SR-01-27-2015-8B - CC, HA & RSACity Council Meeting: January 27, 2015
,.- -,
To: Mayor and City Council
Chairperson and Housing Authority Members
Chairperson and Redevelopment Successor Agency Members
From: Gigi Decavalles- Hughes, Director of Finance
Martin Pastucha, Director of Public Works
Donna Peter, Director of Human Resources
Subject: FY 2015 -16 through FY 2019 -20 Five -Year Financial Forecast;
FY 2014 -15 Midyear Budget, Position and Compensation Changes; and
Parking Rates and Permit Fees for All City Parking Facilities and
Resources
Recommended Action
Staff recommends that the City Council, Housing Authority, and Successor Agency to
the Santa Monica Redevelopment Agency:
1. Appropriate FY 2014 -15 midyear expenditure and revenue budget adjustments
as detailed in Attachment A.
Staff also recommends that the City Council:
1. Review and comment on the FY 2015 -16 through FY 2019 -20 Five -Year
Financial Forecast and direct staff to proceed with developing a fiscally
sustainable budget strategy;
2. Review and comment on community issues and resident feedback that will guide
FY 2015 -17 budget development;
3. Adopt a resolution establishing classification and salary rates for various
positions detailed in Attachment B1;
4. Approve the permanent position and classification changes detailed in
Attachment B2;
5. Adopt a resolution of the City of Santa Monica establishing parking rates and
permit fees for all City parking facilities and resources detailed in Attachment C;
6. Direct staff to commit one -time funds and set aside $1.2 million in residual
receipts for affordable housing until other funding sources can be developed to
provide consistent funding for affordable housing;
7. Authorize the City Manager to accept a grant award in the amount of $27,186
from the 2013 State Homeland Security Grant Program Funds for mobile training
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exercises for the Fire Department that support regional homeland security goals;
and
8. Authorize the City Manager to negotiate and execute a first modification to
Contract No. 9925 in the amount of $348,233 with Santa Monica Convention &
Visitors Bureau, a California -based company, to provide a shuttle program in
Downtown Santa Monica. This will result in a five -year amended contract with a
new total amount not to exceed $997,428, with future year funding contingent on
Council budget approval.
Executive Summary
The FY 2015 -16 through FY 2019 -20 Five -Year Financial Forecast informs the Council
and community of the City's current and projected fiscal status as the City enters the
FY 2015 -17 Biennial Budget preparation process. Every six months, staff updates the
five -year forecast to reflect known and potential factors that will have an impact on the
City's financial position. This tool allows Council to understand the level to which
revenues can adequately cover new ongoing initiatives, or, more critically, to make
course corrections if necessary to avoid a deficit.
This year's forecast is showing that, buoyed by exceptional economic growth and
resulting increases in the City's baseline revenues, as well as one -time revenues
received in the prior year, the City's General Fund budget has the capacity to keep pace
with community priorities, such as the conversion of as- needed and contract staffing to
permanent in -house positions, the addition of public safety personnel, and capital
infrastructure; and to protect the City from future shock losses by setting aside funds to
cover longer term liabilities, many of them related to employee benefits, such as
retirement contributions, other post - employment benefits (OPEB), and workers'
compensation.
Yet normal recurring business cycles dictate that the economic growth Santa Monica is
experiencing is subject to the threat of another recession, likely sometime within the
next five years. Furthermore, the methods that the City has been using to control
compensation - related increases, such as employee cost - sharing, using one -time funds
to smooth increases, and prefunding liabilities, will eventually reach their maximum
ability to stem increases in these costs. Against these future trends, any movement
beyond the conservative budgeting approach that has been a hallmark of City finances
would take away the City's ability to control and adjust its spending in the likely events
of an economic downturn or continued increases in benefit costs.
Staff has completed a series of best to worst case forecast scenarios to provide a range
of impacts that the General Fund may be required to withstand. In the probable
scenario, the General Fund would see a potential deficit of $0.4 million in FY 2017 -18,
the third year of the forecast, which increases to $2.9 million (0.8% of the total
expenditure budget) in FY 2019 -20. In the best case, the General Fund fiscal condition
would be positive over the next five years, while the worst case shows a deficit of
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approximately $5.3 million in FY 2015 -16 that increases to approximately $14 million
(4% of the total expenditure budget) in FY 2019 -20. To eliminate out -year projected
deficits and also maintain a healthy level of General Fund reserves, staff is
recommending a budget strategy based on a controlled spending plan. It is important
that upcoming budgetary decisions be carefully considered in terms of their long -term
fiscal impacts.
A discussion of other funds and any potential changes in their financial status is also
included in the report. Generally, these funds are projected to have positive fund
balances over the course of the next Biennial Budget period.
Proposed FY 2014 -15 midyear adjustments result in a $14.7 million, or a 2.5% increase
over the Citywide revenue budget, and expenditure adjustments result in a net
$17.6 million or a 3.1% increase over the Citywide expenditure budget, $12.6 million of
which is offset by the use of General Fund FY 2013 -14 savings and grant fund set
asides.
Background
On June 24, 2014, Council adopted the FY 2014 -15 Budget as the second year of the
FY 2013 -15 Biennial Budget; and adopted the first year and approved the second year
of the FY 2014 -16 Biennial Capital Improvement Program Budget. First modifications to
the Adopted FY 2014 -15 Budget were approved by Council on October 28, 2014. The
modifications were related to staffing changes, Water Conservation Unit funding, and
expenditure control savings allocations. Staff also reported that several revenue
sources had shown stronger than anticipated growth in the previous year, thereby
increasing the baseline for future year revenues. These included local taxes, fees and
charges, parking revenues, and parking citations. Since October, staff completed a
midyear review of all revenues and expenditures and is proposing budget adjustments
for programs, activities, and revenues that have changed significantly. These
adjustments will align the FY 2014 -15 Revised Budget with current operations.
Discussion
Economic Update
The national economy continues to recover. The economic growth of 5% in the third
quarter was the highest quarterly increase in over a decade. Most economists are
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projecting growth in the 3% range annually over the 2014 -2016 time period.
Unemployment is at its lowest level in over five years. Inflation is expected to remain
relatively low through at least 2016. Also, the recent plunge in oil prices is providing a
boost to the economy in the short term. However, the strong recovery in the housing
market has begun to level off, and the Federal Reserve is indicating it is close to raising
interest rates, which is anticipated to slow down growth.
The State economy is also showing steady improvement. Assisted by the passage of
Proposition 30 in November 2012, which has provided new revenue from a temporary
sales tax increase and a temporary income tax increase for California's top three
percent of income earners, as well as higher than anticipated revenues coming from a
recovering economy, the State no longer faces a deficit. According to the Legislative
Analyst's Office, the State budget is expected to continue to have surpluses even after
the complete phase -out of the Proposition 30 tax increases in 2019.
In November 2014, State voters passed Proposition 2, which requires the State to
maintain a rainy day reserve fund. The State is expected to have $4.2 billion in reserves
by June 2016, with $2 billion of this amount mandated to go to the rainy day fund. This
reserve will offer greater stability to the State's fiscal health.
Santa Monica tends to weather economic downturns better and recover faster than
other jurisdictions, due in large part to its geographic location and to its diversified tax
revenue base, which generally protects the City from downturns that impact one or a
limited number of sectors of the economy. The City's major tax revenues have
recovered significantly and have exceeded pre- recession levels. As outlined below,
most of the City's revenues are expected to show moderate to strong growth in
FY 2014 -15.
Property values in the City remain the third highest in Los Angeles County. The
FY 2014 -15 assessed value increase was nearly 6% after a 7% gain the previous year.
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Sales Tax receipts, like Property Taxes, are projected to show modest growth in the
near future, growing approximately 3.5% per year, approximately 0.5% more than the
previous year's growth.
Tourism, which provides a major stimulus to the local economy by creating jobs and
producing revenues, continues to exhibit strength. Transient Occupancy Taxes ended
FY 2013 -14 with an 8% increase after two consecutive years of double digit growth as
the economy recovered, and another 7 -8% increase is projected for FY 2014 -15 and
FY 2015 -16 before growth moderates in future years.
Business License Taxes are expected to show a modest 3% growth in baseline
revenues in FY 2014 -15. Utility Users Tax revenues are projected to increase by
approximately 4% in FY 2014 -15, primarily due to increased electricity rates.
Additionally, discovery efforts have resulted in new taxes from several
telecommunication companies providing service in the City that had not previously been
remitting the tax. Parking Facility Taxes are expected to grow by approximately 2% in
FY 2014 -15. And interest rates, which fell to historically low levels over the last five
years, significantly impacting the City's investment income, have begun to increase but
are expected to remain at historically low levels for at least two more years.
General Fund Five -Year Financial Forecast
Staff has completed three forecast scenarios that contemplate Best, Probable, and
Worst Case impacts on the General Fund.
