Liquidity Ratio - General Fund

Transcription

1 Liquidity Ratio - 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 that are expected to be paid off within the next twelve months, including such items as accounts payable, accrued liabilities, and amounts due to other funds. Cash is the cash we have on hand and in checking and savings accounts. Short-term investments are certificates of deposit and securities that will mature within the next twelve months. Formula: Cash and Short-Term Investments/Current Liabilities Desirable Trend: Flat or increasing trend line The chart reflects the effect of economic cycles on the City's liquidity. Conservative spending in 2008 helped the City maintain a solid level of liquidity given the recessionary economic climate and decrease in growth of revenuew. A cash ratio less than 1.0 is generally considered a negative indicator. However, since the City's revenues are not consistent throughout the year, this ratio can vary greatly depending on the measurement date. Cash and Short-term Investments Current Liabilities Liquidity Ratio ,624,252 12,126, ,511,958 19,066, ,353,000 17,166, ,283,000 10,901, ,510,000 13,249, ,327,000 17,996, ,827,000 22,096, ,030,000 30,957, ,989,000 24,469, LIQUIDITY RATIO Liquidity Ratio Liquidity Ratio Trend Source: City of Boise CAFRs

2 and Formula: Net /Population; Net /Population. Desirable Trend: Tandem lines moving in the same direction with no intersection. In this exhibit, the per capita indicators for and are analyzed independently. However, when comared side by side the City can measure how effectively it is at earning and spending on a per resident basis. The top portion of the chart displays actual reported revenues and expenditures per capita and the bottom portion displays inflation adjusted (Constant) amounts per capita. The goal is to provide cost-effective delivery of services while generating revenue that does not have a dynamic impact on residents. Our trend in actual dollars per capita is a steady increase, but in constant dollars the trend is essentially flat to slowly increasing. Note that expenditures per capita constant increased in 2008 while revenues per capita constant decreased. Constant Constant Population Per Capita , , , , , , , , , GENERAL FUND OPERATING REVENUES AND EXPENDITURES PER CAPITA Constant Trend Trend Constant Trend Trend Source Data: Community Planning Association of Southwest Idaho; Bureau of Labor Statistics

3 Property Tax Revenue as a Percentage of Total Revenue Formula: Property Tax Desirable Trend: Flat or decreasing trend line Property taxes are a major component of the City's general government operations, accounting for more than 60% of the total. 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. An increasing trend represents an increasing dependency on property taxes to support core services. The trend line shows a moderating increase in property tax dependency. However, a two percent increase in 2008 marks a reversal of the previous four years of decreases in property tax as a percentage of total revenues. Property Tax Property Tax as a % of Total ,516,862 52% ,043,584 59% ,455,361 60% ,461,424 58% ,089,000 62% ,507,000 62% ,716,000 61% ,448,503 60% ,631,000 59% ,087,000 58% ,197,000 60% PROPERTY TAX REVENUES AS A PERCENT OF NET OPERATING REVENUES 62.0% 61.5% 61.0% 60.5% 60.0% 59.5% 59.0% 58.5% 58.0% 57.5% 57.0% Property Tax % of Net Source Data: Idaho Department of Labor and Commerce Property Tax % of Net Trend Source: City of Boise CAFRs.

4 Elastic to Net Formula: Elastic /Net Desirable Trend: Flat or increasing trend line This indicator measures how dependent our revenue stream is on elastic revenues. Elastic revenues are defined as that revenue that may be affected by demographic or economic changes in our community, and include charges for services, sales tax, donations, and investment income. A balance between elastic and inelastic revenues mitigates the effects of economic growth and decline. Insufficient elastic revenues may produce revenue shortages during periods of high inflation or rapid economic growth. Over-dependence on elastic revenues can reduce revenues during economic downturns. The trend is slightly increasing reflecting the effect of economic growth on elastic revenues over the past five years. Net Elastic % of Total ,671,606 23,220, % ,461,172 25,573, % ,165,000 24,626, % ,041,000 26,322, % ,149,000 29,467, % ,865,000 32,770, % ,957,000 36,863, % ,429,000 39,753, % ,367,000 40,861, % ELASTIC REVENUES AS A PERCENTAGE OF NET OPERATING REVENUES - GENERAL FUND 27.00% 26.50% 26.00% 25.50% 25.00% 24.50% 24.00% 23.50% 23.00% 22.50% 22.00% Source Data: Idaho Percent Department of Net of Labor and Commerce Trend Source: City of Boise CAFRs and General Ledger

