FINAL REPORT - San Bernardino Superior Court

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Section 1: Financial Condition During times of fiscal hardship, a minimum of five percent (5%) of the General Fund annual appropriations and transfers out shall be maintained to provide provision for cash flow requirements, economic uncertainties, uninsured losses, local emergencies/disasters, or other unknown financial hardships. As shown in Table 1.1 above, the City was close to meeting its target of 15 percent for reserves as of June 30, 2010, with a General Fund balance of $7,549,553, or 14.8 percent of its annual expenditures of $51,141,804 in FY 2009-10. However, within one year, the City’s General Fund balance as a percent of annual expenditures decreased by more than half, from 14.8 percent to 6.4. Though the General Fund balance as a percent of expenditures in FY 2010-11 was above the City’s established minimum of five percent, the rate of decrease in General Fund balance is significant. On April 19, 2011 the City Council suspended the minimum five percent reserve threshold so that the City may use General Fund reserves to close the gap between revenues and expenditures for FY 2011-12 without a commensurate cut in services The Government Finance Officers Association (GFOA) currently recommends that governments establish a formal policy on the level of unrestricted fund balance that should be maintained in the general fund. The current policy is vague in stating that the “adequacy of unrestricted fund balance in the general fund should be assessed based upon a government’s own specific circumstances.” Though the existing GFOA policy is not specific, it recommends that regardless of size, general-purpose governments should maintain unrestricted fund balance in their general fund of “no less than two months of regular general fund operating revenues or expenditures.” The City’s General Fund balance is well below this threshold. The City’s General Fund balance of $3,103,630 is $4,978,874, or 61.6 percent less than the target reserve of $8,082,504, or two months reserve based on annual expenditures of $48,495,022 in FY 2010-11. It should be noted that $2,322,107 of the General Fund balance is restricted, and therefore, unavailable to meet unforeseen expenditure obligations. A majority of the restricted portion of the General Fund Balance is due from other funds, as a result of General Fund advances and inter-fund loans 2 to other City funds. A small portion of the restricted funds, or $7,256, is reserved for prepaid expenses. Therefore, only $781,523 of the General Fund balance is actually available for immediate expenditures. Three Consecutive Years of Operating Deficits Over the past three fiscal years, actual General Fund expenditures have exceeded actual revenues, resulting in General Fund operating deficits for those three fiscal years. When there is an operating deficit, the General Fund balance is used to balance the operating budget, thus, partially explaining the depletion of the General Fund balance over the last few years. As shown in Table 1.2 and Chart 1.1 below, the General Fund had an operating surplus of $8,972,198 in FY 2007-08, but in the following fiscal year, FY 2008-09, had an operating deficit of $14,037,653. If the trend of operating deficits continues, the General Fund Balance will continue to decrease, very possibly leading to the City’s insolvency, as well as an inability to pay for dayto-day operating expenses and outstanding debt. 2 The City Manager has asserted that an advance of approximately $2.3 million from the General Fund to SCLAA to cover negative cash balances is not a long term loan and has been repaid since it was on the City’s June 30, 2011 financial statements. However, the City Manager has also stated that another “short term” loan to SCLAA from the General Fund may be necessary at the end of the current fiscal year. 1-3 Harvey M. Rose Associates, LLC
Section 1: Financial Condition Table 1.2 Four-Year Comparison of General Fund Actual Revenues and Expenditures Fiscal Year Revenues Expenditures Operating Surplus/(Deficit) FY 2007-08 $51,604,968 $42,632,770 $8,972,198 FY 2008-09 47,558,184 61,595,837 (14,037,653) FY 2009-10 47,263,350 51,141,804 (3,878,454) FY 2010-11 44,694,278 48,495,022 (3,800,744) 4-Year Average $47,780,195 $50,966,358 ($3,186,163) Source: City of Victorville Financial Statements Chart 1.1 Four-Year Comparison of General Fund Operating Surplus/(Deficit) $15,000,000 $10,000,000 $5,000,000 $0 ($5,000,000) ($10,000,000) ($15,000,000) ($20,000,000) Operating Surplus/(Deficit) FY2007‐08 FY2008‐09 FY2009‐10 FY2010‐11 $8,972,198 (14,037,653) (3,878,454) (3,800,744) Source: City of Victorville Financial Statements Inter-fund Loan and Transfers from the General Fund In addition to using the General Fund balance to support General Fund operations when there is an operating deficit, the City has used the General Fund balance to support other funds when there is a negative cash balance. As shown in Table 1.3 below, from FY 2007-08 through FY 2010-11, the General Fund has provided support to seven other funds in the form of: • Short-term loans that are due within a year; • Inter-fund loans that are due within more than a year; and, 1-4 Harvey M. Rose Associates, LLC
Page 1 and 2: FINAL REPORT COUNTY OF SAN BERNARDI
Page 3 and 4: EDITORIAL COMMITTEE From left to ri
Page 5 and 6: Honorable Ronald M. Christianson, P
Page 7 and 8: 2011-2012 GRAND JURY SAN BERNARDINO
Page 9 and 10: TABLE OF CONTENTS 2011-2012 GRAND J
Page 11 and 12: CITIES/SPECIAL DISTRICTS COMMITTEE
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Page 23 and 24: May 15, 2012 Ted Burgnon, Foreman a
Page 25 and 26: Executive Summary Harvey M. Rose As
Page 27 and 28: Executive Summary year to prevent b
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Page 33 and 34: Introduction Harvey M. Rose Associa
Page 35 and 36: Introduction Victorville was establ
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FINAL REPORT - San Bernardino Superior Court

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