HomeMy WebLinkAboutSR - RES-10839 - 2014-15 MID YEAR BUDGET ADJUSTMENTSOF 0-
AGENDA ITEM
February 10, 2015
TO: Honorable Mayor and
Members of the City Council
THRU: John W. Sibley
City Manager
FROM: William M. Kolbo
w2irector
Rick Otto, Assistant City Manager
ReviewedNer' i d By/
City Manager
Finance Direc or
To Be Presente y:
Will Kolbow
Cons Calendar _
City Mgr Rpts
Council Reports _
Legal Affairs
Boards /Cmtes _
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Plan /Environ
1. SUBJECT
Status of Fiscal Year 2014 -2015 budget and necessary Mid -Year Adjustments and preliminary
projections for Fiscal Year 2015 -16 Budget Preparation.
1 2. SUMMARY
This mid -year report provides an update of the FY 2014 -2015 (FY 15) budget and recommends
certain appropriation increases and budget adjustments. Staff has made every effort to identify
potential sources of savings within currently budgeted funds or projects that might appropriately
be used to fund the expenditures that are identified below. In addition, this report also presents a
brief review of the FY 2015 -2016 (FY 16) budget that is currently being prepared.
3. RECOMMENDED ACTION
To be approved in one motion:
1. Authorize the transfer of $2,000,000 from the unreserved fund balance of the General Fund to
the Capital Projects Fund (500).
2. Authorize the transfer of $1,500,000 from the unreserved fund balance of the General Fund to
the Accrued Liability Fund (760 for PERS).
3. Authorize the transfer of $500,000 from the unreserved fund balance of the General Fund to
the Business Investment Fund (115).
4. Authorize the transfer of $260,000 from the unreserved fund balance of the General Fund to
the Worker's Compensation Fund (730).
5. Authorize the appropriation of $111,000 from the unreserved fund balance of the General Fund
to account 100.6001.50002.00000, Community Development - Regular Salaries.
ITEM ]-A 1 2/10/15
6. a) Authorize staff to reclassify position #329 -001 from full -time Business License Inspector
to full time Lead Business License Inspector; and
b) Authorize staff to downgrade position 4329 -002 from a full time Business License
Inspector to a full time Senior Finance Clerk; and
c) Adopt Resolution No. 10839, A Resolution of the City Council of the City of Orange
Amending Resolution No. 10763 Between the City of Orange and the Orange Municipal
Employees' Association to include the new salary range for Lead Business License
Inspector effective February 22, 2015 as follows:
Class Title
Ran a
Ste A
PSte B
Ste C
Ste D
Ste E
Ste F
Lead Business License Inspector
518
4723
5217
5483
5763
6057
7. Authorize the appropriation of $20,000 from the unreserved fund balance of the General Fund
to various Contractual Services accounts within Community Services.
Unfreeze the Assistant Community Development Director position. Funding for the position
in FY 15 can be absorbed by anticipated salary savings. Funding will be included in the FY
16 budget.
9. Unfreeze the Assistant Library Services Director position, freeze a part -time Librarian II
position, and authorize the appropriation of $98,000 from the unreserved fund balance of the
General Fund to account 100.2001.50002.00000, Library - Regular Salaries.
10. Unfreeze a Captain position in the Police Department. Funding for the position in FY 15 can
be absorbed by anticipated salary savings. Funding will be included in the FY 16 budget
11. Authorize the appropriation of $200,000 from the unreserved fund balance of the Worker's
Compensation Fund (730) to account 730.1412.50001.19108, Worker's Compensation -4850
Payroll Safety.
12. Authorize the appropriation of $60,000 from the unreserved fund balance of the Worker's
Compensation Fund (730) to account 730.1412.52212.00000, Worker's Compensation -IDR
Medical /Legal Evaluations.
13. Authorize the appropriation of $317,000 from the unreserved fund balance of the Accrued
Liability Fund (760) to account 760.0000.50611.00000, Retiree Health Insurance.
4. FISCAL IMPACT
Sufficient funds are available in the unreserved fund balance of the General Fund to support the
requested appropriations. Upon approval of the recommended action, sufficient funds will also be
available in the Worker's Compensation and Accrued Liability Funds to support the requested
appropriations. Approval of the recommended action will result in the following appropriations:
ITEM 2 2/10/15
Action
Amount
From:
1
$2,000,000
General Fund
2
1,500,000
General Fund
3
500,000
General Fund
4
260,000
General Fund
5
111,000
General Fund
6
0
General Fund
7
20,000
General Fund
8
0
General Fund
9
98,000
General Fund
10
0
General Fund
$4,489,000 Total General Fund
11 $200,000 Worker's Compensation
12 60,000 Worker's Compensation
13 317,000 Accrued Liability
To:
Capital Projects (500)
Accrued Liability (760 /PERS)
Business Investment (115)
Worker's Compensation (730)
Salaries and Benefits
Salaries and Benefits
Contractual Services
Salaries and Benefits
Salaries and Benefits
Salaries and Benfits
Payroll - Safety
Industrial Disability Retirement
(IDR) Medical /Legal Evaluations
Retiree Health Insurance
5. STRATEGIC PLAN GOAL (S
Goal 2: Be a fiscally healthy community.
