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Date: To: From: Subject: June 11, 2012 El Cerrito City Council/Pension Trust Board/ Public Financing Authority Board Scott Hanin, City Manager AGENDA BILL Agenda Item No. 6 Mary Dodge, Administrative Services Director/City Treasurer Adoption of the City's Fiscal Year 2012-13 Budget, Representing Appropriations from the City, Employee Pension Trust Board and Public Financing Authority. ACTION REQUESTED Conduct a public hearing and continue discussion, consideration and possible adoption of resolutions which adopt Fiscal Year 2012-13 budgets for the City of El Cerrito, the El Cerrito Public Financing Authority, and of the El Cerrito Employee Pension Trust Board. BACKGROUND At the June 5, 2012 concurrent meeting of the City Council, a presentation was made by the City Manager that discussed overall budget assumptions, Council goals, and presented the capital and operating budget of the City, the Employee Pension Board and the Public Financing Authority for Fiscal Year 2012-13. All questions raised by the Council at that meeting and from further discussions have been addressed as appropriate. A meeting of the Financial Advisory Board (F AB) to review and discuss the proposed budget was held on May 25, 2012. At this meeting, the FAB made no requests for changes to the budget appropriations or forecasts. The F AB recognized the efforts made in conservative revenue projections and appreciated the actions of the employees with respect to changes to their salary and benefits. An additional meeting of the F AB was held on June 7, 2012, during which the FAB's extensive review of the draft budget provided various typographical, formatting and clarification edits. These edits will be corrected prior to the final document being assembled in addition to any comments raised by the City Council tonight. It is anticipated the F AB will endorse adoption of the proposed budget. During two Council workshops held on March 5, 2011 and April 9, 2011, the City Council discussed and developed annual goals and a mission statement based on their shared vision and values for the community. With all assumptions and projections in ---PAGE BREAK--- Agenda Item No. 6 mind, as discussed in the June 5, 2012 presentation, the focus again for FY 2012-13 is consistent with the City Council goals of: • Fiscal Responsibility • Responsive Government • Community Engagement and Partnership • Public Safety • Economic Development • Environmental Stewardship • Support of Multi-Modal Transportation On May 2, 2011 the Council approved a resolution adopting the following Mission Statement for the City ofEl Cerrito: The City of El Cerrito serves, leads and supports our diverse community by providing exemplary and innovative services, public places and infrastructure, ensuring public safety and creating an economically and environmentally sustainable future. This proposed budget is intended to support the mission statement and provide staff with the parameters with which to provide programs and services to the residents of El Cerrito. ANALYSIS As in the past few years, City staff has worked very hard during difficult economic times to present a balanced budget that continues to offer the programs and services our residents expect while providing a financial reserve that meets the City Council's financial reserve policy of 10%. For FY 2012-13, without the cooperation shown by the employees, this would not have been possible. The initial draft proposed budget showed a General Fund shortfall of $313,703, which would have put the actual reserve considerably out of compliance with the policy. However, a number of actions have taken place and are proposed in order to balance the budget and bring reserves back into compliance with the reserve policy during the fiscal year. For example, the proposed expenditures included a contractually based cost of living adjustment (COLA) for the Police and Fire Department non-management staff. The Police and Fire Department associations have both agreed to forego this COLA for this fiscal year, reducing expenditures by approximately $250,000. Bridging the remaining shortfall and additional savings required to meet the 10% reserve requirement (roughly $2,900,000) are subject to continued negotiations with SEIU bargaining unit and the proposed City Council consideration