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HomeMy WebLinkAbout06-05-2018 Item 19 2018-19 Supplemental Budget Workshop Meet ing Date: 6/5/2018 FROM: Derek Johnson, City Manager Prepared By: Shelly Stanwyck, Parks and Recreation Director Brigitte Elke, Interim Finance Director Alex Ferreira, Budget Manager SUBJECT: REVIEW AND DISCUSSION OF PROPOSED 2018-19 SUPPLEMENTAL BUDGET RECOMMENDATION Receive and discuss the 2018-19 Budget Supplement including: a. Major City Goals/Other Important Objectives and Performance Measures progress report; and b. The 5-year General Fund Forecast; and c. The proposed changes to the 2018-19 Budget Supplement arising from the implementation of the Adopted Fiscal Health Response Plan (FHRP); and d. The proposed changes to the 2018-19 Capital Improvement Program; and e. The Enterprise Funds Overviews and implementation of the FHRP to the Parking, Sewer, Transit, and Water Enterprise Funds. DISCUSSION The Budget Supplement for 2018-19 implements the Council adopted Fiscal Health Response Plan and contains the following 12 sections. The Budget Overview 2018-19 This section of the Budget Supplement is the narrative summary of the topics covered by the document. It provides highlights for the major sections of the Supplement. Below is a summary of the basic outline of the Budget Overview 2018-19. Packet Pg. 223 Item 19 Budget Outline 1. City Manager Message 2. April 17, 2018 Adoption of Fiscal Health Response Plan 3. Highlights of Status on Major City Goals/Other Important Objectives and Performance Measures 4. Overall Economic Outlook 5. 5-Year Fiscal Forecast for General Fund Including Projected Revenues and Expenditures 6. Application of the adopted Fiscal Health Response Plan to the General Fund and Changes to the 2018-19 Budget 7. Status Report on Revenue Oversight Committee (REOC) Operating Programs and Capital Projects 8. Capital Improvement Projects 9. Enterprise Funds Forecasts and Reports Major City Goals and Other Important Objectives Every two years with the adoption of the City’s Financial Plan the most important, highest priority work programs are established, with resources to accomplish them, as Major City Goals and Other Important Objectives. The 2017-19 Major City Goals are focused on the following: Housing, Multi-Modal Transportation, Climate Action, and Fiscal Sustainability and Responsibility. At this phase of the Financial Plan, a majority of the Major City Goals and Other Important Objectives are tracking at about half way to completion. Section B of the 2018 -19 Budget Supplement provides details for each Goal and Other Important Objective and includes the status of tasks assigned to each with notes on accomplishments, progress, as well as modifications to tasks. 5 Year General Fund Forecast As part of the 5-year Fiscal Forecast Discussion three policy changes are recommended regarding fund balances and reserves and long term financial planning. Council’s action of June 19th will consider adoption of these policies. Packet Pg. 224 Item 19 The 5-year Fiscal Forecast is based on assumptions shown in Section D that the City will be able to maintain a balanced budget and meet its unfunded pension liabilities and appropriate approximately $20 million dollars towards payments of unfunded CalPERS pension liabilities. The forecast largely shows that the City will be able to make modest adjustments in expenditures based on revenue forecasts and that significant expansion of operating programs or capital investments wo uld require operational tradeoffs. The bottom line is that, in order to fund the City’s unfunded pension obligations, fiscal restraint will be required for the foreseeable future. Application of Fiscal Health Response Plan This Financial Plan process is slightly different due to changes in the City’s 10-year Financial Forecast associated with changes to unfunded liabilities associated with the City’s pensions. As a result, since summer of 2017, the Council and public have studied this problem and identif ied a framework in which to address it over the next three years. On April 17, 2017, the City Council adopted a Fiscal Health Response plan to guide the 2018 -19 Budget as well as the 2019-21 Financial Plan. Each City department has applied the polices and guiding principles of the Fiscal Health Response Plan to their operating program budgets for 2018 -19. As a result, predominately reductions achieve a balanced budget for 2018-19. The options proposed are those with the least amount of service level impa cts and are those that are achievable in 2018-19. The following summarizes the proposed operating budget reductions and other changes which implement the Fiscal Health Response Plan and are contained in the Budget Supplement. Capital Improvement Projects Several revisions to the 2018-19 CIP are proposed. They include appropriations for three new projects using grants or previously identified funds. In addition, there are recommended reductions to existing projects whose construction can be deferred in 2018-19. These reductions are recommended to fund a project ready to construct this summer, the Laurel Lane Complete Streets project. The project discussed below is done so for ease of public review with this agenda report, the same information in contained in the Budget Supplement in multiple locations as well. Park in the North Broad Street Neighborhood This topic is discussed in the Budget Overview and is recommended for incorporation into the City’s capital improvement program. It is discussed in th is transmittal report in summary form as not all members of the public will choose to review the Budget Supplement. However, the Supplement covers this topic as well. Packet Pg. 225 Item 19 a. Current Council Direction. In 2016, Council allocated $900,000 of General Fund to the P arkland Fund for the purposes of developing a Park in the North Broad Street Neighborhood. On June 1, 2017, Council provided direction to transfer $160,000 of that allocation