5 Fringe Benefits to Salaries and Wages Formula: Fringe Benefits/Total Payroll Desirable Trend: Flat or decreasing trend line Salaries and employee benefits account for more than 70% of the City's total net operating expenditures. Salaries are defined as compensation paid to full-time, part-time and seasonal employees. Fringe benefits include the employer share of social security and Medicare (FICA), retirement, health insurance (including vision and dental), disability and life insurance, and benefit buyback programs. 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. While the adoption of the Health Care Trust decreased the growth in fringe benefits during 2006 and 2007, the overall trend is negative. Salaries and Wages Fringe Benefits Percent ,842,784 14,180, % 74,838, % ,930,477 14,856, % 77,984, % ,230,357 15,410, % 83,798, % ,758,229 16,584, % 90,911, % ,656,501 19,007, % 97,459, % ,925,838 20,041, % 102,276, % ,107,608 21,548, % 107,216, % ,937,303 23,946, % 114,384, % ,769,020 23,256,919 * 27.68% 118,807, % ,071,293 25,816, % ,960,037 29,845, % GENERAL FUND FRINGE BENEFITS AS A PERCENTAGE OF TOTAL PAYROLL 30.00% 29.00% 28.00% 27.00% 26.00% 25.00% Benefits to Total Payroll Benefits to Total Payroll Trend Source: City of Boise General Ledger * Net of Health Trust savings of 1,370,963

6 City FTEs Per Mille Formula: Number of Municipal Employees/Population Desirable Trend: Flat Trend Line For purposes of this indicator, municipal employees are defined as approved, budgeted FTEs (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. The trend indicates a slow increase in FTEs per mille. Note that the ratio has decreased from 7.74 in 2003 to 7.55 in The average number of employees per thousand since 1987 is 7.20 FTEs Per Thousand Population Running Average Population City FTEs ,787 1, ,174 1, ,808 1, ,117 1, ,000 1, ,219 1, ,473 1, ,503 1, ,490 1, FTEs PER THOUSAND POPULATION Employees Per Thousand Employees Per Thousand Trend Source Data: Community Planning Association of Southwest Idaho; City Budget Office

7 December Cash Balances - investment balances at December 31 The had adequate liquidity at September 30th, however, revenues are not even throughout the year and cash can run short. Property tax represents approximately 60% of revenues and the bulk of property tax is received in late January and July. Below is a chart of the cash and investment balances at December 31 and the amount of fund balance reserved for cash flow. In 2008, there was a deficit of nearly 4 million dollars that was borrowed from other City funds. Without the cash flow reserve the deficit would have been nearly 14 million dollars. A goal of the city is to maintain a cash flow reserve amounting to 8% of revenues. The current reserve is 6.25%. Cash Surplus/ Deficit Balances Without Reserve Reserve for Cash Flow ,854,455 3,454,225 (1,599,769.9) ,698 4,204,000 (4,027,302.0) ,083,374 4,426,000 (2,342,626.0) 2003 (8,116,434) 4,867,000 (12,983,433.8) 2004 (2,327,595) 5,371,000 (7,698,595.0) 2005 (2,751,720) 6,733,000 (9,484,719.8) ,916,809 7,395,000 2,521, ,653,465 8,795,247 (141,782.0) 2008 (3,921,447) 9,652,640 (13,574,087.0) 2008 December Cash Surplus/(Deficit) 15,000,000 10,000,000 5,000,000 - (5,000,000) (10,000,000) (15,000,000) Cash Surplus/ Deficit Balances Without Reserve Source: City of Boise General Ledger

8 to 1983 Formula: ; Desirable Trend: Tandem lines moving in the same direction When operating revenues and operating expenditures are compared over time, the picture becomes clearer of how well the City is matching revenues to expenditures. expenditures are defined as all expenditures other than operating transfers out. In this indicator, a positive trend is when operating revenues and operating expenditures move in tandem in the same direction. A negative trend occurs when the lines begin to converge or cross. The trend lines are widening slightly, which reflects the growth of revenues at a faster pace than expenditures. The City made several large land purchases in FY 2002 and 2003 which created a negative short-term trend. From FY 2004 to FY 2007 an economic recovery combined with department cost saving efforts has yielded the positive results. While not sufficient to impact the longer term trend, FY 2008 reflects a narrowing of revenues over expenditures due to the stagnation of revenue growth ,671,606 83,798, ,461,172 90,911, ,165,000 97,459, ,041, ,276, ,149, ,216, ,865, ,384, ,957, ,807, ,429, ,929, ,367, ,143,000 GENERAL FUND OPERATING REVENUES vs. OPERATING EXPENDITURES Millions Source Data: Idaho Department of Labor and Commerce Revenue Trend Expenditure Trend Source: City of Boise CAFRs

9 Surplus or Deficit to Net Formula: Surplus (Deficit)/Net Desirable Trend: Increasing trend line 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. 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. In 2007 he trend line was slightly upward sloping reflecting four years of strong surpluses. The trend is now nearly flat at 10% due to the decrease in the surplus in Surplus or (Deficit) Surplus after Rebudgets and Percent Encumbrances Percent ,671,606 8,872, % 5,766, % 114% ,461,172 14,549, % 338, % 69% ,165,000 6,706, % % 214% ,041,000 5,765, % 3,677, % 121% ,149,000 9,933, % 2,514, % 63% ,865,000 12,481, % 3,956, % ,957,000 22,150, % 9,592, % ,429,000 20,500, % 11,685, % ,367,000 9,224, % (715,515) -0.46% 2008 OPERATIONSOPERATING SURPLUS OR DEFICIT AS A PERCENTAGE OF NET OPERATING REVENUES 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% -2.00% 9.57% 6.22% 13.80% 15.71% 13.45% 9.84% 8.48% 6.44% 6.81% 7.67% 5.98% 5.34% 3.40% 2.15% 3.12% 0.32% 0.00% -0.46% Surplus Percent of Trend Surplus w/o Rebudgets & Encumbrances Trend w/o Rebudgets and Encumbrances

