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Home My WebLink About101-Budget Adoption.pdf SARATOGA CITY COUNCIL MEETING DATE: June 3, 2009 AGENDA ITEM: DEPARTMENT: Finance & Admin Services CITY MANAGER: Dave Anderson PREPARED BY: Mary Furey DIRECTOR: Mary Furey SUBJECT: Adoption of Fiscal Year 2009/10 Operating & Capital Budget RECOMMENDED ACTION Adopt resolution approving the Proposed FY 2009/10 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. BACKGROUND The City’s Proposed Operating and Capital Budgets reflect both revenue and expenditure appropriations within the General Fund, Special Revenue Funds, Internal Service Funds, several Trust and Debt Service Funds, and the Capital Improvement Funds to 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within each departmental program to identify the resources used to provide these services and operations, and for historical reference.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 City’s Capital Budget document is structured into four program areas, (Streets, Parks & Trails, Facilities, and Administrative Projects) which are then categorized by the type of infrastructure improvement in the Streets and Administrative programs, and by site in the Parks & Trails and Facilities Programs. Capital Improvement Projects represent a multi-year plan for major capital expenditures and related funding sources, to improve and maintain the various types of city infrastructure. The Financial Summaries section of the budget document, compiles the individual financial and staffing information into summary schedules to provide users with an overview of funding sources and uses from different perspectives, including departmental, fund type, and category. REPORT DISCUSSION Budget Status A public hearing was held on May 20, 2009 to review the City of Saratoga’s proposed operating and capital budgets and obtain community input. The FY 2009/10 Proposed Operating Budget sustains service levels, operations, and obligations as are currently in place, with the exception of a decrease in community development services related to a reduction in planning and building activities, and a downsizing of recreation activities related to a decrease in demand for recreation programming. There are few budgetary changes other than ongoing operating costs increases for staff, contract services, consultants, and fees that the City grapples with each year. Notable operating budget expenditure reductions include the elimination of a Planner position, a Building Inspector position, a Recreation Coordinator position, and the reduction of two positions from full-time to three-quarter time: the City Manager’s assistant and an Account Clerk in the Recreation department. The city continues to under-fill the IT Technician position with a temporary IT Intern for the second consecutive fiscal year. Staff continues to seek out opportunities to increase operational efficiencies and reduce service costs on an ongoing basis, in order to provide the best use of City resources. Budget Hearing Follow-Up From the review of the proposed budget on May 20th, Council directed that the following changes be made to the proposed budget for adoption on June 3rd, 2009: 1. Eliminate $125,000 of transfers from the IT Equipment Replacement Fund to the Capital Improvement Administrative Project funds to defer upgrading the phone system and network cabling systems. Council directed that a staff report and budget adjustment request be brought back to the Council after IT completes the preliminary system assessment work for further consideration of these projects. 2. Eliminate the $36,000 budget appropriation for lobbyist services from the Operating Budget. 3. Decrease the budget appropriation for attorney services by $50,000 to be in line with prior year actual expenditures. Staff is directed to notify Council if the attorney’s budget is approaching the appropriation limit. 