from the from the Parkland Development Fund to a fund the Parks and Recreation Master Plan and Element update during the 2017-19 Financial Plan. Staff was directed to pursue a park site in this neighborhood that facilitates a Park and the Broad Street Bike Boulevard. The remaining $740,000 General Fund contribution designated in the Parkland Fund for the Park in this neighborhood was to be reevaluated at the 2019 -21 Financial Plan if no active pursuit of property was underway. During 2017-18, staff from Public Works, Parks and Recreation and the City Attorney initially met with the Church of the Latter Day Saints to discuss the possible use of property it owns that is bounded by Foothill Boulevard and Ramona Drive for the multiple purpose of a Park and a Bike Path. The good news is, an agreement was reached for use of that property for Bike Path purposes with the Church. The disappointing news is no agreement could be reached for Park purposes. Although the circumstances surrounding a potential Park changed, consistent with the current Parks and Recreation Element, (which identifies the need for a Park in the North Broad Street Neighborhood), staff continued to evaluate how and where this could occur given the Ramona/Foothill Drives location was no longer feasible. Parks and Recreation staff facilitated a series of meetings with a group of residents of the North Broad Street Neighborhood. Staff reviewed all properties in the neighborhood that might be available and viable for park purposes. Using the Goldilocks analogy some were too steep, some were too constrained, some were under residential development, and some were just not right. Eventually staff and the residents were able to identify that property the City owns, at 533 Broad Street, Broad Street Community Gardens, could be just right for a Park in this neighborhood. b. Council Direction Sought with 2018-19 Supplement – a new CIP Project It is therefore proposed that Council provide direction to staff to establish a capital improvement project to begin the design and development of a Park in the North Broad Street neighborhood at the City owned property at 533 Broad with the $740,000 General Fund designation in the Parkland Fund to be appropriated for this purpose. Included in this direction, if supported by Council, would be a programmatic work effort by staff, to use the City’s public engagement process to engage the neighborhood about this Park, seek its input in the design, and have the Parks and Recreation Commission continue to serve in its capacity as the advisory body to the Council on this new park. Given staff in Parks and Recreation’s thoughtful reorganization, and focus on other work efforts, this project will not begin until spring 2019. Packet Pg. 226 Item 19 Enterprise Funds For ease of review, the Budget Supplement includes the Fund Reviews for each of the Enterprise Funds: Parking, Sewer, Transit, and Water. Those four Fund Reviews include overviews of each Fund, the Funds’ responses and strategies to apply the Fiscal Health Response Plan, and any Capital Improvement Projects planned. Rate adoptions for the Water and Sewer Funds will be considered by Council on June 19th. ENVIRONMENTAL IMPACT There is no environmental impact associated with the adoption of the 2018 -19 Budget Supplement. Notably, components of the Budget and savings proposed in it are focused on increased sustaina bility and the use of less consumable goods in an ongoing effort by the City to address long-term environmental concerns. Nothing in the Budget Supplement is intended to constitute a final approval of any particular project for purposes of the California Environmental Quality Act and no action herein shall be construed to relieve the City of otherwise applicable environmental review obligations prior to any particular project approval. FISCAL IMPACT Fiscal impact of the proposed 2018-19 Budget Supplement is a balanced budget that sets forth the series of budgetary changes over the next three years to align revenues and expenditures to address increased costs associated with unfunded pension liabilities. NEXT STEPS Following Council discussion and direct ion at a public hearing of June 5, 2018, staff will return on June 19, 2018 for consideration of the Water and Sewer Funds rate adoptions, the amendments to Fiscal Policies regarding a revenue stabilization fund, a capital projects reserve, and the allocat ions of funds to prepay or participate in a trust to address portions of the CalPERS unfunded liability; the adoption of the appropriations limit for 2018 -19, the adoption of the 2018- 19 Budget. ATTACHMENT a - 2018-19 Budget Supplement Packet Pg. 227 Item 19 6/5/2018 1 1 2017‐19 Financial  Plan Supplement Proposed  2018‐19 Budget Picture courtesy of Laura Schwoerer - Instagram @wildflowerfolie Recommendation: Receive and Discuss 1. MCG/OIO and Performance Measure Progress Reports 2. The 5-Year General Fund Forecast; 3. The proposed changes to the 2018-19 Budget Supplement 4. The proposed changes to the 2018-19 Capital Improvement Program 5. Enterprise Funds Overviews 2 6/5/2018 2 Introductory Remarks Substantial outreach. 2018-19 Supplement is guided by the adopted Fiscal Health Response Plan. 2018-19 Supplement and proactively addresses unfunded liabilities and proposes expenditures changes with little service level impact and new ways of doing business that are achievable in the upcoming fiscal year. 92% of residents indicate San Luis Obispo is an excellent or pretty good place to live. 3 42018-2019 Budget Overview Budget is balanced; aligns revenues and expenditures to account for increased payments to CalPERS. Budget affirms City’s commitments to essential services and funding high priority maintenance projects. Fiscal Forecast shows the City will be able to make approximately $20 million in payments to unfunded liabilities over the next 5 years. 