of opening a 2-year CalPERS service credit retirement window (which is anticipated to save more than $150,000 next fiscal year). The adjustments to the proposed budget are summarized in the following table: Page 2 ---PAGE BREAK--- Summary of Final Budget Appropriations Projected Beginning General Fund Balance Revenues per proposed budget book Expenditures per proposed budget Net change before additional actions Additional Reductions to Proposed Expenditures (estimates) Forego of COLA by Police and Fire Proposed Two-Year Service Credit Program Additional Labor Contributions Total Additional Actions Final Expenditures New Net Change to Fund Balance Final Projected Ending Fund Balance 1 0% Reserve Requirement Over (under) Requirement Agenda Item No. 6 $2,798,705 29,192,110 (29,505,813) (313,703) 250,000 150,000 84,000 484,000 (29,021 ,813) 170,297 $2,969,000 ($2,902,181) $66,819 After these actions are considered the required appropriations necessary for the General Fund to meet the reserve requirement within the revenue estimates is $29,021,813. This equates to a Citywide expenditure and transfer appropriation of $45,689,847. Overall, this is a reduction of approximately $6.6 million in appropriations from what was projected for FY 2011-12. This is due primarily to the proposed reduction in capital outlay, flat property taxes and the dissolution of the Redevelopment Agency. The final budget document will be adjusted to reflect the COLA eliminations and an estimate of the savings associated with the proposed service credit program, assuming the City Council approves its implementation. These items will be brought to the Council for consideration and adoption in June and July. Since negotiations with SEIU are not completed, any further adjustments will need to be made at a subsequent City Council meeting. As necessary, staff will report back to Council during the fiscal year and make recommendations for additional adjustments as revenues and expenses are solidified. However, the proposed resolutions for adoption assume the final expenditure amounts as described above which produces both a balanced budget and a 10% reserve projection. ASSUMPTIONS The key revenue assumptions as discussed at the June 5, 2012 City Council meeting are as follows: • Property Taxes Citywide are shown as an increase primarily due to the budgeted receipts in the new City Low and Moderate Income (LMI) Housing Fund (the prior Housing Fund had tax increment as its funding source but it is discontinued due to the elimination of the Redevelopment Agency) • Sales Taxes are projected to increase due to increased business activity and an improving economy Page3 ---PAGE BREAK--- Agenda Item No. 6 • The budget amount for Fines and Forfeitures has decreased to come into line with actual colle<;tions • Use of Money & Property is projected to decline due to the reduction of interest rates and the availability of funds, and other revenue sources are projected to remain flat • The decline in Grant revenues is due to the completion of large infrastructure projects such as the San Pablo Avenue Streetscape Project and the Street Improvement Project in the prior year • Charges for Services has increased as programs in the Recreation Department expand and all departments attempt to recover actual costs for services rendered as described in the City's Master Fee Schedule. While every effort has been made to assure the accuracy and appropriateness of these estimates, they are still estimates. With the uncertainties of the economy these assumptions will be reviewed regularly to determine if action is needed to safeguard the City's reserves and financial stability. The revenues, as proposed, are needed to fund the expenditures determined utilizing the key assumptions shown below: • Overall expenditures and activity of the City remains flat as capital projects such as the initial phase of the Street Improvement Project and the multi-year San Pablo A venue Streetscape project were completed • The Redevelopment Agency was dissolved and history has been removed from current and prior year history • Activity in the Economic Development Division as well as the new City LMI Housing Fund is included in the City Management Department • The grant funding from FEMA acquired in FY 2011-12 by the Fire Department for the East Bay Regional Communication System