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April 16, 2013 Agenda Item No. 7(B) BUDGET STUDY SESSION EL CERRITO CITY COUNCIL DRAFT Agenda Item No. 7(B) ---PAGE BREAK--- Update on FY 2012-13 - Year End Projections Current and Future Budget Challenges Budget Overview Strategic Plan Resource Allocations Priority Setting Exercise Budget Schedule Next Steps 2 AGENDA Agenda Item No. 7 DRAFT ---PAGE BREAK--- 3 FY 2012-13 TOTAL BUDGET – ALL FUNDS Major Funds FY 2013 Adopted Revenues FY 2013 Adopted Expenditures General Fund $29,192,109 $29,020,023 Special Funds Gas Tax Fund $1,323,000 $1,304,324 Landscape and Lighting $1,366,100 $1,292,279 Street Improvement Fund $1,425,000 $1,494,232 Federal, State and Local Grants $464,461 $464,461 Capital Improvements $4,319,616 $4,421,690 Integrated Waste Management $1,931,078 $2,023,333 Other Funds $5,025,694 $5,667,715 Total Special Funds $15,854,949 $16,668,034 Total All Funds $45,047,058 $45,688,057 *Adopted numbers include Transfer Ins and Transfer Outs Agenda Item No. 7 DRAFT ---PAGE BREAK--- Anticipated use of $598K from restricted fund balance is required to offset revenue loss of reimbursement for Redevelopment/Successor Agency funds due to disallowance of enforceable obligations 4 GENERAL FUND UPDATE FY 2012-13 OVERVIEW General Fund Summary Revenues + Expenditures FY 2012 Actuals FY 2013 Adopted FY 2013 Amended FY 2013 Projected Beginning Fund Balance (Restricted & Unassigned) $6,434,405 $3,224,260 $3,224,260 $3,224,260 Total Revenues $29,298,213 $29,192,110 $29,192,110 $28,604,705 1- Time Use of Fund Balance (Offset Loss of Redevelopment) $598,957 $598,957 Total Expenses $32,508,358 $29,020,023 $29,090,923 $29,046,395 Personnel $22,619,755 $22,689,003 $22,759,903 $22,905,306 Non-Personnel $9,888,602 $6,331,020 $6,331,020 $6,141,089 Annual Balance/Deficit ($3,210,145) $172,087 $101,187 $157,267 Ending Fund Balance/Deficit $3,224,260 $3,396,347 $3,325,447 $3,381,527 Agenda Item No. 7 DRAFT ---PAGE BREAK--- 5 GENERAL FUND UPDATE FY 2012-13 YEAR END REVENUE PROJECTIONS General Fund Revenues FY 2012 Actuals FY 2013 Amended FY 2013 Projected Budget Variance Property Taxes $5,685,841 $6,038,300 $5,897,935 ($140,366) Sales Taxes $3,449,617 $3,910,000 $4,060,474 $150,474 Utility Users Taxes $3,163,978 $3,500,000 $3,500,000 $0 Other Taxes $1,885,422 $1,904,900 $1,957,114 $52,214 Interim Sales Tax $1,564,811 $1,545,000 $1,545,000 $0 Total Taxes $15,749,670 $16,898,200 $16,960,523 $62,322 Fees for Services $9,936,538 $10,964,194 $9,892,515 ($1,071,679) Interest, Transfers & Other Revenue $3,612,006 $1,329,716 $1,751,667 $421,951 Total Other Revenues $13,548,544 $12,293,910 $11,644,182 ($649,728) Total Revenues $29,298,213 $29,192,110 $28,604,705 ($587,405) Revenue Variances Property & Sales Tax- Net Increase +$10k Other Taxes- Net Increase of +$52K (Business License +$50K) Fees for Services- Net decrease -$1.1M (Building Permits & Disallowance of Enforceable Obligations) Agenda Item No. 7 DRAFT ---PAGE BREAK--- 6 GENERAL FUND UPDATE FY 2012-13 YEAR END EXPENDITURE PROJECTIONS Expenditure Variances Personnel includes Fire Department OES costs of $198K (fully reimbursed) Insurance costs increased by $200K due to a reduction in annual rebate Personnel $22,619,755 $22,759,903 $22,905,306 ($145,403) Non-Personnel Purchased Professional & Technical Services $2,169,106 $2,516,840 $2,441,335 $75,505 Property Services/Other Services $2,014,613 $2,102,130 $2,039,066 $63,064 Supplies $660,926 $650,850 $631,325 $19,526 Property & Capital $229,826 $252,500 $244,925 $7,575 Other Objects $102,395 $74,600 $50,339 $24,261 Transfers From Other Funds (Indirects) $761,737 $734,100 $734,100 $0 Total Non-Personnel $5,938,602 $6,331,020 $6,141,089 $189,931 Total Expenditures before Land Xfer $28,558,358 $29,090,923 $29,046,395 1X Transfer of Land Held for Redevelopment $3,950,000 Total Expenditures $32,508,358 $29,090,923 $29,046,395 $44,528 Agenda Item No. 7 DRAFT ---PAGE BREAK--- 7 GENERAL FUND BALANCING MEASURES TO DATE General Fund balanced through a combination of measures: Recurring Savings • Decreased compensation (COLAs, raises, etc.) • Increased employee contributions to CalPERS • Furloughs • Use of Special Funds One-Time Measures • Use of grant funds to implement programs, complete projects • City has received over $12M in grants in last 5 years • Use of reserves to offset one-time costs • Strategic hiring/vacancies Agenda Item No. 7 DRAFT ---PAGE BREAK--- 8 INCREASED RELIANCE ON VACANCIES TO BALANCE BUDGET Approved Actual Approved Actual Approved Actual Approved Actual City Council 5 5 5 5 5 5 5 5 City Management 7 7 7 7 7 7 7 7 Administrative Services 7.8 7 7.8 7 7.8 7 7.8 7 Economic Development 5 5 4 4 4 4 4 3 Environmental and Development Services 22 19 20 17 20 19 21 16 Fire 37 36 37 34 37 34 37 34 Police 56.55 55.55 56.55 52.55 56.55 53.55 56.55 50 Public Works 14.25 12.25 14.25 13.25 14.25 14.25 14.25 9 Recreation 38 36 38 34 38 34 38 32 Total 192.6 182.8 189.6 173.8 189.6 177.8 190.6 163 Vacant Positions 9.8 15.8 11.8 27.6 FY 09-10 FY 10-11 FY 11-12 FY 12-13 Agenda Item No. 7 DRAFT ---PAGE BREAK--- Decreased responsiveness Reduced staff morale and productivity Decreased ability to leverage outside resources (partnerships and grants) Reduced recreation programs, services and special events Potential reduction in office hours and customer service Vacant positions leave duties/functions that are unmet Reduced maintenance of City facilities 9 VACANCIES LEAD TO…. Agenda Item No. 7 DRAFT ---PAGE BREAK--- 10 BENEFITS CONTINUE TO TAKE UP AN INCREASING PORTION OF THE OPERATING BUDGET Budgeted FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Benefit Costs Health, Dental, Life Insurance 1,795,148 1,753,347 2,001,611 2,296,493 2,471,859 2,614,014 2,826,138 2,721,663 3,302,919 Pension Contributions 2,618,445 3,054,753 3,622,202 3,912,701 4,207,504 4,195,313 4,385,138 5,111,450 5,388,789 Percentage Change from Prior Year Health, Dental, Life Insurance 19.4% -2.3% 14.2% 14.7% 7.6% 5.8% 8.1% -3.7% 21.4% Pension Contributions 81.9% 16.7% 18.6% 8.0% 7.5% -0.3% 4.5% 16.6% 5.4% Budgeted Headcount 163.7 168.0 185.6 187.7 192.4 192.6 189.6 189.6 190.6 Health, Dental, Life Ins. per Head 10,969 10,440 10,785 12,238 12,848 13,572 14,906 14,355 17,329 Pension Contributions per Head 16,000 18,188 19,516 20,851 21,869 21,783 23,128 26,959 28,273 CalPERS pension costs roughly flat for FY 2013-14 CalPERS Board discussing significant increases for upcoming fiscal years Health and medical projected at ~10% increase Agenda Item No. 7 DRAFT ---PAGE BREAK--- Although pension costs are projected flat this fiscal year, CalPERS threatening large increases in future years Most employees are not or are minimally contributing to pension costs Medical benefits continue to increase at a much higher rate than inflation (~10% in FY 2013-14) City’s median policy keeping salaries competitive (Police and Fire salaries projected roughly flat for FY 2013-14) Non-sworn employees have not received a compensation adjustment in seven years Unlike most cities, EC does not pay for medical benefits after retirement—further benefit reductions may leave the City at a recruitment disadvantage Implementation of Affordable Care Act may impact costs in the future 11 PERSONNEL & COMPENSATION ISSUES Agenda Item No. 7 DRAFT ---PAGE BREAK--- Impact of “triple-flip” true-up = sales tax reduction – ($600,000) No backfill for co-op agreements with MSC – ($585,000) Fund balances now also used for cash flow Dedicating funds for reinvestment and reserves Non-sworn employees have not had a median adjustment in seven years A greater number of approved positions likely to remain vacant or eliminated 12 CITYWIDE CHALLENGES FOR FY 2013-14 Agenda Item No. 7 DRAFT ---PAGE BREAK--- 13 HOW DO WE BECOME—AND STAY— A GREAT ORGANIZATION? Agenda Item No. 7 DRAFT ---PAGE BREAK--- Key Concepts What is our “20 Mile March” and are we hitting it? How do we get the right people “on the bus and in the key seats”? Is it time to face the “Brutal Facts”? Where should we place our “big bets” based on empirical validation? 