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sr-011012-8aity of City Council Report Santa Monica City Council Meeting: January 10, 2012 Agenda Item: 7-A To: Mayor and City Council From: Gigi Decavalles- Hughes; Acting Director of Finance Subject: Financial Status Update and Midyear FY2011 -13 Budget Recommended Action Staff recommends that City Council: 1) Receive the FY2011 -12 through FY2015 -16 Financial Status Update; 2) Appropriate Fiscal Year 2011 -12 budget changes and adjust revenue budgets as detailed in Attachments Al and A2; 3) Adopt a Resolution establishing classification and salary rates for various positions detailed in Attachment B1; 4) Approve the position and classification changes detailed in Attachment B2; 5) Adopt a Resolution establishing the Fire Safety Officer Assignment fee in the Fire Department in Attachment C; and 6) Receive General Fund fund balance classification changes as required under the new Governmental Accounting Standards Board reporting requirements in Attachment D. Executive Summary In June 2011, Council approved the City's first two -year budget against a backdrop of a national economy that appeared to be on the verge of entering a double -dip recession, rising healthcare and pension costs, and stagnant revenue growth. These factors threatened to put the City's General Fund into a structural deficit as early as Fiscal Year 2012 -13. The subsequent cost- saving actions by Council, including a large paydown of the City's PERS liability and significant changes to employee benefits, combined with a slight recovery in several key revenue sources, have positively affected the City's financial position. During the recent "Can We Talk" meetings, the City Manager presented information that showed that these changes had eliminated the potential General Fund structural deficit through FY 2015 -16. E As staff reviewed the current fiscal year revenue and expenditure trends and the latest economic data in preparation of the mid -year Financial Status Report and Mid -Year budget changes, several areas were identified where revenues and expenditures needed to be adjusted. Business license, property, and transient occupancy taxes are showing improvements earlier than previously predicted, while parking citation revenue is lower than expected. Recommended expenditure budget changes to reflect proposed reorganizations that position departments to deliver services more efficiently and effectively, and the various compensation - related cost saving actions noted above, will result in an overall decrease in FY 2011 -12 General Fund expenditures; however, based on current assumptions, the reorganizations and dip in parking citation revenue are anticipated to result in a slight structural deficit in FY 2015 -16. This change from the recent reports that showed the structural deficit eliminated during the five -year period demonstrates the fragile balance that currently exists between revenues and expenditures, and cautions the City to continue to diligently monitor its finances and take appropriate actions to ensure that any structural deficit be addressed so that the current level of service to the community can be maintained. Changes in other funds, whether based on new grant revenues or reorganizations, are not impacting the FY 2011 -12 General Fund budget beyond what was adopted in June, and are anticipated to have a minimal impact on the General Fund over the five years, yet changes related to the elimination of redevelopment present a real challenge to the City's future ability to renovate critical infrastructure and produce affordable housing. Background On June 21 2011, Council adopted the first year and approved the second year of the FY 2011 -13 biennial budget. As part of the biennial budget, staff committed to return to Council at six -month intervals to make adjustments to the City's budget based on updated economic indicators and actual performance. As of June 21, 2011, taking into consideration the budget as adopted and assumptions that reflected a struggling national economy, slight or no growth from several of the City's major tax sources (Property Taxes, Utility Users Taxes, and Business License Taxes), a continuing State budget crisis, deep losses in pension fund investment holdings resulting in increased rates, increasing health insurance rates, and a continuation of the current compensation structure, the five year forecast indicated that the General Fund would experience a structural deficit in FY 2012 -13 and risked having to access its economic uncertainty funds. It was clear that, to prevent a future deficit, measures needed to be taken to change the course of the City's finances. I•a During the summer and fall, staff implemented a number of cost saving measures, and several key areas of the local economy have grown faster than anticipated, resulting in an improved financial outlook for the City. However, many budget challenges still remain, including a slow economic recovery, expenditure growth that exceeds revenue growth, and the loss of future redevelopment funding Discussion Economic Update As the FY 2011 -13 City budget was being prepared, the national economy appeared on the brink of falling into a "double dip" recession. Economic growth was slowing after several quarters of improvement, unemployment remained stubbornly high, and the housing market continued to suffer. Although the national economy remains in a fragile state, recent economic data shows signs of improvement, and few economists expect a double dip recession at this time. Third quarter 2011 economic growth of 1.8 percent, as measured by the change in Gross Domestic Product (GDP), exceeded the growth of each of the previous two quarters, and most economists are now projecting mild economic growth for the next two years. The national unemployment rate has also shown some signs of improvement, falling to 8.6 percent in November, the lowest rate since March 2009. The housing market is also showing mixed results. While the latest home sales data shows a year- over -year increase in the number of units sold, prices are down compared to the prior year. The European debt crisis also has the potential to damage the world -wide economy, which could also affect the pace of the U.S. recovery. The slow pace of economic recovery has also affected California, but there are some indications of improvement. The November 2011 State unemployment rate dropped to 11.3 percent, its lowest level in two and a half years, and the State has now added jobs for three consecutive months. There have been some improvements in exports and technology - related services, but the weak housing market continues to negatively impact the key construction and financial services industry. Despite the signs of improvement, the UCLA Anderson Forecast projects that the State unemployment rate will remain in double digits until 2014. Additionally, the State budget remains in crisis. 41 The Governor recently announced that current projections for State revenue are $2.2 billion less than budget, triggering automatic budget reductions of nearly $1 billion. The State Legislative Analyst's Office (LAO) recently projected a State budget deficit of $3 billion this fiscal year, growing by another $10 billion by the end of FY 2012 -13 Santa Monica's strong economy and diversified tax base have traditionally allowed the City to recover relatively quickly from economic downturns as compared to the national and State economies, and this tradition has continued with the latest recession. Recent data has shown that revenue increases in some areas were greater than assumed in the budget. Business license revenues are projected to be 4.7 percent more than expected in FY 2011 -12, primarily due to the strength of the service and retail categories. Assessed property valuation also showed an unexpected 2.9 percent increase in FY2011 -12, and tourism continues its strong rebound from two down years as year- over -year revenue gains continue to exceed 10 percent per year. The re- opening of Santa Monica Place has also significantly added to the local economy. The City now projects that General Fund revenues will exceed budget by $2.2 million in FY 2011 -12 and $1.8 million in FY 2012 -13. Many cities are still struggling to rebound from the effects of the recession and have been forced to cut services, infrastructure maintenance, staffing, and reserves. Santa Monica has been proactive in facing the challenges presented by the recession over the last two years, employing deficit reduction strategies to balance budgets without jeopardizing core services. The City closed the FY 2010 -11 books with a net increase in its fund balance and projects to do so again in FY 2011 -12. Financial Status Update A key indicator in determining the financial health of a city is its ability to cover annual operating expenditures with annual revenues, so that the fund balance is not tapped for ongoing expenditures. The City's financial status updates include updated current year revenue projections based on receipts through November and the most recent information related to growth rates for both revenues and expenditures. 