The Probable scenario, which serves as the baseline for the forecast, is showing that,
as a result of the growing economy and accompanying increases in the City's baseline
revenues, as well as one -time revenues received in the prior year, the City's General
Fund budget has the capacity to keep pace with community priorities such as the
conversion of as- needed and contract staffing to permanent in -house positions, the
addition of public safety personnel, and capital infrastructure; and to protect the City
from future shock losses by setting aside funds to cover longer term liabilities, many of
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them related to employee benefits, such as retirement, other post - employment benefits
(OPEB), and workers' compensation
The Probable scenario shows the General Fund experiencing a potential deficit of
$0.4 million in FY 2017 -18, that increases to $2.9 million (0.8% of the total General
Fund expenditure budget) in FY 2019 -20. This scenario does not include the impact of
a future recession, which could severely decrease revenues; however, it does reflect
the impact of rising benefit costs, including retirement and health care, and the tools that
the City is using to curb their growth, which are discussed below.
In the Best Case scenario, bolstered by even higher increases in revenues and a slight
decrease in healthcare costs, the General Fund fiscal condition would be positive
throughout the forecast period. In the Worst Case scenario, which shows the effects of
a possible recession and an additional escalation of workers' compensation and
healthcare costs, the General Fund would experience a deficit starting as early as
FY 2015 -16, that would increase significantly to $14 million, or 4% of the total General
Fund expenditure budget, in FY 2019 -20.
The deficits in the Probable Case are manageable, reaching 0.8% of the budget in the
last year. However, the seemingly minor deficit, primarily due to compensation and
healthcare increases, will continue to grow beyond the forecast period. Maintaining a
conservative budgeting and forecasting approach to pay attention to small deficits in the
future strengthens the City's ability to control and adjust its spending in the likely event
of flat growth or decline due to the next recession.
Assumptions
Factors in all scenarios include midyear changes and additional initiatives, as noted
below, as well as the following assumptions:
E^
Revenue Growth Assumptions
Revenue growth rates vary by source but are expected to increase at an average rate of
2.7% during the forecast period. In the Best Case scenario, revenues would grow at a
slightly higher rate. In the Worst Case scenario, showing the potential effects of a
recession, revenues would experience a 2% decrease. As a comparison, this 2%
decrease is similar to the General Fund revenue increase amount recommended as the
midyear revenue increase.
Expenditure Growth Assumptions
All scenarios assume cost increases at the anticipated rate of the Consumer Price Index
(CPI), which is anticipated to be 1.8% in FY 2015 -16, 2% in FYs 2016 -18, 2.2% in
FY 2018 -19 and 2.4% in FY 2019 -20. It is important to note that almost three - quarters
of the operating budget is composed of labor costs, and that a number of these costs,
such as health insurance, workers' compensation and retirement, increase at a rate that
is higher than the CPI. The overall rate of growth for expenditures is 2.9 %. While the
City has been able to curtail overall expenditure increases to a level that is approaching
the growth rate of revenues, using a number of tools and methods to limit retirement,
healthcare and workers' compensation costs, these tools will eventually reach their
maximum capacity to control costs, as noted below.
Retirement Costs
Pensions continue to represent an ever - increasing share of local government costs.
Over the past three years, the California Public Employee Retirement System
(CalPERS), the administrator of the City's retirement funds, has adjusted its methods of
amortizing benefit costs in a way that has resulted in higher required contributions from
plan members. These changes, which included a five year phase -in of a significant rate
increase, were anticipated to lead to increases of up to 50% in contribution rates
between 2014 -15 and FY 2019 -20, after which increases would occur at a lower level.
However, Santa Monica has been successful in moderating the growth of retirement
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rates as a result of several actions and is anticipating that City -paid contribution rates
will instead increase by 16 -25% over this period.
One of the actions the City has taken has been to increase employee cost sharing.
Miscellaneous employees contribute 7% of the employee contribution rate towards the
cost of their retirement benefits, while Police Officers Association employees contribute
3.5% and Firefighters Local 1109 IAFF employees contribute 10 %. The Police and Fire
contribution will increase by an additional 1.5% each year in FY 2015 -16 and FY 2016-
17. Also, the City has used savings to pay down $25 million of its unfunded liability, and
has set aside FY 2013 -14 savings to make an additional payment of $5 million, for a
total $30 million pay down. These payments lower the City's annual contribution costs
over time. On February 11, 2014, Council adopted a policy to set aside a minimum
amount of $1 million annually to be used towards additional payments to CalPERS to
further reduce the City's unfunded retirement liability.
Despite these measures, the cost of retirement is rising at a fast rate. General Fund
contribution costs are projected to experience an overall increase of 34% during the
length of the forecast period. In the future, employees will reach the limit of retirement
cost sharing as defined by law, and any additional cost sharing would be solely at the
discretion of employee groups.
Healthcare Costs
Under the Probable Case Scenario, healthcare costs for employees are anticipated to
increase by 7 -8% in FY 2015 -16, and then by 9 -10% starting in FY 2016 -17, depending
on the healthcare plans used by employees. The Best Case Scenario shows a slightly
lower increase rate in the event of plan changes starting in FY 2016 -17. Under the
Worst Case Scenario, starting in 2018, the City would be subject to the "Cadillac Tax ", a
new excise tax on high -cost health plans. There are still many unknowns about this
excise tax. At this time, there has been little news of what the thresholds for the tax will
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be, or even if it will be levied in 2018. In the meantime, staff is gradually increasing their
cost sharing contributions for healthcare premiums
Workers' Compensation Costs
Under the Probable Case Scenario, workers' compensation costs are anticipated to
increase by 31% in FY 2015 -16 and then by 5% beginning in FY 2016 -17. The
one -time increase is due to updated actuarial assumptions that take into account a large
increase in workers' compensation claims over the past two years, as well as the effects
of increased permanent disability costs as mandated by the State. To smooth the
transition to the higher rates, staff is recommending a two -fold approach. First, an
additional contribution of $3.87 million (set aside from FY 2013 -14 savings) from the
General Fund to the Workers' Compensation Fund in FY 2014 -15, beyond the annual
contribution amount, to strengthen reserves. This is included as a Midyear change,
along with additional contributions from the Big Blue Bus Fund of $750,000 and
Resource Recovery and Recycling Fund of $375,000. Second, the use of an additional
$7.2 million in fund balance to offset increased workers' compensation costs over 4
years ($1.8 million a year) in FYs 2015 -19, until claim levels can stabilize. There is the
potential, however, that these costs will not decrease in the future, and the impact of the
costs with no offset is reflected in FY 2019 -20. Under the Worst Case Scenario, costs
would increase an additional 15 %.
New Initiatives
Future Funding for Affordable Housing
Council has consistently prioritized affordable housing for a range of reasons, including
maintaining Santa Monica's economic diversity, addressing the housing requirements of
Santa Monica's neediest community members, and continuing to support the City's
strategy to address homelessness, where affordable housing plays a crucial role.
Following the State - mandated dissolution of the Santa Monica Redevelopment Agency
in February 2012, the City lost its primary funding source to help build and preserve
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affordable homes. Prior to dissolution, the City awarded between $15 million and
$18 million per year in loans for affordable housing, with a high of nearly $35 million
during 2009. Redevelopment funding played a critical role in the City's ability to outpace
voter - approved requirements of Section 630 of the City Charter (Measure R), with 38%
of all new homes built in Santa Monica since 1994 restricting occupancy to low- and
moderate - income households.
Following dissolution, the Council and community considered a variety of options to
maintain Santa Monica's affordable housing programs in the absence of redevelopment
funding. Ultimately, on July 8, 2014, Council voted to place a funding measure and an
advisory measure on the November 2014 ballot that would have partially restored the
City's ability to fund a robust affordable housing program. While the advisory measure
was approved by voters, the funding measure was not. As a result, the City is left with
little on- going, sustainable funding to support the creation and preservation of affordable
housing.
Understanding that affordable housing continues to be a top Council priority, staff has
considered options for continued support of affordable housing. Staff recommends that
one -time funds be committed toward affordable housing in order to maintain the City's
affordable housing programs for the next two years, until other funding sources can be
developed to provide consistent funding for affordable housing. The recommended use
of one -time funds for affordable housing is as follows:
• Land -sale proceeds: The City sold two properties (1920 Ocean Way and
1122 22 "d Street) whose proceeds were deposited in the Housing Trust Fund.
The total amount of available funds from the two sales is approximately
$13 million. The one -time funds are available to be used to fund affordable
housing opportunities that arise during the coming two years.
• Housing settlement proceeds: On October 14, 2014, Council approved
Settlement Agreement No. 9978, which involved a payment of $5.25 million to
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the City for affordable housing development. The agreement was executed on
November 11, 2014 and the funds have been deposited with the City.
® Civic Center Village Sales Participation: The Disposition and Development
Agreement with Related California for the Civic Center Village development
includes a provision whereby the City shares in the proceeds from the sales of
condominiums, if the condominium sales prices exceed certain thresholds. The
amount of City participation will not be certain until most of the condominiums
have been sold. Depending on sales activity, the City could receive up to
$10 million of participation payments. Once the funds have been received, staff
recommends that they be dedicated to fund affordable housing opportunities.
In addition to the one -time funds identified above, staff recommends that excess
redevelopment residual funds be dedicated to affordable housing. With the dissolution
of redevelopment, a portion of the former property- tax - increment funds are distributed to
various governmental agencies, including the City. The amount of taxes that are
distributed is based on the total amount of taxes, minus the funds that are needed to
satisfy the enforceable obligations of the former redevelopment agency. These funds
are sometimes referred to as "redevelopment residual funds." The portion of the
redevelopment residual funds that are allocated to the City is based on the City's total
share of property taxes within the former redevelopment districts, approximately 14 %.