14 STAFF TRAINING TO BE “GREAT BY CHOICE” Agenda Item No. 7 DRAFT ---PAGE BREAK--- Fiscal Responsibility Responsive Government Community Engagement & Partnership Environmental Stewardship Economic Development Public Safety Support of Multi-Modal Transportation 15 CITY COUNCIL GOALS FY 2012-13 Agenda Item No. 7 DRAFT ---PAGE BREAK--- 16 STRATEGIC PLAN GOALS Agenda Item No. 7 DRAFT ~ft5, ELCERRITO ~L A : DeL.\ liE~ e"'e~PLA2Y GD~Jef2NM~NI seevtces. GIJ/Jrt.- ENSJ2f 'fl..t. Pu Bt..t c.S HeAL-'ttt ~SAfeTY 111~ ---PAGE BREAK--- 17 OVERVIEW OF FY 2012-13 OPERATING BUDGET City Management 7.6% Administrative Services 9.0% Police 25.6% Fire 19.3% Public Works 8.3% Environmental & Developmt Services 8.2% Recreation 10.0% Capital Outlay 11.9% Agenda Item No. 7 DRAFT ---PAGE BREAK--- 18 OVERVIEW OF FY 2012-13 GENERAL FUND City Management 7.4% Administrative Services 4.9% Police 37.5% Fire 28.2% Public Works 2.3% Environmental & Development Services 5.6% Recreation 14.2% Agenda Item No. 7 DRAFT ---PAGE BREAK--- 19 OVERVIEW OF GENERAL FUND USING STRATEGIC PLAN GOALS Goal A: Exemplary Services 19% Goal B: Financial Sustainability 5% Goal C: Sense of Place 7% Goal D: Facilities 2% Goal E: Health & Safety 65% Goal F: Environmental Sustainability 1% Agenda Item No. 7 DRAFT ---PAGE BREAK--- OVERVIEW OF FUNCTIONS ACROSS STRATEGIC PLAN GOAL AREAS 20 Agenda Item No. 7 DRAFT ~ft5, ELCERRITO ---PAGE BREAK--- GOAL A: DELIVER EXEMPLARY GOVERNMENT SERVICES Strategy Ongoing Next year Mid- term Long Term Increase productivity and efficiency by utilizing data driven analysis to ensure appropriate resource allocation. ● Promote employee development and professional growth. ● Recruit and retain a talented and effective workforce. ● Ensure city programs and services are inclusive of people of diverse backgrounds. Develop and strengthen relationships with public and private partners, residents, businesses, schools and community groups. ● Maintain emphasis on providing excellent customer service. ● 21 Key: ● = Can do with current resources = Will require additional resources Agenda Item No. 7 DRAFT ---PAGE BREAK--- GOAL B: ACHIEVE LONG-TERM FINANCIAL SUSTAINABILITY 22 Strategies Ongoing Next year Mid term Long Term Maintain financial discipline by establishing decision-making guidelines. ● Ensure policies, procedures and systems represent best practices in financial management. ● Attract and maximize opportunities for new/expanding businesses. Explore opportunities for public/private partnerships. ● ● Continue to pursue opportunities for new funding, including outside grants. ● Develop a financial plan to address ongoing and deferred maintenance of facilities and infrastructure. Develop a plan to ensure that revenue meets the cost of providing the services identified in the Strategic Plan. ● Track and promote State and Federal legislation that would create new funding opportunities. ● ● Key: ● = Can do with current resources = Will require additional resources Agenda Item No. 7 DRAFT ---PAGE BREAK--- GOAL C: DEEPEN A SENSE OF PLACE AND COMMUNITY IDENTITY Strategies Ongoing Next year Mid term Long Term Promote strong neighborhoods. ● Celebrate the City’s diversity by welcoming residents of all ages and cultures and encouraging their civic involvement. ● Adopt a Revised General Plan that meets the needs of the community. Re-imagine under-utilized properties through advanced planning efforts that encourage investment and/or new development. ● Develop an Economic Development action plan. ● Review and update policies on preservation of historic and cultural resources. Encourage dense business nodes to minimize or eliminate automobile traffic. ● Identify, promote, and/or develop entertainment, recreational, and