HomeMy WebLinkAboutAgenda: Study Session:a: FY: 2012-13 Budget Review Update & Proposed Personnel Re-organization"n ,p.n d '
¢ro
STAFF REPORT
Administrative Services Department
DATE: February 21, 2012
TO: Mayor and City Council
FROM: Donald Penman, City Manager
Hue C. Quach, Administrative Services Director
SUBJECT: Fiscal Year 2011 -12 Budget Review Update and Approval of Various
Proposed Personnel Re- organization. -
Recommendation: Receive and File Fiscal Year 2011 -12 Mid -Year
Budget Review; Approval of Various Proposed Personnel Re-
organization; and Approval of a Fund Transfer from the Park &
Recreational Facilities Fund to the Capital Improvement Fund
SUMMARY
Enclosed are the most recent General Fund revenue budget projections and an
estimated ending fund balance for the Fiscal Year 2011 -12 (FY). Both the Revenue
Projections and General Fund Summary are provided as Exhibits A and B, respectively.
In general, staff's mid -year analysis anticipates results similar to those projections
provided in the FY 2011 -12 adopted budget. FY 2011 -12 was expected to have a
deficit of $848,483 at the end of the year. Staff's mid -year analysis projects similar
result with the fiscal year to end with a deficit of $808,585.
As Council may recall, the FY 2011 -12 budget was adopted with a projected deficit that
would be funded from surplus to be realized at the end of FY 2010 -11. At the City
Council meeting of December 6, 2011, it was reported that the FY 2010 -11 ended with a
surplus of $2.4 million as a result of improved revenues and greater expenditure
savings. In addition to "rolling over" the surplus to cover the FY 2011 -12 deficit, Council
approved for the transfer of $1 million to the Worker's Compensation Fund and
$500,000 to the Emergency Response Fund in light of the destructive windstorm of
December 1, 2011.
The outlook for the remainder of the year is seemingly positive but the growth is but
moderate in comparison to the prior year. Revenues have been coming in mixed with
lower than forecast in some of the tax area but much healthier with building and
Mayor and City Council
February 21, 2012
Page 2
planning related permit fees. From the expenditure side, the mid -year analysis
presumed 100% of expenditures spending at year end as a worst case scenario. The
results are positive in that even with fully expending the budget, the anticipated deficit
does not grow and stays as projected during budget adoption. Staff believes this to be
positive because historically our General Fund has ended the fiscal year better than
projected with approximately 2% savings from expenditures that equates to
approximately $800,000 to $900,000 in savings. In theory, the savings would offset the
now projected deficit of $808,585 and puts the General Fund in surplus in addition to
not using the "rolled over" surplus from FY 2010 -11.
Included in this mid -year budget review report, staff is requesting for Council's approval
of personnel re- organization that has been proposed from: Administrative Services,
City Clerk/City Attorney, and Public Works Departments. These proposed changes are
due to demands in the work environment and calls for restructuring to meet those
requirements. Additional information for the proposed changes is provided below.
Should Council approve these changes, there is a nominal cost of $7,200 in the current
fiscal year that could be absorbed and additional annual cost of $30,400 on an annual
basis going forward.
DISCUSSION
When the budget for fiscal year 2011 -12 was adopted, deep cuts were made from
operating line items; hiring freezes were continued from the prior year, postponement of
the slurry seal program was again proposed, but a projected deficit of approximately
$848,483 was still present. Further levels of budget reductions would lead to service
cuts. Council then adopted budget with the belief that the deficit would be funded from
expected surplus to be realized from the FY 2010 -11. At the City Council meeting of
December 6, 2011, it was reported that the FY 2010 -11 ended with a surplus of $2.4
million as a result of improved revenue and greater expenditure savings. In addition to
"rolling over" the surplus for the FY 2011 -12 deficit, Council approved for the transfer of
$1 million to the Worker's Compensation Fund and $500,000 to the Emergency
Response Fund in light of the windstorm of December 1, 2011.
Since the budget adoption, the economy has moderately improved with overall
revenues trending in line with our budget projections. Mixed results are seen in the tax
category while solid growth of revenues are coming in from building and planning permit
fees. From the tax category, Property Tax, Sales Tax, and Utility User's Tax are
trending lower than budgeted. Property tax is expected to end the year with $128,840
or 1.4% less than budget. Sales Tax is expected to come in $170,120 or 1.9% less
than budget, although it should be noted that we have not received sales tax data from
the holiday season quarter which may improve our current outlook. Both categories are
providing small growth when compared to the previous year's actual receipts. The
Mayor and City Council
February 21, 2012
Page 3
lower than expected result is simply a matter of staff being too optimistic with our budget
projections at the beginning of the year.