Through FY 2012 -13, the amount of residual funds that the City has received annually
has been smaller than the annual financial impacts to the City as a result of
redevelopment dissolution. The impacts include City assumption of debt service that
was previously paid from redevelopment funds and loss of annual loan repayments from
the former agency to the City. In FY 2013 -14, the amount of residual funds exceeding
the City's costs was $424,573; these funds have been set aside for affordable housing.
For FY 2014 -15, the amount of residual funds is anticipated to exceed the City's costs
by $1.2 million. The residual funds are expected to increase incrementally in the
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coming years as the former agency's enforceable obligations mature and property taxes
grow due to increased valuation.
One -Time Sources of Funds
Land -sale proceeds
Settlement proceeds
Civic Center Village participation
FY 14/15 RDA residuals
FY 13/14 RDA residuals
Total
Estimated Amounts
$13,000,000
$5,250,000
$0 - $10,000,000
$1,200,000
$424,573
9,874,573 - $29,874,573
If the Council agrees with the staff recommendation to allocate the one -time funds
toward affordable housing over the next two years, the amount of funding will replace
nearly 100% of what was regularly available from the Redevelopment Agency on an
annual basis for the next two years, until other funding sources can be developed to
provide consistent funding for affordable housing.
Public Safety
Fire Department
Over the past two years, the Fire Department's organizational framework and
deployment protocols have been under review. The purpose of this effort was to assess
the ongoing effectiveness of the existing response model against a number of emerging
challenges, including the arrival of light rail, increased traffic congestion, and a steady
rise in call volume. While fire and medical response remains at the core of the
Department's mission, consideration was also given to the City's ability to provide other
essential services, such as fire inspections, pre -fire plans, and maintaining an
environment that promotes ongoing training and professional development for all
personnel.
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Each assessment considered a number of staffing and response options, using
available call data, local demographics, contemporary trends, industry standards, and
other models used by comparable departments. The result of the assessment
concluded that additional sworn and civilian personnel are needed in order to continue
providing the high level of service that the Santa Monica community has become
accustomed to receiving from its first responders.
As such, the Fire Department is requesting the addition of 7.75 Full -Time Equivalent
(FTE) personnel, at a total annual cost of $1.2 million and a one -time cost of $0.8 million
included in the forecast. The Suppression and Rescue Division would receive 6.0 FTE
firefighters to allow for the full -time staffing of one rescue ambulance (RA) staffed with
2 paramedics, 24 hours a day, 7 days a week. This additional resource would augment
the current delivery system and deployment model, and work towards reducing
response times, improving customer satisfaction, and increasing unit response
reliability. Experience and data would continue to be evaluated to determine how to
best deploy future staffing resources.
An additional 1.0 FTE Fire Code Enforcement Officer would be added to the Fire
Prevention Division to reassign a portion of the residential fire and life safety inspections
that are currently completed by one of the seven Suppression and Rescue Companies.
This new position would relieve one or more suppression crews from their current
residential inspections allowing them more time to complete mandated training, focus
on pre -fire inspections and plans, and allow for career development. The Administration
Division also proposes the addition of a 0.75 FTE Fire Equipment Specialist to assist
with apparatus and facility upkeep, maintenance, and servicing in an effort to shift non -
prevention and suppression activities to non -sworn staff.
Police Department
Over the past year, the Police Department has adjusted its organizational structure to
ensure the most effective deployment of Police Officers on patrol by having non -sworn
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Community Services Officers assist with preliminary investigations of traffic accidents,
crimes, and other incidents. Adding 2.0 FTE non -sworn positions will not only allow
officers to increase their productive time on patrol, it will also be offset by decreased
overtime costs.
An additional 1.0 FTE Forensic Specialist and 1.0 FTE Police Property Evidence Clerk
would be added to the Criminal Investigation Division to improve service to the
community. Due to current staffing and increased call load, Community Services
Officers and Police Officers have taken on additional evidence collection
duties. Additionally, a Community Services Officer is spending numerous hours per
week preparing and booking property. These two new positions would relieve Police
Officers and Community Services Officers from these duties, which would allow them to
be back in the field to assist with proactive crime reduction efforts.
Other Post Employment Benefits (OPEB)
Other post - employment benefits for the City include a small number of employees
receiving limited retiree medical benefits, limited administrative healthcare costs for the
Police Officers Association, and the implicit subsidy related to retired employees being
able to access healthcare at the same rate as active City employees. The City's OPEB
program and obligations are significantly limited compared to those of other cities;
however, it is a best practice of fiscal management to prefund this liability, as the City
prefunds retirement each year, to minimize unfunded liabilities. An added benefit of
prefunding OPEB by depositing funds in an irrevocable 115 Escrow Trust is that these
funds may be invested in a higher yield portfolio than the City's portfolio, which is limited
by State laws. Staff is in the process of selecting a trust administrator, and will return to
Council in the coming months for authority to enter into a contract with the selected
administrator and a request to pay an annual required contribution of approximately
$2.4 million into the new fund. The City currently pays approximately $1.1 million
towards OPEB on a pay as you go basis; the net new annual cost, which is included in
the forecast, is estimated to be approximately $1.3 million.
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Contract and As- Needed Staffing Conversions
On January 13, 2015, Council considered staff's Contract and As- Needed Staffing
Report, prepared in response to Council's August 26, 2014 direction to consider under
what circumstances the City contracts for services. The report recommended changes
to current service delivery methods based on certain criteria. Council approved staff's
recommendation to convert a number of as- needed positions to permanent staff and to
bring some contracted services in -house over a two- and -a -half year period.. Citywide,
these changes would result in a one -time cost of approximately $500,000, with
approximately $1.4 million in ongoing costs and a total of 36 new permanent positions.
The General Fund portion of these changes, included in the forecast, totals $0.4 million
in one -time and $1.0 million in ongoing costs. Council also directed staff to return on
January 27, 2015 with a plan outlining when the recommended changes would take
place. The following table lists the proposed Midyear Budget changes.
*related to contract conversion
* *new recommendation, not included in January 13, 2015 recommendations
Budget changes are included in this report in Attachment A. Staff will incorporate
remaining changes in the proposed FY 2015 -17 biennial budget for Council approval.
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Positions /
Position (Fund)
FTE
Full Time J Part Time
People
Urban Forest Supervisor (General)*
1.0
Full Time
1.0
Custodian I (General)
I 0.5
Part Time (0.5 FTE)
I 1.0
Maintenance Worker (General)
I 2.0
I Full Time
I 2.0
Street Services Worker (General)
I 1.0
I Full Time
I 1.0
Cultural Affairs Coordinator (General)
I 0.5
Part Time
I 1.0
Maintenance Asst (Beach)
I 9.0
Full Time
I 9.0
Custodian II (Beach)
I 1.0
I Full Time
I 1.0
Custodian I (Beach House)
I 4.0
II Part Time (0.8 FTE)
I 5.0
RRR Equipment Operator
2.4
Part Time (0.8 FTE)
3.0
Maintenance Asst (Cemetery) **
1.0
Full Time
1.0
Total
22.4
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*related to contract conversion
* *new recommendation, not included in January 13, 2015 recommendations
Budget changes are included in this report in Attachment A. Staff will incorporate
remaining changes in the proposed FY 2015 -17 biennial budget for Council approval.
fib ".
Projected Fund Balance
The chart below shows the three forecast scenarios. While the Probable Case scenario
takes advantage of the City's positive economic environment to address both
community priorities detailed above and to take further steps to protect the City's
financial standing in the future through additional retirement paydowns, prefunding
OPEB, and full funding of workers' compensation reserves, it leaves very little room for
new ongoing costs without accompanying tradeoffs in other areas.
Among the tradeoffs already being contemplated are the debt service burden
associated with the City Services Building, necessary infrastructure repairs at the Pier
that will require General Fund subsidy, and the implementation of. the City Yards Master
Plan and related construction costs. These projects will require tradeoffs in the capital
planning process, and will also draw on capital reserves. In the event that the revenue
increases considered in the Best Case scenario materialize, they would potentially
relieve the strain that these projects, as well as other community priorities that will arise
during the Biennial Budget process, would impose on the General Fund. However,
prudent budgeting would preclude making decisions to increase expenditures based on
the Best Case scenario.
Also, any one of the factors shown in the Worst Case scenario, including a relatively
small decline in revenues (2 %), similar to the revenue increase realized in FY 2014 -15,
continued increases in workers' compensation claims and the Cadillac Tax, could have
a significant impact on the Probable Case, requiring budget cuts.
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General Fund Projected Fund Balance
($ in millions)
$15
$10
$5
$0
($5)
($10)
$15
$6.5
($2.9)
($14.0)
Revised FY 2015 -16 FY 2016 -17 FY 2017 -18 FY 2018 -19 FY 2019 -20
FY 2014 -15
Probable Case Best Case •••••• Worst Case
Other Funds
Other major funds included in the Five -Year Financial Forecast fall into two categories:
1) funds that operate with sufficient revenues to sustain necessary operating and capital
needs; and 2) funds that have a structural deficit where ongoing revenues are not
sufficient to cover ongoing expenditures.