12 Overall, the City's fund balances have benefitted from a number of cost saving measures approved by Council and implemented throughout the summer and fall of 2011. The most noteworthy changes, which have been incorporated in the financial update, relate to compensation structure changes approved by employees during the collective bargaining process, and to decreased pension costs due to a $10.0 million, one -time paydown of the City's unfunded liability. General Fund Updated Revenue and Expenditure Projections The General Fund is showing the most significant change to its financial status since the last forecast, completed in June 2011, which showed a deficit in FY 2012 -13. The update includes the changes being proposed within this report as part of the midyear budget adjustment process, the cost - saving measures that the City took in the past eight months, and the growth of local tax revenues. These changes have reduced the deficit gap and, with the proposed mid -year changes contained in this report, result in a predicted $100,000 structural deficit in FY 2015 -16. 340.0 _... __. _.... _........ Revenues over Expenditures (includes Capital and Operating Costs in millions) 330.0 325.65 325.55 320.0 315.0 310.0 - - -__ _._. - -- - - - -_. _ -__ �® ®314.5 300.0 - -.. ___ _.. __ - -_ 294.9 ®® ® 298.8 290.0 288.5 ®®® I I 280.0 ® ®® _ 284.3 276.5 270.0 ' i i FY 2011.12 FY 2012 -13 FY 2013.14 FY 2014.15 FY 2015 -16 Expenditures - May 2011 Forecast -- Revenues - May 2011 Forecast ® ®® Expenditures - Current Forecast Revenues - Current Forecast J Current Forecast FY 2011 -12 Operating Revenues $ 288.48 Funds from Other One -Time Sources' $ 2.40 Budgeted Expenditures (Operating and Capital) $ (276.55) Excess Revenues over Expenditures $ 14.33 ' From Assigned and Unassigned Fund Balance. FY 2012 -13 FY 2013 -14 FY 2014 -15 FY 2015 -16 $ 294.85 $ 304.94 $ 315.03 $ 325.55 $ (284.33) $ (298.75) $ (314.50) 5 (325.65) $ 10.52 $ 6.19 $ 0.53 $ (0.10) The key impacts to the General Fund five -year projection due to economic changes and cost - saving measures are shown below: Transient Occupancy Tax Business License Tax Property Tax Parking Citation Fines Savings from CalPERS paydown using one -time savings Safety employee pension contributions (1 percent in FY2011 -12 to 3 percent in FY 2013 -14) Police Officer health benefit contributions Reduced cost of living adjustment for Police Officers (one -time in FY 2011 -12) Total Five -Year Revenue Changes (FY 2011 -12 to FY 2015 -16) $6.7 million $6.6 million $5.5 million -$2.6 million Total Five -Year Expenditures Savings (FY 2011 -12 to FY 2015 -16) $4.0 million $4.9 million $0.8 million $1.1 million Staff is continually assessing ways to sustain the City's financial health and eliminate the potential for a structural deficit. Among the measures that are not yet included in the forecast but will increase future year savings are the two -tier retirement system negotiated with miscellaneous employees as part of the recently- executed Memorandum of Understanding (MOU), potential use of additional one -time savings to 11 further decrease the City's unfunded pension liability and thereby achieve further annual savings, and the possibility that changes to the structure and operations of various facilities, such as the Pier, could decrease the annual General Fund subsidy to several funds. At the same time, however, the elimination of redevelopment continues to be a threat to the General Fund as major tax increment - funded infrastructure and housing production projects, and the staff managing the implementation of these projects, will likely be required to compete for its limited resources in the coming years. Fund Balance Definition The General Fund's June 30, 2011 fund balance presented in the City's FY 2010 -11 Comprehensive Annual Financial Report (CAFR) reflects new categories, or classifications, to describe the various limitations that are placed on the City's funds, as prescribed by the Governmental Accounting Standards Board (GASB) and outlined in Attachment D. Anticipating this change in format, the City Council formally adopted a fund balance policy as part of the recent budget process (also included in Attachment D) that explained the new classifications and formally delegated to the City Manager the authority to establish, modify or rescind assignments (the assigned classification is for funds that are neither restricted nor committed). When converting the fund balance to the new structure, the City Manager eliminated legacy or obsolete assignments (previously known as designations) for activities that were completed, and aligned assignments with the essential needs of the City. These needs include increasing the operating contingency from 10 percent to 15 percent (as recommended by the Government Finance Officers Association) to bring the City closer to a goal of a 20 percent contingency reserve. This goal is viewed by rating agencies as very strong and also puts the City in a stronger position as it addresses the elimination of redevelopment. Other essential needs include one -time funds that may be used to invest in real estate acquisitions related to critical infrastructure or for an additional paydown of the PERS unfunded liability; and providing an advance to the Cemetery Fund, while also maintaining the increased economic uncertainty reserve of $9.7 million that will give the City the added flexibility to address the loss of ongoing redevelopment funding. A detailed list is included in Attachment D. 7 Redevelopment Funds Staff continues to exercise maximum levels of caution during this time of extreme upheaval for redevelopment in Santa Monica and in California. On December 29, 2011, the California Supreme Court issued its decision in the case of California Redevelopment Association et al v. Matosantos et al. The lawsuit challenged the constitutionality of the State's plan to eliminate redevelopment agencies unless cities agree to make one -time and on -going payments to the State. The Court upheld the part of the legislation that dissolves redevelopment agencies while striking down the legislation that allowed for survival of redevelopment agencies that give money to the State. The net effect of the decision is that redevelopment agencies are to be disbanded and replaced with successor agencies responsible for administering the payment and performance of obligations listed in required Enforceable Obligation Payment Schedules (EOPS). On August 23, 2011, Council, under protest and subject to reservation, adopted a resolution, approving an EOPS, for the purpose of preserving all rights to make payments and perform enforceable obligations associated with the Agency's Redevelopment Plans and Five -Year Implementation Plan. In light of the Court's recent decision, staff will return to Council with recommendations and actions necessary to comply with AB 1x 26. Staff intends to continue moving forward on projects for which there are contracts that are unimpeded by the Court's decision. The Supreme Court's decision is expected to have devastating impacts on communities throughout the State by stripping California of its primary tool to produce affordable housing, generate jobs, refurbish critical infrastructure, remediate brownfields, and support smart growth and transit - oriented development. As a result, a coalition of cities and redevelopment agencies is approaching State leaders to discuss clean -up legislation that would allow affordable housing and economic development initiatives in California to continue. Staff will closely monitor these efforts and their potential benefits and impacts to Santa Monica. go Other Funds Other major funds that are included in the Financial Status Update fall into two categories: enterprise funds that operate with sufficient revenues to sustain necessary operation and capital needs, and those funds that have a structural deficit where ongoing revenues are