Agenda Item Wording:
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Review and acceptance of the Annual Measure N Independent accountants’ report on applying agreed-upon procedures for fiscal year ending 6/30/24.
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Deadline for Action: 1/21/2025
Submitting Department: Finance and Technology Services
Contact Name and Phone Number: Kari Williams 559-713-4298
Department Recommendation:
Review and acceptance the Measure N Independent Accountants’ Report on applying agreed-upon procedures for fiscal year ending June 30, 2024.
Background Discussion:
The City, as part of the voter approved Measure N sales tax override, must have an annual procedural review of the uses of Measure N funds. M. Green and Company has performed this review, which is attached.
There were two findings for fiscal year 2023/2024 (FY 23/24). A squad vehicle and related vehicle replacement costs were inadvertently booked to the incorrect fund. The error was corrected in FY 23/24. In addition, a wire for an invoice in the amount of $20,361 was not accrued at year end. The wire year end process has been reviewed and updated to help ensure accruals are not missed in the future.
This procedural review did not include financial management and accounting practices. The purpose of this procedural review is to ensure that Measure N funds are used in accordance with the ballot measure program guidelines, and expenditure plan for the fiscal year ended June 30, 2024. The financial management and accounting practices are included in the City’s annual audit.
This is a discussion of the procedural review and is not intended as a conservation about plan adjustments or other operational issues. If such adjustments are desired, they should be raised as part of a separate Council discussion.
In November of 2016, the voters of Visalia passed a ½ cent Sales Tax Override, Measure N - The Visalia Essential City Services Measure. Sales tax from Measure N will provide for essential city services such as police and fire, as well as maintenance of parks, trails, roads, and City facilities. As part of the measure, Council adopted an accountability ordinance (Ordinance 16-21) to establish accountability measures as outlined below:
Revenue Requirements:
• 10% of budgeted revenues must be deposited in a Measure N Uncertainty Fund. Money can only be accessed from this fund during a fiscal emergency;
• 10% of budgeted revenues must be deposited into the following categories:
o 2% Youth Programs
o 8% Maintenance and Emerging Needs
Expenditure Requirements:
• Money shall not be used for debt service payments;
• Annual expenditure plan must be approved by Council after the following has occurred:
o City Manager makes a recommendation to City Council and makes changes as requested;
o Comments and recommendation received by Sales Tax Oversight Board;
o Two Public Hearings are held at regular Council Meetings to consider expenditure plan.
Sales Tax Oversight Board:
Board will consist of 11 members that will serve two-year terms. Members may be reappointed to serve up to two additional two-year terms (total of 3 terms). Members are selected in the following manner:
• Each Council member shall select one member;
• The Citizens Advisory Committee (CAC) shall select two members;
• Visalia Economic Development Corporation shall select one member;
• Hispanic Chamber of Commerce of Tulare/Kings County or Visalia Chamber of Commerce shall select one member;
• Downtown Alliance that represents Property Based Improvement District or Downtown Merchants shall select one member;
• Home Builders Association or Board of Realtors shall select one member.
Expenditure Requirements:
Annual procedural review - Each year, the City shall provide an annual Independent accountants’ report on applying agreed-upon procedures to account for the tax revenues received and expenditures made to ensure consistency with the program guidelines and expenditure plans. This report completes this requirement.
Effectiveness Reviews:
The ballot measure ordinance requires an effectiveness review every 8 years from the operative date of the ordinance. The operative date is April 1, 2017; thus, the first review will occur on or before April 1, 2025. During the review, Council will hold a public hearing to review the progress of the Measure N 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.
Fiscal Year 2023/24 (FY 23/24) Financials (ACFR document pg. 32 & 36)
Details of the Measure N fund can be found on pages 32 & 36 of the City of Visalia Annual Comprehensive Financial Report (ACFR) for fiscal year ended June 30, 2024.
The approved FY 23/24 expenditure plan and actual expenditures are shown in Table I - Measure N Revenue & Expenditure Summary - FY 23/24. The table is a summary for the four Measure N Funds which are Essential Service, 2% Youth, 8% Maintenance & Emerging Needs, and the Economic Uncertainty Fund. Measure N sales tax revenue decreased $1.1 million (5.6%) over the prior year. Total expenditures for the fiscal year were $21.5 million which included a $1.6 million adjustment required by GASB 96 for the recording of Subscription-Based Information Technology Arrangements (SBITA) or Body Worn Cameras (5year term). Without this required entry, revenues would have covered expenditures for the year despite the decrease in revenues. For the year, fund balance increased by $0.3 million.
Table I - Measure N Revenue & Expenditure Summary - FY 23/24
Amongst the four funds, Measure N has a fund balance of $36.9 million which includes the Economic Uncertainty Fund of $2.0 million. The remaining $34.9 million has $10.7 million in committed capital projects that rolled into fiscal year 2024-25 leaving $24.2 million available as shown in Table II - Measure N Fund Balance. It is important to have cash available in each category to be able to advance projects in the plan (if needed) and/or cover higher costs than what was outlined in the plan.
Table II - Measure N Fund Balance
Annual independent accountants’ report on applying agreed-upon procedures:
As required by the Ordinance, the City engaged in M. Green and Company to attest that the City has used the money as required in the ballot measure. The independent accountants’ report on applying agreed-upon procedures assures that these funds are handled properly, assisting City management in providing the highest level of accountability for Measure N funds.
This report prepared by M. Green and Company is attached. The report confirmed that the plan is being implemented and adjusted according to the ballot measure, program guidelines and expenditure plan.
The measure N independent accountants’ report on applying agreed-upon procedures was presented and accepted by the Measure N Oversight Board at their January 9, 2025 meeting.
Fiscal Impact: N/A
Prior Council Action: June 17, 2024 Measure N Budget adoption.
Alternatives: N/A
Recommended Motion (and Alternative Motions if expected):
recommendation
Move to accept the Measure N independent accountants’ report on applying agreed-upon procedures from M. Green and Company for the fiscal year ending June 30, 2024.
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Environmental Assessment Status: N/A
Attachments: Independent accountants’ report on applying agreed-upon procedures