increased the amended budget in that Department by over $3 million • PERS employer's costs continued to increase: the Public Safety rate rose to 30.657% from 29.928% in FY 2011-12 for the 3%-at-50 program and the Miscellaneous Group increased from 19.013% to 20.012 for the 2.75%-at-55 program • Contractually obligated COLAs of 2.1% for Public Safety non-management will be removed from the proposed budget and the 3% increased contribution of PERS employee contributions from unrepresented employees will be included; other actions are anticipated pending the completion of labor negotiations and are only reflected in the General Fund Ten-Year Plan • Health insurance rates are budgeted to increase by 9.35% and Dental rates by 4% Page4 ---PAGE BREAK--- Agenda Item No. 6 LEGAL CONSIDERATIONS Two resolutions of approval are attached to adopt the operating budget for the City due to a Councilmember' s request to separate out Recreation Department activity because of potential conflict of interest concerns. Additionally, separate resolutions for the Public Financing Authority and Pension Board are also attached for consideration . . :3:c- Scott Hanin City Manager Attachments: 1. Resolution for Adoption of the FY 2012-13 City Budget without Recreation Activity 2. Resolution for Adoption of the FY 2012-13 City Budget for Recreation Activity 3. Resolution for Adoption of the FY 2012-13 Budget for the Employee Pension Board 4. Resolution for Adoption of the FY 2012-13 Budget for the Public Financing Authority Page 5 ---PAGE BREAK--- RESOLUTION 2012-XX Agenda Item No. 6 Attachment 1 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EL CERRITO ADOPTING THE ANNUAL BUDGET REPRESENTING APPROPRIATIONS FROM ALL FUNDS OF THE CITY OF EL CERRITO EXCEPT FOR FUNDS PERTAINING TO THE RECREATION DEPARTMENTFORFISCAL YEAR2012-13 WHEREAS, City staff have prepared, transmitted, and presented a proposed budget for Fiscal Year 2012-13 to the City Council ofthe City ofEl Cerrito for its consideration; and WHEREAS, the City prepares and adopts the budget with the intent of providing a planned policy program for City services and a financial system to carry out the planned program of services; and WHEREAS, the proposed budget continues cost containment efforts in all departments and maintenance of all existing programs and services; and WHEREAS, the proposed budget has been reviewed and analyzed in public review sessions; and WHEREAS, the proposed budget represents anticipated revenues and proposed expenditures, including interfund transfers, from all funds of the City of El Cerrito; and WHEREAS, proposed revenue appropriations from proceeds of taxes are within the Fiscal Year 2012-13 City of El Cerrito appropriations limit, as defined by Article XIIIB of the Constitution of the State of California; and WHEREAS, a Councilmember has requested removal of the Recreation Department from this Budget Resolution to allow separate approval and to promote the appearance of independence in the administrative service of the City. NOW THEREFORE, BE IT RESOLVED that the City Council of the City of El Cerrito, in accordance with its authority and responsibility, hereby adopts the Fiscal Year 2012-13 Budget, summarized as Exhibit A, with exception to the items that pertain to the Recreation Department. BE IT FURTHER RESOLVED that the City Council of the City of El Cerrito, in accordance with its authority and responsibility, does hereby adopt revenue and expenditure appropriations in funds referenced in the budget document pertaining to all activity exclusive of revenue and expenditure appropriations related to the Recreation Department. Page 1 of2 ---PAGE BREAK--- Agenda Item No. 6 Attachment 1 BE IT FURTHER RESOLVED that the City Council of the City of El Cerrito hereby authorizes the City Manager or his/her designee to create such appropriations into such new accounts as may be appropriate for proper accounting in the City's financial system and to make any necessary non-material changes to finalize the budget document. BE IT FURTHER RESOLVED that the City Council of the City of El Cerrito hereby authorizes the City Manager or his/her designee to apply appropriate accounting rules for the proper classification of interfund transactions, including transfers between funds, or other financial transactions, as may be necessary to address bond or