Liquidity Ratio General Fund

Transcription

1 Liquidity Ratio General Fund The liquidity ratio, also known as the "cash ratio", measures our ability to pay off current liabilities with cash and short-term investments. Current liabilities are the amounts we owe and expect to pay off within the next twelve months, including such items as accounts payable, accrued liabilities, and amounts due to other funds. Cash is the balance in our petty cash, checking and savings accounts. Short-term investments are certificates of deposit and securities that will be redeemed or sold within the next twelve months. Formula: Cash and Short-Term Investments/Current Liabilities. Desirable Trend: Flat or increasing trend line Cash and Short-term Investments include cash on hand and interest bearing investments with a maturity date of 12 months or less. Current Liabilities includes Accounts and Interest Payable. Cash and Fiscal Year Short-term Investments Current Liabilities Liquidity Ratio ,859,173 3,678, ,977,686 7,272, ,624,252 6,204, ,511,958 7,483, ,353,000 7,841, ,283,000 8,083, ,510,000 8,271, FY 2001 was a record year for development fee revenue. Development revenue dropped sharply in FY 2002 in line with the economic slowdown. The City made several large land purchases in FY 2002 and FY 2004 primarily reflects the impact of the economic recovery and department cost saving efforts. LIQUIDITY RATIO Liquidity Ratio Liquidity Ratio Trend Source: City of Boise CAFRs

2 Current Ratio General Fund The current ratio measures our ability to pay off current liabilities with current assets. Current assets are defined as cash and amounts we own that can be converted into cash within the next twelve months, and include such items as short-term investments, accounts receivable and amounts due from other funds. Formula: Current Assets/Current Liabilities. Desirable Trend: Flat or increasing trend line Current Assets include cash on hand, interest bearing investments with a maturity date of 12 months or less, other Short-Term Liquid Assets such as Receivables, due from other funds, Inventory, and Prepaid items. Current Liabilities includes Accounts and Interest Payable. Fiscal Year Current Assets Current Liabilities Liquidity Ratio ,141,948 3,678, ,839,488 7,272, ,127,581 6,204, ,853,289 7,483, ,481,000 7,841, ,144,000 8,083, ,130,000 8,271, FY 2001 was a record year for development fee revenue. Development revenue dropped sharply in FY 2002 in line with the economic slowdown. The City made several large land purchases in FY 2002 and FY 2004 primarily reflects the impact of the economic recovery and department cost saving efforts. Current Ratio Actual Trend Source: City of Boise CAFRs

3 Fund Balance to Net Operating Revenue Tax Support Unreserved and undesignated fund balance is defined as the amount of spendable resources that is neither legally restricted nor voluntarily designated for specific purposes. An analysis of this trend helps us to set a target for our unreserved and undesignated fund balance as a percentage of total tax supported appropriations. In periods of economic expansion, our unreserved and undesignated fund balance has exceeded the 5-6% mark, while in periods of economic contraction we have been at 0%. Formula: Unreserved & Undesignated Fund Balance/Net Operating Revenues. Desirable Trend: Increasing trend line Fiscal Year Tax Support Fund Balance Operating Revenues Percent Unreserved Actual ,910,982 83,389, % ,218,222 87,496, % ,766,375 92,671, % , ,461, % ,165, % ,041, % , ,149, % FY 2001 was a record year for development fee revenue. Development revenue dropped sharply in FY 2002 in line with the economic slowdown, and total operating revenue declined over the prior year. The City made several large land purchases in FY 2002 and FY 2004 primarily reflects the impact of the economic recovery and department cost saving efforts. Tax Supported Unreserved and Undesignated Fund Balance as a Percentage of Net Operating Revenues 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% -1.00% -2.00% Actual Trend Source: City of Boise CAFRs

4 Operating Surplus or Deficit to Net Operating Revenues General Fund An operating surplus occurs when revenues exceed expenditures, and an operating deficit occurs when expenditures exceed revenues. It is a positive result when an operating surplus occurs. An operating deficit is not necessarily a negative result, provided that the operating deficit was planned. Operating deficits are often planned when fund balance exists that is considered excessive and the excess amount is used to offset the cost of some programs. Formula: Operating Surplus (Deficit)/Net Operating Revenues. Desirable Trend: Increasing trend line Fiscal Year Net Operating Revenues Surplus or (Deficit) Percent ,389,886 8,551, % ,496,403 9,512, % ,671,606 8,872, % ,461,172 14,549, % ,165,000 6,706, % ,041,000 5,765, % ,149,000 9,933, % This trend clear reflects the positive impact of the stronger economy in during FY 1998 through FY 2001 and the slower economy through FY FY 2004 is when we begin to see signs of economic recovery, but not as strong as in earlier years. The projection trend line is not favorable. Operating Surplus or Deficiet as a Percentage of Net Operating Revenue - General Fund 15.00% 14.00% 13.00% 12.00% 11.00% 10.00% 9.00% 8.00% 7.00% 6.00% 5.00% Percent of Revenues Percent of Revenues Trend Source: Actual Financial Reports