Goal 2(b): Analyze future fiscal needs and potential revenue opportunities.
6. GENERAL PLAN IMPLEMENTATION
Not applicable.
7. DISCUSSION and BACKGROUND
Fiscal Year 2014 -2015 Update
As the economy continues to recover, positive signs are reflected in our revenue receipts. Our
largest General Fund revenue source, sales tax, is anticipated to stay on track with the budget of
$39.6 million. We expect that the increases in auto sales and the sale of consumer goods will
offset the slight decrease in fuel sales due to a decline in gas prices. Property taxes for the current
year are projected to be $23.2 million, which is $458,000 (2 %) above budget. This increase is
related to higher assessed values. Transient occupancy tax has been tracking positively and is
anticipated to increase by $349,000 or 9% higher than the budget projection of $3.8 million. Based
on current trends, other revenue sources such as motor vehicle license fees, franchises, and real
property transfer tax are expected to be above budget as well. Our projections indicate that overall
ITEM 3 2/10/15
FY 15 General Fund revenues will end the fiscal year at $97.6 million, which is $1.5 million or
1.5% over budget.
Expenditures in the General Fund are currently on target. Historically, the General Fund ends the
fiscal year with savings in expenditures and staff is anticipating some savings in FY 15; however,
it is too soon to determine what that amount will be. There are a few adjustments that will be
addressed later in this report that were not known at the time the FY 15 budget was being prepared.
An estimated FY 15 year end fund balance is still too early to be determined however, staff will
be returning to City Council with more information at an upcoming Budget Study Session.
Transfers to Internal Service Funds
Fiscal Year 2013 -14 (FY 14) ended with $94.2 million in revenue, $4.0 million more than
budgeted. In keeping with City Council's direction from the October 2014 Council meeting, staff
is recommending transferring $4.0 million from the General Fund unreserved fund balance to the
Capital Projects Fund ($2.0 million), the Accrued Liability /PERS Fund ($1.5 million), and the
Business Investment Fund ($500,000). Staff is also recommending a transfer of $260,000 from
the General Fund unreserved fund balance to the Worker's Compensation Fund (730) for costs
associated with programs implemented to manage worker's compensation claims and their impact
to the City, explained later in this report.
Budget t Adjustments
• The enactment of Assembly Bill 1484 ( "AB 1484 "), also known as the Redevelopment Budget
Trailer Bill created obligations and deadlines for redevelopment wind -down activities. Since
the dissolution of the Orange Redevelopment Agency (ORA) in 2012, staff has been successful
in meeting the requirements of the wind -down activities including reducing administrative
costs previously funded by ORA. Some of these costs have been moved to the General Fund
as projects are completed. One of the last remaining staff members in the former ORA has
been moved to the Community Development Department as an Administrative Analyst II and
additional funds of $111,000 in Regular Salaries are needed to cover the cost. This position
will be responsible for much of the high level administrative job duties such as preparing and
managing the department's budget, enhancing the department's technology, and preparing
complex reports. This position has been invaluable as the Community Development
department has been in transition. Staff will also include this position and funding as part of
the FY 16 budget.
• The Finance Department is recommending the Business License Inspector position be
reclassified to Lead Business License Inspector due to a necessary change in the original
structure of the General Revenue Division. A revenue team approach has been instituted which
has resulted in greater efficiency, and also greater effectiveness. The recommendation is to
transition from two Business License Inspectors to one Lead Business License Inspector and
one Senior Finance Clerk. This memorializes the change in the team's approach, and results
in a net budget savings of $2,000 in FY 15. In addition, Human Resources staff is
recommending a salary adjustment of 5.0% above the existing Business License Inspector
salary as the appropriate compensation level for this new classification.
ITEM 4 2/10/15
• The Community Services Department is requesting an additional $20,000 for contractual
services. In an effort to keep the Plaza at an acceptable level of cleanliness, maintenance and
in response to complaints from the community, staff has enhanced the maintenance program
to include additional steam cleaning and general maintenance and repair.
• The Community Development Department is recommending to unfreeze the full time Assistant
Community Development Director position. Sufficient funds are available in FY 15 to fund
this position due to salary savings. Funding for this position will be added to the FY 16 budget.
This position plays an integral part in City Council's goal for an enhanced level of succession
planning.
• The Library Department is recommending to unfreeze the full time Assistant Library Services
Director position and freeze a part time Librarian II for a total fiscal impact of $98,000 to the
General Fund. The Assistant Library Services Director position is needed to manage the day
to day operations of the library allowing the Director to assume a leadership rather than
managerial role. This position would allow the succession planning process to move forward,
leaving the Library well prepared for the future loss of key employees.