loan covenants, or any other requirements imposed by formal, legal agreements between the City and any other parties, as previously entered into by the City. BE IT FURTHER RESOLVED that the City Council of the City of El Cerrito hereby authorizes the City Manager or his/her designee to approve payment of goods and services received by the City in accordance with the City's approved budgets, programs, and policies, subject to a limitation of $25,000 for any single vendor in any one fiscal year, beyond which amount the City Council retains authority to approve payment with the exception of those items falling under other statutory authority public works, State purchasing). BE IT FURTHER RESOLVED that the City Council of the City of El Cerrito hereby authorizes the City Manager or his/her designee to shift expenditure appropriations within funds among departments, as may be necessary to meet the City's operational needs. I CERTIFY that at the regular meeting on June 11, 2012, the El Cerrito City Council passed this resolution by the following vote: AYES: NOES: ABSENT: IN WITNESS of this action, I sign this document and affix the corporate seal of the City ofEl Cerrito on June XX, 2012 Cheryl Morse, City Clerk APPROVED: William Jones, III, Mayor Page 2 of2 ---PAGE BREAK--- Exhibit A CITY OF EL CERRITO Proposed Fund Balance Fiscal Year Ending June 30, 2013 Projected Revenues & Expenditures Operating Transfers Net Est. Balance Fund Description at June 30, 2012 Contributions Transfer In Transfer Out Change at June 2013 Nonspendable Restricted Fund Balance $3,950,000 $3,950,000 Restricted MSC Pre-Funding Contributic 1,007,000 1,007,000 Unassigned Fund Balance 2,798,705 2,969,002 101 Sub-total Total General Fund Balance 7,755,705 $28,467,174 $28,287,713 $724,936 $734,100 $170,297 7,926,002 201 Gas Tax Fund (16,567) 660,000 603,649 663,000 700,675 18,676 2,109 202 NPDES 1,624 334,715 334,292 107,000 106,641 782 2,406 203 Landscape and Lighting (72,041) 771,000 1,149,695 595,000 142,584 73,721 1,680 204 Measure J Return to Source 1,986 495,421 128,028 371,786 (4,393) (2,407) 206 Measure A Parcel Tax 247,279 439,400 115,000 185,000 362,305 147,095 394,374 208 Asset Seizure 140,741 2,000 2,000 142,741 209 Vehicle Abatement 162,583 21,000 10,000 11,000 173,583 210 Park In Lieu Fund 11,969 500 500 12,469 211 Street Improvement Fund 89,200 1,425,000 754,232 740,000 (69,232) 19,968 213 Art in Public Places 48,000 48,000 221 Federal, State and Local Grants 186,922 464,461 464,461 186,922 232 City LMI Housing 1,784,252 781,152 1,013,134 (231,982) 1,552,270 2,585,948 5,394,649 4,572,491 1,550,000 2,423,991 (51,833) 2,534,115 301 Capital Improvements (362,309) 4,262,016 4,421,690 57,600 (102,074) (464,383) 205 Measure J Storm Drain 3,383 698,000 154,335 492,000 51,665 55,048 (358,926) 4,960,016 4,576,025 57,600 492,000 (50,409) (409,335) 401 Storm Drain Debt Service 551,559 100 523,974 (523,874) 27,685 834 Finance Authority- Measure A 368,892 300 372,050 362,305 185,000 (194,445) 174,447 835 Financing Authority-City Hall 603,318 300 600,000 599,000 (700) 602,618 836 Financing Authority-Street Imp 741,207 1,000 738,653 740,000 2,347 743,554 2,264,976 1,700 2,234,677 1,701,305 185,000 (716,672) 1,548,304 501 Integrated Waste Management 1,142,996 1,931,078 1,712,083 311,250 (92,255) 1,050,741 601 Vehicle/Equipment Replacement 674,047 146,100 48,017 98,083 772,130 1,817,043 2,077,178 1,760,100 311,250 5,828 1,822,871 701 Employees' Pension Trust Fund 112,500 112,500 Total $14,064,746 $40,900,717 $41,543,506 $4,146,341 $4,146,341 ($642,789) $13,421,957 ---PAGE BREAK--- RESOLUTION 2012- XX Agenda Item No. 6 Attachment 2 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EL CERRITO ADOPTING THE ANNUAL BUDGET REPRESENTING APPROPRIATIONS FROM THE RECREATION DEPARTMENT OF THE CITY OF EL CERRITO FOR FISCAL YEAR 2012-13 WHEREAS, City staff has prepared, transmitted, and presented a proposed budget for Fiscal Year 2012-13 to the City Council of the City of El Cerrito for its consideration; and WHEREAS, the City prepares and adopts the budget with the intent of providing a planned policy program for City services and a financial system to carry out the planned program of services; and WHEREAS, the proposed budget continues cost containment efforts in all departments and maintenance of all existing programs and services; and