6/5/2018 3 2018-2019 Budget Overview 5 This Second Year of the 2017-19 Financial Plan has a positive General Fund balance above policy reserves. Continued economic and regional growth have been forecasted at a modest level. Major City Goals and Other Important Objectives are on course. Presentation Overview 6 Budget Foundation •Status of Major City Goals and Other Important Objectives •Status of Capital Improvement Program 2018-19 Budget •The FHRP •Application of the FHRP •Operating Expenditures •Capital Improvement Program •Five Year Fiscal Forecast •Policy Changes Enterprise Funds •Water •Sewer •Parking •Transit 6/5/2018 4 Budget Foundation: Summary of MCG and CIP 7 Budget Foundation: 2018-19 Major City Goals and Other Important Objectives Major City Goals •Housing •Multi-Modal Transportation •Climate Action •Fiscal Sustainability & Responsibility Other Important Objective •Downtown Vitality 8MCG Update 6/5/2018 5 Housing - 44% Complete Over 10 affordability agreements are in process. Affordable Housing Fund balance is $1.75M. Zoning Regulation Update added workforce housing as an income category. 9MCG Update Multi-Modal Transportation - 40% Complete Calle Joaquin Park and Ride lot opened – the first in SLO. SLO Transit received multiple awards and continued to adjust services. Signal upgrade at Monterey and Osos complete increasing safety. 10MCG Update 6/5/2018 6 Climate Action-40% Complete Sustainability Manager Hired and Green Team re-established Climate Action Plan Update almost complete. Implementation of plastic bottles and straw regulations CCA Underway 11MCG Update Fiscal Sustainability & Responsibility - 50% Complete Adopted the Fiscal Health Response Plan to address unfunded liabilities. Funding the Future of SLO. Continued work on economic impacts of Diablo Canyon closure. 12MCG Update 6/5/2018 7 OIO: Downtown Vitality – 50% Complete Ongoing maintenance in the downtown core with portions of the Mission Plaza Concept Plan to start during Summer of 2018. The Community Action Team and Bicycle Patrols continue to maintain public safety in downtown. 13MCG Update 14 CIP Status Update 6/5/2018 8 QUESTIONS? 15 16Proposed 2018-19 Budget 6/5/2018 9 Strategic Direction: Adopted Fiscal Health Response Plan Affecting all City Funds – the purpose of the Plan is to establish a framework to respond to the long-term fiscal impacts of the significant increases in required pension contributions to the CalPERS retirement system over three-years. 17 2018-19 Budget Refresher: What is the Problem? Similar to 3,000 other agencies in California, the City faces a significant increase in required pension contributions. The City’s annual costs to CalPERS will more than double in 10 years. To address these increases, the City needs to reduce expenditures by $8.9 million in the General Fund & Enterprise Funds over the next three years.$7.8 million$19 million2014–15 ANNUAL CALPERS COST 2024–25 PROJECTED CALPERS COST 2018-19 Budget 6/5/2018 10 Fiscal Health Response Plan (FHRP)19 Problem General & Enterprise Funds Key Policies and Principles Integration with Financial Planning Process Elements of Plan New Revenues New Ways of doing Business Employee Concessions Prepayment or a Trust External Impacts to Plan Communication Plan Implementation 2018-19 Budget The FHRP is a Balanced Approach to Budget Reductions 20 30 - 40% 20 - 30% 30 - 40% General Fund Revenues New Ways of Doing Business Operating Reductions Concessions 2018-19 Budget 6/5/2018 11 Concessions $1.9 million in ALL Funds over the FHRP period 21 All regular employees participate in the same retirement system - CalPERS Adopted policies address the concept of shared responsibility Phased approach for concessions with the objective amount of $1.9 million for all funds by fiscal year 2020-21 City will negotiate in good faith with all bargaining units City will tailor labor agreements to meet mutual objectives. 2018-19 Budget Implementation FHRP with the 2018-19 Budget The FHRP has guided the preparation of the 2018-19 Budget Supplement. All Departments have provided operating reductions and new ways of doing business as have the Enterprise Funds. No reductions to CIP are proposed. The reductions proposed are those: With the least amount of service level impacts That are achievable in the first year of the Plan 22 2018-19 Budget 6/5/2018 12 23Operating Reductions New Ways of Doing Business 1. Refinancing 1. Energy Efficiency 2. Energy Efficiency and Less Consumption 2. Enterprise Resource System 3. Renegotiated Agreements with Vendors 3. Equipment Replacement 4. Proactive Compliance with Collections 4. Thoughtful Department Re- organizations 5. Improved Risk Management 6. Proactive Fiscal Management 2018-19 Budget Application of the FHRP to the 2018-19 Budget achieves $1,472,000 • $100,000New Revenues • $1,102,000 Operating Reductions • $270,000 New Ways of Doing Business 242018-19 Budget 6/5/2018 13 Department Reduction Administration $115,000 Finance $ 15,000 City Attorney $ 19,000 Human Resources $ 30,000 Parks & Rec $131,000 Community Dev. $ 10,000 Public Works $314,000 Fire $ 29,000 Police $ 33,000 Total $696,000 Application of FHRP to 2018-19 Budget – Operating 2018-19 Budget Action Reduction in Costs or Increases in Revenues Debt Refinance $83,000 CalPERS Lump Sum Payment $323,000 Business License $150,000 Contract Renegotiation $20,000 TOT Homestay $50,000 Code Enforcement $50,000 Total $676,000 Application of FHRP to 2018-19 Budget – Operating 2018-19 Budget 6/5/2018 14 New CIP Appropriations Proposed for 2018-19 Budget 27 • Appropriate Grant Funding. • $376,000 of Zone 9 monies to complete final design. Mid Higuera Bypass • Appropriate $59,477 of over-realized Development Services Fees to implement electronic submittal and review program. Electronic Plan Review for Development Services Fees • Appropriate General Fund monies placed in 2016 in the Parkland Fund. • $75,000 for design of Park at 533 Broad Street. • Future construction funds would be appropriated as part of the 2019-21 Financial Plan. Park in North Broad Street Neighborhood 2018-19 Budget Reallocation of Funds to Laurel Lane Complete Street CIP in 2018-19 Budget 28 Additional Funding for Laurel Lane Complete Streets Project Project 2018-19 Project Reallocations 1. Mission Plaza Railing Upgrade $30,000 2. Storm Drain System Replacements $317,100 3. Parks and Recreation Interior Office Rehabilitation $61,000 4. Laguna Lake Dredging $200,000 5. Bike Facilities Improvement $25,000 2017-18 Project Reallocation 6. Downtown Renewal $160,000 Total $793,100 2018-19 Budget 6/5/2018 15 Application of FHRP Proposed 2018-19 Budget – LRM 2018-19 Budget General Fund 2018-19 Operating Expenditures Breakout 30 Note: Includes $1,102,000 in reductions in operating expenditures. 