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HomeMy WebLinkAboutFin Budget Amendments FY2013-14CITY aF 5,1 d, Agenda Item No: meeting eet February Em ing Date: 3, 2014 Department: FINANCE Prepared by: Mark Moses, Finance Director a"I A YEAR 2013-2014 I City Manager Approva RECOMMENDATION: ADOPT RESOLUTION TO AMEND THE CITY OF SA RAFAEL BUDGET FOR FISCAL YEAR 2013-2014 1 BACKGROUND: As part of the budget monitoring process, the Finance Department conducts a mid -year review of the City's financial performance. This report presents the City's financial condition in the current fiscal year (2013-2014) based on actual revenue and expenditure performance for the six months ending December 31, 2013, as compared to the budget approved by City Council in June 2013. Based on this review and analysis, revisions are recommended to address the following categories: (1) Revenue projections (2) Expenditure projections (3) Authorized positions (4) Change in accounting policy or methodology The fiscal year 2013-2014 marks the second consecutive annual general fund budget that was balanced without the use of reserves or borrowed funds. In addition, significant resources have been added over the past year to the general fund operating reserves, and other uses such as: technology to support City operations, facilities and open space maintenance, and to reduce retiree benefit - related pension and health liabilities. Notwithstanding this much -improved fiscal condition from the several preceding years, funding remains inadequate in the areas of operating reserves, technology, facilities maintenance,, unfunded retiree benefits, and major capital and faces replacement. Measure E, which was passed in November 2013, provides for a transactions and use tax that is one-quarter cent higher than the current one-half cent provided for by Measure S. The new tax, which supplants Measure S on April 1, 2014, is available to address some of these deficiencies, particularly in the area of public safety facilities. The key content of this report and staff recommendat ions were reviewed by the City Counc" Finance Committee (Mayor Phillips and Councilmember Colin) at its January meeting. I Council Meeting.- Disposition.* I Z rg"Mve , n iftwM 111,41111 N MIA 11 ADJUSTMENTS TO BEGINNING FUND BALANCES.- City staff recommends one-time fund balance adjustments to bring the City's financial reporting methodology fully in line with the principles of modified accrual accounting. This adjustment consists of the full recognition of payroll -related expenses in the year incurred, and does not impact revenues or expenditures in fiscal year 2013-2014. Details of this restatement will be provided in the City's fiscal year 2013-2014 Comprehensive Annual Financial Report (C FR.). The City's General Fund Emergency Reserve is not affected by these adjustments. In order to enhance the tracking and accountability of revenues dedicated to specific purposes, activities corresponding to the development of General Plan 2040, General Plan Implementation and Camp Chance are beinmoved from the General Fund into special re gvenue funds. The following table displays the impacts of the changes described above: Oneefund balance restatements as of June 30 , 2013): F und Balance Reported Adjustment I�IIIIIIII 'I IIS `II BalancII III IIID u e Restated General Fund Non -spendable $527!235 il General Fund – Committed f 8001876 11 (800!876) "General Fund – Emergency Reserve L General Fund – Other f 6 L Su) b -total: General Fund 398049787] (969972 9 298359058 1 Paramedic Tax Ar 744749 EMM (25927)1 5661737 21469!949 (72855) 2!397094 Internal Services Funds, 6876, 1 32_]��W 10 -ME 6!1749948 Other Special Revenue, Capital & Equipment - 261413172-4d 27329 26g,1441 P054 -Other Funds without adjustments Sub -total: Other Funds 5094159394 X -Met— 5090729582 Total: All Funds S5299017,6400 FISCAL YEAR 2013-,,".7014.