjustments to fund balance reserves which are reflected in the FY 2020/21 ACFR. Contingency Fund A transfer of $486,220 is recommended from Unreserved/Undesignated to the Contingency Fund. Audited Annual Comprehensive Financial Report FY 2020/21 2 November 16, 2021 Capital Improvement Projects Fund A transfer of $6,100,000 is recommended from Unreserved/Undesignated to the Capital Improvement Projects Fund to assist with the funding of future projects as determined by the Town Council. OperatingReserve Fund A transfer of $1,500,000is recommended from Unreserved/Undesignated to the COVID Reserve Fund to increase the balance of this fund from $12,309,768 to $13,809,768. The Operating Reserve Fund was last increased in FY 2016-17 (from $11,111,504 to $12,309,768). Other Reserves Against Fund Balance In addition to the above-designated reserves that require Town Council action to implement, the following reserves/designations are reflected in the ACFR. A number of these are carried over from prior fiscal years and are statutorily restricted. Table 1 General Fund Balance Analysis As of June 30, 2021 Total pre-audit Fund Balance at 6/30/21 $ 34,535,724 Adjusted for unrealized market value reported per GASB 31 $ (1,050,668) Fund Balance without unrealized market value $ 33,485,056 Less Reserves/Designations against Fund Balance for: Operating Reserve$ 12,309,768 Receivable from former CDA$ 5,059,401 Compensated Absences/Personnel $ 1,195,339 Reserved for Debt Service $ 809,518 Contingency $ 348,446 Encumbrances $ 907,310 115 Hartz Avenue –proceeds from rent$ 253,904 500 La Gonda Way–proceeds from rent$ 1,112,509 Reward Fund$ 10,000 Total Reserves/Designations against Fund Balance $ 25,398,836 Current Unreserved/Undesignated Fund Balance at 6/30/21 $ 8,086,220 Recommended Fund Balance Options: Increase Contingency Fund $ (486,220) Audited Annual Comprehensive Financial Report FY 2020/21 3 November 16, 2021 Capital Improvement Program – General Purpose $ (6,100,000) Increase in Operating Reserve Fund $ (1,500,000) When the operating transfers are combined with the above reserves and the designations requireTown Council action, the entire excess of revenues and other sources over expenditures and other uses in the General Fund for the 2020/21 fiscal year will have been designated for specific purposes. PUBLIC CONTACT Posting of the meeting agenda for the Town Council meeting on November 16, 2021, as well as the Finance Committee meeting on October 19, 2021, and the Study Session on November 9, 2021, serves as notice to the general public. FISCAL IMPACT Approval of the recommendations made in this report will increase the Fiscal Year 2020/21net designations in the General Fund by $8,086,220. RECOMMENDATION Adopt Resolution No. 75-2021, accepting the Fiscal Year 2020/21 AuditedAnnual Comprehensive Financial Report for the Town of Danville. Prepared by: Lani Ha Finance Manager/Treasurer Reviewedby : JosephA. Calabrigo Town Manager Attachments: A -Resolution No. 75-2021 B - Fiscal Year 2020/21AnnualComprehensive Financial Report for the Town of Danville (Copies were distributed to the Town Council, Town Manager and City Clerk. Copies are available upon request at the City Clerk’s office.) Audited Annual Comprehensive Financial Report FY 2020/21 4November 16, 2021 RESOLUTION NO. 75-2021 ACCEPTING THE FISCAL YEAR 2020/21 AUDITED ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE TOWN OF DANVILLE , the Town of Danville’s independent auditor has completed its annual WHEREAS examination of the Town’s financial statements and has issued a draft report with an unqualified opinion as to their accuracy; and , the audited financial statements have been combined with introductory and WHEREAS statistical information into the Town’s Annual Comprehensive Financial Report; and , the Town Council has reviewed the draft Annual Comprehensive Financial W HEREAS Report; now, therefore, be it , that the Danville Town Council accepts and approves the Fiscal Year RESOLVED 2020/21 audited Annual Comprehensive Financial Report as presented; and, be it further that the following amount be transferred to the Contingency Fund: R ESOLVED, $ 486,220 for ContingencyFund that the following amount betransferred to the Capital Improvement RESOLVED, Projects Fund: $ 6,100,000 for CIP Capital Improvement Projects Fund that the following amount be transferred to the Operating Reserve Fund RESOLVED, $ 1,500,000 for COVID Reserve Fund by the Danville Town Council at a regular meeting held on November 16, APPROVED 2021, by the following vote: A YES: NOES: ABSTAINED: ABSENT: MAYOR APPROVED AS TO FORM: ATTEST: CITY ATTORNEY CITY CLERK The ANNUAL COMPREHENSIVE FINANCIAL REPORT will be available before Tuesday, November 16, 2021