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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