WHEREAS, the proposed budget has been reviewed and analyzed in public review sessions; and WHEREAS, the proposed budget represents anticipated revenues and proposed expenditures, including interfund transfers, from all funds of the City of El Cerrito; and WHEREAS, proposed revenue appropriations from proceeds of taxes are within the Fiscal Year 2012-13 City of El Cerrito appropriations limit, as defined by Article XIIIB of the Constitution of the State of California; and WHEREAS, a Councilmember has requested a separate Budget Resolution for the Recreation Department to allow separate approval and to promote the appearance of independence in the administrative service of the City. NOW THEREFORE, BE IT RESOLVED that the City Council of the City of El Cerrito, in accordance with its authority and responsibility, hereby adopts the Fiscal Year 2012-13 Budget, summarized as Exhibit A, for items that pertain to the Recreation Department. BE IT FURTHER RESOLVED that the City Council of the City of El Cerrito, in accordance with its authority and responsibility, does hereby adopt revenue and expenditure appropriations in funds referenced in the budget document pertaining exclusively to revenue and expenditure appropriations related to the Recreation Department. BE IT FURTHER RESOLVED that the City Council of the City of El Cerrito hereby authorizes the City Manager or his/her designee to create such appropriations into such new accounts as may be appropriate for proper accounting in the City's financial system and to make any necessary non-material changes to finalize the budget document. Page 1 of2 ---PAGE BREAK--- Agenda Item No. 6 Attachment 2 BE IT FURTHER RESOLVED that the City Council of the City of El Cerrito hereby authorizes the City Manager or his/her designee to apply appropriate accounting rules for the proper classification of interfund transactions, including transfers between funds, or other financial transactions, as may be necessary to address bond or loan covenants, or any other requirements imposed by formal, legal agreements between the City any other parties, as previously entered into by the City. BE IT FURTHER RESOLVED that the City Council of the City of El Cerrito hereby authorizes the City Manager or his/her designee to approve payment of goods and services received by the City in accordance with the City's approved budgets, programs, and policies, subject to a limitation of $25,000 for any single vendor in any one fiscal year, beyond which amount the City Council retains authority to approve payment with the exception of those items falling under other statutory authority public works, State purchasing). BE IT FURTHER RESOLVED that the City Council of the City of El Cerrito hereby authorizes the City Manager or his/her designee to shift expenditure appropriations within funds among departments, as may be necessary to meet the City's operational needs. I CERTIFY that at the regular meeting on June 11, 2012, the El Cerrito City Council passed this resolution by the following vote: AYES: NOES: ABSENT: ABSTAIN: IN WITNESS of this action, I sign this document and affix the corporate seal of the City ofEl Cerrito on June XX, 2012. Cheryl Morse, City Clerk APPROVED: William Jones, III, Mayor Page 2 of2 ---PAGE BREAK--- Exhibit A CITY OF EL CERRITO Proposed Fund Balance Fiscal Year Ending June 30, 2013 Projected Revenues & Expenditures Operating Transfers Net Est. Balance Fund Description at June 30, 2012 Contributions Transfer In Transfer Out Change at June 2013 Nonspendable Restricted Fund Balance $3,950,000 $3,950,000 Restricted MSC Pre-Funding Contributic 1,007,000 1,007,000 Unassigned Fund Balance 2,798,705 2,969,002 101 Sub-total Total General Fund Balance 7,755,705 $28,467,174 $28,287,713 $724,936 $734,100 $170,297 7,926,002 201 Gas Tax Fund (16,567) 660,000 603,649 663,000 700,675 18,676 2,109 202 NPDES 1,624 334,715 334,292 107,000 106,641 782 2,406 203 Landscape and Lighting (72,041) 771,000 1,149,695 595,000 142,584 73,721 1,680 204 Measure J Return to Source 1,986 495,421 128,028 371,786 (4,393) (2,407) 206 Measure A Parcel Tax 247,279 439,400 115,000 185,000 362,305 147,095 394,374 208 Asset Seizure 140,741 2,000 2,000 142,741 209 Vehicle Abatement 162,583 21,000 10,000 11,000 173,583 210 Park In Lieu Fund 11,969 500 500 12,469 211 Street Improvement Fund 89,200 1,425,000 