HomeMy WebLinkAboutStaff Report - Mid-Year Bdgt ReviewITEM C
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
VIA: TROY L. BUTZLAFF, ICMA-CM, CITY MANAGER
FROM: TALIKA M. JOHNSON, DIRECTOR OF FINANCE
DATE: FEBRUARY 27, 2017
SUBJECT: FISCAL YEAR 2016-17 GENERAL FUND MID-YEAR BUDGET REVIEW
AND ADJUSTMENTS
SUMMARY:
This report provides the City Council a Mid-Year budget and financial update for the Fiscal Year
2016-17 adopted budget. The report also makes recommendations for budget amendments, both
to estimated revenues and expenditures, if approved, will result in a decrease of $597,400 in the
projected ending fund balance of $3,184,035 to a revised ending fund balance of $2,586,635.
RECOMMENDATION:
Staff recommends that the City Council take the following action:
1) Adopt Resolution No. 2017-C12 approving proposed budget amendments to the
Fiscal Year 2016-17 adopted budget.
DISCUSSION:
The Mid-Year Budget Review is an opportunity for Staff to update the City Council on current-
year budget performance based on actual operating results through the first half of the fiscal year.
The FY 2016-17 General Fund Budget was adopted on June 20, 2016 with an operating surplus
of $3,184,035. While most of the General Fund revenues (“Revenues”) and expenditures
(“Expenditures”) are on track to, there are some Revenues and Expenditures budgets that will
need to be adjusted. The following net budget adjustments of $597,400 are recommended,
resulting in a revised ending fund balance of $2,586,635:
APPROVED
CITY COUNCIL
2/27/2017
Special Meeting
Mid-Year Review and Adjustments
February 27, 2017
Page 2
Expenditure Highlights
Salaries and Benefits
There are several positions funded by the General Fund that resulted in higher net salary savings
than anticipated. At budget adoption, a 2% vacancy rate was incorporated into the budget for
positions that would not be filled for the entire fiscal year. However, many positions have
remained unfilled longer than anticipated, resulting in more salary savings.
An amendment is also required to reflect the cost of the approved side letter agreement with
Azusa Police Management Association (APMA) adopted in November 2016 in an effort to
reduce the leave bank liability for the City. Vacation and sick leave payouts from accrued leave
banks are also expected to increase as a result of Police Department retirements by the end of the
fiscal year.
Insurance Premiums
Effective July 1, 2016, the City transitioned to a new insurance provider, California Joint Powers
Insurance Authority, to receive better coverage. At the time of budget adoption, annual
premiums for the new membership were estimates. Additional appropriations are needed in order
to cover the finalized premium amounts.
Proposed Mid-Year Adjustments for Fiscal Year 2016-17
Expenditures Revenues
Department Description Increase/(Decrease) Increase/(Decrease) Reason for Adjustment
Citywide Salary Savings (275,000) $ Savings from vacant positions
Citywide Leave Payouts 650,000 PD retirements and MOU side letter
agreement
Econ & Comm Development Business Tax Fees 65,000 BOE Business Tax allocation
adjustment
Econ & Comm Development Legal Services 120,000 Increased development activities
Econ & Comm Development Professional Services 42,000 CDBG Contracts Consultant
Econ & Comm Development Reimb-Court Costs 20,000 Based on current activity levels
Econ & Comm Development Real Property Records
Fees
15,000 Based on current activity levels
Econ & Comm Development Abandoned & Vacant
Property Registration Fees
40,000 Newly adopted revenues - based on
current activity levels
Econ & Comm Development Permit Fees 11,700 Based on current activity levels
Administration Professional Services 18,100 Consulting services
Safety Motor Vehicle Fines (30,000) Traffic ticket amnesty
Safety Contract Services (50,000) Jail services pacing lower than
anticipated
Recreation Donations 10,000 Based on current activity levels
Library Passport Fees 4,000 Based on current activity levels
Library Library Fees 3,000 Based on current activity levels
Public Works Professional Services (27,000) Lower outside engineering services
than anticipated
Risk Management Insurance Premiums 160,000 Premium related to new
membership with CAJPIA
Human Resources Professional Services 75,000 HR Director Recruitment and interim
staffing costs
Human Resources Training 23,000 Citywide professional development
736,100 $ 138,700 $
Mid-Year Review and Adjustments
February 27, 2017
Page 3
Various Expenditures
Based on the analysis of mid-year expenditures, budget revisions are recommended for various
departments. Legal services costs in Economic and Community Development are pacing higher
than expected due to the amount of development activities throughout the City. Additionally, the
City Council approved a contract for CDBG consulting services which cannot be funded using
CDBG proceeds. Additional appropriations are also needed in Human Resources to cover costs
related to the recruitment for a new Director, and to provide much needed professional
development training for Staff citywide.
