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Home My WebLink About111924-05.1 ADMINISTRATIVE STAFF REPORT 5.1 TO: Mayor and Town Council November 19, 2024 SUBJECT: Resolution No. 75-2024, accepting the Fiscal Year 2023/24 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 has approved the draft financial reports, including unqualified opinions, as to their accuracy. The draft audit is attached to this report and the Town Council is now being asked to accept the FY 2023/24 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. • The Statistical Section schedules are designed to show trends in five areas: financial, revenue capacity, debt capacity, demographic and economic information and operating information. GASB 34 presents financial information from two 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- Audited Annual Comprehensive Financial Report FY 2023/24 2 November 19, 2024 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 and American Rescue Plan Act Special Revenue as major funds. 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 $7,957,096 (year over year 2022/23 to 2023/24). Revenues exceeded expenditures by $11,649,793 with net operating transfers to other funds of $3,692,697. Actual revenues exceeded final budgeted revenues by $6,980,841. General Fund expenditures were below budget by $2,132,852. These savings were largely attributable to staffing position vacancies and operating saving from most departments. Note 11 of the Notes to Basic Financial Statements details the reserves and designations against the June 30, 2024 Fund Balance. The recommended designated reserves, described in detail below, were reviewed by the Town Council Finance Committee on November 6, 2024, and by the Town Council at the November 6, 2024 Study Session. These will require approval and appropriation by the full Town Council through Resolution No. 75-2024. TOWN FUND BALANCE Total reserves and designations amount to $24,982,620 (Table 1), an increase of $2,889,096 from prior year reserves and designations of $22,093,524. It is recommended that the Town Council approve the following adjustments to fund balance reserves which are reflected in the FY 2023/24 ACFR. Compensated Absences/Personnel The recommended transfer of $750,000 will increase the reserves for Compensated Absences/Personnel to ensure that sufficient funds are set aside to cover currently accumulated employee general leave hours. Audited Annual Comprehensive Financial Report FY 2023/24 3 November 19, 2024 Contingency Fund The recommended transfer of $500,000 to the Contingency Fund is to replenish the fund for future use. 500 La Gonda The recommended transfer of $300,000 will assist with the cost of replacing the roof for 500 La Gonda Way. Asset Replacement The recommended transfer of $1,000,000 to the Asset Replacement Fund will assist with the replacement of obsolete capital assets including vehicles, equipment, furnishings, and technology. Capital Improvement Projects Fund The recommended transfer of $4,997,432 to the Capital Improvement Projects Fund will assist with the funding of future projects as determined by the Town Council. 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, 2024 Total pre-audit Fund Balance at 6/30/24 $ 36,897,760 Adjusted for unrealized market value reported per GASB 31 $(3,762,414) Adjusted for unrealized leased income/loss reported per GASB 37 $ (605,294) Fund Balance without unrealized market value $ 32,530,052 Less Reserves/Designations against Fund Balance for: Operating Reserve $ 16,009,768 Receivable from former CDA $ 1,759,401 Compensated Absences/Personnel $ 1,465,232 Reserved for Debt Service $ 848,843 Contingency $ 510,470 Encumbrances $ 877,166 Audited Annual Comprehensive Financial Report FY 2023/24 4 November 19, 2024 Emergency Reserved $ 1,985,327 500 La Gonda Way – proceeds from rent $ 1,516,413 Reward Fund $ 10,000 Total Reserves/Designations against Fund Balance $ 24,982,620 Current Unreserved/Undesignated Fund Balance at 6/30/24 $ 7,547,432 Recommended Fund Balance Options: Compensated Absences/Personnel $ (750,000) Contingency Fund $ (500,000) 500 La Gonda $ (300,000) Asset Replacement $ (1,000,000) Capital Improvement Projects Fund $ (4,997,432) When the operating transfers are combined with the above reserves and the designations require Town Council action, the entire excess of revenues and other sources over expenditures and other uses in the General Fund for the 2023/24 fiscal year will have been designated for specific purposes. PUBLIC CONTACT Posting of the meeting agenda for the Town Council meeting on November 19, 2024, as well as the Finance Committee meeting on November 6, 2024, and the Study Session on November 6, 2024, serves as notice to the general public. FISCAL IMPACT Approval of the recommendations made in this report will increase the Fiscal Year 2023/24 net designations in the General Fund by $7,547,432. RECOMMENDATION Adopt Resolution No. 75-2023, accepting the Fiscal Year 2023/24 Audited Annual Comprehensive Financial Report for the Town of Danville. Prepared by: Lani Ha Finance Director/Treasurer Audited Annual Comprehensive Financial Report FY 2023/24 5 November 19, 2024 Reviewed by: Joseph A. Calabrigo Town Manager Attachments: A - Resolution No. 75-2024 B - Fiscal Year 2023/24 Annual Comprehensive 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.) RESOLUTION NO. 75-2024 ACCEPTING THE FISCAL YEAR 2023/24 AUDITED ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE TOWN OF DANVILLE WHEREAS, the Town of Danville’s independent auditor has completed its annual examination of the Town’s financial statements and has issued a draft report with an unqualified opinion as to their accuracy; and WHEREAS, the audited financial statements have been combined with introductory and statistical information into the Town’s Annual Comprehensive Financial Report; and WHEREAS, the Town Council has reviewed the draft Annual Comprehensive Financial Report; now, therefore, be it RESOLVED, that the Danville Town Council accepts and approves the Fiscal Year 2023/24 audited Annual Comprehensive Financial Report as presented; and, be it further RESOLVED, that the following amount be transferred to the Compensated Absences/Personnel Fund: • $ 750,000 for Compensated Absences/Personnel Fund RESOLVED, that the following amount be transferred to the General Fund, Contingency Fund: • $ 500,000 for Contingency Fund RESOLVED, that the following amount be transferred to the General Fund, 500 La Gonda Way: • $ 300,000 for 500 La Gonda Way RESOLVED, that the following amount be transferred to the Asset Replacement Fund: • $ 1,000,000 for Asset Replacement Fund RESOLVED, that the following amount be transferred to the Capital Improvement Projects Fund: • $ 4,997,432 for CIP Capital Improvement Projects Fund Docusign Envelope ID: 2B8C3B91-E5D0-4C4B-8586-63943F3371DA PAGE 2 OF RESOLUTION NO. 75-2024 APPROVED by the Danville Town Council at a regular meeting held on November 19, 2024, by the following vote: AYES: NOES: ABSTAINED: ABSENT: MAYOR APPROVED AS TO FORM: ATTEST: CITY ATTORNEY CITY CLERK Docusign Envelope ID: 2B8C3B91-E5D0-4C4B-8586-63943F3371DA