• Per City Council direction during the adoption of the FY 15 budget, staff is requesting approval
to unfreeze a Captain position in the Police Department. Filling this position will enhance the
succession planning efforts of the Police Department. Additional funding is not needed at this
time as it is anticipated that there are sufficient funds available to cover the cost of this position
due to salary savings within the department. Funding of approximately $280,000 will be added
to the FY 16 budget for this position.
• As part of the City's efforts to reduce the impact to operations when an employee is on
industrial leave, staff has set up a program to move salaries for these employees to the Worker's
Compensation Fund, thus freeing up funding in the affected departments' budgets to backfill
the vacancy. With the recent implementation of a light duty program, the amount needed to
support this program for FY 15 was undetermined at the time of the budget preparation. As
such, staff did not include a budget for this line item in FY 15 with the understanding that
sufficient funds exist within the budget to cover the cost until this mid -year adjustment could
be brought to City Council. Upon review of the actual cost in the first six months, an
appropriation of $200,000 from the Worker's Compensation Fund is needed for this program.
• The Worker's Compensation Fund is in need of an appropriation of $60,000 for costs
associated with the Industrial Disability Retirement (IDR) Medical /Legal Evaluation program.
The City has the legal authority to decide whether a safety employee qualifies for an IDR under
CalPERS law. In late 2013, staff implemented a program to require all employees who apply
for IDR to undergo a PERS medical evaluation which resulted in a reduction of the number of
approved IDR's. Staff is requesting funding for the continuation of this program in the
Worker's Compensation Fund.
• The Accrued Liability Fund is used to pay for costs associated with retirees as well as to reserve
funds for future retirement costs (PERS). At City Council direction, $4.0 million has
previously been set aside in this fund for future PERS cost increases, with an additional $1.5
million proposed as part of this mid -year report. In addition to the one -time allocations,
ITEM 5 2/10/15
contributions to this fund are made through payroll allocations for the purpose of providing
funding for benefit expenses related to an employee who retires from the City. Due to an
unexpected number of employees who recently retired from the City, the amount budgeted for
FY 15 is insufficient to cover these expenses. Staff is requesting an appropriation of $317,000
from the Accrued Liability Fund (760) to cover this cost. In addition, staff is anticipating
similar conditions in future years, therefore staff will be proposing an increase to the payroll
deduction starting in FY 16 to support these increased costs.
Fiscal Year 2015 -2016
Although the economy continues to show signs of recovery, we continue to experience instability
in the global economies and falling oil prices. Despite these factors, our initial analysis suggests
that the City of Orange will continue on a positive upswing with a General Fund revenue estimate
for FY 16 at $101.9 million, which represents a 4.4% increase compared to our estimated revenue
for FY 15. This increase reflects an additional $3.5 million or 8.8% increase in sales tax revenue
as a result of our business efforts and strong performances by the Outlets of Orange, our
automotive dealerships, and the business to business sector. Property tax revenue is projected to
increase 1.9 %, or $451,000, because homes will continue to be assessed with annual increases in
their property taxes. Motor vehicle license fees and transient occupancy tax are also anticipated
to increase. A more detailed analysis of projected revenue will be provided at an upcoming budget
study session.
Preliminary expenditure estimates are at $101.5 million, $5.5 million more than the FY 15 budget,
primarily due to an estimated $2.0 million increase in PERS. In addition, FY 16 will be the first
full year of funding for economic development incentive agreements executed in 2014 at an
expected cost of $2.0 million. Also included is an increase to the allocation to the Worker's
Compensation, Vehicle Maintenance, and Accrued Liability Funds and a slight increase to salaries
and benefits from an anticipated merit increases. As budget preparations continue and budget
amounts are finalized, staff will return to City Council during the upcoming study sessions with
more accurate estimates.
8. ATTACHMENTS
Resolution No. 10839
ITEM 6 2/10/15
RESOLUTION NO. 10839
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF ORANGE AMENDING RESOLUTION NO.
10763 BETWEEN THE CITY OF ORANGE AND THE
ORANGE MUNICIPAL EMPLOYEES' ASSOCIATION
WHEREAS, the City of Orange, hereinafter referred to as "City," and the Orange
Municipal Employees' Association, hereinafter referred to as "OMEA" has an existing labor
contract (i.e., "Memorandum of Understanding" or "MOU ") in effect through June 30, 2015; and
WHEREAS, the Business License Inspector position #329 -001 is being proposed by
City staff for a reclassification to Lead Business License Inspector effective February 22, 2015;
and
WHEREAS, the classification of Lead Business Inspector needs to be established with a
commensurate salary range within the OMEA MOU; and
WHEREAS, the new salary range for this classification must be authorized by the City
Council and published by the City in order for the salary range to be considered pension -
reportable, pursuant to CaIPERS law;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Orange
that the attached updated OMEA salary table effective June 29, 2014 is amended, effective
February 22, 2015, with the new classification of Lead Business License Inspector incorporated
by reference as Exhibit "A."
ADOPTED this 10th day of February 2015.
Teresa E. Smith, Mayor of the City of Orange
ATTEST:
Mary E. Murphy, City Clerk of the City of Orange