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HomeMy WebLinkAbout101-Budget Adoption Report & Reso.pdf SARATOGA CITY COUNCIL MEETING DATE: June 1, 2011 AGENDA ITEM: DEPARTMENT: Finance & Admin Services CITY MANAGER: Dave Anderson PREPARED BY: Mary Furey DIRECTOR: Mary Furey SUBJECT: Adoption of Fiscal Year 2011/12 Operating & Capital Budget and the Environmental Impact Assessment for new CIP projects RECOMMENDED ACTIONS 1. Adopt resolution approving the Proposed FY 2011/12 Operating and Capital Budgets, directing staff to incorporate within the final adopted budget any changes related to minor corrections, carryforward appropriations, refined estimates, grant approvals, claim reimbursements, pass-through appropriations, or additional direction from Council upon adoption of the budget. 2. Adopt attached Environmental Impact Assessment for new projects included in the FY 2011/12 CIP update. BACKGROUND The City’s Proposed Operating and Capital Budgets reflect both revenue and expenditure appropriations which provide for the City’s service operations, administration, obligations, and infrastructure improvement projects. The City’s Operating Budget document is structured into a departmental format which defines departmental oversight, key program services, and significant projects or initiatives for the fiscal year. Summary level revenue and expenditure budget appropriations and assigned personnel schedules for proposed, current and prior years are included within each departmental program to identify the resources used to provide these services and operations, and for historical reference. The Financial Summaries section of the Operating Budget document compiles the individual financial and staffing information into summary schedules to provide readers with a consolidated view of funding sources and uses from different perspectives, including departmental, fund type, and category. The City’s Capital Budget document is structured into four program areas, (Streets, Parks & Trails, Facilities, and Administrative Improvement Projects) which are further categorized by either the type of infrastructure improvement in the Streets and Administrative Improvement programs, or by site in the Parks & Trails and Facilities programs. The Capital Improvement Plan represents a multi-year work plan for major capital expenditures and related funding sources, to improve and maintain the various types of city infrastructure. To remain in compliance with the California Environmental Quality Act (CEQA) requirement to ensure an assessment of the environmental impacts of new projects has been made by the governing body, an Environmental Impact Assessment report is also included in this report for adoption by Council. REPORT DISCUSSION Budget Status A public hearing was held on May 18, 2011 to review the City of Saratoga’s proposed operating and capital budgets and to obtain community input. The FY 2011/12 Proposed Operating Budget sustains service levels, operations, and obligations as are currently in place, with a few exceptions. Services will be impacted by: the elimination of the Assistant City Manager position; the reduction of five full-time staff to part-time status; and potentially by 13 days of furlough for the remainder of the City’s full-time staff. The furlough days are a placeholder for alternative savings which may be obtained through employee negotiations currently underway. Temporary staff hours were also reduced to reflect the anticipated reduction in working hours. These staffing reductions are in addition to the five positions which were eliminated over the last four years and all of the prior year operating budget expenditure reductions. Altogether, these reductions are impacting services and workload; however adjustments have and will continue to be made to continue service levels as efficiently as possible. Budget Appropriations The Operating & Capital Budget’s Financial Summaries is comprised of schedules which illustrate summary level revenue and expenditures information. The first summary schedule is the Total Fund Activity Schedule and is shown on the following page. It illustrates the proposed budget’s activities in each fund, and is categorized by fund group. Activity begins with the estimated July 1, 2011 fund balance, then adds and subtracts all budgeted activity, and ending with the estimated year end fund balance at June 30, 2012. This Total Fund Activity Summary schedule categorizes the City’s different funds by function. Operating Funds support the City’s general operations, restricted revenue programs and services, and internal support services. Debt Service Funds account for the funding and payment of the City’s bond debt, and Trust & Agency Funds account for funds held in a trustee capacity; not to be used for City purposes. Capital Funds are used to account for major acquisition and construction of asset expenditures, in order to separate one-time activity from ongoing operational activities. As shown, the Operating Budget’s Total Expenditures and Transfers-Out exceed Total Revenues and Transfers-In. This is a consequence in part, of transferring out prior year operating