2018-19 Budget 48% 24% 21% 7% Salaries Benefits Operating Expenditures Other Expenditures 6/5/2018 16 General Fund 2018-19 Revenue Breakout 31 35% 10% 17% 8% 14% 16%General Sales Tax Transient Occupancy Tax Property Tax Utility Users Tax Other Tax & Franchise Revenues Non-Tax Revnues Note: Includes $270k in additional revenue for new ways of doing business and $100k in Cannabis revenue. 2018-19 Budget 5-Year Fiscal Forecast - Expenditures 32 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 Salaries 32,605 35,254 34,785 35,777 36,858 37,856 38,613 Benefits (Including UAL) 12,724 13,928 17,089 18,400 19,275 19,815 20,326 Total Staffing 45,329 49,182 51,874 54,177 56,134 57,671 58,939 Operating Expenses 13,583 14,482 15,880 15,910 16,278 16,654 17,037 Other Expenses 11,585 3,514 4,872 5,388 5,005 5,040 5,084 Safety Cost Allocation - - - 200 200 200 200 CIP Reserve - - - 1,000 1,028 1,057 1,086 FHRP Reductions/Revenue - - (1,472) (3,750) (7,500) (7,500) (7,500) Total Expenditures $70,498 $67,178 $71,153 $72,926 $71,144 $73,121 $74,847 Resources Over/(Under) Expenses ($3,138) $2,514 ($917) ($970) $2,580 $2,444 $2,071 5-Year Forecast 6/5/2018 17 5-Year Fiscal Forecast - Revenues 33 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 General Sales Tax 24,069 23,932 24,890 25,161 25,577 26,013 26,468 TOT 7,368 7,294 7,367 7,551 7,627 7,703 7,780 Property Tax 10,756 11,145 11,665 12,307 12,922 13,568 13,975 Utility Users Tax 5,539 5,568 5,617 5,673 5,730 5,787 5,845 Other Tax & Franchise Revenues 9,021 9,784 10,048 10,431 10,830 11,246 11,512 Non-Tax Revenues 10,607 11,968 10,649 10,832 11,038 11,247 11,337 Total Revenues $67,360 $69,692 $70,236 $71,955 $73,724 $75,565 $76,918 5-Year Forecast 5-Year Fiscal Forecast - Fund Balances 34 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 Resources Over/(Under) Expenses ($3,138) $2,514 ($917) ($970) $2,580 $2,444 $2,071 Beginning Balance $29,634 $26,496 $22,522 $17,605 $13,635 $15,214 $16,658 Revenue Stabilization Reserve (Recommendation) - (1,000) - - - - - Bollard CIP Project (one time monies) - (1,288) - - - - - Additional CalPERS Principal Payment - (4,200) (4,000) (3,000) (1,000) (1,000) (1,000) Ending Fund Balance $26,496 $22,522 $17,605 $13,635 $15,214 $16,658 $17,729 Designated Reserves (9,697) (3,301) - - - - - Policy Reserve Level @ 20%: (10,902) (11,358) (11,528) (11,934) (12,337) (12,655) (12,919) Reserve Over/(Under) Policy Level $5,897 $7,863 $6,077 $1,701 $2,878 $4,003 $4,810 5-Year Forecast JD2FA1 Slide 34 JD2 Do these numbers don't match the five year forecast in the budget supplement? Johnson, Derek, 6/4/2018 FA1 They match the revised forecast that included the changes to CIP and transfers in LRM fund. Ferreira, Alex, 6/4/2018 6/5/2018 18 5-Year Fiscal Forecast – Revenues and Expenditures 35 $15,000 $25,000 $35,000 $45,000 $55,000 $65,000 $75,000 $85,000 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 5-Year Forecast Revenues Expenditures Projection($000s) 5-Year Forecast 5-Year Fiscal Forecast - TOT 36 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 Transiant Occupancy Tax Projection($000s) 5-Year Forecast 6/5/2018 19 5-Year Fiscal Forecast – Sales and Property Taxes 37 $15,000 $17,000 $19,000 $21,000 $23,000 $25,000 $27,000 $29,000 2012-132013-142014-152015-162016-172017-182018-192019-202020-212021-222022-23General Sales Tax Projection($000s) $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 2012-132013-142014-152015-162016-172017-182018-192019-202020-212021-222022-23Property Tax Projection($000s) 5-Year Forecast 38Fiscal Policy Direction Fund Balances and Reserves 6/5/2018 20 Policy Changes: Revenue Stabilization Reserve 39 Policy: General Fund Revenue Stabilization Purpose Provide budget stability when unanticipated fluctuations in revenues occur. Funding Target Maintain at $1,000,000 during the term of the FHRP. Action Required for Use Majority of Council Approval Authority to Use Reserve City Council Replenishment of Reserves Funds set aside annually with adoption of Budget. Policy Policy Changes: Revenue Stabilization Reserve J. General Fund Revenue Stabilization Fund. The City will maintain a reserve for the purposes of offsetting unanticipated fluctuations in general fund revenues to provide financial stability. The funding target for the Revenue Stabilization Reserve will be $1,000,000 during the term of the adopted Fiscal Health Response Plan. Use and allocations of funds of the Revenue Stabilization Fund will be made upon Council approvals of the Financial Plan or as becomes necessary during any fiscal year. 40Policy 6/5/2018 21 Policy Changes: Future Capital Project Reserve 41 Policy: Capital Improvement Projects Reserve Purpose Meet unexpected financial or capital project needs due to cost increases and unforeseen conditions and urgent unanticipated projects. Funding Target Funding at an adequate level as determined by Council. Action Required for Use Majority of Council Approval Authority to Use Reserve City Council Replenishment of Reserves Funds set aside annually with adoption of Budget. Policy Policy Changes: Future Capital Project Reserve K. Capital Projects Reserve Fund. The City will maintain a reserve for the purposes of offsetting unanticipated cost increases, unforeseen conditions, and urgent unanticipated projects to provide continued