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CC - Item 5A - Report and Discussion Regarding the Finance Department Fiscal Year 2023 Work PlanROSEMEAD CITY COUNCIL STAFF REPORT TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: BEN KIM, CITY MANAGER DATE: JANUARY 10, 2023 SUBJECT: REPORT AND DISCUSSION REGARDING THE FINANCE DEPARTMENT FISCAL YEAR 2023 WORK PLAN SUMMARY The Finance Department ("Finance") is responsible for the day-to-day financial administration of the City, including oversight over the following areas: cash and investments, financial reporting and accounting, accounts payable, revenue collections, and payroll. Finance is committed to serving our City Council, City departments, and residents by providing quality financial management of taxpayer resources and also to provide exceptional customer service. This update is intended to serve as a summary of those efforts for the current fiscal year. Therefore, it is recommended that the City Council receive and file this report. The Finance Department is working on several projects, and services, that will benefit Rosemead. Financial Reporting and Accounting Finance is responsible for all financial and grant accounting and reporting, auditing functions, investments and debt management for the entire organization. Finance staff also prepares the award-winning Annual Comprehensive Financial Report. Other annual financial reports include the AB 1600 Development Impact Fee report for the City Council, and the Recognized Obligation Payment Schedule (ROPS) for the Successor Agency which is submitted to the Los Angeles County First Supervisorial District Consolidated Oversight Board. In addition, Finance provides the City Council a quarterly report on investments. Finance is also responsible for various local, state, and federal grant reporting requirements and audits. In fiscal year 2021-22, Finance recorded over 5,800 accounting journal record entries in order to adequately maintain accounting records and to be in agreement with Generally Accepted Accounting Principles and Governmental Accounting Standards Board. AGENDA ITEM 5.A City Council Meeting January 10, 2023 Page 2 of 3 Budget Finance assists the City Manager in preparing the City's award-winning operating and multi-year capital budget. The budget is an important tool for effectively managing City resources, planning for the future, and measuring performance against financial objectives. The process of creating the budget involves input from all City departments and stakeholders, including City Council. After the budget has been developed, it must be approved by the City Council before it can be implemented. Preparation of the budget starts this January, and we anticipate bringing the budget to the City Council for approval the first meeting in June 2023. Accounts Payable Finance is responsible for all payment requests in the entire organization. To manage accounts payable, Finance reviews all outstanding bills and make payments as they come due. This includes cutting checks or making electronic payments. In fiscal year 2021-22, Finance processed over 11,000 invoices. The City's account payable process is governed by the City's Purchasing Policy ("the Policy"). Finance is working with the City Manager's Office and the City has contracted with the National Institute of Governmental Purchasing ("NICP") for consultant services to review and recommend changes to the Policy. It is anticipated that NIGP's review of the Policy will increase organizational efficiency and effectiveness by bringing the Policy in line with current industry standards and creating new opportunities for cost savings in the strategic sourcing of goods and services. In addition to improving the accounts payable process, the City has contracted with Tyler Technologies to obtain a financial software module to assist with contract management. It is anticipated that the contracts module will go live this spring. Revenue Collections Revenue collection is a crucial aspect of the City's financial management, as it has a direct impact on cash flow. Proper revenue collection contributes to the City's overall financial health by ensuring that it can pay its own bills and fulfill its financial obligations. The revenue collection process includes sending invoices to customers and accepting payments, which could be cash, credit cards, checks, or wire transfers. The City's revenue collection process is decentralized, with the departments initially receiving cash, checks, and credit card payments at their respective locations. The collections are then forwarded to Finance to be further processed and deposited in the bank. In fiscal year 2021-22, the number of transactions the City processed through cash, credit cards, and checks amounted to over 8,900. Payroll Payroll is the process of compensating employees for their work and managing the deductions of taxes and benefits. It is a critical aspect of the City's financial management because it has a direct impact on the well-being and satisfaction of its employees. Finance is responsible for ensuring that City Council Meeting January 10, 2023 Page 3 of 3 employees are paid accurately and on time. Finance is also responsible for ensuring that the City is in compliance with tax and labor laws, and tracking employee hours and pay for budgeting and financial planning purposes. In fiscal year 2021-22, Finance processed over 3,500 payroll transactions (which includes checks and ACH deposits). With the expiration of the current labor contract with the Rosemead Employee Association ("REA") on June 30, 2023, Finance will be working with the City Manager's Office to begin discussions with REA in early spring. Cash and Investments Finance is responsible for managing the City's cash and investments. The City's investments are governed by the City's investment policy and the California Government Code. Finance is committed to carefully managing cash and investments, to ensure that the City has enough money to meet current and future financial needs. The City's investment policy primary objectives of investment activity, in order of priority, is safety, liquidity, and investment yield. From June 30, 2022 through December 31, 2022, the City's securities investment balance doubled from $7.4 million at an average return of 2.16% to $15.2 million at an average return rate of 3.55%, an increase of 1.39%. Finance will continue to actively consider new investment opportunities while keeping in mind the primary objectives of the City's investment policy. STAFF RECOMMENDATION That the City Council receive and file this report FISCAL IMPACT There is no impact to the General Fund to receive and file this report. The City Council will be requested to make recommendations or award contracts as projects proceed through the normal course of business. STRATEGIC PLAN IMPACT Several of the initiatives outlined will accomplish the policy goals and activities outlined in the 2030 Strategic Plan. PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. 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