not sufficient to cover ongoing expenditures. Self- Sustaining Enterprise Funds Enterprise funds that operate with sufficient revenues to sustain necessary operations include: • Resource Recovery Recycling • Wastewater • Water These funds are not included in the update since they are in the process of undergoing a rate analysis as part of current operational studies that will be completed in the next year. Due to changes in the Resource Recovery Center construction project, the Resource Recovery Recycling rate structure will now be considered as part of the Zero Waste Strategic Plan currently being developed with projected completion in 2012. The information presented in the Plan, including the results of the cost and rate analysis, will be used as the basis for future operational enhancements and rate structure adjustments. The drafting of a Sustainable Water Plan to assist the City in achieving its adopted goal of being 100 percent water self- sufficient by the year 2020 will begin this fiscal year and will be completed in the fall of 2012. The Plan includes an analysis of water and wastewater rates and associated capital facility fees. These funds currently have sufficient revenue to cover current operations but will be assessing their rate structure based on implementation of the Zero Waste and Sustainable Water plans. A financial status update will be included when the draft plans are presented to Council in 2012. Funds Requiring Use of One -time Funds or General Fund Subsidies In addition to the operations of the departments it directly funds, the General Fund is responsible for a number of non - General funds that are intended to be self - supporting �7 but which, due to policy decisions limiting revenue generation or a decrease in funding from other sources, require General Fund subsidies in order to meet their operating and capital needs. These funds, their financial health, and their adjusted impact on the General Fund since the June 2011 forecast, are discussed below: • Airport: The Airport Fund, already forecast to receive $7.2 million in General Fund loans through FY 2014 -15, is anticipated to require an additional $851,000 from the General Fund through FY 2012 -13. However, staff anticipates that changes in the property lease rates at the Airport in 2015 will facilitate the beginning of the repayment of the General Fund loan. • Beach and Beach House: The Beach House Fund fared better than anticipated in FY 2010 -11, due to increased event rentals, filming receipts, and parking revenue. The additional fund balance of almost $1.0 million is anticipated to result in a lower subsidy from the Beach Recreation Fund in FY 2011 -12 ($1.5 million versus budgeted $2.5 million). The Beach Recreation Fund, in addition to benefiting from the decreased expenditures associated with the Beach House subsidy, also finished FY 2010 -11 with a greater than anticipated fund balance due to strong revenues from the use of the Beach parking lot and slower than anticipated expenditures of capital improvement project funds. Ultimately, these changes will positively impact the General Fund, whose subsidy to the Beach Fund is expected to be approximately $1.4 million less than had been forecast through FY 2015 -16. • Big Blue Bus (BBB): The BBB Fund has a projected operating structural deficit beginning in FY 2012 -13 as revenues are not sufficient to cover current operations. The operating deficit is projected to be $1.8 million in FY 2012 -13, growing to $6.6 million in FY 2015 -16. The BBB has been able to close its operating structural deficits each year by using one -time funds; however, longer term strategies to close the structural deficit are required. • Cemetery: The Cemetery Fund will require a General Fund subsidy of approximately $1.1 million through FY 2015 -16. In addition, the Cemetery still owes the General Fund $4.5 million in operating subsidies loaned in previous years. Revenue projections are conservative for the forecast period due to unknown levels of business that will be generated by a full year's operation of the mortuary. Projected Capital Improvement Program expenditures include only the basic fleet, computer, and telecommunication annual expenditures and do not take into consideration infrastructure improvements. Additionally, the fund maintains no operating or capital reserves for unknown needs, suggesting that 10 the General Fund subsidy will likely increase as needs arise. The City has retained the services of Management Partners to review Cemetery operations and present options for the long -term management of the property in late winter. • Civic Auditorium: Due to ongoing negotiations for a public - private partnership, the closure of the Civic Auditorium has been postponed six months to December 2012. The delay will provide the Civic Auditorium fund with an additional $0.5 million in net revenues, which will have the benefit of decreasing the General Fund subsidy to the fund by the same amount over the five -year period. Staff will continue to work with the Nederlander Company to determine the future operations of the Civic Auditorium and will include any new assumptions and impacts to the General Fund in future financial status updates. • Pier: As a result of a one -time premium payment related to the transfer of the Pacific Park lease to a new entity in FY 2010 -11, as well as the pacing of large infrastructure capital improvements, the Pier Fund has decreased its fiscal reliance on the General Fund by $0.4 million through FY 2015 -16. The Pier Fund's master planning process, slated to begin in FY 2012 -13, will address the future fiscal sustainability of the Pier and inform future financial status updates. Midyear Budget Adjustments At the budget midyear, staff reviews revenue receipts to date, recommends revenue budget changes, and proposes adjustments in the budget expenditure projections as necessary to most efficiently implement Council's priorities. This is also the opportunity to make position changes related to reorganizations, new service requirements, or more efficient service delivery. Proposed mid -year changes are balanced' against their impact on the long -term financial projections to ensure that they do not exacerbate predicted future structural deficits to unmanageable levels. The charts below summarize the midyear revenue and expenditure adjustments. 11 FY2011 -12 MIDYEAR BUDGET CHANGES - REVENUES (in millions) FY2011 -12 MIDYEAR BUDGET CHANGES - OPERATING AND CAPITAL EXPENDITURES (in millions) REVISED BUDGET MIDYEAR REVISED BUDGET FUND (As of October 31) CHANGES WITH MID YEAR GENERAL (01) $ 286.3 $ 2.2 $ 288.5 MISC GRANTS (20) 10.2 0.1 10.3 CITIZEN OPTION PUBLIC SAFETY (22) 0.0 0.1 0.1 RESOURCE RECOVERY & RECYCLING (27) 22.6 (0.1) 22.5 CEMETERY (37) 1.6 (0.4) 1.2 BIG BLUE BUS (41) 76.0 7.0 83.0 OTHER FUNDS 193.2 - 193.2 TOTAL ALL FUNDS $ 589.8 $ 9,0 $ 598.8 FY2011 -12 MIDYEAR BUDGET CHANGES - OPERATING AND CAPITAL EXPENDITURES (in millions) *Difference of $50 million between revenues and expenditures is sustainable as capital improvement project costs are expended over a longer period of time and may use one -time funds. Revenue Adjustments - General Fund Revenues are expected to exceed annual budget projections by approximately $2.2 million, due in large part to increases in Transient Occupancy Tax, Business License Tax, and Property Tax, offset by decreases related to State triggers and reduced parking citation revenue due to the elimination of time- limited parking at Parking Structures 7 & 8 and continued staffing shortages. Revenue sources recommended for adjustment are identified in Attachment Al. W_J REVISED BUDGET MIDYEAR REVISED BUDGET FUND (As of October 31) CHANGES WITH MIDYEAR GENERAL (01) $ 276.8 $ (0.2) $ 276.6 EARTHQUAKE REDEVELOPMENT (17) 99.2 2.3 101.5 MISC GRANTS (20) 10.8 0.2 11.0 CITIZEN OPTION FOR PUBLIC SAFETY (22) 0.1 0.1 0.2 WATER (25) 20.5 0.4 20.9 RESOURCE RECOVERY & RECYCLING (27) 23.9 0.6 24.5 PIER (30) 4.4 0.4 4.8 CEMETERY (37) 1.8 (0.2) 1.6 BIG BLUE BUS (41) 84.5 5.7 90.2 INFO TECH REPLACEMENT AND SERVICES (55) 2.1 (0.2) 1.9 OTHER FUNDS 115.1 (0.1) 115,0 TOTAL ALL FUNDS $ 639.2 $ 9,0 $ 648.2 *Difference of $50 million between revenues and expenditures is sustainable as capital improvement project costs are expended over a longer period of time and may use one -time funds. Revenue Adjustments - General Fund Revenues are expected to exceed annual budget projections by approximately $2.2 million, due in large part to increases in Transient Occupancy Tax, Business License