- On January 10. the Governor released his Proposed Budget for fiscal N14-2015, announcing that the State"s defic*t. year . i . which totaled $26.6 billion three years ago, has been eliminated. The Governor credited the combination of spending cuts and new, voter -approved taxes for this result. His plan projects a modest economic recovery for California and increases spending by over $4 billion. Of relevance to cities: the State continues to emphasize the winding down of the former redevelopment acFencies. the suspension of many state mandates, and the continued deferral of pre -2004 mandate obligations, which are statutorily required to be completely paid by fiscal year 2020-202 1. The City of San Rafael is owed approximately $2 million from these State -mandated reimbursements. The Govemor"s Proposed Budget is the starting point for budget discussion with the Legislature. In May, the Governor will release a revised State Budget as the Legislature prepares for budget deliberations. The Legislature has until June 15 to pass a State Budget in advance of the new fiscal year which begins July 1. Locally, the City's revenues are on track with the assumptions made for fiscal year 2013-2014. The largest revenues are property tax and sales tax -related revenues which together account for two- thirds of total general fund revenues. Property tax revenues were projected to increase by 1.2% over the previous year, while sales -tax related revenues (including sales and use tax and transactions and use tax) were projected to increase by approximately 5.5%. Other revenues,, including library parcel tax, paramedic tax and parking fees are also on track or up, relative to the original budget assumptions. Revenues and Other Sources.- Exhibit I presents the status of General Fund revenues and other sources as of December 3 L 2013, and proposed changes, which add $1,,893,000 to total sources. Revenues: Since the budget adoption, there have been no changes to the adopted budgeted revenues of $60,253,618. The following are the -pro-posed ad ustments to the revenue forecast which has been increased to $62, 146,,618, which is 3. 1 % higher than the adopted budget. General Fund projected revenues are being reduced by $311,000, reflecting the tracking of General Plan 2040 ($68,000), General Plan Implementation ($203,000), and Camp Chance ($40,00 0) in separate funds. These reductions are offset by equivalent reductions in general fund expenditures. The revenues will be reported in the newly established funds. There are two, major one-time revenues added to the projections: $411,000 in property tax administration fees to be refunded by the County, and $303,000 from a sales tax -related true -up payment. Economic adjustments, based on actual revenues through December 31, 2013, generate $599,000 in additional, ongoing resources, primarily from property tax,, sales -related taxes and vehicle -in -lieu backfill. The other major adjustment to resources is an estimated $891,000 for the additional one-quarter cent TUT from Measure E, effective April 1, 2014. Transftrs in.- There are no proposed changes to transfers iii Revenues Structural changes offset by expenditure reductions (no net impact) General Plan 2040 now in separate fund (68,000) General Plan Implementation now in separate fund (203,000) I I'V Camp Chance now in separate fund (40,000) Sub -total — structural changes ($311,000) One-time adjustments Property Tax Administration Fee Refund from County 411,000 Sales Tax — true -up (triple flip) 303.000 Ongoing adjustments — current revenue sources Property Tax — economic adjustment based on actual 1511000 Sales Tax/Triple Flip — economic adjustment based on actual 184,000 Transactions and Use Tax (TUT) — adjustment based on actual 1321,000 Vehicle in Lieu — Backfill — economic adjustment based on actual 108!)000 Other ongoing adjustments from current revenue sources (net) 24,000 Ongoing adjustment - new revenue sources TUT — adjustment for additional 1/4 cent (Measure "E") 891,000 Sub -total — economic changes $2,204,9000 I Total prop sea General Fund revenue changes $198939000 Transfers in — proposed changes $0 Total proposed changes to General Fund sources $1,893,00:0] Expenditures and Other Uses: Exhibit 11 presents the General Fund and other uses status through December 3 1 1� 2013. The proposed net expenditure changes, coupled with the recommended transfers out,, result in a reduction of $3 11 .000 in General Fund uses. Expenditures-. General fund operating expenditures are being reduced by $3,894, in order to fund the transfer of funds to match a grant for police safety vests. General Fund projected expenditures are also being reduced by $311,000, reflecting the tracking of General Plan 2040 ($68,000), General Plan Implementation ($203,000), and Camp Chance ($40,,000) in separate funds. These reductions are offset by equivalent reductions in revenues. Transfers out-. An additional transfer out of $31894 to the public safety grant fund is proposed, in order to fulfill the commitment to provide general fund matching for the grant. 