Revenue Highlights
Overall, a $138,700 increase in revenues is proposed. While most of the proposed adjustments
are based on current activities exceeding the adopted budget, a few adjustments require
additional explanation. Revenues from the newly adopted Vacant & Abandoned Property
ordinance is pacing higher than expected due to Code Enforcement efforts to obtain compliance
with the ordinance. Additionally, the City expects to receive an additional $65,000 from the State
Board of Equalization for reallocation of business taxes related to tangible assets recently
installed at the new Lagunitas site. A reduction in Motor Vehicle Moving Violations revenues of
$30,000 is being proposed as a result of Senate Bill 185 (“SB185”), which grants delinquent
traffic ticket amnesty to most who apply in order to increase the collectability of such fines. Staff
will continue to monitor future impacts of SB185.
Based upon the direction received from the City Council, Staff will prepare necessary actions to
implement any changes.
FISCAL IMPACT:
The recommended FY 2016-17 mid-year actions will result in increases to Expenditures of
$736,100 and increases to Revenues of $138,700, for a total net change in to the General Fund’s
ending fund balance of $597,400. The adjusted ending fund as of June 30, 2017 is now projected
at $2,586,635.
Prepared by: Reviewed and Approved:
Talika M. Johnson Louie F. Lacasella
Director of Finance Management Analyst
Reviewed and Approved:
Troy L. Butzlaff, ICMA-CM
City Manager
Attachments:
1) Resolution No. 2017-C12
Attachment 1
RESOLUTION NO. 2017-C12
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPROVING AND
ADOPTING THE MID-YEAR BUDGET ADJUSTMENTS FOR THE CITY OF AZUSA
WHEREAS, on June 20, 2016, City Council of the City of Azusa adopted the General Fund
FY 2016-17 Operating and Capital Budget; and
WHEREAS, on February 27, 2017, City Council met and reviewed the mid-year financial status of
the General Fund and considered staff’s recommendation on the budget amendments.
NOW, THEREFORE, BE IT RESOLVED, THE CITY COUNCIL OF THE CITY OF
AZUSA DOES APPROVE AND ADOPT THE FOLLOWING FY 201 6-17 GENERAL FUND
BUDGET ADJUSTMENTS:
SECTION 1.
Revenues
Business Tax Fees 65,000
Reimb-Court Costs 20,000
Real Property Records Fees 15,000
Abandoned & Vacant Property Registration Fees 40,000
Permit Fees 11,700
Motor Vehicle Fines (30,000)
Donations 10,000
Passport Fees 4,000
Library Fees 3,000
Total Revenue Adjustments 138,700$
Appropriation/Expenditures
Salary Savings (275,000)$
Leave Payouts 650,000
Legal Services - Econ & Comm Dev 120,000
Professional Services - Econ & Comm Dev 42,000
Professional Services - Administration 18,100
Contract Services - Safety (50,000)
Professional Services - Public Works (27,000)
Insurance Premiums - Human Resources 160,000
Professional Services - Human Resources 75,000
Training - Human Resources 23,000
Total Expenditure Adjustments 736,100$
Attachment 1
SECTION 2. The City Clerk shall certify as to the adoption of this resolution.
PASSED, APPROVED AND ADOPTED this 27th day of February 2017.