Self - Sustaining Enterprise Funds
Enterprise funds that historically rely on sufficient revenues to support necessary
operations include the Resource Recovery Recycling (RRR), Water, Wastewater, and
Big Blue Bus (BBB) funds.
With the increase in solid waste rates in FY 2014 -15, the RRR Fund will maintain a
positive fund balance until FY 2019 -20. The fund's reserve levels will decrease by the
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end of the forecast period due to increased recycling and processing costs, increase in
fleet replacement capital costs, and estimated debt service for the initial phases of the
proposed City Yards Master Plan project.
On December 16, 2014, Council gave provided notice, pending a public hearing, of a
potential water rate increase of 9% in FY 2015 -16 and 13% increases every year
thereafter. If these proposed rate increases are approved, the Water Fund will maintain
a positive fund balance throughout the forecast period. However, capital improvement
project expenditures could potentially lower the fund's reserve level to below
recommended levels. The Wastewater Fund forecast indicates that the fund is in sound
financial condition through the end of the forecast period.
The BBB fund will maintain a positive fund balance over the next five years with the use
of Measure R deferred revenue and Prop C Municipal Operator Bus Service
Improvement Program (MOSIP) funds. BBB staff continues to implement strategies to
reduce expenditures through more efficient scheduling of service routes and hours and
successfully changing BBB's feet composition to 100% alternative fuel. At the
December 16, 2014 Council meeting, staff presented service and schedule
recommendations for integrating BBB service with the Expo Light Rail Line, including
the number of new service hours and approximate operating costs. Council directed
staff to evaluate additional evening and weekend service on several Routes. Final
recommendations will be presented to Council in March, 2015. Any new proposed
service above the base plan presented in December would require a potential fare
increase to offset the additional operating and capital expenditures.
The Beach Fund and Airport Fund will remain in balance through the end of the forecast
period.
Staff projects the Pier Fund to be self- sustaining through the end of FY 2016 -17,
contingent on capital project expenditures and timing. Pier capital needs that are
IR
unable to be funded by the Pier Fund during the forecast period would need to compete
with other capital needs to be addressed through the General Fund.
Funds Requiring General Fund Subsidies
Due to a decrease in funding from other sources, the following funds are anticipated to
require a total of $2.5 million in General Fund subsidies over the Five -Year Forecast
period in order to meet their operating and capital needs, as detailed below:
® Cemetery Fund: The Cemetery has historically required loans and subsidies from
the General Fund. Staff projects that the fund will require a General Fund
subsidy of $39,000 in FY 2014 -15. However, if the Cemetery's recommendation
to construct 115 new cemetery plots and 345 new "Green Burial Plots" in
FY 2015 -16 is approved by Council, staff projects a positive fund balance
beginning in FY 2015 -16 through the end of the forecast period.
® Housing Authority Fund: Through the end of the forecast period, subsidies from
the General Fund are projected to total $0.5 million annually. This assumes that
federal funding levels will remain flat over the forecast period.
Midyear Budget Adjustments
At midyear, staff recommends revenue budget changes, and proposes adjustments to
the expenditure budget as necessary to most effectively maintain operations. This is
also the opportunity to make position changes related to reorganizations, new service
requirements, or more efficient service delivery. This year's midyear adjustment
recommendations are atypical. Taking into consideration the rising economy, and the
City's accompanying increase in baseline revenues, staff is using the opportunity to
convert as- needed and contract staffing, add public safety personnel, strengthen
reserves in the workers' compensation fund, and invest in capital infrastructure. Each
proposed midyear change is balanced against its impact on long -term financial
projections to ensure that it does not contribute to future structural deficits. The charts
and descriptions below summarize the midyear revenue and expenditure adjustments.
Me
Revenue Adiustments— General Fund
The FY 2014 -15 Midyear Review includes a number of recommended revenue
adjustments, totaling over $9.2 million, $7.7 million of which are anticipated to be
ongoing. Significant increases include: $1.3 million in Transient Occupancy Taxes; $1.2
million in Utility Users Taxes; $1.0 million in Investment Income; $0.8 million in sales
taxes; $0.7 million in parking citations; $0.7 million in documentary transfer taxes; $0.5
million in business license taxes; $0.4 million in parking facility taxes; and $0.3 million in
property taxes. Revenues recommended for adjustments are identified in Attachment A.
Revenue Adiustments — Other Funds
Significant revenue adjustments in other funds include:
• Special Revenue Source Fund will increase by $5.7 million to reflect a one -time
settlement regarding an affordable housing obligation by market -rate housing
developers and increased inclusionary housing developer fees.
Big Blue Bus Fund reimbursement revenues will decrease by $2.1 million to
reflect a delay in Bus Stop Redevelopment and Farebox projects, which are both
grant- funded. This change is offset by a one -time receipt of alternative fuel tax
credit of $1.3 million and increased advertising revenues, for a net decrease of
$0.5 million.
Operating Expenditure and Staffing Adiustments — General Fund
Proposed General Fund operating expenditure appropriations are offset by accounting
adjustments, for a net appropriation of $3.3 million at midyear. It should be noted that a
number of these appropriations are funded using FY 2013 -14 savings reserved in the
General Fund fund balance. Significant appropriations include:
® $3.87 million to increase Workers' Compensation fund reserve levels based on
increased claims (this amount is funded using FY 2013 -14 savings);
® $0.9 million to reflect a cost of living adjustment associated with FY 2014 -15
bargaining unit agreements (this amount is funded using FY 2013 -14 savings);
K11
• $0.7 million to reflect staffing changes, including:
o Fire: 7.75 FTE positions as described above
o Police: 2.0 FTE positions as described above
o Public Works: 4.5 FTE as- needed and contract conversions based on
Council direction; and 1.0 FTE for a position to assist with capital projects
o Community and Cultural Services: 0.5 FTE as- needed conversion based
on Council direction; and an additional 0.2 FTE position to reflect
operational changes
o Information Systems: 1.0 FTE position to lead the City's role in the
regional interoperable radio communications system project, and
o City Manager's Office: 0.5 FTE to assist with the volunteer program.
• $0.8 million for one -time costs for Fire Academy and Paramedic school related
to the 6.0 FTE new Firefighter positions;
• An offset of $3.7 million related to an accounting adjustment to transfer the
Enterprise Resource Planning (ERP) system replacement capital project from
the Special Revenue Fund to the General Fund, for improved tracking.
All staffing adjustments are identified in Attachment B2.
Operatinq Expenditure and Staffing Adjustments — Other Funds
Proposed midyear appropriations in other funds total $3.7 million. Significant changes
reflected in the request including the following:
• The RRR Fund expenditures will increase by $0.5 million to reflect a one -time
payment to increase Workers' Compensation Fund reserve levels, as discussed
above, and staffing changes, including the conversion of three as- needed RRR
Equipment Operator positions (2.4 FTE) to permanent positions per Council
direction.
• The Beach Fund expenditures will increase by $0.2 million to reflect staffing
changes, including the conversion of 15 as- needed Maintenance Assistant and
Custodian I and II positions (14 FTE) to permanent positions per Council
21
direction (Custodian I positions are part -time permanent), and the conversion of
0.5 FTE as- needed Beach House Event Coordinator position to permanent
limited term status.
• The Cemetery Fund expenditures will increase by $0.01 million to reflect staffing
changes, including the conversion of one as- needed Maintenance Assistant
position (1.0 FTE) to a permanent position per Council direction.
• Big Blue Bus Fund expenditures will increase by $1.3 million to reflect a one -time
payment to increase Workers' Compensation Fund reserve levels, and a one-
time payment of set aside in -lieu funds to the Downtown Shuttle Program
(discussed in more detail below).
• Other funds will increase by $0.6 million to reflect cost of living adjustments
associated with FY 2014 -15 bargaining unit agreements.
• Miscellaneous Grants Fund expenditures will increase by $0.8 million to reflect
use of Proposition A Rail Reserve Funds for the Buffer Park and Expo Tree
Relocation project.
• The Special Revenue Source Fund shows an accounting adjustment of $3.7
million related to the transfer of the Enterprise Resource Planning (ERP) System
project to the General Fund. There is no net impact on the budget.
All staffing adjustments are identified in Attachment B2.
Capital Improvement Program Budget Adiustments
On October 28, 2014, staff reported to Council that approximately $7 million in FY 2013-
14 General Fund savings would be set aside for capital improvement project needs.
Staff recommends appropriating these funds to the following projects as FY 2014 -15
Midyear Budget changes. While appropriations to the General Fund would increase by
approximately $10.6 million, $3.7 million of this amount is due to an accounting
adjustment related to the transfer of a project from one fund to another, and the
remaining $6.9 million is funded using FY 2013 -14 savings. Appropriations to other
funds would decrease by approximately $2.6 million.
��a
The proposed General Fund changes include the following:
• Seismic Retrofit of Fire Station No. 3 and Interim Fire Training Facility -
$3.0 million budget increase. These projects were previously budgeted in FY
2015 -16, to be financed through a lease revenue bond, which would also fund
the construction of a new Fire Station No. 1. While work on these projects is
ready to proceed, Fire Station No. 1 is still in the design phase. Due to the timing
restrictions on issuing a lease revenue bond and spending the proceeds, staff
recommends funding these smaller projects with General Fund dollars and
issuing a bond for Fire Station No. 1 closer to construction readiness.