4anges offset by revenue reductions (no net iTpact) MeneMral MPIan 2040 now in separate fund (681,000) MGeneral Plan Implementation now in separate fund (40.000) Sub -total — structural changes Generai T und expenditures reduced to match safety grant [Total proposed General Fund expenditure changes IM Totalp�o_posed c�� eneral Fund uses General Fund — Operating Results: The following table summarizes the recommended General Fund changes and the impact on the General Fund budget for fiscal year 201-3-2014, and the impact on Net Operating Results. Purchase orders from the prior fiscal year were automatically rolled over into the new period and are reflected in the second column. (This amount was reserved from that year's resources to fund these expenditures and,, therefore, does not require additional action.) General Fund Adopted Budi!et Approved Changes Re ement stat Current Budget Recommended Changes Revised Budget 60253!hI8 59!94216l8Q 212041000 62! 146!1618 11241,424 (241 �424 FY13-14 Sourcs e 61,495,042 61,184,042 2920 4 9 �. _00 0 63,388,04i FY12-13 rll ovi o % o mt111M a tort all Mt Total Sources $61,495,042 $ 611,202,6 4 6 $292049000 ,4 69 646 $63 0 Expenditures i ;q 1526A�41 (292!,396) 591,234M28 591230J34 Transfers out 1 925!P00 1 000 !925 94 1 928 8ii Appropriations $61,451,424 ($292,396) $61,159,028 $619159902 Net Operating Results $2,2049000 $2,2479618 The recommended changes increase the projected net operating results from $43,618 to $2,247,618,, an increase of $2,204,000. Since $891 .000 (approximately 40%) of this increase comes from the additional revenues attributable to Measure E, coupled with the critical need to build back operating reserves to 10% of annual expenditures, staff recommends the following-. 1. Set aside $891 1,000 for funding priorities established by City Council for Measure E. 2. Allocate $1 mon to raise the general fund emergency reserve from $2.3 million (39% of $5.9 million target) to $3.3 million, (56% of $5.9 million target). 3. Allocate a minimum of $300K for additional contributions to pension and/or OPEB 4. Maintain General Fund Expenditure levels consistent with original budget adoption. These actions can be taken without impacting current service levels. Since the budget adoption in June 2013, a total of $3,293 ),464 has been appropriated for spending in other funds. Of thi s amount, S 1.0-54,43 ) 3 was rolled over from major vehicle purchases that were not completed be fiscal year end and $311,000 was added to reflect expenditures formerly tracked in the General Fund. The remaining amount consists of the new Measure A — open space program, the parking meter upgrade, and a number of grants. The recommended changes add $366,595 in revenues and other sources to the current fiscal year. These include an increase of $300,000 to reflect additional parking revenue, an increase of $39,496 in childcare -related revenues, $3,894 in transfers from the General Fund for grant matching, with the balance coming from various grant activity and adjustments to internal charges. The recommended changes also include $5,525,707 in additional appropriations for the current fiscal year. This change formally adopts the funding included in the Capital Improvement Plan update that was presented to the City Council on July 15, 2013, one month after the fiscal year 2013-2014 budget was adopted. These appropriations include approximately $2.4 million in street projects funded by Gas Tax, $1.5 million for building -related repairs, and $1.2 million in stormwater projects funded by runoff fees, with the balance of the changes attributable to other capital projects. The table below summarizes the impact of the recommended changes to the resources