investment in infrastructure maintenance and enhancement. Use and allocations of funds of the Capital Projects Reserve Fund will be made to Capital Projects including Fleet, Information Technology, and Major Facility Replacement upon Council approvals of the Financial Plan or as becomes necessary during any fiscal year. 42Policy 6/5/2018 22 Policy Changes: Unfunded Liabilities Aggressive Payment 43 Policy: Aggressive payment of Unfunded Liabilities & Section 115 Continued Eval. Purpose Aggressive payment of Unfunded Liabilities and continued evaluation of Section 115 Trust formation Funding Target The City will make annual unfunded liabilities payments based on a 20-year amortization schedule opposed to the normal 30-year amortization schedule Action Required for Use Council will approve the additional principal payments at mid-year by evaluating the recommended amounts arising from the CAFR year-end report. Authority to Pay Additional Amounts City Council Continued Analysis of Section 115 Trust Formation 1. Act as a reserve to offset potential volatility in CalPERS annual contributions 2. Realize higher investment returns 3. Act as a set-aside for available use in reducing City’s pension obligations Policy Policy Changes: Unfunded Liabilities Aggressive Payment B. In applying unassigned fund balances to pay down long-term unfunded liabilities a two-part strategy will be used to address the liability to the greatest extent possible. One, annual payments to CalPERS for unfunded liabilities will address interest and principal. Two, analysis of a Section 115 Trust as a mechanism to address future pension obligations an uncertainties will continue and a recommendation about formation of the same will be made during the term of the adopted Fiscal Health Response Plan. 44Policy 6/5/2018 23 45Proposed 2018-19 General Fund Budget Appropriations 2018-19 General Fund Appropriations 46 Allocation Type Governmental Funds Enterprise & Other Funds Total Operating Programs $68,722,687 $33,800,168 $102,522,854 CIP $24,758,084 $26,322,583 $51,080,667 Debt Service $3,185,500 $5,354,158 $8,539,658 Total $96,666,271 $65,476,909 $162,143,179 2018-19 Budget 6/5/2018 24 2018-19 General Fund Appropriations 47 Recommended Appropriations of excess Reserve Public Safety CIP (Downtown bollards) $1,300,000 Revenue Stabilization $1,000,000 Infrastructure Investment Fund $ 250,000 Principal Prepay CalPERS $4,200,000 2018-19 Budget QUESTIONS? 48 6/5/2018 25 Enterprise Funds 49 Water Sewer Parking Transit Enterprise Funds Enterprise Funds 50 Water Fund Enterprise Funds 6/5/2018 26 Water Fund –FHRP Implementation Share over 3-year term $542,000 Water source of supply program reductions Water meter replacement program = more accurate fee collection 51 Water Fund 2018-19 Revenues Efficiencies and New Ways of Doing Business $100,000 $100,000 Enterprise Funds Water Fund 52 Revenue Category 2017-18 Budget 2018-19 Budget Variance Water Sales $ 17,223,312 $ 18,621,279 8% Agency Sales $ 866,250 $ 913,894 6% Recycled Water $ 600,000 $ 600,000 0% Dev. Impact Fees $ 1,200,000 $ 800,000 -33% AB 939 Reimbursement (1) $ 145,000 $ 147,900 2% Other Revenue $ 326,760 $ 473,000 5% Investments $ 50,000 $ 50,000 0% Total $ 20,411,322 $ 21,606,073 6% [1]Groundwater Sustainability Agency reimbursement costs. Enterprise Funds 6/5/2018 27 Water Fund 53 67% 22% 4%4% 3% 2018-19 Water Fund Revenue Water Sales Base Fee Sales to Agencies Impact Fees Other revenue Enterprise Funds Water Fund 54 5% 62% 17% 13% 3% 2018-19 Water Expenditure Breakout Water Admin Source of Supply Water Treatment Water Distribution Water Resources Enterprise Funds 6/5/2018 28 Water Fund 55 Enterprise Funds Water Admin Source of Supply Water Treatment Water Distribution Water Resources Total 2017-18 832,335 9,372,480 2,870,295 1,835,800 527,237 15,438,147 2018-19 762,227 9,427,131 2,619,672 1,870,676 498,540 15,178,246 Variance -8.42% 0.58% -8.73% 1.90% -5.44% -1.68% $(2,000,000) $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 Operating Budgets Water Fund 56 Water Rate Structure and Rates Public Hearing 6:00 p.m. Tuesday, June 19, 2018 Enterprise Funds 6/5/2018 29 Enterprise Funds 57 Sewer Fund Enterprise Funds Sewer Fund -FHRP Implementation Share over 3-year term $540,000 Energy efficiency project and process changes Water meter replacement program = more accurate fee collection 58 Sewer Fund 2018-19 Revenues Efficiencies and New Ways of Doing Business $20,000 $80,000 Enterprise Funds 6/5/2018 30 Sewer Fund 59 Revenue Category 2017-18 Budget 2018-19 Budget Variance Sewer Service Charges $ 14,301,464 $ 14,838,195 3.8% Agency Sales $ 875,000 $ 908,250 3.8% Dev. Impact Fees $ 430,000 $ 300,000 -30.0% Industrial User Charges $ 85,000 $ 85,000 0.0% Other Revenue $ 373,000 $ 383,071 2.7% Investments $ 50,000 $ 50,000 0.0% Total $ 16,114,464 $ 16,564,516 2.8% Enterprise Funds Sewer Fund 60 65% 25% 5% 2%3% 2018-19 Sewer Revenue Sewer Charges Base Fee Sales to Agencies Impact Fees Other revenue Enterprise Funds 6/5/2018 31 Sewer Fund 61 Enterprise Funds 12% 4% 15% 51% 11% 7% 2018-19 Sewer Expenditure Breakout Admin/Engr Environ Compli Collection System WRRF Water Qual Lab Water Resources Sewer Fund 62 Enterprise Funds WW Admin Environmental Compliance WW Collection WRRF WQL Utilities Revenue Total 2017-18 1,050,342 266,094 1,126,925 3,909,379 788,377 509,531 7,650,648 2018-19 900,717 278,432 1,127,562 3,784,224 792,953 491,727 7,375,615 Variance -14.25% 4.64% 0.06% -3.20% 0.58% -3.49% -3.59% $(1,000,000) $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 Operating Budgets 6/5/2018 32 Sewer Fund 63 Sewer Rate Structure and Rates Public Hearing 6:00 p.m. Tuesday, June 19, 2018 Enterprise Funds Enterprise Funds 64 Parking Fund Enterprise Funds 6/5/2018 33 Parking Fund Share of problem over Plan’s 3 year term is approximately $175,000. Unique position, rate changes (not tied to the problem) provide adequate resources to address fiscal sustainability. Application of the plan to 2018-19 Supplement