fund surpluses to the Capital Project Funds. Other fund expenditures may also be budgeted higher than revenues in some budget years. This often occurs in a replacement Internal Service Fund, where funding receipts are less than amounts budgeted for replacement during any given fiscal year. It will also occur if the Internal Service Fund (ISF) includes current year contingency funding which may or may not be expended. This is typical in the Building Maintenance ISF to allow for urgent repairs to be made if needed, while avoiding a continual build-up of fund balance if repairs are not needed. Of further note: Capital Improvement Plan projects are often multi-year operations with fiscal year ending balances that roll forward into the following year. Therefore, as the Beginning Fund Balances on this schedule are estimated year-end balances set two months prior to the end of the fiscal year, many project numbers will change. This in turn will change the revenue and expenditure budgeted numbers. Total Fund Activity Summary FY 2011/12 Estimated Revenues Expenditures Source (Use)Estimated Fund Balance && of Fund Balance Fund Category July 1, 2011 Transfers In Transfers Out Fund Balance June 30, 2012 Operating Funds General Fund Reserve for Petty Cash 1,300 - - - 1,300 Designated for Operations 2,903,522 - - 18,000 2,921,522 Economic Uncertainty 1,500,000 - - - 1,500,000 Environmental Reserve 513,182 - - (50,000) 463,182 Development Reserve 632,380 - - (210,000) 422,380 Uncollected Deposits 44,791 - - - 44,791 Carryforward Reserve 166,900 - - (31,900) 135,000 Capital Projects Reserve 500,000 - - (160,000) 340,000 CIP/Matching Reserve - - - - - Hillside Stability Reserve 500,000 - - - 500,000 Undesignated Fund Balance 512,588 15,249,398 (15,652,347) 433,900 543,538 Total General Fund 7,274,663 15,249,398 (15,652,347) - 6,871,714 Special Revenue Funds CDBG Program Fund - 206,409 (206,409) - - SHARP Program Fund - - - - - Landscape & Lighting Districts 453,509 486,394 (641,518) - 298,384 Internal Service Funds Liability/Risk Management 98,510 377,000 (403,631) - 71,879 Workers Compensation 200,059 225,000 (233,035) - 192,024 Office Support Services 18,795 52,000 (52,250) - 18,545 IT Services 226,153 400,000 (429,723) - 196,430 Vehicle & Equipment Maintenance 42,840 200,000 (217,321) - 25,519 Building Maintenance 212,205 725,000 (712,761) - 224,444 Vehicle & Equipment Replacement 316,230 100,000 - - 416,230 IT Equipment Replacement 186,243 50,000 (79,200) - 157,043 Total Operating Funds 9,029,207$ 18,071,201$ (18,628,196)$ -$ 8,472,211$ Debt Service 2001 Series GO Bonds 853,336 953,600 (1,047,556) - 759,380 Total Debt Service 853,336$ 953,600$ (1,047,556)$ -$ 759,380$ Trust & Agency Funds Library Capital Improvement - - - - - KSAR - - - - - Total Trust & Agency Funds -$ -$ -$ -$ -$ TOTAL OPERATING BUDGET 9,882,542$ 19,024,801$ (19,675,752)$ -$ 9,231,591$ Capital Funds Street Projects 1,134,263 6,485,220 (7,405,391) - 214,091 Park & Trail Projects 547,782 1,378,835 (1,926,617) - - Facility Projects 851,870 277,877 (1,099,746) - 30,001 Administrative Projects 127,703 57,174 (184,877) - - Total Capital Funds 2,661,618$ 8,199,106$ (10,616,631)$ -$ 244,092$ TOTAL ALL FUNDS 12,544,160$ 27,223,907$ (30,292,383)$ -$ 9,475,683$ In the Capital Budget, the total of beginning fund balance and new revenues are typically fully appropriated as expenditures, leaving a fund balance of zero in each of the Capital Project funds. This method of full appropriation provides flexibility to allow the full funding for the project to be encumbered under contract if needed (as project work extends beyond fiscal year boundaries). In some cases budgeted funding is extended out into future years if work is planned for out-years. The result of this method of capital budgeting is to start the year with a fund balance and end with almost zero fund balance (as well as budgeting higher revenue and expenditure appropriations than will actually occur). Budget Adjustments Throughout the year, Council may approve both Operating and Capital Budget adjustments for additional initiatives or projects. Within the Operating Budget, the Council approves the budget at the Fund level, meaning the City Manager is authorized to make program and account changes within a fund, however Council approval is required for adjustments that would either increase or decrease fund appropriations. The Capital Budget is authorized at the project level, meaning Council approval is required for both appropriation dollar changes and project scope changes. As a budget simplification, projects are typically budgeted with total expenditure appropriations accounted for in one project construction account, whereas actual expenditures are accounted for in the appropriate capital expense account. As a contingency built into the budget resolution, if at project close, an immaterial project balance remains, the amount will be transferred out to the annual Streets Resurfacing project in the Streets Program, to the Annual Park & Trail Maintenance project in the Parks & Trail program, to the Annual Facility Improvement project in the Facility Program, and to the Manager’s Records