The third tax category coming in less than expected is Utility User's Tax. Staff was
surprised to learn that the wireless sector is anticipated to end the year $77,400 or 6.8%
less when compared to the previous year. All other groups submitting Utility User's Tax
are expected to have moderate increases of 1 % or less when compared to the previous
year. In total, Utility User's Tax is predicted to be under budget by $245,700 or 4.6 %,
that is attributed to lower than expected growth in the wireless sector but also a higher
overall forecast of Utility Tax receipts that has not developed.
Although taxes are expected to be less than budget, overall revenues will be in line with
budget projections. The offset to lower expected taxes will come from building and
planning permits. Overall Licenses and Permits are projected to exceed budget
projections by $547,220. Strong demands for services at the Building and Planning
counter is believed to be attributed to overall lower mortgage rates and strong market
for new home construction.
From the expenditure side, the mid -year analysis presumed 100% of expenditures
spending by year end. With the presumption of fully expending the budget, the result is
positive that the overall deficit is similar to the projections at budget adoption. Staff
believes this to be positive as historically our General Fund has ended the fiscal year
better than projected with approximately 2% savings from expenditures. This saving
equates to approximately $800,000 to $900,000 in savings. In theory, this savings
would offset the projected deficit of $808,585 and place the General Fund in a surplus in
addition to not using the "rolled over' surplus from FY 2010 -11.
As a result of minor changes in the revenue forecast and a firm belief that expenditures
are likely to result in savings as in past fiscal years, staff is not recommending
realignment of revenues nor budget amendments for the remainder of the FY 2011 -12.
Proposed Personnel Changes:
In addition to the mid -year budget review report, staff is requesting for Council's
approval to proposed personnel re- organization in Administrative Services, City
Clerk/City Attorney, and Public Works Departments. These proposed changes are due
to higher demands in the work environment and the need for restructuring to meet those
requirements. Should Council approve these changes, there is a nominal cost of
$7,200 in the current fiscal year and additional annual cost of $30,990 on an annual
basis going forward.
Administrative Services Department (ASD): During the year, our Revenue
Mayor and City Council
February 21, 2012
Page 4
Collection Specialist left to another city due to a career growth opportunity. This
provided an opportunity for an in -house promotion but has also provided an
opportunity for the department to reorganize to meet the need for a higher level
technical position in the department. Currently, there are three positions
(including the Director) that handle the technical work relating to accounting and
finance. The department would benefit greatly by having another professional
position to assist with general ledger, year -end closing, budget, special reporting
projects, and year round analysis work on both expenditures and revenues for
savings or revenue enhancing opportunities. Additionally, this position gives
flexibility to the department for coverage to other positions without concerns of
labor agreement violations. The department has had a number of medical
related leaves and had to use temporary agencies to fill in while those individuals
were on leave. While this is working temporarily, it becomes costly and time
consuming as staff has had to provide training to new individuals as former
temps find permanent employment elsewhere.
Staff is requesting the approval of an Accountant position. Should Council
approve this request, the department would eliminate a clerical position in place
of this Accountant position. With Council's approval, staff will proceed to take the
job classification to the Human Resource Commission for their adoption as this
will be a new position within the City. The expected increase in cost with the
approval of this change is $3,030 for the rest of the current fiscal year. The
projected annual increase going forward is estimated to be $13,420. Due to the
savings from the current vacant Revenue Collection Specialist position, no
budget appropriation is necessary for the cost difference for this year.
City Clerk/City Attorney: Due to the higher demands for public records request
and records management relating to claims and legal cases, the City Clerk/City
Attorney Office is requesting an additional 10 weekly hours. In 2009, a re-
organization took place where a full time position was cut back to part-time.
Since then, it has been difficult to meet deadlines without the need for staff to
work long hours as well as taking work home. Should Council approve this
request, the estimated cost for the remainder of the fiscal year is approximately
$3,500. An annual cost increase of $14,030 is expected going forward. Though
there would be is an increase in expenditure in the current fiscal year, the
amount is immaterial to warrant a budget appropriation now.
Public Works /Street Section: The department is requesting to re- organize by
changing the current Maintenance Contract Officer back to Streets
Superintendent position. In 2009, the Streets Superintendent was reclassified to
the Maintenance Contract Officer position for budget savings and it was thought
that the restructuring might work by reassigning some of those duties handled by
Mayor and City Council
February 21, 2012
Page 5
the Streets Superintendent to the Utilities Superintendent. Since then, it has
been a challenge for the Utilities superintendent to manage work of both
sections. The department is lacking the resources to keep up with all of the
demands and requests coming from the street section. Should Council approve
this request, overall cost to the current fiscal year is $1,090 with approximately
$654 (60 %) applicable to the General Fund. There would be an annual increase
going forward of approximately $5,900 each year. Similar with the other request,
the increase in this fiscal year is nominal and has been determined that a budget
appropriation is not necessary.
Transfer of Funds for Dana Gym
This last item is a matter of formality for documentation purpose. At the end of the last
fiscal year, staff received final closing cost for the Dana Gym from the school district.