5 Operating Surplus or Deficit to Net Operating Expenditures General Fund An operating surplus occurs when revenues exceed expenditures, and an operating deficit occurs when expenditures exceed revenues. It is a positive result when an operating surplus occurs. An operating deficit is not necessarily a negative result, provided that the operating deficit was planned. Operating deficits are often planned when fund balance exists that is considered excessive and the excess amount is used to offset the cost of some programs. Formula: Operating Surplus (Deficit)/Net Operating Expenditures. Desirable Trend: Increasing trend line Fiscal Year Net Operating Expenditures Surplus or (Deficit) Percent ,838,098 8,551, % ,984,048 9,512, % ,798,722 8,872, % ,911,506 14,549, % ,459,000 6,706, % ,276,000 5,765, % ,216,000 9,933, % This trend clear reflects the positive impact of the stronger economy in during FY 1998 through FY 2001 and the slower economy through FY FY 2004 is when we begin to see signs of economic recovery, but not as strong as in earlier years. The projection trend line is not favorable. Operating Surplus or Deficit as Percentage of Operting Expenditures 17.00% 15.00% 13.00% 11.00% 9.00% 7.00% 5.00% Percent of Revenues Percent of Revenues Trend Source: Boise City CAFR s

6 Operating Revenues to Operating Expenditures General Fund When operating revenues and operating expenditures are compared over time, we get a better picture of how well we are matching our revenues to expenditures. Operating revenues are defined as all revenues less operating transfers in. Operating expenditures are defined as all expenditures other than operating transfers out. Formula: Operating Revenues vs. Operating Expenditures. Desirable Trend: Tandem lines moving in the same direction with no intersection In this indicator, a positive trend is when operating revenues and net operating expenditures move in tandem in the same direction. A negative trend occurs when the lines begin to converge or cross. The trend lines reflect a narrowing between the operating revenues and operating expenditures, which is an indication that we must develop future budgets to ensure that the trend can be halted or reversed. Fiscal Year Operating Revenues Operating Expenditures ,389,886 74,838, ,496,403 77,984, ,671,606 83,798, ,461,172 90,911, ,165,000 97,459, ,041, ,276, ,149, ,216,000 FY 2001 was a record year for development fee revenue. Development revenue dropped sharply in FY 2002 in line with the economic slowdown. The City made several large land purchases in FY 2002 and FY 2004 primarily reflects the impact of the economic recovery and department cost saving efforts. General Fund Operating Revenues vs. Operating Expenditures 140,000, ,000, ,000, ,000, ,000,000 90,000,000 80,000,000 70,000,000 Revenues Expenditures Revenue Trend Expenditure Trend Source: City of Boise CAFRs; Idaho Department of Labor and Commerce

7 Operating Revenues and Expenditures Per Capita In this exhibit, we match the two indicators already analyzed independently, Net Operating Revenue and Operating Expenditures per capita. Side by side we can measure how effectively we are earning and spending on a per resident basis. Formula: Net Operating Revenues/Population; Operating Expenditures/Population. Desirable Trend: Tandem lines moving in the same direction with no intersection Fiscal Year Population Net Operating Revenues Operating Expenditures Revenue Per Capita Expenditures Per Capita Net Per Capita ,000 83,389,886 74,838,098 $499 $448 $ ,000 87,496,403 77,984, ,787 92,671,606 83,798, , ,461,172 90,911, , ,165,000 97,459, , ,041, ,276, , ,149, ,216,000 $577 $528 $34 The goal is to provide cost-effective delivery of services, while generating revenue that does not have a dynamic impact on residents. The trend line is projecting expenditures per capital to grow faster than revenue per capita. General Fund Revenue and Expenditures per Capital $650 $600 $550 $500 $450 $400 Expenditures Per Capita Expenditures Trend Revenues Per Capita Revenues Trend * Source: City of Boise CAFRs; Idaho Department of Labor and Commerce