__________________________
Joseph Romero Rocha
Mayor
ATTEST:
__________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF AZUSA )
I HEREBY CERTIFY that the foregoing Resolution No. 2017-C12 was duly adopted by the City
Council of the City of Azusa at a meeting thereof, held on the 27th day of February 2017, by the
following vote of the Council:
AYES : COUNCIL MEMBERS:
NOES : COUNCIL MEMBERS:
ABSTAIN : COUNCIL MEMBERS:
ABSENT : COUNCIL MEMBERS:
__________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
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➢ Provide an overview of the FY 2016-17 General Fund
Operations
➢ Provide a preview of potential significant budget impacts
for FY 2017-18
➢ Adopt FY 2016-17 Mid-Year Budgets Amendments
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1. Review of FY 2016-17 General Fund Operations
2. Proposed Mid-Year Adjustments
3. Amended Financial Forecast
4. Preview of FY 2017-18 General Fund •Significant
Budget Impacts
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• Match General Fund Costs to Revenues
• Meet 15% Reserve Policy
• Address Unfunded Liabilities
• Maintain Essential Services
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• Conservative Sales Tax projections (+2.5%)
• Total Property Tax moderate growth of (+3.0%)
• Includes one-time revenues of $2.0 million for sale of property
related to Metro Gold-line
• Includes best practice of budgeting for attrition/vacant position
savings (-$417, 140)
• Includes the impacts of recent labor negotiation ($33,315)
• Includes personnel changes ($311,495)
• LA County Fire contract increase of 4. 1% ($178,683)
NO REDUCTIONS IN PROGRAMS AND SERVICES ;` ' s
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$41,000,000
$40,500,000 $3484 035
40,452,778
$40,000,000
$1,394,060 $1,328,860
$39,500,000
39,515,998
$39,000,000
39,221,834
$38,500,000 ---_—_-_
38,187,138
$38,000,000
$37,500,000 37,827,774
37,234,167
$37,000,000
37,009,085 37,268,743
--�-Revenues
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$36,500,000 - -Expenditures_--
$36,000,000
FY 15-16 Budget FY 16-17 Adopted Budget FY 17-18 Estimate FY 18-19 Estimate �'f 'il�
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2016-17 Actual %of $6,000,000
REVENUE Adjusted Budget YTD 1/31/17 Adj. Budget $S,Doo,000
Property Tax 9,197,780 5,515,666 60.0%
Sales Tax 5,764,711 2,418,841 410% $4,000,000
UUT Tax 2,900,000 1,713,718 59.1% $3,000,000
Other Taxes 8,496,283 4,454,289 52.4%
$2,000,000 i a YTD 1/31/16
Charges for Services 2,705,562 896,090 33.1% ■YTD 1/31/17
Cost Reimbursement 2,384,390 1,341,460 56.3% $1,000,000
Fines & Penalties 1,227,050 554,861 45.2% $o I 1
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License &Permits 2,964,861 1,649,554 55.6% 0+ .0+ ,sa+ ,fie" `ey �. ,eh / o,5 4,e
Miscellaneous 3,071,305 2,245,662 73.1% \� \�
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Money&Property Use 1,740,833 1,162,788 66.8% .5c.