Tax, and Property Tax, offset by decreases related to State triggers and reduced parking citation revenue due to the elimination of time- limited parking at Parking Structures 7 & 8 and continued staffing shortages. Revenue sources recommended for adjustment are identified in Attachment Al. W_J Revenue Adjustments — Other Funds Major revenue adjustments in other funds include: • The Miscellaneous Grants revenue will increase by $140,882 to reflect new grants, changes to existing grants, and timing changes in the receipt of grant revenues. • The Citizen Option for Public Safety revenue will increase by $120,543 to reflect approved grant funding for law enforcement expenses. • The Cemetery Fund revenues will decrease by $0.4 million due to less than anticipated lot sales, mausoleum sales, miscellaneous sales, and mortuary services. • The Big Blue Bus revenues will increase by $6.6 million to reflect additional capital revenues for bus replacement, bus amenities, and bus components. All revenue sources recommended for adjustment are identified in Attachment Al. Expenditure and Balance Sheet Adjustments — General Fund Net appropriations for the General Fund decrease by $0.2 million at Midyear. The major adjustments include $2.6 million in savings generated from the CalPERS paydown, COLA adjustments, and public safety employee retirement contributions, primarily offset by equity adjustments and appropriation of $1.8 million for various capital projects funded by the release of a fund balance assignment, and reappropriation of prior year funds. All expenditure changes recommended for adjustment are identified in Attachment A2. Expenditure Adjustments — Other Funds Proposed appropriations at Midyear in Other Funds total $3.7 million. Included in the request are the following: An increase of $2.3 million for debt financing completed in late June 2011 in the Earthquake Redevelopment Fund. • An increase of $0.6 million in the Resource Recovery Recycling Fund, primarily for additional waste processing and disposal costs. • All expenditure changes recommended for adjustment are identified in Attachment A2. 13 Human Resource Changes The City is continuously reviewing its operations to ensure efficient and effective delivery of City services to the community. The human resource changes detailed in Attachment B2 reflect reorganizations in numerous departments, such as a significant reorganization of the Big Blue Bus and moving Pier Management to the City Manager's Office. Other human resource changes in Community and Cultural Services, Finance, Fire, Police, and Public Works will also better align department staff with the delivery of services. The changes result in no net impact to the number of full time equivalent positions citywide. The departments proposed to have an increase or decrease in total positions are: • A reduction of 4 Full Time equivalent (FTE) positions at the Cemetery; • 1 additional FTE in the City Manager's Office to support Pier Management; 1 additional FTE in Planning and Community Development to staff a centralized cashier; and • 2 additional FTEs in Police for Airport Service Officers Fire Safety Officer Assignment Fee Santa Monica Municipal Code Chapter 2.72 provides for establishing fees for services via adoption of a resolution by City Council. The City has consistently maintained a policy to charge the full cost of services provided by City staff when those services benefit individual users, rather than the community as a whole, except at times when Council determines that it is in the best interest of the community to charge lower fees. At times and places that people gather, whether it be for entertainment, festivals, contests, or other purposes, the Fire Marshall may require the organizer of such event to retain a Fire Services Officer in order to ensure that the activity will occur in a safe manner, free from hazards, and with accessible ingress and egress. The attached resolution would set the rate for these services at $125 per hour, for a minimum of four hours, plus a $50 vehicle fee, which achieves cost recovery and is consistent with neighboring jurisdictions. 14 While staff is recommending that Council adopt the attached resolution to establish this fee, it is important to note that this fee is not new to the community. Per the City's past MOUs with the Santa Monica Firefighters Local 1109 IAFF (Section 3.07), Fire Safety Officers have been paid directly for these services by event planners and promoters at a rate of approximately $72 per hour for an eight -hour minimum. The City's current MOU with Santa Monica Firefighters Local 1109 IAFF provides for this fee to be incorporated and managed consistent with similar fees for services. The fee resolution is included as Attachment C. Financial Impacts & Budget Actions The budget impact related to the adoption of the midyear changes is detailed in Attachments Al and A2 of this report. Prepared by: Budget Staff Acting Director of Finance Forwarded to Council: Rod Gould City Manager Attachments: Al: Proposed FY2011 -12 Mid -Year Revenue Changes A2: Proposed FY2011 -12 Mid -Year Expenditure and Balance Sheet Changes B1: Resolution Establishing New Classification and Adopting Salary Rates for Certain Positions 132: Position and Classification Changes C: Resolution establishing the Fire Safety Officer Assignments Fee in the Fire Department D: Fund Balance Classification 15 Council Meeting 1/10/12 ATTACHM ENT Al INCREASE/ DEPT/ DIVISION (DECREASE) DESCRIPTION Community and Cultural Services/ Community 158,269 Adjustments reflect new soccer league ($130,435) and Santa Recreation Monica High School field ($27,834) fees. Information Systems/ Administration (200,000) Adjustment rectifies incorrect adopted budget for Dark Fiber Lease. Police / Administrative Services (1,325,000) Reduction results primarily from the issuance of fewer parking citations due to changes in parking operations for Parking ' Structures 7 & 8 and staffing shortages. Public Works / Engineering (405,004) Adjustment reflects updated enterprise fund reimbursements to the General Fund. Library/ Administration and Facilities (175,000) Revenue decrease due to State budget cuts. Finance / Business and Revenue Operations / 566,156 While the budget had assumed no change in assessed property Property Taxes - Secured values of secured properties in FY 2011 -12, the unanticipated 2.9% increase suggests that the real estate market in the City is recovering sooner than expected. These increases are partially offset by decreased assumptions for unsecured taxes and statutory pass - throughs from the Redevelopment Agency. Finance / Business and Revenue Operations / (354,622) Adjustment based on year to date tracking of revenues primarily Utility Users Tax reflects lower than anticipated revenues for electricity service. Finance / Business and Revenue Operations / 1,200,000 The increase in business license tax revenue reflects the improving Business License Tax economy as businesses reported a net increase in gross receipts. In addition, several large new businesses began operations in the City during the year. Finally, taxes from businesses operating in the re- opened Santa Monica Place were more than anticipated. Finance / Business and Revenue Operations / 1,388,000 Tourism has extended its significant rebound over the last one and Transient Occupancy Tax a half years after two years of declining revenues. The net year -to- date increase in occupancy and room rates is approximately 10 %, nearly twice the budgeted assumption. Finance / Business and Revenue Operations / (192,500) The reduction is due to the suspension of Vehicle License Fee Vehicle License Fees payments to local governments. Finance / Business and Revenue Operations / 200,000 The increase reflects a higher investable fund balance, partially Interest Deposit & Investment _._. _.......... offset by lower than anticipated interest rates. Finance / Business and Revenue Operations / 1,342,141 Discount from prepaying the City's CalPERS obligation. Discount on PERS Prepayment TOTAL GENERAL FUND CHANGES $ 2,202,440 Page 1 of 2 Council Meeting 1/10/12 ATTACHM E NT Al City Manager/ Office of Sustainability and the 26,257 Adjustment to reflect Used Oil Payment Program grant receipt. Environment due to a delay in the soil remediation project. Public Works / Resource Recovery and Recycling 36,450 Adjustment to reflect Tire Derived Product Grant receipt. Public Works / Engineering 460490 Adjustments due to changes in the timing of the funding for the Bus Replacement California