Part of the gymnasium construction cost was to be funded by the City through our
Capital Improvement Fund. Through our budget planning discussions, it was
determined that instead of funding the project using Capital Improvement Fund, the
project meets guidelines to be funded from the City's Park and Recreation Facilities
Fund that are collected through development service fees. In Fiscal Year 2010 -11, a
budget and transfer of $1.1 million was used from the Park and Recreation Facilities
Fund based on assumptions that cost would not exceed this amount. This estimate was
completed prior to the completion of the project and prior to receiving the total actual
construction cost for the gymnasium. Since then, an additional $275,690 also qualifies
to be funded from the Park and Recreation Facilities Fund but has been charged to the
Capital Improvement Fund. Staff is requesting Council's approval of this transfer to the
Capital Improvement Fund to mitigate and replenish the Capital Improvement Fund's
reserve balance for future discretionary capital projects.
Arcadia Redevelopment Agency
As Council is aware, the Arcadia Redevelopment Agency was dissolved as of February
1, 2012. Unfortunately, as of this date, the State hasn't provided clear direction for staff
to be able to bring to Council a budget plan to deal with the dissolution of the agency
and its effect on the General Fund. Once there are clearer directions, staff will bring
back to Council the fiscal impact and proposed budget plan to the General Fund.
CONCLUSION
Based on staff's mid -year budget analysis, the financial outlook is expected to end as
projected in the adopted budget. Revenues are coming in with mix results but overall
revenues are expected to be as projected without the need to adjust for their
differences. Expenditures year to date are also within budget with expenditures
Mayor and City Council
February 21, 2012
Page 6
reported at 54.2% at the end of January 2012, below the expected rate of 58.3 %. Staff
believes this will likely continue and follows a similar pattern from past fiscal years
where an achievable savings of up to 2% would likely occur. This saving equates to
approximately $800,000 to $900,000 in savings which would offset the projected deficit
of $808,585 and place the General Fund in a surplus.
RECOMMENDATION
It is recommended that the City Council:
1. Receive and File the Mid -Year Budget Review Update
2. Approve various proposed re- organization in Administrative Services, City
Clerk/City Attorney, and Public Works Departments
3. Approval of a transfer in the amount of $275,690 from the Park & Recreational
Facilities Fund to the Capital Improvement Fund to offset cost relating to the
Dana Gymnasium Construction Cost
Approved By:
Donald Penman
City Manager
Exhibit A — Mid -Year Revenue Review
Exhibit B — General Fund Summary
EXHIBIT A
CITY OF ARCADIA
GENERAL FUND: MID -YEAR REVENUE REVIEW
Revenue
FY 2011 -12
Adopted
Budget
FY 2011 -12
Estimated
Actual
Change
Budget vs.
Actual
%
Change
Property tax
$ 914382200
$ 913091360
$ (128,840)
-1.37%
Franchise fee
110001000
1,0101990
101990
1.10%
Sales tax
910951600
8,9251480
(170,120)
-1.87%
Transient Occupancy
Tax
21340,300
216191130
278,830
11.91%
Utility Users tax
513731700
511281000
(245,700)
- 4.57%
Business License Tax
111221000
11109,670
(12,330)
-1.10%
Plan check fee
6151000
8001000
185,000
30.08%
Building permits
7751000
11000,000
2251000
29.03%
Motor Vehicle License
Fees
417901000
41790,000
0
0.00%
Ambulance
Subscription Service /
Charge
111001000
17100,000
0
0.00%
All other
11, 308, 624
11, 205, 692
(102, 932)
-0.91%
Total Revenue:
$46,958,424
$46,998,322
$39,898
0.08%
EXHIBIT B
General Fund Summa
Beginning Fund Balance
Estimated Revenue:
Revenues
Transfers -In from other funds
Total Revenues
Proposed Expenditures:
Transfers -Out to Other Funds
Expenditures
Total Expenditures
Revenue Over Expenditure
Transfers -Out to Wrkr's Comp
Fund
Transfers -Out to Emergency
Response Fund
FY 2010 -11
Actuals
FY 2011 -12
Adopted
Budqet
FY 2011 -12
Mid -Year
Estimates
$ 5,948,375 1 $ 7,074,000 1 $ 8,397,796
42, 015, 543
5,150, 538
42, 003, 635
4,954,789
42, 043, 533
4,954,789
47,166, 081
46, 958,424
46, 998, 322
697,364 750,247 750,247
44, 019, 296 47, 056, 660 47, 056, 660
44, 716, 660 47, 806, 907 47, 806, 907
1 2,449,421 1 (848,483)1 (808,585)1
I - 1 (1,000,000)
- 1 (500,000)
Ending Fund Balance $ 8,397,796 1 $ 6,225,517 1 $ 6,089,211