4. Eliminate the Comcate notification system and the annual license and support services funding of $8,500 from the IT budget as it was determined that this system was underutilized. 5. Reduce the Recreation Department’s revenue and expenditure budget to reflect the downsizing of customer demand and to incorporate additional efficiencies into future class offerings. Total General Fund revenues were reduced from the proposed budget by $26,700, and expenditures were reduced further by $51,500. Council also noted that at a later date they would like to review policies regarding cost recovery objectives in the Community Development and Recreation Departments. Budget Appropriations The Operating & Capital Budget’s Financial Summaries include schedules which illustrate summary level revenue and expenditures information. This first schedule on the following page illustrates the City’s total activity by fund within the fund groups, beginning with the July 1, 2009 estimated fund balance, adding and subtracting all budgeted activity, and ending with the June 30, 2010 estimated fund balance. This Total Fund 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 operating activities. As shown, the Operating Budget’s Total Expenditures and Transfers-Out exceed Total Revenues and Transfers-In. This is a consequence of transferring out prior year operating fund surpluses to the Capital Project Funds. In addition, other fund expenditures may be budgeted higher than revenues in certain budget years. This would occur for example, in a replacement Internal Service Fund, where funding receipts may be less than amounts budgeted for replacement during any given fiscal year. It will also occur if the Internal Service (IS) Fund includes current year contingency funding which may or may not be expended. This is typical in the Building Maintenance IS Fund 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 particular note on this schedule, is that the Capital Projects Funds reflect very preliminary information. In a Capital Budget, estimated year-end project balances are automatically carried forward as budgeted appropriations into the following fiscal year as CIP funds are considered multi-year operations. Therefore, the beginning fund balance is dependent on prior year project expenditures which are not finalized at the time the budget is adopted. In addition, the entire estimated carryforward and proposed new and grant reimbursement funding is shown as expended during the fiscal year, leaving a fund balance of zero in each of the Capital Project funds. This full appropriation allows for the full amount of the funded project to be encumbered under contract if needed. Upon further Council direction, and as funding allows, additional projects or funding allocations will be incorporated into the CIP budget during the fiscal year through budget adjustments. The result of capital budgeting reflects a higher beginning estimated Total Fund Balance than the estimated Ending Fund Balance, however actual revenue and expenditure activities will be recorded and brought forward into the capital project budget, leaving a fund balance greater than zero each year. Total Fund Summary Source and Use of Funds EstimatedRevenuesExpendituresUse of Estimated Fund Balance&& Carryforward /Fund Balance Fund Category7/1/2009Transfers InTransfers OutFund Balance6/30/2010 Operating Funds General Fund Reserve for Petty Cash 1,300$ -$ -$ -$ 1,300 Designated for Operations 2,869,964 - - 57,400 2,927,364 Economic Uncertainty 1,500,000 - - - 1,500,000 Capital Projects Reserve 250,000 - - (250,000) - Economic Stabiltiy Funds 25,000 - - (25,000) - Uncollected Deposits Reserve 289,454 - - - 289,454 Development Reserve 707,380 - - (75,000) 632,380 Environmental Reserve 613,182 - - (50,000) 563,182 Undesignated Fund Balance 1,736,185$ 15,895,482$ 16,140,468$ 342,600$ 1,833,799$ Special Revenue Funds Landscape & Lighting Districts 285,965 436,359 533,260 - 189,064 CDBG Program Fund - 332,517 332,517 - - Housing & Rehabilitation Pgm 209,558 3,000 - - 212,558 