Incline project (- $1,007,450) and the additional funds Big Blue Bus / Capital Improvement Projects / 478,920 for the Bike Transit Center ($1,053,940). Library/ Administration and Facilities .9,185 Adjustment reflects adjustments to grant funding. Fire / Administration 22,500 Adjustment to reflect Fire Heritage Grant receipt. TOTAL MISCELLANEOUS GRANT CHANGES $ 140,882 Public safety /CapitallmprovementProject/ 120, 543Adjustment reflects approved grant funding for law enforcement .. COPS Grant - expenses. TOTAL PUBLIC SAFETY FUND $ 120,543 Public Works / Resource Recovery and Recycling ` (67,641) Adjustments due to decreased revenue resulting from the City Transfer Station closure (- $404,041) and increased revenue from facility use ($336,400). TOTAL. RES. RECOV. & REC. FUND CHANGES $ ;(67,641) Ar NEW '000 mm N a+. .. City Manager/ Airport (3,971,471) Adjustment reflects division move from the City Manager's Office (Division 203) to Public Works (Division 431). Public Works / Airport 3,971,471 Adjustment reflects division move from the City Manager's Office (Division 203) to Public Works (Division 431). TOTAL AIRPORT FUND CHANGES $ � a Pubhc Works / Cemetery (387,100) Adjustments reflect reduced revenue for mortuary services (- $267,500) and casket, vault, and flower sales (- $119,600). Big Blue Bus/ Transit Programs (100,000) Adjustment due to loss of revenue from 402 Colorado lot parking due to a delay in the soil remediation project. Big Blue Bus /Transit Maintenance (650,000) Adjustment due to lower than projected bus advertising revenue. Big Blue Bus/ Capital Improvement Projects / 6,345,053 Adjustment for reimbursement received for additional buses Bus Replacement purchased and delivered. Big Blue Bus / Capital Improvement Projects / 478,920 Adjustment for reimbursement received for additional bus Bus Components components purchased and delivered. Big Blue Bus / Capital Improvement Projects / 912,720 Adjustment for reimbursement received for additional bus stop Bus Stop Amenities amenities purchased and delivered. Page 2 of 2 Council Meeting 1/10/12 ATTACHMENT A2 FY.2Q1 1 I�IIDI'EAR.EXPENQITUR HAN6t FUND DEPT DIVISION MY INCREASE/ DESCRIPTION (DECREASE) ,GfJ4ERAU1 FUND (01) 01 City Council 30,088 Expenditure adjustment to appropriate to Council contingency funds to the correct year and set aside amount for early childhood development programs. 01 City Manager 52,276 Expenditure increase reflects position - related changes. 01 City Manager/ Office of Emergency (42 1) Expenditure decrease reflects 6 months of 5 percent Police Management Officer health benefit contributions. 01 Planning and Community Development/ 31,305 Expenditure increase for Q -Matic queuing system cashier jBuilding and Safety ($1,200), centralized cashier ($30,105). 01 Community and Cultural Services / 95,501 Expenditure increase for increased league fees ($59,907) and ,Community Recreation adjustments to Staff Assistant positions ($35,594). 01 Community and Cultural Services / 40,000 Expenditure increase for Homeless Management Information " Human Services System (HM IS). 01 ,Community and Cultural Services / 48,501 Expenditure increase for position changes. Admin and Planning Services 01 Community and Cultural Services / 15,730 Expenditure increase for position changes. Cultural Affairs 01 Finance / Business and Revenue Ops 28,990 Expenditure increase for position changes. - 01 Finance /Administration (63,721) Expenditure decrease for position changes. 01 Finance / Budget- 84,337 Expenditure increase for position changes. 01 Public Works /Street Maintenance 114,310 Expenditure increase due to increased transfer station fees. 01 Public Works /Administration 113,780 Expenditure increase for position changes. 01 Public Works / Architectural Services (108,825) Expenditure decrease for position changes. 01 Public Works / Custodial Services 103,424 Expenditure increase for position changes. 01 General Government/ Capital 11846,718 Expenditure increase to appropriate assignment for office Improvement Project /Tenant improvements to Tenant Improvement Capital Improvement ';.Improvements Project. 01 General Government / Capital (200,000) Expenditure decrease to transfer unneeded PCH signage funds to Improvement Project / Coastal Beach Bike Path Signage Project in the Beach Fund. Circulation and Parking Imp 01 Records and Election Services / Support 38,238 Expenditure increase to appropriate funds fora Data Services Management System. Page 1 of 5 Council Meeting 1/10/12 FUND DEPT/ DIVISION MY INCREASE/ DESCRIPTION (DECREASE) ATTACHMENT A2 01 '.. Housing and Economic Development / 298,325 Expenditure increase for residential repair program unspent ,Housing funds ($300,000) and position related changes (- $1,675). '.... 01 Housing and Economic Development / 181,900 Expenditure increase for FY 2010 -11 insurance costs that were Admin and Redevelopment not charged in that fiscal year. 01 Fire / Administration 25,941 Expenditure increase reflects costs to replace TeleStaff server in CERP ($13,750) and position changes ($12,191). 01 Police/ Animal Control 37,674 Expenditure increase for position changes. 01 Police/ Special Enforcement 01 Police /Various Divisions 01 Non Departmental/ All Other 01 Non Departmental/ Interfund '.Transactions 01 All Departments 05. Public Works/ Water Resources TOTAL 11 Beach Recreation / Capital Improvement Project/ Beach Signage and Wayfinding Non Departmental/ Interfund 11 All Divisions 12 '.. All Divisions TOTAL HOUSING FUNI increase for position changes. (70,208) Expenditure decrease to reflect 6 months of 5 percent Police Officer health benefit contributions. 122,987 Expenditure increase to add debt funding for 2011 Parking Structure 6 Bonds and adjust previously budgeted debt service funding for 2002 Public Safety Facility Bonds. - (598,893) Expenditure decrease to adjust for previously budgeted Pier and Civic Auditorium Interfund Transfers and transfer to the Beach Fund. (2,564,670) Expenditure decrease reflecting savings from PERS rate reduction, COLA adjustment, and safety retirement contributions. , (225,595) _. 20,915 increase for position changes. Expenditure increase to transfer funding for Beach Signage Wayfinding Project. (200,000) Interfund transfer in from the General Fund for the Beach Bike Path Signage Project. (3,365) Expenditure decrease reflecting savings due to PERS rate reduction. (3,365) (2,924) Expenditure decrease reflecting savings due to PERS rate reduction. (2,924) Page 2 of 5 Council Meeting 1/10/12 ATTACHMENT A2 FUND DEPT /DIVISION:. MY INCREASE 'DESCRIPTION (DECREASE) -� ' '' EARTHQUAKE= FEEREUEhOPNLENT =FUND_(17):;?.. 17 Non Departmental/ All Other 2,262,413 Expenditure increae to adjust for previously unbudgeted debt '.Transactions funding. `TOTAL EARTHQUAKE FUND CHANGESI 2,262,413 . MISGELLAfS> C±US Gi#ANTS;FUND (2Q) 20 ,City Manager's Office / Office of 26,257 Expenditure increase reflects CalRecycle FY 2011 -12 Used Oil Sustainability and the Environment Payment Program Grant receipt. 20 Library/ Administration and Facilities 9,185 Expenditure increase reflects adjustment for grant funding. 20 Fire / Administration 106,206 Expenditure increase reflects State Homeland Security ($83,706) and Fire Heritage ($22,500) grants receipt. 20 Miscellenous Grants Fund /Streets, 36,450 Expenditure ad! stment reflects new grant. Traffc Control, Parking / Calrecycle Tire '.. Derived Grant TOTAL MISC GRANTS FUNDCHANGES 178,098 CITIZENSOPTION,FO}2 PUBLIC SAFETY;FUND 22 Police / Administrative Services 124,304 Expenditure increase for approved 2010 COPS front -line law enforcement expenses. TOTAL PUBLICSAFETY FUNDCHANGES - 124,304 BEACH HOUSE e_T ., .. ... (2Q� " 24 All Divisions (3,808) Expenditure decrease due to savings from PERS rate reduction. TOTAL BEACH HOUSE FUND CHANGES (3,808) WAlEH!FUIYD.(25) 25 Public Works / Water 376,786 Expenditure revisions due to imported water charges ($1,241,080) and deferred City of Los Angeles payment 25 All Divisions (18,933) Expenditure decrease due to savings from PERS rate reduction. " TOTAL WATER FUND CHANGES ':.357,853 }2ESOURGE,RECOVERY ANO RECYCI 27 Public Works / Resource Recovery and 650,643 Expenditure increae due to additional SCD waste processing Recycling ($288,000), disposal costs ($235,871), and staff changes ',. ($126,772). 27 All Divisions (26,258) Expenditure decrease due to savings from PERS rate reduction. TOTALRRR .'624,3851 Page 3 of 5 Council Meeting 1/10/12 ATTACHMENTA2 FUND DEPT/ DIVISION MY INCREASE/ _: :.DESCRIPTION (DECREASE) " iNASTEWAT R FUND:(31j �.. 