propose more efficient contract services and prepayment of unfunded liability (to be reviewed and considered in detail on June 19, 2018) 65 Parking Fund 2018-19 Other Efficiencies and New Ways of Doing Business Pre-payment of unfunded liability $10,000 Enterprise Funds Parking Fund Revenue 66 Revenue Category 2017-18 Budget 2018-19 Budget Variance Parking Meter Collections $ 1,939,500 $ 2,093,800 8.0% Parking Structure Collections $ 1,658,900 $ 1,798,100 8.4% Long Term Parking Revenue $ 890,800 $ 1,032,600 15.9% Lease Revenue $ 500,500 $ 500,600 0% Parking in-Lieu Fees $ 20,200 $ 20,200 0.0% Other Service Charges $ (113,100) $ (130,900) 15.7% Total Service Charges $ 4,896,800 $ 5,314,400 9.3% Fines & Forfeitures $ 616,500 $ 634,900 3.0% Investment & Other Revenue $ 50,100 $ 68,100 35.9% Total $ 5,563,400 $ 6,017,400 8.8% 6/5/2018 34 Parking Fund: 5-Year Forecast 67 Enterprise Funds 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 Revenue 5,563,400 6,017,400 6,099,700 6,947,600 7,218,500 7,220,600 Expenditures 4,906,000 5,093,900 6,196,900 6,442,900 6,798,600 6,934,200 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 Revenue Expenditures 2018-19 Parking Services Revenue 68 35% 30% 17% 8% 10%0% 2018-19 Projected Revenue Parking Meters Parking Structures Long Term Parking Lease Revenue Fines and Forfeitures Other 6/5/2018 35 2018-19 Parking Services Expenditures 69 23% 15% 12%11% 14% 20% 5%2018-19 Expenditures Staff Costs Contract Services Retirement & UAL CAP (Genl Govt) CIP Projects Debt Service Other Operating Parking Fund: CIP 70 2016-17 Mid Year 2017-18 Supplement 2018-19 Projected 2019-20 Projected 2020-21 Replace PARCS Equipment * 113,000 650,000 50,000 50,000 Vehicle License Plate Recognition * 145,000 Parking Structure Assessment * 76,667 structural assessment projects 78,000 575,000 200,000 200,000 Palm-Nipomo Parking Structure 1,274,443 250,000 23,600,000 - Parking Lot Acquisition Program - - 333,333 333,333 TRIP reduction Program - - 40,000 40,000 Meter Expansion/Upgrade/Replacement - - 327,500 237,500 Other Projects 328,689 18,854 288,069 78,133 Total 2,015,799 825,000 668,854 24,838,902 938,966 Enterprise Funds 6/5/2018 36 Enterprise Funds 71 Transit Fund Enterprise Funds Transit Fund Share of problem over Plan’s 3 year term is approximately $42,500. Unique position, rate changes (not tied to the problem) and working capital that provide adequate resources to address fiscal sustainability. Application of the plan to 2018-19 reducing consumables purchases and prepayment of unfunded liability (to be reviewed and considered in detail on June 19, 2018). 72 Transit Fund 2018-19 Other Efficiencies and New Ways of Doing Business Pre-payment of unfunded liability $42,500 Enterprise Funds 6/5/2018 37 Transit Fund Revenues 73 Adopted 2017-18 Adopted 2018-19 Revised for Supplement 2018-19 Projected 2019-20 Projected 2020-21 Projected 2021-22 FTA Grants 1,399,640 1,399,640 1,456,036 1,427,633 1,441,909 1,456,328 TDA Revenues (LTF) 1,160,677 1,046,313 1,548,644 1,533,158 1,548,489 1,563,974 TDA Revenues (STA) 143,846 143,846 287,935 285,055 288,476 291,938 Other Grants (e.g. SB1,LCTOP, etc.) 174,600 1,060,000 174,600 179,838 185,233 190,790 Service Charges 787,914 799,715 727,878 735,156 727,805 720,527 Investment and Property Revenues 5,800 5,800 5,800 5,800 5,800 5,800 Other Revenues 8,000 8,000 8,000 8,000 8,000 8,000 Total Revenues $3,680,477 $4,463,314 $4,208,893 $4,174,640 $4,205,712 $4,237,357 Enterprise Funds Transit Fund Expenditures 74 Adopted 2017-18 Adopted 2018-19 Revised for Supplement 2018-19 Projected 2019-20 Projected 2020-21 Projected 2021-22 Transportation 3,321,189 3,411,092 3,615,741 3,710,257 3,773,902 3,811,641 General Government 319,987 319,987 319,987 326,387 332,914 339,573 Operating Transfers Out 38,229 41,634 - - - - Retirement Contribution 22,956 22,956 Discount Rate Adjustment 1,884 Motion Project 58,081 58,081 58,081 Motion Project - On Going 21,020 AVL 319,987 - 173,000 - - - Fleet - 1,141,570 - - 210,000 210,000 Total Expenditures $4,080,429 $5,018,224 $4,166,809 $4,036,643 $4,106,817 $4,151,214 Resources Over/(Under) Expenses -$399,952 -$554,910 $42,083 $137,997 $98,896 $86,143 Enterprise Funds 6/5/2018 38 Revised Transit Five Year Forecast 75 Enterprise Funds Revised FY 2018-19 Transit Revenues & Expenditures 76 Total: $4,020,493 Total: $3,909,185 Enterprise Funds 6/5/2018 39 QUESTIONS? 77 Recommendation Receive and discuss the 2018-19 Budget Supplement including: 1. Major City Goals/Other Important Objectives and Performance Measures progress report; and 2. The five-year General Fund Forecast: and 3. The proposed changes to the 2018-19 Budget Supplement arising from the implementation of the Adopted Fiscal Health Response Plan; and 4. The proposed changes to the 2018-19 Capital Improvement Program 5. Enterprise Funds Overviews and implementation for the FHRP to the Parking, Sewer, Transit, and Water Enterprise Funds. 78 6/5/2018 40 QUESTIONS? 79 Appendix 80 6/5/2018 41 Department: Administration Reduction Amount Service Level Impact Contract Services Networks Services, Community Promotion, City Administration, Economic Development, Administration & Records, Contract Services $64,000 Reductions in contract services will result in increased inhouse network services, less opportunity for the PCC to fund last minute projects, improved value of contract performance, lower contingencies in contracts, and an adjustment in the budget for services not used. Other Operating Expenses Support Services $6,000 An analysis in operating expenses has identified that there are annual savings and this budget can be reduced. Ventures & Contingencies Support Services $45,000 A reduction in V&C results in less available funding for special projects of a Citywide nature. Total $115,000 FHRP Department: Finance Reduction Amount Service Level Impact Contract Services Accounting $5,000 The City has been preparing its AB 1600 report annually and the contract for service will be adjusted