and 9-ppropriations for other funds. Detail is provided in Exhibit 111. Other Funds Adopted Budget Approved Changes Restatement Current Budget ecommended Recommended Changes Changes Revised Budget Operating/Capital -Revenue 41 15921539 42!532,847 42i18951548 Transfers in I; F_ I 990MOO M1 I 19901000 1993894 FY13-14 Sources 43,5829539 44,5229847 4498899442 FY12-13 rollover 19054943il 1905494 J3- 190549433 Total Sources $4395829539 $199 949741 $45957792 8 0 $ 36 6 9595 1 �iiii iii $4599439875 Expenditures 45,3731,913 3i293• �96" 481667377 55251707 54!J930 4 Tr nsrs out afe 41011 424 6 1306424 1 306424 Appropriations $4696809337 $392939464 $49,973,801 $595259707 $55949995 F �Results 31097974�i 1 11 1 (1,298,723) 1) Library Services: Management staff has an ongoing practice of evaluating staffing levels and determining the most effective, efficient, and appropriate way to deliver services. Part of this evaluation includes analyzing the allocation of regular full time employees, regular part time employees, temporary/seasonal employees, etc. Staff recommends making four adjustments in the Library Department that would spread out a beneficial impact to Children's Services, Adult Services, Circulation,, and at our Pickleweed branch. Specifically, two Librarian 11 positions would move from three-quarter time to full time. In additiona if time Librarian 11 would be added at Pickleweed and a part time Library Assistant would be added in Circulation. The cumulative impact of these changes adds 1.67 authorized positions to the Library, with a corresponding reduction in temporary/seasonal staff. These changes would be phased in over the remainder of fiscal year 2013-2014 and next fiscal year. Additional costs would be partially off -set by reductions in the budget for temporary/seasonal employees. The funding required for the remainder of the current fiscal year is approximately one- third, or $25,000, of the approximately $75.000 annualized cost. These additional expenses can be covered by current general fund appropriations; therefore there is no impact on expenditure projections for this fiscal year. Fire Services: In January 2010, four vacant firefighter positions were "suspended" from the budget reducing the Fire Department allocation by 4.0 full time equivalent (FTE) employees. In order to maintain required constant staffing, these positions have continually been backfilled with overtime. Since 2010, departmental needs have reallocated the "suspended" positions which currently stand at one Fire Captain and two Fire Engineer positions. Although it is possible that there may have been some savings generated from this staff reduction early in its implementation, it has severely challenged the Fire Department's ability to staff its facilities without excessive overtime which can contribute to unsafe working conditions. Because these positions can now be replaced with a lower benefit tier, they can be funded from the current,, respective overtime budgets in the General Fund and Paramedic Tax Fund. Therefore!, there is no resulting increase in expenditure projections for the current or future fiscal years. These proposed change increases the approved positions in the Library from 21.74 to 23.41, Fire from 76.00 to 79.00, and the City-wide totals from 378.34 to 383.01. (Exhibit IV) Community Media Center of Marin has requested that $660,000 be redirected from franchise fees over a four year period to help them preserve their reserve levels and meet capital replacement needs. The impact to the City of San Rafael would be $153,703 - $172,443, depending upon the final methodology used to distribute costs. Based on the City's emergency reserve levels, combined with other unfunded needs, an allowance for this support has not been included in the mid -year recommendations. FISCAL IMPACT: GENER,4L FUND IMPACT: The recommendations in this report do not increase the City's General Fund appropriations for fiscal year 2013-2014, which provide for most of the major local services (such as police, fire suppression and prevention., planning, building, library, parks, streets,, engineering, traffic enforcement and management,, and cultural programs). The increase in projected revenues, led primarily by the property tax administrative fee refund and increased transaction and use tax revenues from Measure E,, will be preserved for operating reserves and capital reserves, The additional 1.67 FTE in the Library will increase future year, annual budgets by approximately $75,000. The additional 3.00 FTE in Fire are not projected to have a budgetary impact., due to the projected reduction of overtime. W A oil iiii 403 ,CITY- WIDE IHPACT.