31 30 Housing and Economic Development/ (1,545,529) Supplies and Expenses budget moving from Housing and Pier Division TOTAL WASTEWATER FUND CHANGES Economic Development to Office of Pier Management. 30 City Manager / Office of Pier 1,973,067 Supplies and Expenses budget moving from Housing and ',Management FUNS Economic Development to City Manager's Office of Pier 'All Divisions (8,315) Management ($1,545,529), a correction to reflect TOTAL CIVIC FUND CHANGES reimbursement for Police Pier Patrol ($304,292) and position related changes ($123,246). 30 All Divisions (4,551) Expenditure decrease due to savings from PERS rate reduction. Page 4 of 5 TOTAL PIER FUND CHANGES1 422,987 " iNASTEWAT R FUND:(31j �.. 31 All Divisions (7,220) Expenditure decrease due to savings from PERS rate reduction. TOTAL WASTEWATER FUND CHANGES (7,220) CI3/ICAUDITQRI;UM FUNS 31 'All Divisions (8,315) Expenditure decrease due to savings from PERS rate reduction. TOTAL CIVIC FUND CHANGES ,. (8,315) AIFpORT,FUND..t33) . 33 City Manager /Airport (4,181,647) Expenditure adjustment reflects Airport move from City Manager's Office to Public Works ($4,124,838) and position related changes (- $56,810). 33 Public Works / Airport 4,144,837 Expenditure adjustment reflects increased overtime for Airport patrol ($20,000) and Airport move from City Manager's Office to ',. Public Works ($4,124,838). 33 All Divisions (4,890) Expenditure decrease due to savings from PERS rate reduction. Page 4 of 5 Council Meeting 1/10/12 - ATTACHMENTA2 FY 2011 =12^ MIDYEAR BAUIIYCE SHEET CHANGES „'" " mH 01 : Balance Sheet Transfer in 1,846,718 Reflects release of assignment for City Hall Renovation. Page 5 of 5 Council Meeting 1/10/12 Department City Manager City Manager City Manager City Manager Finance Finance Finance Finance Finance Finance Finance Finance Finance Finance Finance Finance POSITION AND CLASSIFICATION CHANGES FY 2011 -12 Division Delete (FTE) Community & 1.0 Permanent Assistant to ( *(I Governmental Governmental the City Manager Relations 1 Airport 1.O� Permanent Airport Administrator !Office of Pier }Management `Office of Pier ;Management Administration and !Budget 4 [Administration and j Budget Administration and I Budget !Administration and ;Budget !Administration and (Budget !Administration and !Budget !Administration and Budget Budget Finance 11 lAdministration and and and 1.01 Permanent Director of Finance /City Treasurer _1 1.O�Permanent Assistant Director of Finance 1.01 Permanent Budget ,Administrator 2.01 Permanent Principal 1.01 Permanent Contracts !Coordinator ___ 1.0; Permanent Executive ;Administrative Assistant 1.0jPermanent Purchasing !Services Manager 2.O1Permanent Senior Buyer 1.O1Permanent Buyer . 1.01 Permanent Staff ATTACHMENT B2 id (FTEI footnote below) 1.01Permanent Pier !Manager 1.0, Permanent Staff !Assistant III 1.01 Permanent Director of Finance /City Treasurer 1.0: Permanent Assistant Director of Finance 1.0, Permanent Contracts Coordinator 1.0`Permanent Executive Administrative Assistant 1.0 Permanent Purchasing Services Manager Financial Status Update and Midyear FY2011 -13 Budget Page 1 of 7 Council Meeting 1/10/12 ATTACHMENT B2 POSITION AND CLASSIFICATION CHANGES FY 2011 -12 Department Division j Delete (FIE) Add (FTE) } Finance Administration 200ermanent Senior Buyer! Finance !Administration j 1.01 Permanent Buyer 'Finance ;Budget 1.O Permanent Budget I Manager Finance Budget 2.0 Permanent Principal j ( Budget Analyst iFinance !Budget 2.0 Permanent Senior _ ) } Budget Analyst Finance ;Budget 1.0 Permanent Staff Assistant III Information Web Development 1.0 Permanent Internet j 1.0 Permanent Internet Systems Developer - GIS j IDeveloper Planning and Building and Safety ( i _ 1.01 Permanent Revenue Community ! Operations Assistant II Development Police (Operations ( 8.01 Permanent Community i 8.0I Permanent Community Services Officer II Services Officer ;Police !Special Enforcement I 1.0 Permanent Lead Airport Services Officer !Police Special Enforcement) 1.O� Permanent Airport Services Officer Police Special Enforcement j 1.0 Permanent Lead Traffic ' 1.0 Permanent Traffic (Services Officer Services Supervisor Fire Administration 1.01 Permanent Fire Captain ((Vehicle Maintenance I i ;Coordinator) i =Fire !Administration i 1.OjPermanent Fire Captain j !(Paramedic Coordinator)1 Fire !Administration ( t � 1.01 Permanent EMS ;Coordinator Fire Fire Administration 1.0;Permanent Communications Center Supervisor - Fire I ( Administration i 8.0 Permanent !Operator - Fire Administration 1.011 Permanent Staff !Assistant III Financial Status Update and Midyear FY2011 -13 Budget Page 2 of 7 Council.Meeting 1/10/12 ATTACHMENT B2 Financial Status Update and Midyear FY2011 -13 Budget Page 3 of 7 POSITION AND CLASSIFICATION CHANGES FY 2011 -12 Department Division Delete (FTE) Add (FTE) Fire ;Support Services I 1.0(Permanent Fire Captain , !(Vehicle Maintenance Coordinator) E ;Fire I ISupport Services � ; 1.01Permanent Fire Captain (Paramedic Coordinator) Fire !Support Services 1.0 Permanent EMS Coordinator .Fire ISupport Services 1.0 Permanent f j (Communications Center (Supervisor - Fire i ' j E ,Fire Support Services 8.03Permanent ;Communications 'Operator - Fire Fire Support Services 1.0' Permanent Staff Assistant III ;Community & Public Landscape 1.0 Permanent Public 1.0 Permanent Parks ;Cultural Services `Landscape Supervisor i E Maintenance Supervisor Community & ;Public Landscape 4.0` Permanent Parks 4.0 Permanent Parks Cultural Services 'Operations Supervisor Maintenance Supervisor ;Community and !Public Landscape 4.01 Permanent Parks i 4.01 Permanent Cultural Services !Operations Crew Leader! !Maintenance Crew - Leader Library I Information 1.0 Permanent Circulation ':Management Supervisor [ Library ;Information 1.01 Permanent Library Management lAssistant Library ;Information 8.0' Permanent Staff !Management j 'Assistant II Library Information 1.O10ermanent Staff !Management ! (Assistant II Library ;Reference Services R 1.0{ Permanent Circulation !Supervisor Library Reference Services j 1.O1Permanent Library C i :Assistant Library Reference Services _ 8.0: Permanent Staff 'Assistant II Library !Reference Services 1.0i Permanent Staff ! ! jAssistant II Public Works lAdministrative 1.011 Permanent Principal 1.01 Permanent Principal Services ( Public Works Analyst Administrative Analyst Public Works Civil Engineering 1.0 Permanent Public I Works Insoector Financial Status Update and Midyear FY2011 -13 Budget Page 3 of 7 Council Meeting 1/10/12 ATTACHMENT B2 POSITION AND CLASSIFICATION CHANGES FY 2011 -12 Department Division Delete (FTE) I Add (FTE) Public Works iStreet Maintenance -. 1.0;t anent Public j ?Works Inspector j Public Works jResource Recovery 2.O Permanent Transfer ( 2.0i Permanent Equipment & Recycling Station Assistant ;Operator I Public Works lWater Resources 3.O Permanent Water j 3.01' Permanent Water Crew Leader E 'Leader i ;Public Works ;Cemetery 1.0'Permanent Irrigation Technician j Public Works !Cemetery 3.0 Permanent Cemetery Maintenance Worker Big Blue Bus ;Transit Executive 1.0 Permanent Assistant to the Director of Transit ,Services ' Big Blue Bus iTransit Programs 1.O Permanent Transit E Programs and Business Services Manager I F F Big Blue Bus ;Transit Programs 1.0 Permanent Senior � Administrative Analyst - Transit Grants ' Big Blue Bus Transit Programs 2.0' Permanent Senior Administrative Analyst Big Blue Bus Transit Programs 2.O Permanent Senior Transit Programs Analyst Big Blue Bus 'Transit Programs 1.0; Permanent Fiscal Staff i i IAssistant III 3 Big Blue Bus Transit Programs 2.O Permanent Fiscal Staff EAssistant II __ Big Blue Bus `Transit Pro rams g 1.OiPermanent Transit Systems Technician Big Blue Bus iTransit Programs 1.01 Permanent Staff j ( jAssistant III { Big Blue Bus iTransit Finance and 1.01 Permanent Transit Grants ;Finance and Grants j!Manager Big Blue Bus Transit Finance and 1.O1Permanent Senior Grants `Administrative Analyst { Transit Grants Big Blue Bus 'Transit Finance and 2.0 Permanent Senior (Grants Administrative Analyst j Big Blue Bus !Transit Finance and 1.01 Permanent Fiscal Staff ;Grants Assistant III Big Blue Bus Transit Finance and i � Staff 2.O � Permanent Fiscal Sta ;Grants ;Assistant II Big Blue Bus ;Transit Finance and 1 j 1.0 Permanent Staff `Grants i Assistant III Financial Status Update and Midyear FY2011 -13 Budget Page 4 of 7 Council Meeting 1/10/12 ATTACHMENT B2 POSITION AND CLASSIFICATION CHANGES FY 2011 -12 Big Blue Bus Big Blue Bus Big Blue Bus Big Blue Bus Big Blue Bus Q� Big Blue Bus Big Blue Bus Big Blue Bus Transit