Santa Paula Finances and Accounting First Quarter 2015

By Sheryl Hamlin

Finance Director Easley presented a report of the first quarter of fiscal year 2015/2016 at the November 16, 2015 Santa Paula City Council Meeting. She said that the production of this report took one week.

Below are the revenues and expenses for first quarter and capital expenditures for the last fiscal year. Note that this report ONLY considers the General Fund, so none of the special funds which report the grants or the Enterprise Funds for water and sewer were reported.

q1_revenue

q1_expenses

capital_q1

Director Easley said that first quarter revenue is below the expected 25% because property taxes only come to the city twice a year and there is only one month of sales tax shown. She did say that she met with a Sales Tax specialist who said that sales tax showed only about .9% increase. Hoping for a holiday increase, she said that shopping on-line with a delivery to Santa Paula would give Santa Paula a percentage of the sales tax that goes to the county.

Council Member Gherardi said she realized that revenues were cyclical, but expenses should be more linear and relevant. Director Easley said that two large payments were made, one to insurance for $600K and one for $1.4 million to PERS for unfunded pension liabilities so the report is skewed. Council Member Gherardi said that the reporting of one-time payments could be solved with a footnote.

It was not asked nor was not reported from which fund these two large, lump sum payments were made.

Director Easley responded to an audience question about the various grants (SAFER, Limoneira and COPS) saying that this report only considered the General Fund. The audience question was relevant because there are transfers between the funds. There was no response to the question about the lack of transparency into the Enterprise Funds. This question about Enterprise Funds was relevant because Santa Paula has bond commitments requiring a certain cash flow and with residents conserving the water, it is important to know if the revenue has dropped and/or if there will be a DROUGHT SURCHARGE, as seen recently in other communities. Will Santa Paula residents be feeling the effects of a drought surcharge like the one recently enacted in Simi Valley?

Vice Mayor Hernandez said that the quarterly budget was not useful for making decisions and “wouldn’t base decision on it”. However, there have been several expenses of significance, like the study for police and fire funding and the new accounting system, which will affect budgeted expenses, so the report is actually very useful when considering spending.  Director Easley’s report says this:  Other than the notations listed above, most other categories are at the 25% or below expected expenditures. This is useful information.

It was noticed that the budget process will include third quarter information but it was not said if this information will be presented to council or the public.

It was voted not to require quarterly budgets because this report (above) took one week to prepare. There was no question about why this quarterly report took one week to prepare and if the proposed new accounting software could remedy the situation. Director Easley said the mid-year report will take three weeks to prepare because she does the forecasts and adjustments for each fund manually.

Accounting System Software

This item had been considered at a previous meeting. The staff has produced an RFP for new software. The goal is improved reporting and Building and Safety permitting and management. The chief building inspector Mike Leach said that the systems don’t communicate. They input the data manually. Santa Paula is behind the times. They have done the research and he suggests going forward with previous suggestions of software rather than use an RFP process. There are too many layers, he said, to start from scratch.

There is a Building and Safety Module that works with the existing accounting software, which is compatible with Ventura County GIS system, according to Mr. Leach. This costs about $54,000 according to Director Easley. The city is still in position for the Version 10 Encode from Tyler Technology who just bought New World Systems but there is an 18 month waiting list and is very expensive ($150,000 to $600,000) and is not in the fiscal year 2015/2016 budget. She suggests “borrowing” from water and sewer because the city does the billing. InterGov can be installed in weeks.

Attorney Cotti said because it is not a Public Works project, an RFP is not required.  Vice Mayor Hernandez moved entering into contract with Encode to expedite the process. Mayor Procter seconded for discussion purposes. Council Gherardi asked what they are authorizing. Director Easley said that this amount includes $150,000 of training. Discussion ensured about the benefits of an RFP, which Mr. Fontes supports, saying there is no harm proceeding to get the comparisons, even though it is a bit slower. The mayor asked for the time and costs of the RFP process. The Vice Mayor reiterated that the city has needed this software for five years. Vice Mayor Hernandez reminded that council that the staff time to enter the data manually should also be considered to which Director Easley said that one person spends about 60% of her time entering data.

Council Gherardi expressed concerned about picking up the modules in advance of the full accounting system. Director Easley says the InterGov will handle both modules.

The RFP motion was withdrawn. A new motion moving forward with Version 10 of Encode from Tyler Technologies and the purchase of InterGov Building and Permit Management Process system was made. This motion failed.

Could there be a compromise motion, asked Council Member Gherardi, approving a portion for the billing? Director Easley said that preparing for the new accounting system takes six to nine months which is comparable to the time it will take for an RFP. Council Member Gherardi said she has not seen anything in writing to confirm that the upgrade of the current software would solve the problems. Director Easley said that Version 10 improves printing of legible reports and a simplified Excel interface for reporting. Mr. Leach said he viewed the software he needs to use.

Vice Mayor restated the previous motion that failed, which now passed.

Mr. Leach asked if he could spend the remaining $40,000 from the Arula code enforcement fund. Mayor Procter said such an item was not agendized and must be brought back as an agenda item. Council Member Gherardi suggested that it be part of the budget request for the next fiscal year.

Accounting system upgrades are very complicated and involve running both the old and new systems in parallel through several financial cycles in order to compare the results prior to making any model changes to the new system. Director Easley said they “did it too fast the last time” but did not elaborate. Presumably she was referring to this cutover.

No one mentioned the razor thin budget and from what fund(s) the $150,000 to $600,000 would come.

Please click here to read a previous report from this council meeting.

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For more information about the author, visit sheryhamlin.com

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