754,232 740,000 (69,232) 19,968 213 Art in Public Places 48,000 48,000 221 Federal, State and Local Grants 186,922 464,461 464,461 186,922 232 City LMI Housing 1,784,252 781,152 1,013,134 (231,982) 1,552,270 2,585,948 5,394,649 4,572,491 1,550,000 2,423,991 (51,833) 2,534,115 301 Capital Improvements (362,309) 4,262,016 4,421,690 57,600 (102,074) (464,383) 205 Measure J Storm Drain 3,383 698,000 154,335 492,000 51,665 55,048 (358,926) 4,960,016 4,576,025 57,600 492,000 (50,409) (409,335) 401 Storm Drain Debt Service 551,559 100 523,974 (523,874) 27,685 834 Finance Authority- Measure A 368,892 300 372,050 362,305 185,000 (194,445) 174,447 835 Financing Authority-City Hall 603,318 300 600,000 599,000 (700) 602,618 836 Financing Authority-Street Imp 741,207 1,000 738,653 740,000 2,347 743,554 2,264,976 1,700 2,234,677 1,701,305 185,000 (716,672) 1,548,304 501 Integrated Waste Management 1,142,996 1,931,078 1,712,083 311,250 (92,255) 1,050,741 601 Vehicle/Equipment Replacement 674,047 146,100 48,017 98,083 772,130 1,817,043 2,077,178 1,760,100 311,250 5,828 1,822,871 701 Employees' Pension Trust Fund 112,500 112,500 Total $14,064,746 $40,900,717 $41,543,506 $4,146,341 $4,146,341 ($642,789) $13,421,957 ---PAGE BREAK--- RESOLUTION 2012-:XX Agenda Item No.6 Attachment 3 RESOLUTION OF THE CITY OF EL CERRITO EMPLOYEES' PENSION TRUST BOARD ADOPTING THE BOARD'S FISCAL YEAR 2012-13 BUDGET WHEREAS, the El Cerrito Employees' Pension Trust Board (Board) provides for retirement benefits for certain former City ofEl Cerrito employees and/or their beneficiaries; and WHEREAS, the Board wishes to maintain funding levels to support pension payments to plan members; and WHEREAS, the Board of Directors wishes to adopt the budget for Fiscal Year 2012-13. NOW THEREFORE, BE IT RESOLVED that the El Cerrito Employees' Pension Board adopts revenue budgets of$112,500 in FY 2012-13. BE IT FURTHER RESOLVED that the El Cerrito Employees' Pension Board adopts expenditure budgets of$112,500 in FY 2012-13 BE IT FURTHER RESOLVED that this Resolution shall become effective immediately upon its passage and adoption. I CERTIFY that at the regular meeting on June 11, 2012, the El Cerrito Employees' Pension Board passed this resolution by the following vote: AYES: NOES: ABSENT: IN WITNESS of this action, I sign this document and affix the corporate seal of the El Cerrito Employees' Pension Board on June XX, 2012. Cheryl Morse, Secretary to the Board APPROVED: William C. Jones, III, Chair ---PAGE BREAK--- RESOLUTION 2012-XX Agenda Item No. 6 Attachment 4 RESOLUTION OF THE CITY OF EL CERRITO PUBLIC FINANCING AUTHORITY ADOPTING THE FISCAL YEAR2012-13 BUDGET WHEREAS, the El Cerrito Public Financing Authority (Authority) provides for payment of long term debt obligations of the City of El Cerrito; and WHEREAS, the Authority Board wishes to maintain funding levels to support payments of principle and interest on those long term obligations; and WHEREAS, the Board of Directors wishes to adopt the Agency's budget for Fiscal Year 2012-13. NOW THEREFORE, BE IT RESOLVED that the El Cerrito Public Financing Authority adopts a revenue budget of$1,703,005 in FY 2012-13. BE IT FURTHER RESOLVED that the El Cerrito Public Financing Authority adopts an expenditure budget of$1,710,703 in FY 2012-13. BE IT FURTHER RESOLVED that this Resolution shall become effective immediately upon its passage and adoption. I CERTIFY that at the regular meeting on June 11, 2012, the El Cerrito Public Financing Authority passed this resolution by the following vote: AYES: NOES: ABSENT: IN WITNESS of this action, I sign this document and affix the corporate seal of the El Cerrito Public Financing Authority on June XX, 2012. Cheryl Morse, Authority Clerk APPROVED: William C. Jones, III, Chair ---PAGE BREAK--- OFFICE OF THE CITY CLERK CITY HALL 10890 San Pablo Avenue, El Cerrito, CA 94523-3034 Telephone (510) 215-4305 Fax (510) 215-4379 http://www.el-cerrito.org June 11, 2012 Special Concurrent City Council/El Cerrito Public Financing Authority and El Cerrito Pension Trust Board Meeting Agenda Item No. 6 – Fiscal Year 2012–13 Budget http://www.el-cerrito.org/archives/73/finalDraft_Budget_12- 13.pdf Documents are also available for review at: Office of the City Clerk 10890 San Pablo Avenue El Cerrito, CA (510) 215-4305 and The El Cerrito Library 6510 Stockton Avenue El Cerrito, CA