Customer Relations Transit Customer Relations Transit Customer Relations Transit Customer Relations Transit Customer Relations Transit Customer Relations Transit Customer Relations Transit Customer Relations Transit Government and Community Relations Transit Government and Community Relations Transit Government and Community Relations Transit Government and Community Relations Transit Government and Community Relations isit Government Community 1.0 Permanent Transit Customer Relations Administrator 1.0 1Permanent Customer !Services Supervisor 1.O Permanent Marketing land Public Information Coordinator 1.01 Permanent Advertising !Coordinator 1.011-imited -Term ;Administrative Analyst- 1.01 Permanent (Administrative Staff 5.31 Permanent Customer Service Assistant 1.0' Permanent Staff !Assistant III 1.0 Permanent Transit Government and Community Relations :Manager 1.01 Permanent Transit Government Relations Officer 1.0i Permanent Transit [Community Relations :Officer 1.01 Permanent Customer jService Supervisor 5.31 Permanent Customer ,Service Assistant Community Relations Coordinator Financial Status Update and Midyear FY2011 -13 Budget Page 5 of 7 Council Meeting 1/10/12 ATTACHMENT B2 POSITION AND CLASSIFICATION CHANGES FY 2011 -12 Department j Division Delete (FTE) Add (FTE Big Blue Bus !Transit Government. 1.0! Permanent Transit and Community 'Relations Big Blue Bus !Transit Government !and Community Relations Big Blue Bus ITransit Government j and Community Relations i Big Blue Bus Transit Maintenance Blue Bus Big Blue Bus i Blue Bus Transit Services Transit Services Services Services Services Services Operations Operations Transit Operations 1.0i Permanent Motor Coach ;Services and Facilities Maintenance Supervisor i 1.Oi Permanent Transit Services Manager 1.0 Permanent Transit Services Officer 1.6 1Permanent Senior !Transit Programs 1,Analyst 1.0 Permanent Senior AAdminstrative Analyst - JTransit Services 3.01 Permanent Motor Coach (Operator Training !Coordinator 3.0I Permanent Transit ,Operations Assistant 3.O1 Permanent Staff !Assistant III 6.01 Permanent Motor Coach Operator Supervisor 5.4 Permanent Motor Coach Coordinator 1.0! Permanent ;Administrative Staff 1.01 Permanent Staff £Assistant III Facilities e Supervisor 1.01 Permanent Transit !Operations Manager 1.O Permanent Senior Administrative Analyst - Transit Operations 3.0 Permanent Senior ITransit Programs Analyst 1.O Per Transit ;Systems Technician Financial Status Update and Midyear FY2011 -13 Budget Page 6 of 7 Council Meeting 1/10/12 ATTACHMENT B2 POSITION AND CLASSIFICATION CHANGES FY 2011 -12 Big Blue Bus !Transit Operations j 1 3.0 Permanent Motor Coach [ Operator Training Coordinator Big Blue Bus jTransit Operations 3.0 Permanent Transit Operations Assistant Big Blue Bus 'Transit Operations 3.0 Permanent Staff (Assistant III Big Blue Bus ;Transit Operations ( 17.0 Permanent Motor !Coach Operator !Supervisor Big Blue Bus !Transit Operations a 275.4 Permanent Motor Coach I Operator Big Blue Bus jTransit Safety and 1.0 Permanent Transit ;Security Safety and Security 3Officer Big Blue Bus ,Transit Safety and 1.0 Permanent Transit �Security Safety and Security jCoordinator j Big Blue Bus ;Transit Safety and 2.0 Permanent Staff ;Security Assistant II Big Blue Bus ;Transit Safety and 1.03 Permanent Transit Training ,Safety and Training 'Administrator Big lue Bus g ; < Transit Safety and 1.01Transit Safety and ;Training Security Coordinator Big Blue Bus Transit Safety and 2.01Staff Assistant II Training j Housing and iHousing Services 1.0 Permanent Housing 1.01 Permanent Technical Economic Application Assistant ;Staff Assistant Development Housing and !Housing Services 1.01Permanent Senior i 1.01 Permanent Housing Economic Housing Specialist Specialist Development Total] 405.7[ Total; 404.7] " Addition of 1 permanent Deputy City Manager — Special Projects adopted on 10/25/11 Adjusted Total! 405.71 j 40537; Financial Status Update and Midyear FY2011 -13 Budget Page 7 of 7 ATTACHMENT D Fund Balance Classification Policy and Definitions The June 30, 2011 General Fund fund balance structure and terminology reflects new reporting requirements, as prescribed by the Governmental Accounting Standard Board (GASB). Anticipating this change in standard, the City formally adopted a fund balance policy as part of the Fiscal Policies adopted with the FY 2011 -13 Biennial Budget, as shown below: Fiscal Policies — Fund Balance Classifications The City's fund balance is made of the following components: • Non - spendable fund balance typically includes inventories, prepaid items and other items, that by definition cannot be appropriated • The restricted fund balance category includes amounts that can be used only for the specific purposes stipulated by constitution, external resource providers, or through enabling legislations • The committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the City Council. The City Council has authority to establish, modify, or rescind a fund balance commitment. • Amounts in the assigned fund balance classification are intended to be used by the City for specific purposes but do not meet the criteria to be classified as restricted or committed. The City Manager or designee has the authority to establish, modify or rescind a fund balance assignment. • Unassigned fund balance is the residual classification for the City's funds and includes all spendable amounts not contained in the other classifications. Definition of the New Classifications The presentation of fund balance into five classifications, from the previous three classifications, is designed to reflect the extent to which the City is bound by limitations placed on the use of resources. The prior classifications were based on whether or not funds were available for appropriation. New Classifications Classification Definition Nonspendable Funds inherently nonspendable because of Endowment; inventory; prepaid items; long -term form portions of loans receivable; non - financial assets held for resale. Restricted Externally- imposed constraints apply to use of Unspent bond or grant proceeds restricted to specific funds. uses; tax increments; funds authorized by voters or non -local legislation for specific ouroose. Committed Internally - imposed constraints apply to use of Contractual commitments; funds that issuer's funds. Constrained by highest government government authority authorized to use for specific decision - making authority, as defined by purpose. government entity. Assigned Intended use expressed, but neither restricted Budget carryover for specific item; appropriation of nor committed. existing fund balance for specific use. Unassigned Not constrained in any way. Rainy -day and stabilization funds. Old Classifications Classification Definition Reserved Not available for appropriation. Cannot be spent due to form, time constraint, or external limitations. Unreserved Available for appropriation. Can be optionally categorized as designated or undesignated. Designated Available for appropriation. Internally- imposed limitations. Undesiqnated Available for appropriation. No limitations. Implementation As of June 30, 2011, $195.3 million of the City's General Fund Balance of $223 million falls into the assigned or unassigned classification, while the remaining $27.8 million is classified as nonspendable, restricted, or committed. The nonspendable, restricted or committed components of fund balance represent advances from the General Fund to other funds of $26.6 million, a commitment to the SMMUSD Education Foundation of $250,000, and another $460,000 commitment for affordable overnight accommodations. The $223.0 million is allocated as follows: Total Nonspendable 26,555,150 26, 555,150 Restricted Funds restricted for specific use by external constraints Civic Center Bonds $273,446 $273,446 Bond proceeds and interest; restricted for Civic Center area Consumer Protection Funds Mall Assessment 36,762 Total Restricted 503,645 funds restricted for consumer 36,762 Mall Assessment revenues restricted for future debt service 503,645 Fiscal Year Adjustments Fiscal Year As of 6129111 As of 6130/11 Nonspendable Funds inherently nonspendable because of form Advances to Airport $9,016,740 $9,016,740 General Fund loans to Airport Advances to DT RDA 4,920,287 4,920,287 General Fund loans to Downtown Redevelopment .