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CITY OF SAN LUIS OBISPO
FROM: Wayne Padilla,Interim Director of Finance & Information Technology
SUBJECT:CONSIDERATION OF A RESOLUTION ADOPTING CHANGES TO THE
BUDGETS OF VARIOUS FUNDS FOR THE 2OI2-13 FISCAL YEAR AND
CREATING THE INSURANCE BENEFIT FTIND
RECOMMENDATION
Adopt a resolution approving the revisions to the budgets of various funds to reflect current revenue
and expenditure assumptions for the 2012-13 Fiscal Year and creating the Insurance Benefit Fund.
DISCUSSION
As the 2013-15 Financial Plan was being prepared, several proposed changes to the budgets of
various funds were identified. These changes, which are listed below, reflect the current
assumptions for revenue and expenditures and merit consideration for adoption. Additionally,
staff is recommending that the Insurance Benefit Fund be created to account for various costs
related to insurance and benefit programs now and in the future. Several revisions to the current
year budget have been proposed for consideration. These changes reflect revised assumptions for
either revenues or expenditures in various funds and are described below.
Insurance Benefit Fund
As discussed above, this new fund would be used to account for costs related to insurance and
benefit programs. For example, the installment payments made to the California Joint Powers
Insurance Authority (CJPIA) for the retrospective payment that is outstanding will be made from
this fund using resources from the Enterprise Funds and the General Fund. During 2014-15, this
fund will also retain the additional l%o charge (approximately $33I,400 citywide) that the City
will self-assess for CaIPERS retirement program costs in advance of the anticipated changes in
the employer rates that CaIPERS will implement in 2015-16. During 2075-16, the Insurance
Benefit Fund will then apply this amount towards the City's retirement obligation in that year.
During 2072-13, it is proposed to have the General Fund transfer the Property Tax
Administration Fee (PTAF) refund of $632,800 that was received from the County into this fund
for use in the future to pay down the retrospective CJPIA payment. The Preliminary Financial
Plan reflects this transfer occurring during the current year as part of the budget information
presented in Section H of the Financial Plan's Changes in Financial Position documents (see
page H-65).
General Fund
The refund of the prior years' overpayment of the Property Tax Administration Fee (PTAF) as
described above is reflected in the General Fund as additional property tax revenue in the amount
of $632,800. A transfer out to the Insurance Benefit Fund in the same amount is also shown in
order to set this amount aside for future use in paying the retrospective liability amount that is
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owed to the California Joint Powers Insurance Authority (CJPIA). This budget change does not
alter the General Fund's ending fund balance.
Capital Outlay Fund
Staff continues to research the appropriations reflected in this fund in order to determine the
reason why it was found to be out of balance at the time of the mid-year review. At this time, the
budget reflects a decrease in appropriations ($119,838) to remove amounts that are related to
capital projects that were previously completed and closed. The final closing entries for these
projects had not been made to the financial system previously. These adjustments bring the fund
reserve into a positive position.
Debt Service Fund
The budget amendment reflects two items, both of which are tied to the 2012 rcftnancing of the
2001 bonds and which were not provided for in the current budget since these seem to be hold
over items from the original f,rnancing transaction. The first is a charge ($11,500) for work
performed by one of the independent accounting firms who confirmed certain calculations related
to the bond issue. The second amount ($98,108) is related to the payment of a previously
calculated interest arbitrage rebate amount for the 2001 bonds at the time they were refinanced.
This amount is based on the required disclosure report that was prepared to determine whether
the rate of return on amounts that were invested until they were utilized from the 2001 bond
proceeds and reserves exceeded the bonds' arbitrage yield rate. Such a payment is not uncommon
and is due to the fact that the City's rate of return from the investment of available bond reserves
and bond proceeds was higher than the tax exempt arbitrage limit set in the original bond
documents. The actual payment of these amounts came from balances held by the bond trustee.
Open Space Protection Fund
The budget amendment reflects a reduction for capital outlay in the amount of $385,893. This
amount is related to the Froom Ranch open space acquisition that was originally planned using
grant monies from the California Wildlife Conservation Board that did not materialize.
Removing this appropriation restores the budgeted ending fund to a positive value.
Airport Area Impact Fee Fund
The proposed budget amendment lowers the amount of revenue anticipated from investment
income by $11,500 to reflect the lower rate of return that is being reahzed from the City's
investment portfolio. This is in-line with adjustments made to the General Fund's investment
income forecast when the Mid-Year Budget Update was approved in February.