8 General Fund Net Operating Revenues The purpose of this indicator is to show the trend of net operating revenues and the effects of inflation on that trend. The trend shows an increase in actual net operating revenues when compared to our revenue, but when the effects of inflation are accounted for, the increase is less dramatic. This emphasizes the need to evaluate our operating expenditures as adjusted for inflation when developing fees and user charges. Formula: Operating Revenues X CPI-U Change. Desirable Trend: Increasing trend line Actual Constant Fiscal Year Revenues Revenues CPI-U ,397,018 18,397, ,389,886 29,987, ,496,403 30,649, ,671,606 31,679, ,461,172 32,581, ,165,000 33,096, ,041,000 33,850, ,149,000 34,751, GENERAL FUND OPERATING REVENUES ACTUAL AND CONSTANT DOLLARS Millions Revenues Revenue Trend Revenues - Constant Revenues - Constant (Trend) Source: City of Boise CAFRs; Idaho Department of Labor and Commerce

9 General Fund Net Operating Revenues Percentage Change Using the same data as the Net Operating Revenues analysis, the purpose of this indicator is to show the trend of percentage change in net operating revenues and the effects of inflation on that trend. Although actual net operating revenues are increasing, when compared with the effects of inflation, the pattern is more dramatic as it reflects area growth. Formula: Operating Revenues X CPI-U Change. Desirable Trend: Increasing trend line Actual Percent Constant Fiscal Year Revenues Change Revenues ,397,018 18,397,018 Percent Change ,389,886 N/A 29,987,139 N/A ,496,403 5% 30,649,432 2% ,671,606 6% 31,679,665 3% ,461,172 14% 32,581,119 3% ,165,000-1% 33,096,235 2% ,041,000 4% 33,850,513 2% ,149,000 8% 34,751,967 3% FY 2002 reflects the impact of the economic slowdown on our elastic revenues. We then see the impact of the economic recovery in FY 2004 and the acquisition of Idaho Ice World. GENERAL FUND OPERATING REVENUES PERCENTAGE CHANGE 15% 13% 11% 9% 7% 5% 3% 1% -1% -3% Revenues Revenues - Constant Source: City of Boise CAFRs; Idaho Department of Labor and Commerce

10 General Fund Net Operating Revenues Per Capita The purpose of this indicator is to measure how effectively we are earning revenue by calculating it on a per resident basis. Our trend in actual dollars per capita is a strong and steady increase, but in constant dollars the impact is less dramatic. This is important to remember when developing our revenue estimates and setting our taxes, fees, and other revenues. Formula: Operating Revenues X CPI-U Change. Desirable Trend: Increasing trend line Operating Per Capita Per Capita Fiscal Year Population * Revenues Actual Constant 1983** 102,451 18,397,018 $180 $ ,000 83,389, ,000 87,496, ,787 92,671, , ,461, , ,165, , ,041, , ,149,000 $577 $339 * , estimates are based on 1995 & 2000 Bureau of Census Data. **1980 Census. GENERAL FUND NET OPERATING REVENUES PER CAPITA Per Capita Per Capita Constant Per Capita Trend Per Capita Constant Source Data: City of Boise CAFRs; Idaho Department of Labor and Commerce; US Bureau of Census

11 Property Tax Revenues Property taxes are a major component of our general government operations, accounting for more than 60% of our total General Fund Revenues. Property tax revenue is calculated by taking the highest single annual budget from the prior three years increased by 3% plus the growth formula. The growth formula is calculated by multiplying annexation and new construction values by the prior year base tax rate. The growth amount is the total of the new construction value and the annexation value, multiplied by the prior year s base tax rate. Formula: Property Tax Revenues. Desirable Trend: Flat or decreasing trend line An increasing trend represents our increasing dependency on property tax revenue to support our core services. We can easily see the impact of the high development revenue received in FY 2002 in the chart. Property Tax Property Tax as a Fiscal Year Revenues % of Total Revenues ,516,862 52% ,409,888 59% ,043,584 59% ,455,361 60% ,461,424 58% ,089,000 62% ,507,000 62% ,716,000 61% PROPERTY TAX REVENUES AS A PERCENT OF NET OPERATING REVENUES 64% 63% 62% 61% 60% 59% 58% 57% 56% Property Tax % of Net Operating Revenues Property Tax % of Net Operating Revenues Trend Source: City of Boise CAFRs; Idaho Department of Labor and Commerce