downward to reflect that. Operating Expenses Accounting $6,000 An analysis of operating expenses identified historical annual savings and this budget can be reduced. Total $15,000 FHRP 6/5/2018 42 Department: City Attorney Reduction Amount Service Level Impact Contract Services & Operating Reductions $19,000 The City Attorney has reduced its budget to provide temporary staff via contract services and an analysis in operating expenses has identified that there are annual savings and this budget can be reduced. Should a legal matter arise that requires additional staffing it will be address on a case by case basis with Council. Total $19,000 FHRP Department: Human Resources Reduction Amount Service Level Impact Training $19,000 Elimination of budget for unanticipated trainings, majority of City training offered through contract with the Centre for Organization Effectiveness. Tuition Reimbursement $6,000 Reduction in budget to historical average. PACE Contribution $3,000 City's investment in the Centre for Organization Effectiveness makes PACE investment redundant. Appointed Officials $2,000 Reduction through contract negotiation for Appointed Officials' Evaluations facilitator. Total $30,000 FHRP 6/5/2018 43 Department: Parks & Recreation Reduction Amount Service Level Impact Youth Services Youth Services Staffing, Contract Services & Operating Budget $49,000 Eliminate the SLO Teens Program and use City Buses for local Summer Camp Field Trips. The Teen Program was not staffed during 2017-18 and will therefore not impact current students nor a filled position. Elimination of this funding limits the department's ability to engage teens in positive activities in the future. To reduce liability consistent with the City's "30 in 3" initiative, Youth Services will no longer contract for bus trips outside of the region. Recreation Administration Re-Organization $82,000 The Department has completed a re-organization across multiple programs to increase efficiencies. Additionally, the reduction of a vacant Administrative Assistant 1 position focused on customer service and public counter duties is proposed. As a result, the Department's public counter hours will be reduced but users may still register online 24 hours a day and/or make appointments. The use of part time supplemental employees is required to continue to provide in person customer service six hours a day. Total $131,000 FHRP Department: Community Development Reduction Amount Service Level Impact Operational Efficiencies Community Development Admin., Development Review, Long Range Planning, Human Relations $21,000 Reorganization of the Department utilizing current and future anticipated vacancies to obtain a sustainable business model should have little to no effect on service levels but will require the use of supplemental resources during times of high development activity. In addition, the reorganization relies on procedural changes, and “delivering service differently,” with respect to the path that certain projects take through the entitlement process. These procedural changes are being pursued as part of the Zoning Regulations update. Re-organization Development Review, Housing Assistance, Building & Safety -$11,000 The savings comes from the reclassification of an Associate Planner to a Planning Technician and reducing historically underspent operating budgets. A Code Enforcement Technician I position will also be reclassified to a Code Enforcement Supervisor as-a- result of the determined Code Enforcement priorities per Council direction and the Housing Programs Manager has been reclassified to a Senior Planner. The reclassification of the Code Technician is an increase to operating cost, however, total cost reductions yield a net savings. Total $10,000 FHRP 6/5/2018 44 Department: Public Works Reduction Amount Service Level Impact Energy Efficiencies /Consumption Reduction Building Maintenance, Swim Center, Fleet, Parks Maintenance, Street Maintenance, Traffic Signals $293,000 Energy conservation at City facilities is projected to reduce electricity usage resulting in. Reductions in fuel driven by historical trends and the City is replacing its older fleet with energy efficient vehicles which has reduced their overall consumption. The replacement of the existing turf at Damon Garcia sports complex with a more robust species is expected to reduce the cost of fertilizer. New technologies in irrigation controls will also mean an overall reduction in water use. Staff also projects a decrease in water use should the area receive an above average rain fall during the rainy season. A decrease in the cost of asphalt will result in overall cost savings. Replacement of older traffic signals with energy efficient models will result in a projected savings in electricity use. Operational Efficiencies PW Administration, Traffic Signals, Street Maintenance, Transportation & Engineering $21,000 Due to operational efficiencies in consolidating office supplies, replacing hard copy reports with electronic copies, will result in savings in office supplies and print & reproduction. Reduction in contract services and operation materials for traffic signals and transportation & engineering can be absorbed with existing staff and the program's budget. Education and training reductions will be offset because for those staff that do attend trainings, they will present key messages and materials to remaining staff upon their return. Total $314,000 FHRP Department: Fire Reduction Amount Service Level Impact Consumables/Uti lities Fire Administration $4,000 Result of installation of sustainable landscaping. Education & Training Fire Admin., Fire Apparatus Services, Fire Prevention $12,000 Reductions are accomplishable and will require sharing of information in a train the trainer format and more focused selection of training opportunities. Operating Reductions Operating Supplies $13,000 An analysis in operating expenses has identified that there are annual savings and this