Management project in the Administrative Improvements program. If the ending balance is material, a fund balance transfer to another project or back to the General Fund Capital Reserve will be requested for approval from the Council. This methodology simplifies project closure while still retaining appropriated funding in the original capital project fund. General Fund The General Fund is the main operating fund used to account for the majority of the City’s operations. The following two charts provide a graphical overview of the budgetary appropriations for General Fund revenues and expenditures by category. The schedules below each graph provide summary level financial data for the proposed budget year (gray column), as well as the current and two prior fiscal years for historical reference. As you can see on the following page, the General Fund Revenue and Transfers In chart includes additional funding from designated reserves to clearly identify the total General Fund sources which offset the total General Fund uses. The second chart; General Fund Expenditures and Transfers Out shows that Total Uses is slightly less than Total Sources, leaving us with a balanced General Fund budget. General Fund Revenues & Transfers In By Category FY 2011/12 FY 2008/09 FY 2009/10 FY 2010/11 FY 2010/11 FY 2011/12 % of Revenue Category Actuals Actuals Adjusted Estimated Proposed Total Property Tax 8,155,362$ 8,194,364$ 8,022,600$ 7,916,706$ 7,979,050$ 52.3% Sales Tax 1,043,034 954,574 910,000 1,045,242 1,025,000 6.7% Transient Occupancy Tax 151,378 144,151 120,000 150,000 150,000 1.0% Business & Other Taxes 511,675 415,889 425,000 405,000 415,000 2.7% Franchise Fee Tax 1,656,716 1,663,657 1,652,000 1,699,346 1,695,000 11.1% Intergovernmental 303,212 357,887 267,000 317,987 298,000 2.0% Fees, Licenses & Permits 1,186,319 1,111,879 1,043,300 1,146,470 1,049,065 6.9% Charge for Services 1,670,175 1,499,533 1,532,035 1,686,015 1,609,681 10.6% Interest 362,588 97,044 60,000 60,000 60,000 0.4% Rental Income 366,619 444,262 436,320 443,461 455,302 3.0% Other Sources 467,124 361,808 617,200 560,788 378,750 2.5% Total Revenues 15,874,201$ 15,245,049$ 15,085,454$ 15,431,016$ 15,114,848$ 99.1% Fund Transfers In 153,732 325,842 224,550 224,550 134,550 0.9% Total Revenues & Transfers 16,027,933$ 15,570,891$ 15,310,004$ 15,655,566$ 15,249,398$ 100.0% Funding from Use of Designated Funds Theater Surcharge Deposit 53,167 - - - - Funding Carryforward 58,386 22,000 68,600 68,600 31,900 Development Reserve 75,000 75,000 210,000 - 210,000 Environmental Reserve 66,735 50,000 50,000 50,000 50,000 CIP Reserve 1,400,000 550,000 726,983 726,983 160,000 Hillside Reserve - - 50,000 50,000 - Use of Undesignated Funds - 25,000 95,000 95,000 - Total Operating Sources 17,681,221 16,292,891 16,510,587 16,646,149 15,701,298 The FY 2011/12 General Fund proposed budget appropriations reflect net sources (revenues, transfers in, carryforward, and designated fund balance funding) exceeding uses (expenditures and transfers out to other funds) by $48,951. The FY 2011/12 General Fund proposed budget revenues reflect $316,000 less than the current year’s estimated revenues, primarily due to reductions in sales tax, planning and permit fees, and the elimination of the billing reimbursement from the Sheriff’s Office. Under Council policy, one-third of the Development Reserve ($210,000) will be used to offset the shortfall in development revenues resulting from the economic downturn. Additionally, $50,000 of the Environmental Reserve for Solid Waste diversion programs is utilized each year, and $160,000 will be transferred from the CIP reserve to fund approved CIP projects. Carryforward funds will provide for the community grants approved by Council in FY 2010/11. General Fund Expenditures & Transfers Out By Category FY 2011/12 FY 2008/09 FY 2009/10 FY 2010/11 FY 2010/11 FY 2011/12 % of Expenditure Category Actuals Actuals Adjusted Estimated Proposed Total Salary & Benefits 6,485,451$ 6,303,927$ 6,639,680$ 6,582,508$ 6,507,796 41.6% Materials & Supplies 216,062 154,010 174,858 153,947 166,015 1.1% Fees & Charges 619,648 671,493 754,069 727,201 727,336 4.6% Consultant & Contract Services 5,985,878 5,884,326 6,012,896 6,015,648 5,884,392 37.6% Meetings, Events & Training 74,204 47,808 71,975 65,720 50,625 0.3% Community Grants & Events 162,669 203,758 181,376 171,364 156,434 1.0% Fixed Assets 30,105 - - - - 0.0% Internal Services Charges 2,189,343 1,873,576 1,798,212 1,798,212 1,899,749 12.1% Total Expenditures 15,763,360$ 15,138,898$ 15,633,066$ 15,514,599$ 15,392,347$ 98.3% Fund Transfers Out:1,571,727 650,000 876,983 876,983 260,000 1.7% Total Expenditures & Transfers 17,335,086$ 15,788,898$ 16,510,049$ 16,391,582$ 15,652,347$ 100.0% Budgeted General Fund expenditures reflect a $122,000 decrease from FY 2010/11, primarily due to decreases in budgeted salary and benefits (stemming from the elimination of one position and the additional ten furlough days from the prior year), and from the revised Sheriff’s Office contract. Even with staffing and salary reductions, overall budgeted expenses did not decrease significantly from last year due to increases