10 Net vs Adjusted for Inflation Formula: vs adjusted for inflation Desirable Trend: Increasing trend line The purpose of this indicator is to show the trend of net operating revenues and the effects of inflation on that trend. Our trend shows a steady increase in actual net operating revenues, but when the effects of inflation are accounted for, the increase is less dramatic. This emphasizes the need to evaluate our operating revenues as adjusted for inflation when developing fees and user charges. Constant Actual in 1983 Dollars CPI-U ,397,018 18,397, ,671,606 53,816, ,461,172 59,548, ,165,000 57,901, ,041,000 58,717, ,149,000 62,016, ,865,000 64,959, ,957,000 69,919, ,429,000 73,530, ,367,000 71,532, GENERAL FUND OPERATING REVENUES ACTUAL AND CONSTANT DOLLARS Millions Actual - Constant Source Data: Federal Bureau of Labor Statistics; 2008 CPI as of 11/30/2008

11 Rate of Change in vs CPI Formula: Percentage Change in versus Percentage Change in CPI Desirable Trend: Increasing trend line The purpose of this indicator is to show the rate of change in revenues verses the rate of change in the Consumer Price Index (CPI). The trend shows that the City's rate of revenue growth exceeds the annual increase in CPI. This is indicative of strong overall growth in Boise. Note, however, that in 2008 the rate of revenue growth did not keep pace with overall inflation. This emphasizes the need to evaluate our operating revenues as adjusted for inflation when developing fees and user charges. 16% 14% 12% 10% 8% 6% 4% 2% Revenue % Change Constant in 1999 Dollars % Change Constant % Change CPI % Change MCI Actual 1999 Base CPI Municipal CPI-U Cost Index ,671,606 6% 89,657,895 2% % % ,461,172 14% 99,208,533 11% % % ,165,000-1% 96,464,086-3% % % ,041,000 4% 97,824,079 1% % % ,149,000 8% 103,319,340 6% % % ,865,000 8% 108,221,756 5% % % ,957,000 11% 116,485,299 8% % % ,429,000 8% 122,502,033 5% % ,367,000 1% 119,173,041-3% % GENERAL FUND OPERATING REVENUES PERCENTAGE CHANGE 0% -2% Revenue % Change % Change CPI Trend-Revenue % Change Trend-CPI Source: City of Boise CAFRs; Bureau of Labor Statistics

12 Formula: /Population Desirable Trend: Increasing trend line City of Boise Operations The purpose of this indicator is to measure how effectively the City is 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 trend is nearly flat but slowly increasing. This is important to remember when developing the City's revenue estimates and setting the City's taxes, fees, and other revenues. CPI-U Population Actual Constant ,451 18,397,018 $180 $ ,787 92,671, , ,461, , ,165, , ,041, , ,149,000 $ , ,865,000 $ , ,957,000 $ , ,429,000 $ , ,367,000 $ GENERAL FUND NET OPERATING REVENUES PER CAPITA Constant Trend Constant

13 Net vs Adjusted for Inflation Formula: Net vs adjusted for inflation Desirable Trend: Flat or slowly increasing trend line The purpose of this indicator is to show the trend of net operating expenditures and the effects of inflation on that trend. The trend reflects actual operating expenditures increasing; however, when the effects of inflation are accounted for, the increase is less dramatic. The increase is primarily due to the significant growth in the City and surrounding areas Dollars CPI-U ,804,805 18,804, ,798,722 48,663, ,911,506 51,333, ,459,000 54,173, ,276,000 55,584, ,216,000 56,758, ,384,000 58,568, ,807,000 58,932, ,929,000 63,641, ,143,000 67,258, OPERATING EXPENDITURES Millions Trend - Constant Trend - Constant Source Data: City of Boise CAFRs; Bureau of Labor Statistics

14 Formula: /Population Desirable Trend: Flat or slowly increasing trend line City of Boise Operations Net Exp The purpose of this indicator is to measure how effectively the City is at controlling expenditures by calculating it on a per resident basis. Our trend in actual dollars per capita is a steady increase, but in constant dollars the trend is essentially flat to slowly increasing. CPI-U Population Actual Population Constant ,451 18,804,805 $184 $ ,787 83,798, ,174 90,911, ,808 97,459, , ,276, , ,216, , ,384, , ,807, , ,929, , ,143, GENERAL FUND OPERATING EXPENDITURES PER CAPITA Constant Trend Trend Constant