• ERP System Replacement - $1.3 million budget increase. The Enterprise
Resource Planning (ERP) system replacement, which will replace the City's
financial and human resources systems with one fully integrated system was
previously budgeted at a cost of $3.7 million. Based on vendor proposals,
follow -up demonstrations, and a better understanding of system needs, staff
recommends an additional $1.3 million for the project budget. Staff plans to
select a vendor and purchase the system in early 2015. The original budget of
$3.7 million will be transferred from the Special Revenue Fund to the General
Fund.
® Memorial Park Parking Lot - $1.3 million budget appropriation. The Memorial
Park Neighborhood Plan (MPNP) team has been working with an
interdepartmental team to respond to the immediate need to increase parking
availability prior to the opening of the 17th Street Expo Light Rail Station to relieve
pressure on limited existing parking resources, which are anticipated to
experience heightened demand with the arrival of light rail. Staff is proposing that
a portion of the Colorado Yards be utilized as an interim surface parking lot to
provide an additional parking resource for Memorial Park users. The remaining
portion of the Colorado Yards site would continue to be utilized for Public
Landscape vehicle storage and operations. The intended future use of the
Colorado Yards site is for community open space, and the use of a portion of the
23
site for surface parking would be an interim use until the property could be
redeveloped as community open space.
• Airport Park Synthetic Turf Infill Replacement - $500,000 budget appropriation. In
light of questions regarding the potential for health risks with continued use of the
existing recycled tire infill material, and of the required maintenance on the field,
staff recommends replacing the existing recycled crumb rubber infill at Airport
Park with a suitable product that is not associated with similar concerns.
• Parking Camera Enforcement - $321,840 budget reinstatement. Funding for the
Police Department's Parking Camera Enforcement project was inadvertently not
rolled over into the FY 2014 -15 budget. Budget needs to be restored to complete
this project previously approved by Council.
• City Hall Basement Tenant Improvement - $300,000 budget appropriation. Staff
recommends this tenant improvement project to improve underutilized space in
the City Hall basement, given space constraints in City Hall. Improved basement
space will be used for file storage and for additional office and /or meeting space
given recent personnel increases and space limitations.
• Public Safety Facility Planter - $120,000 budget appropriation. Staff recommends
appropriating budget for this project to waterproof the leaking fountain at the
Public Safety Facility and turn it into a sustainable landscape demonstration
garden. This project is part of the City's commitment to water conservation, and
will offset water use from Tongva Park and Ken Genser Square fountains.
• Palisades Park Landscape Modifications - $30,000 budget appropriation. In
response to safety concerns associated with the large crowds drawn by
performers in the area of Palisades Park near the intersection of Ocean Avenue
and Colorado Avenue, staff recommends modifying the landscape design.
• Public Landscape Tenant Improvements - $375,000 cost covered by budget
savings. Tenant improvements are needed to improve the office space of the
Public Landscape Division. Public Works Departmental expenditure control
budget savings are being utilized to fund this project, so no additional budget will
be needed.
24
• Fairview Library Improvements - $200,000 cost covered by budget savings.
Fairview Library requires renovations, including tenant improvements, increased
access to the new ADA accessible restroom, and repairs to the HVAC system.
This expenditure would be offset by a General Fund reduction to the Expo Buffer
Park, which received higher than anticipated grant revenues.
• Percent for Arts - $51,510 budget appropriation. Pursuant to Resolution 7231,
one percent of the budget of all eligible capital projects shall provide funding for
various forms of public art. Budget is recommended to be appropriated based on
eligible midyear capital budget increases in the General Fund.
The proposed changes in other funds include the following:
• ERP System Replacement - $3.7 million budget transfer. Budget will be moved
from the Special Revenue Fund and moved to the General Fund.
• Expo Buffer Park - $853,000 budget increase. Remaining rail reserve funds will
be added to the Expo Buffer Park project in the Miscellaneous Grants Fund to
supplement funding for the Expo Buffer Park project.
• Expo Tree Relocation - $22,000 budget increase. Appropriating remaining rail
reserve funds in the Miscellaneous Grants Fund to supplement the Expo Tree
Relocation budget.
• Water Resources Tenant Improvement - $200,000 budget appropriation. The
Water Resources office space requires improvements. The recommended
budget appropriation would fund design of these improvements from the Water
and Wastewater Funds, and construction costs would be included in the FY
2015 -16 budget.
• Noise Management Equipment - $50,000 budget appropriation. Funds for noise
management equipment at the airport were previously budgeted in FY 2015 -16.
Staff recommends moving $50,000 of the previously allocated budget from the
Airport Fund into FY 2014 -15 to address an accelerated need for the equipment.
25
Parking Rates and Permit Fees
On June 25, 2013, as part of the adoption of the FY 2013 -15 budget, Council adopted
Resolution No. 10755 (CCS), establishing parking rates and permit fees for all City
parking facilities and resources. Since that time, staff has identified necessary
administrative corrections to Resolution No. 10755. Particularly, Resolution No. 10755
inadvertently omitted previously - established rates for the Ken Edwards Center parking
structure and the Main Library surface parking lot, free beach parking for vehicles with
disabled placards, and reduced monthly parking rates for vehicles with disabled
placards in Downtown parking structures for Downtown residents living in multi - family
buildings with 100% affordable housing units when no onsite parking is available. The
attached resolution makes those administrative corrections and several other minor
language revisions. The resolution also proposes: fees for one -day visitor permits in
preferential parking zones, both print -at -home permits and those issued within City
offices; fees for half -year visitor permits in preferential parking zones; and to authorize
the Chief Administrative Officer of Planning and Community Development to waive
parking fees for City meetings, City co- sponsored events, and events at Santa Monica
High School, subject to certain conditions, allowing for more administrative efficiency
since currently such waivers may only be approved by the City Manager. Staff is not
proposing changes to any other rates and /or fees.
State Homeland Security Grant Program Funds
On June 10, 2014, City Council accepted the 2013 State Homeland Security Grant
Program Funds in the amount of $400,000 for the purchase of interoperability
equipment and portable emergency solar lighting systems. The Fire Department
recently received an additional $27,186 to support regional Hazardous Material
(HazMat) and Urban Search and Rescue (USAR) mobile training exercises. These
funds would be used to fund the HazMat team and the USAR team's participation in
three regional mobile training exercises.
0.1
Downtown Shuttle Services
According to the terms of their development agreements, certain hotels in the
Downtown area are required to provide an alternative shuttle service to certain Santa
Monica destinations or pay an in lieu fee to cover this service. Hotels had previously
paid the in lieu fee. On June 24, 2014, Council awarded a five -year contract providing a
one -time grant of $377,195 in set aside in lieu fee funds, and an additional $68,000 per
year, over four years, to the Santa Monica Visitors and Convention Bureau (SMCVB) to
administer a shuttle program on behalf of the hotels.
Staff recommends a modification to the five -year contract with SMCVB to increase the
not to exceed amount from $649,195 to $997,428, a $348,233 increase funded by
remaining set aside in lieu funds. The grant funds will fund short distance trip needs in
the Downtown, Main Street, and Montana Avenue areas. The shuttle service is
available free of charge to the general public.
Human Services Grants Program and Cultural /Art Organizational Support Program
The City engages in a competitive process to allocate funds to non - profit human service
and arts organizations through the Human Services Grants Program (HSGP) and
Cultural /Art Organizational Support Program (OSP). Funding rationales, including
proposed guidelines and selection criteria, for both the HSGP and OSP are included in
Item 8 -C on the January 27, 2015 agenda. The funding rationales for these grant
programs identify key areas of program expansion that will likely require budget
increases, and will be considered as part of the FY 2015 -17 Biennial Budget process.
27
Building the FY 2015 -17 Biennial Budget
Over the next several months, staff will prepare the FY 2015 -17 Proposed Biennial
Budget, as well as the FY 2015 -16 exception -based CIP Budget (this will be the second
year of the FY 2014 -16 Biennial CIP Budget).
The City uses a management system of goals, objectives and benchmarks to identify,
measure and evaluate the impact of City services and progress on key priorities,
projects, and programs. New to the budget development process this year will be the
phased integration of Wellbeing - related indicators in relevant departments' goals,
objectives and benchmarks. Community wellbeing is a multi - dimensional concept
encompassing five key areas known to influence wellbeing: community, place, learning,
health and opportunity. Gradually incorporating elements of the Local Wellbeing Index,
and continuing to incorporate sustainability goals into the budget process, allows for
strategic and data - driven decision - making about City priorities and resources.
Every other year, at the start of the biennial budget cycle, staff updates the community
on local government activities and provides a forum for people to ask questions and
comments. The November 2014 Santa Monica Talks series provided people who live
and work in Santa Monica the opportunity to learn about what is happening in the City.
The City Manager explained the City's financial position and fiscal management
approach, talked about future challenges and possible solutions, and shared information
about the City, including public safety, community and cultural services, the public
libraries, sustainability and water conservation, transportation and capital improvement
projects. City staff answered questions and provided essential information about current
city programs, initiatives, and ways for people to get involved with local government.
Three events were held: November 13 at Tongva Park, November 18 at the Civic
Auditorium East Wing, and November 20 at the Real Office Centers. In total 257
community members who registered online attended Santa Monica Talks — a 63%
m
increase in total attendees compared to 2012 numbers. A number of people attended
the event who did not register online.