- The following table summarizes the impact of the recommended appropriation changes across all funds. The detail for this table is provided in Exhibit 111. RECOMMENDATION: Staff recommends that City Council accept the report and adopt the resolution as presented. ATTACHMENTS Resolution with exhibits: Exhibit I — FY 2013-14 General Fund Revenue and Other Sources Exhibit 11 - FY 2013-14 General Fund Expenditures and Other Uses Exhibit III — Comprehensive Fund Summary Exhibit IV- Authorized Positions W-\Mianagement Services- WorkFile\Finance- Work File\Council Material\Staff Rep orts\2014\C ity\M i d- Year Review Adopted Budget Approved Changes Restatement Current Budget Recommended Changes Revised Budget 1 45 1 424 (292396) 611,159028 61 1591,028 Other Funds 461,680,337 312931464 4911973ui ii 81- 0 5525 !1707 Less interfund (13,0531,978) (131053978) (2293 1) (13 IP76909 S 019068 S 9890p.78981,i S5 950 29776 SIIT 035816iiuini 27 199 RECOMMENDATION: Staff recommends that City Council accept the report and adopt the resolution as presented. ATTACHMENTS Resolution with exhibits: Exhibit I — FY 2013-14 General Fund Revenue and Other Sources Exhibit 11 - FY 2013-14 General Fund Expenditures and Other Uses Exhibit III — Comprehensive Fund Summary Exhibit IV- Authorized Positions W-\Mianagement Services- WorkFile\Finance- Work File\Council Material\Staff Rep orts\2014\C ity\M i d- Year Review % A ' i i i i i► l WHEREAS, the City Council approved Resolution 13554 adopting the fiscal year 0-1013-2014 budget; ani requireWHEREAS, the changes in available funding sources and operational needs adjustments • some City • ii` and WHEREAS, it is the intention of this Council to review recommendations from staff regardingcondition,i • revenue projections ani available WHEREAS,resources and provide funding for various ongoing, capital and other service needs; and ` examination, deliberation . • due consideration,the City Council •• i `• the staff reportand recommendations,and directs Manager to proceed with the implementation of these recommendations for the remainder year; !a of this fiscal ExhibitNOW, THEREFORE, BE IT RESOLVED, by the San Rafael City Council that Resolution 13554 for fiscal year 2013-2014 is amended to increase total general fund revenues to $62,146,618 with transfers in unchanged at $1,241,424 as presented on `i hereto; and reduces general fun• expenditure authi • to attached$59,230,134 and increases transfers out to $1,928,894, as presented on Exhibit 11 hereto. Further,Resolution is am` • `i for other i revenues ai # $42,895,548 and transfers in to $1,993,894, ` !` • ` i $54,193,084 • transfers out i $1,306,424 presented i i attached hereto. a i changes result net City-wide appropriations of $103,581,627. NOW, THEREFORE, BE IT FURTHER RESOLVED, by the San Rafael City Council that Resolution 13554 for fiscal year 2013-2014 is also amended to increase the number of authorized positions from 378.34 to 383.01, as presented in Exhibit IV attached i aii R C. B i Clerk . i Rafael, certify i # ihereby foregoing ` i # . duly and regularly introduced and adopted at a regular meeting of the Council of said City on Monday, the 3rd of February 2014, by the following i` to YES- C OUNC ILMEMBERS- lips Bushey, Colin, Connolly, McCullough & Mayor Phillips NOES- C OUNCI LM EMBERS: Nerve ABSENT: COUNCILMEMBERS- Nene e49Hzi*e e- - e=ae 40-z * ZSTHER C. BEIRNE, City Clerk ]1'' 11 , IN Ak mlc�� 1 1 s ♦ a a® 0 0 (29, NIL! Ilk INSTRUCTIONS: USE THIS FORM WITH EACH SUBMITTAL OF A CONTRACT, AGREEMENT, ORDINANCE ! • RESOLUTION BEFORE APPROVAL AGENCY. DATE OF February 1 16111 ,. 11 11 li� - 01 0o DATE: 1/29/2014 # i! i 1•! 'i 1 ' i• i � 1 i�' 1 i Department Head (signature) APPROVED AS COUNCIL / AGENCY AGENDA REMARKS: APPROVED AS TO FORM: City Attorney (signaoire)