Study Session 05/10/16CITY COUNCIL
MEETING MINUTES
ORANGE, CALIFORNIA
May 10, 2016
The City Council of the City of Orange, California, convened on May 10, 2016, at 4:00 p.m. in an
Adjourned Regular Meeting in the Weimer Room, 300 E. Chapman Avenue, Orange, California.
4:00 P.M. BUDGET STUDY SESSION
1. OPENING
This Adjourned Regular Meeting of the Orange City Council was called to order by
Mayor Smith at 4:00 p.m.
1.1 PLEDGE OF ALLEGIANCE TO THE FLAG
Led by Councilmember Fred Whitaker.
1.2 ROLL CALL
PRESENT - Alvarez, Whitaker, Smith, Murphy, Nichols
ABSENT - None
1.3 PRESENTATIONS/ ANNOUNCEMENTS/ INTRODUCTIONS
Mayor Smith introduced Bonnie Hagen, the new Community Services Director and David
Curtis the new Orange Public Library Director.
2. PUBLIC COMMENTS - None
3. CONSENT CALENDAR - None
4. REPORTS FROM MAYOR SMITH - None
5. REPORTS FROM COUNCILMEMBERS — None
6. REPORTS FROM BOARDS, COMMITTEES, AND COMMISSIONS - None
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CITY COUNCIL
MEETING MINUTES
7. ADMINISTRATIVE REPORTS — None
8. REPORTS FROM CITY MANAGER
ORANGE, CALIFORNIA
May 10, 2016
8.1 First Study Session for the Proposed Fiscal Year 2016 -17 Budget. (C2500.J.1.1)
City Manager Rick Otto and Finance Director Will Kolbow reviewed a series of slides, including
an update on the status of the FY 16 General Fund, updated projections, reviews of other funds
and a PERS pre - payment review.
For the current fiscal year, FY 16, revenues are estimated at $107.3 million with expenditures
estimated at $104.1 million. For the FY 17 budget estimated revenues are up slightly from the
originally budgeted number to $106.4 million. One factor that has helped the revenue numbers
increase is the Outlet Center revenues are up. Our Outlet Center is doing well in comparison to
other regional centers. Staff also indicated the strong diversity of the local economy and that the
City of Orange does not rely on any one segment of the economy for strength.
FY 17 expenditures are estimated at $106.3 million. Increases compared to the FY 16 budget are
due to increases in the Library book budget, Zoning Ordinance amendments, reclassification of
various positions, the addition of a fourth summer day camp, the addition of off hours security
for parks, and CERT program supplies.
In the FY 17 budget, there are no new full -time positions, no consultants for revisions to traffic
analysis models, no additional funds for repairs to equipment, no additional funds for supplies
and new equipment, and no funding for the Senior Center updates. From a 2009 high of 698
funded full time positions, the City currently has 640 full time funded positions. There are
approximately 20 vacant positions and 43 frozen positions in the FY 17 budget. The FY 17
budget is estimated to have a $115,000 surplus.
For the Water Fund FY 16 revenues are estimated at $25.5 million and expenditures are
estimated at $23.3 million. For FY 17, revenue is estimated at $26.2 million and expenditures are
estimated at $29.0 million.
Mayor pro tem Murphy confirmed that the loss of revenues combined with cost increases is due
to the costs of imported water. The cost of water has increased from the Orange County Water
Authority. Costs related to the full position burden of staff positions impacts the budget as well.
With the drop in water consumption, costs rise.
Councilmember Whitaker confirmed that passthrough costs have still been utilized. With
decreases of 25% of water used, the passthroughs have not kept pace with the loss of revenues.
City Manager Otto mentioned that the Council may see an item on an agenda in the late fall
related to rate structures for water prior to the scheduled January review.
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CITY COUNCIL ORANGE, CALIFORNIA
MEETING MINUTES May 10, 2016
8. REPORTS FROM CITY MANAGER (Continued)
In response to a question from Mayor Smith, Public Works Director Joe DeFrancesco, explained
that the Orange County Jail's water use is mostly indoor use while the conservation efforts have
concentrated on outdoor uses.
In the Sanitation Fund FY 16 revenues are estimated to be $4.1 million while estimated
expenditures are $5.2 million. In FY 17 revenues are estimated at $4.1 with expenditures
estimated at $5.0 million. Sewer repairs are done on a reactive basis where hot spots are worked
on rather that a proactive approach considering the entire system.
Councilmember Whitaker is not comfortable with the model where street sweeping fees are tied
to water consumption. With water use down the Sanitation fund is also down due to their being
tied together. The ideal should be a fair and equitable re- adjustment that is sustainable.
Internal service funds were reviewed with ending balances. The Equipment Replacement Fund:
$5.4 million. Workers Compensation Fund: $654,000. Liability: $750,000. Employee Accrued
Liability: $345,000. PERS Reserve: $5.2 million. Computer Replacement: $1.1 million.
PERS Pre - Payment plan would allow the City to pre -pay the entire year of PERS costs up front.
The total would be approximately $18 million. The City would then replenish the PERS account
over the following year.
In response to a question from Councilmember Whitaker, staff explained that the PERS costs are
calculated by CALPERS and are not negotiable. The City cannot finesse the dollars owed by
manipulating the number of employees.
Mayor Smith asked about the recent news of wire transfer irregularities in a neighboring City.
She asked for an explanation of how Orange manages these wire transfers. City Treasurer
Richard Rohm met with staff to discuss internal controls and checks and balances related to wire
transfers in the City of Orange. Richard Rohm plans to continue to watch and work with staff in
improving procedures. Staff added that with checks and balances and strong controls in place,
this type of fraud would be very difficult to pull off in the City of Orange. The City is watching
how this story plays out to insure our controls are strong and that this type of fraud does not
happen in Orange.
Mayor Smith thanked Finance staff for the hard work completed to get the budget to this point.
She thanked all City staff for keeping the budget on a positive track. She also thanked City
Treasurer Richard Rohm for getting involved in the wire transfer story.
ACTION: Received and filed report.
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CITY COUNCIL
MEETING MINUTES
9. LEGAL AFFAIRS - None
ORANGE, CALIFORNIA
May 10, 2016
10. ADJOURNMENT — The Study Session adjourned at 5:00 p.m. The next Regular City
Council Meeting was held on Tuesday April 12, 2016, at 6:00 p.m. in the Council
Chamber with a Closed Session beginning at 5:00 p.m., if necessary.
ROBERT ORNADO
CHIEF 'CLERK
TERESA E. WITH
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