Internal Service Funds Liability/Risk Management 213,548 305,000 342,861 - 175,687 Workers Compensation 49,368 260,000 265,881 - 43,487 Office Stores Fund 40,585 50,000 54,200 - 36,385 IT Services 158,521 400,000 458,185 - 100,336 Vehicle & Equip Maintenance 42,247 225,000 237,953 - 29,294 Building Maintenance 198,303 750,000 791,198 - 157,105 Equipment Replacement Funds 150,645 206,000 126,360 - 230,285 IT Equipment Replacement 1 312,703 58,008 116,200 - 254,512 Total Operating Funds 9,653,909$ 18,921,367$ 19,399,082$ -$ 9,176,193$ Debt Service 2001 Series GO Bonds 981,602 950,000 1,018,556 - 913,046 Total Debt Service 981,602$ 950,000$ 1,018,556$ -$ 913,046$ Trust & Agency Funds Library Capital Improvement 2 330,089 10,000 15,000 - 325,089 KSAR 37,661 65,200 100,000 - 2,861 Total Trust & Agency Funds 367,750$ 75,200$ 115,000$ -$ 327,950$ TOTAL OPERATING BUDGET11,003,261 19,946,567 20,532,638 - 10,417,189 Capital Funds 3 Street Projects 1,769,548 7,728,048 9,497,596 - - Park & Trail Projects 716,525 2,236,963 2,953,488 - - Facility Projects 791,018 177,571 968,589 - - Administrative Projects 99,859 175,000 274,859 - - Total Capital Funds 3,376,950$ 10,317,582$ 13,694,532$ -$ -$ TOTAL ALL FUNDS14,380,210$ 30,264,149$ 34,227,170$ -$ 10,417,189$ 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. General Fund Revenues & Transfers In By Category FY 2009/10 Business & Other Taxes 3.2% Fees, Licenses & Permits 8.3% Intergovt'l 1.9% Charge for Services 10.7% Rental Income 2.3% Fund Transfers In 0.9% Other Sources 1.8% Transient Occupancy Tax 0.9% Sales Tax 5.9% Franchise Fee Tax 10.5% Interest Income 2.0% Property Tax 51.4% FY 2006/07FY 2007/08FY 2008/09FY 2008/09FY 2009/10% of Revenue CategoryActualsActualsAdjustedEstimatedProposedTotal Property Tax7,577,444$ 7,922,815$ 8,122,000$ 8,076,074$ 8,175,500$ 51.4% Sales Tax994,680 1,057,977 986,000 1,041,956 935,000 5.9% Franchise Fee Tax1,187,806 1,623,318 1,611,000 1,681,748 1,675,000 10.5% Transient Occupancy Tax195,261 211,532 175,000 150,000 150,000 0.9% Business & Other Taxes510,063 482,184 490,000 455,000 505,000 3.2% Fees, Licenses & Permits1,548,054 1,747,922 2,044,075 1,126,333 1,323,750 8.3% Intergovernmental511,395 428,304 480,700 314,937 308,500 1.9% Charge for Services 1,235,931 1,738,918 1,964,334 1,643,223 1,701,531 10.7% Interest Income714,976 615,731 420,000 420,361 320,000 2.0% Rental Income297,522 386,834 358,755 353,598 364,342 2.3% Other Sources644,243 387,958 279,000 338,870 288,000 1.8% Total Revenues 15,417,375$ 16,603,493$ 16,930,864$ 15,602,101$ 15,746,623$ 99.1% Fund Transfers In499,735 2,275,254 153,732 153,732 148,859 0.9% Total Revenues & Transfers15,917,110$ 18,878,747$ 17,084,596$ 15,755,833$ 15,895,482$ 100.0% Funding from Use of Deposits/Carryforwards/Designated Funds Theater Surcharge Deposit - - 43,500 43,500 - Funding Carryforward - 80,000 58,000 58,386 - Development Fund Balance - 99,447 75,000 75,000 75,000 Environmental Fund Balance - 40,000 66,735 66,735 50,000 CIP Fund Balance - 1,400,000 1,400,000 250,000 Economic Stability FB - - - - 25,000 Total Operating Sources 15,917,110 19,098,194 18,727,831 17,399,454 16,295,482 General Fund Expenditures & Transfers Out By Category FY 2009/10 Meetings, Events & Training 0.6% Community Grants & Events 1.3% Consultant & Contract Services 36.8% Fees & Charges 4.3% Materials & Supplies 1.6% Salary & Benefit s 40.6% Internal Services Charges 12.6% Fund Transfers Out: 2.2% FY 2006/07FY 2007/08FY 2008/09FY 2008/09FY 2009/10% of Expenditure CategoryActualsActualsAdjustedEstimatedProposedTotal Salary & Benefits5,492,133$ 6,172,956$ 6,870,136$ 6,499,851$ 6,549,203$ 40.6% Materials & Supplies 368,011 316,073 272,475 215,092 256,900 1.6% Fees & Charges 1,073,453 621,787 728,699 716,711 698,610 4.3% Consultant & Contract Services 5,707,332 5,516,722 6,443,407 5,964,567 5,936,590 36.8% Meetings, Events & Training85,049 73,746 118,475 80,728 97,960 0.6% Community Grants & Events182,793 189,934 203,464 164,764 213,706 