Questions arose about transportation, specifically how the Big Blue Bus would integrate
with the coming Expo Light Rail. Bicycling and pedestrian safety was a common theme,
as was the overall impact of private development. Attendees acknowledged the City's
commitment to culture and the arts, and inquired about future programs. Residents
sought advice on ways to reduce water consumption, and the City's overall plan to
encourage water conservation. Affordable housing remained a topic of keen interest as
people inquired about alternative ways to fund affordable housing efforts in the future.
Santa Monica Talks is one channel among many that informs staff of community
sentiment and trends.
The Proposed Biennial Budget will be submitted to Council and available for public
review prior to the Budget Study Sessions on May 26 -27, at which point staff will
present department budget presentations to the Council. Council will convene a public
hearing on June 23, 2015 to consider, receive public comment, make revisions to, and
adopt the first year and approve the second year of the Biennial Budget. Staff seeks
community input on the Biennial Budget. Members of the public can provide comments
for consideration during the budgeting process by sending an email to
council(c)smgov.net or by giving public testimony at the May study sessions and
June 23`d public hearing. Boards, Commissions, and Task Forces historically make
their recommendations and priorities known through written communication to the
Council, and staff encourages these groups to continue this practice.
29
Financial Impacts & Budget Actions
Recommended FY 2014 -15 midyear budget adjustments result in a $14.7 million, or a
2.5% increase over the Citywide revenue budget, and expenditure adjustments result in
a net $17.6 million or a 3.1% increase over the Citywide expenditure budget,
$12.6 million of which is offset by the use of General Fund FY 2013 -14 savings and
grant fund set asides. Detail for FY 2014 -15 adjustments is in Attachment A.
Prepared by: Susan Lai, Budget Manager
Approved:
I
'Gigi Decavalle64tjghes
Director of Finance
Martin Pastucha
Director of Public Works
Donna Peter
Director of Human Resources
Forwarded to Council:
Rod Gould
City Manager
Attachments:
A: FY 2014 -15 Budget Adjustments
B1: Resolution for Position Changes
B2: Permanent Position and Classification Changes FY 2014 -15
C: Resolution of the City of Santa Monica Establishing Parking Rates and Permit
Fees for all City Parking Facilities and Resources
D: Fire Department Report
0
ATTACHMENT A
REVISIONS TO FY 2014 -15 REVENUE AND EXPENDITURE BUDGET APPROPRIATIONS
Revenue Budget Adjustments ($ in thousands)
GENERAL FUND (01)
Records & Election Services
Reflects reduction in print shop services (25.0)
$ (25.0)
Finance
Reflects increased one -time State of CA SB 90 Claims due to timing of
reimbursements
192.8
Reflects transfer of Autopark Permit fees from Finance to Planning & Community
Development (10.9)
Reflects transfer of Tobacco retail permit fee from Police to Finance 28.1
5 210.0
Information Systems
Reflects increased fiber optic services - 140.0
$ 140.0
Planning & Community Development
Police
Reflects increased fees and charges primarily due to one -time 0% interest loan
program from Southern California Edison for energy efficient projects 182.6
Reflects transfer of Autopark Permit fees from Finance to Planning & Community
Development 10.9
Reflects increased fees due to the continuation of the advertising and signage
project in parking structures 1 -8; approved by Council on October 28, 2014 325.3
Reflects increased parking revenues in City parking lots and structures, offset by
reduction in on- street meters and preferential parking permits 78.0
$ 596.8
Reflects increased parking citation fines offset by a slight reduction in other fines 670.0
Reflects transfer of Tobacco retail permit fee from Police to Finance (28.1)
$ 641.9
Library
Reflects reduction in non - resident fees due to less than anticipated demand for
non - resident library cards as well as a reduction in library fines due to recent
change in borrowing policy which allows for an additional four weeks for
customers to renew library content free of charge (105.0)
$ (105.0)
Housing & Economic Development
Reflects decreased fees and charges for Affordable Housing Production Program
(AHPP) Compliance (20.0)
$ (20.0)
Non - Departmental
1 of 8
ATTACHMENT A
REVISIONS TO FY 2014 -1S REVENUE AND EXPENDITURE BUDGET APPROPRIATIONS
Discount on PERS Prepayment - Savings from prepayment of City's FY 2014 -15
CaIPERS obligation 1,529.0
Transient Occupancy Tax - Reflects greater than anticipated growth in average
room rates 1.305.0
Utility Users Tax - Reflects greater than anticipated increase in electricity rates 1,245.0
Investment Income - Reflects interest on loan from General Fund to the Airport
Fund, and increasing portfolio yield reflecting initial implementation of revised
investment strategies and increasing interest rates 969.0
Sales and Use Tax/Transaction and Use Tax - Reflects improving local economy 757.8
Real Property Transfer Tax- Primarily reflects sales of several very large
properties 700.0
Business License Taxes - Reflects improving local economy and one -time
settlement oavments 500.0
Parking Facility Tax - Reflects increased parking activity in the City 400.0
Property Taxes - Reflects greater than anticipated FY 2014 -15 assessed valuation
growth 341.8
;TOTAL GENERAL FUND REVENUE
NON - GENERAL FUNDS
SPECIAL REVENUE SOURCE
City Manager's Office Reflects increased energy efficiency rebates related to the Pico Branch Library 25.9
Planning & Community Reflects adjustment to Transportation Impact Fees to reflect finalized
Development development agreements (135.1)
Community & Cultural Services Reflects receipt of one -time development agreement contribution fees 248.4
Public Works Reflects receipt of one -time development agreement contribution fees 225.0
Reflects receipt of one -time settlement payment regarding an affordable
Housing & Economic housing obligation by market -rate housing developers as well as greater than
TOTAL 04 FUND REVENUE ADJUSTMENTS
TENANT OWNERSHIP RIGHTS CHARTER AMENDMEND (TORCA) FUND
Housing & Economic
Reflects adiustment to Proo K TORCA conversion tax
TOTAL 14 FUND REVENUE ADJUSTMENTS
MISCELLANEOUS GRANTS FUND
Fire Reflects the receipt of the 2013 State of California Homeland Security Grant 27.2
TOTAL 20 FUND REVENUE ADJUSTMENTS $ 27.2
2 of
ATTACHMENT A
REVISIONS TO FY 2014 -15 REVENUE AND EXPENDITURE BUDGET APPROPRIATIONS
BIG BLUE BUS FUND (41)
Reflects increased advertising revenues offset by a reduction in reimbursements
for labor cost associated with the servicing of Fire Department vehicles at the
Big Blue Bus Big Blue Bus yard
285.5
Reflects one -time receipt of the alternative fuel tax credit
1,276.2
Reflects decrease in capital grant reimbursements related to a delay in capital
spending for the Bus Stop Redevelopment and Farebox projects
(2,063.5)
TOTAL 41 FUND REVENUE ADJUSTMENTS
VEHICLE MANAGEMENT FUND (54)
$
(501.8)
Reflects increase related to unbudgeted contributions from other funds for fuel
Public Works purchases made at the City yard
82.5
TOTAL 54 FUND REVENUE ADJUSTMENTS
INFORMATION TECHNOLOGY REPLACEMENT AND SERVICES FUND (55)
$
82.5
Information Systems Reflects reduction in CERP and telecommunications services contributions
(103.3)
TOTAL 55 FUND REVENUE ADJUSTMENTS
RISK MANAGEMENT ADMINISTRATION FUND (58)
$
(103.3)
Finance Reflects increase related to updated property insurance contributions
3.1
TOTAL 58 FUND REVENUE ADJUSTMENTS
3.1
TOTAL NON- GENERAL FUND REVENUE ADJUSTMENTS
Expenditure Budget Adjustments ($ in thousands)
GENERAL FUND (03)
City Council
Reflects appropriation of Council Discretionary Funds ($30,000) and cost of living
adjustment associated with FY 2014 -15 bargaining unit agreements 32.2
$ 32.2
City Manager
Reflects staffing changes and cost of living adjustment associated with FY 2014-
15 bargaining unit agreements - 83.3
$ 83.3
Record & Election Services
Finance
Reflects cost of living adjustment associated with FY 2014 -15 bargaining unit
16.4
16.4
Reflects staffing changes ad cost of living adjustment associated with FY 2014 -15
bargaining unit agreements 78.6
$ 78.6
3of8
ATTACHMENT A
REVISIONS TO FY 2014 -15 REVENUE AND EXPENDITURE BUDGET APPROPRIATIONS
City Attorney
Reflects appropriation to cover the cost for expert witnesses for the consumer
protection unit as well as cost of living adjustment associated with FY 2014 -15
bargaining unit agreements 41.9
$ 41.9.
