BUCK HILL, Dana Point, Former Financial Review Committee Vice Chair
Whether it’s a household, a business or a city, budgets are important in planning income and expenses and prioritizing future spending.
Dana Point’s FY 2018 Comprehensive Annual Financial Report (CAFR) for the period ending June 30, 2018 was released at the January 15, 2019, city council meeting. The auditors verified the City’s financial statements, but they did not address the budgeting process or its accuracy.
The city’s budget for FY 2018 was finalized and approved in April 2018. The budget for all funds in the FY 2018 CAFR (shown on pages 25, 60, 67-77) projected a deficit where spending exceeded revenue by $5.6 Million. The FY 2018 CAFR shows that actual income exceeded expenditures to produce a surplus of $2.6 Million (page 86). Therefore, the budget was inaccurate by over $8 Million in a three month period.
Year after year, Dana Point’s budgeting process seems to significantly overestimate expenditures and capital spending, and understate revenue, leading to huge differences in actual results. Those inaccurate budgets do not provide a sound basis to make spending decisions and effectively measure performance.
A best-practices budgeting process would include regular progress reports for every city department and fund. Timely reporting would track expenditures and revenues against what is budgeted. Then adjustments could be made when needed to mitigate potential problems, change spending priorities or take action to improve results.
Overseeing and approving the budget is one of the city council’s most important responsibilities. Clear and timely reporting comparing actuals to budget would enable the City Council to provide responsible oversight of the city’s finances.