Sewer Enterprise Fund
The proposed budget amendment makes changes to various revenue line items in order to reflect
current trends. The following line items are proposed for adjustment based on the YTD revenues
received and the remaining amounts that are estimated to be received:
Customer Sales Charges: reduced by $369,000
reduced by $34,000 (in-line with adjustment made at mid-year to
the General Fund's investment income)
Investment Revenue
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Impact Fees:increase by $30,000
Connection Charges: increase by $7,000
Account Set-up Fees: decrease by $16,000
Cify Attorney's Office Contract Services Carryover
As part of the 20I2-I3 Budget supplement, Council appropriated $25,000 to the City Attomey's
office to support code enforcement efforts. The prior allocation to the ofhce for contract services
was $1,500. It was originally contemplated that the funding would be utilized to obtain the
assistance of outside counsel, as necessary to address procedural due process/conflict
requirements and to supplement resources for increased prosecutorial case load.
Subsequent to the allocation of funding, the City Attorney's Office began exploring means by
which to maximize funding. The City Attorney's Office has been working with Hastings College
of Law to explore opportunities to employ a recent law graduate in a one year fellowship
opportunity. It now appears that there may be a prospect to employ such a resource as a
temporary, in-house staff resource for one year within the budget allocated to the City Attorney's
Offrce for code enforcement supporl. The City Attorney proposes to focus the resource on
support of staff in policy and enforcement infrastructure development and, once licensed, court
appearances on code enforcement matters.
Thus, the City Attorney is requesting that Council authorize the Finance Director to affect the
carryover from20l2-13 of up to $26,100 currently unencumbered in the City Attomey's Contract
Services line item and to transfer this amount to the City Attorney's Temporary Salaries line, in
the event a fellowship can be established.
F'ISCAL IMPACT
If approved, these budget amendments will align the appropriated amounts with the values that
staff expects to be realized through the end of the current hscal year. It is important to note that
the budgeted values are used as a guide by staff when preparing the audited financial statements,
since a significant variance from a realistic budget value can be an indicator of an item that has
been overlooked or posted incorrectly.
ALTERNATIVES
If the City Council opts to forego approving these budget amendments, a final budget clean-up
item can be brought back before the City Council at alater date.
ATTACHMENT
Resolution aonrovins the budset revisions for 2012-13 and creatins the lnsurance Benefit Fund
T:\Council Agenda Reports9Ol3V013-06-17\2012-13 Budget Changes (PadillalCAR - Adoption of2012-13 budget chgs - final doc
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RESOLUTION NO (2013 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
APPROVING AN AMENDMENT TO TIJE 2OI2-13 BUDGETS OF VARIOUS FUNDS
AND CREATING THE INSURANCE BENEFIT INTERNAL SERVICE FUND
WHEREAS, the City Council adopted the 2011-13 Financial Plan on June 2I,2011,
which established comprehensive financial and policy guidelines for fiscal years 2011-I2 and
2012-13; and
WHEREAS, the City Manager submitted the 20lI-I3 Financial Plan Supplement and
Preliminary 2012-13 Budget to the City Council for their review and consideration; and
V/HEREAS, the City Council approved the Preliminary 2012-13 Budget and adopted it
as the 20I2-I3 Budget on June 19,2012;' and
WHEREAS, the City Council considered the Mid-Year update to the 2012-13 Budget on
February 19,2013 and approved revisions to the 2012-13 Budgets of various funds that were
reflected in that document; and
WHEREAS, the Council has considered the Preliminary 20I3-I5 Financial Plan that has
been presented during public hearings held on June 10, ll, 12 and June 17,2013 which includes
proposed revisions to various funds to reflect current revenue and expenditure assumptions for
the 2012-13 Fiscal Year as set forth in detail in the June 1 7, 201 3 Council Agenda Report item
C-13; and
WHEREAS, the Insurance Benefit Internal Service Fund is hereby created for the
purpose of accumulating the resources needed to pay for certain insurance and benefit program
costs.
NOV/, THEREFORE, BE IT RESOLVED that the Council of the City of San Luis Obispo
hereby approves and adopts the changes to the 2012-13 Budget as reflected in the Preliminary
2013-15 Financial Plan and authorizes the Finance Director to affect the carryover from 2012-13
of up to $26,100 currently unencumbered in the City Attorney's Contract Services line item and
to transfer this amount to the City Attorney's Temporary Salaries line, in the event a fellowship
can be established.
Upon motion of seconded by and on the
following roll call vote:
AYES:
NOES:
ABSENT:
the foregoing resolution was adopted on June l7th,2013
Mayor Jan Howell Marx
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ATTEST:
Maeve Kennedy Grimes, City Clerk
APPROVED AS TO FORM
Christine
Christine Dietrick, City Attorney
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