budget can be reduced. Total $29,000 FHRP 6/5/2018 45 Department: Police Reduction Amount Service Level Impact Operating Reductions Police Admin, Neighborhood Services $23,000 Reductions are possible due to operating changes, a no longer using software that was ineffective, use of an existing citywide communications contract for efficiencies, more targeted disbursement of educational materials. Contract Services Police Admin, Patrol, Investigations, Support Services, Neighborhood Services, Traffic Safety $10,000 Contract service reductions are possible due to operating changes, a no longer using software that was ineffective, use of an existing citywide communications contract for efficiencies, more targeted disbursement of educational materials. Total $33,000 FHRP Performance Measures 90 Department Measure Target 2017-18 Actual 2017-18 Target 2018-19 City Admin Maintain City Network Reliability Uptime Status 99.9% 99.995%99.9% Open City Hall Participant Satisfaction Rating 90% 92%90% Amount of Sales and Transient Occupancy Tax $32,272,000 $31,686,000 $33,056,000 City Attorney Documents Turned-around Within 4 Days 65% 72% 70% Administrative Citation Appeal Process Completed Within 70 Days 80% 63% 85% Claims Against the City Resulting in Litigation 5% 7% 5% 6/5/2018 46 Performance Measures 91 Department Measure Target 2017-18 Actual 2017-18 Target 2018-19 Community Development Percent of Development Review activities completed within established cycle times. 75% 71% 70% Affordable Housing Units Constructed 24 Units Added 38 Units Added 56 Units Added Code Enforcement Response Within Established Timelines 80% 82% 80% Finance Receive the Government Finance Officers Association Distinguished Budget and CAFR Award Yes No Yes Meet Budget and Fiscal Policy Fund Balance Requirements 100% 100%100% Meet all Federal, State, and City Charter Reporting Requirements 100% 100%100% Performance Measures 92 Department Measure Target 2017-18 Actual 2017-18 Target 2018-19 Fire Meet the Total Response Time (TRT) goal as defined by General Plan Safety Element of 7 minutes or less to 90% of all lights-and-siren emergencies in the City. 90% 83.5% 90% Maximize property saved from fire damage 85% 65.9% 85% Percentage of Fire Department Development Review activities completed within published cycle times 80% 65.3% 50% Human Resources Percentage of On-time Employee Performance Evaluations 90%86%95% Percentage of Internal Promotions 38%55%38% Reduction in Liability and Workers Compensation Claims -10%-3%-20% 6/5/2018 47 Performance Measures 93 Department Measure Target 2017-18 Actual 2017-18 Target 2018-19 Parks and Recreation Maintain and Enhance Parks and Recreation Participation 337,315 337,923 337,900 Increase Number of Volunteers in Parks and Recreation Number Pending 12- month use of services 970 3% Miles of Trails Maintained in the City Open Space 53 Miles 55 miles 55 Miles Police Crime Reduction -5% -13% -14% Increased Community Outreach Programs 567 Fiscal Health & Sustainability - Overtime Reduction -2,000 Hours +1,300 Hours -2,000 Hours Performance Measures 94 Department Measure Target 2017-18 Actual 2017-18 Target 2018-19 Public Works Increase the number of work orders for proactive preventive maintenance of city assets 5% annual increase 1% Increase 5% annual increase Enhance traffic safety for all modes of transportation A) 3% B) 2% C) 2% A) 5.3% B) 4.2% C) 10.6% A) 3% B) 2% C) 2% Percentage of capital projects constructed in the budgeted year 85% 50% 85% Utilities Drinking Water Compliance Rate (% Days) 100% 100% 100% Wastewater Treatment Effectiveness Rate (% Days) 100% 99% 100% Capital Improvement Projects Completion 100% 75% 100% 6/5/2018 48 Parking Fund: Debt Service 95 2016-17 Budget 2017-18 Mid-Year 2017-18 Supplemental 2018-19 Projected 2019-20 Projected 2020-21 Projected 2021-22 Marsh Expansion until Aug 2031 419,729 418,856 418,856 417,955 417,027 416,071 415,085 919 Palm until Jun 2036 539,899 538,755 538,755 539,803 540,275 540,162 539,320 Palm - Nipomo until Jun 2048 - -- - 1,086,023 1,454,105 1,454,105 Dispatch Ctr Upgrade until Jun 2039 9,759 9,761 9,761 9,700 4,200 4,200 4,200 Total Debt Service $969,387 $967,372 $967,372 $967,458 $2,047,525 $2,414,538 $2,412,710 Enterprise Funds Parking Fund: Revenue 96 2016-17 Budget 2017-18 Mid Year 2017-18 Supplement 2018-19 Projected 2019-20 Projected 2020-21 Projected 2021-22 Parking Meter Collections 1,763,118 1,788,500 1,939,500 2,093,800 2,075,600 2,408,500 2,408,500 Parking Structure Collections 1,336,165 1,489,500 1,658,900 1,798,100 1,798,100 2,245,700 2,509,700 Long Term Parking Revenue 810,487 795,000 890,800 1,032,600 1,138,200 1,279,400 1,279,400 Lease Revenue 486,256 502,900 500,500 500,600 500,600 500,600 505,000 Parking In-Lieu Fees (184,721) 20,400 20,200 20,200 20,200 20,200 20,200 Other Service Charges (95,558) (89,100) (113,100) (130,900) (130,900) (174,200) (174,200) Total Service Charges 4,115,747 4,507,200 4,896,800 5,314,400 5,401,800 6,280,200 6,548,600 Fines and Forfeitures 530,644 587,300 616,500 634,900 634,900 634,900 634,900 Investment & Other Revenue 72,927 48,100 50,100 68,100 63,000 32,500 35,000 Total Revenues 4,719,318 5,142,600 5,563,400 6,017,400 6,099,700 6,947,600 7,218,500 Enterprise Funds 6/5/2018 49 Parking Fund: Operating Services 97 2016-17 Budget 2017-18 Mid-Year 2017-18 Supplemental 2018-19 Projected 2019-20 Projected 2020-21 Projected 2021-22 Staffing 1,008,923 1,060,385 1,060,403 1,086,900 1,119,500 1,153,100 1,187,700 Retirement Contribution 109,781 61,300 61,330 68,800 76,900 94,600 104,400 Unfunded CalPERS Liabilities -157,700 157,652 171,800 193,300 207,500 222,300 Additional UAL Contribution - - - 328,400 - - - Contract Services 600,146 694,500 969,794 693,700 714,500 735,900 758,000 Other Operating Expenses 267,576 241,200 242,162 244,100 251,400 258,900 266,700 Palm-Nipomo Exp. - - - - - 64,900 267,200 Total Parking Services $1,986,426 $2,215,085 $2,491,341 $2,593,700 $2,355,600 $2,514,900 $2,806,300 Enterprise Funds