Agenda Item Wording:
title
Review and acceptance of the Annual Measure T Compliance Audit for fiscal year ending 6/30/22.
body
Deadline for Action: 2/6/2023
Submitting Department: Finance and Technology Services
Contact Name and Phone Number: Kari Williams 559-713-4298
Department Recommendation:
Accept the Measure T Compliance Audit from M. Green and Company for the Fiscal Year ending June 30, 2022.
Background Discussion:
The City, as part of the voter approved Measure T sales tax override, must have an annual audit of the uses of Measure T funds. M. Green and Company has performed this audit and it is now being presented to Council.
There were no audit findings for FY 21/22.
This audit did not include financial management and accounting practices. The purpose of this audit is to ensure that Measure T funds are used in accordance with the Ballot Measure, Program Guidelines and Expenditure Plan for fiscal year ended June 30, 2022. The financial management and accounting practices are included in the City’s annual audit which is also being presented tonight (February 6, 2023).
This is a review of the audit and is not intended as a discussion of plan adjustments or other operational issues. Those adjustments should be considered as part of a separate discussion.
In March of 2004, the voters of Visalia passed a ¼ cent Sales Tax Override, Measure T, to provide additional police and fire personnel and services to protect our community. Program guidelines were implemented as part of the Measure T plan to ensure that the public would be well informed of the progress and process of Measure T. These guidelines are outlined as follows:
Revenue Requirements:
• 60% of revenues received must be deposited into a Measure T Police fund and 40% into the Measure T Fire Fund.
• An Economic Uncertainty Fund will be established for both Measure T funds. The Economic Uncertainty Funds require 25% of the actual sales tax collected to be deposited to maintain operations if revenues do not cover expenditures.
• Measure T revenues cannot replace General Fund budgeted operating expenditures for police and fire.
Expenditure Requirements:
Annual Audit - Each year, the City shall provide an annual independent audit to account for the tax revenues received and expenditures made to ensure consistency with the program guidelines and expenditure plans. This report is completing this requirement.
Annual Recertification:
Annual Recertification - Each June, as the City’s budget is adopted following public hearings, the City Manager will re-certify the Measure T plan by taking it to the City Council, stating what monies have been received, what monies have been spent, and what monies are available. The City Manager will also certify that the monies have not been used for purposes other than Public Safety. The Citizens Advisory Committee will act as an oversight function and review and approve the re-certification report prior to the report being taken to Council. This item was completed June 2022 for fiscal year 2022/23. The next recertification will return June 2023.
Effectiveness Reviews:
Effectiveness Reviews - The ballot measure ordinance requires an effectiveness review every 8 years at the first City Council meeting in January. The last effectiveness review was completed January 2021. During the review, Council will hold a public hearing to review the progress of the Measure T plan and the continuing need for the sales tax measure. To continue the sales tax measure, 4/5ths of the City Council must affirm the tax. During the January 2021 effectiveness review Council reaffirmed the tax. The next effectiveness review will be January 2029.
Measure T Plan
Measure T uses a detailed 20- year plan for, hiring personnel, construction of facilities, and equipment purchases. The original plan included a deficit that would be covered by increased revenues, lower expenditures, and General Fund subsidy. Since 2008, Measure T has been operating on an amended plan due to several years of lower revenues, higher expenditures, and no subsidy from the General Fund due to rising costs.
Even though the plan needed to be amended, the majority of the items accomplished would not have been achieved without Measure T. The progress of the plan components as of June 30, 2022 is shown in Table 1, Measure T Plan Components.
Table 1, Measure T Plan Components
Fiscal Year 2021/22 (FY21/22) Financials (ACFR document pg. 145-146)
Measure T Police - As shown in Table 2, Measure T Police Revenue & Expenditure Plan with Actuals - FY 21/22, the Measure T Police fund ended FY 21/22 with a surplus of $1.7 million as revenues came in higher than expenditures. The majority of the surplus is due to a 17% growth in sales tax revenue. This was an increase of $868,020 over the prior year. The large increase in sales tax revenue growth was mainly due to the high inflation rate that occurred during the fiscal year in addition to consumers continuing to spend the extra funds available to them from federal and state COVID relief stimulus packages.
Table 2, Measure T Police Revenue & Expenditure Plan with Actuals - FY 21/22
Measure T Fire - As shown in Table 3, Measure T Fire Revenue & Expenditure Plan with Actuals - FY 21/22, the Measure T Fire fund ended FY 21/22 with a surplus of $1.0 million as revenues came in higher than expenditures. The majority of Fire’s surplus is due to sales tax revenue growth of 17% ($578,680) over the prior year, mainly due to the aforementioned reasons.
Table 3, Measure T Fire Revenue & Expenditure Plan with Actuals - FY 21/22
This year in Measure T there was a total surplus of $2.7 million versus last fiscal of $2.1 million. This large surplus is not expected to continue as vacancies are filled and employee costs increase. As of June 30,2022, there was one Measure T vacancy. In addition, both funds will need to contribute toward a Public Safety building. Staff believes the amendments made in previous years will help sustain these funds for several years.
FY 21/22 Audit
As required by the Ordinance, the City engaged in an auditor to attest that the City has used the money as required in the ballot measure. The outside audit review assures that these funds are handled properly, assisting City management in providing the highest level of accountability for Measure T funds.
The City hired M. Green and Company to perform the audit which is attached. The audit confirmed that the plan is being implemented and adjusted according to the ballot measure, program guidelines and expenditure plan.
The Measure T Compliance Audit was presented and accepted by the Citizens Advisory Committee at their January 4, 2023 meeting.
Fiscal Impact:
N/A
Prior Council Action: June 20, 2022 - Annual Recertification of the 2022/23 Measure T Plan
Other: Citizens Advisory Committee accepted the report at their January 4, 2023 meeting.
Alternatives: N/A
Recommended Motion (and Alternative Motions if expected):
recommendation
I move to accept the 2021/22 Measure T compliance audit from M. Green and Company for the Fiscal Year ending June 30, 2022.
end
Environmental Assessment Status: N/A
CEQA Review: N/A
Attachments: Measure T Report