in CalPERS employer rates, medical insurance premiums, and staff’s cost-of-living increase. For salary and benefits, most staff is budgeted at the top step, and temporary staff is budgeted at their actual pay rate – as some positions are not in an established range. In past years, the highest cost medical plan was used to calculate benefits so as to build in a buffer for unknown status changes and potential costs that could occur if employees were to choose the highest cost medical plan. While this methodology provides consistency for budgeting, it was modified this year to reflect each employee’s actual insurance premium rates. Because most staff members do not use the most expensive medical plan, this change reduced budgeted expenditures. Overall, the General Fund Operating Budget’s expenditures reflect continuing reductions in staff time, operating materials, supplies, fees, and services where available without significantly impacting community services, in order to offset areas of increase. Any additional changes as a result of direction from Council and/or identified by staff as a clean-up item will be included in the final budget document, per Council’s adoption of the FY 2011/12 Operating & Capital Budget resolution at the June 1, 2011 Council Meeting. Of final note is that the Proposed Operating and Capital Budget reflects estimated year-end balances for FY 2010/11, whereas the final budget document will be adjusted to actuals prior to publication and posting so as to provide the public with accurate information for future year’s reference. CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION The City would not adopt an Operating & Capital Budget for FY 2011/12. ALTERNATIVE ACTION N/A FOLLOW UP ACTIONS 1. Prepare FY 2011/12 Adopted Operating & Capital Summary and Detail Budget documents as directed by Council. 2. Monitor revenues and expenditures and provide quarterly reports and updates as necessary to Finance Committee and Council. ADVERTISING, NOTICING AND PUBLIC CONTACT Pursuant to Government Code 54954.2, this item was properly posted as a City Council agenda item and included in the packet made available on the City’s website in advance of the meeting. A copy of the agenda packet is also made available at the Saratoga Branch Library each Monday in advance of the Council meeting. ATTACHMENTS A: Resolution to Adopt the Fiscal Year 2011/12 Operating & Capital Budget Attachment A A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SARATOGA ADOPTING THE FISCAL YEAR 2011/12 OPERATING & CAPITAL BUDGET WHEREAS, the City Council held a public hearing on the Proposed Operating & Capital Budget for Fiscal Year 2011/12 on May 18, 2011; WHEREAS, Section 2-20.050(i) of the Code of the City of Saratoga requires the City Manager to prepare and submit the proposed annual budget to the City Council for its approval; WHEREAS, the Planning Commission has conducted an annual review of proposed new capital projects for consistency with the City’s general plan; and WHEREAS, after the Planning Commission’s approval of the proposed new projects the City Manager did submit a proposed budget for FY 2011/12 to the City Council; and WHEREAS, the City Council has considered and, upon consensus may provide direction for modifications to the proposed budget during a public hearing; and WHEREAS, the City Council gave staff direction to adopt the Fiscal Year 2011/12 operating and capital budgets as proposed; NOW THEREFORE, BE IT RESOLVED, that the City Council of the City of Saratoga hereby adopts the Fiscal Year 2011/12 Operating & Capital Budget as shown in the Total Fund Activity Summary schedule in the budget adoption report; AND BE IT FURTHER RESOLVED, that the final adopted budget includes carry-forward appropriations for prior year capital projects, identified funding for specified expenditures, grants, and pass-through balances; that capital projects are in compliance with the General Plan; that there be carried forward from the prior year within each fund an amount sufficient to cover approved outstanding encumbrances as of June 30, 2011; AND BE IT FURTHER RESOLVED, that the City Council hereby directs staff that any changes or impacts resulting from: Council approval of the meet and confer process or management compensation plan; from classification adjustments or miscellaneous corrections; from changes due to more refined estimates, grant approvals, or claim reimbursements; from development fee based pass- through budget appropriations; or from further City Council consensus direction received on June 1, 2011 be incorporated within the final Fiscal Year 2011/12 Operating & Capital Budgets; Attachment A AND BE IT FURTHER RESOLVED, that the Finance and Administrative Services Director is directed to record these changes into the City’s accounting records in accordance with appropriate accounting practices. The above and foregoing resolution was passed and adopted at a regular meeting of the Saratoga City Council held on the 1st day of June, 2011, by the following vote: AYES: NOES: ABSENT: ABSTAIN: Howard A. Miller, Mayor City of Saratoga ATTEST: Ann Sullivan, City Clerk of the City of Saratoga