12 Elastic Operating Revenues to Net Operating Revenues This indicator measures how dependent our revenue stream is on elastic revenues. Elastic revenues are defined as revenue that may be affected by demographic or economic changes in our community, and include charges for services, donations, and investment income. A down turn in the economy or a return of higher inflation could send it into a downward trend, requiring us to consider service alternatives. Formula: Elastic Operating Revenues/Net Operating Revenues. Desirable Trend: Flat or increasing trend line Net Operating Elastic Percent of Fiscal Year Revenues Revenues Gross ,397,018 3,417, % ,389,886 12,414, % ,496,403 11,852, % ,671,606 13,114, % ,461,172 15,195, % ,165,000 13,473, % ,041,000 15,020, % ,149,000 17,470, % FY 2002 shows the impact of the economic slowdown. The City s purchase of Idaho Ice World is reflected in FY Elastic Revenues as a Percentage of Net Operating Revenues 15.50% 15.00% 14.50% 14.00% 13.50% 13.00% 12.50% 12.00% 11.50% Percent to Gross Percent to Gross Trend Source: City of Boise CAFRs

13 General Fund Net Operating Expenditures Percentage Change The purpose of this indicator is to show the trend of net operating expenditures and the effects of inflation on that trend. Our trend shows that our actual operating expenditures are increasing, even after we account for inflation. The increase is primarily due to the significant growth in the City and surrounding areas. Formula: Net Operating Expenditures Desirable Trend: Flat to slowly increasing trend line Actual Operating Percent Operating Expenditures Fiscal Year Expenditures Change Constant ,804,805 18,804,805 Percent Change ,838,098 N/A 30,651,832 N/A ,984,048 4% 31,328,805 2% ,798,722 7% 32,381,874 3% ,911,506 8% 33,303,310 3% ,459,000 7% 33,829,844 2% ,276,000 5% 34,600,841 2% ,216,000 5% 35,522,277 3% The strong growth in the late 1990 s is evident in this graphic. OPERATING EXPENDITURES 8% 7% 6% 5% 4% 3% 2% 1% 0% Expenditures Expenditures Constant Source: City of Boise CAFRs; Idaho Department of Labor and Commerce

14 Fringe Benefits to Salaries and Wages General Fund Salaries and employee benefits account for more than 70% of our total General Fund net operating expenditures. Salaries are defined as compensation paid to full-time, part-time, temporary and seasonal employees. Employee benefits include the employer share of social security and Medicare (FICA), Public Employee Retirement System of Idaho (PERSI), health insurance (including vision and dental), disability and life insurance, and benefit buyback programs. Formula: Fringe Benefits/Salaries and Wages. Desirable Trend: Flat to slowly increasing trend line Fiscal Year Salaries and Wages Fringe Benefits Percent ,842,784 14,180, % ,930,477 14,856, % ,230,357 15,410, % ,758,229 16,584, % ,656,501 19,007, % ,925,838 20,041, % ,107,608 21,548, % An increasing percentage of fringe benefits to salaries is a negative trend and may reveal increases in total compensation that may not otherwise be clearly seen in negotiated labor agreements. For the first four years of the trend period the trend was positive with fringe benefits decreasing, but the last four years reversed to a negative trend due to increased health insurance and retirement costs with expectations of increases in the future. GENERAL FUND FRINGE BENEFITS AS A PERCENTAGE OF SALARIES 29.00% 28.00% 27.00% 26.00% 25.00% Percent of Salaries Percent of Salaries Trend Source: Actual expenditures

15 Municipal Employees Per Capita General Fund For purposes of this indicator, municipal employees are defined as approved, budgeted full-time equivalents for each fiscal year. An increasing trend in the number of full-time employees may foretell expenditures rising faster than revenues, a government that is becoming more labor intensive, and/or a reduction in employee productivity. Our ratio shows a range of 6.29 to 7.74 employees per-thousand population for the entire seven-year trend period. Formula: Number of Municipal Employees/Population. Desirable Trend: Flat trend line Fiscal Year Population Municipal Employees Employees Per Thousand ,000 1, ,000 1, ,787 1, ,174 1, ,808 1, ,117 1, ,000 1, FTE's per Thousand Population Employees Per Thousand Employess Per Thousand Trend Source: Budget Office HR Documentation; Idaho Department of Labor and Commerce