__.. _.. - -— - - - - - -- - -- - -- - Project Fund - -- Advances to Cemetery 4,481,160 4,481,160 General Fund loans to Cemetery Advances to Beach 3,842,973 3,842,973 General Fund loans to Beach Fund Advances to Civic 62,081 62,081 General Fund-loans—to Civic Auditorium Fund Notes Receivable 2,490,653 2,490,653 General Fund loans to unrelated parties Prepaids and Inventory 1,7411256 1,741,256 Prepaid items and inventory Total Nonspendable 26,555,150 26, 555,150 Restricted Funds restricted for specific use by external constraints Civic Center Bonds $273,446 $273,446 Bond proceeds and interest; restricted for Civic Center area Consumer Protection Funds Mall Assessment 36,762 Total Restricted 503,645 funds restricted for consumer 36,762 Mall Assessment revenues restricted for future debt service 503,645 Committed Funds committed for specific use by formal City Council action Overnight Accommodations 460,000 460,000 Proceeds from American Youth Hostel loan repayment committed to affordable overnight accommodations Education Foundation 250,000 250,000 Commitment to the SMMUSD Education Foundation Total Committed 710,000 710,000 Assigned No Proposed Adjustments Funds intended for expressed use, but neither restricted nor committed Capital Projects $48,925,642 - $48,925,642 Remaining budget balances of adjusted as part of operating -- - - -- capital projects approved in Land Use Plan 1011845 (101,845) Funds set aside for the Land prior years Compensated Absences 10,840,574 - 10,840,574 Liability for accrued vacation Avenue Park, Project balances at June 30 Encumbrances 3,605,159 - 3,605,159 Purchases made prior to June 30 and charged against budget appropriations in prior years PERS 488,239 - 488,239 Savings associated with retirement benefit costs Solar Financing Program 1,000,000 Subtotal 66, 706,332 1,000,000 Start-up monies for solar financing program 66, 706,332 Projects Completed or Included in Current Budget Parking Meters 2,272,500 2,272,500 Capital Project approved by Council in October 2011 Environmental Mitigation 1,569,131 (1,569,131) Funds designated for environmental mitigation, now included as part of project Civic Courthouse Mitigation 160,000 (160,000) Funds for Civic Courthouse mitigation. Project complete. Fuel Set aside 200,000 (200,000) Funds for fuel purchase to help offset price fluctuation, now adjusted as part of operating -- - - -- budgets. Land Use Plan 1011845 (101,845) Funds set aside for the Land Use and Circulation Element fLUCE). Project complete. Virginia Avenue Start Up 100,000 (100,000) Funds set aside for Virginia Avenue Park, Project Future Improvements 83,000 (83,000) Council designated funds for borderline neighborhood improvements, now budgeted Assigned (continued) Employee Training 90,000 (90,000) - Funds for employee training programs. Will be included in future fiscal year operating _- - budgets. Other Purposes 236,716 (236,716) - Funds set aside for various studies that have been completed. Subtotal 2,540,692 (20,192) 2,272,500 New Assignments Tax Litigation 800,000 800,000 Funds for ongoing Utility Users Tax (UUT) litigation R/E Acquisition and PERS 10,954,279 10,954,279 Funds for Fire Station and City Yard property acquisition and _ PERS liability_ Payment Advance to Measure V 4,0001000 4,000,000 Advance to Measure V for storm water treatment facility. - Advance to Cemetery - - - - 2-,- 450,647 2- - - ,450,647 -- - ._ - Additional advance to Cemetery to offset lower than — __ _ projected revenue Subtotal 18, 204, 926 18, 204, 926 Legacy Projects Parks Enhancement 370,845 (370,845) - -_ - For City park enhancement Low /Mod Housing 255,544 (255,544) Residual receipts for low and moderate income housing funds. Funds budgeted as needed. Homelessness 2,282 (2,282) Balance of previously appropriated Council approved funds for homeless services_ Revenue Not Available 150,000 (150,000) Funds __ _ are included in - Restricted Civic Center Bond - - - — category above. Police Badges 50, 000 (50,000) Funds to replace current Police badges with old style. Print Shop 35,000 (35,000) - Funds for potential print shop work order system. Project to - - - - -- - -- be budgeted. .. Civic Area Development 758,708 (758,708) Funds for civic area development. Now considered as part of annual CIP budget process. Subtotal $1,622,379 ($1,622,379) Total Assigned 70,869,403 16,314,355 87,183,758 Unassigned Use is not constrained in anyway Operating and Capital $27,557,022 $13,921,857 $41,478,879 Represents 15 percent of _ Contingency annual operating and capital expenditures. - Unrealized Gain 238,301 238,301 Unrealized gain on investments at June 30. 2011 rd Future Expenditures 56,658,980 56,658,980 Funds from INTBE contamination Settlement Economic Uncertainty 8,200,000 1,500,000 9,700,000 Established by Council Cash Liquidity 3,546,996 (3,546,996) - Funds set aside to cover City operating expenses on a cash basis Undesignated 28,189,216 (28,189,216) Unassigned and undesignated fund balance as of June 30, 2011 Total Unassigned 124,390,515 (16,314,355) 108,076,160 Total General Fund 223,028,713 223,028,713 Balance Financial Status Update FY 2011 -12 January , • Receive the FY 2011 -12 through FY 2015 -16 Financial Status Update • Appropriate FY 2011 -12 midyear budget changes and adjust revenue budgets • Adopt a resolution establishing classification and salary rates for various positions • Approve position and classification changes • Adopt a resolution establishing the Fire Safety Officer Assignment Fee • Receive General Fund fund balance classification changes • Biennial Budget - Efficient — More time for strategic project focus, long range planning • Financial Status Update /Midyear Adjustment — Reflects policy and economic changes — Shows budget decision impact on future years — Identifies emerging concerns 3 • Debt deal triggers 10.0 • European debt 8.0 6.0 crisis challenges 4.0 economic stability 2.0 0.0 2008 2009 2010 2011(Q4) 1/ Source: Bureau of Economic Analysis 4 2/ Source: Bureau of Labor Statistics • Unemployment 11.3 percent November 2011 • Trigger cuts implemented — Library — Education / Early childhood • Elimination of Redevelopment — Affects infrastructure, affordable housing production funding and staffing — Staff developing recommendations and actions to comply with legislation 5 Key Indicators Transient Occupancy Tax ($ in billions) 35.0 31.3 29.8 32.7 36.3'(f) 38.4 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Unemployment Rate' 6.7 6.8 6.2 5.5 5.7 5.3 12.4 11.3 11.3 5 7.2 ,. °' 9.5 9.5 5.3 5.4 6.1 4.1 4.4 3.9 340.0 330.0 320.0 310.0 300.0 290.0 0 270.0 June 2011: Revenues over Expenditures' $ in millions FY 2011 -12 FY 2012 -13 FY 2013 -14 FY 2014 -15 FY 2015 -16 --- Expenditures -June 2011 Revenues -June 2011 1/ Includes capital and operating costs 7 DO Council- enacted cost saving measures and revenue recovery improved fiscal position Item Five -year change vs. prior forecast (FY 2011 -12 to FY 2015 -16) EXPENDITURE $10M CalPERS prepayment -$4.0 million MOU Changes -$6.8 million .REVENUE Transient Occupancy Tax $6.7 million Business License Tax $6.6 million Property Tax $5.5 million 8 Changes reflect actual revenue receipts, and resource realignment to most effectively serve City REVENUE: $9.0 million EXPENDITURE: $9.0 million OPERATING AND CAPITAL EXPENDITURE REVBUDGETf, FUND REVBUDGET MIDYEARCHANGES MIDYEAR i GENERALFUND 276.8 -0.2 276.6 OTHER FUNDS 362.4 9.2 371.6 TOTAL 639.2 9.0 648.2 HUMAN RESOURCES: No Net Change HUMAN Cemetery -4 City Manager/ Pier 1 Planning and Comm Development 1 Police / Airport Services 2 * Difference of $50 million between revenues and expenditures is sustainable as capital improvement project costs are 5 expended over a longer period of time and may use one -time funds. • Required under GASB • Increase Operating Contingency Reserve from 10% to 15% of expenditures = $41.5 million • Maintain Economic Uncertainty Reserve = $9.7 million • Funds for real estate acquisition or PERS paydown = $11 million 10 CE 330.0 320.0 310.0 300.0 290.0 270.0 December 2011: Revenues over Expenditures' $ in millions FY 2011 -12 FY 2012 -13 FY 2013 -14 FY 2014 -15 FY 2015 -16 ® ® — Expenditures - Current Forecast Revenues - Current Forecast 1/ Includes capital and operating costs 11 330.0 320.0 310.0 300.0 i3:Iixll 280.0 MIMI FY 2011 -12 FY 2012 -13 FY 2013 -14 FY 201415 FY 2015 -16 ® --Expenditures -Current Forecast Revenues - Current Forecast 12 340.0 330.0 C a s: 310.0 300.0 290.0 280.0 270.0 FY 2011 -12 FY 2012 -13 FY 2013 -14 FY 2014 -15 FY 2015 -16 ® --Expenditures -Current Forecast Revenues -Current Forecast 13 • Slow economic recovery • Ongoing state budget crisis • Redevelopment changes • Must be proactive: increase reserves 14 15 Reference Resolution Nos. 10649 (CCS) and 10650 (CCS).