1.3% Infrastructure/Bldg Projects1,439,066 - - - - 0.0% Fixed Assets 204,913 30,127 - 24,655 - 0.0% Internal Services Charges 55,600 2,053,479 2,189,343 2,189,340 2,037,499 12.6% Total Expenditures 14,608,350$ 14,974,823$ 16,825,999$ 15,855,707$ 15,790,468$ 97.8% Fund Transfers Out:2,607,834 3,325,968 1,543,500 1,543,500 350,000 2.2% Total Expenditures & Transfers17,216,184$ 18,300,791$ 18,369,499$ 17,399,207$ 16,140,468$ 100.0% The FY 2009/10 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 approximately $155,000. Overall, the FY 2009/10 General Fund proposed budget revenues are less than 1% over than the current year’s estimated revenues, and reflect a decrease of 7% from the FY 2008/09 adjusted budget. General Fund expenditures reflect a slight decrease from the current year’s estimated expenditures, and are 12.4% less than the prior year’s adjusted budget. The overall decrease in expenditures was offset in part by increases in labor costs – from employee, consultant, and contract services costs. The Sheriff’s budget appropriation incorporates a contract increase of approximately $167,000; a 4.21% increase from the prior year. Without staffing changes, employee labor costs would have increased approximately $90,000 from the prior year, however with the staff reductions, budgeted salary & benefit costs decreased by $321,000 from the prior budget. Besides the staffing reductions, other cuts to balance the FY 2009/10 budget include the elimination of temporary staff and supplemental planner and plan check consultants, contract planning services, attorney services, reductions in charge-backs from the internal service funds, and materials, supplies, training, and contract services where possible without impacting service levels to the community. 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, per Council’s adoption of the FY 2009/10 Operating & Capital Budget resolution at the June 3, 2009 Council Meeting. CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION The City would not adopt an Operating & Capital Budget for FY 2009/10. ALTERNATIVE ACTION N/A FOLLOW UP ACTIONS 1. Prepare FY 2009/10 Adopted Operating & Capital Summary and Detail Budget documents as directed by Council. 2. Monitor revenues and report deficiencies to Council 3. Monitor State budget proposals and report impacts to Council. If State budget includes takeaways or significant fee impacts to the City’s budget, staff will propose alternatives for re-balancing the budget. ADVERTISING, NOTICING AND PUBLIC CONTACT N/A ATTACHMENTS A: Resolution to Adopt the Fiscal Year 2009/10 Operating & Capital Budget B: Revised Financial Summaries Attachment A A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SARATOGA ADOPTING THE FISCAL YEAR 2009/10 OPERATING & CAPITAL BUDGET WHEREAS, the City Council held a public hearing on the Proposed Operating & Capital Budget for Fiscal Year 2009/10 on May 20, 2009; 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 City Manager did submit a proposed budget for FY 2009/10 to the City Council; and WHEREAS, the City Council has considered and modified the proposed budget during a public hearing; and WHEREAS, the Planning Commission is to conduct an annual review of the proposed Capital Improvement Plan for consistency with the City’s general plan when new projects are submitted; and WHEREAS, the City Council gave staff direction to adopt the Fiscal Year 2009/10 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 2009/10 Operating & Capital Budget as shown in the Total Fund Summary – Source and Use of Funds 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, 2009; 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 3, 2009 be incorporated within the final Fiscal Year 2009/10 Operating & Capital Budgets; 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 3rd day of June, 2009, by the following vote: AYES: NOES: ABSENT: ABSTAIN: Chuck Page, Mayor City of Saratoga ATTEST: Ann Sullivan, City Clerk of the City of Saratoga