Human Resources
Reflects staffing changes and cost of living adjustment associated with FY 2014-
15 bargaining unit agreements 36.4
$ 36.4
Information Systems
Reflects staffing changes and cost of living adjustment associated with FY 2014-
15 bargaining unit agreements 147.8
$ 147.8
Planning & Community Development
Reflects cost of living adjustment associated with FY 2014 -15 bargaining unit
agreements and advertising licensing costs 219.9
Reflects increased licensing costs due to the continuation of the advertising and
signage project in parking structures 1 -8; approved by Council on October 28,
2014 54.7
$ 274.6
Police
Reflects staffing changes and cost of living adjustment associated with FY 2014-
15 bargaining unit agreements 1,226.4
$ 1,226.4
Fire
Reflects staffing changes and cost of living adjustment associated with FY 2014-
15 bargaining unit agreements 930.8
Reflects one -time costs related to Academy and Paramedic School $ 818.1
$ 1,748.9
Community & Cultural Services
Reflects staffing changes, Tongva Park Festival fund reappropriation and cost of
living adjustment associated with FY 2014 -15 bargaining unit agreements 192.1
$ 192.1
Reflects furniture fund reappropriation and cost of living adjustment associated
with FY 2014 -15 bargaining unit agreements 143.7
$ 143.7
Public Works
Reflects staffing changes, including conversion of as- needed positions to
permanent positions, and cost of living adjustment associated with FY 2014 -15
unit
4 of
405.5
405.5
ATTACHMENT A
REVISIONS TO FY 2014 -15 REVENUE AND EXPENDITURE BUDGET APPROPRIATIONS
Housing & Economic Development
Reflects cost of living adjustment associated with FY 2014 -15 bargaining unit
34.6
Non - Departmental
Reflects offset to cost of living adjustment associated with FY 2014 -15
bargaining unit agreements (1,779.6)
Reflects one -time payment to increase Workers' Compensation Fund reserve
levels. based on increased claims. 3.870.0
Reflects portion of anticipated increase in Transaction & Use Tax to be remitted
to the Santa Monica /Malibu School District 155.4
Reflects correction to Housing Authority (12) Fund subsidy 181.0
Reflects correction for environmental reimbursement for programs
administered by the Office of Sustainability and the Environment(OSE) 108.1
Reflects transfer of the Enterprise Resource Planning (ERP) System project from
the Special Revenue Source Fund (04) to the General Fund (01) (3,700.0)
$ (1,165.1)
TOTAL GENERAL FUND OPERATING EXPENDITURE ADJUSTMENTS
Seismic Retrofit of Fire Station No. 3 project
1,500.0
Interim Fire Training Facility at 2500 Michigan Avenue project
1,500.0
Enterprise Resource Planning System Replacement project
5,000.0
Memorial Park Parking Lot project
1,326.0
Airport Park Synthetic Turf Infill Replacement project
500.0
Parking Camera Enforcement project
321.8
Citv Hall Basement Tenant Improvement proiect 300.0
Public Safety Facility Planter project 120.0
Palisades Park Landscape Modifications project 30.0
Public Landscape Tenant Improvement project 375.0
Fairview Library Reno project 200.0
Maintenance Yard Buffer Park
Percent for the Arts project 51.5
Decrease primarily related to use of expenditure control, release of unspent CIP
funds related to completed projects (438.8)
TOTAL GENERAL FUND CAPITAL EXPENDITURE ADJUSTIVIENTS1 $ 10,585.5
Expenditure Offsets (Use of Reserves)
Use of reserves set aside in prior years to cover the cost of new high - priority
Capital Improvement Projects (6,885.5)
Use of reserves set aside in prior years for the one -time payment to increase
Workers' Compensation Fund reserve levels, based on increased claims. (3,870.0)
5 of
ATTACHMENT A
REVISIONS TO FY 2014 -15 REVENUE AND EXPENDITURE BUDGET APPROPRIATIONS
Use of reserves set aside in prior years to fund the additional cost associated
with the FY 2014 -15 bargaining unit agreements (927.9;
Use of reserves set aside in prior year to cover the cost for expert witnesses for
the consumer protection unit - (39.2'
TOTAL GENERAL FUND EXPENDITURE OFFSETS - USE OF RESERVES $ (11,722.6;
NON - GENERAL FUNDS
SPECIAL REVENUE SOURCE FUND (04)
Reflects the transfer of the Enterprise Resource Planning (ERP) System project
Non - Departmental from the Special Revenue Source Fund (04) to the General Fund (01) 3,700.0
Reflects the transfer of the Enterprise Resource Planning (ERP) System project
Capital Improvement Program from the Special Revenue Source Fund (04) to the General Fund (01) (3,700.0)
TOTAL 04 FUND EXPENDITURE ADJUSTMENTS $ -
BEACH FUND (11)
Reflects staffing changes and cost of living adjustment associated with FY 2014 -
Community & Cultural Services 15 bargaining unit agreements 33.1
Reflects staffing changes, including conversion of as- needed positions to
permanent positions, and cost of living adjustment associated with FY 2014 -15
Public Works bargaining unit agreements 150.5
TOTAL 11 FUND EXPENDITURE ADJUSTMENTS $ 183.6
HOUSING AUTHORITY FUND (12)
Housing & Economic Reflects staffing changes and cost of living adjustment associated with FY 2014 -
Development 15 bargaining unit agreements 42.8
TOTAL 12 FUND EXPENDITURE ADJUSTMENTS $ 42.8
LOW /MODERATE INCOME HOUSING ASSET FUND (15)
TOTAL 15 FUND EXPENDITURE ADJUSTMENTS $ (22.1)
MISCELLANEOUS GRANTS (201
Capital Improvement Program Buffer Park and Expo Tree Relocation project 875.0
Fire Reflects the receipt of the 2013 State of California Homeland Security Grant 27.2
,.
TOTAL 20 FUND EXPENDITURE ADJUSTMENTS $ 902.2
WATER FUND (25)
Reflects cost of living adjustment associated with FY 2014 -15 bargaining unit
Public Works agreements 73.6
Capital Improvement Program Water Resources Tenant Improvement Project 100.0
TOTAL 25 FUND EXPENDITURE ADJUSTMENTS $ 173.6
6 of
ATTACHMENT A
REVISIONS TO FY 2014 -15 REVENUE AND EXPENDITURE BUDGET APPROPRIATIONS
RESOURCE RECOVERY AND RECYCLING (27)
Reflects staffing changes, including conversion of as- needed positions to
permanent positions, and cost of living adjustment . associated with FY 2014 -15
Public Works bargainine unit agreements 135.9
Reflects one -time payment to increase Workers' Compensation Fund reserve
levels, based on increased claims. 375.0
TOTAL 27 FUND EXPENDITURE ADJUSTMENTS $ 510.9
PIER (30),.
Reflects cost of living adjustment associated with FY 2014 -15 bargaining unit
City Manager's Office agreements 3.9
Reflects staffing changes and cost of living adjustment associated with FY 2014 -
Police 15 bargaining unit agreements 16.7
Reflects cost of living adjustment associated with FY 2014 -15 bargaining unit
Public Works
TOTAL 30 FUND EXPENDITURE ADJUSTMENTS $ 27.7
WASTEWATER (31)
TOTAL 41 FUND EXPENDITURE ADJUSTMENTS
7 of
Reflects increased contributions to the Vehicle Management Fund and cost of
Public Works
living adjustment associated with FY 2014 -15 bargaining unit agreements
110.0
Capital Improvement Program
Water Resources Tenant Improvement Project
100.0
TOTAL 31 FUND EXPENDITURE ADJUSTMENTS
$
210.0
AIRPORT (33)
Reflects airport noise retrofit fund reappropriation and cost of living adjustment
Public Works
associated with FY 2014 -15 bargaining unit agreements
215.3
Capital Improvement Program
Noise management equipment project
50.0
TOTAL 33 FUND EXPENDITURE ADJUSTMENTS
$
265.3
CEMETERY (37)
Reflects staffing changes, including conversion of as- needed position to
permanent position, and cost of living adjustment associated with FY 2014 -15
Public Works
bargaining unit agreements -
13.9
TOTAL 37 FUND EXPENDITURE ADJUSTMENTS
$
13.9
BIG BLUE BUS (41)
Reflects cost of living adjustment associated with FY 2014 -15 bargaining unit
Big Blue Bus
agreements
230.2
Reflects one -time accounting adjustment to account for the Downtown shuttle
program
348.2
Reflects one -time payment to increase Workers' Compensation Fund reserve
levels. based on increased claims.