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Total Revenues $40,452,775 $21,952,929 54.3% 40
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2016/17 Actual
EXPENDITURE Adj. Budget YTD 1/31/17 %of Budget
Council $135,525 $76,642 56.6%
City Clerk 664,155 270,203 40.7%
City Attorney 250,000 140,211 56.1% Actual Actual Increase/
City Treasurer 203,870 67,296 33.0% EXPENDITURE YTD 1/31/16 YTD 1/31/17 (Decrease)
Administration 579,780 348,732 60.1%
Finance 1,362,760 763,510 56.0% Personnel $14,663,529 $14,706,978 $43,448
Economic&Comm. Dev. 2,037,290 1,060,257 52.0% Operating 4,396,426 4,753,333 356,907
Human Resources 485,391 378,405 78.0% Total Expenditures $19,059,955 $19,460,311 $400,356
Library 1,149,370 572,831 49.8%
18,167,267 11,413,513 62.8%
Public Safety
Public Works 843,485 448,347 53.2%
Recreation & Fam. Serv. 3,178,932 2,134,828 67.2%
City-Wide 2,606,824 1,783,339 68.4%
;Total Expenditure $31,664,649 $19,458,113 61.5%
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Department Description Increase/(Decrease)
Econ & Comm Development Business Tax Fees $ 65,000
Econ & Comm Development Reimb-Court Costs 20,000
Econ & Comm Development Real Property Records Fees 15,000
Econ & Comm Development Abandoned & Vacant Property 40,000
Registration Fees
Econ & Comm Development Permit Fees 11 ,700
Library Passport Fees 4,000
Library Library Fees 3,000
Recreation Donations 10,000
Safety Motor Vehicle Fines (30,000)
Total Increase to Revenues $ 138,700
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• BOE Business Tax Allocation Adjustment
• Vacant & Abandoned Property Registration
• Motor Vehicle Moving Violations
• Various Fees
— Library and Passport
— Permits, Court Reimbursements, and Real Property Records
— Recreation Donations
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Department Description Increase/(Decrease)
Administration Professional Services $ 18,100
Citywide Salary Savings (275,000)
Citywide Leave Payouts 650,000
Econ & Comm Development Legal Services 120,000
Econ & Comm Development Professional Services 42,000
Human Resources Professional Services 75,000
Human Resources Training 23,000
Public Works Professional Services (27,000)
Risk Management Insurance Premiums 160,000
Safety Contract Services (50,000)
Total Increase to Expenditures $ 736,100
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• Salaries and Benefits
— Position Vacancies
— Leave Payouts
• Insurance Premiums
• Various Expenditures
— Legal costs related to development projects
— City-wide staff development
— Professional and Contract Services
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Budget vs. Estimated Actual
(in millions)
A B C
Adopted Amended
Budget Budget Variance
2016-17 2016-17 (B-A)
Beginning Fund Balance $ 5.83 $ 5.83 * $ -
Plus Revenues 38.92 39.06 0.14
Transfers In 1.53 1.53 -
Total 2016-17 Sources 40.45 40.59 0.14
Less Expenditures 31.49 32.22 0.73
Transfers Out 5.78 5.78 -
Total FY 2016-17 Uses 37.27 38.00 0.73
Revenues in excess/(below) Exp-FY 2016-17 3.18 2.59 (0.59)
Available Fund Balance $ 9.01 $ 8.42 $ (0.59)
*Audited
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$41,884,923
41,500,000
$3,129,142
$41,000,000
. $2,586,63
$40,500,000
$40,652,082 $40,591,478
$40,000,000
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$39,000,000 4
$39,137,138
$39,056,092
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$38,000,000
1 $38,004,843 -4--Revenues
$37,500,000
$37,522,940 —f—Expenditures
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FY 15-16 Actuals FY 16-17 Amended Budget FY 17-18 Estimate FY 18-19 Estimate i�
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FY 16/17 PROJECTED GENERAL FUND RESERVES
Proposed Budget $ 38,004,843
Reserve Target 15%
FY 2016/17 Fund Balance Target $ 5,700,726
FY 2016/17 Projected Fund Balance $ 8,420,368
Estimate General Fund's reserve level will be at 22%
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• ICMRA Special Assessment
— Lump sum payment vs. 10-year amortization
• Lowering of PERS discount rate
— From current 7.5% to 7.0% by FY 2020-21
• Unfunded Pension and OPEB liabilities
— Establishing Trusts
• Infrastructure and Facility needs
— Facilities Condition Assessment
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➢ January 26 CIP requests submitted to Public Works
➢ February 16 Budget materials distributed to Departments
➢ February 27 Mid-Year Budget review at Utility Board meeting
➢ March 9 Final date for Personnel Request Submittals
➢ March 9 Departmental Budget requests submitted to Finance
➢ April 10-April 20 Budget meetings with Departments and City Manager
➢ May 4 Preliminary Budget balanced by City Manager
➢ May 22 City Council Budget Study Session (tentative date)
➢ June 19 Final Budget adopted by City Council C r
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Staff recommends that the City Council take the
following action :
1. Adopt Resolution 2017-C12, A Resolution of the City
Council of the City of Azusa approving and adopting
the mid-year budget adjustments for the City of
Azusa .
23
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