leisure activities for people of all ages and demographics. ● Promote arts and culture and community celebrations. ● Develop plans for the City’s 100 Year anniversary. Be a strong partner with the schools. ● 23 Key: ● = Can do with current resources = Will require additional resources Agenda Item No. 7 DRAFT ---PAGE BREAK--- GOAL D: DEVELOP AND REHABILITATE PUBLIC FACILITIES AS COMMUNITY FOCAL POINTS 24 Strategy Ongoing Next year Mid- term Long Term Develop a plan to address ongoing and deferred maintenance of facilities and infrastructure. Continue the facilities assessment to prioritize and strategize investment library, public safety facility, community center). ● Revisit and update the Structural Facilities Management Plan. Key: ● = Can do with current resources = Will require additional resources Agenda Item No. 7 DRAFT ---PAGE BREAK--- GOAL E: ENSURE THE PUBLIC’S HEALTH AND SAFETY 25 Strategies Ongoing Next year Mid term Long Term Provide transparent info on crime, and address perceptions of safety. ● Utilize environmental design techniques to deter and prevent crimes. ● Apply data-driven analysis to target resources and enhance safety. Maintain disaster preparedness programs and ensure plans are current. ● Continue teamwork to ensure and enhance efficient and comprehensive plan review, permitting and inspection process. ● Continue to work with local partners BART, school district, other communities, EBRPD) on a coordinated approach to public safety. ● Utilize community-oriented policing and problem solving. ● Utilize a diverse array of crime prevention techniques (e.g. School Resource Officer (SRO) program, Traffic Unit, Bike Patrol, etc). ● Explore innovative and best practices for promoting public health. Key: ● = Can do with current resources = Will require additional resources Agenda Item No. 7 DRAFT ---PAGE BREAK--- GOAL F: FOSTER ENVIRONMENTAL SUSTAINABILITY CITYWIDE 26 Strategy Ongoing Next year Mid- term Long Term Be a leader in setting policies and providing innovative programs. ● Promote environmental education to facilitate behavioral changes by working with the school district and other community groups. ● Implement polices to promote waste diversion (i.e. ban on single-use bags and Styrofoam food containers). ● Encourage alternative modes of transportation to the single occupancy vehicle. ● Implement the City’s Climate Action Plan, including: • Reduce vehicle miles • Facilitate energy and water efficiency • Reduce the amount of waste generated in El Cerrito • Make municipal operations more resource efficient and environmentally friendly ● Key: ● = Can do with current resources = Will require additional resources Agenda Item No. 7 DRAFT ---PAGE BREAK--- What goals and strategies are most important to the City Council for the next fiscal year ? How should goals be aligned with resources? What options are most or least desirable to the City Council for balancing the budget? 27 DEVELOPING BUDGET PRIORITIES FOR FY 2013-14 Agenda Item No. 7 DRAFT ---PAGE BREAK--- 28 EXAMPLE OF GOAL BASED BUDGETING Agenda Item No. 7 DRAFT ~ft5, ELCERRITO COMMUNiTY AND ABILITY lOCI SI.JppOfts ~ ---PAGE BREAK--- 29 EXAMPLE OF GOAL BASED BUDGETING Agenda Item No. 7 DRAFT ~ft5 , ELCERRITO Drilling Platform - Rank~d Off~rs by Outcom~ Budg~t Y~ars: 2013-2014 COMMUNITY AND NEIGHBORHOOD LIVABILITY- 2013 170.1 NeighbootlOCid SeMoes 170.2 Code~. Occupancy and ZaWlg Enfon:ement 40.1 Loog Range Plarvling 80.2 Alfordable Hoo.Mlg & SeMoes Funding and Adrrinislrative Support 80.3 KFCG: Alfordable Housing and Human Services 200.1 Low Income. Senior and Di- Rebate QQ.1 Median Maintenance 203.1 NeighbootlOCid Sln!e! Tree Replacement 162.1 NeighbootlOCid Traffic Mitigrion 80.1 Social Sustainability Management. Core Programs. and Projects 170.3 Medialion & ResiiOra!M! Jusli"" Srden Oulreach Pro!J"am 80.7 elHANCEMENT: Social Sustainabiity Support Offer Cost Offer fundi!!!! GENERAL FUND Tobil ~ Ongoing OlltER FUNDS RESEJM:S 314.029 0 314.029 0 0 701.092 50.000 651.092 0 0 Sp«Jo/ 370.318 0 370.3 18 0 0 760.01!2 0 760.0C2 0 0 C!:IIYOIFOtfca&9U 150.047 0 0 150.047 0 ~F«rcc.rs 217.450 0 217.450 0 0 489.157 8.094 481.063 0 0 50.000 0 50.000 0 0 130.000 130.000 0 0 0 294.553 0 294.553 0 0 124.750 0 124.750 0 0 112.Q61 0 112.Q61 0 0 37.508 0 37.508 0 0 ---PAGE BREAK--- 30 EXAMPLE OF GOAL BASED BUDGETING Agenda Item No. 7 DRAFT ~ft5, ELCERRITO Quality OesigJIIBuilding standards • Sustainable/ Attainable Housing Milt of Housing Types, Densities and Locations Owni!I'Ship Opportunities • Attractive Public Places • Clean and Maintained • Code Compliance • Gr.lffiti.free • Historic Present .Won • Parlcing 75 Collabor..tionl Outreach Occupancy Standards Reasonable Noise Lewels lnfonnal NetwortcsiHOAs Conflict Resolution Economic, Social, ~d Environmental Sustainability Efficient Su,pply of Infrastructure and Services Prioritized lnfill and Targeted Redevefopment Unique Gateways • Coonlinatl!d Edges and Growth Management AINs • 11\.dti-llodal Connections • llixed-Use Community CentErs ---PAGE BREAK--- There are four main categories to be considered in developing the FY 2013-14 Budget: Fiscal Policies Improved Efficiencies Service/Program Changes Other Budget Directives 31 OPTIONS TO CONSIDER FOR FY 2013-14 Agenda Item No. 7 DRAFT ---PAGE BREAK--- FISCAL POLICIES The budget should be balanced. Agree or Disagree? General Fund reserves between 10% and 15% could be used to help balance the budget. Agree or Disagree? Reserves should be used for cash flow AND dedicated reserves. Agree or Disagree? Budget should identify our core services as first priority and shortfalls for additional programs and services. Agree or Disagree? 32 For FY 2013-14, are these policies important to the City Council to maintain or implement? Agenda Item No. 7 DRAFT ---PAGE BREAK--- IMPROVED EFFICIENCIES Vacant positions should continue to be the primary method of balancing the budget. Yes or No? Are there particular vacant positions that should be filled regardless of the budget impact? Yes or No? Which ones? Reduction of office hours should be considered. Yes or No? Median adjustments to control points (not necessarily salaries) for unrepresented employees is appropriate. Yes or No? 33 Agenda Item No. 7 DRAFT ---PAGE BREAK--- Budget Strategies (1 - 3, 1 = highest priority) Layoffs should only be considered as a last resort in order to balance the budget and meet goals and strategies. 1 – 2 – 3 Service reductions should be considered over continued reliance on vacancies. 1 – 2 – 3 Alternatives to reduce the City’s cost of health care benefits should be evaluated, including greater employee contributions should be considered. 1 – 2 – 3 Employee benefit contributions to pensions should be increased over time. 1 – 2 – 3 34 SERVICE AND PROGRAM CHANGES Agenda Item No. 7 DRAFT ---PAGE BREAK--- OTHER BUDGET DIRECTIVES Additional fee increases to cover actual operating costs, above inflation, for programs should be considered. Yes or No? All special events should continue as in the past (particularly July 4th). Yes or No? Additional funds should be earmarked for a restricted reserve fund. Yes or No? Additional funds should be earmarked for a dedicated facility repair fund. Yes or No? 35 Agenda Item No. 7 DRAFT ---PAGE BREAK--- Adoption of Strategic Plan Budget Priority Setting Preliminary Budget to FAB Draft Budget Book to City Council Budget Presentation Study Sessions – as needed Budget Adoption April 2, 2013 April 16, 2013 Mid-May Early June June 4, 2013 June 10, 11, 18 & 25 By June 30, 2013 36 BUDGET SCHEDULE Agenda Item No. 7 DRAFT ---PAGE BREAK--- Should the City Council wish to discuss priorities and options further, an additional workshop can be scheduled If priorities are relatively clear, staff will go forward and develop FY 2013- 14 Budget for Council consideration in June 37 NEXT STEPS Agenda Item No. 7 DRAFT