750.0
TOTAL 41 FUND EXPENDITURE ADJUSTMENTS
7 of
ATTACHMENT A
REVISIONS TO FY 2014 -15 REVENUE AND EXPENDITURE BUDGET APPROPRIATIONS
VEHICLE REPLACEMENT (54)
Reflects staffing changes and cost of living adjustment associated with FY 2014-
Public Works
15 bargaining unit
TOTAL 54 FUND EXPENDITURE ADJUSTMENTS $ 54.6
RISK MANAGEMENT ADMINISTRATION (58)
Reflects staffing changes and cost of living adjustment associated with FY 2014-
Finance 15 bargainine unit agreements 19.6
Reflects transfer of budget for fleet vehicle replacement from the Self- Insurance
Capital Improvement Program Workers' Compensation Fund to the Risk Management Administration Fund. 3.3
TOTAL 58 FUND EXPENDITURE ADJUSTMENTS $ 22.9
SELF- INSURANCE WORKERS' COMPENSATION (591
Reflects transfer of budget for fleet vehicle replacement from the Self - insurance
Capital Improvement Program Workers' Compensation Fund to the Risk Management Administration Fund. (3.3)
TOTAL 59 FUND EXPENDITURE ADJUSTMENTS $ (3.3)
TOTAL NON - GENERAL FUND EXPENDITURE ADJUSTMENTS 1$ 3,710.50
Expenditure Offsets (Use of Reserves)
Use of reserves set aside in prior years to cover the cost the Buffer Park and Tree
Miscellaneous Grants Fund Relocation projects (875.0)
TOTAL - ALL OTHER FUNDS EXPENDITURE OFFSETS - USE OF RESERVES $ (875.0)
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ATTACHMENT D
Fire Department Staffing Report
A. City Demographics
The City of Santa Monica is 8.3 square miles and is situated on the west side of Los Angeles
County, about 16 miles from downtown Los Angeles, where the Pacific Coast Highway and
Interstate Highway 10 meet. It is bordered by the City of Los Angeles on three sides and the
Pacific Ocean on the west. The area is served by two freeways, Santa Monica (Interstate 10) and
San Diego (405), and by four major east -west thoroughfares: Santa Monica (Route 66), Wilshire,
Olympic and Pico Boulevards, and is located approximately six miles from Los Angeles
International Airport. Santa Monica is home to a mix of commercial districts, residential
communities, recreational and art venues, three miles of wide beaches, high - profile corporate
headquarters, hi -tech and entertainment companies, small entrepreneurial start -ups, and retail
businesses. A generally mild climate and consistently good air quality are hallmarks of the coastal
district that surrounds Santa Monica.
Santa Monica is a full- service city. City departments provide police, fire, transit (a regional bus
system and general aviation airport), water, wastewater, refuse, streets, parking, planning,
building, engineering, free public Wi -Fi, a high speed fiber optic network, parks, affordable
housing, economic development, sustainability, library, rent control, recreational, social, cultural,
and educational services to the community. The City of Santa Monica has a nighttime population
of approximately 91,040 and a daytime population exceeding 250,000 during summer and
holidays, resulting in significant fluctuations in response patterns.
B. Department Profile
Mission: The Santa Monica Fire Department is dedicated to preventing the loss of life, property,
and the environment from fire, medical, and other natural or man -made disasters through
aggressive prevention, training, public education, and emergency response.
The Santa Monica Fire Department (SMFD) is a progressive, historically well- staffed and equipped
organization that, according to the Insurance Services Organization (ISO), is ranked among the top
1% of all fire departments nationwide.
In 2014, the SMFD was dispatched to 14,207 calls for service, nearly 80% of which were related to
Emergency Medical Services (EMS). This represents an increase of 7.6% in EMS and 5.8% in total
call volume over the previous year. The trend is illustrative of a gradual increase over the past
decade, while staffing levels have remained relatively the same.
SMFD Incidents Per Year
ie,am
aa.am
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10,020
e,000
x,000
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x,000
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2003 20D 2005 200 2007 tom 2O 2010 Sou 20]2 2.l. 2014
Page 1 of 4
ATTACHMENT D
The Department is structured into four divisions including Administration, Operations
(Suppression, Rescue and EMS), Fire Prevention and Training. The responsibilities of each are
further divided based on relative state and Federal mandates, code enforcement, policy, contract
and grant management, and standards and industry best practices.
Through the City's Capital Improvement Program (CIP), the fire department continues to receive
top -of- the -line fire apparatus. Over the next 2 -year cycle, this will include two new fire engines, a
ladder truck, an air & light rescue, and an urban search and rescue (USAR) unit totaling
$5,550,000.
The CIP process also netted $1,233,000 to improve mobile data technology and software systems
intended to assist in the gathering and analysis of critical response data. The allocation also
included additional safety equipment totaling $700,000. Over the past eight years, the SMFD has
received over $2.9 million in Federal Homeland Security grant funds, thereby offsetting
expenditures that otherwise would have been drawn from the City's General Fund. Awards have
included enhancements in technology, communications, and special operations training overtime,
props, and equipment. An additional $2.9 million in grant funds has been awarded in 2014 to fund
interoperability communication projects.
C. Current Department Staffing
The SMFD currently consists of 122 total personnel; 108 sworn firefighters and 14 civilian
employees. Nine civilian employees were recently transferred to the Office of Emergency
Management to staff the joint public safety communications center. The SMFD operates within a
constant staffing model; meaning that 24 -hours a day, 7 -days a week, and 365 -days a year the
Department staffs thirty -one Suppression and Rescue crew members on duty. Firefighters
operate on a 24 -hour rotating schedule (24 -on, 24 -off, 24 -on, 24 -off, 24 -on, 96= hours off). Aside
from the addition of 3.0 FTE Firefighters (one person per shift) to permanently staff the
Hazardous Materials Response Team in FY2008 -09, the 31- member per day Suppression and
Rescue staffing model has not changed since 1980 (5,000 calls /year).
D. Levels of Service
Suppression and Rescue personnel respond from four fire stations strategically located
throughout the City. Frontline apparatus include six engines, one ladder truck, one air light
rescue unit, one command vehicle, one urban search and rescue (USAR) unit, one hazardous
materials (HazMat) unit, one aircraft rescue unit (ARFF), two Polaris medical carts and three
paramedic bicycle teams (staffed during special events and peak hours). The Fire Department
delivers Emergency Medical Services (EMS) via Advanced Life Support (ALS) capable engine
companies whose personnel consists of one captain, one engineer, and two firefighters; two of
which must be licensed as paramedics. The truck company provides Basic Life Support (BLS) and
is staffed with a captain, engineer, and one tiller operator; a companion air light rescue unit is
staffed with two firefighters. Additional Suppression and Rescue personnel include one firefighter
assigned to the HazMat response unit and a shift Battalion Chief. The City contracts with a private
ambulance company to provide EMS transportation services with a minimum of five dedicated
units staffed with two Emergency Medical Technicians (EMTs) 24 -hours a day, 7 -days a week.
Page 2 of 4
ATTACHMENT D
E. Staffing Assessment and Proposal
Over the past 2 -years the SMFD has been has been actively engaged in a process of evaluating its
existing response model against a number of emerging challenges, including the arrival of light
rail, increased traffic congestion, the potential impact of the Affordable Care Act, and a steady
rise in call volume. While fire and medical response remains at the core of the Department's
mission, consideration was also given to our organization's current ability to provide other
essential services, such as fire inspections, pre -fire plans, and maintaining an environment that
promotes ongoing training and professional development for all personnel.
Evaluators considered call data, local demographics, contemporary trends, industry standards,
and other Los Angeles County response models. The resulting analysis acknowledges that, while
regionally there are a number of different delivery models, an increase in the number of sworn
and civilian personnel is warranted in order to continue providing the high level of service that the
citizens and guests of Santa Monica have become accustomed to receiving from its first
responders.
New Staffing Proposal
The SMFD is requesting the addition of 7.75 full- time - equivalent (FTE) personnel. The
Suppression and Rescue Division would receive 6.0 FTE firefighters to allow for the full -time
staffing of one rescue ambulance staffed with 2 paramedics, 24 -hours a day, 7 -days a week. This
additional resource will enhance the current delivery system and deployment model.
An additional 1.0 FTE Fire Code Enforcement Officer would be added to the Fire Prevention
Division to reassign a portion of the residential fire and life safety inspections that are currently
completed by one of the seven Suppression and Rescue Companies. This new position would
relieve one or more suppression crews from their current residential inspections allowing them
more time to complete mandated training, focus on pre -fire inspections and plans, and allow for
career development. The Administration Division would also add 0.75 FTE Fire Equipment
Maintenance Specialist to assist with apparatus and facility upkeep, maintenance, and servicing.
F. Program Goals
Program goals include sending the "right response resource to the right call at the right time,"
thereby reducing response times, improving response reliability, and decreasing unit utilization
(how many calls per day a unit is assigned to an incident). It is anticipated that adding a
paramedic rescue ambulance increases unit availably by over 16 %.
G. Pilot Deployment
The initial proposal would respond the rescue ambulance code -3 (lights and sirens) to all calls
within Engine 2's response district (roughly South of Olympic and West of 14th). In the event that
an assessment indicates a need for only BLS, Engine 2 would be placed back in service, leaving
patient care to the rescue ambulance. In like manner, if the rescue ambulance arrives on scene
first and determines that an engine company is not needed, they can elect to cancel the engine
company's response. Given its ability to maneuver through congested areas, the rescue
ambulance would also be added to all calls on the Pier. While each unit is similarly staffed with
two paramedics, the proposal leaves the engine in service a greater percentage of time, available
Page 3 of 4
ATTACHMENT D
to respond on ALS calls, when it may necessary to have additional personnel available to care for
a more critical patient.
Using key performance measures, a standing Deployment Committee will regularly evaluate and
propose variations to the new staffing model. These may include adjustments in response
protocol or alterations in unit type or location. By establishing a benchmark of response with a
single ALS unit, the pilot will provide the necessary experience and data to make well- educated
decisions on how best to deploy staffing resources, should they be allocated sometime in the
future.
While additional resources may be necessary in order to achieve these goals, the long -term
benefits of adding staff would enhance fire, EMS, and special operations training, and provide
more time for inspections and commercial high- hazard pre -fire plans.
Page 4 of 4
Reference:
Resolution No. 10859
(CCS)
0
Resolution No. 10860
(CCS)